Intellectual Property Law (Trademark) Page |1

G.R. No. L-6235 March 28, 1955 On November 8, 1948, Ong Ai Gui alias Tan Ai Gui filed an application (No. 803)
with the Director of Patents for the registration of the following trade-name:
ONG AI GUI alias TAN AI GUI, applicant-petitioner, "20th Century Nylon Shirts Factory." It is stated in connection with the
vs. application that the trade-name was used for the first time by the applicant on
the Director of the Philippines Patent Office, respondent. September 12, 1941 for his business described as follows: "General merchandise
E. I. DU PONT DE NEMOURS AND COMPANY, intervenor. dealing principally in textiles, haberdasheries; also operating as manufacturer of
shirts, pants and other men's and woman's wears." Upon the filing of the
Jose P. Laurel for petitioner. application, the same was referred by the Director to an examiner. The latter in
Solicitor General Juan R. Liwag and Solicitor Pacifico P. de Castro for a report dated August 18, 1950 held that the words "shirts factory" are not
respondent. registrable; so the applicant made a disclaimer of said words (shirts factory)
J. A. Wolfson for intervenor. inserting a statement to that effect in his original application. On August 13,
1951 the Director ordered the publication of the trade-name in the official
Gazette.
1.TRADE-NAMES; DESCRIPTIVE OR GENERIC TERM CAN NOT BE
APPROPRIATED BY SINGLE INDIVIDUAL.—Although a combination of words Publication was made but before the expiration of the period for filing
may be registered as a trade-name, it is no justification for not applying the opposition, Atty. J. A. Wolfson, on behalf of E. I. De Pont de Nemours and
principle that the use of a descriptive or generic term in a trade-name is always Company, presented on February 27, 1952, an opposition on the ground that
subject to the limitation that the registrant can not acquire the exclusive right to the word "nylon" was a name coined by E. I. Du Pont de Nemours and Company
the descriptive or generic term or word. as the generic name of a synthetic fabric material, invented, patented,
2.ID.; PROCEDURE FOR REGISTRATION.—There are 'two steps in the manufactured and sold by it and that this word is a generic term; that the use of
proceedings for the approval of an application for registration; the first is that the name "nylon" is descriptive or deceptively misdescriptive of the goods,
conducted in the office of the Director and taking place prior to publication, and business of manufactures of the applicant; that the use of the name would
the second, that conducted after publication, in which the public is given the produce confusion in trade and would deceive the public; and that "nylon" is not
opportunity to contest the application. In the first, the application is referred to distinctive of applicant's goods; business and manufactures and applicant does
an examiner, who, after study and investigation makes a report and not claim that it has so become. This opposition, however, was dismissed by the
recommendation to the Director who, upon finding that applicant is entitled to Director on the ground that at the time it was submitted Atty. J. A. Wolfson did
registration, orders publication of the application. (Sec. 7, Rep. Act No. 166.) If not have, nor did he submit, authority to file it (opposition) in the corporate
he finds that applicant is. not entitled to registration, he may then and there name, and that the subsequent authorization from the corporation to that effect
dismiss the application. In the second, opportunity is offered the public or any did not cure the general defect in the opposition.
interested party to come in and object to the petition (Sec. 8, Id.), giving proofs
and reasons for the objection, applicant being given the opportunity also to But while he dismissed the opposition, the Director ruled that the application
submit proofs or arguments in support of the application. (Sec. 9, Id.) It is the must be disapproved unless the word "nylon" is also disclaimed. The grounds for
decision of the Director, given after this hearing, or opportunity to every the disapproval of the application were as follows:
interested party to be heard, that finally terminates the proceedings and in
which the registration is finally approved or disapproved. Thereafter, notice of "Nylon" is merely descriptive of the business of shirt-making if the shirts are
the issuance of the certificate of registration is published. (Sec. 10, Id.) made of nylon. It is deceptively misdescriptive of said business, if the shirts are
not made of nylon. In either case, its registration in the Principal Register as a
PETITION for review by certiorari of a decision of the Director of Patents. [Ong trade-name, or as a part of a trade-name, is expressly forbidden by subsection
Ai Gui vs. Director, Phil. Patent Office, 96 Phil. 673(1955)] (e) of Section 4 of Republic Act No. 166, as amended by Section 2 of Republic
Act No. 638.
LABRADOR, J.:
xxx xxx xxx
 Intellectual Property Law (Trademark) Page |2

But even if the trade-name here in question were applied for under the said understand their meaning, they are reasonably indicative and descriptive of the
subsection (f), "Nylon" would still have to be disclaimed. Used in connection with thing intended. If they are thus descriptive, and not arbitrary, they cannot be
shirt-making, "Nylon" can never become distinctive, can never acquire secondary appropriated from general use and become the exclusive property of anyone.
meaning, because it is a generic term, like cotton, silk, linen, or ramie. Just as (52 Am. Jur. 542-543.) .
no length of use and no amount of advertising will make "cotton," "silk," "linen,"
or "ramie," distinctive of shirts or of the business of making them, so no length . . . If the trade-name consists of a descriptive word, no monopoly of the right to
of use and no amount of advertising will make "nylon" distinctive of shirts or of use the same can be acquired. This is but a corollary of the proposition that a
the business of manufacturing them." descriptive word cannot be the subject of a trade mark. G. & C. Merriam Co. vs.
Salfield (C. C. A.) 198, 369. Other may use the same or similar descriptive word
Again the above decision applicant has filed an appeal to this Court. During the in connection with their own wares, provided they take proper steps to prevent
pendency of this appeal, E. I. Du Pont de Nemours and Co. filed a petition to the public being deceived. . . . (Richmond Remedies Co. vs. Dr. Miles Medical
intervene, which petition was granted. It has also, through counsel, filed a brief Co., 16 E. (sd) 598.)
answering the arguments of the applicant-appellant and supporting the decision
appealed from. . . . The so-called descriptive terms, which may be used to described the product
adequately, can not be monopolized by a single user and are available to all. It
There are two main questions raised in the appeal, one legal and the other is only natural that the trade will prefer those marks which bear some reference
procedural. The legal question is put up by the claim of the applicant-appellant to the article itself. Therefore, even those descriptive marks which are distinctive
that while he admits that the term "nylon" is by itself alone descriptive and by themselves can be appropriated by others with impunity. A descriptive word
generic, what he desires to register is not the said word alone but the whole may be admittedly distinctive, especially if the user is the first creator of the
combination of "20th Century Nylon Shirts Factory." It is to be noted in answer article. It will, however, be denied protection, not because it lacks
to this contention that the Director of Patents has not completely denied the distinctiveness, but rather because others are equally entitled to its use. . . (2
registration of the whole trade-name. He has made a conditional denial only, Callman. Unfair Competition and Trade Marks, pp. 869-870.)
permitting the registration of the name but with the disclaimer of the terms
"shirt factory" and "nylon." The import of the decision is that the trade-name The claim that a combination of words may be registered as a trade-name is no
may be registered, but applicant-appellant may not be entitled to the exclusive justification for not applying the rules or principles hereinabove mentioned. The
use of the terms "shirts factory" and "nylon" as against any other who may use of a generic term in a trade-name is always conditional, i. e., subject to the
subsequently use the said terms, juris publici, incapable of appropriation by any limitation that the registrant does not acquire the exclusive right to the
single individual to the exclusion of others. This is supported by reason and descriptive or generic term or word.
authority.
. . . A combination of marks or words may constitute a valid trademark or (in the
A word or a combination of words which is merely descriptive of an article of case of words) a tradename even though some of the constituent portions
trade, or of its composition, characteristics, or qualities, cannot be appropriated thereof would not be subject, separately, to exclusive appropriation as such.
and protected as a trademark to the exclusion of its use by others. The reason Thus, although a word may be descriptive and not subject to exclusive use as a
for this is that inasmuch as all persons have an equal right to produce and vend trademark, it may properly become the subject of a trademark by combination
similar articles, they also have the right to describe them properly and to use with another word or term which is nondescriptive, although no exclusive right
any appropriate to himself exclusively any word or expression, properly to then descriptive word or term id created . . . (52 Am. Jur. 553.)
descriptive of the article, its qualities, ingredients, or characteristics, and thus
limit other persons in the use of language appropriate to the description of their The citation of appellant himself supports the decision thus: ". . . although
manufactures, the right to the use of such language being common to all. This perhaps not entitled to protection against infringement by the use of the
rule excluding descriptive terms has also been held to apply to trade-names. As descriptive matter by another." (Frost vs. Rindskopt, 42 Fed. 408.)
to whether words employed fall within this prohibition, it is said that the true
test is not whether they are exhaustively descriptive of the article designated, It must also be noted that no claim is made in the application that the trade-
but whether in themselves, and as they are commonly used by those who name sought to be registered has acquired what is known as a secondary
 Intellectual Property Law (Trademark) Page |3

meaning within the provisions of paragraph (f) of section 4 of Republic Act No. the first is that conducted in the Office of the Director and taking place prior to
166. All that the applicant declares in his statement accompanying his publication, and the second, that conducted after publication, in which the public
application is that the said trade-name has been continuously used by it in is given the opportunity to contest the application. In the first, the application is
business in the Philippines for about seven years, without allegation or proof referred to an examiner, who, after study and investigation makes a report and
that the trade-name has become distinctive of the applicant's business or recommendation to the Director who, upon finding that applicant is entitled to
services. Furthermore, the use of the term "nylon" in the trade-name is both registration, orders publication of the publication. (Sec. 7, Rep. Act No. 166.) If
"descriptive" and "deceptively and misdescriptive" of the applicant-appellant's he finds that applicant is not entitled to registration, he may then and there
business, for apparently he does not use nylon in the manufacture of the shirts, dismiss the application. In the second, opportunity is offered the public or any
pants and wears that he produces and sells. How can a secondary meaning be interested party to come in and object to the petition (Sec. 8, Id.), giving proofs
acquired if appellant's products are not made of nylon? Certainly no exclusive and reasons for the objection, applicant being given opportunity also to submit
right can be acquired by deception of fraud. proofs or arguments in support of the application. (Sec. 9, Id.) It is the decision
of the Director, given after this hearing, or opportunity to every interested party
The procedural question arises from the fact that after the Director had ordered to be heard, that finally terminates the proceedings and in which the registration
publication and notwithstanding dismissal of an opposition, the Director is finally approved or disapproved. Thereafter, notice of the issuance of the
nevertheless conditionally denied the application after its publication and failed certificate of registration is published. (Sec. 10, Id.)
to give applicant opportunity for a hearing, as specifically required by section 7
of Republic Act No. 166. It is evident that the decision of the Director after the first step, ordering
publication, can not have any finality. Of what use is the second step in the
It is argued that after approval of the findings of the commissioner to whom the proceedings, if the Director is bound by his first decision, giving course to the
application id referred and giving of the order of publication, it becomes the publication? His first decision is merely provisional, in the sense that the
ministerial duty of the Director to issue the corresponding certificate of application appears to be meritorious and is entitled to be given course leading
registration and that his power is confined to this issuance alone. The answer to to the more formal and important second step of hearing and trial, where the
this argument is the fact that the law allows oppositions to be filed after public and interested parties are allowed to take part.
publication, thus:
The argument that the Director failed to comply with paragraph 2 of section 7,
Sec. 8. Opposition. — Any person who believes that he would be damaged by Republic Act No. 166 cannot be raised in the case at bar, because the Director
the registration of a mark or trade-name may, upon payment of the required fee did not find that the applicant is not entitled to registration. He actually found
and within thirty days after the publication under the first paragraph of section that he is entitled to registration and that is why an order for the publication of
seven hereof, file with the Director an opposition to the application. Such the application was issued. How can the Director comply with the provisions of
opposition shall be in writing and verified by the oppositor, or by any person on said paragraph 2 if he did not disapprove the applicant's petition for registration?
his behalf who knows the facts, and shall specify the grounds on which it is
based and include a statement of the facts relied upon. Copies of certificates of We, therefore, find that the errors assigned in the appeal have not been
registration of marks or trade-names registered in other countries or other committed id hereby respondent Director of Patents. His decision is hereby
supporting documents mentioned in the opposition shall be filed therewith, affirmed, with costs against the applicant-appellant.
together with the translation thereof into English, if not in the English language.
For good cause shown and upon payment of the required surcharge, the time Paras, C. J., Pablo, Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo,
for filing an opposition may be extended for an additional thirty days by the Concepcion, and Reyes, J. B. L., JJ., concur.
Director, who shall notify the applicant of such extension. (Republic Act No.
166.)

Of what use is the period given to oppositors to register their oppositions if such
oppositions are not to be given consideration at all, because the Director has
only the ministerial duty after publication to issue the certificate of registration;
 Intellectual Property Law (Trademark) Page |4

G.R. No. L-53672 May 31, 1982

RESOLUTION
BATA INDUSTRIES, LTD., petitioner,
vs. ABAD SANTOS, J.:
THE HONORABLE COURT OF APPEALS; TIBURCIO S. EVALLE,
DIRECTOR OF PATENTS, NEW OLYMPIAN RUBBER PRODUCTS CO., On October 27, 1980, the petition in this case was denied for lack of merit.
INC., respondents. Petitioner moved to reconsider and as required, private respondent submitted
comments. A hearing on the motion for reconsideration was held on June 7,
Courts; Courts of Appeals; Judgments; There is nothing wrong where a new set 1982. This is Our resolution on the motion for reconsideration.
of Justices in the Court of Appeals reconsiders a decision of the Justices they
have replaced.—It should be stated that there is nothing wrong and unusual In Inter Partes Case No. 654 of the Philippine Patent Office, New Olympian
when a decision is reconsidered. This is so when the reconsideration is made by Rubber Products Co., Inc. sought the registration of the mark BATA for casual
a division composed of the same justices who rendered the decision but much rubber shoes. It alleged that it has used the mark since July 1, 1970.
more so when the reconsideration is made by a different set of justices as
happened in this case. Obviously, the new set of justices would have a fresh Registration was opposed by Bata Industries, Ltd., a Canadian corporation,
perspective unencumbered by the views expressed in the decision sought to be which alleged that it owns and has not abandoned the trademark BATA.
reconsidered. Nor should it be a cause for wonder why Justices Gutierrez,
Agrava and Nocon had replaced the original justices. Justice Cortez resigned to Stipulated by the parties were the following:
become a candidate for the governorship of Cagayan (he was elected), while
Justices Serrano and Jimenez retired upon reaching the age of 65. 1. Bata Industries, Ltd. has no license to do business in the Philippines;
Tradenames and Trademarks; A slight goodwill generated by a foreign company
before World War II can be considered an abandoned after more than 35 years. 2. It is not presently selling footwear under the trademark BATA in the
—We are satisfied from the evidence that any slight goodwill generated by the Philippines; and
Czechoslovakian product during the Commonwealth years was completely
abandoned and lost in the more than 35 years that have passed since the 3. It has no licensing agreement with any local entity or firm to sell its
liberation of Manila from the Japanese troops. products in the Philippines.
Same; Same.—The applicant-appellee has reproduced excerpts from the
testimonies of the opposer-appellant’s witnesses to prove that the opposer- Evidence received by the Philippine Patent Office showed that Bata shoes made
appellant was never a user of the trademark BATA either before or after the by Gerbec and Hrdina of Czechoslovakia were sold in the Philippines prior to
war, that the appellant is not the successor-in-interest of Gerbec and Hrdina who World War II. Some shoes made by Bata of Canada were perhaps also sold in
were not its representatives or agents, and could not have passed any rights to the Philippines until 1948. However, the trademark BATA was never registered in
the appellant, that there was no privity of interest between the Czechoslovakian the Philippines by any foreign entity. Under the circumstances, it was concluded
owner and the Canadian appellant and that the Czechoslovakian trademark has that "opposer has, to all intents and purposes, technically abandoned its
been abandoned in Czechoslovakia. trademark BATA in the Philippines."
Same; A foreign company selling a brand (BATA) of shoes abroad but not in the
Philippines has no goodwill that would be damaged by registration of the same Upon the other hand, the Philippine Patent Office found that New Olympian
trademark in favor of a domestic corporation which has been using it for years Rubber Products Co., Inc.:
here.—The appellant has no Philippine goodwill that would be damaged by the
registration of the mark in the appellee’s favor. We agree with the decision of ... has overwhelmingly and convincingly established its right to the trademark
the Director of Patents which sustains, on the basis of clear and convincing BATA and consequently, its use and registration in its favor. There is no
evidence, the right of the appellee to the registration and protection of its gainsaying the truth that the respondent has spent a considerable amount of
industrial property, the BATA trademark. [Bata Industries, Ltd. vs. Court of money and effort in popularizing the trademark BATA for shoes in the Philippines
Appeals, 114 SCRA 318(1982)] through the advertising media since it was lawfully used in commerce on July 1,
 Intellectual Property Law (Trademark) Page |5

1970. It can not be denied, therefore, that it is the respondent-applicant's On the merits, the extended resolution penned by Justice Gutierrez does not
expense that created the enormous goodwill of the trademark BATA in the have to be fortified by Us. We agree with Mr. Justice Gutierrez when he says:
Philippines and not the opposer as claimed in its opposition to the registration of
the BATA mark by the respondent. We are satisfied from the evidence that any slight goodwill generated by the
Czechoslovakian product during the Commonwealth years was completely
Additionally, on evidence of record, having also secured (three) copyright abandoned and lost in the more than 35 years that have passed since the
registrations for the word BATA, respondent-applicant's right to claim ownership liberation of Manila from the Japanese troops.
of the trademark BATA in the Philippines, which it claims to be a Tagalog word
which literally means "a little child" (Exh. 5), is all the more fortified. The applicant-appellee has reproduced excerpts from the testimonies of the
opposer-appellant's witnesses to prove that the opposer-appellant was never a
The Philippine Patent Office dismissed the opposition and ordered the user of the trademark BATA either before or after the war, that the appellant is
registration of the trademark BATA in favor of the domestic corporation. not the successor-in-interest of Gerbec and Hrdina who were not is
representatives or agents, and could not have passed any rights to the
Appeal from the decision of the Philippine Patent Office was made to the Court appellant, that there was no privity of interest between the Czechoslovakian
of Appeals by Bata Industries, Ltd. In a decision penned by Justice Justiniano P. owner and the Canadian appellant and that the Czechoslovakian trademark has
Cortez dated August 9, 1979, with Justices Mariano Serrano and Jose B. Jimenez been abandoned in Czechoslovakia.
concurring, the PPO decision was reversed. A motion for reconsideration filed by
New Olympian Rubber Products Co., Inc. was denied on October 17, 1979, by We agree with the applicant-appellee that more than substantial evidence
the same justices. supports the findings and conclusions of the Director of Patents. The appellant
has no Philippine goodwill that would be damaged by the registration of the
However, in a resolution on a second motion for reconsideration penned by mark in the appellee's favor. We agree with the decision of the Director of
Justice Hugo E. Gutierrez who is now a member of this Court, to which Justices Patents which sustains, on the basis of clear and convincing evidence, the right
Corazon J. Agrava and Rodolfo A. Nocon concurred (with the former filing a of the appellee to the registration and protection of its industrial property, the
separate opinion), the decision of August 9, 1979, was set aside and that of the BATA trademark.
Director of Patents was affirmed.
WHEREFORE, the motion for reconsideration is hereby denied for lack of merit.
In addition to points of law, Bata Industries, Ltd. questions "the circumstances No special pronouncement as to costs.
surrounding the issuance of the questioned resolutions of the respondent Court
of Appeals." In effect, it insinuates that there was something wrong when a new SO ORDERED.
set of justices rendered a completely different decision.
Barredo (Chairman), Aquino, Guerrero, De Castro and Escolin, JJ., concur.
It should be stated that there is nothing wrong and unusual when a decision is
reconsidered. This is so when the reconsideration is made by a division Concepcion, Jr., J., is on leave.
composed of the same justices who rendered the decision but much more so
when the reconsideration is made by a different set of justices as happened in
this case. Obviously, the new set of justices would have a fresh perspective
unencumbered by the views expressed in the decision sought to be
reconsidered. Nor should it be a cause for wonder why Justices Gutierrez,
Agrava and Nocon had replaced the original justices. Justice Cortez resigned to
become a candidate for the governorship of Cagayan (he was elected), while
Justices Serrano and Jimenez retired upon reaching the age of 65.
 Intellectual Property Law (Trademark) Page |6

G.R. No. L-18337 January 30, 1965

2. Was first used by him in commerce in or with the Philippines on June 10,
CHUA CHE, petitioner, 1957.
vs.
PHILIPPINES PATENT OFFICE and SY TUO, respondents. 3. Has been continuously used by him in trade in or with the Philippines for
more than one year.
Chipeco & Alcaraz, Jr. for petitioner.
Perfecto E. de Vera for respondents. 4. Is, on the date of this application, actually used by him on the following
goods, classified according to the Official Classification of Goods (Rule 82):
Patents; Appeal from decisions of Director of Patents ordinarily allowed only on
questions of law.—Ordinarily, only questions of law should be raised in appeals Class 51 — Soap
from decisions of the Director of Patents. The only exception to this rule is when
the findings of fact in the decision are not supported by substantial evidence. 5. Is applied to the goods or to the packages containing the same, by placing
Same; Same; Finding of priority of use and adoption of trademark is one of fact. thereon a printed label on which the trademark is shown, or by directly
—The finding of the Director of Patents to the effect that the oppositor had impressing the mark to the goods.
priority of use and adoption of the trademark in question is, for all intents and
purposes, one of fact. The corresponding declaration, which was under oath, contained, among others,
Same; Registration of trademark refused where it will cause confusion with the following:
similar mark on goods of different category.—Registration of a trademark should
be refused in cases -where there is a likelihood of confusion, mistake, or 3. That he believes himself to be the lawful owner of the trademark sought to be
deception, even though the goods fall under different categories. registered.
PETITION for review of a decision of the Director of Patents. [Chua Che vs.
Philippines Patent Office, 13 SCRA 67(1965)] 4. That the said trademark is in actual use in commerce in or with the
Philippines not less than two months before this application is filed.
PAREDES, J.:
5. That no other person, partnership, corporation, or association, to the best of
This is a petition to review the decision of the Director of Patents, in Inter Partes his knowledge and belief, has the right to use said trademark in the Philippines,
Case No. 161, denying the application of petitioner Chua Che for the registration either in the identical form or in any such near resemblance thereto as might be
of "T.M. X-7" for use on soap Class 51, being manufactured by said Chua Che, calculated to deceive.
upon the opposition of respondent Sy Tuo.
Under date of July 6, 1959, an Examiner of the Department of Commerce and
Under date of October 30, 1958, Chua Che presented with the Philippines Patent Industry, submitted a report recommending the allowance of the application,
Office a petition praying for the registration in his favor the trade name "X-7". which report was approved by the Supervising TM Examiner. After the Notice of
The petition, states: allowance was published in the Official Gazette, as required, respondent Sy Tuo
presented a "Notice of Opposition," dated October 15, 1959, anchoring said
The undersigned CHUA CHE, a citizen of China, a resident of 2804 Limay St., opposition on the following allegations:
Tondo, Manila, and doing business at same address, has adopted and used the
trademark "X-7" shown in the accompanying Drawing. 1. The registration of the trademark "X-7" as applied for by CHUA CHE will not
only violate the rights and interests of the Oppositor over his registered
In accordance with the requirements of law, the undersigned declares that this trademark "X-7" covered by Certificate of Registration No. 5,000, issued April 21,
trademark — 1951, but will also tend to mislead the purchasing public and make it convenient
for unscrupulous dealers to pass off the goods of the applicant CHUA CHE, for
1. Was first used by him on June 10, 1957.
 Intellectual Property Law (Trademark) Page |7

those of the oppositor SY TUO, to the injury of both the oppositor and the
public. Oppositor SY TUO —

2. The registration of the said trademark "X-7" in the name of CHUA CHE will be The registration of the trademark "X-7" in the name of applicant CHUA CHE will
in violation of, and will run counter to, Section 4 (d) of Republic Act No. 166, as likely mislead the public so as to make them believe that said goods are
amended, because it is confusingly similar to the trademark "X-7" covered by manufactured or sponsored by or in some way in trade associated with opposer.
Registration No. 5,000 previously registered to, and being used by the oppositor
and is not abandoned. Applicant CHUA CHE —

The Oppositor SY TUO, doing business as the Western Cosmetic Laboratory will In Inter Partes proceedings, the principal issue is "priority of adoption and use."
rely on the following facts: Since opposer has not yet used "X-7" mark on soap, but will still use it, applicant
should be entitled to the registration of the same.
(a) Oppositor has prior use of the trademark "X-7" as he has been using it
extensively and continuously since July 31, 1952, while the applicant, Chua Che, The Director of Patents rendered judgment on January 18, 1961, the pertinent
allegedly used his trademark only since June 10, 1957.1äwphï1.ñët portions of which read:

(b) Oppositor's mark "X-7" is distinctive and his invented mark and not merely Based on those facts there is no question that opposer's first use of the
an ordinary, common and weak mark. trademark X-7 on July 31, 1953, is prior to applicant's first use of the mark on
June 10, 1957. The only question then in this case is whether or not purchasers
(c) The oppositor and the applicant use the trademark "X-7" for allied and of X-7 perfume, lipstick and nail polish would likely upon seeing X-7 laundry
closely related products. soap, attribute common origin to the products or assume that there existed
some kind of trade connection between applicant and opposer.
(d) The oppositor has spent a huge amount by way of advertising and
advertising his "X-7" brand. Opposer's record shows that he has been using since July 31, 1953 the
trademark X-7 on perfume, lipstick and nail polish; that he has spent substantial
(e) The oppositor has spent a big amount in expanding his business for the amounts of money in building upon the goodwill of this trademark through
manufacture of toilet soap and crystal laundry soap with his already popular "X- advertisements in all kinds of media — through newspapers of general
7" brand. circulation, by means of billboards in various places in the Philippines, and also
over the radio and television. In these advertisements opposer has spent about
(f) The trademark applied for by the applicant Chua Che consists of the P120,000.00. There is no question that opposer enjoys a valuable goodwill in the
trademark "X-7" and anyone is likely to be misled as to the source or origin by trademark X-7.
the close resemblance or identity with the trademark "X-7" of the oppositor.
The products of the parties, while specifically different, are products intended for
Attached to the Opposition were labels (samples) being used by oppositor on his use in the home and usually have common purchasers. Furthermore, the use of
products, which clearly show "X-7". X-7 for laundry soap is but a natural expansion of business of the opposer. In
fact, herein opposer in 1956, prior to the alleged date of first use by respondent-
Petitioner herein presented an Answer to Notice of Opposition, claiming among applicant of the trademark X-7 for laundry soap on June 10, 1957, had made
others that the grounds of opposition are not correct, since although it is steps in expanding the use of this trademark to granulated soap. Under these
admitted that "X-7" is registered in the name of oppositor, said trademark is not circumstances, it is concluded that the average purchasers are likely to associate
being used on soap, but purely toilet articles. After the presentation of the X-7 laundry soap with X-7 perfume, lipstick and nail polish or to think that the
Answer the case was heard, wherein the parties presented their respective products have common origin or sponsorship.
evidence, both testimonial and documentary. In the memoranda of the
contenders, they limited the principal issues, thus —
 Intellectual Property Law (Trademark) Page |8

IN VIEW OF THE ABOVE FINDINGS, the opposition in this case should be as it is appellee's rights to the trademark "X-7", it becomes manifest that the
hereby sustained and consequently Application Serial No. 6941, of Chua Che, is registration of said trademark in favor of applicant-appellant should be denied.
also hereby rejected.
PREMISES CONSIDERED, the decision sought to be reviewed should be, as it is
OPPOSITION SUSTAINED hereby affirmed in all respects, with costs against appellant CHUA CHE in both
instances.
The above judgment is now before Us, applicant-appellant claiming that it was
error for the Director to conclude that opposer SY TUO had priority to use the Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal,
trademark in question, and that the use by appellant of the trademark "X-7" on Bengzon, J.P., and Zaldivar, JJ., concur.
granulated soap to be manufactured and sold by him, would likely mislead Concepcion, J., took no part.
purchasers.

At the very outset, we would like to state that in cases of the nature of the one
at bar, only questions of law should be raised, and the only exception to this
rule, meaning that findings of facts may be reviewed, is when such findings are
not supported by substantial evidence (Sec. 2, Rule 44, Revised Rules). The
finding of the Director of Patents Office to the effect that opposer-appellee Sy
Tuo had priority of use and adoption of the trademark "X-7", is for all intents
and purposes, one of fact. This being the case, such finding becomes conclusive
to this Court. Even on this sole issue alone, the petition for review must fall.

However, there are other matters which must be clarified. For instance, the fact
that appellee has not yet used the trademark "X-7" on granulated soap, the
product on which appellant wants to use the said trademark. The circumstance
of non-actual use of the mark on granulated soap by appellee, does not detract
from the fact that he has already a right to such a trademark and should,
therefore, be protected. The observation of the Director of Patents to the effect
that "the average purchasers are likely to associate X-7 laundry soap with X-7
perfume, lipstick and nail polish or to think that the products have common
origin or sponsorship," is indeed well taken. It has been pointed out by appellant
that the product upon which the trademark X-7 will be used (laundry soap) is
different from those of appellee's, and therefore no infringement and/or
confusion may result. We find no merit in the above contention, for it has been
held that while it is no longer necessary to establish that the goods of the
parties possess the same descriptive properties, as previously required under the
Trade Mark Act of 1905, registration of a trademark should be refused in cases
where there is a likelihood of confusion, mistake, or deception, even though the
goods fall into different categories. (Application of Sylvan Sweets Co., 205 F.
2nd, 207.) The products of appellee are common household items nowadays, in
the same manner as laundry soap. The likelihood of purchasers to associate
those products to a common origin is not far-fetched. Both from the standpoint
of priority of use and for the protection of the buying public and, of course,
 Intellectual Property Law (Trademark) Page |9

G.R. No. L-23023 August 31, 1968 removed from shoes as to preclude relief, any more than the pancake flour is
from syrup or sugar cream, or baking powder from baking soda, or cosmetics
JOSE P. STA. ANA, petitioner, and toilet goods from ladies' wearing apparel and costume jewelry. More
vs. specifically, manufacturers of men's clothing were declared entitled to protection
FLORENTINO MALIWAT and TIBURCIO S. EVALLE, in his capacity as against the use of their trademark in the sale of hats and caps (Rosenberg Bros.
Director of Patents, respondents. v. Elliott, 7 Fed. [2d] 962) and of ladies shoes (Forsythe & Co. vs. Forsythe Shoe
Corp., 254 NYS 584). In all these cases, the courts declared the owner of a
Rodolfo A. Francisco for petitioner. trade-mark from the first named goods entitled to exclude use of its trade-mark
Catalino S. Maravilla for respondent Florentino Maliwat. on the related class of goods above-referred to.
Office of the Solicitor General for respondent Tiburcio S. Evalle. Same; Possession of the same descriptive properties not required; Case at bar.—
The law (Rep. Act No. 166, sec. 4, par. d, as amended) does not require that the
Evidence; Judicial admissions.—Admissions made by the parties in the pleadings, articles of manufacture of the previous user and the late user of the mark should
or in the course of the trial or other proceedings do not require proof and can possess the same descriptive properties or should fall into the same categories
not be contradicted unless previously shown to have been made through as to bar the latter from registering his mark in the principal register (Chua Che
palpable mistake (Sec. 2, Rule 129, Rev. Rules of Court). v. Phil. Patent Office, et al., L-18337, Jan. 30 1965 [between toiletries and
Same; Stenographic notes; When presumption that stenographer regularly laundry soap], citing Application of Sylvan Sweets Co., 205 F. 2nd, 207 [between
performed her duty stands.—Where the integrity of the stenographic record is candies and cigarettes]). Therefore, whether or not shirts and shoes have the
intact and no one has ever taken any step to correct any alleged error in the same descriptive properties, or whether or not it is the prevailing practice or the
transcript of stenographic notes before the records were elevated to the tendency of tailors and haberdashers to expand their business into shoemaking,
appellate court, the presumption that the stenographer regularly performed her are not controlling. The meat of the matter is the likelihood of confusion,
duty stands. mistake or deception upon purchasers of the goods of the junior user of the
Patents; Registration of trademark; Applicant for registration of trademark is not mark and the goods manufactured by the previous user. Here, the resemblance
bound by the date of first use; Case at bar.—An applicant for registration is not or similarity of the mark FLORMANN and the name FLORMEN and the likelihood
bound by the date of first use as stated by him in his application, but is entitled of confusion, one to the other, is admitted; therefore, the prior adopter has the
to carry back said stated date of first use to a prior date by proper evidence; but better right to the use of the mark.
in order to show an earlier date of use, he is then under a heavy burden, and his
proof must be clear and convincing (Anchor Trading Co., Inc. v. The Director of PETITION for review of a decision of the Director of Patents.
Patents, et al., L-8004, May 30, 1956; Chung Te v. Ng Kian Giab, et al., L-23791, The facts are stated in the opinion of the Court.
Nov. 23, 1966). In the case at bar, the proof of date of first use (1953), earlier      
than that alleged in respondent Maliwat's application (1962), can be no less than [Sta. Ana vs. Maliivat, 24 SCRA 1018(1968)]
clear and convincing because the fact was stipulated and no proof was needed.
Same; Junior appropriator of trademark; Scope of the protection of the owner of REYES, J.B.L., J.:
a trademark.—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 Petition for review of the decision of the respondent Director of Patents in an
actual market competition with identical or similar products of the parties, but interference proceeding1 (Inter Partes Case No. 291), finding for the senior
extends to all cases in which the use by a junior appropriator of a trade-mark or party applicant, Florentino Maliwat, the herein private respondent, and against
tradename is likely to lead to a confusion of source, as where prospective the junior party applicant2 Jose P. Sta. Ana, the herein petitioner.
purchasers would be misled into thinking that the complaining party has
extended his business into the field or is in any way connected with the activities On 21 June 1962, Florentino Maliwat filed with the Patent Office an application
of the infringer; or when it forestalls the normal potential expansion of his for registration of the trademark FLORMANN, which is used on shirts, pants,
business. Mere dissimilarity of goods should not preclude relief where the junior jackets and shoes for ladies, men, and children, claiming first use in commerce
user's goods are not too different or remote from any that the owner would be of the said mark on 15 January 1962. The claim of first use was subsequently
likely to make or sell; and in the present case, wearing apparel is not so far amended to 6 July 1955.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 10

in the course of the trial in the interference proceedings. The recorded

On 18 September 1962, Jose P. Sta. Ana filed an application for the registration stipulation is as follows:
of the tradename FLORMEN SHOE MANUFACTURERS (SHOE MANUFACTURERS
disclaimed),3 which is used in the business of manufacturing ladies' and ATTY. FRANCISCO: Your Honor please, with the mutual understanding of the
children's shoes. His claim of first use in commerce of the said tradename is 8 counsel for the Junior Party and the counsel for the Senior Party in their desire
April 1959. to shorten the proceedings of this case, especially on matters that are admitted
and not controverted by both parties, they have agreed and admitted that Mr.
In view of the admittedly confusing similarity between the trademark Jose P. Sta. Ana, the Junior Party Applicant in this case, is engaged solely in the
FLORMANN and the tradename FLORMEN, the Director of Patents declared an manufacture of shoes under the firm name FLORMEN SHOE MANUFACTURERS
interference. After trial, the respondent Director gave due course to Maliwat's since April 1959; that the name FLORMEN SHOE MANUFACTURERS is registered
application and denied that of Sta. Ana. The latter, not satisfied with the with the Bureau of Commerce on April 8, 1959, as shown by Exhibits "A" and "A-
decision, appealed to this Court. 2". That Mr. Florentino Maliwat has been engaged in the manufacture and sale
of menswear shirts, polo shirts, and pants, since 1953, using FLORMANN as its
The petitioner assigned the following errors: trademark. That Mr. Florentino Maliwat began using the trademark FLORMANN
on shoes on January 1962 and the firm name FLORMANN SHOES under which
I. The Director of Patents erred in not finding that respondent (senior party- these shoes with the trademark FLORMANN were manufactured and sold was
applicant) failed to establish by clear and convincing evidence earlier date of use first used on January 1962, having also been registered with the Bureau of
of his mark FLORMANN than that alleged in his application for registration, Commerce on January 1962 and with other departments of the government, like
hence, respondent is not entitled to carry back the date of first use to a prior the Bureau of Labor, the Social Security System and the Workmen's
date. Compensation in 1962.

II. The Director erred in holding that respondent is the prior adopter and user of ATTY. MARAVILLA: On behalf of the Senior Party Applicant, represented by this
his mark and in concluding that this is strengthened with documentary evidence humble representation, I respectfully concur and admit all those stipulations
that respondent has been using his mark since 1953 as tailor and haberdasher. above mentioned.

III. The Director of Patents erred in not finding false and fabricated respondent's HEARING OFFICER: The court reserves the resolution on those stipulations. We
testimonial and documentary evidence and Director should have applied the rule can proceed now with the redirect examination. (T.s.n., 9 August 1963, pp. 33-
"Falsus in uno, falsus in omnibus" and should have disregarded them. 34).

IV. The Director of Patents erred in declaring that Maliwat has the prior right to And the Rules of Court provide:1äwphï1.ñët
the use of his trademark on shoes and such right may be carried back to the
year 1953 when respondent started his tailoring and haberdashery business and Sec. 2. Judicial admissions. — Admission made by the parties in the pleadings,
in holding that the manufacture of shoes is within the scope of natural or in the course of the trial or other proceedings do not require proof and can
expansion of the business of a tailor and haberdasher. not be contradicted unless previously shown to have been made through
palpable mistake." (Rule 129, Revised Rules of Court).
V. The Director of Patents erred in failing to apply the stricture that parties
should confine use of their respective marks to their corresponding fields of Since the aforequoted stipulation of facts has not been shown to have been
business, and should have allowed the concurrent use of tradename FLORMEN made through palpable mistake, it is vain for the petitioner to allege that the
SHOE MANUFACTURERS and the trademark FLORMANN provided it is not used evidence for respondent Maliwat is false, fabricated, inconsistent, indefinite,
on shoes. contradictory, unclear, unconvincing, and unsubstantial.

The findings of the Director that Maliwat was the prior adopter and user of the The rule on judicial admissions was not found or provided for in the old Rules
mark can not be contradicted, since his findings were based on facts stipulated but can be culled from rulings laid down by this Court previous to its revision
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 11

(Irlanda v. Pitargue, 22 Phil. 383; 5 Moran 57-59, 1963 Ed.). It was the law, performed her duty stands. The integrity of the record being intact, the
then and now, being an application of the law on estoppel. petitioner is bound by it. We can not overlook that even if his charges were true,
it was plain and inexcusable negligence on his part not to discover earlier the
To be true, petitioner Sta. Ana, through counsel, filed with this Court, on 24 defect he now complains of, if any, and in not taking steps to correct it before
December 1964, a motion entitled "MOTION TO ORDER STENOGRAPHER TO the records were elevated to this Court.
PRODUCE STENOGRAPHIC NOTES AND TO CORRECT TRANSCRIPT OF
STENOGRAPHIC NOTES; TO ALLOW PETITIONER TO WITHDRAW FROM An application for registration is not bound by the date of first use as stated by
STIPULATION OF FACTS AND BE ALLOWED TO PRESENT ADDITIONAL him in his application, but is entitled to carry back said stated date of first use to
EVIDENCE; AND TO SUSPEND PERIOD FOR FILING PETITIONER'S BRIEF." The a prior date by proper evidence; but in order to show an earlier date of use, he
reason given was that "counsel for Mr. Jose P. Sta. Ana does not recall making is then under a heavy burden, and his proof must be clear and convincing
any stipulation or agreement of facts with the counsel of Mr. Florentino Maliwat (Anchor Trading Co., Inc. vs. The Director of Patents, et al., L-8004, 30 May
on 9 August 1963." Opposition thereto was filed by Maliwat, asserting that the 1956; Chung Te vs. Ng Kian Giab, et al.,
stenographer took down notes on those things which were stated and uttered by L-23791, 23 November 1966). In the case at bar, the proof of date of first use
the parties; that movant should have moved for reconsideration in the Patent (1953), earlier than that alleged in respondent Maliwat's application (1962), can
Office, instead of here in the Supreme Court, which is both untimely and be no less than clear and convincing because the fact was stipulated and no
unhonorable. proof was needed.

Upon requirement by this Court, stenographer Cleofe Rosales commented on Petitioner would confine the respondent to the use of the mark FLORMANN to
petitioner's motion that what she had taken down were actually uttered by tailoring and haberdashery only, but not on shoes, on the ground that petitioner
counsel for Sta. Ana, no more, no less; that it was practically and highly had used the name FLORMEN on shoes since 1959, while the respondent used
impossible for her to have intercalated into the records the questioned his mark on shoes only in 1962; but the Director ruled:
stipulation of facts because of the length of counsel's manifestations and the
different subject matters of his statements, aside from the concurrence of . . . I believe that it is now the common practice among local tailors and
Maliwat's counsel and the reservation on the resolution made by the hearing haberdashers to branch out into articles of manufacture which have, one way or
officer; and that despite her length of service, since 1958, as stenographic another, some direct relationship with or appurtenance to garments or attire to
reporter, there had been no complaint against her, except this one. complete one's wardrobe such as belts, shoes, handkerchiefs, and the like, . . .
It goes without saying that shoes on one hand and shirts, pants and jackets on
Counsel for Sta. Ana replied to the foregoing comments, alleging, among others, the other, have the same descriptive properties for purposes of our Trademark
that after his receipt of the decision, after 5 May 1964, he bought the transcript Law.
and requested the stenographer to verify the contents of pages 33 and 34 of her
transcript but, despite several requests, and for a period of seven (7) months, Modern law recognizes that the protection to which the owner of a trademark
for her to produce the stenographic notes, she has failed to produce said notes. mark 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
On 2 April 1965, stenographer Rosales sent to the clerk of this Court the to all cases in which the use by a junior appropriator of a trademark or
transcript of stenographic notes. tradename is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has
This Court, on 2 February 1965, denied, for being late the motion to present extended his business into the field (see 148 ALR 56 et seq; 52 Am. Jur. 576) or
additional testimonial and documentary evidence, and, on 8 April 1965, deferred is in any way connected with the activities of the infringer; or when it forestalls
action on the objection to a portion of the transcript until after hearing. the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur.
576, 577). It is on this basis that the respondent Director of Patents adverted to
We find no substantiation of the charge that the stipulation of facts appearing on the practice "among local tailors and haberdashers to branch out into articles of
pages 33 to 34 of the transcript of stenographic notes taken on 9 August 1963 manufacture which have some direct relationship" . . . "to garments or attire to
had been intercalated; hence, the presumption that the stenographer regularly complete one's wardrobe". Mere dissimilarity of goods should not preclude relief
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 12

where the junior user's goods are not too different or remote from any that the al., L-18337, 30 Jan. 1965.4 citing Application of Sylvan Sweets Co., 205 F. 2nd,
owner would be likely to make or sell; and in the present case, wearing apparel 207).5 Therefore, whether or not shirts and shoes have the same descriptive
is not so far removed from shoes as to preclude relief, any more than the properties, or whether or not it is the prevailing practice or the tendency of
pancake flour is from syrup or sugar cream (Aunt Jemima Mills Co. vs. Rigney & tailors and haberdashers to expand their business into shoes making, are not
Co., LRA 1918 C 1039), or baking powder from baking soda (Layton Pure Food controlling. The meat of the matter is the likelihood of confusion, mistake or
Co. vs. Church & Co., 182 Fed. 35), or cosmetics and toilet goods from ladies' deception upon purchasers of the goods of the junior user of the mark and the
wearing apparel and costume jewelry (Lady Esther Ltd. vs. Lady Esther Corset goods manufactured by the previous user. Here, the resemblance or similarity of
Shoppe, 148 ALR 6). More specifically, manufacturers of men's clothing were the mark FLORMANN and the name FLORMEN and the likelihood of confusion,
declared entitled to protection against the use of their trademark in the sale of one to the other, is admitted; therefore, the prior adopter, respondent Maliwat,
hats and caps [Rosenberg Bros. vs. Elliott, 7 Fed. (2d) 962] and of ladies shoes has the better right to the use of the mark.
(Forsythe & Co. vs. Forsythe Shoe Corp., 254 NYS 584). In all these cases, the
courts declared the owner of a trademark from the first named goods entitled to FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, with
exclude use of its trademark on the related class of goods above-referred to. costs against the petitioner.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and

It may be that previously the respondent drew a closer distinction among kinds Fernando, JJ., concur.1äwphï1.ñët
of goods to which the use of similar marks could be applied; but it can not be
said that the present ruling under appeal is so devoid of basis in law as to
amount to grave abuse of discretion warranting reversal.

Republic Act No. 166, as amended, provides:

Sec. 4. . . . The owner of a trademark, tradename or service-mark used to

distinguish his goods, business or services from the goods, business or services
of others shall have the right to register the same on the principal register,
unless it:

xxx xxx xxx

xxx xxx xxx

(d) Consists of or comprises a mark or tradename which resembles a mark or

tradename registered in the Philippines or a mark or 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 purchasers;

xxx xxx xxx

Note that the provision does not require that the articles of manufacture of the
previous user and the 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 (Chua Che vs. Phil. Patent Office, et
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 13

G.R. No. L-26676 July 30, 1982 has been held that “if a mark is so commonplace that it cannot be readily
distinguished from others, then it is apparent that it cannot identify a particular
PHILIPPINE REFINING CO., INC., petitioner, business; and he who first adopted it cannot be injured by any subsequent
vs. appropriation or imitation by others, and the public will not be deceived.”
NG SAM and THE DIRECTOR OF PATENTS, respondents. Same; Same.—The trademark “CAMIA” is used by petitioner on a wide range of
products: lard, butter, cooking oil, abrasive detergents, polishing materials and
Ponce Enrile, Siguion Reyna, Montecillo & Bello and Associates for soap of all kinds. Respondent desires to use the same on his product, ham.
petitioner. While ham and some of the products of petitioner are classified under Class 47
(Foods and Ingredients of Food), this alone cannot serve as the decisive factor
Primitivo C. Bucasas for respondents. in the resolution of whether or not they are related goods. Emphasis should be
on the similarity of the products involved and not on the arbitrary classification
Trademarks and Tradenames; Concept of Trademark protection.—A rudimentary or general description of their properties or characteristics.
precept in trademark protection is that “the right to a trademark is a limited one, Same; “CAMIA” used by a manufacturer for lard, butter, cooking oil, soap, and
in the sense that others may use the same mark on unrelated goods.” Thus, as the like, can be used as a trademark by another for its ham products, ham not
pronounced by the United States Supreme Court in the case of American being a daily food fare of the average consumer.—The observation and
Foundries vs. Robertson, “the mere fact that one person has adopted and used conclusion of the Director of Patents are correct. The particular goods of the
a trademark on his goods does not prevent the adoption and use of the same parties are so unrelated that consumers would not in any probability mistake
trademark by others on articles of a different description. one as the source or origin of the product of the other. ‘Ham” is not a daily food
Same; Restricted right over a trademark—that some trademark may be used by fare for the average consumer. One purchasing ham would exercise a more
another on unrelated goods—is reflected in our Trademark Law.—Such restricted cautious inspection of what he buys on account of its price. Seldom, if ever, is
right over a trademark is likewise reflected in our Trademark Law. Under Section the purchase of said food product delegated to household helps, except perhaps
4(d) of the law, registration of a trademark which so resembles another already to those who, like the cooks, are expected to know their business. Besides, there
registered or in use should be denied, where to allow such registration could can be no likelihood for the consumer of respondent’s ham to confuse its source
likely result in confusion, mistake or deception to the consumers. Conversely, as anyone but respondent. The facsimile of the label attached by him on his
where no confusion is likely to arise, as in this case, registration of a similar or product, his business name “SAM’S HAM AND BACON FACTORY” written in bold
even identical mark may be allowed. white letters against a reddish orange background, is certain to catch the eye of
Same; “CAMIA” is descriptive of a whole genus of garden plants.—The term the class of consumers to which he caters.
“CAMIA” is descriptive of a whole genus of garden plants with fragrant white Same; Same.—In addition, the goods of petitioners are basically derived from
flowers. Some people call the “CAMIA” the “white ginger plant” because of its vegetable oil and animal fats, while the product of respondent is processed from
tuberous roots, while children refer to it as the butterfly flower because of its pig’s legs. A consumer would not reasonably assume that petitioner has so
shape. Being a generic and common term, its appropriation as a trademark, diversified its business as to include the product of respondent.
albeit in a fanciful manner in that it bears no relation to the product it identifies, De Castro, J., dissenting:
is valid. However, the degree of exclusiveness accorded to each user is closely
restricted. Trademarks and Tradenames; Respondent should be prohibited from using
Same; Purpose of a trademark.—A trademark is designed to identify the user. “CAMIA” as brandname of its ham products as it falls under the same
But it should be so distinctive and sufficiently original as to enable those who classification of “Food and Ingredients of Foods” as petitioner’s products such as
come into contact with it to recognize instantly the identity of the user. “It must lard, butter, cooking oil and the like.—I vote to grant the petition of the
be affirmative and definite, significant and distinctive, capable to indicate origin.” Philippine Refining Co. Inc. As the registered owner and prior user of the
Same; “CAMIA” as a trademark is far from being distinctive of goods of trademark, “CAMIA” on a wide variety of products such as lard, butter, cooking
petitioner.—It is evident that “CAMIA” as a trademark is far from being oil, abrasive detergents, polishing materials and soap of all kinds, the
distinctive. By itself, it does not identify petitioner as the manufacturer or respondent’s ham which comes under the same classification of “Food and
producer of the goods upon which said mark is used, as contra-distinguished to Ingredients of Foods” under which petitioner has registered its trademark, if
trademarks derived from coined words such as “Rolex”, “Kodak” or “Kotex”. It given the same trademark, “CAMIA”, is likely to confuse the public that the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 14

source of the ham is the petitioner. If the respondent’s ham is of poor quality, when applied to or used in connection with the goods, business services of the
petitioner’s business may thus be affected adversely as a result, while from the applicant, to cause confusion or mistake or to deceive purchasers.
standpoint of the purchasers, some measure of deception may take effect upon
them. Thus, the use of the same trademark on the ham would likely result in The parties submitted the case for decision without presenting any evidence:
confusion as to the source or origin thereof, to the damage or detriment of the thereafter the Director of patents rendered a decision allowing registration of the
petitioner. The purpose of the law will be served better by not allowing the trademark "CAMIA" in favor of Ng Sam.
registration of the trademark “CAMIA” for respondent’s ham, with such a
limitless number of other words respondent may choose from, as trademark for Petitioner moved for a reconsideration, but the same was denied.
his product.
PETITION for review of the decision of the Director of Patents. [Philippine Hence, this petition.
Refining Co., Inc. vs. Ng Sam, 115 SCRA 472(1982)]
A rudimentary precept in trademark protection is that "the right to a trademark
ESCOLIN, J.: is a limited one, in the sense that others may used the same mark on unrelated
goods." 1 Thus, as pronounced by the United States Supreme Court in the case
The sole issue raised in this petition for review of the decision of the Director of of American Foundries vs. Robertson 2, "the mere fact that one person has
patents is whether or not the product of respondent, Ng Sam, which is ham, and adopted and used a trademark on his goods does not prevent the adoption and
those of petitioner consisting of lard, butter, cooking oil and soap are so related use of the same trademark by others on articles of a different description."
that the use of the same trademark "CAMIA" on said goods would likely result in
confusion as to their source or origin. Such restricted right over a trademark is likewise reflected in our Trademark law.
Under Section 4(d) of the law, registration of a trademark which so resembles
The trademark "CAMIA" was first used ill the Philippines by petitioner on its another already registered or in use should be denied, where to allow such
products in 1922. In 1949, petitioner caused the registration of said trademark registration could likely result in confusion, mistake or deception to the
with the Philippine Patent Office under certificates of registration Nos. 1352-S consumers. Conversely, where no confusion is likely to arise, as in this case,
and 1353-S, both issued on May 3, 1949. Certificate of Registration No. 1352-S registration of a similar or even Identical mark may be allowed.
covers vegetable and animal fats, particularly lard, butter and cooking oil, all
classified under Class 47 (Foods and Ingredients of Food) of the Rules of The term "CAMIA" is descriptive of a whole genus of garden plants with fragrant
Practice of the Patent Office, while certificate of registration No. 1353-S applies white flowers. Some people call the "CAMIA" the "white ginger plant" because of
to abrasive detergents, polishing materials and soap of all kinds (Class 4). its tuberous roots, while children refer to it as the butterfly flower because of its
shape. Being a generic and common term, its appropriation as a trademark,
On November 25, 1960, respondent Ng Sam, a citizen residing in Iloilo City, filed albeit in a fanciful manner in that it bears no relation to the product it Identifies,
an application with the Philippine Patent office for registration of the Identical is valid. However, the degree of exclusiveness accorded to each user is closely
trademark "CAMIA" for his product, ham, which likewise falls under Class 47. restricted. 3
Alleged date of first use of the trademark by respondent was on February 10,
1959. The records of this case disclose that the term "CAMIA" has been registered as a
trademark not only by petitioner but by two (2) other concerns, as follows:
After due publication of the application, petitioner filed an opposition, in
accordance with Section 8 of Republic Act No. 166, otherwise known as the 1. CAMIA Application No. 280 Registration No. SR-320 Date
Trademark Law, as amended. Basis of petitioner's opposition was Section 4(d) of Registered — May 26, 1960 Owner — Everbright Development Company
said law, which provides as unregistrable: Business Address — 310 M. H. del Pilar Grace Park, Caloocan City Class 4 —
Thread and Yarn
a mark which consists of or comprises a mark or tradename which so resembles
a mark or tradename registered in the Philippines or a mark or tradename 2. CAMIA and Representation Application No. 538 Date Filed — August 10,
previously used in the Philippines by another and not abandoned, as to be likely, 1945 Date Registered - April 20, 1946 Owner — F.E. Zuellig, Inc.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 15

Business Address — 55 Rosario St., Manila Class 43 — Particular Good on which The observation and conclusion of the Director of Patents are correct. The
mark is used: Textiles, Embroideries laces, etc. particular goods of the parties are so unrelated that consumers would not in any
probability mistake one as the source or origin of the product of the other.
A trademark is designed to Identify the user. But it should be so distinctive and "Ham" is not a daily food fare for the average consumer. One purchasing ham
sufficiently original as to enable those who come into contact with it to recognize would exercise a more cautious inspection of what he buys on account of it
instantly the Identity of the user. " It must be affirmative and definite, significant price. Seldom, if ever, is the purchase of said food product delegated to
and distinctive, capable to indicate origin." 4 household helps, except perhaps to those who, like the cooks, are expected to
know their business. Besides, there can be no likelihood for the consumer of
It is evident that "CAMIA" as a trademark is far from being distinctive. By itself, respondent's ham to confuse its source as anyone but respondent. The facsimile
it does not Identify petitioner as the manufacturer or producer of the goods of the label attached by him on his product, his business name "SAM'S HAM AND
upon which said mark is used, as contra-distinguished to trademarks derived BACON FACTORY" written in bold white letters against a reddish orange
from coined words such as "Rolex", "Kodak" or "Kotex". It has been held that if background 6, is certain to catch the eye of the class of consumers to which he
a mark is so commonplace that it cannot be readily distinguished from others, caters.
then it is apparent that it cannot Identify a particular business; and he who first
adopted it cannot be injured by any subsequent appropriation or imitation by In addition, the goods of petitioners are basically derived from vegetable oil and
others, and the public will not be deceived." 5 animal fats, while the product of respondent is processed from pig's legs. A
consumer would not reasonably assume that, petitioner has so diversified its
The trademark "CAMIA" is used by petitioner on a wide range of products: lard, business as to include the product of respondent.
butter, cooking oil, abrasive detergents, polishing materials and soap of all kinds.
Respondent desires to use the same on his product, ham. While ham and some Mr. Runolf Callman, in Section 80.3, VOL. I, p. 1121 of his book, Unfair
of the products of petitioner are classified under Class 47 (Foods and Ingredients Competition and Trade Marks, declare:
of Food), this alone cannot serve as the decisive factor in the resolution of
whether or not they are related goods. Emphasis should be on the similarity of While confusion of goods can only be evident, where the litigants are actually in
the products involved and not on the arbitrary classification or general competition, confusion of business may arise between non-competitive interests
description of their properties or characteristics. as well. This is true whether or not the trademarks are registered. Sec. 16 of the
Trademark Act, in referring to 'merchandise of substantially the same descriptive
In his decision, the Director of Patents enumerated the factors that set properties, embraces competitive and non-competitive trademark infringement
respondent's product apart from the goods of petitioner. He opined and We but it is not so extensive as to be applicable to cases where the public would not
quote: reasonably expect the plaintiff to make or sell the same class of goods as those
made or sold by the defendant. (Emphasis supplied).
I have taken into account such factors as probable purchaser attitude and
habits, marketing activities, retail outlets, and commercial impression likely to be In fine, We hold that the businesss of the parties are non-competitive and their
conveyed by the trademarks if used in conjunction with the respective goods of products so unrelated that the use of Identical trademarks is not likely to give
the parties. I believe that ham on one hand, and lard, butter, oil, and soap on rise to confusion, much less cause damage to petitioner.
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 WHEREFORE, the instant petition is hereby dismissed and the decision of the
be distributed and marketed under dissimilar conditions, and are displayed Director of Patents in Inter Partes Case No. 231 affirmed in toto. Costs against
separately even though they frequently may be sold through the same retail petitioner.
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 SO ORDERED.
of a character which purchasers would be likely to attribute to a common origin.
(p. 23, Rollo). Barredo (Chairman), Aquino, Concepcion, Jr., Guerrero, Abad Santos and De
Castro, JJ., concur.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 16

G.R. No. L-44707 August 31, 1982 petitioner's petition to cancel private respondent's registration of the trademark
of HICKOK for its Marikina shoes as against petitioner's earlier registration of the
HICKOK MANUFACTURING CO., INC., petitioner, same trademark for its other non-competing products.
vs.
COURT OF APPEALS ** and SANTOS LIM BUN LIONG, respondents. On the basis of the applicable reasons and considerations extensively set forth in
the above-cited controlling precedents and the leading case of Acoje Mining Co.,
Sycip, Salazar, Feliciano, Hernandez & Castillo Law Offices for Inc. vs. Director of Patents 3 on which the appellate court anchored its decision
petitioner. at bar, said decision must stand affirmed, as follows: 1äwphï1.ñët

Tañada, Sanchez, Tafiada & Tanada Law Offices and George R. An examination of the trademark of petitioner-appellee and that of registrant-
Arbolario for respondents. appellant convinces us that there is a difference in the design and the coloring
of, as well as in the words on the ribbons, the two trademarks.
Commercial Law; Trademarks; Registration of the same trademark but for
unrelated and non-competing products, allowed; Emphasis in registration of In petitioner-appellee's trademark for handkerchiefs (Exhibit 'Q'), the word
patent is the similarity of products involved, not on the arbitrary classification or 'HICKOK' is in red with white background in the middle of two branches of laurel
general description of their properties and characteristics.—It is established in light gold. At the lower part thereof is a ribbon on which are the words
doctrine, as held in the above-cited cases, that “emphasis should be on the 'POSITIVELY FINER' in light gold. In the trademark for underwear (Exhibit 'R'),
similarity of the products involved and not on the arbitrary classification or the word 'HICKOK' is also in red with white background in the middle of two
general description of their properties or characteristics” and that “the mere fact branches of laurel in dark gold with similar ribbons and the words 'POSITIVELY
that one person has adopted and used a trademark on his goods does not FINER' in dark gold. And in the trademark for briefs (Exhibit 'S'), the word
prevent the adoption and use of the same trademark by others on unrelated 'HICKOK' is in white but with red background in the middle of two branches of
articles of a different kind ” Taking into account the facts of record that laurel, the leaves being in dark gold with white edges, and with similar ribbon
petitioner, a foreign corporation registered the trademark for its diverse articles and words 'POSITIVELY FINER' in dark gold. In contrast, in respondent-
of men’s wear such as wallets, belts and men’s briefs which are all manufactured appellant's trademark (Exhibit 'J'), the word 'HICKOK' is in white with gold
here in the Philippines by a licensee Quality House, Inc (which pays a royalty of background between the two branches of laurel in red, with the word 'SHOES'
1-½% of the annual net sales) but are so labelled as to give the misimpression also in red below the word 'HICKOK'.ït¢@lFº The ribbon is in red with the words
that the said goods are of foreign (stateside) manufacture and that respondent 'QUALITY AT YOUR FEET,' likewise in red.
secured its trademark registration exclusively for shoes (which neither petitinner
nor the licensee ever manufactured or traded in) and which are clearly labelled While the law does not require that the competing trademarks be Identical, the
in block letters as “Made in Marikina, Rizal, Philippines,” no error can be two marks must be considered in their entirety, as they appear in the respective
attributed to the appellate court in upholding respondent’s registration of the labels, in relation to the goods to which they are attached.
same trademark for his unrelated and non-competing product of Marikina shoes.
The case of H.E. Heacock Co. vs. American Trading Co., 56 Phil. 763, cited by
APPEAL from the judgment of the Court of Appeals. [Hickok Manufacturing Co., petitioner - appellee, is hardly applicable here, because the defendant in that
Inc. vs. Court of Appeals, 116 SCRA 387(1982)] case imported and sold merchandise which are very similar to, and precisely of
the same designs as, that imported and sold by the plaintiff. ...
TEEHANKEE, J.:1äwphï1.ñët
In the recent case of Acoje Mining Co., Inc. vs. Director of Patents, 38 SCRA
The Court affirms on the strength of controlling doctrine as reaffirmed in the 480, 482-483, the Supreme Court stated - 1äwphï1.ñët
companion case of Esso Standard Eastern Inc. vs. Court of Appeals 1
promulgated also on this date and the recent case of Philippine Refining Co., Can it be said then that petitioner's application would be likely to cause
Inc. vs. Ng Sam and Director of Parents 2 the appealed decision of the Court of confusion or mistake on the part of the buying public? The answer should be in
Appeals reversing the patent director's decision and instead dismissing the negative. It does not defy common sense to assert that a purchaser would
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 17

be cognizant of the product he is buying. There is quite a difference between ACCORDINGLY, the petition is dismissed and the appealed judgment of the
soy sauce and edible oil. If one is in the market for the former, he is not likely to Court of Appeals is hereby affirmed.
purchase the latter just because on the trademark LOTUS. Even on the rare
occasion that a mistake does occur, it can easily be rectified. Moreover, there is Melencio-Herrera, Plana, Relova and Gutierrez, Jr., JJ., concur.1äwphï1.ñët
no denying that the possibility of confusion is remote considering petitioner's
trademark being in yellow and red while that of the Philippine Refining Company Makasiar, J., is on leave.
being in green and yellow, and the much smaller size of petitioner's trademark.
When regard is had for the principle that the two trademarks in their entirety as Vasquez, J., took no part.
they appear in their respective labels should be considered in relation to the
goods advertised before registration could be denied, the conclusion is
inescapable that respondent Director ought to have reached a different
conclusion. Petitioner has successfully made out a case for registration.

From the statements of the Supreme Court in the two cases aforementioned, we
gather that there must be not only resemblance between the trademark of the
plaintiff and that of the defendant, but also similarity of the goods to which the
two trademarks are respectively attached.

Since in this case the trademark of petitioner-appellee is used in the sale of

leather wallets, key cases, money folds made of leather, belts, men's briefs,
neckties, handkerchiefs and men's socks, and the trademark of registrant-
appellant is used in the sale of shoes, which have different channels of trade,
the Director of Patents, as in the case of Acoje Mining Co., Inc. vs. Director of
Patents, supra, 'ought to have reached a different conclusion.

It is established doctrine, as held in the above-cited cases, that "emphasis

should be on the similarity of the products involved and not on the arbitrary
classification or general description of their properties or characteristics" 4 and
that "the mere fact that one person has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by others
on unrelated articles of a different kind." 5 Taking into account the facts of
record that petitioner, a foreign corporation registered the trademark for its
diverse articles of men's wear such as wallets, belts and men's briefs which are
all manufactured here in the Philippines by a licensee Quality House, Inc. (which
pays a royalty of 1-1/2 % of the annual net sales) but are so labelled as to give
the misimpression that the said goods are of foreign (stateside) manufacture
and that respondent secured its trademark registration exclusively for shoes
(which neither petitioner nor the licensee ever manufactured or traded in) and
which are clearly labelled in block letters as "Made in Marikina, Rizal,
Philippines," no error can be attributed to the appellate court in upholding
respondent's registration of the same trademark for his unrelated and non-
competing product of Marikina shoes. 6
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 18

G.R. No. 148222 August 15, 2003 Same; Same; Same; To be able to effectively and legally preclude others from
copying and profiting from the invention, a patent is a primordial requirement.—
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, To be able to effectively and legally preclude others from copying and profiting
vs. from the invention, a patent is a primordial requirement. No patent, no
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, protection. The ultimate goal of a patent system is to bring new designs and
INCORPORATED, Respondents. technologies into the public domain through disclosure. Ideas, once disclosed to
the public without the protection of a valid patent, are subject to appropriation
Intellectual Property; Copyrights; Patents; Being a mere statutory grant, the without significant restraint.
rights are limited to what the statute confers; It can cover only the works falling Same; Same; Same; Patent law has a three-fold purpose.—The patent law has a
within the statutory enumeration or description.—Copyright, in the strict sense three-fold purpose: “first, patent law seeks to foster and reward invention;
of the term, is purely a statutory right. Being a mere statutory grant, the rights second, it promotes disclosures of inventions to stimulate further innovation and
are limited to what the statute confers. It may be obtained and enjoyed only to permit the public to practice the invention once the patent expires; third, the
with respect to the subjects and by the persons, and on terms and conditions stringent requirements for patent protection seek to ensure that ideas in the
specified in the statute. Accordingly, it can cover only the works falling within public domain remain there for the free use of the public.”
the statutory enumeration or description. Same; Same; Same; 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
Same; Same; Same; The three legal rights are completely distinct and separate products which are of a different description.—Under the circumstances, the
from one another and the protection afforded by one cannot be used Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,
interchangeably to cover items or works that exclusively pertain to the others.— where we, invoking Section 20 of the old Trademark Law, ruled that “the
During the trial, the president of P & D himself admitted that the light box was certificate of registration issued by the Director of Patents can confer (upon
neither a literary not an artistic work but an “engineering or marketing petitioner) the exclusive right to use its own symbol only to those goods
invention.” Obviously, there appeared to be some confusion regarding what specified in the certificate, subject to any conditions and limitations specified in
ought or ought not to be the proper subjects of copyrights, patents and the certificate x x x. One who has adopted and used a trademark on his goods
trademarks. In the leading case of Kho vs. Court of Appeals, we ruled that these does not prevent the adoption and use of the same trademark by others for
three legal rights are completely distinct and separate from one another, and the products which are of a different description.” Faberge, Inc. was correct and was
protection afforded by one cannot be used interchangeably to cover items or in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.
works that exclusively pertain to the others. Same; Same; Same; Unfair Competition; There can be no unfair competition
Same; Same; Same; There can be no infringement of a patent until a patent has under the law on copyrights although it is applicable to disputes over the use of
been issued since whatever right one has to the invention covered by the patent trademarks.—By the nature of things, there can be no unfair competition under
arises alone from the grant of patent.—For some reason or another, petitioner the law on copyrights although it is applicable to disputes over the use of
never secured a patent for the light boxes. It therefore acquired no patent rights trademarks. Even a name or phrase incapable of appropriation as a trademark or
which could have protected its invention, if in fact it really was. And because it trade name may, by long and exclusive use by a business (such that the name
had no patent, petitioner could not legally prevent anyone from manufacturing or phrase becomes associated with the business or product in the mind of the
or commercially using the contraption. In Creser Precision Systems, Inc. vs. purchasing public), be entitled to protection against unfair competition. In this
Court of Appeals, we held that “there can be no infringement of a patent until a case, there was no evidence that P & D’s use of “Poster Ads” was distinctive or
patent has been issued, since whatever right one has to the invention covered well-known. As noted by the Court of Appeals, petitioner’s expert witnesses
by the patent arises alone from the grant of patent. x x x (A)n inventor has no himself had testified that “Poster Ads” was too generic a name. So it was difficult
common law right to a monopoly of his invention. He has the right to make use to identify it with any company, honestly speaking.”
of and vend his invention, but if he voluntarily discloses it, such as by offering it
for sale, the world is free to copy and use it with impunity. A patent, however, PETITION for review on certiorari of a decision of the Court of Appeals.
gives the inventor the right to exclude all others. As a patentee, he has the
exclusive right of making, selling or using the invention. The facts are stated in the opinion of the Court.
     Rilloraza, Africa, De Ocampo and Africa for petitioner.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 19

     Poblador, Bautista & Reyes for private respondent SM. contract and reminding him that their agreement for installation of light boxes
     Gonzales, Batiller, Bilog and Associates for respondent North Edsa Mktg., Inc. was not only for its SM Makati branch, but also for SM Cubao. SMI did not
[Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated, 409 SCRA bother to reply.
231(2003)]
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl
DECISION and Dean that it was rescinding the contract for SM Makati due to non-
performance of the terms thereof. In his reply dated February 17, 1986, Vergara
CORONA, J.: protested the unilateral action of SMI, saying it was without basis. In the same
letter, he pushed for the signing of the contract for SM Cubao.
In the instant petition for review on certiorari under Rule 45 of the Rules of
Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 Two years later, Metro Industrial Services, the company formerly contracted by
decision1 of the Court of Appeals reversing the October 31, 1996 decision2 of Pearl and Dean to fabricate its display units, offered to construct light boxes for
the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes
declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing were subsequently fabricated by Metro Industrial for SMI. After its contract with
Inc. (NEMI) liable for infringement of trademark and copyright, and unfair Metro Industrial was terminated, SMI engaged the services of EYD Rainbow
competition. Advertising Corporation to make the light boxes. Some 300 units were fabricated
in 1991. These were delivered on a staggered basis and installed at SM
FACTUAL ANTECEDENTS Megamall and SM City.

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this Sometime in 1989, Pearl and Dean, received reports that exact copies of its light
dispute: boxes were installed at SM City and in the fastfood section of SM Cubao. Upon
investigation, Pearl and Dean found out that aside from the two (2) reported SM
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the branches, light boxes similar to those it manufactures were also installed in two
manufacture of advertising display units simply referred to as light boxes. These (2) other SM stores. It further discovered that defendant-appellant North Edsa
units utilize specially printed posters sandwiched between plastic sheets and Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing
illuminated with back lights. Pearl and Dean was able to secure a Certificate of Services, was set up primarily to sell advertising space in lighted display units
Copyright Registration dated January 20, 1981 over these illuminated display located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister
units. The advertising light boxes were marketed under the trademark "Poster company of SMI.
Ads". The application for registration of the trademark was filed with the Bureau
of Patents, Trademarks and Technology Transfer on June 20, 1983, but was In the light of its discoveries, Pearl and Dean sent a letter dated December 11,
approved only on September 12, 1988, per Registration No. 41165. From 1981 1991 to both SMI and NEMI enjoining them to cease using the subject light
to about 1988, Pearl and Dean employed the services of Metro Industrial boxes and to remove the same from SMI’s establishments. It also demanded the
Services to manufacture its advertising displays. discontinued use of the trademark "Poster Ads," and the payment to Pearl and
Dean of compensatory damages in the amount of Twenty Million Pesos
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant (P20,000,000.00).
Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City
North Edsa. Since SM City North Edsa was under construction at that time, SMI Upon receipt of the demand letter, SMI suspended the leasing of two hundred
offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean twenty-four (224) light boxes and NEMI took down its advertisements for
agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both
Vergara, submitted for signature the contracts covering SM Cubao and SM SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant
Makati to SMI’s Advertising Promotions and Publicity Division Manager, case for infringement of trademark and copyright, unfair competition and
Ramonlito Abano. Only the contract for SM Makati, however, was returned damages.
signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 20

In denying the charges hurled against it, SMI maintained that it independently (d) attorney’s fees - P1,000,000.00
developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Dean’s copyright. SMI plus
noted that the registration of the mark "Poster Ads" was only for stationeries
such as letterheads, envelopes, and the like. Besides, according to SMI, the (e) costs of suit;
word "Poster Ads" is a generic term which cannot be appropriated as a
trademark, and, as such, registration of such mark is invalid. It also stressed (2) to deliver, under oath, for impounding in the National Library, all light boxes
that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since of SMI which were fabricated by Metro Industrial Services and EYD Rainbow
its advertising display units contained no copyright notice, in violation of Section Advertising Corporation;
27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it
and that the suit was purely intended to malign SMI’s good name. On this basis, (3) to deliver, under oath, to the National Library, all filler-posters using the
SMI, aside from praying for the dismissal of the case, also counterclaimed for trademark "Poster Ads", for destruction; and
moral, actual and exemplary damages and for the cancellation of Pearl and
Dean’s Certification of Copyright Registration No. PD-R-2558 dated January 20, (4) to permanently refrain from infringing the copyright on plaintiff’s light boxes
1981 and Certificate of Trademark Registration No. 4165 dated September 12, and its trademark "Poster Ads".
1988.
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
NEMI, for its part, denied having manufactured, installed or used any advertising
display units, nor having engaged in the business of advertising. It repleaded SO ORDERED.4
SMI’s averments, admissions and denials and prayed for similar reliefs and
counterclaims as SMI." On appeal, however, the Court of Appeals reversed the trial court:

The RTC of Makati City decided in favor of P & D: Since the light boxes cannot, by any stretch of the imagination, be considered as
either prints, pictorial illustrations, advertising copies, labels, tags or box wraps,
Wherefore, defendants SMI and NEMI are found jointly and severally liable for to be properly classified as a copyrightable class "O" work, we have to agree
infringement of copyright under Section 2 of PD 49, as amended, and with SMI when it posited that what was copyrighted were the technical drawings
infringement of trademark under Section 22 of RA No. 166, as amended, and only, and not the light boxes themselves, thus:
are hereby penalized under Section 28 of PD 49, as amended, and Sections 23
and 24 of RA 166, as amended. Accordingly, defendants are hereby directed: 42. When a drawing is technical and depicts a utilitarian object, a copyright over
the drawings like plaintiff-appellant’s will not extend to the actual object. It has
(1) to pay plaintiff the following damages: so been held under jurisprudence, of which the leading case is Baker vs. Selden
(101 U.S. 841 (1879). In that case, Selden had obtained a copyright protection
(a) actual damages - P16,600,000.00, for a book entitled "Selden’s Condensed Ledger or Bookkeeping Simplified"
representing profits which purported to explain a new system of bookkeeping. Included as part of
derived by defendants the book were blank forms and illustrations consisting of ruled lines and
as a result of infringe- headings, specially designed for use in connection with the system explained in
ment of plaintiff’s copyright the work. These forms showed the entire operation of a day or a week or a
from 1991 to 1992 month on a single page, or on two pages following each other. The defendant
Baker then produced forms which were similar to the forms illustrated in
(b) moral damages - P1,000.000.00 Selden’s copyrighted books. The Court held that exclusivity to the actual forms is
not extended by a copyright. The reason was that "to grant a monopoly in the
(c) exemplary damages - P1,000,000.00 underlying art when no examination of its novelty has ever been made would be
a surprise and a fraud upon the public; that is the province of letters patent, not
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 21

of copyright." And that is precisely the point. No doubt aware that its alleged The records show that on June 20, 1983, Pearl and Dean applied for the
original design would never pass the rigorous examination of a patent registration of the trademark "Poster Ads" with the Bureau of Patents,
application, plaintiff-appellant fought to foist a fraudulent monopoly on the Trademarks, and Technology Transfer. Said trademark was recorded in the
public by conveniently resorting to a copyright registration which merely Principal Register on September 12, 1988 under Registration No. 41165 covering
employs a recordal system without the benefit of an in-depth examination of the following products: stationeries such as letterheads, envelopes and calling
novelty. cards and newsletters.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough With this as factual backdrop, we see no legal basis to the finding of liability on
Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had the part of the defendants-appellants for their use of the words "Poster Ads", in
obtained a copyright over an unpublished drawing entitled "Bridge Approach – the advertising display units in suit. Jurisprudence has interpreted Section 20 of
the drawing showed a novel bridge approach to unsnarl traffic congestion". The the Trademark Law as "an implicit permission to a manufacturer to venture into
defendant constructed a bridge approach which was alleged to be an the production of goods and allow that producer to appropriate the brand name
infringement of the new design illustrated in plaintiff’s drawings. In this case it of the senior registrant on goods other than those stated in the certificate of
was held that protection of the drawing does not extend to the unauthorized registration." The Supreme Court further emphasized the restrictive meaning of
duplication of the object drawn because copyright extends only to the Section 20 when it stated, through Justice Conrado V. Sanchez, that:
description or expression of the object and not to the object itself. It does not
prevent one from using the drawings to construct the object portrayed in the Really, if the certificate of registration were to be deemed as including goods not
drawing. 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
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz conceive even if he had never intended to use the trademark for the said goods.
Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright We believe that such omnibus registration is not contemplated by our
infringement when one who, without being authorized, uses a copyrighted Trademark Law.
architectural plan to construct a structure. This is because the copyright does
not extend to the structures themselves. While we do not discount the striking similarity between Pearl and Dean’s
registered trademark and defendants-appellants’ "Poster Ads" design, as well as
In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the parallel use by which said words were used in the parties’ respective
the technical drawings of the latter’s advertising display units. advertising copies, we cannot find defendants-appellants liable for infringement
of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in
xxx xxx xxx its stationeries, in contrast to defendants-appellants who used the same words
in their advertising display units. Why Pearl and Dean limited the use of its
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate trademark to stationeries is simply beyond us. But, having already done so, it
Appellate Court that the protective mantle of the Trademark Law extends only to must stand by the consequence of the registration which it had caused.
the goods used by the first user as specified in the certificate of registration,
following the clear mandate conveyed by Section 20 of Republic Act 166, as xxx xxx xxx
amended, otherwise known as the Trademark Law, which reads:
We are constrained to adopt the view of defendants-appellants that the words
SEC. 20. Certification of registration prima facie evidence of validity.- A "Poster Ads" are a simple contraction of the generic term poster advertising. In
certificate of registration of a mark or trade-name shall be prima facie evidence the absence of any convincing proof that "Poster Ads" has acquired a secondary
of the validity of the registration, the registrant’s ownership of the mark or meaning in this jurisdiction, we find that Pearl and Dean’s exclusive right to the
trade-name, and of the registrant’s exclusive right to use the same in connection use of "Poster Ads" is limited to what is written in its certificate of registration,
with the goods, business or services specified in the certificate, subject to any namely, stationeries.
conditions and limitations stated therein." (underscoring supplied)
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 22

Defendants-appellants cannot thus be held liable for infringement of the the National Library, is the light box depicted in such engineering drawings ipso
trademark "Poster Ads". facto also protected by such copyright?

There being no finding of either copyright or trademark infringement on the part (2) or should the light box be registered separately and protected by a patent
of SMI and NEMI, the monetary award granted by the lower court to Pearl and issued by the Bureau of Patents Trademarks and Technology Transfer (now
Dean has no leg to stand on. Intellectual Property Office) — in addition to the copyright of the engineering
drawings?
xxx xxx xxx
(3) can the owner of a registered trademark legally prevent others from using
WHEREFORE, premises considered, the assailed decision is REVERSED and SET such trademark if it is a mere abbreviation of a term descriptive of his goods,
ASIDE, and another is rendered DISMISSING the complaint and counterclaims in services or business?
the above-entitled case for lack of merit.5
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Dissatisfied with the above decision, petitioner P & D filed the instant petition
assigning the following errors for the Court’s consideration: Petitioner P & D’s complaint was that SMI infringed on its copyright over the
light boxes when SMI had the units manufactured by Metro and EYD Rainbow
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO Advertising for its own account. Obviously, petitioner’s position was premised on
COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND its belief that its copyright over the engineering drawings extended ipso facto to
NEMI; the light boxes depicted or illustrated in said drawings. In ruling that there was
no copyright infringement, the Court of Appeals held that the copyright was
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO limited to the drawings alone and not to the light box itself. We agree with the
INFRINGEMENT OF PEARL & DEAN’S TRADEMARK "POSTER ADS" WAS appellate court.
COMMITTED BY RESPONDENTS SM AND NEMI;
First, petitioner’s application for a copyright certificate — as well as Copyright
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD Certificate No. PD-R2588 issued by the National Library on January 20, 1981 —
OF THE TRIAL COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The
THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH Intellectual Property Decree) which was the statute then prevailing. Said Section
IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN. 2 expressly enumerated the works subject to copyright:

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING SEC. 2. The rights granted by this Decree shall, from the moment of creation,
RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL subsist with respect to any of the following works:
& EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.6
xxx xxx xxx
ISSUES
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
In resolving this very interesting case, we are challenged once again to put into
proper perspective four main concerns of intellectual property law — patents, xxx xxx xxx
copyrights, trademarks and unfair competition arising from infringement of any
of the first three. We shall focus then on the following issues: Although petitioner’s copyright certificate was entitled "Advertising Display Units"
(which depicted the box-type electrical devices), its claim of copyright
(1) if the engineering or technical drawings of an advertising display unit (light infringement cannot be sustained.
box) are granted copyright protection (copyright certificate of registration) by
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 23

Copyright, in the strict sense of the term, is purely a statutory right. Being a thereto, a trade name means the name or designation identifying or
mere statutory grant, the rights are limited to what the statute confers. It may distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to
be obtained and enjoyed only with respect to the subjects and by the persons, literary and artistic works which are original intellectual creations in the literary
and on terms and conditions specified in the statute.7 Accordingly, it can cover and artistic domain protected from the moment of their creation. Patentable
only the works falling within the statutory enumeration or description.8 inventions, on the other hand, refer to any technical solution of a problem in any
field of human activity which is new, involves an inventive step and is industrially
P & D secured its copyright under the classification class "O" work. This being applicable.
so, petitioner’s copyright protection extended only to the technical drawings and
not to the light box itself because the latter was not at all in the category of ON THE ISSUE OF PATENT INFRINGEMENT
"prints, pictorial illustrations, advertising copies, labels, tags and box wraps."
Stated otherwise, even as we find that P & D indeed owned a valid copyright, This brings us to the next point: if, despite its manufacture and commercial use
the same could have referred only to the technical drawings within the category of the light boxes without license from petitioner, private respondents cannot be
of "pictorial illustrations." It could not have possibly stretched out to include the held legally liable for infringement of P & D’s copyright over its technical
underlying light box. The strict application9 of the law’s enumeration in Section 2 drawings of the said light boxes, should they be liable instead for infringement
prevents us from giving petitioner even a little leeway, that is, even if its of patent? We do not think so either.
copyright certificate was entitled "Advertising Display Units." What the law does
not include, it excludes, and for the good reason: the light box was not a literary For some reason or another, petitioner never secured a patent for the light
or artistic piece which could be copyrighted under the copyright law. And no less boxes. It therefore acquired no patent rights which could have protected its
clearly, neither could the lack of statutory authority to make the light box invention, if in fact it really was. And because it had no patent, petitioner could
copyrightable be remedied by the simplistic act of entitling the copyright not legally prevent anyone from manufacturing or commercially using the
certificate issued by the National Library as "Advertising Display Units." contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held
that "there can be no infringement of a patent until a patent has been issued,
In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the since whatever right one has to the invention covered by the patent arises alone
public without license from P & D, then no doubt they would have been guilty of from the grant of patent. x x x (A)n inventor has no common law right to a
copyright infringement. But this was not the case. SMI’s and NEMI’s acts monopoly of his invention. He has the right to make use of and vend his
complained of by P & D were to have units similar or identical to the light box invention, but if he voluntarily discloses it, such as by offering it for sale, the
illustrated in the technical drawings manufactured by Metro and EYD Rainbow world is free to copy and use it with impunity. A patent, however, gives the
Advertising, for leasing out to different advertisers. Was this an infringement of inventor the right to exclude all others. As a patentee, he has the exclusive right
petitioner’s copyright over the technical drawings? We do not think so. of making, selling or using the invention.13 On the assumption that petitioner’s
advertising units were patentable inventions, petitioner revealed them fully to
During the trial, the president of P & D himself admitted that the light box was the public by submitting the engineering drawings thereof to the National
neither a literary not an artistic work but an "engineering or marketing Library.
invention."10 Obviously, there appeared to be some confusion regarding what
ought or ought not to be the proper subjects of copyrights, patents and To be able to effectively and legally preclude others from copying and profiting
trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that from the invention, a patent is a primordial requirement. No patent, no
these three legal rights are completely distinct and separate from one another, protection. The ultimate goal of a patent system is to bring new designs and
and the protection afforded by one cannot be used interchangeably to cover technologies into the public domain through disclosure.14 Ideas, once disclosed
items or works that exclusively pertain to the others: to the public without the protection of a valid patent, are subject to
appropriation without significant restraint.15
Trademark, copyright and patents are different intellectual property rights that
cannot be interchanged with one another. A trademark is any visible sign On one side of the coin is the public which will benefit from new ideas; on the
capable of distinguishing the goods (trademark) or services (service mark) of an other are the inventors who must be protected. As held in Bauer & Cie vs.
enterprise and shall include a stamped or marked container of goods. In relation O’Donnel,16 "The act secured to the inventor the exclusive right to make use,
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 24

and vend the thing patented, and consequently to prevent others from of the light boxes on the sole basis of its copyright certificate over the technical
exercising like privileges without the consent of the patentee. It was passed for drawings.
the purpose of encouraging useful invention and promoting new and useful
inventions by the protection and stimulation given to inventive genius, and was Stated otherwise, what petitioner seeks is exclusivity without any opportunity for
intended to secure to the public, after the lapse of the exclusive privileges the patent office (IPO) to scrutinize the light box’s eligibility as a patentable
granted the benefit of such inventions and improvements." invention. The irony here is that, had petitioner secured a patent instead, its
exclusivity would have been for 17 years only. But through the simplified
The law attempts to strike an ideal balance between the two interests: procedure of copyright-registration with the National Library — without
undergoing the rigor of defending the patentability of its invention before the
"(The p)atent system thus embodies a carefully crafted bargain for encouraging IPO and the public — the petitioner would be protected for 50 years. This
the creation and disclosure of new useful and non-obvious advances in situation could not have been the intention of the law.
technology and design, in return for the exclusive right to practice the invention
for a number of years. The inventor may keep his invention secret and reap its In the oft-cited case of Baker vs. Selden21, the United States Supreme Court
fruits indefinitely. In consideration of its disclosure and the consequent benefit held that only the expression of an idea is protected by copyright, not the idea
to the community, the patent is granted. An exclusive enjoyment is guaranteed itself. In that case, the plaintiff held the copyright of a book which expounded
him for 17 years, but upon the expiration of that period, the knowledge of the on a new accounting system he had developed. The publication illustrated blank
invention inures to the people, who are thus enabled to practice it and profit by forms of ledgers utilized in such a system. The defendant reproduced forms
its use."17 similar to those illustrated in the plaintiff’s copyrighted book. The US Supreme
Court ruled that:
The patent law has a three-fold purpose: "first, patent law seeks to foster and
reward invention; second, it promotes disclosures of inventions to stimulate "There is no doubt that a work on the subject of book-keeping, though only
further innovation and to permit the public to practice the invention once the explanatory of well known systems, may be the subject of a copyright; but,
patent expires; third, the stringent requirements for patent protection seek to then, it is claimed only as a book. x x x. But there is a clear distinction between
ensure that ideas in the public domain remain there for the free use of the the books, as such, and the art, which it is, intended to illustrate. The mere
public."18 statement of the proposition is so evident that it requires hardly any argument
to support it. The same distinction may be predicated of every other art as well
It is only after an exhaustive examination by the patent office that a patent is as that of bookkeeping. A treatise on the composition and use of medicines, be
issued. Such an in-depth investigation is required because "in rewarding a useful they old or new; on the construction and use of ploughs or watches or churns;
invention, the rights and welfare of the community must be fairly dealt with and or on the mixture and application of colors for painting or dyeing; or on the
effectively guarded. To that end, the prerequisites to obtaining a patent are mode of drawing lines to produce the effect of perspective, would be the subject
strictly observed and when a patent is issued, the limitations on its exercise are of copyright; but no one would contend that the copyright of the treatise would
equally strictly enforced. To begin with, a genuine invention or discovery must give the exclusive right to the art or manufacture described therein. The
be demonstrated lest in the constant demand for new appliances, the heavy copyright of the book, if not pirated from other works, would be valid without
hand of tribute be laid on each slight technological advance in art."19 regard to the novelty or want of novelty of its subject matter. The novelty of the
art or thing described or explained has nothing to do with the validity of the
There is no such scrutiny in the case of copyrights nor any notice published copyright. To give to the author of the book an exclusive property in the art
before its grant to the effect that a person is claiming the creation of a work. described therein, when no examination of its novelty has ever been officially
The law confers the copyright from the moment of creation20 and the copyright made, would be a surprise and a fraud upon the public. That is the province of
certificate is issued upon registration with the National Library of a sworn ex- letters patent, not of copyright. The claim to an invention of discovery of an art
parte claim of creation. or manufacture must be subjected to the examination of the Patent Office
before an exclusive right therein can be obtained; and a patent from the
Therefore, not having gone through the arduous examination for patents, the government can only secure it.
petitioner cannot exclude others from the manufacture, sale or commercial use
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 25

The difference between the two things, letters patent and copyright, may be This issue concerns the use by respondents of the mark "Poster Ads" which
illustrated by reference to the subjects just enumerated. Take the case of petitioner’s president said was a contraction of "poster advertising." P & D was
medicines. Certain mixtures are found to be of great value in the healing art. If able to secure a trademark certificate for it, but one where the goods specified
the discoverer writes and publishes a book on the subject (as regular physicians were "stationeries such as letterheads, envelopes, calling cards and
generally do), he gains no exclusive right to the manufacture and sale of the newsletters."22 Petitioner admitted it did not commercially engage in or market
medicine; he gives that to the public. If he desires to acquire such exclusive these goods. On the contrary, it dealt in electrically operated backlit advertising
right, he must obtain a patent for the mixture as a new art, manufacture or units and the sale of advertising spaces thereon, which, however, were not at all
composition of matter. He may copyright his book, if he pleases; but that only specified in the trademark certificate.
secures to him the exclusive right of printing and publishing his book. So of all
other inventions or discoveries. Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs.
Intermediate Appellate Court,23 where we, invoking Section 20 of the old
The copyright of a book on perspective, no matter how many drawings and Trademark Law, ruled that "the certificate of registration issued by the Director
illustrations it may contain, gives no exclusive right to the modes of drawing of Patents can confer (upon petitioner) the exclusive right to use its own symbol
described, though they may never have been known or used before. By only to those goods specified in the certificate, subject to any conditions and
publishing the book without getting a patent for the art, the latter is given to the limitations specified in the certificate x x x. One who has adopted and used a
public. 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."24
xxx Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki
Kaisha vs. Court of Appeals.25
Now, whilst no one has a right to print or publish his book, or any material part
thereof, as a book intended to convey instruction in the art, any person may Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the
practice and use the art itself which he has described and illustrated therein. The failure of P & D to secure a trademark registration for specific use on the light
use of the art is a totally different thing from a publication of the book explaining boxes meant that there could not have been any trademark infringement since
it. The copyright of a book on bookkeeping cannot secure the exclusive right to registration was an essential element thereof.1âwphi1
make, sell and use account books prepared upon the plan set forth in such book.
Whether the art might or might not have been patented, is a question, which is ON THE ISSUE OF UNFAIR COMPETITION
not before us. It was not patented, and is open and free to the use of the public.
And, of course, in using the art, the ruled lines and headings of accounts must If at all, the cause of action should have been for unfair competition, a situation
necessarily be used as incident to it. which was possible even if P & D had no registration.26 However, while the
petitioner’s complaint in the RTC also cited unfair competition, the trial court did
The plausibility of the claim put forward by the complainant in this case arises not find private respondents liable therefor. Petitioner did not appeal this
from a confusion of ideas produced by the peculiar nature of the art described in particular point; hence, it cannot now revive its claim of unfair competition.
the books, which have been made the subject of copyright. In describing the art,
the illustrations and diagrams employed happened to correspond more closely But even disregarding procedural issues, we nevertheless cannot hold
than usual with the actual work performed by the operator who uses the art. x x respondents guilty of unfair competition.
x The description of the art in a book, though entitled to the benefit of
copyright, lays no foundation for an exclusive claim to the art itself. The object By the nature of things, there can be no unfair competition under the law on
of the one is explanation; the object of the other is use. The former may be copyrights although it is applicable to disputes over the use of trademarks. Even
secured by copyright. The latter can only be secured, if it can be secured at all, a name or phrase incapable of appropriation as a trademark or tradename may,
by letters patent." (underscoring supplied) by long and exclusive use by a business (such that the name or phrase becomes
associated with the business or product in the mind of the purchasing public), be
ON THE ISSUE OF TRADEMARK INFRINGEMENT entitled to protection against unfair competition.27 In this case, there was no
evidence that P & D’s use of "Poster Ads" was distinctive or well-known. As
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 26

noted by the Court of Appeals, petitioner’s expert witnesses himself had testified
that " ‘Poster Ads’ was too generic a name. So it was difficult to identify it with
any company, honestly speaking."28 This crucial admission by its own expert
witness that "Poster Ads" could not be associated with P & D showed that, in the
mind of the public, the goods and services carrying the trademark "Poster Ads"
could not be distinguished from the goods and services of other entities.

This fact also prevented the application of the doctrine of secondary meaning.
"Poster Ads" was generic and incapable of being used as a trademark because it
was used in the field of poster advertising, the very business engaged in by
petitioner. "Secondary meaning" means that a word or phrase originally
incapable of exclusive appropriation with reference to an article in the market
(because it is geographically or otherwise descriptive) might nevertheless have
been used for so long and so exclusively by one producer with reference to his
article that, in the trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his property.29 The admission by
petitioner’s own expert witness that he himself could not associate "Poster Ads"
with petitioner P & D because it was "too generic" definitely precluded the
application of this exception.

Having discussed the most important and critical issues, we see no need to
belabor the rest.

All told, the Court finds no reversible error committed by the Court of Appeals
when it reversed the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of
Appeals dated May 22, 2001 is AFFIRMED in toto.

SO ORDERED.

Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ.,

concur.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 27

G.R. No. 112012 April 4, 2001 elements constituting the relevant factual landscape be comprehensively
examined.
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES, INC., Same; Same; Same; Same; “Totality Rule,” Explained.—In the same manner,
petitioners, the Court of Appeals erred in applying the totality rule as defined in the cases of
vs. Bristol Myers v. Director of Patents; Mead Johnson & Co. v. NVJ Van Dorf Ltd.;
COURT OF APPEALS and CFC CORPORATION., respondents. and American Cyanamid Co. v. Director of Patents. The totality rule states that
“the test is not simply to take their words and compare the spelling and
Trademarks and Tradenames; Words and Phrases; “Trademark,” Defined.—A pronunciation of said words. In determining whether two trademarks are
trademark has been generally defined as “any word, name, symbol or device confusingly similar, the two marks in their entirety as they appear in the
adopted and used by a manufacturer or merchant to identify his goods and respective labels must be considered in relation to the goods to which they are
distinguish them from those manufactured and sold by others.” attached; the discerning eye of the observer must focus not only on the
Same; Same; Tests to Determine Colorable Imitation; “Dominancy Test,” and predominant words but also on the other features appearing on both labels.”
“Holistic Test,” Explained; Colorable imitation denotes such a close or ingenious Same; Same; Same; Same; In view of the difficulty of applying jurisprudential
imitation as to be calculated to deceive ordinary persons, or such a resemblance precedents to trademark cases due to the peculiarity of each case, judicial fora
to the original as to deceive an ordinary purchaser giving such attention as a should not readily apply a certain test or standard just because of seeming
purchaser usually gives, as to cause him to purchase the one supposing it to be similarities.—In the case at bar, other than the fact that both Nestle’s and CFC’s
the other.—Colorable imitation denotes such a close or ingenious imitation as to products are inexpensive and common household items, the similarity ends
be calculated to deceive ordinary persons, or such a resemblance to the original there. What is being questioned here is the use by CFC Of the trademark
as to deceive an ordinary purchaser giving such attention as a purchaser usually MASTER. In view of the difficulty of applying jurisprudential precedents to
gives, as to cause him to purchase the one supposing it to be the other. In trademark cases due to the peculiarity of each case, judicial fora should not
determining if colorable imitation exists, jurisprudence has developed two kinds readily apply a certain test or standard just because of seeming similarities. As
of tests—the Dominancy Test and the Holistic Test. The test of dominancy this Court has pointed above, there could be more telling differences than
focuses on the similarity of the prevalent features of the competing trademarks similarities as to make a jurisprudential precedent inapplicable.
which might cause confusion or deception and thus constitute infringement. On Same; Same; Same; Same; The application of the totality or holistic test is
the other side of the spectrum, the holistic test mandates that the entirety of the improper since the ordinary purchaser would not be inclined to notice the
marks in question must be considered in determining confusing similarity. specific features, similarities or dissimilarities, considering that the product is an
Same; Same; Same; Same; In infringement or trademark cases in the inexpensive and common household item.—The Court of Appeals held that the
Philippines, particularly in ascertaining whether one trademark is confusingly test to be applied should be the totality or holistic test reasoning, since what is
similar to or is a colorable imitation of another, no set rules can be deduced— of paramount consideration is the ordinary purchaser who is, in general,
each case must be decided on its own merits.—The Court of Appeals applied undiscerningly rash in buying the more common and less expensive household
some judicial precedents which are not on all fours with this case. It must be products like coffee, and is therefore less inclined to closely examine specific
emphasized that in infringement or trademark cases in the Philippines, details of similarities “and dissimilarities between competing products. This Court
particularly in ascertaining whether one trademark is confusingly similar to or is cannot agree with the above reasoning. If the ordinary purchaser is
a colorable imitation of another, no set rules can be deduced. Each case must be “undiscerningly rash” in buying such common and inexpensive household
decided on its own merits. In Esso Standard, Inc. v. Court of Appeals, we ruled products as instant coffee, and would therefore be “less inclined to closely
that the likelihood of confusion is a relative concept; to be determined only examine specific details of similarities and dissimilarities” between the two
according to the particular, and sometimes peculiar, circumstances of each case. competing products, then it would be less likely for the ordinary purchaser to
In trademark cases, even more than in any other litigation, precedent must be notice that CFC’s trademark FLAVOR MASTER carries the colors orange and
studied in light of the facts of the particular case. The wisdom of the likelihood mocha while that of Nestle’s uses red and brown. The application of the totality
of confusion test lies in its recognition that each trademark infringement case or holistic test is improper since the ordinary purchaser would not be inclined to
presents its own unique set of facts. Indeed, the complexities attendant to an notice the specific features, similarities or dissimilarities, considering that the
accurate assessment of likelihood of confusion require that the entire panoply of product is an inexpensive and common household item.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 28

Same; Same; Same; Same; The totality or holistic test only relies on visual Same; Same; Same; Same; The term “MASTER” has acquired a certain
comparison between two trademarks whereas the dominancy test relies not only connotation to mean the coffee products MASTER ROAST and MASTER BLEND
on the visual but also on the aural and connotative comparisons and overall produced by Nestle.—The term “MASTER,” therefore, has acquired a certain
impressions between the two trademarks.—Moreover, the totality or holistic test connotation to mean the coffee products MASTER ROAST and MASTER BLEND
is contrary to the elementary postulate of the law on trademarks and unfair produced by Nestlé. As such, the use by CFC of the term “MASTER” in the
competition that confusing similarity is to be determined on the basis of visual, trademark for its coffee product FLAVOR MASTER is likely to cause confusion or
aural, connotative comparisons and overall impressions engendered by the mistake or even to deceive the ordinary purchasers.
marks in controversy as they are encountered in the realities of the marketplace. PETITION for review on certiorari of a decision of the Court of Appeals.
The totality or holistic test only relies on visual comparison between two
trademarks whereas the dominancy test relies not only on the visual but also on The facts are stated in the opinion of the Court.
the aural and connotative comparisons and overall impressions between the two      Tan, Manzano & Velez for petitioners.
trademarks.      Hilario A. Perez for private respondent. [Societe Des Produits Nestlé, S.A. vs.
Same; Same; Same; Same; “Generic Terms,” and “Descriptive Terms,” Court of Appeals, 356 SCRA 207(2001)]
Explained; The word “MASTER” is neither a generic nor a descriptive term, and
as such, said term can not be invalidated as a trademark and, therefore, may be YNARES-SANTIAGO, J.:
legally protected.—In addition, the word “MASTER” is neither a generic nor a
descriptive term. As such, said term can not be invalidated as a trademark and, This is a petition for review assailing the Decision of the Court of Appeals in CA-
therefore, may be legally protected. Generic terms are those which constitute G.R. SP No. 24101,1 reversing and setting aside the decision of the Bureau of
“the common descriptive name of an article or substance,” or comprise the Patents, Trademarks and Technology Transfer (BPTTT),2 which denied private
“genus of which the particular product is a species,” or are “commonly used as respondent’s application for registration of the trade-mark, FLAVOR MASTER.
the name or description of a kind of goods,” or “imply reference to every
member of a genus and the exclusion of individuating characters,” or “refer to On January 18, 1984, private respondent CFC Corporation filed with the BPTTT
the basic nature of the wares or services provided rather than to the more an application for the registration of the trademark "FLAVOR MASTER" for
idiosyncratic characteristics of a particular product,” and are not legally instant coffee, under Serial No. 52994. The application, as a matter of due
protectable. On the other hand, a term is descriptive and therefore invalid as a course, was published in the July 18, 1988 issue of the BPTTT’s Official Gazette.
trademark if, as understood in its normal and natural sense, it “forthwith
conveys the characteristics, functions, qualities or ingredients of a product to Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under
one who has never seen it and does not know what it is,” or “if it forthwith Swiss laws and domiciled in Switzerland, filed an unverified Notice of
conveys an immediate idea of the ingredients, qualities or characteristics of the Opposition,3 claiming that the trademark of private respondent’s product is
goods,” or if it clearly denotes what goods or services are provided in such a "confusingly similar to its trademarks for coffee and coffee extracts, to wit:
way that the consumer does not have to exercise powers of perception or MASTER ROAST and MASTER BLEND."
imagination.
Same; Same; Same; Same; “Suggestive Terms,” Explained.—Rather, the term Likewise, a verified Notice of Opposition was filed by Nestle Philippines, Inc., a
“MASTER” is a suggestive term brought about by the advertising scheme of Philippine corporation and a licensee of Societe Des Produits Nestle S.A., against
Nestle. Suggestive terms are those which, in the phraseology of one court, CFC’s application for registration of the trademark FLAVOR MASTER.4 Nestle
require “imagination, thought and perception to reach a conclusion as to the claimed that the use, if any, by CFC of the trademark FLAVOR MASTER and its
nature of the goods.” Such terms, “which subtly connote something about the registration would likely cause confusion in the trade; or deceive purchasers and
product,” are eligible for protection in the absence of secondary meaning. While would falsely suggest to the purchasing public a connection in the business of
suggestive marks are capable of shedding “some light” upon certain Nestle, as the dominant word present in the three (3) trademarks is "MASTER";
characteristics of the goods or services in dispute, they nevertheless involve “an or that the goods of CFC might be mistaken as having originated from the latter.
element of incongruity,” “figurativeness,” or “imaginative effort on the part of
the observer.” In answer to the two oppositions, CFC argued that its trademark, FLAVOR
MASTER, is not confusingly similar with the former’s trademarks, MASTER
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 29

ROAST and MASTER BLEND, alleging that, "except for the word MASTER (which smaller, white print. And further below are the inscriptions in white: "A selection
cannot be exclusively appropriated by any person for being a descriptive or of prime Arabica and Robusta coffee." With regard to appellees’ "MASTER
generic name), the other words that are used respectively with said word in the BLEND" label (Exhibit "6") of which only a xeroxed copy is submitted, the letters
three trademarks are very different from each other – in meaning, spelling, are bolder and taller as compared to appellant CFC’s and the word "MASTER"
pronunciation, and sound". CFC further argued that its trademark, FLAVOR appears on top of the word "BLEND" and below it are the words "100% pure
MASTER, "is clearly very different from any of Nestle’s alleged trademarks instant coffee" printed in small letters.
MASTER ROAST and MASTER BLEND, especially when the marks are viewed in
their entirety, by considering their pictorial representations, color schemes and From the foregoing description, while the contending marks depict the same
the letters of their respective labels." product, the glaring dissimilarities in their presentation far outweigh and dispel
any aspect of similitude. To borrow the words of the Supreme Court in American
In its Decision No. 90-47 dated December 27, 1990, the BPTTT denied CFC’s Cyanamid Co. v. Director of Patents (76 SCRA 568), appellant CFC’s and
application for registration.5 CFC elevated the matter to the Court of Appeals, appellees’ labels are entirely different in size, background, colors, contents and
where it was docketed as CA-G.R. SP No. 24101. pictorial arrangement; in short, the general appearances of the labels bearing
the respective trademarks are so distinct from each other that appellees cannot
The Court of Appeals defined the issue thus: "Does appellant CFC’s trade dress assert that the dominant features, if any, of its trademarks were used or
bear a striking resemblance with appellee’s trademarks as to create in the appropriated in appellant CFC’s own. The distinctions are so well-defined so as
purchasing public’s mind the mistaken impression that both coffee products to foreclose any probability or likelihood of confusion or deception on the part of
come from one and the same source?" the normally intelligent buyer when he or she encounters both coffee products
at the grocery shelf. The answer therefore to the query is a clear-cut NO.6
As stated above, the Court of Appeals, in the assailed decision dated September
23, 1993, reversed Decision No. 90-47 of the BPTTT and ordered the Director of Petitioners are now before this Court on the following assignment of errors:
Patents to approve CFC’s application. The Court of Appeals ruled:
1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND SETTING ASIDE
Were We to take even a lackadaisical glance at the overall appearance of the THE DECISION (NO. 90-47) OF THE DIRECTOR OF THE BUREAU OF PATENTS,
contending marks, the physical discrepancies between appellant CFC’s and TRADEMARKS AND TECHNOLOGY TRANSFER (BPTTT) DATED DECEMBER 27,
appellee’s respective logos are so ostensible that the casual purchaser cannot 1990.
likely mistake one for the other. Appellant CFC’s label (Exhibit "4") is
predominantly a blend of dark and lighter shade of orange where the words 2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT CFC’S TRADE
"FLAVOR MASTER", "FLAVOR" appearing on top of "MASTER", shaded in mocha DRESS IS BEYOND THE SCOPE OF THE PROSCRIPTION LAID DOWN BY
with thin white inner and outer sidings per letter and identically lettered except JURISPRUDENCE AND THE TRADEMARK LAW.
for the slightly protruding bottom curve of the letter "S" adjoining the bottom tip
of the letter "A" in the word "MASTER", are printed across the top of a 3. RESPONDENT COURT ERRED IN HOLDING THAT THE TOTALITY RULE,
simmering red coffee cup. Underneath "FLAVOR MASTER" appears "Premium RATHER THAN THE TEST OF DOMINANCY, APPLIES TO THE CASE.
Instant Coffee" printed in white, slim and slanted letters. Appellees’ "MASTER
ROAST" label (Exhibit "7"), however, is almost double the width of appellant 4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE APPLIED IN
CFC’s. At the top is printed in brown color the word "NESCAFE" against a white THE CASES OF BRISTOL MYERS V. DIRECTOR OF PATENTS, ET AL. (17 SCRA
backdrop. Occupying the center is a square-shaped configuration shaded with 128), MEAD JOHNSON & CO. V. NVJ VAN DORF LTD., (7 SCRA 768) AND
dark brown and picturing a heap of coffee beans, where the word "MASTER" is AMERICAN CYANAMID CO. V. DIRECTOR OF PATENTS (76 SCRA 568).
inscribed in the middle. "MASTER" in appellees’ label is printed in taller capital
letters, with the letter "M" further capitalized. The letters are shaded with red The petition is impressed with merit.
and bounded with thin gold-colored inner and outer sidings. Just above the word
"MASTER" is a red window like portrait of what appears to be a coffee shrub
clad in gold. Below the "MASTER" appears the word "ROAST" impressed in
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 30

A trademark has been generally defined as "any word, name, symbol or device The law prescribes a more stringent standard in that there should not only be
adopted and used by a manufacturer or merchant to identify his goods and confusing similarity but that it should not likely cause confusion or mistake or
distinguish them from those manufactured and sold by others."7 deceive purchasers.

A manufacturer’s trademark is entitled to protection. As Mr. Justice Frankfurter Hence, the question in this case is whether there is a likelihood that the
observed in the case of Mishawaka Mfg. Co. v. Kresge Co.:8 trademark FLAVOR MASTER may cause confusion or mistake or may deceive
purchasers that said product is the same or is manufactured by the same
The protection of trade-marks is the law’s recognition of the psychological company. In other words, the issue is whether the trademark FLAVOR MASTER
function of symbols. If it is true that we live by symbols, it is no less true that we is a colorable imitation of the trademarks MASTER ROAST and MASTER BLEND.
purchase goods by them. A trade-mark is a merchandising short-cut which
induces a purchaser to select what he wants, or what he has been led to believe Colorable imitation denotes such a close or ingenious imitation as to be
he wants. The owner of a mark exploits this human propensity by making every calculated to deceive ordinary persons, or such a resemblance to the original as
effort to impregnate the atmosphere of the market with the drawing power of a to deceive an ordinary purchaser giving such attention as a purchaser usually
congenial symbol. Whatever the means employed, the aim is the same --- to gives, as to cause him to purchase the one supposing it to be the other.9 In
convey through the mark, in the minds of potential customers, the desirability of determining if colorable imitation exists, jurisprudence has developed two kinds
the commodity upon which it appears. Once this is attained, the trade-mark of tests - the Dominancy Test and the Holistic Test.10 The test of dominancy
owner has something of value. If another poaches upon the commercial focuses on the similarity of the prevalent features of the competing trademarks
magnetism of the symbol he has created, the owner can obtain legal redress. which might cause confusion or deception and thus constitute infringement. On
the other side of the spectrum, the holistic test mandates that the entirety of the
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as amended, which marks in question must be considered in determining confusing similarity.11
was in force at the time, provides thus:
In the case at bar, the Court of Appeals held that:
Registration of trade-marks, trade-names and service-marks on the principal
register. - There is hereby established a register of trade-marks, trade-names The determination of whether two trademarks are indeed confusingly similar
and service marks which shall be known as the principal register. The owner of a must be taken from the viewpoint of the ordinary purchasers who are, in
trade-mark, trade-name or service-mark used to distinguish his goods, business general, undiscerningly rash in buying the more common and less expensive
or services from the goods, business or services of others shall have the right to household products like coffee, and are therefore less inclined to closely
register the same on the principal register, unless it: examine specific details of similarities and dissimilarities between competing
products. The Supreme Court in Del Monte Corporation v. CA, 181 SCRA 410,
xxx xxx xxx held that:

(d) Consists of or comprises a mark or trade-name which so resembles a mark "The question is not whether the two articles are distinguishable by their labels
or trade-name registered in the Philippines or a mark or trade-name previously when set side by side but whether the general confusion made by the article
used in the Philippines by another and not abandoned, as to be likely, when upon the eye of the casual purchaser who is unsuspicious and off his guard, is
applied to or used in connection with the goods, business or services of the such as to likely result in his confounding it with the original. As observed in
applicant, to cause confusion or mistake or to deceive purchasers; several cases, the general impression of the ordinary purchaser, buying under
the normally prevalent conditions in trade and giving the attention such
xxx xxx xxx purchasers usually give in buying that class of goods, is the touchstone."

(Emphasis supplied) From this perspective, the test of similarity is to consider the two marks in their
entirety, as they appear in the respective labels, in relation to the goods to
which they are attached (Bristol Myers Company v. Director of Patents, et al., 17
SCRA 128, citing Mead Johnson & Co. v. NVJ Van Dorp, Ltd., et al., 7 SCRA
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 31

768). The mark must be considered as a whole and not as dissected. If the Patents.19 The totality rule states that "the test is not simply to take their words
buyer is deceived, it is attributable to the marks as a totality, not usually to any and compare the spelling and pronunciation of said words. In determining
part of it (Del Monte Corp. v. CA, supra), as what appellees would want it to be whether two trademarks are confusingly similar, the two marks in their entirety
when they essentially argue that much of the confusion springs from appellant as they appear in the respective labels must be considered in relation to the
CFC’s use of the word "MASTER" which appellees claim to be the dominant goods to which they are attached; the discerning eye of the observer must focus
feature of their own trademarks that captivates the prospective consumers. Be it not only on the predominant words but also on the other features appearing on
further emphasized that the discerning eye of the observer must focus not only both labels."20
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 As this Court has often declared, each case must be studied according to the
similar to the other (Mead Johnson & Co. v. NVJ Van Dorp, Ltd., supra).12 peculiar circumstances of each case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically
The Court of Appeals applied some judicial precedents which are not on all fours in point.
with this case. It must be emphasized that in infringement or trademark cases in
the Philippines, particularly in ascertaining whether one trademark is confusingly In the above cases cited by the Court of Appeals to justify the application of the
similar to or is a colorable imitation of another, no set rules can be deduced. totality or holistic test to this instant case, the factual circumstances are
Each case must be decided on its own merits.13 In Esso Standard, Inc. v. Court substantially different. In the Bristol Myers case, this Court held that although
of Appeals,14 we ruled that the likelihood of confusion is a relative concept; to both BIOFERIN and BUFFERIN are primarily used for the relief of pains such as
be determined only according to the particular, and sometimes peculiar, headaches and colds, and their names are practically the same in spelling and
circumstances of each case. In trademark cases, even more than in any other pronunciation, both labels have strikingly different backgrounds and
litigation, precedent must be studied in light of the facts of the particular case. surroundings. In addition, one is dispensable only upon doctor’s prescription,
The wisdom of the likelihood of confusion test lies in its recognition that each while the other may be purchased over-the-counter.
trademark infringement case presents its own unique set of facts. Indeed, the
complexities attendant to an accurate assessment of likelihood of confusion In the Mead Johnson case, the differences between ALACTA and ALASKA are
require that the entire panoply of elements constituting the relevant factual glaring and striking to the eye. Also, ALACTA refers to "Pharmaceutical
landscape be comprehensively examined.15 Preparations which Supply Nutritional Needs," falling under Class 6 of the official
classification of Medicines and Pharmaceutical Preparations to be used as
The Court of Appeals’ application of the case of Del Monte Corporation v. Court prescribed by physicians. On the other hand, ALASKA refers to "Foods and
of Appeals16 is, therefore, misplaced. In Del Monte, the issue was about the Ingredients of Foods" falling under Class 47, and does not require medical
alleged similarity of Del Monte’s logo with that of Sunshine Sauce Manufacturing prescription.
Industries. Both corporations market the catsup product which is an inexpensive
and common household item. In the American Cyanamid case, the word SULMET is distinguishable from the
word SULMETINE, as the former is derived from a combination of the syllables
Since Del Monte alleged that Sunshine’s logo was confusingly similar to or was a "SUL" which is derived from sulfa and "MET" from methyl, both of which are
colorable imitation of the former’s logo, there was a need to go into the details chemical compounds present in the article manufactured by the contending
of the two logos as well as the shapes of the labels or marks, the brands printed parties. This Court held that the addition of the syllable "INE" in respondent’s
on the labels, the words or lettering on the labels or marks and the shapes and label is sufficient to distinguish respondent’s product or trademark from that of
colors of the labels or marks. The same criteria, however, cannot be applied in petitioner. Also, both products are for medicinal veterinary use and the buyer
the instant petition as the facts and circumstances herein are peculiarly different will be more wary of the nature of the product he is buying. In any case, both
from those in the Del Monte case. products are not identical as SULMET’s label indicates that it is used in a drinking
water solution while that of SULMETINE indicates that they are tablets.
In the same manner, the Court of Appeals erred in applying the totality rule as
defined in the cases of Bristol Myers v. Director of Patents;17 Mead Johnson & It cannot also be said that the products in the above cases can be bought off the
Co. v. NVJ Van Dorf Ltd.;18 and American Cyanamid Co. v. Director of shelf except, perhaps, for ALASKA. The said products are not the usual "common
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 32

and inexpensive" household items which an "undiscerningly rash" buyer would notice that CFC’s trademark FLAVOR MASTER carries the colors orange and
unthinkingly buy.In the case at bar, other than the fact that both Nestle’s and mocha while that of Nestle’s uses red and brown. The application of the totality
CFC’s products are inexpensive and common household items, the similarity or holistic test is improper since the ordinary purchaser would not be inclined to
ends there. What is being questioned here is the use by CFC of the trademark notice the specific features, similarities or dissimilarities, considering that the
MASTER. In view of the difficulty of applying jurisprudential precedents to product is an inexpensive and common household item.
trademark cases due to the peculiarity of each case, judicial fora should not
readily apply a certain test or standard just because of seeming similarities. As It must be emphasized that the products bearing the trademarks in question are
this Court has pointed above, there could be more telling differences than "inexpensive and common" household items bought off the shelf by
similarities as to make a jurisprudential precedent inapplicable. "undiscerningly rash" purchasers. As such, if the ordinary purchaser is
"undiscerningly rash", then he would not have the time nor the inclination to
Nestle points out that the dominancy test should have been applied to determine make a keen and perceptive examination of the physical discrepancies in the
whether there is a confusing similarity between CFC’s FLAVOR MASTER and trademarks of the products in order to exercise his choice.
Nestle’s MASTER ROAST and MASTER BLEND.
While this Court agrees with the Court of Appeals’ detailed enumeration of
We agree. differences between the respective trademarks of the two coffee products, this
Court cannot agree that totality test is the one applicable in this case. Rather,
As the Court of Appeals itself has stated, "[t]he determination of whether two this Court believes that the dominancy test is more suitable to this case in light
trademarks are indeed confusingly similar must be taken from the viewpoint of of its peculiar factual milieu.
the ordinary purchasers who are, in general, undiscerningly rash in buying the
more common and less expensive household products like coffee, and are Moreover, the totality or holistic test is contrary to the elementary postulate of
therefore less inclined to closely examine specific details of similarities and the law on trademarks and unfair competition that confusing similarity is to be
dissimilarities between competing products."21 determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in
The basis for the Court of Appeals’ application of the totality or holistic test is the the realities of the marketplace.23 The totality or holistic test only relies on
"ordinary purchaser" buying the product under "normally prevalent conditions in visual comparison between two trademarks whereas the dominancy test relies
trade" and the attention such products normally elicit from said ordinary not only on the visual but also on the aural and connotative comparisons and
purchaser. An ordinary purchaser or buyer does not usually make such scrutiny overall impressions between the two trademarks.
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 For this reason, this Court agrees with the BPTTT when it applied the test of
a library.22 dominancy and held that:

The Court of Appeals held that the test to be applied should be the totality or From the evidence at hand, it is sufficiently established that the word MASTER is
holistic test reasoning, since what is of paramount consideration is the ordinary the dominant feature of opposer’s mark. The word MASTER is printed across the
purchaser who is, in general, undiscerningly rash in buying the more common middle portion of the label in bold letters almost twice the size of the printed
and less expensive household products like coffee, and is therefore less inclined word ROAST. Further, the word MASTER has always been given emphasis in the
to closely examine specific details of similarities and dissimilarities between TV and radio commercials and other advertisements made in promoting the
competing products. product. This can be gleaned from the fact that Robert Jaworski and Atty. Ric
Puno Jr.., the personalities engaged to promote the product, are given the titles
This Court cannot agree with the above reasoning. If the ordinary purchaser is Master of the Game and Master of the Talk Show, respectively. In due time,
"undiscerningly rash" in buying such common and inexpensive household because of these advertising schemes the mind of the buying public had come to
products as instant coffee, and would therefore be "less inclined to closely learn to associate the word MASTER with the opposer’s goods.
examine specific details of similarities and dissimilarities" between the two
competing products, then it would be less likely for the ordinary purchaser to
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 33

x x x. It is the observation of this Office that much of the dominance which the
word MASTER has acquired through Opposer’s advertising schemes is carried Robert Jaworski. Living Legend. A true hard court hero. Fast on his feet. Sure in
over when the same is incorporated into respondent-applicant’s trademark every shot he makes. A master strategist. In one word, unmatched.
FLAVOR MASTER. Thus, when one looks at the label bearing the trademark
FLAVOR MASTER (Exh. 4) one’s attention is easily attracted to the word MASTER ROAST. Equally unmatched. Rich and deeply satisfying. Made from a
MASTER, rather than to the dissimilarities that exist. Therefore, the possibility of unique combination of the best coffee beans - Arabica for superior taste and
confusion as to the goods which bear the competing marks or as to the origins aroma, Robusta for strength and body. A masterpiece only NESCAFE, the world’s
thereof is not farfetched. x x x.24 coffee masters, can create.

In addition, the word "MASTER" is neither a generic nor a descriptive term. As

such, said term can not be invalidated as a trademark and, therefore, may be MASTER ROAST. Coffee perfection worthy of masters like Robert Jaworski.28
legally protected. Generic terms25 are those which constitute "the common
descriptive name of an article or substance," or comprise the "genus of which In the art of conversation, Ric Puno Jr. is master. Witty. Well-informed.
the particular product is a species," or are "commonly used as the name or Confident.
description of a kind of goods," or "imply reference to every member of a genus
and the exclusion of individuating characters," or "refer to the basic nature of In the art of coffee-making, nothing equals Master Roast, the coffee masterpiece
the wares or services provided rather than to the more idiosyncratic from Nescafe, the world’s coffee masters. A unique combination of the best
characteristics of a particular product," and are not legally protectable. On the coffee beans - Arabica for superior taste and aroma, Robusta for strength and
other hand, a term is descriptive26 and therefore invalid as a trademark if, as body. Truly distinctive and rich in flavor.
understood in its normal and natural sense, it "forthwith conveys the
characteristics, functions, qualities or ingredients of a product to one who has Master Roast. Coffee perfection worthy of masters like Ric Puno Jr.29
never seen it and does not know what it is," or "if it forthwith conveys an
immediate idea of the ingredients, qualities or characteristics of the goods," or if The term "MASTER", therefore, has acquired a certain connotation to mean the
it clearly denotes what goods or services are provided in such a way that the coffee products MASTER ROAST and MASTER BLEND produced by Nestle. As
consumer does not have to exercise powers of perception or imagination. such, the use by CFC of the term "MASTER" in the trademark for its coffee
product FLAVOR MASTER is likely to cause confusion or mistake or even to
Rather, the term "MASTER" is a suggestive term brought about by the deceive the ordinary purchasers.
advertising scheme of Nestle. Suggestive terms27 are those which, in the
phraseology of one court, require "imagination, thought and perception to reach In closing, it may not be amiss to quote the case of American Chicle Co. v.
a conclusion as to the nature of the goods." Such terms, "which subtly connote Topps Chewing Gum, Inc.,30 to wit:
something about the product," are eligible for protection in the absence of
secondary meaning. While suggestive marks are capable of shedding "some Why it should have chosen a mark that had long been employed by [plaintiff]
light" upon certain characteristics of the goods or services in dispute, they and had become known to the trade instead of adopting some other means of
nevertheless involve "an element of incongruity," "figurativeness," or " identifying its goods is hard to see unless there was a deliberate purpose to
imaginative effort on the part of the observer." obtain some advantage from the trade that [plaintiff] had built up. Indeed, it is
generally true that, as soon as we see that a second comer in a market has, for
This is evident from the advertising scheme adopted by Nestle in promoting its no reason that he can assign, plagiarized the "make-up" of an earlier comer, we
coffee products. In this case, Nestle has, over time, promoted its products as need no more; . . . [W]e feel bound to compel him to exercise his ingenuity in
"coffee perfection worthy of masters like Robert Jaworski and Ric Puno Jr." quarters further afield.

In associating its coffee products with the term "MASTER" and thereby WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in
impressing them with the attributes of said term, Nestle advertised its products CA-G.R. SP No. 24101 is REVERSED and SET ASIDE and the decision of the
thus:
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 34

Bureau of Patents, Trademarks and Technology Transfer in Inter Partes Cases

Nos. 3200 and 3202 is REINSTATED.

SO ORDERED.

Davide, Jr., C.J. (Chairman), Kapunan, and Pardo, JJ., concur.

Puno J., on official leave.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 35

G.R. No. 138900 September 20, 2005 writ of preliminary injunction is addressed to the sound discretion of the trial
court, this discretion must be exercised based upon the grounds and in the
LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC., Petitioners, manner provided by law. The exercise of discretion by the trial court in
vs. injunctive matters is generally not interfered with save in cases of manifest
CLINTON APPARELLE, INC., Respondent. abuse. And to determine whether there was abuse of discretion, a scrutiny must
be made of the bases, if any, considered by the trial court in granting injunctive
Provisional Remedies; Injunctions; Injunction is accepted as the strong arm of relief. Be it stressed that injunction is the strong arm of equity which must be
equity or a transcendent remedy to be used cautiously as it affects the issued with great caution and deliberation, and only in cases of great injury
respective rights of the parties, and only upon full conviction on the part of the where there is no commensurate remedy in damages. In the present case, we
court of its extreme necessity. —Section 1, Rule 58 of the Rules of Court defines find that there was scant justification for the issuance of the writ of preliminary
a preliminary injunction as an order granted at any stage of an action prior to injunction.
the judgment or final order requiring a party or a court, agency or a person to Intellectual Property Code of the Philippines (R.A. No. 8293); Trademarks;
refrain from a particular act or acts. Injunction is accepted as the strong arm of According to Section 138 of Republic Act No. 8293, the Certificate of Registration
equity or a transcendent remedy to be used cautiously as it affects the is a prima facie evidence of the validity of the registration, the registrant’s
respective rights of the parties, and only upon full conviction on the part of the ownership of the mark and of the exclusive right to use the same in connection
court of its extreme necessity. An extraordinary remedy, injunction is designed with the goods or services and those that are related thereto specified in the
to preserve or maintain the status quo of things and is generally availed of to certificate.— Petitioners anchor their legal right to “Dockers and Design”
prevent actual or threatened acts until the merits of the case can be heard. It trademark on the Certificate of Registration issued in their favor by the Bureau
may be resorted to only by a litigant for the preservation or protection of his of Patents, Trademarks and Technology Transfer. According to Section 138 of
rights or interests and for no other purpose during the pendency of the principal Republic Act No. 8293, this Certificate of Registration is prima facie evidence of
action. It is resorted to only when there is a pressing necessity to avoid injurious the validity of the registration, the registrant’s ownership of the mark and of the
consequences, which cannot be remedied under any standard compensation. exclusive right to use the same in connection with the goods or services and
The resolution of an application for a writ of preliminary injunction rests upon those that are related thereto specified in the certificate. Section 147.1 of said
the existence of an emergency or of a special recourse before the main case can law likewise grants the owner of the registered mark the exclusive right to
be heard in due course of proceedings. prevent all third parties not having the owner’s consent from using in the course
Same; Same; Injunction is not a remedy to protect or enforce contingent, of trade identical or similar signs for goods or services which are identical or
abstract, or future rights—it will not issue to protect a right not in esse and similar to those in respect of which the trademark is registered if such use
which may never arise, or to restrain an act which does not give rise to a cause results in a likelihood of confusion.
of action.—Under the cited provision, a clear and positive right especially calling Same; Same; Given the single registration of the trademark “Dockers and
for judicial protection must be shown. Injunction is not a remedy to protect or Design” and considering that respondent only uses the assailed device but a
enforce contingent, abstract, or future rights; it will not issue to protect a right different word mark, the right to prevent the latter from using the challenged
not in esse and which may never arise, or to restrain an act which does not give “Paddocks” device is far from clear. It is not evident whether the single
rise to a cause of action. There must exist an actual right. There must be a registration of the trademark “Dockers and Design” confers on the owner the
patent showing by the complaint that there exists a right to be protected and right to prevent the use of a fraction thereof in the course of trade.—Attention
that the acts against which the writ is to be directed are violative of said right. should be given to the fact that petitioners’ registered trademark consists of two
Same; Same; Kinds of Preliminary Injunction.—There are generally two kinds of elements: (1) the word mark “Dockers” and (2) the wing-shaped design or logo.
preliminary injunction: (1) a prohibitory injunction which commands a party to Notably, there is only one registration for both features of the trademark giving
refrain from doing a particular act; and (2) a mandatory injunction which the impression that the two should be considered as a single unit. Clinton
commands the performance of some positive act to correct a wrong in the past. Apparelle’s trademark, on the other hand, uses the “Paddocks” word mark on
Same; Same; The exercise of discretion by the trial court in injunctive matters is top of a logo which according to petitioners is a slavish imitation of the
generally not interfered with save in cases of manifest abuse.—The Court of “Dockers” design. The two trademarks apparently differ in their word marks
Appeals did not err in reviewing proof adduced by petitioners to support its (“Dockers” and “Paddocks”), but again according to petitioners, they employ
application for the issuance of the writ. While the matter of the issuance of a similar or identical logos. It could thus be said that respondent only
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 36

“appropriates” petitioners’ logo and not the word mark “Dockers”; it uses only a prayed for and this Court is of the considered belief and humble view that,
portion of the registered trademark and not the whole. Given the single without necessarily delving on the merits, the paramount interest of justice will
registration of the trademark “Dockers and Design” and considering that be better served if the status quo shall be maintained.” Clearly, this statement
respondent only uses the assailed device but a different word mark, the right to falls short of the requirement laid down by the above-quoted case. Similarly, in
prevent the latter from using the challenged “Paddocks” device is far from clear. Developers Group of Companies, Inc. v. Court of Appeals, we held that it was
Stated otherwise, it is not evident whether the single registration of the “not enough” for the trial court, in its order granting the writ, to simply say that
trademark “Dockers and Design” confers on the owner the right to prevent the it appeared “after hearing that plaintiff is entitled to the relief prayed for.”
use of a fraction thereof in the course of trade. It is also unclear whether the Same; Same; Damages; A writ of injunction should not be issued when an
use without the owner’s consent of a portion of a trademark registered in its action for damages would adequately compensate the injuries caused.—We
entirety constitutes material or substantial invasion of the owner’s right. agree with the Court of Appeals in its holding that the damages the petitioners
Same; Same; Trademark Dilution; Words and Phrases; Trademark dilution is the had suffered or continue to suffer may be compensated in terms of monetary
lessening of the capacity of a famous mark to identify and distinguish good or consideration. As held in Government Service Insurance System v. Florendo: . . .
services; To be eligible for the protection from dilution, there has to be a finding a writ of injunction should never have been issued when an action for damages
that: (1) the trademark sought to be protected is famous and distinctive; (2) the would adequately compensate the injuries caused. The very foundation of the
use by another began after the owner’s mark became famous; and (3) such jurisdiction to issue the writ of injunction rests in the probability of irreparable
subsequent use defames the owner’s mark.—Trademark dilution is the lessening injury, inadequacy of pecuniary estimation and the prevention of the multiplicity
of the capacity of a famous mark to identify and distinguish goods or services, of suits, and where facts are not shown to bring the case within these
regardless of the presence or absence of: (1) competition between the owner of conditions, the relief of injunction should be refused.
the famous mark and other parties; or (2) likelihood of confusion, mistake or Same; Same; The prevailing rule is that the courts should avoid issuing a writ of
deception. Subject to the principles of equity, the owner of a famous mark is preliminary injunction that would in effect dispose of the main case without trial.
entitled to an injunction “against another person’s commercial use in commerce —We also believe that the issued injunctive writ, if allowed, would dispose of the
of a mark or trade name, if such use begins after the mark has become famous case on the merits as it would effectively enjoin the use of the “Paddocks”
and causes dilution of the distinctive quality of the mark.” This is intended to device without proof that there is basis for such action. The prevailing rule is
protect famous marks from subsequent uses that blur distinctiveness of the that courts should avoid issuing a writ of preliminary injunction that would in
mark or tarnish or disparage it. Based on the foregoing, to be eligible for effect dispose of the main case without trial. There would be a prejudgment of
protection from dilution, there has to be a finding that: (1) the trademark sought the main case and a reversal of the rule on the burden of proof since it would
to be protected is famous and distinctive; (2) the use by respondent of assume the proposition which petitioners are inceptively bound to prove.
“Paddocks and Design” began after the petitioners’ mark became famous; and Same; Same; Trademarks and Trade Names; Certiorari; The appellate court
(3) such subsequent use defames petitioners’ mark. In the case at bar, goes beyond the issue brought up on certiorari when it makes a statement and
petitioners have yet to establish whether “Dockers and Design” has acquired a touches on the merits of the infringement case which is yet to be decided by the
strong degree of distinctiveness and whether the other two elements are present trial court.—We believe the Court of Appeals overstepped its authority when it
for their cause to fall within the ambit of the invoked protection. The Trends declared that the “alleged similarity as to the two logos is hardly confusing to
MBL Survey Report which petitioners presented in a bid to establish that there the public.” The only issue brought before the Court of Appeals through
was confusing similarity between two marks is not sufficient proof of any dilution respondent’s Petition under Rule 65 of the Rules of Court involved the grave
that the trial court must enjoin. abuse of discretion allegedly committed by the trial court in granting the TRO
Actions; Injunction; Judgments; The trial court must state its own findings of and the writ of preliminary injunction. The appellate court in making such a
fact and cite particular law to justify grant of preliminary injunction.—The Court statement went beyond that issue and touched on the merits of the infringement
also finds that the trial court’s order granting the writ did not adequately detail case, which remains to be decided by the trial court. In our view, it was
the reasons for the grant, contrary to our ruling in University of the Philippines v. premature for the Court of Appeals to declare that there is no confusion
Hon. Catungal Jr., wherein we held that: The trial court must state its own between the two devices or logos. That matter remains to be decided on by the
findings of fact and cite particular law to justify grant of preliminary injunction. trial court.
Utmost care in this regard is demanded. The trial court in granting the injunctive Same; Same; Due Process; In applications for preliminary injunction, the
relief tersely ratiocinated that “the plaintiffs appear to be entitled to the relief requirement of hearing and prior notice before injunction may issue has been
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relaxed to the point that not all the petitions for preliminary investigation must of Quezon City, Branch 90.8 The Complaint was docketed as Civil Case No. Q-
undergo trial-type hearing, it being a hornbook doctrine that a formal or trial- 98-34252, entitled "Levi Strauss & Co. and Levi Strauss (Phils.), Inc. v. Clinton
type hearing is not at all times and in all instances essential to due process.—We Aparelle, Inc. and/or Olympian Garments, Inc."
have no contention against the procedure adopted by the trial court in resolving
the application for an injunctive writ and we believe that respondent was
accorded due process. Due process, in essence, is simply an opportunity to be The Complaint alleged that LS & Co., a foreign corporation duly organized and
heard. And in applications for preliminary injunction, the requirement of hearing existing under the laws of the State of Delaware, U.S.A., and engaged in the
and prior notice before injunction may issue has been relaxed to the point that apparel business, is the owner by prior adoption and use since 1986 of the
not all petitions for preliminary injunction must undergo a trial-type hearing, it internationally famous "Dockers and Design" trademark. This ownership is
being a hornbook doctrine that a formal or trial-type hearing is not at all times evidenced by its valid and existing registrations in various member countries of
and in all instances essential to due process. Due process simply means giving the Paris Convention. In the Philippines, it has a Certificate of Registration No.
every contending party the opportunity to be heard and the court to consider 46619 in the Principal Register for use of said trademark on pants, shirts,
every piece of evidence presented in their favor. Accordingly, this Court has in blouses, skirts, shorts, sweatshirts and jackets under Class 25.9
the case of Co v. Calimag, Jr., rejected a claim of denial of due process where
such claimant was given the opportunity to be heard, having submitted his The "Dockers and Design" trademark was first used in the Philippines in or about
counter-affidavit and memorandum in support of his position. May 1988, by LSPI, a domestic corporation engaged in the manufacture, sale
and distribution of various products bearing trademarks owned by LS & Co. To
PETITION for review on certiorari of the decision and resolution of the Court of date, LSPI continues to manufacture and sell Dockers Pants with the "Dockers
Appeals. and Design" trademark.10

The facts are stated in the opinion of the Court. LS & Co. and LSPI further alleged that they discovered the presence in the local
     Poblador, Bautista & Reyes for petitioner. market of jeans under the brand name "Paddocks" using a device which is
     Arnold V. Guerrero for private respondent. [Levi Strauss & Co. vs. Clinton substantially, if not exactly, similar to the "Dockers and Design" trademark
Apparelle, Inc., 470 SCRA 236(2005)] owned by and registered in the name of LS & Co., without its consent. Based on
their information and belief, they added, Clinton Apparelle manufactured and
DECISION continues to manufacture such "Paddocks" jeans and other apparel.

Tinga, J.: However, since LS & Co. and LSPI are unsure if both, or just one of impleaded
defendants are behind the manufacture and sale of the "Paddocks" jeans
Before us is a petition for review on certiorari1 under Rule 45 of the 1997 Rules complained of, they brought this suit under Section 13, Rule 311 of the 1997
of Civil Procedure filed by Levi Strauss & Co. (LS & Co.) and Levi Strauss Rules of Civil Procedure.12
(Philippines), Inc. (LSPI) assailing the Court of Appeals’ Decision2 and
Resolution3 respectively dated 21 December 1998 and 10 May 1999. The The Complaint contained a prayer that reads as follows:
questioned Decision granted respondent’s prayer for a writ of preliminary
injunction in its Petition4 and set aside the trial court’s orders dated 15 May 1. That upon the filing of this complaint, a temporary restraining order be
19985 and 4 June 19986 which respectively granted petitioners’ prayer for the immediately issued restraining defendants, their officers, employees, agents,
issuance of a temporary restraining order (TRO) and application for the issuance representatives, dealers, retailers or assigns from committing the acts herein
of a writ of preliminary injunction. complained of, and, specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to cease and desist
This case stemmed from the Complaint7 for Trademark Infringement, Injunction from manufacturing, distributing, selling, offering for sale, advertising, or
and Damages filed by petitioners LS & Co. and LSPI against respondent Clinton otherwise using denims, jeans or pants with the design herein complained of as
Apparelle, Inc.* (Clinton Aparelle) together with an alternative defendant, substantially, if not exactly similar, to plaintiffs’ "Dockers and Design" trademark.
Olympian Garments, Inc. (Olympian Garments), before the Regional Trial Court
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2. That after notice and hearing, and pending trial on the merits, a writ of WHEREFORE, let this Temporary Restraining Order be issued restraining the
preliminary injunction be issued enjoining defendants, their officers, employees, defendants, their officers, employees, agents, representatives, dealers, retailers
agents, dealers, retailers, or assigns from manufacturing, distributing, selling, or assigns from committing the acts complained of in the verified Complaint, and
offering for sale, advertising, jeans the design herein complained of as specifically, for the defendants, their officers, employees, agents,
substantially, if not exactly similar, to plaintiffs’ "Dockers and Design" trademark. representatives, dealers and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising or otherwise
3. That after trial on the merits, judgment be rendered as follows: using denims, jeans or pants with the design complained of in the verified
Complaint as substantially, if not exactly similar, to plaintiffs’ "Dockers and
a. Affirming and making permanent the writ of preliminary injunction; Design" trademark; until after the application/prayer for the issuance of a Writ of
Preliminary Injunction is heard/resolved, or until further orders from this Court.
b. Ordering that all infringing jeans in the possession of either or both
defendants as the evidence may warrant, their officers, employees, agents, The hearing on the application for the issuance of a Writ of Preliminary
retailers, dealers or assigns, be delivered to the Honorable Court of plaintiffs, Injunction as embodied in the verified Complaint is set on May 26, 1998
and be accordingly destroyed;13 (Tuesday) at 2:00 P.M. which setting is intransferable in character considering
that the lifetime of this Temporary Restraining Order is twenty (20) days from
Acting on the prayer for the issuance of a TRO, the trial court issued an Order14 date hereof.18
setting it for hearing on 5 May 1998. On said date, as respondent failed to
appear despite notice and the other defendant, Olympian Garments, had yet to On 4 June 1998, the trial court issued another Order19 granting the writ of
be notified, the hearing was re-scheduled on 14 May 1998.15 preliminary injunction, to wit:

On 14 May 1998, neither Clinton Apparelle nor Olympian Garments appeared. ORDER
Clinton Apparelle claimed that it was not notified of such hearing. Only Olympian
Garments allegedly had been issued with summons. Despite the absence of the This resolves the plaintiffs’ application or prayer for the issuance of a writ of
defendants, the hearing on the application for the issuance of a TRO preliminary injunction as embodied in the verified complaint in this case.
continued.16 Parenthetically, this Court earlier issued a temporary restraining order. (see
Order dated May 15, 1998; see also Order dated May 26, 1998)
The following day, the trial court issued an Order17 granting the TRO applied
for, the pertinent portions of which state: After a careful perusal of the contents of the pleadings and documents on record
insofar as they are pertinent to the issue under consideration, this Court finds
…Considering the absence of counsel/s for the defendant/s during the summary that at this point in time, the plaintiffs appear to be entitled to the relief prayed
hearing scheduled on May 5, 1998 and also during the re-scheduled summary for and this Court is of the considered belief and humble view that, without
hearing held on May 14, 1998 set for the purpose of determining whether or not necessarily delving on the merits, the paramount interest of justice will be better
a Temporary Restraining Order shall be issued, this Court allowed the counsel served if the status quo shall be maintained and that an injunction bond of
for the plaintiffs to present on May 14, 1998 their arguments/evidences in P2,500,000.00 appears to be in order. (see Sections 3 and 4, Rule 58, 1997
support of their application. After hearing the arguments presented by the Rules of Civil Procedure)
counsel for the plaintiffs during the summary hearing, this Court is of the
considered and humble view that grave injustice and irreparable injury to the IN VIEW OF THE FOREGOING, the plaintiffs’ prayer for the issuance of a writ of
plaintiffs would arise before the matter of whether or not the application for the preliminary injunction is GRANTED. Accordingly, upon the plaintiffs’ filing, within
issuance of a Writ of Preliminary Injunction can be heard, and that, in the ten (10) days from their receipt hereof, an injunction bond of P2,500,000.00
interest of justice, and in the meantime, a Temporary Restraining Order be executed to the defendants to the effect that the plaintiffs will pay all damages
issued. the defendants may sustain by reason of this injunction in case the Court should
finally decide that the plaintiffs are not entitled thereto, let a writ of preliminary
injunction issue enjoining or restraining the commission of the acts complained
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of in the verified Complaint in this case, and specifically, for the defendants, would like to emphasize, among other things, that the complaint states a cause
their officers, employees, agents, representatives, dealers and retailers or of action as provided under paragraphs 1 to 18 thereof.
assigns or persons acting in their behalf to cease and desist from manufacturing,
distributing, selling, offering for sale, advertising, or otherwise using, denims, On the second motion, the arguments raised in the plaintiffs’ aforecited
jeans or pants with the design complained of in the verified Complaint in this Consolidated Opposition likewise appear to be impressed with merit. Besides,
case, which is substantially, if not exactly, similar to plaintiffs’ "DOCKERS and there appears to be no strong and cogent reason to reconsider and set aside this
DESIGN" trademark or logo as covered by the Bureau of Patents, Trademarks Court’s Order dated June 4, 1998 as it has been shown so far that the trademark
and Technology Transfer Certificate of Registration No. 46619, until after this or logo of defendants is substantially, if not exactly, similar to plaintiffs’
case shall have been decided on the merits and/or until further orders from this "DOCKERS and DESIGN" trademark or logo as covered by BPTTT Certificate of
Court.20 Registration No. 46619 even as the BPTTT Certificate of Registration No. 49579
of Clinton Apparelle, Inc. is only for the mark or word "PADDOCKS" (see
The evidence considered by the trial court in granting injunctive relief were as Records, p. 377) In any event, this Court had issued an Order dated June 18,
follows: (1) a certified true copy of the certificate of trademark registration for 1998 for the issuance of the writ of preliminary injunction after the plaintiffs filed
"Dockers and Design"; (2) a pair of DOCKERS pants bearing the "Dockers and the required bond of P2,500,000.00.
Design" trademark; (3) a pair of "Paddocks" pants bearing respondent’s assailed
logo; (4) the Trends MBL Survey Report purportedly proving that there was IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss and Motion For
confusing similarity between two marks; (5) the affidavit of one Bernabe Alajar Reconsideration are both DENIED for lack of merit, and accordingly, this Court’s
which recounted petitioners’ prior adoption, use and registration of the "Dockers Order dated June 18, 1998 for the issuance of the writ of preliminary injunction
and Design" trademark; and (6) the affidavit of one Mercedes Abad of Trends is REITERATED so the writ of preliminary injunction could be implemented
MBL, Inc. which detailed the methodology and procedure used in their survey unless the implementation thereof is restrained by the Honorable Court of
and the results thereof.21 Appeals or Supreme Court.

Clinton Apparelle thereafter filed a Motion to Dismiss22 and a Motion for The writ of preliminary injunction was thereafter issued on 8 October 1998.27
Reconsideration23 of the Order granting the writ of preliminary injunction.
Meantime, the trial court issued an Order24 approving the bond filed by Thus, Clinton Apparelle filed with the Court of Appeals a Petition28 for certiorari,
petitioners. prohibition and mandamus with prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction, assailing the orders of the
On 22 June 1998, the trial court required25 the parties to file their "respective trial court dated 15 May 1998, 4 June 1998 and 2 October 1998.
citation of authorities/ jurisprudence/Supreme Court decisions" on whether or
not the trial court may issue the writ of preliminary injunction pending the On 20 October 1998, the Court of Appeals issued a Resolution29 requiring
resolution of the Motion for Reconsideration and the Motion to Dismiss filed by herein petitioners to file their comment on the Petition and at the same time
respondent. issued the prayed-for temporary restraining order.

On 2 October 1998, the trial court denied Clinton Apparelle’s Motion to Dismiss The appellate court rendered on 21 December 1998 its now assailed Decision
and Motion for Reconsideration in an Omnibus Order,26 the pertinent portions of granting Clinton Apparelle’s petition. The Court of Appeals held that the trial
which provide: court did not follow the procedure required by law for the issuance of a
temporary restraining order as Clinton Apparelle was not duly notified of the
After carefully going over the contents of the pleadings in relation to pertinent date of the summary hearing for its issuance. Thus, the Court of Appeals ruled
portions of the records, this Court is of the considered and humble view that: that the TRO had been improperly issued.30

On the first motion, the arguments raised in the plaintiffs’ aforecited The Court of Appeals also held that the issuance of the writ of preliminary
Consolidated Opposition appears to be meritorious. Be that as it may, this Court injunction is questionable. In its opinion, herein petitioners failed to sufficiently
establish its material and substantial right to have the writ issued. Secondly, the
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Court of Appeals observed that the survey presented by petitioners to support Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an
their contentions was commissioned by petitioners. The Court of Appeals order granted at any stage of an action prior to the judgment or final order
remarked that affidavits taken ex-parte are generally considered to be inferior to requiring a party or a court, agency or a person to refrain from a particular act
testimony given in open court. The appellate court also considered that the or acts. Injunction is accepted as the strong arm of equity or a transcendent
injury petitioners have suffered or are currently suffering may be compensated remedy to be used cautiously as it affects the respective rights of the parties,
in terms of monetary consideration, if after trial, a final judgment shall be and only upon full conviction on the part of the court of its extreme necessity.
rendered in their favor.31 An extraordinary remedy, injunction is designed to preserve or maintain the
status quo of things and is generally availed of to prevent actual or threatened
In addition, the Court of Appeals strongly believed that the implementation of acts until the merits of the case can be heard.34 It may be resorted to only by a
the questioned writ would effectively shut down respondent’s business, which in litigant for the preservation or protection of his rights or interests and for no
its opinion should not be sanctioned. The Court of Appeals thus set aside the other purpose during the pendency of the principal action.35 It is resorted to
orders of the trial court dated 15 May 1998 and 4 June 1998, respectively only when there is a pressing necessity to avoid injurious consequences, which
issuing a temporary restraining order and granting the issuance of a writ of cannot be remedied under any standard compensation. The resolution of an
preliminary injunction. application for a writ of preliminary injunction rests upon the existence of an
emergency or of a special recourse before the main case can be heard in due
With the denial of their Motion for Reconsideration,32 petitioners are now before course of proceedings.36
this Court seeking a review of the appellate court’s Decision and Resolution. LS
& Co. and LSPI claim that the Court of Appeals committed serious error in: (1) Section 3, Rule 58, of the Rules of Court enumerates the grounds for the
disregarding the well-defined limits of the writ of certiorari that questions on the issuance of a preliminary injunction:
sufficiency of evidence are not to be resolved in such a petition; (2) in holding
that there was no confusion between the two marks; (3) in ruling that the SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction
erosion of petitioners’ trademark is not protectable by injunction; (4) in ignoring may be granted when it is established:
the procedure previously agreed on by the parties and which was adopted by
the trial court; and (5) in declaring that the preliminary injunction issued by the (a) That the applicant is entitled to the relief demanded, and the whole or part
trial court will lead to the closure of respondent’s business. of such relief consists in restraining the commission or continuance of the act or
acts complained of, or in requiring the performance of an act or acts, either for a
In its Comment,33 Clinton Apparelle maintains that only questions of law may be limited period or perpetually;
raised in an appeal by certiorari under Rule 45 of the Rules of Court. It asserts
that the question of whether the Court of Appeals erred in: (1) disregarding the (b) That the commission, continuance, or non-performance of the act or acts
survey evidence; (2) ruling that there was no confusion between the two marks; complained of during the litigation would probably work injustice to the
and (c) finding that the erosion of petitioners’ trademark may not be protected applicant; or
by injunction, are issues not within the ambit of a petition for review on
certiorari under Rule 45. Clinton Apparelle also contends that the Court of (c) That a party, court, agency or a person is doing, threatening, or is
Appeals acted correctly when it overturned the writ of preliminary injunction attempting to do, or is procuring or suffering to be done, some act or acts
issued by the trial court. It believes that the issued writ in effect disturbed the probably in violation of the rights of the applicant respecting the subject of the
status quo and disposed of the main case without trial. action or proceeding, and tending to render the judgment ineffectual.

There is no merit in the petition. Under the cited provision, a clear and positive right especially calling for judicial
protection must be shown. Injunction is not a remedy to protect or enforce
At issue is whether the issuance of the writ of preliminary injunction by the trial contingent, abstract, or future rights; it will not issue to protect a right not in
court was proper and whether the Court of Appeals erred in setting aside the esse and which may never arise, or to restrain an act which does not give rise to
orders of the trial court. a cause of action. There must exist an actual right.37 There must be a patent
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 41

showing by the complaint that there exists a right to be protected and that the differ in their word marks ("Dockers" and "Paddocks"), but again according to
acts against which the writ is to be directed are violative of said right.38 petitioners, they employ similar or identical logos. It could thus be said that
respondent only "appropriates" petitioners’ logo and not the word mark
There are generally two kinds of preliminary injunction: (1) a prohibitory "Dockers"; it uses only a portion of the registered trademark and not the whole.
injunction which commands a party to refrain from doing a particular act; and
(2) a mandatory injunction which commands the performance of some positive Given the single registration of the trademark "Dockers and Design" and
act to correct a wrong in the past.39 considering that respondent only uses the assailed device but a different word
mark, the right to prevent the latter from using the challenged "Paddocks"
The Court of Appeals did not err in reviewing proof adduced by petitioners to device is far from clear. Stated otherwise, it is not evident whether the single
support its application for the issuance of the writ. While the matter of the registration of the trademark "Dockers and Design" confers on the owner the
issuance of a writ of preliminary injunction is addressed to the sound discretion right to prevent the use of a fraction thereof in the course of trade. It is also
of the trial court, this discretion must be exercised based upon the grounds and unclear whether the use without the owner’s consent of a portion of a trademark
in the manner provided by law. The exercise of discretion by the trial court in registered in its entirety constitutes material or substantial invasion of the
injunctive matters is generally not interfered with save in cases of manifest owner’s right.
abuse.40 And to determine whether there was abuse of discretion, a scrutiny
must be made of the bases, if any, considered by the trial court in granting It is likewise not settled whether the wing-shaped logo, as opposed to the word
injunctive relief. Be it stressed that injunction is the strong arm of equity which mark, is the dominant or central feature of petitioners’ trademark—the feature
must be issued with great caution and deliberation, and only in cases of great that prevails or is retained in the minds of the public—an imitation of which
injury where there is no commensurate remedy in damages.41 creates the likelihood of deceiving the public and constitutes trademark
infringement.43 In sum, there are vital matters which have yet and may only be
In the present case, we find that there was scant justification for the issuance of established through a full-blown trial.
the writ of preliminary injunction.
From the above discussion, we find that petitioners’ right to injunctive relief has
Petitioners anchor their legal right to "Dockers and Design" trademark on the not been clearly and unmistakably demonstrated. The right has yet to be
Certificate of Registration issued in their favor by the Bureau of Patents, determined. Petitioners also failed to show proof that there is material and
Trademarks and Technology Transfer.* According to Section 138 of Republic Act substantial invasion of their right to warrant the issuance of an injunctive writ.
No. 8293,42 this Certificate of Registration is prima facie evidence of the validity Neither were petitioners able to show any urgent and permanent necessity for
of the registration, the registrant’s ownership of the mark and of the exclusive the writ to prevent serious damage.
right to use the same in connection with the goods or services and those that
are related thereto specified in the certificate. Section 147.1 of said law likewise Petitioners wish to impress upon the Court the urgent necessity for injunctive
grants the owner of the registered mark the exclusive right to prevent all third relief, urging that the erosion or dilution of their trademark is protectable. They
parties not having the owner’s consent from using in the course of trade assert that a trademark owner does not have to wait until the mark loses its
identical or similar signs for goods or services which are identical or similar to distinctiveness to obtain injunctive relief, and that the mere use by an infringer
those in respect of which the trademark is registered if such use results in a of a registered mark is already actionable even if he has not yet profited thereby
likelihood of confusion. or has damaged the trademark owner.

However, attention should be given to the fact that petitioners’ registered Trademark dilution is the lessening of the capacity of a famous mark to identify
trademark consists of two elements: (1) the word mark "Dockers" and (2) the and distinguish goods or services, regardless of the presence or absence of: (1)
wing-shaped design or logo. Notably, there is only one registration for both competition between the owner of the famous mark and other parties; or (2)
features of the trademark giving the impression that the two should be likelihood of confusion, mistake or deception. Subject to the principles of equity,
considered as a single unit. Clinton Apparelle’s trademark, on the other hand, the owner of a famous mark is entitled to an injunction "against another
uses the "Paddocks" word mark on top of a logo which according to petitioners person’s commercial use in commerce of a mark or trade name, if such use
is a slavish imitation of the "Dockers" design. The two trademarks apparently begins after the mark has become famous and causes dilution of the distinctive
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 42

quality of the mark." This is intended to protect famous marks from subsequent
uses that blur distinctiveness of the mark or tarnish or disparage it.44 We also believe that the issued injunctive writ, if allowed, would dispose of the
case on the merits as it would effectively enjoin the use of the "Paddocks"
Based on the foregoing, to be eligible for protection from dilution, there has to device without proof that there is basis for such action. The prevailing rule is
be a finding that: (1) the trademark sought to be protected is famous and that courts should avoid issuing a writ of preliminary injunction that would in
distinctive; (2) the use by respondent of "Paddocks and Design" began after the effect dispose of the main case without trial.50 There would be a prejudgment
petitioners’ mark became famous; and (3) such subsequent use defames of the main case and a reversal of the rule on the burden of proof since it would
petitioners’ mark. In the case at bar, petitioners have yet to establish whether assume the proposition which petitioners are inceptively bound to prove.51
"Dockers and Design" has acquired a strong degree of distinctiveness and
whether the other two elements are present for their cause to fall within the Parenthetically, we find no flaw in the Court of Appeals’ disquisition on the
ambit of the invoked protection. The Trends MBL Survey Report which consequences of the issued injunction. An exercise of caution, we believe that
petitioners presented in a bid to establish that there was confusing similarity such reflection is necessary to weigh the alleged entitlement to the writ vis-à-vis
between two marks is not sufficient proof of any dilution that the trial court must its possible effects. The injunction issued in the instant case is of a serious
enjoin. nature as it tends to do more than to maintain the status quo. In fact, the
assailed injunction if sustained would bring about the result desired by
The Court also finds that the trial court’s order granting the writ did not petitioners without a trial on the merits.
adequately detail the reasons for the grant, contrary to our ruling in University
of the Philippines v. Hon. Catungal Jr., 45 wherein we held that: Then again, we believe the Court of Appeals overstepped its authority when it
declared that the "alleged similarity as to the two logos is hardly confusing to
The trial court must state its own findings of fact and cite particular law to justify the public." The only issue brought before the Court of Appeals through
grant of preliminary injunction. Utmost care in this regard is demanded.46 respondent’s Petition under Rule 65 of the Rules of Court involved the grave
abuse of discretion allegedly committed by the trial court in granting the TRO
The trial court in granting the injunctive relief tersely ratiocinated that "the and the writ of preliminary injunction. The appellate court in making such a
plaintiffs appear to be entitled to the relief prayed for and this Court is of the statement went beyond that issue and touched on the merits of the infringement
considered belief and humble view that, without necessarily delving on the case, which remains to be decided by the trial court. In our view, it was
merits, the paramount interest of justice will be better served if the status quo premature for the Court of Appeals to declare that there is no confusion
shall be maintained." Clearly, this statement falls short of the requirement laid between the two devices or logos. That matter remains to be decided on by the
down by the above-quoted case. Similarly, in Developers Group of Companies, trial court.
Inc. v. Court of Appeals,47 we held that it was "not enough" for the trial court,
in its order granting the writ, to simply say that it appeared "after hearing that Finally, we have no contention against the procedure adopted by the trial court
plaintiff is entitled to the relief prayed for." in resolving the application for an injunctive writ and we believe that respondent
was accorded due process. Due process, in essence, is simply an opportunity to
In addition, we agree with the Court of Appeals in its holding that the damages be heard. And in applications for preliminary injunction, the requirement of
the petitioners had suffered or continue to suffer may be compensated in terms hearing and prior notice before injunction may issue has been relaxed to the
of monetary consideration. As held in Government Service Insurance System v. point that not all petitions for preliminary injunction must undergo a trial-type
Florendo:48 hearing, it being a hornbook doctrine that a formal or trial-type hearing is not at
all times and in all instances essential to due process. Due process simply means
…a writ of injunction should never have been issued when an action for giving every contending party the opportunity to be heard and the court to
damages would adequately compensate the injuries caused. The very foundation consider every piece of evidence presented in their favor. Accordingly, this Court
of the jurisdiction to issue the writ of injunction rests in the probability of has in the case of Co v. Calimag, Jr.,52 rejected a claim of denial of due process
irreparable injury, inadequacy of pecuniary estimation and the prevention of the where such claimant was given the opportunity to be heard, having submitted
multiplicity of suits, and where facts are not shown to bring the case within his counter-affidavit and memorandum in support of his position.53
these conditions, the relief of injunction should be refused.49
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After a careful consideration of the facts and arguments of the parties, the Court
finds that petitioners did not adequately prove their entitlement to the injunctive
writ. In the absence of proof of a legal right and the injury sustained by the
applicant, an order of the trial court granting the issuance of an injunctive writ
will be set aside for having been issued with grave abuse of discretion.54
Conformably, the Court of Appeals was correct in setting aside the assailed
orders of the trial court.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of

Appeals dated 21 December 1998 and its Resolution dated 10 May 1999 are
AFFIRMED. Costs against petitioners.

SO ORDERED.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 44

G.R. No. L-40163 June 19, 1982 the requirements thereof that (1) its trademark “Leviton” has been registered
with the Patent Office and (2) that it should show that the State of New York
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM, DOMINGO GO, and LIM grants to Philippine corporations the privilege to bring an action for unfair
KIAT, petitioners, competition in that state. Respondent Leviton has to comply with those
vs. requirements before it can be allowed to maintain an action for unfair
HON. SERAFIN SALVADOR, Judge, Court of First Instance of Rizal, competition (Atlantic Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc. 124 Phil.
Caloocan City, Branch XIV and LEVITON MANUFACTURING CO., INC., 463).
respondents. PETITION for certiorari and prohibition to review the order of the Court of First
Instance of Rizal, Caloocan City, Br. XIV. Salvador, J.
Corporation Law; Actions; Unfair Competition; Foreign Corporations; Failure of a
foreign corporation to allege essential facts under the Trademark Law regarding The facts are stated in the opinion of the Court. [Leviton Industries vs. Salvador,
its capacity to sue before Philippine courts is fatal to its cause; Case at bar.—All 114 SCRA 420(1982)]
that is alleged in private respondent’s complaint is that it is a foreign
corporation. Such bare averment not only fails to comply with the requirements ESCOLIN, J:
imposed by the aforesaid Section 21-A but violates as well the directive of
Section 4, Rule 8 of the Rules of Court that “facts showing the capacity of a Challenged in this petition for certiorari and prohibition is the order of the
party to sue or be sued or the authority of a party to sue or be sued in a respondent Judge Serafin Salvador in Civil Case No. C-2891 of the Court of First
representative capacity or the legal existence of an organized association of Instance of Rizal, sustaining the legal capacity of a foreign corporation to
persons that is made a party, must be averred.” In the case at bar, private maintain a suit for unfair competition under Section 21-A of Republic Act No.
respondent has chosen to anchor its action under the Trademark Law of the 166, as amended, otherwise known as the Trademark Law.
Philippines, a law which, as pointed out, explicitly sets down the conditions
precedent for the successful prosecution thereof. It is therefore incumbent upon On April 17, 1973, private respondent Leviton Manufacturing Co., Inc. filed a
private respondent to comply with these requirements or aver its exemption complaint for unfair competition against petitioners Leviton Industries, Nena de
therefrom, if such be the case. It may be that private respondent has the right la Cruz Lim, Domingo Go and Lim Kiat before the Court of First Instance of Rizal,
to sue before Philippine courts, but our rules on pleadings require that the Branch XXXIII, presided by respondent Judge Serafin Salvador. The complaint
necessary qualifying circumstances which clothe it with such right be substantially alleges that plaintiff is a foreign corporation organized and existing
affirmatively pleaded. under the laws of the State of New York, United States of America, with office
located at 236 Greenpoint Avenue, Brooklyn City, State of New York, U.S.A.; that
Barredo, J.: defendant Leviton Industries is a partnership organized and existing under the
laws of the Philippines with principal office at 382 10th Avenue, Grace Park,
I concur in the above opinion and judgment as well as in the concurring opinion Caloocan City; while defendants Nena de la Cruz Lim, Domingo Go and Lim Kiat
of Justice Aquino. are the partners, with defendant Domingo Go acting as General Manager of
defendant Leviton Industries; that plaintiff, founded in 1906 by Isidor Leviton, is
Aquino, J., concurring: the largest manufacturer of electrical wiring devices in the United States under
the trademark Leviton, which various electrical wiring devices bearing the
Corporation Law; Actions; Complaint for unfair competition; Foreign trademark Leviton and trade name Leviton Manufacturing Co., Inc. had been
Corporations; Foreign corporation cannot sue in Philippine courts under Sec. 21- exported to the Philippines since 1954; that due to the superior quality and
A of the Trademark Law unless it complies with the requirements under said widespread use of its products by the public, the same are well known to Filipino
law; A party is bound by allegations in its complaint.—Respondent Leviton consumers under the trade name Leviton Manufacturing Co., Inc. and trademark
Manufacturing Co., Inc. alleged in paragraph 2 of its complaint for unfair Leviton; that long subsequent to the use of plaintiff's trademark and trade name
competition that its action “is being filed under the provisions of section 21-A of in the Philippines, defendants began manufacturing and selling electrical ballast,
Republic Act” No. 166, as amended, Respondent is bound by that allegation in fuse and oval buzzer under the trademark Leviton and trade name Leviton
its complaint. It cannot sue under Section 21-A because it has not complied with Industries Co.; that Domingo Go, partner and general manager of defendant
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 45

partnership, had registered with the Philippine Patent Office the trademarks defendant's rejoinder, after which respondent judge issued the questioned order
Leviton Label and Leviton with respect to ballast and fuse under Certificate of 3 denying the motion, thus:
Registration Nos. SR-1132 and 15517, respectively, which registration was
contrary to paragraphs (d) and (e) of Section 4 of RA 166, as amended, and Acting on the Urgent Supplemental Motion to Dismiss, dated July 2, 1974, filed
violative of plaintiff's right over the trademark Leviton; that defendants not only by counsels for the defendants, as well as the oppositions thereto, the Court
used the trademark Leviton but likewise copied the design used by plaintiff in after a careful consideration of the reasons adduced for and against said motion,
distinguishing its trademark; and that the use thereof by defendants of its is of the opinion that the same should be, as it is hereby DENIED.
products would cause confusion in the minds of the consumers and likely to
deceive them as to the source of origin, thereby enabling defendants to pass off SO ORDERED.
their products as those of plaintiff's. Invoking the provisions of Section 21-A of
Republic Act No. 166, plaintiff prayed for damages. It also sought the issuance The motion for reconsideration having likewise been denied, defendants
of a writ of injunction to prohibit defendants from using the trade name Leviton instituted the instant petition for certiorari and prohibition, charging respondent
Industries, Co. and the trademark Leviton. judge with grave abuse of discretion in denying their motion to dismiss.

Defendants moved to dismiss the complaint for failure to state a cause of action, We agree with petitioners that respondent Leviton Marketing Co., Inc. had failed
drawing attention to the plaintiff's failure to allege therein its capacity to sue to allege the essential facts bearing upon its capacity to sue before Philippine
under Section 21-A of Republic Act No. 166, as amended. After the filing of the courts. Private respondent's action is squarely founded on Section 21-A of
plaintiff's opposition and the defendant's reply, the respondent judge denied the Republic Act No. 166, as amended, which we quote:
motion on the ground that the same did not appear to be indubitable. On
September 21, 1973, defendants filed their answer, reiterating the ground Sec. 21-A. Any foreign corporation or juristic person to which a mark or
supporting their motion to dismiss. Thereafter, defendants served upon plaintiff tradename has been registered or assigned under this Act may bring an action
a request for admission under Rule 26 of the Rules of Court, of the following hereunder for infringement, for unfair competition, or false designation of origin
matters of fact, to wit: and false description, whether or not it has been licensed to do business in the
Philippines under Act numbered Fourteen Hundred and Fifty-Nine, as amended,
(1) That the plaintiff is not actually manufacturing, selling and/or otherwise known as the Corporation Law, at the time it brings the complaint;
distributing ballasts generally used in flourescent lighting; Provided, That the country of which the said foreign corporation or juristic
person is a citizen, or in which it is domiciled, by treaty, convention or law,
(2) That plaintiff has no registered trademark or trade name in the grants a similar privilege to corporate or juristic persons of the Philippines. (As
Philippine Patent Office of any of its products; and amended by R.A. No. 638)

(3) That plaintiff has no license to do business in the Philippines under and Undoubtedly, the foregoing section grants to a foreign corporation, whether or
by virtue of the provision of Act No. 1459, better known as the Philippine not licensed to do business in the Philippines, the right to seek redress for unfair
Corporation Law, at the time it filed the complaint. 1 competition before Philippine courts. But the said law is not without
qualifications. Its literal tenor indicates as a condition sine qua non the
Complying with the said request, plaintiff admitted: registration of the trade mark of the suing foreign corporation with the Philippine
Patent Office or, in the least, that it be an asignee of such registered trademark.
That it does not manufacture ballasts; that it has not registered its trademark in The said section further requires that the country, of which the plaintiff foreign
the Philippine Patent Office, but has filed with the same office an application of corporation or juristic person is a citizen or domicilliary, grants to Filipino
its trade mark on April 16, 1971; and that it has no license to do business in the corporations or juristic entities the same reciprocal treatment, either thru treaty,
Philippines. 2 convention or law,

On the basis of these admissions, defendants filed an Urgent Supplemental All that is alleged in private respondent's complaint is that it is a foreign
Motion to Dismiss. This was followed by the plaintiff's opposition, and the corporation. Such bare averment not only fails to comply with the requirements
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 46

imposed by the aforesaid Section 21-A but violates as well the directive of Concepcion Jr., J., is on leave.
Section 4, Rule 8 of the Rules of Court that "facts showing the capacity of a
party to sue or be sued or the authority of a party to sue or be sued in a
representative capacity or the legal existence of an organized association of
persons that is made a party, must be averred "

In the case at bar, private respondent has chosen to anchor its action under the
Trademark Law of the Philippines, a law which, as pointed out, explicitly sets
down the conditions precedent for the successful prosecution thereof. It is
therefore incumbent upon private respondent to comply with these requirements
or aver its exemption therefrom, if such be the case. It may be that private
respondent has the right to sue before Philippine courts, but our rules on
pleadings require that the necessary qualifying circumstances which clothe it
with such right be affirmatively pleaded. And the reason therefor, as enunciated
in "Atlantic Mutual Insurance Co., et al. versus Cebu Stevedoring Co., Inc." 4 is
that —

these are matters peculiarly within the knowledge of appellants alone, and it
would be unfair to impose upon appellees the burden of asserting and proving
the contrary. It is enough that foreign corporations are allowed by law to seek
redress in our courts under certain conditions: the interpretation of the law
should not go so far as to include, in effect, an inference that those conditions
had been met from the mere fact that the party sued is a foreign corporation.

It was indeed in the light of this and other considerations that this Court has
seen fit to amend the former rule by requiring in the revised rules (Section 4,
Rule 8) that "facts showing the capacity of a party to sue or be sued or the
authority of a party to sue or be sued in a representative capacity or the legal
existence of an organized association of persons that is made a party, must be
averred,

IN VIEW OF THE FOREGOING, the instant petition is hereby granted and,

accordingly, the order of the respondent judge dated September 27, 1974
denying petitioner's motion to dismiss is hereby set aside. The Court of First
Instance of Rizal (Caloocan City), the court of origin, is hereby restrained from
conducting further proceedings in Civil Case No. C-2891, except to dismiss the
same. No costs.

SO ORDERED.

Guerrero, Abad Santos and De Castro, JJ., concur.

 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 47

G.R. No. 75067 February 26, 1988 petitioner submits that the relief prayed for in its civil action is different from the
relief sought in the Inter Partes cases. More important, however, is the fact that
PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner for lis pendens to be a valid ground for the dismissal of a case, the other case
vs. pending between the same parties and having the same cause must be a court
THE INTERMEDIATE APPELLATE COURT and MIL-ORO action.
MANUFACTURING CORPORATION, respondents.
PETITION for certiorari to review the decision of the Court of Appeals.
Corporation Law; Trademarks and Tradenames; Action; A foreign corporation
not doing business in the Philippines needs no license to site before Philippine The facts are stated in the opinion of the Court. [Puma Sportschuhfabriken
courts for infringement of trademark and unfair competition.—In the leading Rudolf Dassler, K.G. vs. Intermediate Appellate Court, 158 SCRA 233(1988)]
case of La Chemise Lacoste, S.A. v. Fernandez, (129 SCRA 373), we ruled: "But
even assuming the truth of the private respondent's allegation that the petitioner GUTIERREZ, JR., J.:
failed to allege material facts in its petition relative to capacity to sue, the
petitioner may still maintain the present suit against respondent Hemandas. As This is a petition for review by way of certiorari of the Court of Appeals' decision
early as 1927, this Court was, and it still is, of the view that a foreign which reversed the order of the Regional Trial Court and dismissed the civil case
corporation not doing business in the Philippines needs no license to sue before filed by the petitioner on the grounds of litis pendentia and lack of legal capacity
Philippine courts for infringement of trademark and unfair competition, Thus, in to sue.
Western Equipment and Supply Co. v. Reyes (51 Phil. 115), this Court held that
a foreign corporation which has never done any business in the Philippines and On July 25, 1985, the petitioner, a foreign corporation duly organized and
which is unlicensed and unregistered to do business here, but is widely and existing under the laws of the Federal Republic of Germany and the
favorably known in the Philippines through the use therein of its products manufacturer and producer of "PUMA PRODUCTS," filed a complaint for
bearing its corporate and tradename, has a legal right to maintain an action in infringement of patent or trademark with a prayer for the issuance of a writ of
the Philippines to restrain the residents and inhabitants thereof from organizing preliminary injunction against the private respondent before the Regional Trial
a corporation therein bearing the same name as the foreign corporation, when it Court of Makati.
appears that they have personal knowledge of the existence of such a foreign
corporation, and it is apparent that the purpose of the proposed domestic Prior to the filing of the said civil suit, three cases were pending before the
corporation is to deal and trade in the same goods as those of the foreign Philippine Patent Office, namely:
corporation."
Same; Same; Adherence to the Paris Convention re-affirmed.—In the case of Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v. MIL-ORO
Converse Rubber Corporation v. Universal Rubber Products, Inc. (147 SCRA MANUFACTURING CORPORATION, respondent-applicant which is an opposition
165). we likewise re-affirmed our adherence to the Paris Convention: "The ruling to the registration of petitioner's trademark 'PUMA and DEVICE' in the
in the aforecited case is in consonance with the Convention of the Union of Paris PRINCIPAL REGISTER;
for the Protection of Industrial Property to which the Philippines became a party
on September 27, 1965. Article 8 thereof provides that 'a trade name Inter Partes Case No. 1675 similarly entitled, 'PUMA SPORTSCHUHFABRIKEN
[corporation name] shall be protected in all the countries of the Union without RUDOLF DASSLER, K.G., petitioner, versus MIL-ORO MANUFACTURING
the obligation of filing or registration, whether or not it forms part of the CORPORATION, respondent-registrant,' which is a case for the cancellation of
trademark. the trademark registration of the petitioner; and
Same; Same; Same; Object of the convention.—"The object of the Convention is
to accord a national of a member nation extensive protection 'against Inter Partes Case No. 1945 also between the same parties this time the
infringement and other types of unfair competition' [Vanity Fair Mills, Inc. v. T. petitioner praying for the cancellation of private respondent's Certificate of
Eaton Co., 234 F. 2d 633]." (at p. 165) Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51 -52, Rollo)
Civil Procedure; Action; Lis Pendens; Other case pending must be a court action.
—Anent the issue of lis pendens as a ground for a motion to dismiss, the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 48

On July 31, 1985, the trial court issued a temporary restraining order, restraining forbids the re-opening of a matter once judicially determined by competent
the private respondent and the Director of Patents from using the trademark authority applies as well to judicial acts of public executive and administrative
"PUMA' or any reproduction, counterfeit copy or colorable imitation thereof, and officers and boards acting within their jurisdiction as to the judgments of Courts
to withdraw from the market all products bearing the same trademark. having general judicial powers (Brilliantes vs. Castro, supra). It may be recalled
that the resolution and determination of the issue on ownership are both within
On August 9, 1985, the private respondent filed a motion to dismiss on the the jurisdiction of the Director of Patents and the Regional Trial Court (Sec 25,
grounds that the petitioners' complaint states no cause of action, petitioner has RA 166). It would thus be confusing for two (2) different forums to hear the
no legal personality to sue, and litis pendentia. same case and resolve a main and determinative issue with both forums risking
the possibility of arriving at different conclusions. In the construction of laws and
On August 19, 1985, the trial court denied the motion to dismiss and at the statutes regarding jurisdiction, one must interpret them in a complementary
same time granted the petitioner's application for a writ of injunction. The manner for it is presumed that the legislature does not intend any absurdity in
private respondents appealed to the Court of Appeals. the laws it makes (Statutory Construction, Martin, p. 133). Ms is precisely the
reason why both decisions of the Director of Patents and Regional Trial Court
On June 23, 1986, the Court of Appeals reversed the order of the trial court and are appealable to the Intermediate Appellate Court (Sec. 9, BP 129), as both are
ordered the respondent judge to dismiss the civil case filed by the petitioner. co-equal in rank regarding the cases that may fall within their jurisdiction.

In reversing the order of the trial court, the Court of Appeals ruled that the The record reveals that on March 31, 1986, the Philippine Patent Office rendered
requisites of lis pendens as ground for the motion to dismiss have been met. It a decision in Inter Partes Cases Nos. 1259 and 1675 whereby it concluded that
said: petitioner is the prior and actual adaptor of the trademark 'PUMA and DEVICE
used on sports socks and belts, and that MIL-ORO CORPORATION is the rightful
Obviously, the parties are Identical. They are the same protagonists. As to the owner thereof. ... (pp. 6-7, CA — decision, pp. 51-52, Rollo)
second requisite, which is Identity of rights and reliefs prayed for, both sides
maintain that they are the rightful owners of the trademark "PUMA" for socks With regard to the petitioner's legal capacity to sue, the Court of Appeals
and belts such that both parties seek the cancellation of the trademark of the likewise held that it had no such capacity because it failed to allege reciprocity in
other (see prayer in private respondent's complaint, pp, 54-55, Rollo, Annex "A" its complaint:
to the Petition). Inevitably, in either the lower court or in the Patent Office, there
is a need to resolve the issue as to who is the rightful owner of the TRADEMARK As to private respondent's having no legal personality to sue, the record
'PUMA' for socks and belts.After all,the right to register a trademark must be discloses that private respondent was suing under Sec. 21-A of Republic Act No.
based on ownership thereof (Operators Inc. v. Director of Patents, L-17910, Oct. 166, as amended (p. 50, Annex "A", Petition). This is the exception to the
29,1965,15 SCRA 147). Ownership of the trademark is an essential requisite to general rule that a foreign corporation doing business in the Philippines must
be proved by the applicant either in a cancellation case or in a suit for secure a license to do business before said foreign corporation could maintain a
infringement of trademark. The relief prayed for by the parties in Inter Partes court or administrative suit (Sec. 133, Corporation Code, in relation to Sec. 21-A,
Cases Nos. 1259, 1675 and 1945 and Civil Case No. 11189 before respondent RA 638, as amended). However, there are some conditions which must be met
court seek for the cancellation of usurper's trademark, and the right of the legal before that exception could be made to apply, namely: (a) the trademark of the
owner to have exclusive use of said trademark. From the totality of the obtaining suing corporation must be registered in the Philippines, or that it be the assignee
circumstances, the rights of the respective parties are dependent upon the thereof: and (b) that there exists a reciprocal treatment to Philippine
resolution of a single issue, that is, the rightful ownership of the trademark in Corporations either by law or convention by the country of origin of the foreign
question. The second requisite needed to justify a motion to dismiss based on lis corporation (Sec. 21-A Trademark Law). Petitioner recognizes that private
pendens is present. respondent is the holder of several certificates of registration, otherwise, the
former would not have instituted cancellation proceedings in the Patent's Office.
As to the third requisite, the decisions and orders of administrative agencies Petitioner actually zeroes on the second requisite provided by Section 21-A of
rendered pursuant to their quasi-judicial authority have upon their finality the the Trademark Law which is the private respondent's failure to allege reciprocity
character of res judicata (Brilliantes v. Castro, 99 Phil. 497). The rule which in the complaint. ...
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 49

courts are bound to take judicial notice of such treaty, and, consequently, this
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further fact need not be averred in the complaint.
ruled:
We agree.
Failure to allege reciprocity, it being an essential fact under the trademark law
regarding its capacity to sue before the Philippine courts, is fatal to the foreign In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373),
corporations' cause. The Concurring Opinion of Chief Justice Aquino on the same we ruled:
case is more emphatic when he said:
But even assuming the truth of the private respondents allegation that the
Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of its complaint for petitioner failed to allege material facto in its petition relative to capacity to sue,
unfair competition that its action 'is being filed under the provisions of Section the petitioner may still maintain the present suit against respondent Hernandes.
21-A of Republic Act No. 166, as amended.' Respondent is bound by the As early as 1927, this Court was, and it still is, of the view that a foreign
allegation in its complaint. It cannot sue under Section 21-A because it has not corporation not doing business in the Philippines needs no license to sue before
complied with the requirements hereof that (1) its trademark Leviton has been Philippine courts for infringement of trademark and unfair competition. Thus, in
registered with the Patent Office and (2) that it should show that the State of Western Equipment and Supply Co. v. Reyes (51 Phil. 11 5), this Court held that
New York grants to Philippine Corporations the privilege to bring an action for a foreign corporation which has never done any business in the Philippines and
unfair competition in that state. Respondent 'Leviton has to comply with those which is unlicensed and unregistered to do business here, but is widely and
requirements before it can be allowed to maintain an action for unfair favorably known in the Philippines through the use therein of its products
competition. (p. 9, CA — decision). (p. 55, Rollo). bearing its corporate and tradename, has a legal right to maintain an action in
the Philippines to restrain the residents and inhabitants thereof from organizing
The Court of Appeals further ruled that in issuing the writ of preliminary a corporation therein bearing the same name as the foreign corporation, when it
injunction, the trial court committed grave abuse of discretion because it appears that they have personal knowledge of the existence of such a foreign
deprived the private respondent of its day in court as the latter was not given corporation, and it is apparent that the purpose of the proposed domestic
the chance to present its counter-evidence. corporation is to deal and trade in the same goods as those of the foreign
corporation.
In this petition for review, the petitioner contends that the Court of appeals
erred in holding that: (1) it had no legal capacity to sue; (2) the doctrine of lis Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton,
pendens is applicable as a ground for dismissing the case and (3) the writ of Co. (234 F. 2d 633), this Court further said:
injunction was improperly issued.
By the same token, the petitioner should be given the same treatment in the
Petitioner maintains that it has substantially complied with the requirements of Philippines as we make available to our own citizens. We are obligated to assure
Section 21-A of Republic Act R.A. No. 166, as amended. According to the to nationals of 'countries of the Union' an effective protection against unfair
petitioner, its complaint specifically alleged that it is not doing business in the competition in the same way that they are obligated to similarly protect Filipino
Philippines and is suing under the said Repulbic Act; that Section 21-A thereof citizens and firms.
provides that "the country of which the said corporation or juristic person is a
citizen, or in which it is domiciled, by treaty, convention or law, grants a similar Pursuant to this obligation, the Ministry of Trade on November 20,1980 issued a
privilege to corporate or juristic persons of the Philippines" but does not memorandum addressed to the Director of the Patents Office directing the latter
mandatorily require that such reciprocity between the Federal Republic of --
Germany and the Philippines be pleaded; that such reciprocity arrangement is
embodied in and supplied by the Union Convention for the Protection of xxx xxx xxx
Industrial Property Paris Convention) to which both the Philippines and Federal
Republic of Germany are signatories and that since the Paris 'Convention is a
treaty which, pursuant to our Constitution, forms part of the law of the land, our
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 50

... [T]o reject all pending applications for Philippine registration of signature and The mandate of the aforementioned Convention finds implementation in Section
other world famous trademarks by applicants other than its original owners or 37 of RA No. 166, otherwise known as the trademark Law:
users.
Rights of Foreign Registrants. — Persons who are nationals of, domiciled in, or
The conflicting claims over internationally known trademarks involve such name have a bona fide or effective business or commercial establishment in any
brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, foreign country, which is a party to an international convention or treaty relating
Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, to marks or tradenames on the represssion of unfair competition to which the
Geoffrey Beene, Lanvin and Ted Lapidus. Philippines may be party, shall be entitled to the benefits and subject to the
provisions of this Act ...
It is further directed that, in cases where warranted, Philippine registrants of
such trademarks should be asked to surrender their certificates of registration, if Tradenames of persons described in the first paragraph of this section shall be
any, to avoid suits for damages and other legal action by the trademarks' foreign protected without the obligation of filing or registration whether or not they form
or local owners or original users. part of marks.

The memorandum is a clear manifestation of our avowed adherence to a policy We, therefore, hold that the petitioner had the legal capacity to file the action
of cooperation and amity with an nations. It is not, as wrongly alleged by the below.
private respondent, a personal policy of Minister Luis Villafuerte which expires
once he leaves the Ministry of trade. For a treaty or convention is not a mere Anent the issue of lis pendens as a ground for a motion to dismiss, the petitioner
moral obligation to be enforced or not at the whims of an incumbent head of a submits that the relief prayed for in its civil action is different from the relief
Ministry. It creates a legally binding obligation on the parties founded on the sought in the Inter Partes cases. More important, however, is the fact that for lis
generally accepted principle of international law of pacta sunt servanda which pendens to be a valid ground for the dismissal of a case, the other case pending
has been adopted as part of the law of our land. (Constitution, Art. II, Sec. 3). between the same parties and having the same cause must be a court action. As
The memorandum reminds the Director of Patents of his legal duty to obey both we have held in Solancho v. Ramos (19 SCRA 848):
law and treaty. It must also be obeyed. (at pp. 389-390, La Chemise Lacoste,
S.A. v. Fernandez, supra). As noted above, the defendants contend that the pendency of an administrative
between themselves and the plaintiff before the Bureau of Lands is a sufficient
In the case of of Cerverse Rubber Corporation V. Universal Rubber Products, ground to dismiss the action. On the other hand, the plaintiff, believing that this
Inc. (174 SCRA 165), we likewise re-aafirmed our adherence to the Paris ground as interposed by the defendants is a sufficient ground for the dismissal
Convention: of his complaint, filed a motion to withdraw his free patent application No.
16649.
The ruling in the aforecited case is in consonance with the Convention of
Converse Rubber Corporation v. Universal Rubber Products, Inc. (I 47 SCRA This is not what is contemplated under the law because under section 1(d), Rule
165), we likewise re-affirmed our adherence to the Paris Convention: the Union 16 (formerly Rule 8) of the Rules of Court, one of the grounds for the dismissal
of Paris for the Protection of Industrial Property to which the Philippines became of an action is that "there is another action pending between the same parties
a party on September 27, 1965. Article 8 thereof provides that 'a trade name for the same cause." Note that the Rule uses the phrase another action. This
[corporation name] shall be protected in all the countries of the Union without phrase should be construed in line with Section 1 of Rule 2, which defines the
the obligation of filing or registration, whether or not it forms part of the word action, thus--
trademark.'
Action means an ordinary suit in a court of justice by which one party prosecutes
The object of the Convention is to accord a national of a member nation another for the enforcement or protection of alright, or the prevention or redress
extensive protection 'against infringement and other types of unfair competition of a wrong. Every other remedy is a special proceeding.
[Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F. 2d 633]." (at p. 165)
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 51

It is,therefore,very clear that the Bureau of Land is not covered under the
aforementioned provisions of the Rules of Court. (at p. 851) SO ORDERED.

Thus, the Court of Appeals likewise erred in holding that the requisites of lis Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.
pendens were present so as to justify the dismissal of the case below.

As regards the propriety of the issuance of the writ of preliminary injunuction,

the records show that herein private respondent was given the opportunity to
present its counter-evidence against the issuance thereof but it intentionally
refused to do so to be consistent with its theory that the civil case should be
dismissed in the first place.

Considering the fact that "PUMA" is an internationally known brand name, it is

pertinent to reiterate the directive to lower courts, which equally applies to
administrative agencies, found in La Chemise Lacoste, S.A. v. Fernandez, supra):

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

WHEREFORE, the appealed decision of the Court of Appeals dated June 23,
1986 is REVERSED and SET ASIDE and the order of the Regional Trial Court of
Makati is hereby Reinstated.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 52

G.R. No. L-18289 March 31, 1964 brassieres manufactured by respondent Maiden Form Brassiere Co., Inc.,
petitioner Andres Romero, interposed this appeal.
ANDRES ROMERO, petitioner,
vs. On February 12, 1957, respondent company, a foreign corporation, filed with
MAIDEN FORM BRASSIERE CO., INC., and THE DIRECTOR OF PATENTS, respondent Director of Patents an application for registration (pursuant to
respondents. Republic Act No. 166) of the trademark "Adagio" for the brassieres
manufactured by it. In its application, respondent company alleged that said
Alafriz Law Office for petitioner. trademark was first used by it in the United States on October 26, 1937, and in
Ross, Selph & Carrascoso for respondent Maiden Form Brassiere Co., the Philippines on August 31, 1946; that it had been continuously used by it in
Inc. trade in, or with the Philippines for over 10 years; that said trademark "is on the
Office of the Solicitor General and Tiburcio S. Evalle for respondent date of this application, actually used by respondent company on the following
Director of Patents. goods, classified according to the official classification of goods (Rule 82) -
Brassieres, Class 40"; and that said trademark is applied or affixed by
Trademarks; Registrability; "Adagio" as a musical term, not a common respondent to the goods by placing thereon a woven label on which the
descriptive name for brassieres.—The trademark "Adagio" is a musical term, trademark is shown.
which means slowly or in an easy manner, and when applied to brassieres is
used in an arbitrary (fanciful) sense, not being a common descriptive name of a Acting on said application, respondent Director, on August 13, 1957, approved
particular style of brassieres, and is therefore registrable. for publication in the Official Gazette said trademark of respondent company, in
Same; Same; Long continuous use of trademark does not render it descriptive of accordance with Section 7 of Republic Act No. 166 (Trademark Law), having
a product.—A company's long and continuous use of a trademark does not by found, inter alia, that said trademark is "a fanciful and arbitrary use of a foreign
itself render it merely descriptive of the product. word adopted by applicant as a trademark for its product; that it is neither a
Same; Same; Using trademark for one type of the product does not affect its surname nor a geographical term, nor any that comes within the purview of
validity as a trademark.—Where a product is usually of different types or styles Section 4 of Republic Act No. 166; and that the mark as used by respondent
and the manufacturer has used different trademarks for every type as shown by company convincingly shows that it identifies and distinguishes respondent
its labels, the mere fact that said manufacturer uses a trademark, like "Adagio", company's goods from others."
for one type or style, does not affect the validity of such word as a trademark.
Same; Abandonment; Temporary non-use occasioned by government On October 17, 1957, respondent Director issued to respondent company a
restrictions not deemed abandonment.—Temporary nonuse of a trademark certificate of registration of with, trademark "Adagio".
occasioned by government restrictions. not being permanent, intentional and
voluntary, does not affect the right to a trademark. On February 26, 1958, petitioner filed with respondent Director a petition for
Same; Foreign trademarks; May be availed of in the Philippines despite lack of cancellation of said trademark, on the grounds that it is a common descriptive
actual use only when the Philippines is a party to a trademark treaty.—Section name of an article or substance on which the patent has expired; that its
37 of Republic Act No. 166 can be availed of only where the Philippines is a registration was obtained fraudulently or contrary to the provisions of Section 4,
party to an international convention or treaty relating to trademarks, in which Chapter II of Republic Act No. 166; and that the application for its registration
case the trademark sought to be registered need not be in use in the Philippines. was not filed in accordance with the provisions of Section 37, Chapter XI of the
same Act. Petitioner also alleged that said trademark has not become distinctive
APPEAL from a decision of the Director of Patents. [Romero vs. Maiden Form of respondent company's goods or business; that it has been used by
Brassiere Co., Inc., 10 SCRA 556(1964)] respondent company to classify the goods (the brassieres) manufactured by it,
in the same manner as petitioner uses the same; that said trademark has been
BARRERA, J.: used by petitioner for almost 6 years; that it has become a common descriptive
name; and that it is not registered in accordance with the requirements of
From the decision of the Director of Patents (of January 17, 1961) dismissing his Section 37(a), Chapter XI of Republic Act No. 166.
petition for cancellation of the registration of the trademark "Adagio" for
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 53

Issues having been joined, the case was heard and, after hearing, respondent Winthrop Chemical Co. v. Blackman (268 NYS 653), it was held that widespread
Director (on January 17, 1961) rendered the decision above adverted to. dissemination does not justify the defendants in the use of the trademark.

Petitioner filed a motion for reconsideration of said decision, on the grounds that Veronal has been widely sold in this country by the plaintiff; over 5,250,000
(1) it is contrary to the evidence, and (2) it is contrary to law. Said motion was packages have been sold since 1919. This is a consequence of the long and
denied by respondent Director by resolution of March 7, 1961. continued use by the plaintiff of this trademark and is the result of its efforts to
inform the profession and the public of its product. This widespread
Hence, this appeal. dissemination does not justify the defendants in the use of this trademark. If this
argument were sound, then every time a plaintiff obtained the result of having
Appellant claims that the trademark "Adagio" has become a common descriptive the public purchase its article, that fact of itself would destroy a trademark.
name of a particular style of brassiere and is, therefore, unregistrable. It is Arbitrary trademarks cannot become generic in this way. Jacobs v. Beecham,
urged that said trademark had been used by local brassiere manufacturers since 221 U.S. 263, 31 S. Ct. 555, 55 L. Ed. 729; Coca-Cola Co. v. Koke Co. of
1948, without objection on the part of respondent company. American, 254 U.S. 143, 41 S. Ct. 113, 65 L. Ed. 189. (emphasis supplied.)

This claim is without basis in fact. The evidence shows that the trademark Appellant next contends that the trademark "Adagio at the time it was registered
"Adagio" is a musical term, which means slowly or in an easy manner, and was (in the Philippines) on October 17, 1957, had long been used by respondent
used as a trademark by the owners thereof (the Rosenthals of Maiden Form Co., company, only "to designate a particular style or quality of brassiere and,
New York) because they are musically inclined. Being a musical term, it is used therefore, is unregistrable as a trademark. In support of the contention, he
in an arbitrary (fanciful) sense as a trademark for brassieres manufactured by alleges that the sentence "Maidenform bras are packaged for your quick
respondent company. It also appears that respondent company has, likewise, shopping convenience. For other popular Maidenform styles writ for free style
adopted other musical terms such as "Etude" (Exh. W-2), "Chansonette" (Exh. booklet to: Maiden Form Brassiere Co., Inc 200 Madison Avenue, New York 16,
W-3), "Prelude" (Exh. W-4), "Over-ture" (Exh. W-6), and "Concerto" (Exh. V), to N.Y." printed on the package (Exh. W), shows that the trademark "Adagio" is
identify, as a trademark, the different styles or types of its brassieres. As used to designate a particular style or quality of brassiere. He also cites portions
respondent Director pointed out, "the fact that said mark is used also to of the testimonies of his witnesses Bautista and Barro, to the effect that said
designate a particular style of brassiere, does not affect its registrability as a trademark refers to the style of brassieres sold in the stores of which they are
trademark" (Kiekhaefer Corp. v. Willys-Overland Motors, Inc., 111 USPQ salesmen.
105).1äwphï1.ñët
This contention is untenable. Said sentence appearing on the package (Exh. W),
It is not true that respondent company did not object to the use of said standing alone, does not conclusively indicate that the trademark "Adagio" is
trademark by petitioner and other local brassiere manufacturers. The records merely a style of brassiere. The testimony of Mr. Schwartz, witness of
show that respondent company's agent, Mr. Schwartz, warned the Valleson respondent company, belies petitioner's claim:
Department Store to desist from the sale of the "Adagio" Royal Form brassieres
manufactured by petitioner (t.s.n., pp. 27-28, Oct. 7, 1958), and even placed an Q. There is a statement at the bottom of Exhibit W which reads, 'There is a
advertisement (Exhs. 3 & 4) in the local newspapers (Manila Daily Bulletin, Maidenform for every type of figure'. As you stated you are very familiar with
Manila Times, Fookien Times, and others) warning the public against unlawful these bras manufacture by Maidenform Brassiere Company, what are these
use of said trademark (t.s.n., p. 15, Aug. 17, 1959). The advertisement (Exh. U) types of figures this Exhibit W refer to?
in the Manila Times made by respondent company on February 9, 1958, was
brought to petitioner's attention (t.s.n., p. 24, Oct. 7, 1958), which must have A. This is a product sold primarily in the United States they have cold climate
prompted him to file this present petition for cancellation, on February 26, 1958. there, and a style to suit the climate and we have different here. This kind of bra
very seldom comes here. This type is very expensive and sold primarily in the
On the other hand, respondent company's long and continuous use of the United States. We do not sell it here; it is very expensive an import restrictions
trademark "Adagio" has not rendered it merely descriptive of the product. In do not allow our dollar allocations for such sort.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 54

As to the testimonies of Bautista and Barro, they are me conclusions of said This contention flows from a misconception of the application for registration of
witnesses. Note that when Bautista was asked why he considered the trademark trademark of respondent. As we see it, respondent's application was filed under
"Adagio" as a style, he replied that the brand "Adagio" is attached distinguish the provisions of Section 2 of Republic Act No. 166 as amended by Section 1 of
the style. He stated as follows: Republic Act 865 which reads as follows:

Q. You said that those bras mentioned by you such as Adagio, Prelude, Alloette, "SEC. 2. What are registrable — Trademarks, ... own by persons, corporations,
are styles, will you please tell us the reason why you said that those are styles? partnerships or associations domiciled ... in any foreign country may be
registered in accordance with the provisions of this Act: Provided, That said
A. You know his brand like Adagio, Alloette are just attached to the bras just to trademarks, trade-names, or service marks are actually in use in commerce and
distinguish the style: It is not the main brand. services not less than two months in the Philippines before the time the
applications for registration are filed: ..."
Barro, on the other hand, said that "Adagio" is a mark. She declared as follows:
Section 37 of Republic Act No. 166 can be availed of only where the Philippines
Q. You state that you used to sell brassieres in the store in which you work; is a party to an international convention or treaty relating to trademarks, in
when customers come to your store and ask for brassieres, what do they usually which the trade-mark sought to be registered need not be use in the Philippines.
ask from you? The applicability of Section 37 has been commented on by the Director of
Patents, in this wise:
A. Well, I tell you there are so many types and certain types of people ask for
certain brassiere. There are people who ask for Royal Form Adagio and there are Trademark rights in the Philippines, without actual use the trademark in this
others who ask for Duchess Ideal Form, and so many kinds of marks. country can, of course, be created artificially by means of a treaty or convention
with another country or countries. Section 37 of the present Philippine
Brassieres are usually of different types or styles, and appellee has used Trademark Law, Republic Act No. 166 (incorporated as Rule 82 in the Rules of
different trademarks for every type as shown by its labels, Exhibits W-2 (Etude), Practice for Registration of Trademarks) envisions the eventual entrance of the
W-3 (Chansonette), W-4 (Prelude), W-5 (Maidenette), and W-6, (Overture). The Philippines into such convention treaty. It is provided in said section that
mere fact that appellee uses "Adagio" for one type or style, does not affect the applications filed thereunder need not allege use in the Philippines of the trade
validity of such word as a trademark. In. the case of Kiekhaefer Corp. v. Willys- mark sought to be registered. The Philippines has, however not yet entered into
Overland Motors, 111 USPQ 105, it was held that the fact that the word any such treaty or convention and, until she does, actual use in the Philippines
"Hurricane" was used to designate only one model of automobile, did not affect of the trademark sought to be registered and allegation in the application of
the validity of that word as a trademark. In Minnesota Mining Co. V. Motloid Co., such fact, will be required in all applications for original or renewal registration
74 USPQ 235, the applicant sought to register the letters "MM" in diagonal submitted to the Philippine Patent Office. (Circular Release No. 8.)
relationship within a circle. Applicant admitted that this mark was used only for
its medium price and medium quality denture-base materials. The Assistant Appellant, likewise, contends that the registration the trademark in question was
Commissioner of Patents held: fraudulent or contrary Section 4 of Republic Act No. 166. There is no evidence to
show that the registration of the trademark "Adagio" was obtained fraudulently
It clearly appears, however, that the mark serves to indicate origin of applicant's by appellee. The evidence record shows, on the other hand, that the trademark
goods; and the fact that it is used on only one of several types or grades does "Adagio" was first exclusively in the Philippines by a appellee in the year 1932.
not affect its registrability as a trade mark. There being no evidence of use of the mark by others before 1932, or that
appellee abandoned use thereof, the registration of the mark was made in
Appellant also claims that respondent Director erred in registering the trademark accordance with the Trademark Law. Granting that appellant used the mark
in question, despite appellee's non-compliance with Section 37, paragraphs 1 when appellee stopped using it during the period of time that the Government
and 4 (a) of Republic Act No. 166. imposed restrictions on importation of respondent's brassiere bearing the
trademark, such temporary non-use did not affect the rights of appellee because
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 55

it was occasioned by government restrictions and was not permanent, restrictions on the name of liquor. (Nims Unfair Competition and Trade-Mark p.
intentional, and voluntary. 1269.)

To work an abandonment, the disuse must be permanent and not ephemeral; it IN VIEW OF ALL THE FOREGOING, we are of the opinion and so hold, that
must be intentional and voluntary, and not involuntary or even compulsory. respondent Director of Patents did not err in dismissing the present petition for
There must be a thorough-going discontinuance of any trade-mark use of the cancellation of the registered trademark of appellee company, and the decision
mark in question (Callman, Unfair Competition and Trademark, 2nd Ed., p. appealed from is therefore hereby affirmed, with costs against the appellant. So
1341). ordered.

The use of the trademark by other manufacturers did not indicate an intention Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Paredes, Dizon,
on the part of appellee to abandon it. Regala and Makalintal, JJ., concur.
Concepcion, J., took no part.
"The instances of the use by others of the term 'Budweiser, cited by the
defendant, fail, even when liberally construed, to indicate an intention upon the
part of the complainant to abandon its rights to that name. 'To establish the
defense of abandonment, it is necessary to show not only acts indicating a
practical abandonment, but an actual intention to abandon. Saxlehner v. Eisener
& Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 60). (Anheuser-Busch, Inc.
v. Budweiser Malt Products Corp., 287 F. 245.)

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

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

Non-use of their ancient trade-mark and the adoption of new marks by the
Carthusian Monks after they had been compelled to leave France was consistent
with an intention to retain their right to use their old mark. Abandonment will
not be inferred from a disuse over a period of years occasioned by statutory
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 56

G.R. No. 111580 June 21, 2001 Intellectual Property Office) continue independently from the infringement case
so as to determine whether a registered mark may ultimately be cancelled.—
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD., SHANGRI- Following both law and the jurisprudence enunciated in Conrad and Company,
LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL AND RESORT, INC. Inc. v. Court of Appeals, the infringement case can and should proceed
and KUOK PHILIPPINE PROPERTIES, INC., petitioners, independently from the cancellation case with the Bureau so as to afford the
vs. owner of certificates of registration redress and injunctive writs. In the same
THE COURT OF APPEALS, HON. FELIX M. DE GUZMAN, as Judge, RTC of light, so must the cancellation case with the BPTTT (now the Bureau of Legal
Quezon City, Branch 99 and DEVELOPERS GROUP OF COMPANIES, Affairs, Intellectual Property Office) continue independently from the
INC., respondents. infringement case so as to determine whether a registered mark may ultimately
be cancelled. However, the Regional Trial Court, in granting redress in favor of
---------------------------------------- Developers Group, went further and upheld the validity and preference of the
latter’s registration over that of the Shangri-La Group.
G.R. No. 114802 June 21, 2001 Same; Same; Same; With the decision of the Regional Trial Court upholding the
validity of the registration of the service mark “Shangri-La” and “S” logo in the
DEVELOPERS GROUP OF COMPANIES, INC., petitioner, name of Developers Group, the cancellation case filed with the Bureau becomes
vs. moot.—With the decision of the Regional Trial Court upholding the validity of the
THE COURT OF APPEALS, HON. IGNACIO S. SAPALO, in his capacity as registration of the service mark “Shangri-La” and “S” logo in the name of
Director, Bureau of Patents, Trademarks and Technology Transfer, and Developers Group, the cancellation case filed with the Bureau hence becomes
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., moot. To allow the Bureau to proceed with the cancellation case would lead to a
respondents. possible result contradictory to that which the Regional Trial Court has rendered,
albeit the same is still on appeal. Such a situation is certainly not in accord with
Trademarks and Tradenames; Infringement; Actions; The earlier institution of an the orderly administration of justice. In any event, the Court of Appeals has the
Inter Partes case for the cancellation of a registered service mark and competence and jurisdiction to resolve the merits of the said RTC decision.
device/logo with the Bureau of Patents, Trademarks and Technology Transfer Same; Same; Same; To provide a judicious resolution of the issues, the Court
(BPTTT) cannot effectively bar the subsequent filing of an infringement case by finds it apropos to order the suspension of the proceedings before the Bureau
the registrant.—Hence, as applied in the case at bar, the earlier institution of an pending final determination of the infringement case, where the issue of the
Inter Partes case by the Shangri-La Group for the cancellation of the “Shangri- validity of the registration of the subject trademark and logo in the name of
La” mark and “S” device/logo with the BPTTT cannot effectively bar the Developers Group was passed upon.—We are not unmindful of the fact that in
subsequent filing of an infringement case by registrant Developers Group. The G.R. No. 114802, the only issue submitted for resolution is the correctness of the
law and the rules are explicit. The rationale is plain: Certificate of Registration Court of Appeals’ decision sustaining the BPTTPs denial of the motion to suspend
No. 31904, upon which the infringement case is based, remains valid and the proceedings before it. Yet, to provide a judicious resolution of the issues at
subsisting for as long as it has not been cancelled by the Bureau or by an hand, we find it apropos to order the suspension of the proceedings before the
infringement court. As such, Developers Group’s Certificate of Registration in the Bureau pending final determination of the infringement case, where the issue of
principal register continues as “prima facie evidence of the validity of the the validity of the registration of the subject trademark and logo in the name of
registration, the registrant’s ownership of the mark or trade-name, and of the Developers Group was passed upon.
registrant’s exclusive right to use the same in connection with the goods,
business or services specified in the certificate.” Since the certificate still PETITION for review on certiorari of a decision of the Court of Appeals.
subsists, Developers Group may thus file a corresponding infringement suit and
recover damages from any person who infringes upon the former’s rights. The facts are stated in the opinion of the Court.
Same; Same; Same; In the same light that the infringement case can and       Oreta, Suarez & Narvasa Law Firm for petitioners.
should proceed independently from the cancellation case with the Bureau so as       Bernardo P. Fernandez, Cesar San Diego and Carag, Aballes, Jamora &
to afford the owner of certificates of registration redress and injunctive reliefs, Somera for private respondents. [Shangri-La International Hotel Management
so must the cancellation case with the BPTTT (now the Bureau of Legal Affairs, Ltd. vs. Court of Appeals, 359 SCRA 273(2001)]
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 57

YNARES-SANTIAGO, J.: THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND
COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT:
On June 21, 1988, the Shangri-La International Hotel Management, Ltd.,
Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and Kuok I. THE INFRINGEMENT CASE SHOULD BE DISMISSED OR AT LEAST
Philippine Properties, Inc. (hereinafter collectively referred as the "Shangri-La SUSPENDED; AND
Group"), filed with the Bureau of Patents, Trademarks and Technology Transfer
(BPTTT) a petition, docketed as Inter Partes Case No. 3145, praying for the II. THE HONORABLE PRESIDING JUDGE SHOULD INHIBIT HIMSELF FROM
cancellation of the registration of the "Shangri-La" mark and "S" device/logo TRYING THE INFRINGEMENT CASE.9
issued to the Developers Group of Companies, Inc., on the ground that the same
was illegally and fraudulently obtained and appropriated for the latter's Meanwhile, on October 28, 1991, the Developers Group filed in Inter Partes Case
restaurant business. The Shangri-La Group alleged that it is the legal and No. 3145 an Urgent Motion to Suspend Proceedings, invoking the pendency of
beneficial owners of the subject mark and logo; that it has been using the said the infringement case it filed before the Regional Trial Court of Quezon City.10
mark and logo for its corporate affairs and business since March 1962 and On January 10, 1992, the BPTTT, through Director Ignacio S. Sapalo, issued an
caused the same to be specially designed for their international hotels in 1975, Order denying the Motion.11 A Motion for Reconsideration was filed which was,
much earlier than the alleged first use thereof by the Developers Group in 1982. however, denied in a Resolution dated February 11, 1992.12

Likewise, the Shangri-La Group filed with the BPTTT its own application for From the denial by the BPTTT of its Urgent Motion to Suspend Proceedings and
registration of the subject mark and logo. The Developers Group filed an Motion for Reconsideration, the Developers Group filed with the Court of Appeals
opposition to the application, which was docketed as Inter Partes Case No. a petition for certiorari, mandamus and prohibition, docketed as CA-G.R. SP No.
3529. 27742.13 On March 29, 1994, the Court of Appeals dismissed the petition for
lack of merit.14
Almost three (3) years later, or on April 15, 1991, the Developers Group
instituted with the Regional Trial Court of Quezon City, Branch 99, a complaint A petition for review was thereafter filed, docketed as G.R. No. 114802, raising
for infringement and damages with prayer for injunction, docketed as Civil Case the issue of:
No. Q-91-8476, against the Shangri-La Group.
WHETHER OR NOT, GIVEN THE ESTABLISHED FACTS AND CIRCUMSTANCES
On January 8, 1992, the Shangri-La Group moved for the suspension of the ON RECORD AND THE LAW AND JURISPRUDENCE APPLICABLE TO THE
proceedings in the infringement case on account of the pendency of the MATTER, THE RESPONDENT COURT ERRED IN HOLDING THAT, INASMUCH AS
administrative proceedings before the BPTTT.1 This was denied by the trial court BOTH THE CIVIL ACTION AND THE ADMINISTRATIVE PROCEEDINGS HERE
in a Resolution issued on January 16, 1992.2 The Shangri-La Group filed a INVOLVED MAY CO-EXIST AND THE LAW DOES NOT PROVIDE FOR ANY
Motion for Reconsideration.3 Soon thereafter, it also filed a Motion to Inhibit PREFERENCE BY ONE OVER THE OTHER, THE RESPONDENT DIRECTOR HAD
against Presiding Judge Felix M. de Guzman.4 On July 1, 1992, the trial court JURISDICTION TO RULE AS HE DID AND HAD NOT INCURRED ANY GRAVE
denied both motions.5 ABUSE OF DISCRETION CORRECTIBLE BY THE EXTRAORDINARY REMEDIES OF
CERTIORARI, PROHIBITION AND MANDAMUS.15
The Shangri-La Group filed a petition for certiorari before the Court of Appeals,
docketed as CA-G.R. SP No. 29006.6 On February 15, 1993, the Court of On February 2, 1998, G.R. Nos. 111580 and 114802 were ordered consolidated.
Appeals rendered its decision dismissing the petition for certiorari.7 The Shangri-
La Group filed a Motion for Reconsideration, which was denied on the ground The core issue is simply whether, despite the institution of an Inter Partes case
that the same presented no new matter that warranted consideration.8 for cancellation of a mark with the BPTTT (now the Bureau of Legal Affairs,
Intellectual Property Office) by one party, the adverse party can file a
Hence, the instant petition, docketed as G.R. No. 111580, based on the subsequent action for infringement with the regular courts of justice in
following grounds: connection with the same registered mark.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 58

corresponding infringement suit and recover damages from any person who
We rule in the affirmative. infringes upon the former's rights.17

Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual Furthermore, the issue raised before the BPTTT is quite different from that
Property Code, provides, as follows – raised in the trial court. The issue raised before the BPTTT was whether the
mark registered by Developers Group is subject to cancellation, as the Shangri-
Section 151.2. Notwithstanding the foregoing provisions, the court or the La Group claims prior ownership of the disputed mark. On the other hand, the
administrative agency vested with jurisdiction to hear and adjudicate any action issue raised before the trial court was whether the Shangri-La Group infringed
to enforce the rights to a registered mark shall likewise exercise jurisdiction to upon the rights of Developers Group within the contemplation of Section 22 of
determine whether the registration of said mark may be cancelled in accordance Republic Act 166.
with this Act. The filing of a suit to enforce the registered mark with the proper
court or agency shall exclude any other court or agency from assuming The case of Conrad and Company, Inc. v. Court of Appeals18 is in point. We
jurisdiction over a subsequently filed petition to cancel the same mark. On the held:
other hand, the earlier filing of petition to cancel the mark with the Bureau of
Legal Affairs shall not constitute a prejudicial question that must be resolved We cannot see any error in the above disquisition. It might be mentioned that
before an action to enforce the rights to same registered mark may be decided. while an application for the administrative cancellation of a registered trademark
(Emphasis provided) on any of the grounds enumerated in Section 17 of Republic Act No. 166, as
amended, otherwise known as the Trade-Mark Law, falls under the exclusive
Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings, cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action, however, for
provides to wit – infringement or unfair competition, as well as the remedy of injunction and relief
for damages, is explicitly and unquestionably within the competence and
Section 7. Effect of filing of a suit before the Bureau or with the proper court. - jurisdiction of ordinary courts.
The filing of a suit to enforce the registered mark with the proper court or
Bureau shall exclude any other court or agency from assuming jurisdiction over xxx xxx xxx
a subsequently filed petition to cancel the same mark. On the other hand, the
earlier filing of petition to cancel the mark with the Bureau shall not constitute a Surely, an application with BPTTT for an administrative cancellation of a
prejudicial question that must be resolved before an action to enforce the rights registered trade mark cannot per se have the effect of restraining or preventing
to same registered mark may be decided. (Emphasis provided) the courts from the exercise of their lawfully conferred jurisdiction. A contrary
rule would unduly expand the doctrine of primary jurisdiction which, simply
Hence, as applied in the case at bar, the earlier institution of an Inter Partes expressed, would merely behoove regular courts, in controversies involving
case by the Shangri-La Group for the cancellation of the "Shangri-La" mark and specialized disputes, to defer to the findings or resolutions of administrative
"S" device/logo with the BPTTT cannot effectively bar the subsequent filing of an tribunals on certain technical matters. This rule, evidently, did not escape the
infringement case by registrant Developers Group. The law and the rules are appellate court for it likewise decreed that for "good cause shown, the lower
explicit. court, in its sound discretion, may suspend the action pending outcome of the
cancellation proceedings" before the BPTTT.
The rationale is plain: Certificate of Registration No. 31904, upon which the
infringement case is based, remains valid and subsisting for as long as it has not However, while the instant Petitions have been pending with this Court, the
been cancelled by the Bureau or by an infringement court. As such, Developers infringement court rendered a Decision, dated March 8, 1996, in Civil Case No.
Group's Certificate of Registration in the principal register continues as "prima Q-91-8476,19 the dispositive portion of which reads:
facie evidence of the validity of the registration, the registrant's ownership of the
mark or trade-name, and of the registrant's exclusive right to use the same in WHEREFORE, judgment is hereby rendered in favor of plaintiff Developers Group
connection with the goods, business or services specified in the certificate."16 of Companies, Inc. and against defendants Shangri-La International Hotel
Since the certificate still subsists, Developers Group may thus file a
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 59

Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and Developers Group, went further and upheld the validity and preference of the
Resort, Inc., and Kuok Philippine Properties, Inc. – latter's registration over that of the Shangri-La Group.

a) Upholding the validity of the registration of the service mark "Shangri-La" and There can be no denying that the infringement court may validly pass upon the
"S-Logo" in the name of plaintiff; right of registration. Section 161 of Republic Act No. 8293 provides to wit –

b) Declaring defendants' use of said mark and logo as an infringement of SEC. 161. Authority to Determine Right to Registration – In any action involving
plaintiff's right thereto; a registered mark the court may determine the right to registration, order the
cancellation of the registration, in whole or in part, and otherwise rectify the
c) Ordering defendants, their representatives, agents, licensees, assignees and register with respect to the registration of any party to the action in the exercise
other persons acting under their authority and with their permission, to of this. Judgement and orders shall be certified by the court to the Director, who
permanently cease and desist from using and/or continuing to use said mark shall make appropriate entry upon the records of the Bureau, and shall be
and logo, or any copy, reproduction or colorable imitation thereof, in the controlled thereby. (Sec. 25, R.A. No. 166a). (Emphasis provided)
promotion, advertisement, rendition of their hotel and allied projects and
services or in any other manner whatsoever; With the decision of the Regional Trial Court upholding the validity of the
registration of the service mark "Shangri-La" and "S" logo in the name of
d) Ordering defendants to remove said mark and logo from any premises, Developers Group, the cancellation case filed with the Bureau hence becomes
objects, materials and paraphernalia used by them and/or destroy any and all moot. To allow the Bureau to proceed with the cancellation case would lead to a
prints, signs, advertisements or other materials bearing said mark and logo in possible result contradictory to that which the Regional Trial Court has rendered,
their possession and/or under their control; and albeit the same is still on appeal. Such a situation is certainly not in accord with
the orderly administration of justice. In any event, the Court of Appeals has the
e) Ordering defendants, jointly and severally, to indemnify plaintiff in the competence and jurisdiction to resolve the merits of the said RTC decision.
amounts of P2,000,000.00 as actual and compensatory damages, P500,000.00
as attorney's fees and expenses of litigation. We are not unmindful of the fact that in G.R. No. 114802, the only issue
submitted for resolution is the correctness of the Court of Appeals' decision
Let a copy of this Decision be certified to the Director, Bureau of Patents, sustaining the BPTTT's denial of the motion to suspend the proceedings before
Trademarks and Technology Transfer, for his information and appropriate action it. Yet, to provide a judicious resolution of the issues at hand, we find it apropos
in accordance with the provisions of Section 25, Republic Act No. 166. to order the suspension of the proceedings before the Bureau pending final
determination of the infringement case, where the issue of the validity of the
Costs against defendants. registration of the subject trademark and logo in the name of Developers Group
was passed upon.
SO ORDERED.20
WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing
The said Decision is now on appeal with respondent Court of Appeals.21 G.R. No. 111580 for being moot and academic, and ordering the Bureau of Legal
Affairs, Intellectual Property Office, to suspend further proceedings in Inter
Following both law and the jurisprudence enunciated in Conrad and Company, Partes Case No. 3145, to await the final outcome of the appeal in Civil Case No.
Inc. v. Court of Appeals,22 the infringement case can and should proceed Q-91-8476.1âwphi1.nêt
independently from the cancellation case with the Bureau so as to afford the
owner of certificates of registration redress and injunctive writs. In the same SO ORDERED.
light, so must the cancellation case with the BPTTT (now the Bureau of Legal
Affairs, Intellectual Property Office) continue independently from the Davide, Jr., C.J. Puno and Pardo, JJ., concur.
infringement case so as to determine whether a registered mark may ultimately
be cancelled. However, the Regional Trial Court, in granting redress in favor of Kapunan, J., no part.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 60

G.R. No. L-23035 July 31, 1975 Same: Same; Same Insignificant differences in trademarks; Effect of; Case at
bar.—The merchandize or goods being sold by the parties herein are very
PHILIPPINE NUT INDUSTRY, INC., petitioner, ordinary commodities purchased by the average person and many times by the
vs. ignorant and unlettered and these are the persons who will not as a rule
STANDARD BRANDS INCORPORATED and TIBURCIO S. EVALLE as examine the printed small letterings on the container but will simply be guided
Director of Patents, respondents. by the presence of the striking mark PLANTERS on the label. Differences there
will always be, but whatever differences exist, these pale into insignificance in
Perfecta E. De Vera for petitioner. the face of an evident similarity in the dominant feature and overall appearance
of the labels of the parties.
Paredes, Poblador, Cruz and Nazareno for private respondent. Same; Same; Doctrine of secondary meaning.—The doctrine is to the effect that
a word or phrase originally incapable of exclusive appropriation with reference to
Office of the Solicitor General Arturo A. Alafriz, Acting Assistant an article on the market, because geographically or otherwise descriptive, might
Solicitor General Isidro C. Borromeo and Solicitor Francisco J. Bautista nevertheless have been used so long and so exclusively by one producer with
for respondent Director. reference to his article that, in that trade and to that branch of the purchasing
public, the word or phrase has come to mean that the article was his product.
Trademarks; Infringement of; Marks likely to cause confusion, mistake or even Same; Same; Same; Preferential right to adoption of trademark by priority of
deception.—There is infringement of trademark when the use of the mark use; Case at bar.—There is evidence to show that the term PLANTERS has
involved would be likely to cause confusion or mistake in the mind of the public become a distinctive mark or symbol insofar as salted peanuts are concerned,
or to deceive purchasers as to the origin or source of the commodity. and by priority of use dating as far back as 1938, respondent Standard Brands
Same; Same; Determination of infringement a question of fact; Test of has acquired a preferential right to its adoption as its trademark warranting
dominancy.—Whether or not a trademark causes confusion and is likely to protection against its usurpation by another. Ubi jus ibi remedium. Where there
deceive the public is a question of fact which is to be resolved by applying the is a right there is a remedy.
“test of dominancy”, meaning, if the competing trademark contains the main, or Same; Same; Same; Temporary non-use of trademark; Effect of.—Non-use of a
essential or dominant features of another by reason of which confusion and trademark on an article of merchandize due to legal restrictions or circumstances
deception are likely to result, then infringement takes place; that duplication or beyond one’s control is not to be considered as an abandonment.
imitation is not necessary a similarity in the dominant features of the trademarks Same; Same; Same; Abandonment of use of trademark; Abandonment must be
would be sufficient. permanent, intentional and voluntary.—To work an abandonment, the disuse
Same; Same; Same; Same; Word PLANTERS considered the dominant feature of must be permanent and not ephemeral; it must be intentional and voluntary,
trademark; Case at bar.—While it is true that PLANTERS is an ordinary word, and not involuntary or even compulsory. There must be a thorough-going
nevertheless it is used in the labels not to describe the nature of the product, discontinuance of any trade-mark use of the mark in question.
but to project the source or origin of the salted peanuts contained in the cans, Same; Findings of facts of Director of Patents conlusive on Supreme Court.—
the word PLANTERS printed across the upper portion of the label in bold letters Findings of fact by the Director of Patents are conclusive and binding on the
easily attracts and catches the eye of the ordinary consumer and it is that word Supreme Court provided they are supported by substantial evidence.
and none other that sticks in his mind when he thinks of salted peanuts.
Same; Same; Intent to pass to public one’s product as that of another; Similarity PETITION for review of the decision of the Director of Patents. [Phil. Nut
of coloring scheme, layout of words, and type and size of lettering.—No Industry, Inc. vs. Standard Brands Inc., 65 SCRA 575(1975)]
producer or manufacturer may have a monopoly of any color scheme or form of
words in a label. But when a competitor adopts a distinctive or dominant mark MUNOZ PALMA, J.:
or feature of another’s trademark and with it makes use of the same color
ensemble, employs similar words written in a style, type and size of lettering Challenged in this petition for review is the decision of respondent Director of
almost identical with those found in the other trademark, the intent to pass to Patents which orders the cancellation of Certificate of Registration No. SR-416
the public his product as that of the other is quite obvious. issued in favor of herein petitioner Philippine Nut Industry, Inc. (hereinafter
called Philippine Nut) for the trademark "PHILIPPINE PLANTERS CORDIAL
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PEANUTS," upon complaint of Standard Brands Inc. (hereinafter to be called very similar manner" so much so that "as to appearance and general impression"
Standard Brands). there is "a very confusing similarity," and he concluded that Philippine Nut "was
not entitled to register the mark at the time of its filing the application for
The records of the case show the following incidents: registration" as Standard Brands will be damaged by the registration of the
same. Its motion for reconsideration having been denied, Philippine Nut came up
Philippine Nut, a domestic corporation, obtained from the Patent Office on to this Court for a review of said decision.
August 10, 1961, Certificate of Registration No. SR-416 covering the trademark
"PHILIPPINE PLANTERS CORDIAL PEANUTS," the label used on its product of In seeking a reversal of the decision of respondent Director of Patents, petitioner
salted peanuts. brings forth eleven assigned errors all of which revolve around one main issue:
is the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" used by Philippine
On May 14, 1962, Standard Brands a foreign corporation, 1 filed with the Nut on its label for salted peanuts confusingly similar to the trademark
Director of Patents Inter Partes Case No. 268 asking for the cancellation of "PLANTERS COCKTAIL PEANUTS" used by Standard Brands on its product so as
Philippine Nut's certificate of registration on the ground that "the registrant was to constitute an infringement of the latter's trademark rights and justify its
not entitled to register the mark at the time of its application for registration cancellation? 2
thereof" for the reason that it (Standard Brands) is the owner of the trademark
"PLANTERS COCKTAIL PEANUTS" covered by Certificate of Registration No. SR- The applicable law to the case is found in Republic Act 166 otherwise known as
172, issued by the Patent Office on July 28, 1958. Standard Brands alleged in its the Trade-Mark Law from which We quote the following pertinent provisions:
petition that Philippine Nut's trademark "PHILIPPINE PLANTERS CORDIAL
PEANUTS" closely resembles and is confusingly similar to its trademark Chapter II-A. —
"PLANTERS COCKTAIL PEANUTS" used also on salted peanuts, and that the
registration of the former is likely to deceive the buying public and cause Sec. 4. Registration of trade-marks, trade-names and service-marks on the
damage to it. principal register. — There is hereby established a register of trade-marks,
trade-names and service-marks which shall be known as the principal register.
On June 1, 1962, Philippine Nut filed its answer invoking the special defense that The owner of a trade-mark, trade-name or service-mark used to distinguish his
its registered label is not confusingly similar to that of Standard Brands as the goods, business or services from the goods, business or services of others shall
latter alleges. have the right to register the same on the principal register, unless it:

At the hearing of October 4, 1962, the parties submitted a partial stipulation of (d) Consists of or comprises a mark or trade-name which so resembles a
facts. On December 12, 1962, an amended partial stipulation of facts was mark or trade-name registered in the Philippines or a mark or trade-name
submitted, the pertinent agreements contained in which are: (1) that Standard previously used in the Philippines by another and not abandoned, as to be likely,
Brands is the present owner of the trademark "PLANTERS COCKTAIL PEANUTS" when applied to or used in connection with the goods, business or services of
covered by Certificate of Registration No. SR-172 issued on July 28, 1958; (2) the applicant, to cause confusion or mistake or to deceive purchasers; ...
that Standard Brands trademark was first used in commerce in the Philippines in (emphasis Ours)
December, 1938 and (3) that Philippine Nut's trademark "PHILIPPINE PLANTERS
CORDIAL PEANUTS" was first used in the Philippines on December 20, 1958 and Sec. 17.Grounds for cancellation — Any person, who believes that he is or will
registered with the Patent Office on August 10, 1961. be damaged by the registration of a mark or trade-name, may, upon the
payment of the prescribed fee, apply to cancel said registration upon any of the
On December 10, 1963, after the presentation of oral and documentary evidence following grounds:
and the filing by the parties of their memoranda, respondent Director of Patents
rendered Decision No. 281 giving due course to Standard Brand's petition and (c) That the registration was obtained fraudulently or contrary to the
ordering the cancellation of Philippine Nut's Certificate of Registration No. SR- provisions of section four, Chapter II hereof; ....
416. The Director of Patents found and held that in the labels using the two
trademarks in question, the dominant part is the word "Planters", displayed "in a
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Sec. 22.Infringement, what constitutes. — Any person who shall use, without
the consent of the registrant, any reproduction, counterfeit, copy or colorable In cases of this nature there can be no better evidence as to what is the
imitation of any registered mark or trade-name in connection with the sale, dominant feature of a label and as to whether there is a confusing similarity in
offering for sale, or advertising of any goods, business or services on or in the contesting trademarks than the labels themselves. A visual and graphic
connection with which such use is likely to cause confusion or mistake or to presentation of the labels will constitute the best argument for one or the other,
deceive purchasers or others as to the source or origin of such goods or hence, we are reproducing hereunder a picture of the cans of salted peanuts of
services, or identity of such business; or reproduce, counterfeit, copy or the parties to the case.
colorably imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages, The picture below is part of the documentary evidence appearing in the original
wrappers, receptacles or advertisements intended to be used upon or in records, and it clearly demonstrates the correctness of the finding of respondent
connection with such goods, business or services, shall be liable to a civil action Director that the word PLANTERS is the dominant, striking mark of the labels in
by the registrant for any or all of the remedies herein provided. (emphasis question.
supplied).
It is true that there are other words used such as "Cordial" in petitioner's can
In the cases involving infringement of trademark brought before the Court it has and "Cocktail" in Standard Brands', which are also prominently displayed, but
been consistently held that there is infringement of trademark when the use of these words are mere adjectives describing the type of peanuts in the labeled
the mark involved would be likely to cause confusion or mistake in the mind of containers and are not sufficient to warn the unwary customer that the two
the public or to deceive purchasers as to the origin or source of the commodity; products come form distinct sources. As a whole it is the word PLANTERS which
that whether or not a trademark causes confusion and is likely to deceive the draws the attention of the buyer and leads him to conclude that the salted
public is a question of fact which is to be resolved by applying the "test of peanuts contained in the two cans originate from one and the same
dominancy", meaning, if the competing trademark contains the main or essential manufacturer. In fact, when a housewife sends her housemaid to the market to
or dominant features of another by reason of which confusion and deception are buy canned salted peanuts, she will describe the brand she wants by using the
likely to result, then infringement takes pIace; that duplication or imitation is not word PLANTERS and not "Cordial" nor "Cocktail".
necessary, a similarity in the dominant features of the trademarks would be
sufficient. 3 2. The next argument of petitioner is that respondent Director should not
have based his decision simply on the use of the term PLANTERS, and that what
1. The first argument advanced by petitioner which We believe goes to the he should have resolved is whether there is a confusing similarity in the
core of the matter in litigation is that the Director of Patents erred in holding trademarks of the parties.
that the dominant portion of the label of Standard Brands in its cans of salted
peanuts consists of the word PLANTERS which has been used in the label of It is quite obvious from the record, that respondent Director's decision is based
Philippine Nut for its own product. According to petitioner, PLANTERS cannot be not only on the fact that petitioner herein adopted the same dominant mark of
considered as the dominant feature of the trademarks in question because it is a Standard Brands, that is, the word PLANTERS, but that it also used in its label
mere descriptive term, an ordinary word which is defined in Webster the same coloring scheme of gold, blue, and white, and basically the same lay-
International Dictionary as "one who or that which plants or sows, a farmer or out of words such as "salted peanuts" and "vacuum packed" with similar type
an agriculturist." (pp. 10-11, petitioner's brief) and size of lettering as appearing in Standard Brands' own trademark, all of
which result in a confusing similarity between the two labels. 4 Thus, the
We find the argument without merit. While it is true that PLANTERS is an decision states: "Furthermore, as to appearance and general impression of the
ordinary word, nevertheless it is used in the labels not to describe the nature of two trademarks, I find a very confusing similarity." (Emphasis supplied) 5
the product, but to project the source or origin of the salted peanuts contained
in the cans. The word PLANTERS printed across the upper portion of the label in Referring again to the picture We have reproduced, the striking similarity
bold letters easily attracts and catches the eye of the ordinary consumer and it is between the two labels is quite evident not only in the common use of
that word and none other that sticks in his mind when he thinks of salted PLANTERS but also in the other words employed. As a matter of fact, the capital
peanuts.
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letter "C" of petitioner's "Cordial" is alike to the capital "C" of Standard's purchaser the impression that that particular can of PLANTERS salted peanuts is
"Cocktail", with both words ending with an "1". locally produced or canned but that what he is buying is still PLANTERS canned
salted peanuts and nothing else. As regards "Mr. Peanut" on Standard Brands'
Admittedly, no producer or manufacturer may have a monopoly of any color label, the same appears on the top cover and is not visible when the cans are
scheme or form of words in a label. But when a competitor adopts a distinctive displayed on the shelves, aside from the fact that the figure of "Mr. Peanut" is
or dominant mark or feature of another's trademark and with it makes use of printed on the tin cover which is thrown away after opening the can, leaving no
the same color ensemble, employs similar words written in a style, type and size lasting impression on the consumer. It is also for this reason that We do not
of lettering almost identical with those found in the other trademark, the intent agree with petitioner that it is "Mr. Peanut and the Humanized Peanut" which is
to pass to the public his product as that of the other is quite obvious. Hence, the trademark of Standard Brands salted peanuts, it being a mere descriptive
there is good reason for Standard Brands' to ask why did petitioner herein use pictorial representation of a peanut not prominently displayed on the very body
the word PLANTERS, the same coloring scheme, even almost identical size and of the label covering the can, unlike the term PLANTERS which dominates the
contour of the cans, the same lay-out of words on its label when there is a label.
myriad of other words, colors, phrases, symbols, and arrangements to choose
from to distinguish its product from Standard Brands, if petitioner was not It is correctly observed by respondent Director that the merchandize or goods
motivated to simulate the label of the latter for its own can of salted peanuts, being sold by the parties herein are very ordinary commodities purchased by the
and thereby deceive the public? average person and many times by the ignorant and unlettered 6 and these are
the persons who will not as a rule examine the printed small letterings on the
A similar question was asked by this Court in Clarke vs. Manila Candy Co., 36 container but will simply be guided by the presence of the striking mark
Phil. 100, when it resolved in favor of plaintiff a case of unfair competition based PLANTERS on the label. Differences there will always be, but whatever
on an imitation of Clarke's packages and wrappers of its candies the main differences exist, these pale into insignificance in the face of an evident similarity
feature of which was one rooster. The Court queried thus: "... why, with all the in the dominant feature and overall appearance of the labels of the parties.
birds in the air, and all the fishes in the sea, and all the animals on the face of
the earth to choose from, the defendant company (Manila Candy Co.) selected It is not necessary, to constitute trademark "infringement", that every word of a
two roosters as its trademark, although its directors and managers must have trade-mark should be appropriated, but it is sufficient that enough be taken to
been well aware of the long-continued use of a rooster by the plaintiff with the deceive the public in the purchase of a protected article. (Bunte Bros. v.
sale and advertisement of its goods? ... A cat, a dog, a carabao, a shark or an Standard Chocolates, D.C. Mass., 45 F. Supp. 478, 481)
eagle stamped upon the container in which candies are sold would serve as well
as a rooster for purposes of identification as the product of defendant's factory. A trade-name in order to be an `infringement' upon another need not be exactly
Why did defendant select two roosters as its trademark ?" (p.109, supra) like it in form and sound, but it is enough if the one so resembles another as to
deceive or mislead persons of ordinary caution into the belief that they are
Petitioner contends, however, that there are differences between the two dealing with the one concern when in fact they are dealing with the other. (Foss
trademarks, such as, the presence of the word "Philippine" above PLANTERS on v. Culbertson, 136 P. 2d 711, 718, 17 Wash. 2d 610)
its label, and other phrases, to wit: "For Quality and Price, Its Your Outstanding
Buy", the address of the manufacturer in Quezon City, etc., plus a pictorial Where a trade-mark contains a dominating or distinguishing word, and
representation of peanuts overflowing from a tin can, while in the label of purchasing public has come to know and designate the article by such
Standard Brands it is stated that the product is manufactured in San Francisco, dominating word, the use of such word by another in marking similar goods may
California, and on top of the tin can is printed "Mr. Peanut" and the constitute Infringement though the marks aside from such dominating word may
representation of a "humanized peanut". (pp. 30-33, petitioner's brief) be dissimilar. (Queen Mfg. Co. v. lsaac Ginsberg & Bros., C.C.A. Mon., 25 F. 2d
284, 287)
We have taken note of those alleged differences but We find them insignificant
in the sense that they are not sufficient to call the attention of the ordinary (d) "Infringement" of trade-mark does not depend on the use of identical
buyer that the labeled cans come from distinct and separate sources. The word words, nor on the question whether they are so similar that a person looking at
"Philippine" printed in small type in petitioner's label may simply give to the one would be deceived into the belief that it was the other; it being sufficient if
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one mark is so like another in form, spelling, or sound that one with not a very The applicability of the doctrine of secondary meaning to the situation now
definite or clear recollection as to the real mark is likely to be confused or before Us is appropriate because there is oral and documentary evidence
misled. (Northam Warren Corporation v. Universal Cosmetic Co., C. C. A; III., 18 showing that the word PLANTERS has been used by and closely associated with
F. 2d 774, 775) Standard Brands for its canned salted peanuts since 1938 in this country. Not
only is that fact admitted by petitioner in the amended stipulation of facts (see
3. What is next submitted by petitioner is that it was error for respondent p. 2 of this Decision), but the matter has been established by testimonial (tsn
Director to have enjoined it from using PLANTERS in the absence of evidence October 4, 1962, pp. 2-8) and documentary evidence consisting of invoices
showing that the term has acquired secondary meaning. Petitioner, invoking covering the sale of "PLANTERS cocktail peanuts". (Exhibits C to C-4; D to D-10;
American jurisprudence, asserts that the first user of a tradename composed of E to E-10; F to F-2) In other words, there is evidence to show that the term
common words is given no special preference unless it is shown that such words PLANTERS has become a distinctive mark or symbol insofar as salted peanuts
have acquired secondary meaning, and this, respondent Standard Brands failed are concerned, and by priority of use dating as far back as 1938, respondent
to do when no evidence was presented to establish that fact. (pp. 14-16, Standard Brands has acquired a preferential right to its adoption as its
petitioner's brief) trademark warranting protection against its usurpation by another. Ubi jus ibi
remedium. Where there is a right there is a remedy. Standard Brands has shown
The doctrine of secondary meaning is found in Sec. 4 (f), Chapter II-A of the the existence of a property right(Arce Sons & Co. vs. Selecta Biscuit Co., Inc.,
Trade-Mark Law, viz: supra, pp. 262-263) and respondent Director, has afforded the remedy.

Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this section, Still on this point, petitioner contends that Standard Brands' use of the
nothing herein shall prevent the registration of a mark or trade-name used by trademark PLANTERS was interrupted during the Japanese occupation and in
the applicant which has become distinctive of the applicant's goods, business or fact was discontinued when the importation of peanuts was prohibited by
services. The Director may accept as prima facie evidence that the mark or Central Bank regulations effective July 1, 1953, hence it cannot be presumed
trade-name has become distinctive, as applied to or used in connection with the that it has acquired a secondary meaning. We hold otherwise. Respondent
applicant's goods, business or services, proof of substantially exclusive and Director correctly applied the rule that non-use of a trademark on an article of
continuous use thereof as a mark or trade-name by the applicant in connection merchandize due to legal restrictions or circumstances beyond one's control is
with the sale of goods, business or services for the five years next preceding the not to be considered as an abandonment.
date of the filing of the application for its registration. (As amended by Sec. 3,
Rep. Act No. 638.) In the case of Andres Romero vs. Maiden Form Brassiere Co., Inc., L-18289,
March 31, 1964, 10 SCRA 556, the same question was raised by petitioner
This Court held that the doctrine is to the effect that a word or phrase originally Romero when he filed with the Bureau of Patents a petition to cancel the
incapable of exclusive appropriation with reference to an article on the market, registration of the trademark "Adagio" for brassieres manufactured by Maiden
because geographically or otherwise descriptive, might nevertheless have been Form Brassiere Co., Inc. His petition having been dismissed by the Director of
used so long and so exclusively by one producer with reference to his article Patents, Romero appealed to this Court and one of the issues posed by him was
that, in that trade and to that branch of the purchasing public, the word or that when the Government imposed restrictions on importations of brassieres
phrase has come to mean that the article was his product. 7 bearing that particular trademark, there was abandonment of the same by
respondent company which entitled petitioner to adopt it for his own use and
By way of illustration, is the word "Selecta" which according to this Court is a which in fact he had been using for a number of years. That argument was met
common ordinary term in the sense that it may be used or employed by any one by the Court in the words of Justice Jesus Barrera thus:
in promoting his business or enterprise, but which once adopted or coined in
connection with one's business as an emblem, sign or device to characterize its ... The evidence on record shows, on the other hand, that the trademark
products, or as a badge of authenticity, may acquire a secondary meaning as to "Adagio" was first used exlusively in the Philippines by appellee in the year 1932.
be exclusively associated with its products and business, so that its use by There being no evidence of use of the mark by others before 1932, or that
another may lead to confusion in trade and cause damage to its business. 8 appellee abandoned use thereof, the registration of the mark was made in
accordance with the Trademark Law. Granting that appellant used the mark
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 65

when appellee stopped using it during the period of time that the Government testimonial and documentary evidence in addition to the stipulation of facts
imposed restrictions on importation of respondent's brassiere being the submitted by the parties fully support the findings of respondent Director that(1)
trademark, such temporary non-use did not affect the rights of appellee because there is a confusing similarity between the labels or trademarks of Philippine Nut
it was occasioned by government restrictions and was not permanent, and Standard Brands used in their respective canned salted peanuts; (2)
intentional, and voluntary. respondent Standard Brands has priority of adoption and use of the label with
PLANTERS as the dominant feature and the same has acquired secondary
To work an abandonment, the disuse must be permanent and not ephemeral; it meaning in relation to salted peanuts; and (3) there has been no abandonment
must, be intentional and voluntary, and not involuntary or even compulsory. or non-use of said trademark by Standard Brands which would justify its
There must be a thoroughgoing discontinuance of any trade-mark use of the adoption by petitioner or any other competitor for the sale of salted peanuts in
mark in question (Callman, Unfair Competition and Trademark, 2nd Ed., p. the market.
1341).1äwphï1.ñët
PREMISES CONSIDERED, We AFFIRM the decision of respondent Director of
The use of the trademark by other manufacturers did not indicate an intention Patents with costs against petitioner.
on the part of appellee to abandon it.
So Ordered.
The instances of the use by others of the term Budweiser, cited by the
defendant, fail, even when liberally construed, to indicate an intention upon the Castro (Chairman), Makasiar, Esguerra and Martin, JJ., concur.
part of the complainant to abandon its rights to that name. "To establish the
defense of abandonment, it is necessary to show not only acts indicating a Teehankee, J., is on leave.
practical abandonment, but an actual intention to abandon." Sanlehner v.
Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 6.0).(Anheuser-
Busch, Inc, v. Budweiser Malt Products Corp., 287 F. 245.)

xxx xxx xxx

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

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

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

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

this Court provided they are supported by substantial evidence. 9 The
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 66

G.R. No. L-19531 August 10, 1967 Same; Public officers; Legal discretion.—The only discretion conferred upon
officers is a legal discretion, and when anything is left to any officer to be done
THE CLOROX COMPANY, petitioner, according to his discretion, the law intends it to be done with a sound discretion
vs. and according to law.
THE DIRECTOR OF PATENTS and GO SIU GIAN, respondents. Same; Motion for reconsideration; Abuse of discretion.—When the allegations of
the pleading clearly show circumstances constituting mistake and excusable
Luchauco, Picazo and Agcaoli for petitioner. negligence, which are grounds for a motion for reconsideration, a dismissal of
Gonzalo A. Tejada for respondent Go Siu Gian. the motion and a denial of the relief sought upon the flimsy excuse that the
Office of the Solicitor General for respondent Director of Patents. same was filed as a petition for relief amounts to an abuse of that discretion.
Trademarks; Nature of opposition to registration and petition for cancellation.—
Trademarks; When opposition to registration must be filed.—An opposition to an The opposition to the registration of a trademark and the petition for its
application for registration of a trademark should be filed within 30 days from cancellation are alternative proceedings which a party may avail of according to
the publication of the application in the Official Gazette. However, "an unverified his purposes, needs, and predicament and the petitioner has the right to choose
notice of opposition may be filed by a duly authorized attorney, but such which remedy he deems best f or the protection of his rights.
opposition will be null and void unless verified by the opposer in person within PETITION to review an order and resolution of the Director of Patents. [Clorox
sixty days after such filing". A verified opposition filed on time under an Company vs. Director of Patents, 20 SCRA 965(1967)]
erroneous covering letter is valid,
Courts; Duty of clerk of court as to filing of papers.— It is the duty of the clerk ANGELES, J.:
of court to receive and file the necessary papers of a case in their corresponding
files. It is gross negligence on his part to receive and file pleadings in the We have before us petition to review the order of the Director of Patents in
records of the case by relying upon a letter of submittal or covering letter "inter Partes Case No. 204," dated January 6, 1961, dismissing the opposition of
without bothering to examine whether or not the pleading or document the Clorox Company to the registration of the trade-mark "OLDROX" in the name
submitted corresponds to the enclosure mentioned in the letter. of Go Siu Gian, and the resolution of said Official, dated February 12, 1962,
Pleading and Practice; Liberal construction; Technicalities.—The rule is always in denying the Clorox Company's motion and petition for relief from said
favor of liberality in construction so that the real matter in dispute may be order.1äwphï1.ñët
submitted to the judgment of the court. Imperfections of form and technicalities
of procedure should be disregarded, unless substantial rights would otherwise The facts of the case, either appearing in the record or admitted by the parties
be prejudiced. in their pleadings, are as follows:
Trial; New trial; Grounds for new trial are substantially similar to those of
petition for relief.—The grounds of fraud, accident, mistake or excusable On April 7, 1959, respondent Go Siu Gian filed with the Patent Office an
negligence for new trial are substantially similar to the grounds of a petition for application for registration of the trademark "OLDROX," with an accompanying
relief under the Rules; the only difference being that a motion for new trial or for statement that he is a citizen of China, residing and doing business in the
reconsideration is filed before the order or judgment becomes final, while a Philippines at 838 Folgueras St., Manila; that he has adopted the trademark
petition for relief should be filed after the finality of the judgment or order, but "OLDROX" for his goods (whitening agent for bleaching) in trade and commerce
within certain periods. in the country; and that said trademark, shown on printed labels affixed to the
Same; Courts may vacate judgments or grant new trials due to error in fact or goods, or to the containers thereof, has been used by him since February 1,
law.—Courts may vacate judgments and grant new trials or enter new 1959. The application was allowed and published in the issue of the Official
judgments on the ground of error in fact or in law. They have the power, of Gazette dated April 25, 1960, which was released for circulation on August 22,
course, to vacate judgments after they have become final, in the sense that the 1960.
party in whose favor they are rendered is entitled as of right, to have execution
thereon, but prior thereto, the courts have plenary control over the proceedings On September 21 of the same year, or within 30 days from the date of its
including the judgment, and, in the exercise of a sound judicial discretion, may publication in the Official Gazette, an unverified opposition to the application was
take such proper action in this regard as truth and justice may require.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 67

filed by the law firm Lichauco, Picazo and Agcaoili in behalf of the Clorox considered as having been filed on time, for the reason that it was misfiled in
Company, herein petitioner. the record of another opposition case through the negligence of its own counsel.

On January 6, 1961, respondent Director of Patents issued the order appealed Section 8 of Republic Act No. 166 requires that an opposition to an application
from, dismissing the petitioner's opposition to the application upon the ground, for registration of a trademark should be filed within 30 days from the
which is stated in said order, that the Clorox Company failed to filed the required publication of the application in the Official Gazette. This requirement is relaxed
verified notice of opposition within the period allowed by law. Upon notice of the under Rule 187 (c) of the Revised Rules of Practice in Trademark Cases which
said order, petitioner's counsel filed a motion with the Patent Office, dated provide as follows:
January 10, 1961, advising that it has filed the verified notice of opposition on
time, i.e., on November 16, 1960; although it also admitted that the covering Rule 187 (c). Notice filed by attorney. — An unverified notice of opposition may
letter of said verified opposition was given another case number (Inter Partes be filed by a duly authorized attorney, but such opposition will be null and void
Case No. 200, entitled "The Shell Company of the Philippines versus Faustino unless verified by the opposer in person within sixty days after such filing. . . .
Co") which is also handled by the same counsel in the Patent Office. Petitioner
requested in that motion that the verified opposition be detached from the There is no question that petitioner's counsel filed an unverified notice of
record of Inter Partes Case No. 200 and to transfer the same in the opposition to the application for registration of the trademark "OLDROX" within
corresponding file of this case. The motion was opposed by herein respondent 30 days from the date of its publication in the Official Gazette. There is no
Go Siu Gian. disagreement also that the record of the case shows that an unverified
opposition was filed, and it was for this reason that the order of January 8,
Before the motion could be acted upon by the Director of Patents, petitioner 1961, was issued, because the law requires that for an opposition to be valid, it
filed on January 26, 1961, a petition for relief from the order dismissing its must be verified. It is not disputed, however, that immediately after it received
opposition, alleging circumstances constituting mistake or excusable negligence the notice of dismissal of its opposition, petitioner, in due time, filed a motion
of its counsel and his employee which led to the misfiling of its verified dated January 10, 1961, advising the Director of Patents that its verified
opposition, and praying that said order of January 6, 1961, be set aside. opposition was filed on time, although it admitted its error in submitting it under
a covering letter designating another opposition case. Under the circumstances,
After due consideration of the arguments of both parties relative to the aforesaid it is our considered opinion that the verified opposition mentioned was filed on
motion and petition for relief from the order of January 6, 1961, the Director of time, although it was submitted under an erroneous covering letter. That fact
Patents issued the resolution of February 12, 1962, also appealed from, denying alone is no argument to the proposition that a pleading "misfiled" is a pleading
both the motion and the petition for relief, and ordering the issuance of the "not filed." A covering letter is not part of the pleading. What is important is the
Certificate of Registration of the trademark "OLDROX" in the name of Go Siu fact that the pleading reached the official designated by law to receive it within
Gian. The Clorox Company has come to Us on Appeal. the prescribed time, regardless of the mistake in the indorsement or covering
letter which is not a necessary element of filing. It is the duty of the clerk of
In a nutshell, the various errors pointed out in the petitioner's brief which were court to receive and file the necessary papers of a case in their corresponding
allegedly committed by the respondent Director of Patents in issuing the order files. It is gross negligence on the part of a clerk of court to receive and file
and resolution appealed from, really boil down to two main propositions, pleadings in the record of a case by relying upon a letter of submittal or covering
namely: (1) that the Director of Patents erred in dismissing its opposition to the letter without bothering to examine whether or not the pleading or document
registration of the trademark in question, on the ground of failure to file the submitted corresponds to the enclosure mentioned in the letter. And when, as in
required "verified" opposition on time; and (2) that said Official erred in denying this case, the pleading is misfiled in the record of another case through the fault
altogether its motion and petition for relief from said order. of its clerk, it can not be said that the papers were not filed. It is admitted in this
case that the verified opposition of herein petitioner was lodged with the proper
Under the first proposition, the petitioner argues that it was error for the official authorized to receive. Under the circumstances, we hold, that there was
respondent official to have dismissed the opposition, it appearing in an substantial compliance with the requirement of the law.
indubitable manner that a verified opposition was timely filed. The Director of
Patents, on the other hand, maintains that the verified opposition cannot be
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 68

As a second proposition, petitioner contends that the Director of Patents erred in negligence which are grounds for a motion for reconsideration of the order in
denying its motion and petition for relief from the order of January 6, 1961, question, a dismissal of the motion and a denial of the relief sought upon the
dismissing its opposition to the registration of the trademark in question. It holds flimsy excuse that the same was filed as a petition for relief, will amount to an
the view that said Official should have set aside the order and given due course abuse of that discretion. Neither may we consider the argument of herein
to its opposition. respondent that the petitioner is not totally deprived of its right to question the
registration of the trademark in question because it may still pursue a
The respondents, on the other hand, argue that the petition for relief filed by cancellation proceeding under Sections 17 to 19 of Republic Act No. 166, and
petitioner before the order dismissing the opposition became final was Rules 191 to 197 of the Rules of Practice in Trademark Cases. The opposition to
premature and may not be legally considered for purposes of setting aside said a registration and the petition for cancellation are alternative proceedings which
order. This is being too technical about it. The rule is always in favor of liberality a party may avail of according to his purposes, needs, and predicaments
in construction so that the real matter in dispute may be submitted to the (Anchor Trading Company vs. Director of Patents, G.R. No. L-8004, May 30,
judgment of the court. Imperfections of form and technicalities of procedure 1956), and herein petitioner has the right to choose which remedy it deems best
should be disregarded unless substantial rights would otherwise be prejudiced for the protection of its rights.
(Gaspar vs. Dorado, et al., G.R. No. L-17884, November 29, 1965). It should be
noted that the grounds of fraud, accident, mistake or excusable negligence for Wherefore and considering all the foregoing, the order and resolution of the
new trial are substantially similar to the grounds of a petition for relief under the Director of Patents appealed from are hereby set aside, and the case remanded
Rules; the only difference being that a motion for new trial or for reconsideration to the Patent Office for further proceedings. Costs against the private
is filed before the order or judgment becomes final, while a petition for relief respondent.
should be filed after the finality of the judgment or order, but within the periods Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Fernando,
prescribed in Section 3 of Rule 38. Had herein respondents so minded, the JJ., concur.
petition for relief filed by the petitioner in this case, having been filed before the Concepcion, C.J. and Dizon, J., are on leave.
finality of the order dismissing its opposition, could have been treated as a
motion. for reconsideration of the order of January 6, 1961, and having been
previously apprised of the fact that the verified opposition in this case was
misfiled in the record of another case, should have set aside said order. The rule
is well settled that courts may vacate judgments and grant new trials or enter
new judgments on the grounds of error in fact or in law. They have no power, of
course, to vacate judgments after they have become final, in the sense that the
party in whose favor they are rendered is entitled as of right, to have execution
thereon, but prior thereto, the courts have plenary control over the proceedings
including the judgment, and in the exercise of a sound judicial discretion, may
take such proper action in this regard as truth and justice may require (Arnedo
vs. Llorente and Liongson, 18 Phil. 257). The order of herein respondent
dismissing the opposition of petitioner to the registration of the trademark in
question may amount to considerable injustice to the opposer Clorox Company,
the order having been entered not upon the merits of the controversy; and the
possibility of such serious consequences necessitates a careful examination of
the grounds upon which it requests that the order be set aside. It must be
remembered that the only discretion conferred upon officers is a legal discretion,
and when anything is left to any officer to be done according to his discretion,
the law intends it to be done with a sound discretion and according to law
(Coombs vs. Santos, 24 Phil. 446). And when, as in this case, the allegation of
the pleading clearly show circumstances constituting mistake and excusable
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 69

G.R. No. 78298 January 30, 1989 registration of a trademark, necessarily litigated the issue of ownership of such
trademark because ownership is, indeed, the basis of registration of a
WOLVERINE WORLDWIDE, INC., petitioner, trademark. Thus, Section 4 of R.A. 166 provides: "... The owner of a trademark,
vs. trade name or service-mark used to distinguish his goods, business or services
HONORABLE COURT OF APPEALS and LOLITO P. CRUZ, respondents. from the goods, business or services of others shall have the right to register the
same on the principal register . . ." Res judicata now bars the petitioner from
K. V. Faylona & Associates for petitioner. reopening, by way of another petition for cancellation (the present Inter Partes
Case No. 1807), the issue of ownership of the trademark HUSH PUPPIES.
Florencio Z. Sioson for private respondent Lolito P. Cruz. Otherwise, there will never be an end to litigation.

Remedial Law; Civil Procedure; Judgments; Res Judicata; A judgment or order PETITION to review the resolution of the Court of Appeals. Purisima, J.
is final, as to give it the element of res judicata, if it can no longer be modified [Wolverine Worldwide, Inc. vs. Court of Appeals, 169 SCRA 627(1989)]
by the court issuing it or by any other court.—Contrary to the petitioner’s
assertion, the judgment in Inter Partes Cases Nos. 700, 701, and 709 had long SARMIENTO, J.:
since become final and executory. That Sec. 17 of Republic Act 166, also known
as the Trademark Law, allows the cancellation of a registered trademark is not a The subject of this petition for review is the resolution of the Court of Appeals 1
valid premise for the petitioner’s proposition that a decision granting registration granting the private respondents's motion for reconsideration and reviving the
of a trademark cannot be imbued with the character of absolute finality as is decision of the Director of Patents which ordered the dismissal, on the ground of
required in res judicata. A judgment or order is final, as to give it the authority res judicata, of Inter Partes Case No. 807 instituted by the petitioner herein.
of res judicata, if it can no longer be modified by the court issuing it or by any
other court. In the case at bar, the decision of the Court of Appeals affirming On February 8, 1984, the petitioner, a foreign corporation organized and existing
that of the Director of Patents, in the cancellation cases filed in 1973, was never under the laws of the United States, brought a petition before the Philippine
appealed to us. Consequently, when the period to appeal from the Court of Patent Office, docketed as Inter Partes Case No. 1807, for the cancellation of
Appeals to this Court lapsed, with no appeal having been perfected, the Certificate of Registration No. 24986-B of the trademark HUSH PUPPIES and
foregoing judgment denying cancellation of registration in the name of private DOG DEVICE issued to the private respondent, a Filipino citizen.
respondent’s predecessor-in-interest but ordering cancellation of registration in
the name of the petitioner’s predecessor-in-interest, became the settled law in In support of its petition for cancellation, the petitioner alleged, inter alia, that it
the case. is the registrant of the internationally known trademark HUSH PUPPIES and the
Same; Same; Same; Same; Civil Law; Torts and Damages; Trademarks and DEVICE of a Dog in the United States and in other countries which are members
Patents; The principle of res judicata applies in appropriate cases in proceedings of the Paris Convention for the Protection of Industrial Property; that the goods
for cancellation of trademarks before the Philippines Patent Office.—It must be sold by the private respondent, on the one hand, and by the petitioner, on the
stressed anew that, generally, the fundamental principle of res judicata applies other hand, belong to the same class such that the private respondent's use of
to all cases and proceedings in whatever form they may be. We now expressly the same trademark in the Philippines (which is a member of said Paris
affirm that this principle applies, in the appropriate cases, to proceedings for Convention) in connection with the goods he sells constitutes an act of unfair
cancellation of trademarks before the Philippine Patent Office (now Bureau of competition, as denied in the Paris Convention.
Patents, Trademarks and Technology Transfer). In Ipekjan Merchandising Co.,
Inc. vs. Court of Tax Appeals, we said: To say that the doctrine applies Subsequently, the private respondent moved to dismiss the petition on the
exclusively to decisions rendered by what are usually understood as courts ground of res judicata, averring that in 1973, or more than ten years before this
would be to unreasonably circumscribe the scope thereof. The more equitable petition (Inter Partes Case No. 1807) was filed, the same petitioner filed two
attitude is to allow extension of the defense to decisions of bodies upon whom petitions for cancellation (Inter Partes Cases Nos. 700 and 701) and was a party
judicial powers have been conferred. to an interference proceeding (Inter Partes Case No. 709), all of which involved
Same; Same; Same; Same; Same; Same; Same; Ownership is the basis of the trademark HUSH PUPPIES and DEVICE, before the Philippine Patent Office.
registration of a trademark.—The aforesaid cases, involving as they were the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 70

The Director of Patents had ruled in all three inter parties cases in favor of The Court has repeatedly held that for a judgment to be a bar to a subsequent
Ramon Angeles, the private respondent's predecessor-in-interest, to wit: case, the following requisites must concur: (1) it must be a final judgment; (2)
the court which rendered it had jurisdiction over the subject matter and the
WHEREFORE, for all the foregoing considerations, parties; (3) it must be a judgment on the merits; and (4) there must be Identity
between the two cases, as to parties, — subject matter, and cause of action. 7
1. The petitions seeking cancellation of Registration Nos. SR-1099 and SR-
1526, respectively, are both denied and accordingly DISMISSED; Contrary to the petitioner's assertion, the judgment in Inter Partes Cases Nos.
700, 701, and 709 had long since become final and executory. That Sec. 17 of
2. Respondent-Registrant/Junior Party-Applicant, Roman Angeles, is Republic Act 166, also known as the Trademark Law, allows the cancellation of a
hereby adjudged as the prior user and adopter of the trademark HUSH PUPPIES registered trademark is not a valid premise for the petitioner's proposition that a
& DEVICE, under Appl. Serial No. 17174, and therefore, the same given due decision granting registration of a trademark cannot be imbued with the
course; and character of absolute finality as is required in res judicata. A judgment or order
is final, as to give it the authority of res judicata, if it can no longer be modified
3. Registration No. 14969 of Dexter Sales Company, assignor to Wolverine by the court issuing it or by any other court. 8 In the case at bar, the decision of
Worldwide, Inc., covering the trademark HUSH PUPPIES & Representation of a the Court of Appeals affirming that of the Director of Patents, in the cancellation
Dogie Head, is hereby CANCELLED. 2 cases filed in 1973, was never appealed to us. Consequently, when the period to
appeal from the Court of Appeals to this Court lapsed, with no appeal having
On June 29, 1979, the Court of Appeals affirmed tile above decision, finding the been perfected, the foregoing judgment denying cancellation of registration in
same to be in accordance with law and supported by substantial evidence. 3 the name of private respondent's predecessor-in-interest but ordering
cancellation of registration in the name of the petitioner's predecessor-in-
In the present case, after both parties had submitted their respective interest, became the settled law in the case. In the words of the Court of
memoranda, the Director of Patents rendered the questioned decision (in Inter Appeals:
Partes Case No. 1807), the dispositive portion of which states:
The subsequent failure of appellant-oppositor to elevate the decision of the
WHEREFORE, in view of the foregoing considerations this Office is constrained to Court of Appeals, which affirmed the ruling of the Director of Patents, to the
hold that Respondent's Motion to Dismiss be, as it is hereby, GRANTED and that Supreme Court, sounded the death knell of appellant-oppositor's instant case.
the subject Petition for Cancellation be, as it is hereby DISMISSED. Having become final and executory, the decision in Case No. 967 now bars the
prosecution of the present action under the principle of res judicata. 9
Accordingly, Certificate of Registration No. 24986-B issued on May 3, 1983 to
the herein Respondent-Registrant, Lolito P. Cruz, for the trademark "HUSH It must be stressed anew that, generally, the fundamental principle of res
PUPPIES" for use on shoes is, as it is hereby, declared valid and subsisting for judicata applies to all cases and proceedings in whatever form they may be. 10
the duration of its term unless owner cancelled in accordance with law. 4 We now expressly affirm that this principle applies, in the appropriate cases, to
proceedings for cancellation of trademarks before the Philippine Patent Office
On appeal, the Court of Appeals at first set aside the Director's decision; 5 (now Bureau of Patents, Trademarks and Technology Transfer). In Ipekjan
however, upon reconsideration the latter was revived. 6 Merchandising Co., Inc. vs Court of Tax Appeals, we said:

The principal legal question raised in this petition for review is whether or not To say that the doctrine applies exclusively to decisions rendered by what are
the present petition for cancellation (Inter Partes Case No. 1807) is barred by usually understood as courts would be to unreasonably circumscribe the scope
res judicata in the light of the final and executory decision in Inter Partes Cases thereof. The more equitable attitude is to allow extension of the defense to
Nos. 700 701, and 709. decisions of bodies upon whom judicial powers have been conferred. 11

We rule in the affirmative.

 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 71

Undoubtedly, final decisions, orders, and resolutions, of the Director of Patents 166, the present one was brought pursuant to the cited memorandum which
are clothed with a judicial character as they are, in fact, reviewable by the Court expressly sanctions the cancellation of registration of a trademark granted even
of Appeals and by us. prior to the same memorandum.

The subject judgment is undeniably on the merits of the case, rendered after In the first place, the subject memorandum never amended, nor was it meant to
both parties and actually submitted their evidence. amend, the Trademark Law. It did not indicate a new policy with respect to the
registration in the Philippines of world-famous trademarks. The protection
Between the earlier petitions and the present one there is substantial identity of against unfair competition, and other benefits, accorded to owners of
parties, subject matter, and cause of action. internationally known marks, as mandated by the Paris Convention, is already
guaranteed under the Trademark Law. 14 Thus, the subject memorandum, as
The petitioner in all of these cases is Wolverine Worldwide, Inc. The respondent- well as Executive Order No. 913, merely reiterated the policy already existing at
registrant in this case is the assignee of Randelson Agro-Industrial Development, the time of its issuance. As accurately enunciated by the Court of Appeals:
Inc. (formerly known as Randelson Shoes, Inc.) which in turn, acquired its right
from Ramon Angeles, the original respondents-registrant. Such being the case, appellant-oppositor could have properly ventilated the
issue of whether or not it fell within the protective ambit of the Paris Convention
As regards the subject matter, all of these cases refer to the cancellation of in the previous proceedings which culminated in the registration of the Hush
registration of the trademark HUSH PUPPIES and DEVICE of a Dog. Puppies trademark in appellee-movant's name, i.e., in Case No. 967 before the
Philippine Patent Office. The Director of Patents in that case, after hearing both
Finally, there is identity of cause of action, which is the alleged wrongful or parties and thereafter, deciding that appellee-movant was entitled to the
erroneous registration of the trademark. registration of the trademark in its name, must have concluded that appellant-
oppositor had not established the fact that it was entitled to the application of
It is argued, however, that res judicata does not apply in this particular instance the favorable provision; of the Paris Convention. 15
because when the May 9, 1977 decision was handed down by the Director of
Patents, Executive Order No. 913 dated October 7, 1983 and the resulting Furthermore, we agree with the conclusion of the Court of Appeals that the
memorandum of Minister Roberto Ongpin dated October 25, 1983 had not yet memorandum discussed here is subject to the doctrine of res judicata. The same
been issued. (The validity of this memorandum was later upheld by this Court in memorandum has, in the words of the Court of Appeals:
La Chemise Lacoste, S.A. vs. Fernandez and Sujanani vs. Ongpin). 12 The
petitioner underscores the following specific directive contained in the ... no room for application where the oppositor previously availed of the same
abovementioned memorandum of Minister Ongpin for the Director of Patents: remedy to contest and cancel the registration of subject trademark but did not
prevail, against the same registrant regarding the same subject matter (the
5. All pending applications for Philippine registration of signature and other trademark in question) and for the same cause of action. This is the more so
world famous trademarks filed by applicants other than their original owners or when, as in this present controversy, the certificate of registration, cancellation
users shall be rejected forthwith. Where such applicants have already obtained of which is sought anew, was issued by the Patent office after due hearing in the
registration contrary to the abovementioned PARIS CONVENTION and/or prior appropriate inter partes case, pursuant to a decision of the Director of
Philippine Law, they shall be directed to surrender their Certificates of Patents which was affirmed on appeal by the Court of Appeals, and has become
Registration to the Philippine Patent Office for immediate cancellation final and executory. 16
proceedings. 13
In the same light, the repeated filing of petitions for cancellation founded on
It is thus contended that despite the previous grant of registration to the private substantially the same ground as provided in Sec. 17 of the Trademark Law, we
respondent, the present petition for cancellation could still be brought, and the rule, is not permissible. For to allow without any limitation whatsoever such a
same should be granted by the Director of Patents, pursuant to the abovequoted practice would be clearly violative of the time-honored doctrine of res judicata.
clause. Stated otherwise, the petitioner suggests that the petition is not barred The present petition for cancellation raises basically the same issue of ownership
by res judicata because while the former petitions were filed under Republic Act of the trademark HUSH PUPPIES, which issue was already discussed and settled
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 72

in Inter Partes Cases Nos. 700, 701, and 709. As pointed out by the private
respondent, the petitioner itself expressly recognized the issue of ownership
when in the brief it filed in the Court of Appeals it included the following in the
assignment of errors:

That the Philippine Patent Office erred in holding that respondent-appellee has
established prior use and adoption of the trademark HUSH PUPPIES and is the
true and lawful owner thereof, instead of petitioner-appellant herein. (Emphasis
supplied). 17

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

necessarily litigated the issue of ownership of such trademark because
ownership is, indeed, the basis of registration of a trademark. 18 Thus, Section 4
of R.A. 166 provides: ". . . The owner of a trademark, trade name or service-
mark used to distinguish his goods, business or services from the goods,
business or services of others shall have the right to register the same on the
principal register. . . " Res judicata now bars the petitioner from reopening, by
way of another petition for cancellation (the present Inter Partes Case No.
1807), the issue of ownership of the trademark HUSH PUPPIES. Otherwise, there
will never be an end to litigation.

WHEREFORE, the petition for review is DENIED.

SO ORDERED.

Paras, Padilla and Regalado, JJ., concur.

Melencio-Herrera, J., took no part.

 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 73

G.R. No. 132993 June 29, 2005 cancellation of a registered trademark in the BPTTT.—It bears stressing that an
action for infringement or unfair competition, including the available remedies of
LEVI STRAUSS (PHILS.), INC., petitioner, injunction and damages, in the regular courts can proceed independently or
vs. simultaneously with an action for the administrative cancellation of a registered
VOGUE TRADERS CLOTHING COMPANY, respondent. trademark in the BPTTT. As applied to the present case, petitioner’s prior filing
of two inter partes cases against the respondent before the BPTTT for the
Trademarks and Trade Names; Infringement; Actions; A certificate of cancellation of the latter’s trademark registrations, namely, “LIVE’S” and “LIVE’S
registration gives rise to a presumption of its validity and the right to the Label Mark,” does not preclude petitioner’s right (as a defendant) to include in
exclusive use of the trademarks.—Petitioner is a holder of Certificate of its answer (to respondent’s complaint for damages in Civil Case No. No. 96-
Registration No. 1379-A for its Levi’s trademarks. The registration gives rise to a 76944) a counterclaim for infringement with a prayer for the issuance of a writ
presumption of its validity and the right to the exclusive use of the same. As set of preliminary injunction.
forth in Section 17 of Republic Act (R.A.) No. 166 or “The Trademark Law,” an Remedial Law; Actions; Forum Shopping; The requirement of certification
entity having a duly registered trademark can file a suit against another entity against forum shopping under the Rules is to be executed by the petitioner, or in
for the protection of its right. the case of a corporation, its duly authorized director or officer, but not
Same; Same; Same; While an administrative cancellation of a registered petitioner’s counsel whose professional services have been engaged to handle
trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the the subject case.—The requirement of certification against forum shopping
ambit of the BPTTT, an action for infringement or any other incidental remedy under the Rules is to be executed by the petitioner, or in the case of a
sought is within the jurisdiction of the ordinary courts.—In Conrad and corporation, its duly authorized director or officer, but not petitioner’s counsel
Company, Inc. v. Court of Appeals, as reiterated in the case of Shangri-La whose professional services have been engaged to handle the subject case. The
International Hotel Management Ltd. v. Court of Appeals, the Court clarified that reason is that it is the petitioner who has personal knowledge whether there are
while an administrative cancellation of a registered trademark, on any of the cases of similar nature pending with the other courts, tribunals, or agencies.
grounds under Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an Thus, in the present case, the Court of Appeals should have outrightly dismissed
action for infringement or any other incidental remedy sought is within the the petition for certiorari filed by the respondent (as therein petitioner in the
jurisdiction of the ordinary courts. appeals court) due to the defective certification of non-forum shopping. The
Same; Same; Same; The rights accorded to an owner of a registered trademark certification made by Atty. Soriano, counsel for the respondent, who is not one
expanded with the passage of Republic Act No. 8293.—The passage of Republic of its duly authorized directors or officers, is defective. Even if Atty. Soriano was
Act No. 8293, otherwise known as the “Intellectual Property Code of the the “in-house counsel,” the fact remains that no board resolution, or even a
Philippines,” expanded the rights accorded to an owner of a registered Secretary’s Certificate containing the board resolution, was submitted to show
trademark. that he was indeed authorized to file the said petition in the Court of Appeals.
Same; Same; Same; The remedy of an owner of a registered mark to institute Same; Same; Injunction; A writ of preliminary injunction would become a
an action for infringement or damages provided in Sections 155 (2), 156 and prejudgment of a case only when it grants the main prayer in the complaint or
163 of the law.—Sections 155 (2), 156, and 163 of the said law further provide responsive pleading, so much so that there is nothing left for the trial court to
for the remedy of an owner of a registered mark to institute an action for try except merely incidental matters.—Indeed, a writ of preliminary injunction is
infringement or damages against a person or entity that may reproduce, generally based solely on initial and incomplete evidence adduced by the
counterfeit, copy or colorably imitate a registered mark or a dominant feature applicant (herein petitioner). The evidence submitted during the hearing of the
thereof and apply such reproduction, counterfeit, copy or colorable imitation to incident is not conclusive, for only a “sampling” is needed to give the trial court
labels, signs, prints, packages, wrappers, receptacles or advertisements intended an idea of the justification for its issuance pending the decision of the case on
to be used in commerce upon or in connection with the sale, offering for sale, the merits. As such, the findings of fact and opinion of a court when issuing the
distribution, or advertising of goods or services on or in connection with which writ of preliminary injunction are interlocutory in nature. Moreover, the sole
such use is likely to cause confusion, or to cause mistake, or to deceive. object of a preliminary injunction is to preserve the status quo until the merits of
Same; Same; Same; An action for infringement or unfair competition, including the case can be heard. Since Section 4 of Rule 58 of the Rules of Civil Procedure
the available remedies of injunction and damages, in the regular courts can gives the trial courts sufficient discretion to evaluate the conflicting claims in an
proceed independently or simultaneously with an action for the administrative application for a provisional writ which often involves a factual determination,
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 74

the appellate courts generally will not interfere in the absence of manifest abuse instituted two cases before the BPTTT for the cancellation of respondent’s
of such discretion. A writ of preliminary injunction would become a prejudgment trademark registrations, to wit: Inter Partes Case No. 4216, a petition for
of a case only when it grants the main prayer in the complaint or responsive cancellation of Certificate of Registration No. 53918 (for "LIVE’S") and Inter
pleading, so much so that there is nothing left for the trial court to try except Partes Case No. 4217, a petition for cancellation of Certificate of Registration No.
merely incidental matters. Such fact does not obtain in the present case. 8868 (for "LIVE’S" Label Mark).

PETITION for review on certiorari of the decision and resolution of the Court of
Appeals. Petitioner then applied for the issuance of a search warrant on the premises of
respondent Vogue Traders Clothing Company, owned by one Tony Lim, with the
The facts are stated in the opinion of the Court. Regional Trial Court of Manila, Branch 3. On December 12, 1995, said trial court
     Gilbert T. Reyes for petitioner. issued Search Warrant No. 95-75714 and Search Warrant No. 95-75815 based
     Danilo Soriano for respondent. [Levi Strauss (Phils.), Inc. vs. Vogue Traders on its finding of probable cause that the respondent had violated Article 189 of
Clothing Company, 462 SCRA 52(2005)] the Revised Penal Code16 in manufacturing, selling, and incorporating designs
or marks in its jeans which were confusingly similar to petitioner’s "LEVI’s
DECISION jeans." These search warrants commanded the seizure of certain goods bearing
copies or imitations of the trademarks which belonged to petitioner.17 On
AZCUNA, J.: December 13, 1995, the search warrants were enforced and several goods
belonging to respondent were seized.18 Meanwhile, it appears that criminal
This is a petition for review on certiorari seeking to annul the decision1 of the charges were filed against Tony Lim of respondent company in the Department
Court of Appeals, dated August 13, 1997, which annulled and set aside the of Justice,19 but the same were eventually dismissed and the search warrants
orders,2 dated December 10, 1996 and April 11, 1997, issued by the Regional were quashed.
Trial Court of Manila, Branch 1 and which directed the trial court to desist from
proceeding with the said case until the Bureau of Patents, Trademarks and Consequently, on February 1, 1996, respondent filed a complaint20 for damages
Technology Transfer (BPTTT) has finally resolved Inter Partes Cases Nos. 4216 in the Regional Trial Court of Manila, Branch 50, against petitioner. The
and 4217, and the resolution of the Court of Appeals, dated March 5, 1998, complaint alleged that since January 1, 1988, respondent, through Antonio
denying petitioner’s motion for reconsideration. Sevilla, with business address at 1082 Carmen Planas Street, Tondo, Manila, had
been a lawful assignee and authorized user of: (a) the trademark "LIVE’S" under
The factual antecedents are as follows: Certificate of Registration No. 53918 issued by the BPTTT, (b) the trademark
"LIVE’S LABEL MARK" under Certificate of Registration No. SR 8868 issued by
In 1972, per "Trademark, Technical Data, and Technical Assistance the BPTTT, and (c) the copyright registrations of "LIVE’S ORIGINAL JEANS," its
Agreement,"3 Levi Strauss & Co., the principal based in Delaware, United States pocket design, and hand tag; that the goods, articles, and effects seized from
of America, granted petitioner Levi Strauss (Phils.) a non-exclusive license to use respondent’s establishment were manufactured and used in its legitimate
LEVI’S trademark, design, and name in the manufacturing, marketing, business of manufacturing and selling of the duly registered trademark "LIVE’S"
distribution, and sale of its clothing and other goods.4 The licensing agreement and "LIVE’S ORIGINAL JEANS;" and that the trademarks of respondent did not
was renewed several times, the recent one being under Certificate of have any deceptive resemblance with the trademarks of petitioner. Respondent
Registration No. 1379-A.5 Levi Strauss & Co. obtained certificates of registration sought to recover the seized assorted sewing materials, equipment, and finished
from the BPTTT for the following trademarks: "LEVI’S"6; "501"7; "Two Horse products or the value thereof, in case the same had been destroyed or impaired
Design"8; "Two Horse Label"9; "Two Horse Patch"10; "Two Horse Label with as a result of the seizure. Respondent also prayed that, after due trial, judgment
Patterned Arcuate Design"11; "Arcuate Design"12; and the composite be rendered ordering the petitioner to pay compensatory damages of P320,000
trademarks,13 namely, "Arcuate," "Tab," and "Two Horse Patch." with an additional amount of damages of P11,000 per day until the seized
properties are restored; P2,000,000 as exemplary damages; P100,000 for
Petitioner discovered the existence of some trademark registrations belonging to attorney’s fees with an additional amount of P100,000 in the event of an appeal
respondent which, in its view, were confusingly similar to its trademarks. Thus, it plus P1,500 per court appearance and the costs of the suit.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 75

similar to, or a colorable imitation of LS & CO./LSPI trademarks, since there is a

In its amended answer with counterclaim,21 petitioner countered that practically limitless array of other marks, words, numbers, devices, symbols and
respondent’s LIVE’S brand infringed upon its licensed brand name LEVI’S. It designs which plaintiff could have used on its products to identify and distinguish
sought to cancel respondent’s Copyright Registration No. I-3838 and enjoin the them from those of defendant and other manufacturers. All told, from the mass
respondent from further manufacturing, selling, offering for sale, and advertising of evidence adduced, plaintiff’s intent to appropriate, copy, and slavishly imitate
the denim jeans or slacks by using a design substantially, if not exactly similar the genuine appearance of authentic LEVI’s jeans and pass off its LIVE’s jeans
to, or a colorable imitation of the trademarks22 of petitioner. as genuine LEVI’S jeans in much too stark.

Upon manifestation/motion23 by petitioner, the RTC of Manila, Branch 50 issued As above-discussed, through more than a century’s use and continuous
an order dated May 9, 1996,24 forwarding the case to the Executive Judge (RTC substantial promotions and advertising of the LEVI’s TRADEMARKS on its
of Manila, Branch 23) for re-raffle among the courts designated as Special products — on jeans and trousers in particular — LS & Co. has cultivated, gained
Courts to try and decide cases involving violations of Intellectual Property Rights and established an invaluable goodwill in its name "LEVI’s STRAUSS &
pursuant to Administrative Order No. 113-95, dated October 2, 1995. On May COMPANY" and in the products which carry such name and the LEVI’s
17, 1996, Branch 23 issued an order25 directing that the case be forwarded to TRADEMARKS. Hence, unless plaintiff is immediately enjoined from further
Branch 1 (a designated Special Court per said administrative order) for further manufacturing, selling, offering for sale and advertising denims, jeans or slacks
proceedings. using a design substantially, if not exactly similar to, or a colorable imitation of
the LS & Co./LSPI trademarks, it will continue to have a free ride on, and erode
On the scheduled hearing on December 4, 1996 in the RTC of Manila, Branch 1, such invaluable goodwill and reputation by the mere effortless expedient of
respondent (as therein plaintiff) failed to appear. Upon motion of petitioner, the imitating the overall visual impression of genuine LEVI’s JEANS on its own
trial court declared respondent to have waived its right to present evidence to designs, employing minute points of distinction sufficient to muddle the overall
controvert petitioner’s application for a writ of preliminary injunction.26 conclusion which is actually generated, but do not dispel the similitude between
the trademarks. Well has been said that the most successful form of copying is
In an order dated December 10, 1996, the trial court found that the respondent to employ enough points of similarity to confuse the public with enough points
intended to appropriate, copy, and slavishly imitate the genuine appearance of of difference to confuse the court. [(]Del Monte Corporation vs. Court of
authentic LEVI’s jeans and pass off its LIVE’s jeans as genuine LEVI’s jeans. Appeals, 181 SCRA 418[)].
Thus,
There is no question that the above-discussed circumstances call for the
In opposing defendant’s application for preliminary in injunction, plaintiff alleges intervention of equity to prevent further irreparable harm to defendant’s goodwill
that it has obtained Certificates of Registration for the trademarks "LIVE[‘]S," and reputation. In consonance with Section 3 (a), (b) and (c), Rule 58 of the
"LIVE[‘]S LABEL MARK," ["]LIVE[‘]S ORIGINAL JEANS["] as well as the patch Rules, defendant is thus entitled to the ancillary relief demanded either for a
pocket design and hand tag. It did not, however, present any evidence to limited period or perpetually.
support the same.
Corollarily, defendant is hereby directed to execute a bond to the party enjoined
In any event, plaintiff’s backpocket design is not copyrightable, as it is neither an to the effect that defendant will pay to plaintiff all damages it may sustain by
original work nor a novel design. Rather it is a copy or slavish imitation of LS & reason of the injunction if the court should finally decide that defendant is not
Co./LSPI’s Arcuate trademark which was first used by LS & Co. worldwide in entitled thereto.
1873 and the Philippines Registration of which is based on LS & Co.’s US
Certificate of Registration No. 404243, issued on November 16, 1943. Thus, no WHEREFORE, upon the filing of a bond in the sum of FIVE HUNDRED
rights attendant to a copyright can ever attach to plaintiff’s infringing backpocket THOUSAND PESOS (P500,000.00), let a writ of preliminary injunction issue
design. restraining plaintiff, its officers, employees, agents, representatives, dealers,
retailers or assigns from manufacturing, distributing, selling, offering for sale,
Also, it could not have been pure chance or coincidence that plaintiff’s LIVE’S advertising or otherwise using denims or jeans with a design which is
jeans use a trademark, symbol or design which is substantially, if not exactly substantially, if not exactly similar to defendant’s trademarks.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 76

Respondent took the matter to the Court of Appeals. On August 13, 1997, the
Meanwhile, the hearing on the main cause of action is hereby set on February 5 Court of Appeals rendered a decision in favor of the respondent, enjoining the
and 12, 1997, both at 9:00 a.m. trial court from further proceeding with the case. The dispositive portion thereof
reads:
SO ORDERED.27
WHEREFORE, the petition is GRANTED. The assailed Orders dated December 10,
On motion for reconsideration, respondent prayed that the petitioner’s 1996 and April 11, 1997 are annulled and set aside for having been issued with
counterclaim be dismissed and that the order dated December 10, 1996, be set grave abuse of discretion and in excess of jurisdiction. Respondent court is
aside. In an order dated April 11, 1997, the trial court denied the motion, stating ordered to desist from proceeding with Civil Case No. 96-76944, entitled "Vogue
that: Traders Clothing Company, Plaintiff, versus Levi Strauss (Phil.), Inc.,
Defendant.", until the Bureau of Patents, Trademarks and Technology Transfer
Considering: has finally resolved Inter Partes Cases Nos. 4216 and 4217.

(1) That the defendant’s application for injunctive relief was properly directed No costs.
against the real property in interest, the self-proclaimed lawful assignee and
authorized user of the subject trademarks, hence, the party who would be SO ORDERED.29
benefited or injured by this court’s final decision on the application;
After its motion for reconsideration was denied, petitioner filed the present
(2) That the acts which plaintiff was enjoined from doing are within the scope of petition for review on certiorari, raising the following assignment of errors:
the reliefs demanded by defendant;
I
(3) That the institution of defendant’s counterclaim for infringement and
damages does not amount to forum-shopping in that the elements of litis THE COURT OF APPEALS COMMITTED CLEARLY REVERSIBLE ERROR IN
pendentia which form the basis for a charge for forum-shopping are not all HOLDING THAT THE DOCTRINE OF PRIMARY JURISDICTION OPERATES TO
present in the instant case; SUSPEND ANY AND ALL PROCEEDINGS IN CIVIL CASE NO. 96-76944,
PARTICULARLY THE ABILITY OF THE TRIAL COURT TO ISSUE PRELIMINARY
(4) That the injunctive order sought to be reconsidered, by its very nature, is INJUNCTIVE RELIEF, AND THAT THE TRIAL COURT JUDGE THEREFORE
merely provisional and does not dispose of the case on the merits. Hence, it COMMITTED ABUSE OF DISCRETION IN GRANTING SUCH RELIEF.
would not amount to a prejudgment considering that the defendant still has the
burden of proving during trial on the merits that it is entitled to protection and II
that confusion does, in fact, or likely to exist, and, on the other hand, plaintiff
would have its opportunity to prove that confusion does not exist or is not likely THE COURT OF APPEALS ERRED IN FAILING TO HOLD THAT THE
to happen; and CERTIFICATION AGAINST FORUM-SHOPPING ATTACHED BY RESPONDENT TO
ITS PETITION FOR CERTIORARI AND PROHIBITION IS FATALLY DEFECTIVE.
(5) That the evidence on record justifies the injunctive relief granted by this
court in favor of defendant. III

WHEREFORE, in view of all the foregoing, plaintiff’s motion for reconsideration THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT JUDGE
and supplemental motion for reconsideration are DENIED for lack of merit. COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING RESPONDENT TO
HAVE WAIVED ITS RIGHT TO ADDUCE EVIDENCE TO COUNTER PETITIONER’S
SO ORDERED.28 EVIDENCE IN SUPPORT OF ITS APPLICATION FOR PRELIMINARY INJUNCTIVE
RELIEF.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 77

IV
(e) That cancellation is authorized by other provisions of this Act.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE PRELIMINARY
INJUNCTIVE ORDER ISSUED IN CIVIL CASE NO. 96-76944 PREJUDGES THE Section 27 thereof states that the proper Regional Trial Court shall have
CASE.30 jurisdiction over the damage suits.

The petition has merit. In Conrad and Company, Inc. v. Court of Appeals,31 as reiterated in the case of
Shangri-La International Hotel Management Ltd. v. Court of Appeals,32 the
First. Petitioner points out that while the Court of Appeals categorically stated Court clarified that while an administrative cancellation of a registered
that it did not commit forum-shopping when it filed its counterclaim for trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the
infringement (to the petitioner’s complaint for damages in the Regional Trial ambit of the BPTTT, an action for infringement or any other incidental remedy
Court of Manila, Branch 1 — Civil Case No. 96-76944) as the causes of action in sought is within the jurisdiction of the ordinary courts. Thus,
the said civil case and the two inter partes cases (Inter Partes Cases Nos. 4216
and 4217 pending before the BPTTT) are different and do not involve the same . . . It might be mentioned that while an application for the administrative
subject matter and issues, it erred in applying the "doctrine of primary cancellation of a registered trademark on any of the grounds enumerated in
jurisdiction." The appeals court declared that the trial court never had the Section 17 of Republic Act No. 166, as amended, otherwise known as the Trade-
authority to hear and grant petitioner’s prayer for injunctive relief nor to proceed Mark Law, falls under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark
with the hearing of the case in view of the pendency of the two inter partes Law), an action, however, for infringement or unfair competition, as well as the
cases. remedy of injunction and relief for damages, is explicitly and unquestionably
within the competence and jurisdiction of ordinary courts.
Petitioner is a holder of Certificate of Registration No. 1379-A for its Levi’s
trademarks. The registration gives rise to a presumption of its validity and the ...
right to the exclusive use of the same. As set forth in Section 17 of Republic Act
(R.A.) No. 166 or "The Trademark Law," an entity having a duly registered Surely, an application with BPTTT for an administrative cancellation of a
trademark can file a suit against another entity for the protection of its right: 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
Sec. 17. Grounds for cancellation. — Any person, who believes that he is or will rule would unduly expand the doctrine of primary jurisdiction which, simply
be damaged by the registration of a mark or trade-name, may, upon the expressed, would merely behoove regular courts, in controversies involving
payment of the prescribed fee, apply to cancel said registration upon any of the specialized disputes, to defer to the findings or resolutions of administrative
following grounds: 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
(a) That the registered mark or trade-name becomes the common descriptive court, in its sound discretion, may suspend the action pending outcome of the
name of an article or substance on which the patent has expired; cancellation proceedings" before BPTTT. (Underscoring supplied.)

(b) That it has been abandoned; The passage of Republic Act No. 8293, otherwise known as the "Intellectual
Property Code of the Philippines,"33 expanded the rights accorded to an owner
(c) That the registration was obtained fraudulently or contrary to the provisions of a registered trademark. Sections 151 (2), 156, and 161 thereof state:
of section four, Chapter II hereof;
Section 151.2. Notwithstanding the foregoing provisions, the court or the
(d) That the registered mark or trade-name has been assigned, and is being administrative agency vested with jurisdiction to hear and adjudicate any action
used by, or with the permission of, the assignee, so as to misrepresent the to enforce the rights to a registered mark shall likewise exercise jurisdiction to
source of the goods, business or services in connection with which the mark or determine whether the registration of said mark may be cancelled in accordance
trade-name is used; or with this Act. The filing of a suit to enforce the registered mark with the proper
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 78

court or agency shall exclude any other court or agency from assuming packages, wrappers, receptacles or advertisements intended to be used in
jurisdiction over a subsequently filed petition to cancel the same mark. On the commerce upon or in connection with the sale, offering for sale, distribution, or
other hand, the earlier filing of petition to cancel the mark with the Bureau of advertising of goods or services on or in connection with which such use is likely
Legal Affairs {formerly BPTTT] shall not constitute a prejudicial question that to cause confusion, or to cause mistake, or to deceive.
must be resolved before an action to enforce the rights to same registered mark
may be decided. (Sec. 17, R.A. No. 166a) Finally, Rule 8, Section 7 of the Regulations on Inter Partes Proceedings,
provides:
Section 156. Actions, and Damages and Injunction for Infringement. — 156.1
The owner of a registered mark may recover damages from any person who Section 7. Effect of filing of a suit before the Bureau or with the proper court. —
infringes his rights, and the measure of the damages suffered shall be either the The filing of a suit to enforce the registered mark with the proper court or
reasonable profit which the complaining party would have made, had the Bureau shall exclude any other court or agency from assuming jurisdiction over
defendant not infringed his rights, or the profit which the defendant actually a subsequently filed petition to cancel the same mark. On the other hand, the
made out of the infringement, or in the event such measure of damages cannot earlier filing of petition to cancel the mark with the Bureau shall not constitute a
be readily ascertained with reasonable certainty, then the court may award as prejudicial question that must be resolved before an action to enforce the rights
damages a reasonable percentage based upon the amount of gross sales of the to same registered mark may be decided. (Emphasis supplied)
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 It bears stressing that an action for infringement or unfair competition, including
(Sec. 23, first par., R.A. No. 166a). the available remedies of injunction and damages, in the regular courts can
proceed independently or simultaneously with an action for the administrative
156.2 On application of the complainant, the court may impound during the cancellation of a registered trademark in the BPTTT. As applied to the present
pendency of the action, sales invoices and other documents evidencing sales. case, petitioner’s prior filing of two inter partes cases against the respondent
(n) before the BPTTT for the cancellation of the latter’s trademark registrations,
namely, "LIVE’S" and "LIVE’S Label Mark," does not preclude petitioner’s right
156.3. In cases where actual intent to mislead the public or to defraud the (as a defendant) to include in its answer (to respondent’s complaint for damages
complainant is shown, in the discretion of the court, the damages may be in Civil Case No. No. 96-76944) a counterclaim for infringement with a prayer for
doubled. (Sec. 23, first par., R.A. No. 166) the issuance of a writ of preliminary injunction.

156.4 The complainant, upon proper showing, may also be granted injunction. Second. As to the procedural matter, petitioner argues that the Court of Appeals
(Sec. 23, second par., R.A. No. 166a) erred in giving due course to the respondent’s petition for certiorari even if it
was the latter’s counsel, Atty. Danilo A. Soriano, not one of its duly authorized
Section 161. Authority to Determine Right to Registration. — In any action officers, who executed the certification of non-forum shopping.
involving a registered mark, the court may determine the right to registration,
order the cancellation of a registration, in whole or in part, and otherwise rectify Section 5, Rule 7 of the Rules of Civil Procedure incorporating Administrative
the register with respect to the registration of any party to the action in the Circular Nos. 28-91 (effective January 1, 1992) and 04-94 (effective April 1,
exercise of this. Judgment and orders shall be certified by the court to the 1994) states the requirement of a plaintiff or petitioner to include in his initiatory
Director, who shall make appropriate entry upon the records of the Bureau, and pleading or petition a certification of non-forum shopping. Thus,
shall be controlled thereby (Sec. 25, R.A. No. 166a).
Sec. 5. Certification against forum shopping. — The plaintiff or principal party
Sections 155 (2), 156, and 163 of the said law further provide for the remedy of shall certify under oath in the complaint or other initiatory pleading asserting a
an owner of a registered mark to institute an action for infringement or damages claim for relief, or in a sworn certification annexed thereto and simultaneously
against a person or entity that may reproduce, counterfeit, copy or colorably filed therewith: (a) that he has not theretofore commenced any action or filed
imitate a registered mark or a dominant feature thereof and apply such any claim involving the same issues in any court, tribunal or quasi-judicial
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, agency and, to the best of his knowledge, no such other action or claim is
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 79

pending therein; (b) if there is such other pending action or claim, a complete Third. Petitioner avers that the Court of Appeals erred in finding that the
statement of the present status thereof; and (c) if he should thereafter learn respondent was denied due process. It contends that the trial court had
that the same or similar action or claim has been filed or is pending, he shall correctly ruled that respondent was deemed to have waived its right to present
report that fact within five (5) days therefrom to the court wherein his aforesaid evidence due to its non-appearance at the scheduled hearing (to oppose the
complaint or initiatory pleading has been filed. petitioner’s application for the issuance of a writ of preliminary injunction) on
December 4, 1996.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for The records show that respondent, through its former counsel, Atty. Alfonso R.
the dismissal of the case without prejudice, unless otherwise provided, upon Yatco, was present during the hearing on November 6, 1996 as reflected in the
motion and after hearing. The submission of a false certification or non- minutes of the court proceedings that day. The counsels for both parties had
compliance with any of the undertakings therein shall constitute indirect been duly notified in open court. The Branch Clerk of Court of RTC of Manila,
contempt of court, without prejudice to the corresponding administrative and Branch 1, Atty. Joselito C. Frial, even made a notation in the minutes that
criminal actions. If the acts of the party or his counsel clearly constitute willful respondent (as oppositor) shall be given a period of 10 days to interpose its
and deliberate forum shopping, the same shall be ground for summary dismissal opposition to the petitioner’s prayer for injunctive relief.35 The Order dated
with prejudice and shall constitute direct contempt, as well as a cause for November 6, 1996 states:
administrative sanctions.
After witness Atty. Gilbert Raymond T. Reyes [witness for the petitioner] had
In Digital Microwave Corp. v. CA,34 this Court gave the rationale for this rule, finished his testimony, the counsel for defendant [herein petitioner] moved for
namely, that the certification against forum shopping is required to be and was allowed ten (10) days from today within which to file a written formal
accomplished by petitioner himself because only the petitioner himself has actual offer of exhibits, copy furnish[ed] the counsel for plaintiff [herein respondent]
knowledge of whether or not he has initiated similar actions or proceedings in who is allowed a similar period of time from receipt thereof within which to file
different courts or agencies. Even his counsel may be unaware of such fact as comment and/or objection.
he may only be aware of the action for which he has been retained. As to
corporations, the law requires that the certification could be made by its duly In the meantime, let the hearing be continued on December 4 & 11, 1996, both
authorized director or officer. The Court also stresses that the petitioner’s non- at 9:00 a.m. as previously scheduled.
compliance and utter disregard of the rules cannot be rationalized by invoking
the policy of liberal construction. The counsels are notified of this order in open court.

The requirement of certification against forum shopping under the Rules is to be SO ORDERED.36
executed by the petitioner, or in the case of a corporation, its duly authorized
director or officer, but not petitioner’s counsel whose professional services have However, on December 4, 1996, Atty. Yatco failed to appear without proferring
been engaged to handle the subject case. The reason is that it is the petitioner any valid reason which prompted the trial court to issue an order that
who has personal knowledge whether there are cases of similar nature pending respondent was deemed to have waived its right to present evidence:
with the other courts, tribunals, or agencies. Thus, in the present case, the
Court of Appeals should have outrightly dismissed the petition for certiorari filed On call for hearing, only the counsel for defendant [herein petitioner] appeared.
by the respondent (as therein petitioner in the appeals court) due to the There was no appearance for plaintiff [herein respondent] although its counsel
defective certification of non-forum shopping. The certification made by Atty. was duly notified. In view thereof, upon motion of counsel for defendant,
Soriano, counsel for the respondent, who is not one of its duly authorized plaintiff is considered to have waived its right to present evidence to controvert
directors or officers, is defective.Even if Atty. Soriano was the "in-house defendant’s application for a writ of preliminary injunction, which, consequently,
counsel," the fact remains that no board resolution, or even a Secretary’s is hereby deemed submitted for resolution.
Certificate containing the board resolution, was submitted to show that he was
indeed authorized to file the said petition in the Court of Appeals. The counsel for defendant is notified in open court. Furnish the counsel for
plaintiff with a copy hereof.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 80

discretion to evaluate the conflicting claims in an application for a provisional

SO ORDERED.37 writ which often involves a factual determination, the appellate courts generally
will not interfere in the absence of manifest abuse of such discretion.38 A writ of
Respondent explained to the trial court that its former counsel, Atty. Yatco, had preliminary injunction would become a prejudgment of a case only when it
honestly thought that the December 4, 1996 hearing had been rescheduled to grants the main prayer in the complaint or responsive pleading, so much so that
December 11, 1996 per agreement with the petitioner’s counsel. This is not a there is nothing left for the trial court to try except merely incidental matters.39
sufficient ground. It was correct for the trial court, upon motion of petitioner, to Such fact does not obtain in the present case.
consider the matter submitted for resolution on the basis of petitioner’s
evidence. Respondent cannot find solace in its lame excuse of honest mistake WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals
which was, in fact, negligence and lack of vigilance. dated August 13, 1997 and its Resolution dated March 5, 1998 are REVERSED
and SET ASIDE. The Regional Trial Court of Manila, Branch 1 is ORDERED to
Fourth. Petitioner claims that the assailed orders of the trial court, dated proceed with the hearing of Civil Case No. 96-76944 with dispatch.
December 10, 1996 and April 11, 1997, did not prejudge the case. On the other
hand, respondent counters that the trial court’s order dated December 10, 1996 No costs.
amounted to a prejudgment of the case, to wit: that its LIVE’s backpocket
design was not copyrightable because it was neither an original work nor a novel SO ORDERED.
design; that it was a copy or slavish imitation of petitioner’s LEVI’s Arcuate
trademark; and that no rights attendant to a copyright can ever attach to Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Carpio, JJ.,
respondent’s backpocket design. concur.

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

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

incomplete evidence adduced by the applicant (herein petitioner). The evidence
submitted during the hearing of the incident is not conclusive, for only a
"sampling" is needed to give the trial court an idea of the justification for its
issuance pending the decision of the case on the merits. As such, the findings of
fact and opinion of a court when issuing the writ of preliminary injunction are
interlocutory in nature. Moreover, the sole object of a preliminary injunction is to
preserve the status quo until the merits of the case can be heard. Since Section
4 of Rule 58 of the Rules of Civil Procedure gives the trial courts sufficient
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 81

Before the Patent Office, proceedings for the cancellation of La Estrella's label by
G.R. No. L-11818 July 31, 1959 trademark registration No. SR-13 were instituted by Cheng Chiong under Section
19-A of Republic Act No. 166. After answer by La Estrella and after trial on the
LA ESTRELLA DISTILLERY, INC., petitioner, merits, the Director of Patents found that the two label trademarks are distinctly
vs. differently in appearance and possess different identifying marks which make
THE DIRECTOR OF PATENTS, CHENG CHIONG, and FOO U. CHING and each satisfy the statutory requirement for registration — the requirement of
CO., respondents. being capable of distinguishing the particular goods upon which each is used.
The Director accordingly held that no damage to Cheng Chiong could possibly
Carlos, Yumol and Crisologo for petitioners. result from La Estrella's registration and use of its own label trademark and
Pacunayen and Aguilar for respondent Company. dismissed the petition for its cancellation.
Assistant Solicitor General E. Torres and Solicitor H. C. Fule for
respondent Director of Patents. Despite this favorable decision, La Estrella moved for its reconsideration praying
for the elimination of "the findings made therein that the label trademarks of the
TRADEMARK; CANCELLATION OF; PETITIONER MUST SHOW THAT HE WILL BE petitioner and respondents are distinctly different" and "that in lieu thereof a
DAMAGED BY CONTINUANCE OF TRADEMARK.—Despite the favorable decision pronouncement be made to the effect that said label trademarks are similar."
of the Director of Patents, the petitioner moved for its reconsideration praying The reason given for this motion for reconsideration is that the matter of
for the elimination of the findings that the label trademarks of the petitioner and similarly or dissimilarity has not been raised in issue and that in fact the parties
respondent are distinctly different. The reason given for this motion for have impliedly admitted that the labels are similar.
reconsideration is that the similarity of the trademarks having been admitted,
the only issues to be decided were: (1) whether or not the label trademark of Its motion for reconsideration having been denied, La Estrella has taken the
the respondent consisted a valid trademark; and (2) whether or not the present appeal and here urges the same contention that the Director of Patents
registration of said trademark had been obtained through fraud and false has committed error in making a pronouncement in his decision that the two
representation; hence, it was error for the Director of Patents to disregard them labels in question are not similar, contrary to the pleadings and evidence
and to pass on the question of the similarity or dissimilarity of the label presented by the parties.
trademarks. Held: These two issues are not important. Even if proved, these two
facts were not sufficient to warrant the cancellation of the respondent's label This appeal is without merit. While appellant attacks the grounds upon which the
trademark. In order that these two facts might produce cancellation, it was decision of the Director of Patents is based, it does not question the dispositive
necessary that they be coupled with a showing that the maintenance of the part thereof because it is favorable to it. Appellant claims that the matter of
respondent's label trademark on the register would damage the petitioner. The dissimilarity of the two labels has never been put in issue. This is not true. The
continuance of the respondent's label trademark on the register would damage whole theory upon which this case was presented, tried and decided in the
the petitioner only if the respondent's and petitioner's marks were similar; hence Patent Office was predicated mainly on this question.
the necessity and the importance of making a finding on the similarity or
dissimilarity between the two marks. The pleadings of the parties disclose their respective contentions. The petition
for cancellation alleges, among others:
PETITION for review by certiorari of a decision of the Director of Patents. [La
Estrella Distillery Inc. vs. Director of Patents, et al., 105 Phil. 1213(1959)] (1) That La Estrella's label "is not and cannot be a trademark as defined by law"
because it is a "common label affixed to rice wine, Chinese wine and similar
BARRERA, J.: goods and also to other kinds of goods."

La Estrella Distillery, Inc. (hereinafter referred to as La Estrella) and Cheng (2) That "it is also used by petitioner (Cheng Chiong) and other manufacturers
Chiong & Foo U. Ching Company (Cheng Chiong for short) are both holders of of same or similar products."
Supplemental Registration label trademarks.
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(3) That therefore petitioners (Cheng Chiong) deem themselves "prejudiced filed his application for its registration; and (2) provided the register of the
and/or injured damage by said registration." registered mark.

The answer of La Estrella avers: Under the same Sec. 19-A, among the facts that they may be established to
show that the registrant was not entitled to the registration of the mark sought
(1) That its trademark "meets all the necessary elements of a valid trademark" to be cancelled are (1) the mark was prescribed under paragraph (a), (b), (c)
in that it is "so disposed as to attract attention, impress the memory, and and (d), of Sec. 4 of the Rep. Act 166, as amended; (2) the mark was and is not
advertises more effectually the origin of the article to which it is attached." capable of distinguishing the registrant's goods; (3) the registrants had never
used the mark or had not actually used the mark for one year next preceding
(2) That it has been long and continuously used by it "for no other purpose than the filing of his application for registration; and (4) the registrants had
to further distinguish the products of said respondent (La Estrella) from those of abandoned his mark after registration. But although the petitioner for
its competitors." cancellation may succeed in establishing one or all of the above four facts, his
petition for cancellation will nevertheless be dismissed, under the same Sec. 19-
(3) "That the trademark in question is the original and exclusive creation of A unless he is able clearly to establish that he will damaged by the continuance
respondent" (La Estrella). on the register of the mark he seeks to cancel.

During the trial, Cheng Chiong, in support of their claim that La Estrella's label Of the two grounds alleged by the petitioner for cancellation (loser in this case,
trademark is "publici juris" and therefore incapable of distinguish La Estrella's for canceling the respondent's mark, the one pertinent to the instant motion of
goods, presented over a dozen labels of different merchants including his own. the respondent (winner in this case) for reconsideration, is the following that
To counteract this, La Estrella exhibited its own label in color and other evidence respondent's label trademark was and is common to the trade, being used not
to prove that its trademark sufficiently identifies and differentiates its only by the respondent, but by the petitioner and by the New Occidental
merchandise from those of its competitors. Distillery as well. If this allegation be true, then the respondent's trademark is
not only incapable of distinguishing respondent's goods, but its continuance on
The record disclose similar testimonies of witnesses and statements of counsel the register will damage the petitioner for cancellation.
of both parties sustaining respectively their opposing stands.
To determine whether respondent's label trademark was incapable of
In disposing of and denying the motion for reconsideration of appellant La distinguishing respondent's goods and whether its continuance on the register
Estrella, the Director of Patents correctly ruled: would damage the petitioner for cancellation, it was necessary for this tribunal
to examine the label trademark of the respondent, the petitioner, and the New
It is alleged in said motion that the Director of Patents erred (1) in finding that Occidental Distillery and to make a finding thereon. The finding was that the
the label trade-mark of the petitioner and of the respondent-registrant are not label trademark were different; that therefore, respondent's goods, the
similar, and (2) in making pronouncement on why they are not similar. petitioner for cancellation would not be damaged by the continuance on the
registers of the respondent's label trademark, and petitioner's petition for
Under Sec. 19-A Rep. Act 166, as amended, a label, used as a trademark, may cancellation should be dismissed.
be registered on the Supplemental Register provided (1) it is not a mark
prescribed or prohibited under paragraph (a), (b), (c) and (d) of Sec. 4 of the xxx xxx xxx
same acts; (2) it is capable of distinguishing the goods upon it is used; (3) it had
been used by the applicants for registration for one year next preceding the It is urged by the respondent's that the similarity of the label trademark having
filing of the application. been admitted the only issue to be decided were —

Under the same Sec. 19-A, a person may petition for the cancellation of the 1. Whether or not the label trademark of the respondent constitutes a valid
registration on the Supplementary Register was not label, used as a trademark, trademark as defined by law; and
provided (1) the registrant was not entitled to register the mark at the time he
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 83

2. Whether or nor not the registration of respondent's trademark in the

Supplemental Register had been obtained trough fraud and false representation.

and, because these were the only issues, it was an error, for this tribunal to
disregard them and to pass on the questions of the similarity of dissimilarity of
the label trademark.

These two issues are not important. What if the respondent's label trademark
was not valid trademark, not registerable under Sec. 19-A of Rep. Act No. 166?
What if the registration of the respondent's label trademark was obtained thru
the misrepresentation that respondent had been using the same since 1905?
Even if proved, these two facts were not sufficient to warrant the cancellation of
the respondent's label trademark. In order that these two facts produce
cancellation, it was necessary that they he coupled with a showing that the
maintenance of the respondent's label trademark on the register would damage
the petitioner. The continuance of the respondent's label trademark and
petitioner's on the register would damage the petitioner for cancellation only if
the respondent's mark were similar. Hence the necessity and the importance of
this tribunal making a finding on the similarity or dissimilarity between the two
marks.

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

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

Director of Patents.

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

Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador,

Concepcion and Endencia, JJ., concur.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 84

G.R. No. L-32747 November 29, 1984 Same; Same.—The similarities of the competing trademarks in this case are
completely lost in the substantial differences in the design and general
FRUIT OF THE LOOM, INC., petitioner, appearance of their respective hang tags. WE have examined the two
vs. trademarks as they appear in the hang tags submitted by the parties and We are
COURT OF APPEALS and GENERAL GARMENTS CORPORATION, impressed more by the dissimilarities than by the similarities appearing therein.
respondents. 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
Lichauco, Picazo & Agcaoli Law Office for petitioner. 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
Trademarks; In what cases there is an infringement of trademark.—In cases 80; Hyram Walke and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to be able to
involving infringement of trademark brought before this Court it has been see the obvious differences between the two trademarks in question.
consistently held that there is infringement of trademark when the use of the Furthermore, We believe that a person who buys petitioner’s products and starts
mark involved would be likely to cause confusion or mistake in the mind of the to have a liking for it, will not get confused and reach out for private
public or to deceive purchasers as to the origin or source of the commodity (Co respondent’s products when she goes to a garment store.
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 PETITION for certiorari to review the decision of the Court of Appeals. [Fruit of
Oge, 47 Phil. 75). the Loom, Inc. vs. Court of Appeals, 133 SCRA 405(1984)]
Same; In determining whether two trademarks are confusingly similar, the
entirety of both and not just a comparison of words used must be considered.— MAKASIAR, J.:
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 This is a petition for review on certiorari of the decision dated October 8, 1970
trademarks is the word FRUIT. In determining whether the trademarks are of the former Court of Appeals reversing the decision of the defunct Court of
confusingly similar, a comparison of the words is not the only determinant First Instance of Manila, Branch XIV, ordering the cancellation of private
factor. The trademarks in their entirety as they appear in their respective labels respondent's registration of the trademark FRUIT FOR EVE, enjoining it
or hang tags must also be considered in relation to the goods to which they are permanently from using trademark and ordering it to pay herein petitioner
attached. The discerning eye of the observer must focus not only on the P10,000.00 as attorney's fees.
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 Petitioner, a corporation duly organized and existing under the laws of the State
other (Bristol Myers Co. vs. Director of Patents, 17 SCRA 131). of Rhode Island, United States of America, is the registrant of a trademark,
Same; The trademarks “Fruit of the Loom” and “Fruit for Eve” are not FRUIT OF THE LOOM, in the Philippines Patent Office and was issued two
confusingly similar.—In the trademarks FRUIT OF THE LOOM and FRUIT FOR Certificates of Registration Nos. 6227 and 6680, on November 29, 1957 and July
EVE, the lone similar word is FRUIT. WE agree with the respondent court that by 26, 1958, respectively. The classes of merchandise covered by Registration
mere pronouncing the two marks, it could hardly be said that it will provoke a Certificate No. 6227 are, among others, men's, women's and children's
confusion, as to mistake one for the other. Standing by itself, FRUIT OF THE underwear, which includes women's panties and which fall under class 40 in the
LOOM is wholly different from FRUIT FOR EVE. WE do not agree with petitioner Philippine Patent Office's classification of goods. Registration Certificate No. 6680
that the dominant feature of both trademarks is the word FRUIT for even in the covers knitted, netted and textile fabrics.
printing of the trademark in both hang tags, the word FRUIT is not at all made
dominant over the other words. Private respondent, a domestic corporation, is the registrant of a trademark
Same; Where two trademarks present striking or glaring dissimilarities, no FRUIT FOR EVE in the Philippine Patent Office and was issued a Certificate of
infringement case obtains.—As to the design and coloring scheme of the hang Registration No. 10160, on January 10, 1963 covering garments similar to
tags, We believe that while there are similarities in the two marks like the red petitioner's products like women's panties and pajamas.
apple at the center of each mark, We also find differences or dissimilarities
which are glaring and striking to the eye.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 85

On March 31, 1965 petitioner filed before the lower court, a complaint for The first and second arguments advanced by petitioner are that the respondent
infringement of trademark and unfair competition against the herein private court committed an error in holding that the word FRUIT, being a generic word,
respondent. Petitioner principally alleged in the complaint that private is not capable of exclusive appropriation by petitioner and that the registrant of
respondent's trademark FRUIT FOR EVE is confusingly similar to its trademark a trademark is not entitled to the exclusive use of every word of his mark.
FRUIT OF THE LOOM used also on women's panties and other textile products. Otherwise stated, petitioner argues that the respondent court committed an
Furthermore, it was also alleged therein that the color get-up and general error in ruling that petitioner cannot appropriate exclusively the word FRUIT in
appearance of private respondent's hang tag consisting of a big red apple is a its trademark FRUIT OF THE LOOM.
colorable imitation to the hang tag of petitioner.
The third and fourth arguments submitted by petitioner which We believe is the
On April 19, 1965, private respondent filed an answer invoking the special core of the present controversy, are that the respondent court erred in holding
defense that its registered trademark is not confusingly similar to that of that there is no confusing similarity in sound and appearance between the two
petitioner as the latter alleged. Likewise, private respondent stated that the trademarks in question. According to petitioner, the prominent and dominant
trademark FRUIT FOR EVE is being used on ladies' panties and pajamas only features in both of petitioner's and private respondent's trademark are the word
whereas petitioner's trademark is used even on men's underwear and pajamas. 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
At the pre-trial on May 5, 1965, the following admissions were made: (1) That hang tag would be led to believe that the latter's products are those of the
the trademark FRUIT OF THE LOOM has been registered with the Bureau of petitioner, The resolution of these two assigned errors in the negative will lay to
Patents and it does not bear the notice 'Reg. Phil. Patent Off.', and (2) That the rest the matter in litigation and there is no need to touch on the other issues
trademark FRUIT FOR EVE has been registered with the Bureau of Patents and it raised by petitioner. Should the said questions be resolved in favor of petitioner,
bears the notice "Reg. Phil. Patent Off." and (3) That at the time of its then the other matters may be considered.
registration, plaintiff filed no opposition thereto.
Petitioner, on its fifth assigned error, blames the former Court of Appeals for not
After trial, judgment was rendered by the lower court in favor of herein touching the question of the fraudulent registration of private respondent's
petitioner, the dispositive portion of which reads as follows: trademark FRUIT FOR EVE. As may be gleaned from the questioned decision,
respondent court did not pass upon the argument of petitioner that private
Judgment is, therefore, rendered ordering the Bureau of Patents to cancel the respondent obtained the registration of its trademark thru fraud or
registration of the Trademark "Fruit for Eve", permanently enjoining Defendant misrepresentation because of the said court's findings that there is no confusing
from using the trademark "Fruit for Eve", ordering Defendant to pay plaintiff the similarity between the two trademarks in question. Hence, said court has
sum of P10,000.00 as attorney's fees and to pay the costs. allegedly nothing to determine as to who has the right to registration because
both parties have the right to have their respective trademarks registered.
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. Lastly, petitioner asserts that respondent court should have awarded damages in
Private respondent, on the other hand, sought the reversal of the lower court's its favor because private respondent had clearly profited from the infringement
decision. of the former's trademark.

On October 8, 1970, the former Court of Appeals, as already stated, rendered its The main issue involved in this case is whether or not private respondent's
questioned decision reversing the judgment of the lower court and dismissing trademark FRUIT FOR EVE and its hang tag are confusingly similar to petitioner's
herein petitioner's complaint. 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
Petitioner's motion for reconsideration having been denied, the present petition former.
was filed before this Court.
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
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 86

the mark involved would be likely to cause confusion or mistake in the mind of 2. The designs differ. Petitioner's trademark is written in almost semi-circle while
the public or to deceive purchasers as to the origin or source of the commodity that of private respondent is written in straight line in bigger letters than
(Co Tiong Sa vs. Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. petitioner's. Private respondent's tag has only an apple in its center but that of
vs. Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular vs. petitioner has also clusters of grapes that surround the apple in the center.
Jao Oge, 47 Phil. 75).
3. The colors of the hang tag are also very distinct from each other. Petitioner's
In cases of this nature, there can be no better evidence as to whether there is a hang tag is fight brown while that of respondent is pink with a white colored
confusing similarity in the contesting trademarks than the labels or hang tags center piece. The apples which are the only similarities in the hang tag are
themselves. A visual presentation of the labels or hang tags is the best differently colored. Petitioner's apple is colored dark red, while that of private
argument for one or the other, hence, We are reproducing hereunder pictures of respondent is light red.
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. The similarities of the competing trademarks in this case are completely lost in
the substantial differences in the design and general appearance of their
Petitioner asseverates in the third and fourth assignment of errors, which, as We respective hang tags. WE have examined the two trademarks as they appear in
have said, constitute the main argument, that the dominant features of both the hang tags submitted by the parties and We are impressed more by the
trademarks is the word FRUIT. In determining whether the trademarks are dissimilarities than by the similarities appearing therein. WE hold that the
confusingly similar, a comparison of the words is not the only determinant trademarks FRUIT OF THE LOOM and FRUIT FOR EVE do not resemble each
factor. The trademarks in their entirety as they appear in their respective labels other as to confuse or deceive an ordinary purchaser. The ordinary purchaser
or hang tags must also be considered in relation to the goods to which they are must be thought of as having, and credited with, at least a modicum of
attached. The discerning eye of the observer must focus not only on the intelligence (Carnation Co. vs. California Growers Wineries, 97 F. 2d 80; Hyram
predominant words but also on the other features appearing in both labels in Walke and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to be able to see the
order that he may draw his conclusion whether one is confusingly similar to the obvious differences between the two trademarks in question. Furthermore, We
other (Bristol Myers Co. vs. Director of Patents, 17 SCRA 131). 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
In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone similar when she goes to a garment store.
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 These findings in effect render immaterial the other errors assigned by petitioner
mistake one for the other. Standing by itself, FRUIT OF THE LOOM is wholly which are premised on the assumption that private respondent's trademark
different from FRUIT FOR EVE. WE do not agree with petitioner that the FRUIT FOR EVE had infringed petitioner's trademark FRUIT OF THE LOOM.
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 WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS AGAINST
over the other words. PETITIONER.

As to the design and coloring scheme of the hang tags, We believe that while SO ORDERED.
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 Aquino, Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ., concur.
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.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 87

G.R. No. 115115 July 18, 1995 VITUG, J.:

CONRAD AND COMPANY, INC., petitioner, In an Amended Decision, dated 20 April 1994, the Court of Appeals reversed an
vs. order of the Regional Trial Court ("RTC") which dismissed Civil Case No. 91-3119
HON. COURT OF APPEALS, FITRITE INC., and VICTORIA BISCUITS CO., for "Injunction with Damages with Prayer for Preliminary Injunction" filed by
INC., respondents. herein private respondents Fitrite, Inc., and Victoria Biscuits Co., Inc., against
petitioner Conrad and Company, Inc.
Trademarks; Jurisdiction; Infringement; Unfair Competition; While an
application for the administrative cancellation of a registered trademark on any The RTC, acting on a motion to dismiss filed by petitioner, ordered the dismissal
of the grounds enumerated in Section 17 of R.A. 166 falls under the exclusive of the complaint. Accordingly, for purposes of this review, the facts alleged in
cognizance of the Bureau of Patents, Trademarks and Technology Transfer the complaint, narrated by the appellate court and hereunder reproduced,
(BPTTT), an action for infringement or unfair competition, as well as the remedy should be deemed hypothetically admitted.
of injunction and relief for damages, is explicitly and unquestionably within the
competence and jurisdiction of ordinary courts.—It might be mentioned that . . . Plaintiffs appellants FITRITE, INC. and VICTORIA BISCUIT CO., INC.
while an application for the administrative cancellation of a registered trademark [private respondents here], both domestic corporations, are engaged in the
on any of the grounds enumerated in Section 17 of Republic Act No. 166, as business of manufacturing, selling and distributing biscuits and cookies bearing
amended, otherwise known as the Trade-Mark Law, falls under the exclusive the trademark "SUNSHINE" in the Philippines. Defendant CONRAD AND
cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action, however, for COMPANY [petitioner here] is also engaged in the business of importing, selling
infringement or unfair competition, as well as the remedy of injunction and relief and distributing biscuits and cookies in the Philippines.
for damages, is explicitly and unquestionably within the competence and
jurisdiction of ordinary courts. Sometime in April 1982, plaintiff FITRITE filed in the Bureau of Patents,
Same; Same; Administrative Law; Words and Phrases; Doctrine of Primary Trademarks and Technology Transfer (hereto referred as BPTTT) applications for
Jurisdiction, Explained; An application with BPTTT for an administrative registration of the trademark "SUNSHINE," both in the Supplemental and
cancellation of a registered trade mark cannot per se have the effect of Principal Registers, to be used on biscuits and cookies. Since March 31, 1981
restraining or preventing the courts from the exercise of their lawfully conferred FITRITE had exclusively used this trademark in the concept of owner on its
jurisdiction.—Surely, an application with BPTTT for an administrative cancellation biscuits and cookies. On May 20, 1983
of a registered trade mark cannot per se have the effect of restraining or FITRITE's application for this trademark in the Supplemental Register was
preventing the courts from the exercise of their lawfully conferred jurisdiction. A approved by the BPTTT and FITRITE was issued a Certificate of Registration No.
contrary rule would unduly expand the doctrine of primary jurisdiction which, SR-6217 for a term of 20 years from the date of approval. On March 22, 1990
simply expressed, would merely behoove regular courts, in controversies FITRITE's application for the same trademark in the Principal Register was
involving specialized disputes, to defer to the findings or resolutions of approved by BPTTT and FITRITE was issued a Certificate of Registration No.
administrative tribunals on certain technical matters. This rule, evidently, did not 47590 for a term of 20 years from said date of approval. On June 28, 1984
escape the appellate court for it likewise decreed that for “good cause shown, FITRITE authorized its sister company, co-plaintiff VICTORIA BISCUIT CO., to
the lower court, in its sound discretion, may suspend the action pending use this trademark on its biscuits and cookies, as well as to manufacture,
outcome of the cancellation proceedings” before BPTTT. promote, sell and distribute products bearing said trademark.

PETITION for review of a decision of the Court of Appeals. On September 7, 1990, FITRITE assigned its trademark "SUNSHINE AND
DEVICE LABEL," together with its interest and business goodwill to said
The facts are stated in the opinion of the Court. VICTORIA BISCUIT. From the time FITRITE was issued the Certificate of
     Abiera & San Jose Law Offices for petitioner. Registration for this trademark on May 20, 1983 up to the filing of the complaint
     Anni & Diansuy for private respondents. [Conrad and Company, Inc. vs. a quo FITRITE and VICTORIA BISCUIT have been manufacturing, selling and
Court of Appeals, 246 SCRA 691(1995)] distributing on a massive scale biscuits and cookies bearing this trademark; so
that through the years of extensive marketing of plaintiffs' biscuits and cookies
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 88

with this trademark, their products have become popularly known and enjoyed alleged to be registered in the United States should be considered as including
wide acceptability in Metro Manila and in the provinces. 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
Then sometime in June 1990, through the affidavit executed on May 30, 1990 by applicable to the case at bar. It cannot also be denied that there is another
defendant CONRAD's own Import Manager and Executive Assistant by the name action pending between the same parties for the same cause. Plaintiffs,
of Raul Olaya, plaintiffs succeeded in tracing and discovered that CONRAD had therefore, should not have filed this case with this court. It must, therefore, be
been importing, selling and distributing biscuits and cookies, and other food summarily dismissed. The ground of
items bearing this trademark in the Philippines. Although CONRAD had never litis pendentia is no doubt meritorious. The doctrine of primary jurisdiction
before been engaged in the importation, sale and distribution of products similar should be made to apply in this case considering that the BPTTT had already
to those of plaintiffs, on April 18, 1988 CONRAD was suddenly designated acquired jurisdiction over the suit brought by defendant's principal against the
exclusive importer and dealer of the products of "Sunshine Biscuits, Inc." for sale plaintiffs involving the right of plaintiffs to use said trademark. No doubt the
in the Philippine market; and on April 21, 1988, per the affidavit of said Raul BPTTT is better situated, considering its experience and special knowledge to
Olaya, CONRAD made its first importation, which was continuously repeated up determine the matters of fact involved. Indeed, the rulings laid down by the
to the present (May 30, 1990 [date of the affidavit]), altogether consisting of Supreme Court on the point is along this trend.
51,575 cartons and amounting to $579,224.35.
WHEREFORE, premises considered, the Motion To Dismiss filed by defendant is
Those acts of CONRAD, done without plaintiffs' consent, were deliberately hereby GRANTED. The instant case filed by plaintiffs is hereby ordered
calculated to mislead and deceive the purchasers by making them believe that DISMISSED. 2 (Emphasis ours)
its (CONRAD'S) "Sunshine" products had originated from plaintiffs and thereby
inducing them to patronize those products, all to the damage and prejudice of Unsuccessful in their attempt to have the order reconsidered, private
both the purchasing public and plaintiffs. Through their counsel, plaintiffs respondents brought the case to the Court of Appeals (CA-G.R. CV No. 38822).
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 In an amended decision, dated 20 April 1994, the appellate court reversed the
of infringement and unfair competition in violation of plaintiffs' rights, plaintiffs order of the trial court and ordered the reinstatement of the case, holding, in
can validly avail themselves of the remedies against infringement under Sec. 23 part, thusly:
of Republic Act No. 166, as amended, as well as of the remedies against unfair
competition under 1. It was a motion to dismiss that CONRAD filed instead of an answer
Sec. 29 of the same statute. 1 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
In seeking the dismissal of the complaint filed by private respondents with the did, raise such defense in a mere motion to dismiss, although such defense
trial court, petitioner invoked, among other grounds, litis pendentia, the doctrine involved factual matters outside of the allegations contained in the complaint;
of primary jurisdiction and failure to state a cause of action.
2. No evidence whatever had been introduced before the outright
The trial court, agreeing with petitioner, granted the motion to dismiss the dismissal, despite the fact that the factual issues involved in CONRAD's
complaint in an Order, dated 26 February 1992, reading thusly: "affirmative defense" were whether the "SUNSHINE" trademark has been
registered in the United States of America as claimed by CONRAD; if so
The Court agrees with defendant that internationally accepted trademarks enjoy registered, whether such registration antedated the registered trademark of
protection under Philippine laws. Defendant having been granted distributorship FITRITE in the Philippines; whether Sunshine Biscuits, Inc., CONRAD's principal,
by Sunshine Biscuits USA over Philippine territory it follows that the resolution of is the actual registrant thereof; and whether CONRAD is truly an agent of
the issue with respect to the ownership of Sunshine Biscuits which is the basis of Sunshine Biscuits, Inc. who is protected by the alleged American "SUNSHINE"
plaintiffs' claim is lodged under the exclusive jurisdiction of the BPTTT. The trademark and therefore vested with the legal capacity to raise such "affirmative
action filed by defendant's principal in whose name the trademark "SUNSHINE defense" in the action a quo; etc.; and
BISCUITS" is
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 89

3. Unless and until FITRITE's certificates both in the Supplemental and (5) ORDERS defendant-appellee Conrad and Company, Inc. to desist and
Principal Registers as registrant of said "SUNSHINE" trademark are cancelled by refrain from importing, manufacturing, selling and distributing in the Philippines
BPTTT, or so long as said "SUNSHINE" trademark has not been successfully any goods bearing the trademark "SUNSHINE & DEVICE LABEL" registered in
proved by CONRAD in the action FITRITE's name pending final decision in the action a quo, it being understood
a quo as belonging to Sunshine Biscuits, Inc. or so long as said trademark has that this order, to effect such desistance and enjoin defendant-appellee from the
not been successfully proved by Sunshine Biscuits, Inc. in the cancellation aforesaid activities, shall be considered as the Writ of Injunction itself and an
proceeding before BPTTT as belonging to it (Sunshine Biscuits), for all legal integral part of this Amended Decision.
intents and purposes the trademark belongs to FITRITE and all those acts of
importing, selling and distributing by CONRAD constitute infringement as defined No pronouncement as to costs.
in said Sec. 22 of Republic Act No. 166, as amended.
SO ORDERED. 3 (Emphasis ours.)
xxx xxx xxx
In the instant petition for review, which has additionally prayed for a writ of
In sum, we find the appeal impressed with merit, considering that FITRITE is the preliminary injunction or for a temporary restraining order, petitioner tells us
registrant of the "SUNSHINE" trademark in the Philippines; that CONRAD's claim that the appellate court has erred —
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 1. When it ordered the issuance of a writ of preliminary injunction, upon
proof; that there is no identity of causes of action and because the cause before private respondents, posting of a bond in the sum of P10,000.00, despite the
BPTTT is the cancellability of FITRITE's registration while the cause in the case a pendency of the cancellation proceedings in Inter Partes case Nos. 3397 and
quo is infringement by CONRAD of said "SUNSHINE" trademark of FITRITE; that 3739, and in subsequently amending its decision by issuing the writ of
there is implied admission that CONRAD has been importing, selling and preliminary injunction itself.
distributing biscuits, cookies and other food items bearing said "SUNSHINE"
trademark without FITRITE's consent; that so long as the cancellation 2. When respondent court failed to apply and totally disregarded the
proceeding remains pending in BPTTT, said "SUNSHINE" trademark belongs provisions of the Paris Convention for the protection of industrial property, as
exclusively to FITRITE in the Philippines, and any person using it without well as the memorandum of the Minister of Trade, dated November 20, 1980.
FITRITE's consent is guilty of infringement.
3. In holding that the doctrine of primary jurisdiction by the Bureau of
WHEREFORE, the Court hereby: 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
(1) SETS ASIDE the appealed order dated February 26, 1992 dismissing the the "SUNSHINE" trademark in question is registerable or cancellable.
complaint a quo;
4. Respondent court erred in holding that the ground of litis pendentia
(2) REINSTATES the complaint; 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
(3) ORDERS defendant Conrad and Company, Inc. to file its answer within as the cause of action in the case a quo.
the reglementary period from receipt hereof;
5. In ordering the lower court to proceed with the action a quo, although
(4) ORDERS the lower court to proceed with the action a quo, although for for a good cause shown the lower court, in its sound discretion, may suspend
a good cause shown the lower court, in its sound discretion, may suspend the the action pending outcome of the cancellation proceeding between Sunshine
action pending outcome of the cancellation proceeding between Sunshine Biscuits, Inc. and Fitrite, Inc. in inter partes Case No. 3397 and 3739 before
Biscuits, Inc. and Fitrite, Inc. in Inter Partes Case BPTTT. 4
No. 3397 before BPTTT, subject to the condition provided for in No. (5) below;
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 90

The petition was given due course; however, neither a writ of preliminary The trial court erred in adopting such fallacious argument. The issue involved in
injunction nor a restraining order was issued by this Court. 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
Unadorned, the issues would revolve simply around the question of whether or technical in nature requiring "expertise, specialized skills and knowledge" —
not the Court of Appeals committed reversible error (1) in allowing the trial court since the trademark has already been registered in both the Supplemental and
to proceed with the case for "injunction with damages" filed by private Principal Registers of BPTTT in the name of FITRITE; actually, the issue involved
respondents notwithstanding the pendency of an administrative case for the in the action a quo is whether CONRAD's acts of importing, selling and
cancellation of the former's trademark filed by supposedly "petitioner's principal" distributing biscuits, cookies and other food items bearing said registered
with the Bureau of Patents, Trademarks and Technology Transfer ("BPTTT"); "SUNSHINE" trademark in the Philippines without the consent of its registrant
and (2) in meanwhile issuing an injunction order against petitioner. (FITRITE) constitute infringement thereof in contemplation of Sec. 22 of
Republic Act No. 166, as amended. Under Sec. 22, the elements that constitute
We find for private respondents. 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,
The assailed amended decision of the appellate court reinstated the complaint business or services, among other things, bearing such registered mark or trade-
for "Injunction with Damages with Prayer for Preliminary Injunction" filed by name. This, clearly, is a factual question that does not require any specialized
private respondents with the trial court and ordered petitioner to file its answer. skill and knowledge for resolution to justify the exercise of primary jurisdiction
The appellate court enjoined petitioner in the meantime from importing, by BPTTT.
manufacturing, selling and distributing in the Philippines goods bearing the
trademark "Sunshine and Device Label" duly registered with BPTTT in private But, even assuming — which is not the case — that the issue involved here is
respondents' name. technical in nature requiring specialized skills and knowledge, still Industrialized
Enterprises does not authorize the outright dismissal of a case originally
Petitioner, invoking the case of Developers Group of Companies vs. Court of cognizable in the courts; what it says is where primary jurisdiction comes into
Appeals (219 SCRA 715), contends that the "Petitions for Cancellation" of play in a case "the judicial process is suspended pending referral of such issues
Fitrite's Certificate of Registration No. SR-6217 and No. 47590 in the to the administrative body for its view. 5
Supplemental Register and the Principal Register, respectively, which Sunshine
Biscuits, Inc., of the United States of America filed in 1989 and in 1990 We cannot see any error in the above disquisition. It might be mentioned that
(docketed Inter Partes Case No. 3397 and 3739) with BPTTT cast a cloud of while an application for the administrative cancellation of a registered trademark
doubt on private respondents' claim of ownership and exclusive right to the use on any of the grounds enumerated in Section 17 6 of Republic Act No. 166, as
of the trademark "Sunshine." Considering that this matter is at issue before the amended, otherwise known as the Trade-Mark Law, falls under the exclusive
BPTTT, which has primary jurisdiction over the case, petitioner argues, an cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action, however, for
injunctive relief from any court would be precipitate and improper. infringement or unfair competition, as well as the remedy of injunction and relief
for damages, is explicitly and unquestionably within the competence and
The appellate court, in disposing of petitioner's argument, points out: jurisdiction of ordinary courts.

Notwithstanding those provisions, it is CONRAD's contention — relying on the Private respondents are the holder of Certificate of Registration No. 47590
ruling in Industrial Enterprises, Inc. vs. Court of Appeals (G.R. No. 88550, 184 (Principal Register) for the questioned trademark. In Lorenzana vs. Macagba,
SCRA 426 [1990]) — that, because technical matters or intricate issues of fact 154 SCRA 723, cited with approval in Del Monte Corporation vs. Court of
regarding the ownership of the trademark in question are involved, its Appeals, 181 SCRA 410, we have declared that registration in the Principal
determination requires the expertise, specialized skills and knowledge of the Register gives rise to a presumption of validity of the registration and of the
proper administrative body, which is BPTTT, which has the primary jurisdiction registrant's ownership and right to the exclusive use of the mark. It is precisely
over the action a quo; and therefore the trial court should, and as it correctly such a registration that can serve as the basis for an action for infringement. 7
did, yield its jurisdiction to BPTTT. 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:
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 91

is an urgent necessity to prevent serious damage to FITRITE's business interest,

Sec. 23.Actions, and damages and injunction for infringement. — Any person goodwill and profit, thus under the authority of Sec. 23 of said Republic Act No.
entitled to the exclusive use of a registered mark or trade-name may recover 166, as amended, a preliminary injunction may be issued in favor of FITRITE to
damages in a civil action from any person who infringes his rights, and the maintain the status quo pending trial of the action a quo on the merits without
measure of the damages suffered shall be either the reasonable profit which the prejudice to the suspension of such action if the aforesaid cancellation
complaining party would have made, had the defendant not infringe his said proceeding before the BPTTT has not been concluded. 8 (Emphasis supplied.)
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 The appellate court's finding that there is an urgent necessity for the issuance of
reasonable certainty, then the court may award as damages a reasonable the writ of preliminary injunction pending resolution by BPTTT of the petition for
percentage based upon the amount of gross sales of the defendant or the value cancellation filed by Sunshine USA in Inter Partes Case No. 3397 would indeed
of the services in connection with which the mark or trade-name was used in the appear to have merit. The prematurity of petitioner's motion to dismiss places
infringement of the rights of the complaining party. In cases where actual intent the case at bench quite apart from that of Developers Group of Companies, Inc.
to mislead the public or to defraud the complaining party shall be shown, in the vs. Court of Appeals, 219 SCRA 715. The allegations of the complaint, perforced
discretion of the court, the damages may be doubled. hypothetically deemed admitted by petitioner, would here justify the issuance by
appellate court of its injunction order. Petitioner, itself, does not even appear to
The complaining party, upon proper showing, may also be granted injunction. 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
Sec. 27.Jurisdiction of [Regional Trial Court]. All actions under this Chapter and foreign registration that should be respected conformably with the Convention of
Chapters VI and VII hereof shall be brought before the proper [Regional Trial the Union of Paris for the Protection of Industrial Property are mere
Court]. asseverations in the motion to dismiss which, along with some other factual
assertions, are yet to be established.
Surely, an application with BPTTT for an administrative cancellation of a
registered trade mark cannot per se have the effect of restraining or preventing All given, we find no reversible error on the part of the appellate court in its
the courts from the exercise of their lawfully conferred jurisdiction. A contrary appealed decision.
rule would unduly expand the doctrine of primary jurisdiction which, simply
expressed, would merely behoove regular courts, in controversies involving In closing, the Court would urge the Bureau of Patents, Trademarks and
specialized disputes, to defer to the findings of resolutions of administrative Technology Transfer to resolve with dispatch the administrative cases (Inter
tribunals on certain technical matters. This rule, evidently, did not escape the Partes Case No. 3397 and No. 3739) referred to in this decision.
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 WHEREFORE, the petition for review is DENIED for lack of merit, and the
cancellation proceedings" before BPTTT. questioned amended decision of the Court of Appeals is AFFIRMED. Costs
against petitioner.
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 Romero, Melo and Francisco, JJ., concur.
the petition hereinbefore discussed, would be that which focuses on the
propriety of the injunction order of the appellate court. On this score, the Feliciano, J., concurs in the result.
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
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 92

G.R. No. 139300 March 14, 2001 (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.”
AMIGO MANUFACTURING, INC., petitioner, Same; Same; Same; Administrative Law; Evidence; Administrative agencies’
vs. findings of fact in matters falling under their jurisdiction are generally accorded
CLUETT PEABODY CO., INC., respondent. great respect, if not finality.—In any case, absent any clear showing to the
contrary, this Court accepts the finding of the Bureau of Patents that it was
Trademarks and Tradenames; Infringement; Unfair Competition; A certificate of respondent which had prior use of its trademark, as shown in the various
registration of a mark or tradename is prima facie evidence of the validity of the Certificates of Registration issued in its favor. Verily, administrative agencies’
registration, the registrant’s ownership of the mark or tradename, and of the findings of fact in matters falling under their jurisdiction are generally accorded
registrant’s exclusive right to use the same in connection with the goods, respect, if not finality. Thus, the Court has held: “x x x. By reason of the special
business or services specified in the certificate, subject to any conditions and knowledge and expertise of said administrative agencies over matters falling
limitations stated therein.—The registration of the above marks in favor of under their jurisdiction, they are in a better position to pass judgment thereon;
respondent constitutes prima facie evidence, which petitioner failed to overturn thus, their findings of fact in that regard are generally accorded great respect, if
satisfactorily, of respondent’s ownership of those marks, the dates of not finality, by the courts. The findings of fact of an administrative agency must
appropriation and the validity of other pertinent facts stated therein. Indeed, be respected as long as they are supported by substantial evidence, even if such
Section 20 of Republic Act 166 provides as follows: “Sec. 20. Certificate of evidence might not be overwhelming or even preponderant. It is not the task of
registration prima facie evidence of validity.—A certificate of registration of a an appellate court to weigh once more the evidence submitted before the
mark or tradename shall be prima facie evidence of the validity of the administrative body and to substitute its own judgment for that of the
registration, the registrant’s ownership of the mark or tradename, and of the administrative agency in respect of sufficiency of evidence.”
registrant’s exclusive right to use the same in connection with the goods, Same; Same; Same; Tests to Determine Whether Trademarks are Confusingly
business or services specified in the certificate, subject to any conditions and Similar; Words and Phrases; “Dominancy Test” and “Holistic Test,” Explained;
limitations stated therein.” The test of dominancy focuses on the similarity of the prevalent features of the
Same; Same; Same; The fact that the marks were indeed registered by a party competing trademarks which might cause confusion or deception and thus
shows that it did use them on the date indicated in the Certificate of constitutes infringement, while the holistic test mandates that the entirety of the
Registration.—Section 5-A of Republic Act No. 166 states that an applicant for a marks in question must be considered in determining confusing similarity.—In
trademark or tradename shall, among others, state the date of first use. The Emerald Garment Manufacturing Corporation v. Court of Appeals, this Court
fact that the marks were indeed registered by respondent shows that it did use stated that in determining whether trademarks are confusingly similar,
them on the date indicated in the Certificate of Registration. jurisprudence has developed two kinds of tests, the Dominancy Test and the
Same; Same; Same; Registration with the supplemental register gives no Holistic Test. In its words: “In determining whether colorable imitation exists,
presumption of ownership of the trademark.—Furthermore, petitioner registered jurisprudence has developed two kinds of tests—the Dominancy Test applied in
its trademark only with the supplemental register. In La Chemise Lacoste v. Asia Brewery, Inc. v. Court of Appeals and other cases and the Holistic Test
Fernandez, the Court held that registration with the supplemental register gives developed in Del Monte Corporation v. Court of Appeals and its proponent cases.
no presumption of ownership of the trademark. Said the Court: “The registration As its title implies, the test of dominancy focuses on the similarity of the
of a mark upon the supplemental register is not, as in the case of the principal prevalent features of the competing trademarks which might cause confusion or
register, prima facie evidence of (1) the validity of registration; (2) registrant’s deception and thus constitutes infringement, x x x x x x x x x . . . If the
ownership of the mark; and (3) registrant’s exclusive right to use the mark. It is competing trademark contains the main or essential or dominant features of
not subject to opposition, although it may be cancelled after its issuance. Neither another, and confusion and deception is likely to result, infringement takes
may it be the subject of interference proceedings. Registration [i]n the place. Duplication or imitation is not necessary; nor is it necessary that the
supplemental register is not constructive notice of registrant’s claim of infringing label should suggest an effort to imitate. [C. Neilman Brewing Co. v.
ownership. A supplemental register is provided for the registration because of Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs.
some defects (conversely, defects which make a mark unregistrable on the Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of
principal register, yet do not bar them from the supplemental register.)’ 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
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 93

Rubber Corporation vs. Hanover Rubber Co., 107 F. 2d 588; x x x.) x x x x x x x Petitioner Amigo Manufacturing Inc. challenges, under Rule 45 of the Rules of
x x On the other side of the spectrum, the holistic test mandates that the Court, the January 14, 1999 Resolution1 of the Court of Appeals (CA) in CA-GR
entirety of the marks in question must be considered in determining confusing SP No. 22792, which reversed, on reconsideration, its own September 29, 1998
similarity.” Decision.2 The dispositive portion of the assailed Resolution reads as follows:
Same; Same; Same; Intellectual Property Law; Due Process; Duly registered
trademarks are protected by law as intellectual properties and cannot be "WHEREFORE, the Motion for Reconsideration is GRANTED, and the Decision
appropriated by others without violating the due process clause.—Let it be dated September 29, 1998 REVERSED. Consequently, the decision rendered by
remembered that duly registered trademarks are protected by law as intellectual the Director of Patents dated September 3, 1990 is hereby AFFIRMED."
properties and cannot be appropriated by others without violating the due
process clause. An infringement of intellectual rights is no less vicious and The Decision of the Director of Patents, referred to by the CA, disposed as
condemnable as theft of material property, whether personal or real. follows:
Same; Same; Same; Conflict of Laws; Paris Convention; A foreign-based
trademark owner, whose country of domicile is a party to an international "WHEREFORE, the Petition is GRANTED. Consequently, Certificate of Registration
convention relating to protection of trademarks, is accorded protection against No. SR-2206 issued to Respondent-Registrant [herein petitioner] is hereby
infringement or any unfair competition.—Thus, applicable is the Union cancelled.
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 "Let the records of this case be remanded to the Patent/Trademark Registry and
the United States are members. Respondent is domiciled in the United States EDP Division for appropriate action in accordance with this Decision."
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 Petitioner also seeks the reversal of the June 30, 1999 CA Resolution3 denying
country of domicile is a party to an international convention relating to its own Motion for Reconsideration.
protection of trademarks, is accorded protection against infringement or any
unfair competition as provided in Section 37 of Republic Act 166, the Trademark The Facts
Law which was the law in force at the time this case was instituted.
The facts, which are undisputed, are summarized by the Court of Appeals in its
PETITION for review on certiorari of a decision of the Court of Appeals. original Decision, as follows:

The facts are stated in the opinion of the Court. "The source of the controversy that precipitated the filing by [herein
     Arturo S. Santos for petitioner. Respondent] Cluett Peabody Co., Inc. (a New York corporation) of the present
     V.E. Del Rosario & Partners for respondent. [Amigo Manufacturing, Inc. vs. case against [herein Petitioner] Amigo Manufacturing Inc. (a Philippine
Cluett Peabody Co., Inc., 354 SCRA 434(2001)] corporation) for cancellation of trademark is [respondent's] claim of exclusive
PANGANIBAN, J.: ownership (as successor in interest of Great American Knitting Mills, Inc.) of the
following trademark and devices, as used on men's socks:
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 a) GOLD TOE, under Certificate of Registration No. 6797 dated September 22,
sufficient evidence to the contrary. In the present case, the Bureau considered 1958;
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 b) DEVICE, representation of a sock and magnifying glass on the toe of a sock,
the two products are confusingly if not deceptively the same. under Certificate of Registration No. 13465 dated January 25, 1968;

Statement of the Case 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
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 94

other by lines of contrasting color of the major part of the stocking' under form of copying is to employ enough points of similarity to confuse the public
Certificate of Registration No. 13887 dated May 9, 1968; and with enough points of difference to confuse the courts.' Furthermore,
[petitioner]'s mark is only registered with the Supplemental Registry which gives
d) LINENIZED, under Certificate of Registration No. 15440 dated April 13, 1970. no right of exclusivity to the owner and cannot overturn the presumption of
validity and exclusiv[ity] given to a registered mark.
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' "Finally, the Philippines and the United States are parties to the Union
background with a magnified design of the sock's garter, and is labeled 'Amigo Convention for the Protection of Industrial Property adopted in Paris on March
Manufacturing Inc., Mandaluyong, Metro Manila, Made in the Philippines'. 20, 1883, otherwise known as the Paris Convention. (Puma Sportschuhfabriken
Rudolf Dassler K.G. v. Intermediate Appellate Court, 158 SCRA 233).
In the Patent Office, this case was heard by no less than six Hearing Officers: [Respondent] is domiciled in the United States of America and is the lawful
Attys. Rodolfo Gilbang, Rustico Casia, M. Yadao, Fabian Rufina, Neptali Bulilan owner of several trademark registrations in the United States for the mark
and Pausi Sapak. The last named officer drafted the decision under appeal which 'GOLD TOE'.
was in due court signed and issued by the Director of Patents (who never
presided over any hearing) adversely against the respondent Amigo xxx xxx x x x'
Manufacturing, Inc. as heretofore mentioned (supra, p.1).
By virtue of the Philippines' membership to the Paris Union, trademark rights in
The decision pivots on two point: the application of the rule of idem sonans and favor of the [respondent] were created. The object of the Convention is to
the existence of a confusing similarity in appearance between two trademarks accord a national of a member nation extensive protection against infringement
(Rollo, p. 33)."4 and other types of unfair competition. (Puma Sportschuhfabriken Rudolf Dassler
K.G. v. Intermediate Appellate Court, 158 SCRA 233; La Chemise Lacoste, S.A.
Ruling of the Court of Appeals v. Fernandez, 129 SCRA 373)"5

In its assailed Resolution, the CA held as follows: Hence, this Petition.6

"After a careful consideration of [respondent's] arguments and a re-appreciation Issues

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 In its Memorandum,7 petitioner raises the following issues for the consideration
Patents, there is hardly any variance in the appearance of the marks 'GOLD TOP' of this Court:
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. "I
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 Whether or not the Court of Appeals overlooked that petitioner's trademark was
Philippines of tradename previously used in the Philippines by another and not used in commerce in the Philippines earlier than respondent's actual use of its
abandoned, as to be likely, when applied to or used in connection with the trademarks, hence the Court of Appeals erred in affirming the Decision of the
goods, business or services of the applicant, to cause confusion or mistake or to Director of Patents dated September 3, 1990.
deceive the purchasers. [Petitioner]'s mark is a combination of the different
registered marks owned by [respondent]. As held in Del Monte Corporation v. II
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 Since the petitioner's actual use of its trademark was ahead of the respondent,
confusion made by the article upon the eye of the casual purchaser who is whether or not the Court of Appeals erred in canceling the registration of
unsuspicious and off his guard, is such as to likely result in confounding it with petitioner's trademark instead of canceling the trademark of the respondent.
the original. As held by the Court in the same decision[,] 'The most successful
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 95

III pertinent facts stated therein. Indeed, Section 20 of Republic Act 166 provides
as follows:
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 "Sec. 20. Certificate of registration prima facie evidence of validity. - A certificate
respondent's trademarks. of registration of a mark or trade-name shall be prima facie evidence of the
validity of the registration, the registrant's ownership of the mark or trade-name,
IV 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
Whether or not the Court of Appeals erred in applying the Paris Convention in and limitations stated therein."9
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 Moreover, the validity of the Certificates of Registration was not questioned.
Neither did petitioner present any evidence to indicate that they were
In the main, the Court will resolve three issues: (1) the date of actual use of the fraudulently issued. Consequently, the claimed dates of respondent's first use of
two trademarks; (2) their confusing similarities, and (3) the applicability of the the marks are presumed valid. Clearly, they were ahead of petitioner's claimed
Paris Convention. date of first use of "Gold Top and Device" in 1958.

The Court's Ruling Section 5-A of Republic Act No. 16610 states that an applicant for a trademark
or trade name shall, among others, state the date of first use. The fact that the
The Petition has no merit. marks were indeed registered by respondent shows that it did use them on the
date indicated in the Certificate of Registration.
First Issue:
Dates of First Use of Trademark and Devices 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
Petitioner claims that it started the actual use of the trademark "Gold Top and respondent started using it only on May 15, 1962, we can make no finding that
Device" in September 1956, while respondent began using the trademark "Gold petitioner had started using it ahead of respondent.
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. Furthermore, petitioner registered its trademark only with the supplemental
The latter's witnesses supposedly contradicted themselves as to the date of first register. In La Chemise Lacoste v. Fernandez,11 the Court held that registration
actual use of their trademark, coming up with different dates such as 1952, with the supplemental register gives no presumption of ownership of the
1947 and 1938. trademark. Said the Court:

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 "The registration of a mark upon the supplemental register is not, as in the case
trademark and the devices in question prior to petitioner's use of its own. During of the principal register, prima facie evidence of (1) the validity of registration;
the hearing at the Bureau of Patents, respondent presented Bureau registrations (2) registrant's ownership of the mark; and (3) registrant's exclusive right to use
indicating the dates of first use in the Philippines of the trademark and the the mark. It is not subject to opposition, although it may be cancelled after its
devices as follows: a) March 16, 1954, Gold Toe; b) February 1, 1952, the issuance. Neither may it be the subject of interference proceedings. Registration
Representation of a Sock and a Magnifying Glass; c) January 30, 1932, the Gold [i]n the supplemental register is not constructive notice of registrant's claim of
Toe Representation; and d) February 28, 1952, "Linenized." ownership. A supplemental register is provided for the registration because of
some defects (conversely, defects which make a mark unregistrable on the
The registration of the above marks in favor of respondent constitutes prima principal register, yet do not bar them from the supplemental register.)'
facie evidence, which petitioner failed to overturn satisfactorily, of respondent's (Agbayani, II Commercial Laws of the Philippines, 1978, p. 514, citing Uy Hong
ownership of those marks, the dates of appropriation and the validity of other Mo v. Titay & Co., et al., Dec. No. 254 of Director of Patents, Apr. 30, 1968."
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 96

As to the actual date of first use by respondent of the four marks it registered, "As shown by the drawings and labels on file, the mark registered by
the seeming confusion may have stemmed from the fact that the marks have Respondent-Registrant under Registration No. SR-2206 is a combination of the
different dates of first use. Clearly, however, these dates are indicated in the abovementioned trademarks registered separately by the petitioner in the
Certificates of Registration. Philippines and the United States.

In any case, absent any clear showing to the contrary, this Court accepts the "With respect to the issue of confusing similarity between the marks of the
finding of the Bureau of Patents that it was respondent which had prior use of petitioner and that of the respondent-registrant applying the tests of idem
its trademark, as shown in the various Certificates of Registration issued in its sonans, the mark 'GOLD TOP & DEVICE' is confusingly similar with the mark
favor. Verily, administrative agencies' findings of fact in matters falling under 'GOLD TOE'. The difference in sound occurs only in the final letter at the end of
their jurisdiction are generally accorded great respect, if not finality. Thus, the the marks. For the same reason, hardly is there any variance in their
Court has held: 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
"x x x. By reason of the special knowledge and expertise of said administrative incorporates petitioner's 'LINENIZED' which by itself is a registered mark."13
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 The Bureau considered the drawings and the labels, the appearance of the
generally accorded great respect, if not finality, by the courts. The findings of labels, the lettering, and the representation of a man's foot wearing a sock.
fact of an administrative agency must be respected as long as they are Obviously, its conclusion is based on the totality of the similarities between the
supported by substantial evidence, even if such evidence might not be parties' trademarks and not on their sounds alone.
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 In Emerald Garment Manufacturing Corporation v. Court of Appeals,14 this Court
substitute its own judgment for that of the administrative agency in respect of stated that in determining whether trademarks are confusingly similar,
sufficiency of evidence."12 jurisprudence has developed two kinds of tests, the Dominancy Test15 and the
Holistic Test.16 In its words:
Second Issue:
Similarity of Trademarks "In determining whether colorable imitation exists, jurisprudence has developed
two kinds of tests – the Dominancy Test applied in Asia Brewery, Inc. v. Court of
Citing various differences between the two sets of marks, petitioner assails the Appeals and other cases and the Holistic Test developed in Del Monte
finding of the director of patents that its trademark is confusingly similar to that Corporation v. Court of Appeals and its proponent cases.
of respondent. Petitioner points out that the director of patents erred in its
application of the idem sonans rule, claiming that the two trademarks "Gold Toe" As its title implies, the test of dominancy focuses on the similarity of the
and "Gold Top" do not sound alike and are pronounced differently. It avers that prevalent features of the competing trademarks which might cause confusion or
since the words gold and toe are generic, respondent has no right to their deception and thus constitutes infringement.
exclusive use.
xxx xxx xxx
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 . . . . If the competing trademark contains the main or essential or dominant
"Gold Top" with that of respondent's "Gold Toe." Admittedly, the pronunciations features of another, and confusion and deception is likely to result, infringement
of the two do not, by themselves, create confusion. 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.
The Bureau of Patents, however, did not rely on the idem sonans test alone in Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs.
arriving at its conclusion. This fact is shown in the following portion of its Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of
Decision: trademarks is whether the use of the marks involved would be likely to cause
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 97

confusion or mistakes in the mind of the public or deceive purchasers. (Auburn The Paris Convention
Rubber Corporation vs. Hanover Rubber Co., 107 F. 2d 588; x x x.)
Petitioner claims that the Court of Appeals erred in applying the Paris
xxx xxx xxx Convention. Although respondent registered its trademark ahead, petitioner
argues that the actual use of the said mark is necessary in order to be entitled
On the other side of the spectrum, the holistic test mandates that the entirety of to the protection of the rights acquired through registration.
the marks in question must be considered in determining confusing similarity."
As already discussed, respondent registered its trademarks under the principal
In the present case, a resort to either the Dominancy Test or the Holistic Test register, which means that the requirement of prior use had already been
shows that colorable imitation exists between respondent's "Gold Toe" and fulfilled. To emphasize, Section 5-A of Republic Act 166 requires the date of first
petitioner's "Gold Top." A glance at petitioner's mark shows that it definitely has use to be specified in the application for registration. Since the trademark was
a lot of similarities and in fact looks like a combination of the trademark and successfully registered, there exists a prima facie presumption of the correctness
devices that respondent has already registered; namely, "Gold Toe," the of the contents thereof, including the date of first use. Petitioner has failed to
representation of a sock with a magnifying glass, the "Gold Toe" representation rebut this presumption.
and "linenized."
Thus, applicable is the Union Convention for the Protection of Industrial Property
Admittedly, there are some minor differences between the two sets of marks. adopted in Paris on March 20, 1883, otherwise known as the Paris Convention,
The similarities, however, are of such degree, number and quality that the of which the Philippines and the United States are members. Respondent is
overall impression given is that the two brands of socks are deceptively the domiciled in the United States and is the registered owner of the "Gold Toe"
same, or at least very similar to each another. An examination of the products in trademark. Hence, it is entitled to the protection of the Convention. A foreign-
question shows that their dominant features are gold checkered lines against a based trademark owner, whose country of domicile is a party to an international
predominantly black background and a representation of a sock with a convention relating to protection of trademarks,17 is accorded protection against
magnifying glass. In addition, both products use the same type of lettering. Both infringement or any unfair competition as provided in Section 37 of Republic Act
also include a representation of a man's foot wearing a sock and the word 166, the Trademark Law which was the law in force at the time this case was
"linenized" with arrows printed on the label. Lastly, the names of the brands are instituted.
similar -- "Gold Top" and "Gold Toe." Moreover, it must also be considered that
petitioner and respondent are engaged in the same line of business. In sum, petitioner has failed to show any reversible error on the part of the
Court of Appeals. Hence, its Petition must fail.
Petitioner cannot therefore ignore the fact that, when compared, most of the
features of its trademark are strikingly similar to those of respondent. In WHEREFORE, the Petition is hereby DENIED and the assailed Resolution
addition, these representations are at the same location, either in the sock itself AFFIRMED. Costs against petitioner.
or on the label. Petitioner presents no explanation why it chose those
representations, considering that these were the exact symbols used in SO ORDERED.
respondent's marks. Thus, the overall impression created is that the two
products are deceptively and confusingly similar to each other. Clearly, petitioner Melo, Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez JJ., concur.
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:
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 98

G.R. No. 154342 July 14, 2004 trademark is a prerequisite to the action, whereas in unfair competition
registration is not necessary.
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., Same; Same; Same; Elements of Trademark Infringement under Article 6 of the
petitioner, Paris Convention.—Under Article 6 of the Paris Convention, the following are the
vs. elements of trademark infringement: (a) registration or use by another person of
E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., a trademark which is a reproduction, imitation or translation liable to create
respondents. confusion, (b) of a mark considered by the competent authority of the country of
registration or use to be well-known in that country and is already the mark of a
Remedial Law; Appeals; As a general rule, a petition for review on certiorari person entitled to the benefits of the Paris Convention, and (c) such trademark
under Rule 45 must raise only “questions of law.”—As a general rule, a petition is used for identical or similar goods.
for review on certiorari under Rule 45 must raise only “questions of law” that is, Same; Same; Same; Section 20 of the Trademark Law considers the trademark
the doubt pertains to the application and interpretation of law to a certain set of registration certificate as prima facie evidence of the validity of the registration,
facts) and not “questions of fact” (where the doubt concerns the truth or the registrant’s ownership and exclusive right to use the trademark in connection
falsehood of alleged facts), otherwise, the petition will be denied. We are not a with the goods, business or services as classified by the Director of Patents and
trier of facts and the Court of Appeals’ factual findings are generally conclusive as specified in the certificate; In the adjudication of trademark rights between
upon us. contending parties, equitable principles of laches, estoppel, and acquiescence
Intellectual Property; Trademarks; Unfair Competition; The law on unfair may be considered and applied.— Section 20 of the Trademark Law considers
competition is broader and more inclusive than the law on trademark the trademark registration certificate as prima facie evidence of the validity of
infringement; Conduct constitutes unfair competition if the effect is to pass off the registration, the registrant’s ownership and exclusive right to use the
on the public the goods of one man as the goods of another. Although the laws trademark in connection with the goods, business or services as classified by the
on trademark infringement and unfair competition have a common conception at Director of Patents and as specified in the certificate, subject to the conditions
their root, that is, a person shall not be permitted to misrepresent his goods or and limitations stated therein. Sections 2 and 2-A of the Trademark Law
his business as the goods or business of another, the law on unfair competition emphasize the importance of the trademark’s actual use in commerce in the
is broader and more inclusive than the law on trademark infringement. The Philippines prior to its registration. In the adjudication of trademark rights
latter is more limited but it recognizes a more exclusive right derived from the between contending parties, equitable principles of laches, estoppel, and
trademark adoption and registration by the person whose goods or business is acquiescence may be considered and applied.
first associated with it. The law on trademarks is thus a specialized subject Same; Same; Same; Elements of Trademark Infringement Under the Trademark
distinct from the law on unfair competition, although the two subjects are Law.—Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore,
entwined with each other and are dealt with together in the Trademark Law the following constitute the elements of trademark infringement: (a) a
(now, both are covered by the IP Code). Hence, even if one fails to establish his trademark actually used in commerce in the Philippines and registered in the
exclusive property right to a trademark, he may still obtain relief on the ground principal register of the Philippine Patent Office; (b) is used by another person in
of his competitor’s unfairness or fraud. Conduct constitutes unfair competition if connection with the sale, offering for sale, or advertising of any goods, business
the effect is to pass off on the public the goods of one man as the goods of or services or in connection with which such use is likely to cause confusion or
another. It is not necessary that any particular means should be used to this mistake or to deceive purchasers or others as to the source or origin of such
end. goods or services, or identity of such business; or such trademark is reproduced,
Same; Same; Same; Distinction Between Trademark Infringement and Unfair counterfeited, copied or colorably imitated by another person and such
Competition.—In Del Monte Corporation vs. Court of Appeals, we distinguished reproduction, counterfeit, copy or colorable imitation is applied to labels, signs,
trademark infringement from unfair competition: (1) Infringement of trademark prints, packages, wrappers, receptacles or advertisements intended to be used
is the unauthorized use of a trademark, whereas unfair competition is the upon or in connection with such goods, business or services as to likely cause
passing off of one’s goods as those of another. (2) In infringement of trademark confusion or mistake or to deceive purchasers; (c) the trademark is used for
fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent identical or similar goods, and (d) such act is done without the consent of the
is essential. (3) In infringement of trademark the prior registration of the trademark registrant or assignee.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 99

Same; Same; Same; In case of domestic legal disputes on any conflicting that the GALLO trademark registration certificates in the Philippines and in other
provisions between the Paris Convention and the Trademark Law the latter will countries expressly state that they cover wines only, without any evidence or
prevail.—In summary, the Paris Convention protects wellknown trademarks only indication that registrant Gallo Winery expanded or intended to expand its
(to be determined by domestic authorities), while the Trademark Law protects business to cigarettes. Thus, by strict application of Section 20 of the Trademark
all trademarks, whether well-known or not, provided that they have been Law, Gallo Winery’s exclusive right to use the GALLO trademark should be
registered and are in actual commercial use in the Philippines. Following limited to wines, the only product indicated in its registration certificates. This
universal acquiescence and comity, in case of domestic legal disputes on any strict statutory limitation on the exclusive right to use trademarks was amply
conflicting provisions between the Paris Convention (which is an international clarified in our ruling in Faberge, Inc. vs. Intermediate Appellate Court.
agreement) and the Trademark law (which is a municipal law) the latter will Same; Same; Same; There are two types of confusion in trademark
prevail. infringement, confusion of goods and confusion of business; Circumstances to
Same; Same; Same; Under both the Paris Convention and the Trademark Law, Determine the Likelihood of Confusion.—There are two types of confusion in
the protection of a registered trademark is limited only to goods identical or trademark infringement. The first is “confusion of goods” when an otherwise
similar to those in respect of which such trademark is registered and only when prudent purchaser is induced to purchase one product in the belief that he is
there is likelihood of confusion; Proof of all the elements of trademark purchasing another, in which case defendant’s goods are then bought as the
infringement is a condition precedent to any finding of liability.—Under both the plaintiff’s and its poor quality reflects badly on the plaintiff’s reputation. The
Paris Convention and the Trademark Law, the protection of a registered other is “confusion of business” wherein the goods of the parties are different
trademark is limited only to goods identical or similar to those in respect of but the defendant’s product can reasonably (though mistakenly) be assumed to
which such trademark is registered and only when there is likelihood of originate from the plaintiff, thus deceiving the public into believing that there is
confusion. Under both laws, the time element in commencing infringement cases some connection between the plaintiff and defendant which, in fact, does not
is material in ascertaining the registrant’s express or implied consent to exist. In determining the likelihood of confusion, the Court must consider: [a]
another’s use of its trademark or a colorable imitation thereof. This is why the resemblance between the trademarks; [b] the similarity of the goods to
acquiescence, estoppel or laches may defeat the registrant’s otherwise valid which the trademarks are attached; [c] the likely effect on the purchaser and [d]
cause of action. Hence, proof of all the elements of trademark infringement is a the registrant’s express or implied consent and other fair and equitable
condition precedent to any finding of liability. considerations.
Same; Same; Same; Actual use in commerce in the Philippines is an essential Same; Same; Same; Two Tests in Determining Similarity and Likelihood of
prerequisite for the acquisition of ownership over a trademark.— In Emerald Confusion in Trademark Resemblance.—Jurisprudence has developed two tests
Garment Manufacturing Corporation vs. Court of Appeals, we reiterated our in determining similarity and likelihood of confusion in trademark resemblance:
rulings in Pagasa Industrial Corporation vs. Court of Appeals, Converse Rubber (a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals and
Corporation vs. Universal Rubber Products, Inc., Sterling Products International, other cases, and (b) the Holistic or Totality Test used in Del Monte Corporation
Inc. vs. Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan vs. vs. Court of Appeals and its preceding cases.
Intermediate Appellate Court, and Philip Morris vs. Court of Appeals, giving Same; Same; Same; Same; Concept of “Related Goods.”—Thus, apart from the
utmost importance to the actual commercial use of a trademark in the strict application of Section 20 of the Trademark Law and Article 6 of the Paris
Philippines prior to its registration, notwithstanding the provisions of the Paris Convention which proscribe trademark infringement not only of goods specified
Convention: x x x x x x x x x In addition to the foregoing, we are constrained to in the certificate of registration but also of identical or similar goods, we have
agree with petitioner’s contention that private respondent failed to prove prior also uniformly recognized and applied the modern concept of “related goods.”
actual commercial use of its “LEE” trademark in the Philippines before filing its Simply stated, when goods are so related that the public may be, or is actually,
application for registration with the BPTTT and hence, has not acquired deceived and misled that they come from the same maker or manufacturer,
ownership over said mark. Actual use in commerce in the Philippines is an trademark infringement occurs.
essential prerequisite for the acquisition of ownership over a trademark pursuant Same; Same; Same; Same; Factors to be Considered in Resolving Whether
to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) x x x Goods are Related.—In resolving whether goods are related, several factors
Same; Same; Same; By strict application of Section 20 of the Trademark Law, come into play: (a) the business (and its location) to which the goods belong,
Gallo Winery’s exclusive right to use the GALLO trademark should be limited to (b) the class of product to which the goods belong, (c) the product’s quality,
wines, the only product indicated in its registration certificates.—We also note quantity, or size, including the nature of the package, wrapper or container, (d)
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 100

the nature and cost of the articles, (e) the descriptive properties, physical
attributes or essential characteristics with reference to their form, composition, The Factual Background
texture or quality, (f) the purpose of the goods, (g) whether the article is bought
for immediate consumption, that is, day-to-day household items, (h) the fields of Respondent Gallo Winery is a foreign corporation not doing business in the
manufacture, (i) the conditions under which the article is usually purchased and Philippines but organized and existing under the laws of the State of California,
(j) the channels of trade through which the goods flow, how they are United States of America (U.S.), where all its wineries are located. Gallo Winery
distributed, marketed, displayed and sold. produces different kinds of wines and brandy products and sells them in many
Same; Same; Same; Same; The mere fact that one person has adopted and countries under different registered trademarks, including the GALLO and
used a particular trademark for his goods does not prevent the adoption and use ERNEST & JULIO GALLO wine trademarks.
of the same trademark by others on articles of a different description.—We are
mindful that product classification alone cannot serve as the decisive factor in Respondent domestic corporation, Andresons, has been Gallo Winery’s exclusive
the resolution of whether or not wines and cigarettes are related goods. wine importer and distributor in the Philippines since 1991, selling these
Emphasis should be on the similarity of the products involved and not on the products in its own name and for its own account.5
arbitrary classification or general description of their properties or
characteristics. But the mere fact that one person has adopted and used a Gallo Winery’s GALLO wine trademark was registered in the principal register of
particular trademark for his goods does not prevent the adoption and use of the the Philippine Patent Office (now Intellectual Property Office) on November 16,
same trademark by others on articles of a different description. 1971 under Certificate of Registration No. 17021 which was renewed on
PETITION for review on certiorari of the decision and resolution of the Court of November 16, 1991 for another 20 years.6 Gallo Winery also applied for
Appeals and decision of the trial court. registration of its ERNEST & JULIO GALLO wine trademark on October 11, 1990
under Application Serial No. 901011-00073599-PN but the records do not
The facts are stated in the opinion of the Court. disclose if it was ever approved by the Director of Patents.7
     Hector L. Hofileña and Miguelito V. Ocampo for petitioners.
     Sycip, Salazar, Hernandez and Gatmaitan for respondents. [Mighty On the other hand, petitioners Mighty Corporation and La Campana and their
Corporation vs. E. & J. Gallo Winery, 434 SCRA 473(2004)] sister company, Tobacco Industries of the Philippines (Tobacco Industries), are
engaged in the cultivation, manufacture, distribution and sale of tobacco
DECISION products for which they have been using the GALLO cigarette trademark since
1973. 8

CORONA, J.: The Bureau of Internal Revenue (BIR) approved Tobacco Industries’ use of
GALLO 100’s cigarette mark on September 14, 1973 and GALLO filter cigarette
In this petition for review on certiorari under Rule 45, petitioners Mighty mark on March 26, 1976, both for the manufacture and sale of its cigarette
Corporation and La Campana Fabrica de Tabaco, Inc. (La Campana) seek to products. In 1976, Tobacco Industries filed its manufacturer’s sworn statement
annul, reverse and set aside: (a) the November 15, 2001 decision1 of the Court as basis for BIR’s collection of specific tax on GALLO cigarettes.9
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 On February 5, 1974, Tobacco Industries applied for, but eventually did not
of Makati City, Branch 57 (Makati RTC) in Civil Case No. 93-850, which held pursue, the registration of the GALLO cigarette trademark in the principal
petitioners liable for, and permanently enjoined them from, committing register of the then Philippine Patent Office.10
trademark infringement and unfair competition, and which ordered them to pay
damages to respondents E. & J. Gallo Winery (Gallo Winery) and The Andresons In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La
Group, Inc. (Andresons); (b) the July 11, 2002 CA resolution denying their Campana which, on July 16, 1985, applied for trademark registration in the
motion for reconsideration4 and (c) the aforesaid Makati RTC decision itself. Philippine Patent Office.11 On July 17, 1985, the National Library issued
Certificate of Copyright Registration No. 5834 for La Campana’s lifetime
I. copyright claim over GALLO cigarette labels.12
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compensatory damages, at least P500,000 as exemplary and moral damages,

Subsequently, La Campana authorized Mighty Corporation to manufacture and and at least P500,000 as attorney’s fees and litigation expenses.23
sell cigarettes bearing the GALLO trademark.13 BIR approved Mighty
Corporation’s use of GALLO 100’s cigarette brand, under licensing agreement In their answer, petitioners alleged, among other affirmative defenses, that:
with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100’s petitioner’s GALLO cigarettes and Gallo Winery’s wines were totally unrelated
cigarette brand on April 3, 1989.14 products; Gallo Winery’s GALLO trademark registration certificate covered wines
only, not cigarettes; GALLO cigarettes and GALLO wines were sold through
Petitioners claim that GALLO cigarettes have been sold in the Philippines since different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and
1973, initially by Tobacco Industries, then by La Campana and finally by Mighty P3 for GALLO menthols, were low-cost items compared to Gallo Winery’s high-
Corporation.15 priced luxury wines which cost between P98 to P242.50; the target market of
Gallo Winery’s wines was the middle or high-income bracket with at least
On the other hand, although the GALLO wine trademark was registered in the P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen,
Philippines in 1971, respondents claim that they first introduced and sold the laborers and other low-income workers; the dominant feature of the GALLO
GALLO and ERNEST & JULIO GALLO wines in the Philippines circa 1974 within cigarette mark was the rooster device with the manufacturer’s name clearly
the then U.S. military facilities only. By 1979, they had expanded their Philippine indicated as MIGHTY CORPORATION while, in the case of Gallo Winery’s wines,
market through authorized distributors and independent outlets.16 it was the full names of the founders-owners ERNEST & JULIO GALLO or just
their surname GALLO; by their inaction and conduct, respondents were guilty of
Respondents claim that they first learned about the existence of GALLO laches and estoppel; and petitioners acted with honesty, justice and good faith
cigarettes in the latter part of 1992 when an Andresons employee saw such in the exercise of their right to manufacture and sell GALLO cigarettes.
cigarettes on display with GALLO wines in a Davao supermarket wine cellar
section.17 Forthwith, respondents sent a demand letter to petitioners asking In an order dated April 21, 1993,24 the Makati RTC denied, for lack of merit,
them to stop using the GALLO trademark, to no avail. respondent’s prayer for the issuance of a writ of preliminary injunction,25
holding that respondent’s GALLO trademark registration certificate covered
II. wines only, that respondents’ wines and petitioners’ cigarettes were not related
goods and respondents failed to prove material damage or great irreparable
The Legal Dispute injury as required by Section 5, Rule 58 of the Rules of Court.26

On March 12, 1993, respondents sued petitioners in the Makati RTC for On August 19, 1993, the Makati RTC denied, for lack of merit, respondents’
trademark and tradename infringement and unfair competition, with a prayer for motion for reconsideration. The court reiterated that respondents’ wines and
damages and preliminary injunction. petitioners’ cigarettes were not related goods since the likelihood of deception
and confusion on the part of the consuming public was very remote. The trial
Respondents charged petitioners with violating Article 6bis of the Paris court emphasized that it could not rely on foreign rulings cited by respondents
Convention for the Protection of Industrial Property (Paris Convention)18 and RA "because the[se] cases were decided by foreign courts on the basis of unknown
166 (Trademark Law),19 specifically, Sections 22 and 23 (for trademark facts peculiar to each case or upon factual surroundings which may exist only
infringement),20 29 and 3021 (for unfair competition and false designation of within their jurisdiction. Moreover, there [was] no showing that [these cases
origin) and 37 (for tradename infringement).22 They claimed that petitioners had] been tested or found applicable in our jurisdiction."27
adopted the GALLO trademark to ride on Gallo Winery’s GALLO and ERNEST &
JULIO GALLO trademarks’ established reputation and popularity, thus causing On February 20, 1995, the CA likewise dismissed respondents’ petition for
confusion, deception and mistake on the part of the purchasing public who had review on certiorari, docketed as CA-G.R. No. 32626, thereby affirming the
always associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Makati RTC’s denial of the application for issuance of a writ of preliminary
Winery’s wines. Respondents prayed for the issuance of a writ of preliminary injunction against petitioners.28
injunction and ex parte restraining order, plus P2 million as actual and
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After trial on the merits, however, the Makati RTC, on November 26, 1998, held
petitioners liable for, and permanently enjoined them from, committing Petitioners now seek relief from this Court contending that the CA did not follow
trademark infringement and unfair competition with respect to the GALLO prevailing laws and jurisprudence when it held that: [a] RA 8293 (Intellectual
trademark: 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
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the the reason alone that they were purportedly forms of vice; [c] both goods
defendant (sic), to wit: passed through the same channels of trade and [d] petitioners were liable for
trademark infringement, unfair competition and damages.31
a. permanently restraining and enjoining defendants, their distributors, trade
outlets, and all persons acting for them or under their instructions, from (i) using Respondents, on the other hand, assert that this petition which invokes Rule 45
E & J’s registered trademark GALLO or any other reproduction, counterfeit, copy does not involve pure questions of law, and hence, must be dismissed outright.
or colorable imitation of said trademark, either singly or in conjunction with
other words, designs or emblems and other acts of similar nature, and (ii) IV.
committing other acts of unfair competition against plaintiffs by manufacturing
and selling their cigarettes in the domestic or export markets under the GALLO Discussion
trademark.
THE EXCEPTIONAL CIRCUMSTANCES
b. ordering defendants to pay plaintiffs – IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
(i) actual and compensatory damages for the injury and prejudice and
impairment of plaintiffs’ business and goodwill as a result of the acts and As a general rule, a petition for review on certiorari under Rule 45 must raise
conduct pleaded as basis for this suit, in an amount equal to 10% of FOURTEEN only "questions of law"32 (that is, the doubt pertains to the application and
MILLION TWO HUNDRED THIRTY FIVE THOUSAND PESOS (PHP14,235,000.00) interpretation of law to a certain set of facts) and not "questions of fact" (where
from the filing of the complaint until fully paid; 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’
(ii) exemplary damages in the amount of PHP100,000.00; factual findings are generally conclusive upon us.34

(iii) attorney’s fees and expenses of litigation in the amount of PHP1,130,068.91; 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’
(iv) the cost of suit. similarity, identity, relation, channels of trade, and acts of trademark
infringement and unfair competition is greatly dependent on the interpretation of
SO ORDERED."29 applicable laws. The controversy here is not simply the identity or similarity of
both parties’ trademarks but whether or not infringement or unfair competition
On June 24, 1999, the Makati RTC granted respondent’s motion for partial was committed, a conclusion based on statutory interpretation. Furthermore,
reconsideration and increased the award of actual and compensatory damages one or more of the following exceptional circumstances oblige us to review the
to 10% of P199,290,000 or P19,929,000.30 evidence on record:35

On appeal, the CA affirmed the Makati RTC decision and subsequently denied (1) the conclusion is grounded entirely on speculation, surmises, and
petitioner’s motion for reconsideration. conjectures;

III. (2) the inference of the Court of Appeals from its findings of fact is manifestly
mistaken, absurd and impossible;
The Issues
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(3) there is grave abuse of discretion;

The CA apparently did not notice the error and affirmed the Makati RTC
(4) the judgment is based on a misapprehension of facts; decision:

(5) the appellate court, in making its findings, went beyond the issues of the In the light of its finding that appellants’ use of the GALLO trademark on its
case, and the same are contrary to the admissions of both the appellant and the cigarettes is likely to create confusion with the GALLO trademark on wines
appellee; 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
(6) the findings are without citation of specific evidence on which they are the provisions of the our trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293)
based; but also Article 6bis of the Paris Convention.39 (Emphasis and underscoring
supplied)
(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 We therefore hold that the courts a quo erred in retroactively applying the IP
Code in this case.
(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 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
In this light, after thoroughly examining the evidence on record, weighing, effective cannot be considered as conclusively known by the populace. To make
analyzing and balancing all factors to determine whether trademark infringement a law binding even before it takes effect may lead to the arbitrary exercise of
and/or unfair competition has been committed, we conclude that both the Court the legislative power.40 Nova constitutio futuris formam imponere debet non
of Appeals and the trial court veered away from the law and well-settled praeteritis. A new state of the law ought to affect the future, not the past. Any
jurisprudence. doubt must generally be resolved against the retroactive operation of laws,
whether these are original enactments, amendments or repeals.41 There are
Thus, we give due course to the petition. only a few instances when laws may be given retroactive effect,42 none of
which is present in this case.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS, The IP Code, repealing the Trademark Law,43 was approved on June 6, 1997.
NOT THE INTELLECTUAL PROPERTY CODE 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
We note that respondents sued petitioners on March 12, 1993 for trademark and the CA should have limited the consideration of the present case within the
infringement and unfair competition committed during the effectivity of the Paris parameters of the Trademark Law and the Paris Convention, the laws in force at
Convention and the Trademark Law. the time of the filing of the complaint.

Yet, in the Makati RTC decision of November 26, 1998, petitioners were held DISTINCTIONS BETWEEN
liable not only under the aforesaid governing laws but also under the IP Code TRADEMARK INFRINGEMENT
which took effect only on January 1, 1998,37 or about five years after the filing AND UNFAIR COMPETITION
of the complaint:
Although the laws on trademark infringement and unfair competition have a
Defendants’ unauthorized use of the GALLO trademark constitutes trademark common conception at their root, that is, a person shall not be permitted to
infringement pursuant to Section 22 of Republic Act No. 166, Section 155 of the misrepresent his goods or his business as the goods or business of another, the
IP Code, Article 6bis of the Paris Convention, and Article 16 (1) of the TRIPS law on unfair competition is broader and more inclusive than the law on
Agreement as it causes confusion, deception and mistake on the part of the trademark infringement. The latter is more limited but it recognizes a more
purchasing public.38 (Emphasis and underscoring supplied) exclusive right derived from the trademark adoption and registration by the
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person whose goods or business is first associated with it. The law on (a) registration or use by another person of a trademark which is a reproduction,
trademarks is thus a specialized subject distinct from the law on unfair imitation or translation liable to create confusion,
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 (b) of a mark considered by the competent authority of the country of
Code). Hence, even if one fails to establish his exclusive property right to a registration or use48 to be well-known in that country and is already the mark of
trademark, he may still obtain relief on the ground of his competitor’s unfairness a person entitled to the benefits of the Paris Convention, and
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 (c) such trademark is used for identical or similar goods.
any particular means should be used to this end.44
On the other hand, Section 22 of the Trademark Law holds a person liable for
In Del Monte Corporation vs. Court of Appeals,45 we distinguished trademark infringement when, among others, he "uses without the consent of the
infringement from unfair competition: registrant, any reproduction, counterfeit, copy or colorable imitation of any
registered mark or tradename in connection with the sale, offering for sale, or
(1) Infringement of trademark is the unauthorized use of a trademark, whereas advertising of any goods, business or services or in connection with which such
unfair competition is the passing off of one's goods as those of another. 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) In infringement of trademark fraudulent intent is unnecessary, whereas in reproduce, counterfeit, copy or colorably imitate any such mark or tradename
unfair competition fraudulent intent is essential. and apply such reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be
(3) In infringement of trademark the prior registration of the trademark is a used upon or in connection with such goods, business or services."49 Trademark
prerequisite to the action, whereas in unfair competition registration is not registration and actual use are material to the complaining party’s cause of
necessary. action.

Pertinent Provisions on Trademark Corollary to this, Section 20 of the Trademark Law50 considers the trademark
Infringement under the Paris registration certificate as prima facie evidence of the validity of the registration,
Convention and the Trademark Law 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
Article 6bis of the Paris Convention,46 an international agreement binding on the and as specified in the certificate, subject to the conditions and limitations stated
Philippines and the United States (Gallo Winery’s country of domicile and origin) therein. Sections 2 and 2-A52 of the Trademark Law emphasize the importance
prohibits "the [registration] or use of a trademark which constitutes a of the trademark’s actual use in commerce in the Philippines prior to its
reproduction, imitation or translation, liable to create confusion, of a mark registration. In the adjudication of trademark rights between contending parties,
considered by the competent authority of the country of registration or use to be equitable principles of laches, estoppel, and acquiescence may be considered
well-known in that country as being already the mark of a person entitled to the and applied.53
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 Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the
of any such well-known mark or an imitation liable to create confusion following constitute the elements of trademark infringement:
therewith." There is no time limit for seeking the prohibition of the use of marks
used in bad faith.47 (a) a trademark actually used in commerce in the Philippines and registered in
the principal register of the Philippine Patent Office
Thus, under Article 6bis of the Paris Convention, the following are the elements
of trademark infringement: (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
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to the source or origin of such goods or services, or identity of such business; or Makati, Philippines and sales invoice no. 85926 dated March 22, 1996 addressed
such trademark is reproduced, counterfeited, copied or colorably imitated by to Andresons Global, Inc., Quezon City, Philippines. Both invoices were for the
another person and such reproduction, counterfeit, copy or colorable imitation is sale and shipment of GALLO wines to the Philippines during that period.55
applied to labels, signs, prints, packages, wrappers, receptacles or Nothing at all, however, was presented to evidence the alleged sales of GALLO
advertisements intended to be used upon or in connection with such goods, wines in the Philippines in 1974 or, for that matter, prior to July 9, 1981.
business or services as to likely cause confusion or mistake or to deceive
purchasers, On the other hand, by testimonial evidence supported by the BIR authorization
letters, forms and manufacturer’s sworn statement, it appears that petitioners
(c) the trademark is used for identical or similar goods, and 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
(d) such act is done without the consent of the trademark registrant or assignee.
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we
In summary, the Paris Convention protects well-known trademarks only (to be reiterated our rulings in Pagasa Industrial Corporation vs. Court of Appeals,58
determined by domestic authorities), while the Trademark Law protects all Converse Rubber Corporation vs. Universal Rubber Products, Inc.,59 Sterling
trademarks, whether well-known or not, provided that they have been registered Products International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft,60
and are in actual commercial use in the Philippines. Following universal Kabushi Kaisha Isetan vs. Intermediate Appellate Court,61 and Philip Morris vs.
acquiescence and comity, in case of domestic legal disputes on any conflicting Court of Appeals,62 giving utmost importance to the actual commercial use of a
provisions between the Paris Convention (which is an international agreement) trademark in the Philippines prior to its registration, notwithstanding the
and the Trademark law (which is a municipal law) the latter will prevail.54 provisions of the Paris Convention:

Under both the Paris Convention and the Trademark Law, the protection of a xxx xxx xxx
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 In addition to the foregoing, we are constrained to agree with petitioner's
of confusion. Under both laws, the time element in commencing infringement contention that private respondent failed to prove prior actual commercial use of
cases is material in ascertaining the registrant’s express or implied consent to its "LEE" trademark in the Philippines before filing its application for registration
another’s use of its trademark or a colorable imitation thereof. This is why with the BPTTT and hence, has not acquired ownership over said mark.
acquiescence, estoppel or laches may defeat the registrant’s otherwise valid
cause of action. 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
Hence, proof of all the elements of trademark infringement is a condition Philippine Trademark Law (R.A. No. 166) x x x
precedent to any finding of liability.
xxx xxx xxx
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE The provisions of the 1965 Paris Convention for the Protection of Industrial
TRADEMARK PRECEDED THAT OF Property relied upon by private respondent and Sec. 21-A of the Trademark Law
GALLO WINE TRADEMARK. (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]):
By respondents’ own judicial admission, the GALLO wine trademark was
registered in the Philippines in November 1971 but the wine itself was first xxx xxx xxx
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 Following universal acquiescence and comity, our municipal law on trademarks
the GALLO wine trademark in the Philippines, respondents presented sales regarding the requirement of actual use in the Philippines must subordinate an
invoice no. 29991 dated July 9, 1981 addressed to Conrad Company Inc., international agreement inasmuch as the apparent clash is being decided by a
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municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of registration certificate serves merely as prima facie evidence. It is not conclusive
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World but can and may be rebutted by controverting evidence.
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 xxx xxx xxx
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 In the case at bench, however, we reverse the findings of the Director of
a standing equal, not superior, to national legislative enactments. 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
xxx xxx xxx the registration certificates as proof of use by private respondent of the
trademark "LEE" which, as we have previously discussed are not sufficient. We
In other words, (a foreign corporation) may have the capacity to sue for cannot give credence to private respondent's claim that its "LEE" mark first
infringement irrespective of lack of business activity in the Philippines on account reached the Philippines in the 1960's through local sales by the Post Exchanges
of Section 21-A of the Trademark Law but the question of whether they have an of the U.S. Military Bases in the Philippines (Rollo, p. 177) based as it was solely
exclusive right over their symbol as to justify issuance of the controversial writ on the self-serving statements of Mr. Edward Poste, General Manager of Lee
will depend on actual use of their trademarks in the Philippines in line with (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein
Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to private respondent. (Original Records, p. 52) Similarly, we give little weight to
claim that when a foreign corporation not licensed to do business in the the numerous vouchers representing various advertising expenses in the
Philippines files a complaint for infringement, the entity need not be actually Philippines for "LEE" products. It is well to note that these expenses were
using the trademark in commerce in the Philippines. Such a foreign corporation incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into a
may have the personality to file a suit for infringement but it may not necessarily licensing agreement with private respondent on 11 May 1981. (Exhibit E)
be entitled to protection due to absence of actual use of the emblem in the local
market. 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"
xxx xxx xxx trademark since 1975 as evidenced by appropriate sales invoices to various
stores and retailers. (Exhibit 1-e to 1-o)
Undisputably, private respondent is the senior registrant, having obtained
several registration certificates for its various trademarks "LEE," "LEE RIDERS," Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526
and "LEESURES" in both the supplemental and principal registers, as early as [1982]) and Converse Rubber Corp. v. Universal Rubber Products, Inc., (147
1969 to 1973. However, registration alone will not suffice. In Sterling Products SCRA 154 [1987]), respectively, are instructive:
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214
[1969]; Reiterated in Kabushi Isetan vs. Intermediate Appellate Court (203 SCRA The Trademark Law is very clear. It requires actual commercial use of the mark
583 [1991]) we declared: 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
xxx xxx xxx 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
A rule widely accepted and firmly entrenched because it has come down through among others, of considerable sales since its first use. The invoices submitted by
the years is that actual use in commerce or business is a prerequisite in the respondent which were dated way back in 1957 show that the zippers sent to
acquisition of the right of ownership over a trademark. 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.
xxx xxx xxx "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
The credibility placed on a certificate of registration of one's trademark, or its law. Respondent did not expect income from such "samples." There were no
weight as evidence of validity, ownership and exclusive use, is qualified. A
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receipts to establish sale, and no proof were presented to show that they were (Page 27, Brief for the Petitioner; page 202, Rollo). Even then, a mere
subsequently sold in the Philippines. 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
xxx xxx xxx Law. In short, paraphrasing Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate of registration
For lack of adequate proof of actual use of its trademark in the Philippines prior issued by the Director of Patents can confer upon petitioner the exclusive right
to petitioner's use of its own mark and for failure to establish confusing similarity to use its own symbol only to those goods specified in the certificate, subject to
between said trademarks, private respondent's action for infringement must any conditions and limitations stated therein. This basic point is perhaps the
necessarily fail. (Emphasis supplied.) 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
In view of the foregoing jurisprudence and respondents’ judicial admission that States Supreme Court in American Foundries vs. Robertson (269 U.S. 372, 381,
the actual commercial use of the GALLO wine trademark was subsequent to its 70 L ed 317, 46 Sct. 160) that one who has adopted and used a trademark on
registration in 1971 and to Tobacco Industries’ commercial use of the GALLO his goods does not prevent the adoption and use of the same trademark by
cigarette trademark in 1973, we rule that, on this account, respondents never others for products which are of a different description. Verily, this Court had the
enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of occasion to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan
Tobacco Industries and its successors-in-interest, herein petitioners, either under (18 SCRA 944 [1966]) that no serious objection was posed by the petitioner
the Trademark Law or the Paris Convention. therein since the applicant utilized the emblem "Tango" for no other product
than hair pomade in which petitioner does not deal.
Respondents’ GALLO trademark
registration is limited to wines only 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
We also note that the GALLO trademark registration certificates in the business. It may be recalled that petitioner claimed that it has a pending
Philippines and in other countries expressly state that they cover wines only, application for registration of the emblem "BRUT 33" for briefs (page 25, Brief
without any evidence or indication that registrant Gallo Winery expanded or for the Petitioner; page 202, Rollo) to impress upon Us the Solomonic wisdom
intended to expand its business to cigarettes.63 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
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery’s goods are not remote from any other product which the first user would be likely
exclusive right to use the GALLO trademark should be limited to wines, the only to make or sell (vide, at page 1025). Commenting on the former provision of the
product indicated in its registration certificates. This strict statutory limitation on Trademark Law now embodied substantially under Section 4(d) of Republic Act
the exclusive right to use trademarks was amply clarified in our ruling in No. 166, as amended, the erudite jurist opined that the law in point "does not
Faberge, Inc. vs. Intermediate Appellate Court:64 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
Having thus reviewed the laws applicable to the case before Us, it is not difficult categories as to bar the latter from registering his mark in the principal register."
to discern from the foregoing statutory enactments that private respondent may (supra at page 1026).
be permitted to register the trademark "BRUTE" for briefs produced by it
notwithstanding petitioner's vehement protestations of unfair dealings in Yet, it is equally true that as aforesaid, the protective mantle of the Trademark
marketing its own set of items which are limited to: after-shave lotion, shaving Law extends only to the goods used by the first user as specified in the
cream, deodorant, talcum powder and toilet soap. Inasmuch as petitioner has certificate of registration following the clear message conveyed by Section 20.
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 How do We now reconcile the apparent conflict between Section 4(d) which was
that private respondent had invaded petitioner's exclusive domain. To be sure, it relied upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It would
is significant that petitioner failed to annex in its Brief the so-called "eloquent seem that Section 4(d) does not require that the goods manufactured by the
proof that petitioner indeed intended to expand its mark ‘BRUT’ to other goods" second user be related to the goods produced by the senior user while Section
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20 limits the exclusive right of the senior user only to those goods specified in In determining the likelihood of confusion, the Court must consider: [a] the
the certificate of registration. But the rule has been laid down that the clause resemblance between the trademarks; [b] the similarity of the goods to which
which comes later shall be given paramount significance over an anterior proviso the trademarks are attached; [c] the likely effect on the purchaser and [d] the
upon the presumption that it expresses the latest and dominant purpose. registrant’s express or implied consent and other fair and equitable
(Graham Paper Co. vs. National Newspapers Asso. (Mo. App.) 193 S.W. 1003; considerations.
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 Petitioners and respondents both use "GALLO" in the labels of their respective
Reprinted, p. 144). It ineluctably follows that Section 20 is controlling and, cigarette and wine products. But, as held in the following cases, the use of an
therefore, private respondent can appropriate its symbol for the briefs it identical mark does not, by itself, lead to a legal conclusion that there is
manufactures because as aptly remarked by Justice Sanchez in Sterling Products trademark infringement:
International Inc. vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):
(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 we ordered the approval of
"Really, if the certificate of registration were to be deemed as including goods Acoje Mining’s application for registration of the trademark LOTUS for its soy
not specified therein, then a situation may arise whereby an applicant may be sauce even though Philippine Refining Company had prior registration and use of
tempted to register a trademark on any and all goods which his mind may such identical mark for its edible oil which, like soy sauce, also belonged to Class
conceive even if he had never intended to use the trademark for the said goods. 47;
We believe that such omnibus registration is not contemplated by our
Trademark Law." (1226). (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
NO LIKELIHOOD OF CONFUSION, MISTAKE Sam’s ham under Class 47, despite Philippine Refining Company’s prior
OR DECEIT AS TO THE IDENTITY OR SOURCE trademark registration and actual use of such mark on its lard, butter, cooking
OF PETITIONERS’ AND RESPONDENTS’ oil (all of which belonged to Class 47), abrasive detergents, polishing materials
GOODS OR BUSINESS and soaps;

A crucial issue in any trademark infringement case is the likelihood of confusion, (c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun
mistake or deceit as to the identity, source or origin of the goods or identity of Liong,69 we dismissed Hickok’s petition to cancel private respondent’s HICKOK
the business as a consequence of using a certain mark. Likelihood of confusion trademark registration for its Marikina shoes as against petitioner’s earlier
is admittedly a relative term, to be determined rigidly according to the particular registration of the same trademark for handkerchiefs, briefs, belts and wallets;
(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 (d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute
each particular case. 65 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
There are two types of confusion in trademark infringement. The first is manufactured by respondent Fortune Tobacco Corporation, notwithstanding
"confusion of goods" when an otherwise prudent purchaser is induced to Shell Company’s opposition as the prior registrant of the same trademark for its
purchase one product in the belief that he is purchasing another, in which case gasoline and other petroleum products;
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 (e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we dismissed ESSO’s
the goods of the parties are different but the defendant’s product can complaint for trademark infringement against United Cigarette Corporation and
reasonably (though mistakenly) be assumed to originate from the plaintiff, thus allowed the latter to use the trademark ESSO for its cigarettes, the same
deceiving the public into believing that there is some connection between the trademark used by ESSO for its petroleum products, and
plaintiff and defendant which, in fact, does not exist.66
(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
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Rubber Corporation could use the trademark CANON for its sandals (Class 25) be conveyed by the trademarks if used in conjunction with the respective goods
despite Canon Kabushiki Kaisha’s prior registration and use of the same of the parties.83
trademark for its paints, chemical products, toner and dyestuff (Class 2).
Applying the Dominancy and Holistic Tests, we find that the dominant feature of
Whether a trademark causes confusion and is likely to deceive the public hinges the GALLO cigarette trademark is the device of a large rooster facing left,
on "colorable imitation"73 which has been defined as "such similarity in form, outlined in black against a gold background. The rooster’s color is either green
content, words, sound, meaning, special arrangement or general appearance of or red – green for GALLO menthols and red for GALLO filters. Directly below the
the trademark or tradename in their overall presentation or in their essential and large rooster device is the word GALLO. The rooster device is given prominence
substantive and distinctive parts as would likely mislead or confuse persons in in the GALLO cigarette packs in terms of size and location on the labels.84
the ordinary course of purchasing the genuine article."74
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes
Jurisprudence has developed two tests in determining similarity and likelihood of as it has no relation at all to the product but was chosen merely as a trademark
confusion in trademark resemblance:75 due to the fondness for fighting cocks of the son of petitioners’ president.
Furthermore, petitioners adopted GALLO, the Spanish word for rooster, as a
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals76 and cigarette trademark to appeal to one of their target markets, the sabungeros
other cases,77 and (cockfight aficionados).85

(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of Also, as admitted by respondents themselves,86 on the side of the GALLO
Appeals78 and its preceding cases.79 cigarette packs are the words "MADE BY MIGHTY CORPORATION," thus clearly
informing the public as to the identity of the manufacturer of the cigarettes.
The Dominancy Test focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception, and thus On the other hand, GALLO Winery’s wine and brandy labels are diverse. In many
infringement. If the competing trademark contains the main, essential or of them, the labels are embellished with sketches of buildings and trees,
dominant features of another, and confusion or deception is likely to result, vineyards or a bunch of grapes while in a few, one or two small roosters facing
infringement takes place. Duplication or imitation is not necessary; nor is it right or facing each other (atop the EJG crest, surrounded by leaves or ribbons),
necessary that the infringing label should suggest an effort to imitate. The with additional designs in green, red and yellow colors, appear as minor features
question is whether the use of the marks involved is likely to cause confusion or thereof.87 Directly below or above these sketches is the entire printed name of
mistake in the mind of the public or deceive purchasers.80 the founder-owners, "ERNEST & JULIO GALLO" or just their surname
"GALLO,"88 which appears in different fonts, sizes, styles and labels, unlike
On the other hand, the Holistic Test requires that the entirety of the marks in petitioners’ uniform casque-font bold-lettered GALLO mark.
question be considered in resolving confusing similarity. Comparison of words is
not the only determining factor. The trademarks in their entirety as they appear Moreover, on the labels of Gallo Winery’s wines are printed the words "VINTED
in their respective labels or hang tags must also be considered in relation to the AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA."89
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 The many different features like color schemes, art works and other markings of
appearing in both labels in order that he may draw his conclusion whether one is both products drown out the similarity between them – the use of the word
confusingly similar to the other.81 “GALLO” ― a family surname for the Gallo Winery’s wines and a Spanish word
for rooster for petitioners’ cigarettes.
In comparing the resemblance or colorable imitation of marks, various factors
have been considered, such as the dominant color, style, size, form, meaning of WINES AND CIGARETTES ARE NOT
letters, words, designs and emblems used, the likelihood of deception of the IDENTICAL, SIMILAR, COMPETING OR
mark or name's tendency to confuse82 and the commercial impression likely to RELATED GOODS
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Confusion of goods is evident where the litigants are actually in competition; but (j) the channels of trade through which the goods flow,104 how they are
confusion of business may arise between non-competing interests as well.90 distributed, marketed, displayed and sold.105

Thus, apart from the strict application of Section 20 of the Trademark Law and The wisdom of this approach is its recognition that each trademark infringement
Article 6bis of the Paris Convention which proscribe trademark infringement not case presents its own unique set of facts. No single factor is preeminent, nor can
only of goods specified in the certificate of registration but also of identical or the presence or absence of one determine, without analysis of the others, the
similar goods, we have also uniformly recognized and applied the modern outcome of an infringement suit. Rather, the court is required to sift the
concept of "related goods."91 Simply stated, when goods are so related that the evidence relevant to each of the criteria. This requires that the entire panoply of
public may be, or is actually, deceived and misled that they come from the same elements constituting the relevant factual landscape be comprehensively
maker or manufacturer, trademark infringement occurs.92 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
Non-competing goods may be those which, though they are not in actual the factors, a conclusion is reached whether the parties have a right to the relief
competition, are so related to each other that it can reasonably be assumed that sought.107
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 A very important circumstance though is whether there exists a likelihood that
entirely unrelated, cannot be assumed to have a common source; hence, there an appreciable number of ordinarily prudent purchasers will be misled, or simply
is no confusion of business, even though similar marks are used.94 Thus, there confused, as to the source of the goods in question.108 The "purchaser" is not
is no trademark infringement if the public does not expect the plaintiff to make the "completely unwary consumer" but is the "ordinarily intelligent buyer"
or sell the same class of goods as those made or sold by the defendant.95 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
In resolving whether goods are related,96 several factors come into play: 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
(a) the business (and its location) to which the goods belong 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
(b) the class of product to which the goods belong 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
(c) the product's quality, quantity, or size, including the nature of the package, objectionable, must be such as appears likely to mislead the ordinary intelligent
wrapper or container 97 buyer who has a need to supply and is familiar with the article that he seeks to
purchase."110
(d) the nature and cost of the articles98
Hence, in the adjudication of trademark infringement, we give due regard to the
(e) the descriptive properties, physical attributes or essential characteristics with goods’ usual purchaser’s character, attitude, habits, age, training and education.
reference to their form, composition, texture or quality 111

(f) the purpose of the goods99 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
(g) whether the article is bought for immediate consumption,100 that is, day-to- "ordinarily intelligent buyer" of either wines or cigarettes or both as to the
day household items101 identity of the goods, their source and origin, or identity of the business of
petitioners and respondents.
(h) the fields of manufacture102
Obviously, wines and cigarettes are not identical or competing products. Neither
(i) the conditions under which the article is usually purchased103 and do they belong to the same class of goods. Respondents’ GALLO wines belong to
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Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in In his decision, the Director of Patents enumerated the factors that set
Trademark Cases while petitioners’ GALLO cigarettes fall under Class 34. respondent’s products apart from the goods of petitioner. He opined and we
quote:
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. "I have taken into account such factors as probable purchaser attitude and
Emphasis should be on the similarity of the products involved and not on the habits, marketing activities, retail outlets, and commercial impression likely to be
arbitrary classification or general description of their properties or conveyed by the trademarks if used in conjunction with the respective goods of
characteristics. But the mere fact that one person has adopted and used a the parties, I believe that ham on one hand, and lard, butter, oil, and soap on
particular trademark for his goods does not prevent the adoption and use of the the other are products that would not move in the same manner through the
same trademark by others on articles of a different description. 112 same channels of trade. They pertain to unrelated fields of manufacture, might
be distributed and marketed under dissimilar conditions, and are displayed
Both the Makati RTC and the CA held that wines and cigarettes are related separately even though they frequently may be sold through the same retail
products because: (1) "they are related forms of vice, harmful when taken in food establishments. Opposer’s products are ordinary day-to-day household
excess, and used for pleasure and relaxation" and (2) "they are grouped or items whereas ham is not necessarily so. Thus, the goods of the parties are not
classified in the same section of supermarkets and groceries." of a character which purchasers would likely attribute to a common origin.

We find these premises patently insufficient and too arbitrary to support the The observations and conclusion of the Director of Patents are correct. The
legal conclusion that wines and cigarettes are related products within the particular goods of the parties are so unrelated that consumers, would not, in
contemplation of the Trademark Law and the Paris Convention. any probability mistake one as the source of origin of the product of the other.
(Emphasis supplied).
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 The same is true in the present case. Wines and cigarettes are non-competing
abuse of discretion to treat wines and cigarettes as similar or related products and are totally unrelated products not likely to cause confusion vis-à-vis the
likely to cause confusion just because they are pleasure-giving, relaxing or goods or the business of the petitioners and respondents.
potentially harmful. Such reasoning makes no sense.
Wines are bottled and consumed by drinking while cigarettes are packed in
Second, it is common knowledge that supermarkets sell an infinite variety of cartons or packages and smoked. There is a whale of a difference between their
wholly unrelated products and the goods here involved, wines and cigarettes, descriptive properties, physical attributes or essential characteristics like form,
have nothing whatsoever in common with respect to their essential composition, texture and quality.
characteristics, quality, quantity, size, including the nature of their packages,
wrappers or containers.113 GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO
wines are patronized by middle-to-high-income earners while GALLO cigarettes
Accordingly, the U.S. patent office and courts have consistently held that the appeal only to simple folks like farmers, fishermen, laborers and other low-
mere fact that goods are sold in one store under the same roof does not income workers.116 Indeed, the big price difference of these two products is an
automatically mean that buyers are likely to be confused as to the goods’ important factor in proving that they are in fact unrelated and that they travel in
respective sources, connections or sponsorships. The fact that different products different channels of trade. There is a distinct price segmentation based on
are available in the same store is an insufficient standard, in and of itself, to vastly different social classes of purchasers.117
warrant a finding of likelihood of confusion.114
GALLO cigarettes and GALLO wines are not sold through the same channels of
In this regard, we adopted the Director of Patents’ finding in Philippine Refining trade. GALLO cigarettes are Philippine-made and petitioners neither claim nor
Co., Inc. vs. Ng Sam and the Director of Patents:115 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,
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mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu.118 On the other hand, 1959 WL 5894, 120 U.S.P.Q. 306, 307 (1959) (holding that the decision in John
GALLO wines are imported, distributed and sold in the Philippines through Gallo Walker & Sons was ‘merely the law on the particular case based upon its own
Winery’s exclusive contracts with a domestic entity, which is currently peculiar facts’); see also Alfred Dunhill, 350 F. Supp. At 1363 (defendant’s
Andresons. By respondents’ own testimonial evidence, GALLO wines are sold in adoption of ‘Dunhill’ mark was not innocent). However, in Schenley, the court
hotels, expensive bars and restaurants, and high-end grocery stores and noted that the relation between tobacco and whiskey products is significant
supermarkets, not through sari-sari stores or ambulant vendors.119 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
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing unrelated goods. Schenley, 427 F.2d. at 785. Significantly, in Schenley, the court
Company vs. Philip Morris, Inc.120 to support its finding that GALLO wines and looked at the industry practice and the facts of the case in order to determine
GALLO cigarettes are related goods. The courts a quo should have taken into the nature and extent of the relationship between the mark on the tobacco
consideration the subsequent case of IDV North America, Inc. and R & A Bailey product and the mark on the alcohol product.
Co. Limited vs. S & M Brands, Inc.:121
The record here establishes conclusively that IDV has never advertised BAILEYS
IDV correctly acknowledges, however, that there is no per se rule that the use of liqueurs in conjunction with tobacco or tobacco accessory products and that IDV
the same mark on alcohol and tobacco products always will result in a likelihood has no intent to do so. And, unlike the defendant in Dunhill, S & M Brands does
of confusion. Nonetheless, IDV relies heavily on the decision in John Walker & not market bar accessories, or liqueur related products, with its cigarettes. The
Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), aff’d, advertising and promotional materials presented a trial in this action
222 F. 2d 460 (5th Cir. 1955), wherein the court enjoined the use of the mark demonstrate a complete lack of affiliation between the tobacco and liqueur
"JOHNNIE WALKER" on cigars because the fame of the plaintiff’s mark for scotch products bearing the marks here at issue.
whiskey and because the plaintiff advertised its scotch whiskey on, or in
connection with tobacco products. The court, in John Walker & Sons, placed xxx xxx xxx
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 Of equal significance, it is undisputed that S & M Brands had no intent, by
Brewing Co. v. Philip Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in adopting the family name ‘Bailey’s’ as the mark for its cigarettes, to capitalize
which the court enjoined the defendant’s use of the mark "BLACK LABEL" for upon the fame of the ‘BAILEYS’ mark for liqueurs. See Schenley, 427 F. 2d at
cigarettes because it was likely to cause confusion with the plaintiff’s well-known 785. Moreover, as will be discussed below, and as found in Mckesson & Robbins,
mark "BLACK LABEL" for beer. the survey evidence refutes the contention that cigarettes and alcoholic
beverages are so intimately associated in the public mind that they cannot under
xxx xxx xxx any circumstances be sold under the same mark without causing confusion. See
Mckesson & Robbins, 120 U.S.P.Q. at 308.
Those decisions, however, must be considered in perspective of the principle
that tobacco products and alcohol products should be considered related only in Taken as a whole, the evidence here demonstrates the absence of the ‘special
cases involving special circumstances. Schenley Distillers, Inc. v. General Cigar circumstances’ in which courts have found a relationship between tobacco and
Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of special alcohol products sufficient to tip the similarity of goods analysis in favor of the
circumstances has been found to exist where there is a finding of unfair protected mark and against the allegedly infringing mark. It is true that BAILEYS
competition or where a ‘famous’ or ‘well-known mark’ is involved and there is a liqueur, the world’s best selling liqueur and the second best selling in the United
demonstrated intent to capitalize on that mark. For example, in John Walker & States, is a well-known product. That fact alone, however, is insufficient to
Sons, the court was persuaded to find a relationship between products, and invoke the special circumstances connection here where so much other evidence
hence a likelihood of confusion, because of the plaintiff’s long use and extensive and so many other factors disprove a likelihood of confusion. The similarity of
advertising of its mark and placed great emphasis on the fact that the defendant products analysis, therefore, augers against finding that there is a likelihood of
used the trademark ‘Johnnie Walker with full knowledge of its fame and confusion. (Emphasis supplied).
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.,
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In short, tobacco and alcohol products may be considered related only in cases "Regarding the applicability of Article 8 of the Paris Convention, this Office
involving special circumstances which exist only if a famous mark is involved and believes that there is no automatic protection afforded an entity whose
there is a demonstrated intent to capitalize on it. Both of these are absent in the tradename is alleged to have been infringed through the use of that name as a
present case. trademark by a local entity.

THE GALLO WINE TRADEMARK IS NOT A In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No.
WELL-KNOWN MARK IN THE CONTEXT 75420, 15 November 1991, the Honorable Supreme Court held that:
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT ‘The Paris Convention for the Protection of Industrial Property does not
IDENTICAL OR SIMILAR GOODS 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
First, the records bear out that most of the trademark registrations took place in taxicab or bus company in a town in the United Kingdom or India happens to
the late 1980s and the 1990s, that is, after Tobacco Industries’ use of the use the tradename ‘Rapid Transportation,’ it does not necessarily follow that
GALLO cigarette trademark in 1973 and petitioners’ use of the same mark in ‘Rapid’ can no longer be registered in Uganda, Fiji, or the Philippines.
1984.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection of
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor Intellectual Property regarding well-known marks and possible application
related goods, a requisite element under both the Trademark Law and the Paris thereof in this case. Petitioner, as this office sees it, is trying to seek refuge
Convention. 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.
Second, the GALLO trademark cannot be considered a strong and distinct mark
in the Philippines. Respondents do not dispute the documentary evidence that However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin,
aside from Gallo Winery’s GALLO trademark registration, the Bureau of Patents, issued a memorandum dated 25 October 1983 to the Director of Patents, a set
Trademarks and Technology Transfer also issued on September 4, 1992 of guidelines in the implementation of Article 6bis of the Treaty of Paris. These
Certificate of Registration No. 53356 under the Principal Register approving conditions are:
Productos Alimenticios Gallo, S.A’s April 19, 1990 application for GALLO
trademark registration and use for its "noodles, prepared food or canned a) the mark must be internationally known;
noodles, ready or canned sauces for noodles, semolina, wheat flour and bread
crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking b) the subject of the right must be a trademark, not a patent or copyright or
powder, salt, mustard, vinegar, species and ice."122 anything else;

Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. c) the mark must be for use in the same or similar kinds of goods; and
Court of Appeals and NSR Rubber Corporation,123 "GALLO" cannot be
considered a "well-known" mark within the contemplation and protection of the d) the person claiming must be the owner of the mark (The Parties Convention
Paris Convention in this case since wines and cigarettes are not identical or Commentary on the Paris Convention. Article by Dr. Bogsch, Director General of
similar goods: the World Intellectual Property Organization, Geneva, Switzerland, 1985)’

We agree with public respondents that the controlling doctrine with respect to From the set of facts found in the records, it is ruled that the Petitioner failed to
the applicability of Article 8 of the Paris Convention is that established in Kabushi comply with the third requirement of the said memorandum that is the mark
Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As must be for use in the same or similar kinds of goods. The Petitioner is using the
pointed out by the BPTTT: mark "CANON" for products belonging to class 2 (paints, chemical products)
while the Respondent is using the same mark for sandals (class 25).
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Hence, Petitioner's contention that its mark is well-known at the time the likely to influence purchasers to believe that the goods offered are those of a
Respondent filed its application for the same mark should fail." (Emphasis manufacturer or dealer other than the actual manufacturer or dealer, or who
supplied.) 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
Consent of the Registrant and goods or any agent of any vendor engaged in selling such goods with a like
Other air, Just and Equitable purpose;
Considerations
(b) Any person who by any artifice, or device, or who employs any other means
Each trademark infringement case presents a unique problem which must be calculated to induce the false belief that such person is offering the services of
answered by weighing the conflicting interests of the litigants.124 another who has identified such services in the mind of the public;

Respondents claim that GALLO wines and GALLO cigarettes flow through the (c) Any person who shall make any false statement in the course of trade or
same channels of trade, that is, retail trade. If respondents’ assertion is true, who shall commit any other act contrary to good faith of a nature calculated to
then both goods co-existed peacefully for a considerable period of time. It took discredit the goods, business or services of another.
respondents almost 20 years to know about the existence of GALLO cigarettes
and sue petitioners for trademark infringement. Given, on one hand, the long The universal test question is whether the public is likely to be deceived. Nothing
period of time that petitioners were engaged in the manufacture, marketing, less than conduct tending to pass off one man’s goods or business as that of
distribution and sale of GALLO cigarettes and, on the other, respondents’ delay another constitutes unfair competition. Actual or probable deception and
in enforcing their rights (not to mention implied consent, acquiescence or confusion on the part of customers by reason of defendant’s practices must
negligence) we hold that equity, justice and fairness require us to rule in favor of always appear.125 On this score, we find that petitioners never attempted to
petitioners. The scales of conscience and reason tip far more readily in favor of pass off their cigarettes as those of respondents. There is no evidence of bad
petitioners than respondents. faith or fraud imputable to petitioners in using their GALLO cigarette mark.

Moreover, there exists no evidence that petitioners employed malice, bad faith All told, after applying all the tests provided by the governing laws as well as
or fraud, or that they intended to capitalize on respondents’ goodwill in adopting those recognized by jurisprudence, we conclude that petitioners are not liable
the GALLO mark for their cigarettes which are totally unrelated to respondents’ for trademark infringement, unfair competition or damages.
GALLO wines. Thus, we rule out trademark infringement on the part of
petitioners. WHEREFORE, finding the petition for review meritorious, the same is hereby
GRANTED. The questioned decision and resolution of the Court of Appeals in CA-
PETITIONERS ARE ALSO NOT LIABLE G.R. CV No. 65175 and the November 26, 1998 decision and the June 24, 1999
FOR UNFAIR COMPETITION 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
Under Section 29 of the Trademark Law, any person who employs deception or DISMISSED.
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 Costs against respondents.
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 SO ORDERED.
acts:
Vitug, (Chairman), and Sandoval-Gutierrez, JJ., concur.
(a) Any person, who in selling his goods shall give them the general appearance Carpio-Morales, J., no part..
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
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G.R. No. 166115 February 2, 2007 should be applied only to a case if they are specifically in point. While we agree
with the CA’s detailed enumeration of differences between the two (2)
McDONALD’S CORPORATION, Petitioner, competing trademarks herein involved, we believe that the holistic test is not the
vs. one applicable in this case, the dominancy test being the one more suitable. In
MACJOY FASTFOOD CORPORATION, Respondent. recent cases with a similar factual milieu as here, the Court has consistently
used and applied the dominancy test in determining confusing similarity or
Appeals; While the Supreme Court is not the proper venue to consider factual likelihood of confusion between competing trademarks.
issues as it is not a trier of facts, when the factual findings of the appellate court Same; Paris Convention; A mark is valid if it is distinctive and hence not barred
are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave from registration under the Trademark Law; Once registered, not only the
abuse of discretion, or contrary to the findings called by the court of origin, the mark’s validity but also the registrant’s ownership thereof is prima facie
Supreme Court will review them.—As regards the respondent’s argument that presumed.—A mark is valid if it is distinctive and hence not barred from
the petition raises only questions of fact which are not proper in a petition for registration under the Trademark Law. However, once registered, not only the
review, suffice it to say that the contradictory findings of the IPO and the CA mark’s validity but also the registrant’s ownership thereof is prima facie
constrain us to give due course to the petition, this being one of the recognized presumed. Pursuant to Section 37 of R.A. No. 166, as amended, as well as the
exceptions to Section 1, Rule 45 of the Rules of Court. True, this Court is not the provision regarding the protection of industrial property of foreign nationals in
proper venue to consider factual issues as it is not a trier of facts. Nevertheless, this country as embodied in the Paris Convention under which the Philippines
when the factual findings of the appellate court are mistaken, absurd, and the petitioner’s domicile, the United States, are adherent-members, the
speculative, conjectural, conflicting, tainted with grave abuse of discretion, or petitioner was able to register its MCDONALD’S marks successively, i.e.,
contrary to the findings culled by the court of origin, as here, this Court will “McDonald’s” in 04 October, 1971; the corporate logo which is the “M” or the
review them. golden arches design and the “McDonald’s” with the “M” or golden arches design
Trademarks and Trade Names; Dominancy Test; Holistic Test; In determining both in 30 June 1977; and so on and so forth.
similarity and likelihood of confusion, jurisprudence has developed two tests— Same; Same; The Paris Convention is essentially a compact among the various
the dominancy test and the holistic test; The dominancy test focuses on the member countries to accord in their own countries to citizens of the other
similarity of the prevalent features of the competing trademarks that might contracting parties’ trademarks and other rights comparable to those accorded
cause confusion or deception; The holistic test requires the court to consider the their own citizens by their domestic laws.—The Paris Convention is essentially a
entirety of the marks as applied to the products, including the labels and compact among the various member countries to accord in their own countries
packaging, in determining confusing similarity.—In determining similarity and to citizens of the other contracting parties’ trademarks and other rights
likelihood of confusion, jurisprudence has developed two tests, the dominancy comparable to those accorded their own citizens by their domestic laws. The
test and the holistic test. The dominancy test focuses on the similarity of the underlying principle is that foreign nationals should be given the same treatment
prevalent features of the competing trademarks that might cause confusion or in each of the member countries as that country makes available to its own
deception. In contrast, the holistic test requires the court to consider the entirety citizens. In addition, the Convention sought to create uniformity in certain
of the marks as applied to the products, including the labels and packaging, in respects by obligating each nation to assure to nationals of countries of the
determining confusing similarity. Under the latter test, a comparison of the Union an effective protection against unfair competition. Article 2 of the Paris
words is not the only determinant factor. Convention provides that: ART. 2. Nationals of each of the countries of the
Same; In trademark cases, particularly in ascertaining whether one trademark is Union shall, as regards the protection of industrial property, enjoy in all the
confusingly similar to another, no set of rules can be deduced because each other countries of the Union the advantages that their respective laws now
case must be decided on its merits—in such cases, even more than in any other grant, or may hereafter grant, to nationals, without prejudice to the rights
litigation, precedent must be studied in the light of the facts of the particular specially provided by the present Convention. Consequently, they shall have the
case.—In trademark cases, particularly in ascertaining whether one trademark is same protection as the latter, and the same legal remedy against any
confusingly similar to another, no set rules can be deduced because each case infringement of their rights, provided they observe the conditions and formalities
must be decided on its merits. In such cases, even more than in any other imposed upon nationals.
litigation, precedent must be studied in the light of the facts of the particular Same; The requirement of “actual use in commerce * * * in the Philippines”
case. That is the reason why in trademark cases, jurisprudential precedents before one may register a trademark, trade name and service mark under the
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Trademark Law pertains to the territorial jurisdiction of the Philippines and is not sandwiches, halo-halo and steaks under classes 29 and 30 of the International
only confined to a certain region, province, city or barangay.—Respondent’s Classification of Goods.
contention that it was the first user of the mark in the Philippines having used
“MACJOY & DEVICE” on its restaurant business and food products since Petitioner McDonald’s Corporation, a corporation duly organized and existing
December, 1987 at Cebu City while the first McDonald’s outlet of the petitioner under the laws of the State of Delaware, USA, filed a verified Notice of
thereat was opened only in 1992, is downright unmeritorious. For the Opposition3 against the respondent’s application claiming that the trademark
requirement of “actual use in commerce x x x in the Philippines” before one may "MACJOY & DEVICE" so resembles its corporate logo, otherwise known as the
register a trademark, trade name and service mark under the Trademark Law Golden Arches or "M" design, and its marks "McDonalds," McChicken,"
pertains to the territorial jurisdiction of the Philippines and is not only confined "MacFries," "BigMac," "McDo," "McSpaghetti," "McSnack," and "Mc," (hereinafter
to a certain region, province, city or barangay. collectively known as the MCDONALD’S marks) such that when used on identical
or related goods, the trademark applied for would confuse or deceive purchasers
PETITION for review on certiorari of the decision and resolution of the Court of into believing that the goods originate from the same source or origin. Likewise,
Appeals. the petitioner alleged that the respondent’s use and adoption in bad faith of the
"MACJOY & DEVICE" mark would falsely tend to suggest a connection or
The facts are stated in the opinion of the Court. affiliation with petitioner’s restaurant services and food products, thus,
     Bernardito A. Florido and Joan J. Sarausos-Largo for respondent. constituting a fraud upon the general public and further cause the dilution of the
[McDonald’s Corporation vs. MacJoy Fastfood Corporation, 514 SCRA 95(2007)] distinctiveness of petitioner’s registered and internationally recognized
MCDONALD’S marks to its prejudice and irreparable damage. The application
DECISION and the opposition thereto was docketed as Inter Partes Case No. 3861.

GARCIA, J.: Respondent denied the aforementioned allegations of the petitioner and averred
that it has used the mark "MACJOY" for the past many years in good faith and
In this petition for review on certiorari under Rule 45 of the Rules of Court, has spent considerable sums of money for said mark’s extensive promotion in
herein petitioner McDonald’s Corporation seeks the reversal and setting aside of tri-media, especially in Cebu City where it has been doing business long before
the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to the petitioner opened its outlet thereat sometime in 1992; and that its use of
wit: said mark would not confuse affiliation with the petitioner’s restaurant services
and food products because of the differences in the design and detail of the two
1. Decision dated 29 July 20041 reversing an earlier decision of the Intellectual (2) marks.
Property Office (IPO) which rejected herein respondent MacJoy FastFood
Corporation’s application for registration of the trademark "MACJOY & DEVICE"; In a decision4 dated December 28, 1998, the IPO, ratiocinating that the
and predominance of the letter "M," and the prefixes "Mac/Mc" in both the "MACJOY"
and the "MCDONALDS" marks lead to the conclusion that there is confusing
2. Resolution dated 12 November 20042 denying the petitioner’s motion for similarity between them especially since both are used on almost the same
reconsideration. products falling under classes 29 and 30 of the International Classification of
Goods, i.e., food and ingredients of food, sustained the petitioner’s opposition
As culled from the record, the facts are as follows: and rejected the respondent’s application, viz:

On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic WHEREFORE, the Opposition to the registration of the mark MACJOY & DEVICE
corporation engaged in the sale of fast food products in Cebu City, filed with the for use in fried chicken and chicken barbecue, burgers, fries, spaghetti, palabok,
then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the tacos, sandwiches, halo-halo, and steaks is, as it is hereby, SUSTAINED.
Intellectual Property Office (IPO), an application, thereat identified as Application Accordingly, Application Serial No. 75274 of the herein Respondent-Applicant is
Serial No. 75274, for the registration of the trademark "MACJOY & DEVICE" for REJECTED.
fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos,
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Let the filewrapper of MACJOY subject matter of this case be sent to the 2. The word "MacJoy" comes with the picture of a chicken head with cap and
Administrative, Financial and Human Resources Development Bureau for bowtie and wings sprouting on both sides, while the word "McDonald’s" comes
appropriate action in accordance with this Decision, with a copy to be furnished with an arches "M" in gold colors, and absolutely without any picture of a
the Bureau of Trademarks for information and to update its record. chicken;

SO ORDERED. 3. The word "MacJoy" is set in deep pink and white color scheme while
"McDonald’s" is written in red, yellow and black color combination;
In time, the respondent moved for a reconsideration but the IPO denied the
motion in its Order5 of January 14, 2000. 4. The façade of the respective stores of the parties are entirely different.
Exhibits 1 and 1-A, show that [respondent’s] restaurant is set also in the same
Therefrom, the respondent went to the CA via a Petition for Review with prayer bold, brilliant and noticeable color scheme as that of its wrappers, containers,
for Preliminary Injunction6 under Rule 43 of the Rules of Court, whereat its cups, etc., while [petitioner’s] restaurant is in yellow and red colors, and with
appellate recourse was docketed as CA-G.R. SP No. 57247. the mascot of "Ronald McDonald" being prominently displayed therein." (Words
in brackets supplied.)
Finding no confusing similarity between the marks "MACJOY" and
"MCDONALD’S," the CA, in its herein assailed Decision7 dated July 29, 2004, Petitioner promptly filed a motion for reconsideration. However, in its similarly
reversed and set aside the appealed IPO decision and order, thus: challenged Resolution8 of November 12, 2004, the CA denied the motion, as it
further held:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us
REVERSING and SETTING ASIDE the Decision of the IPO dated 28 December Whether a mark or label of a competitor resembles another is to be determined
1998 and its Order dated 14 January 2000 and ORDERING the IPO to give due by an inspection of the points of difference and resemblance as a whole, and not
course to petitioner’s Application Serial No. 75274. merely the points of resemblance. The articles and trademarks employed and
used by the [respondent] Macjoy Fastfood Corporation are so different and
SO ORDERED. distinct as to preclude any probability or likelihood of confusion or deception on
the part of the public to the injury of the trade or business of the [petitioner]
Explains the CA in its decision: McDonald’s Corporation. The "Macjoy & Device" mark is dissimilar in color,
design, spelling, size, concept and appearance to the McDonald’s marks. (Words
xxx, it is clear that the IPO brushed aside and rendered useless the glaring and in brackets supplied.)
drastic differences and variations in style of the two trademarks and even
decreed that these pronounced differences are "miniscule" and considered them Hence, the petitioner’s present recourse on the following grounds:
to have been "overshadowed by the appearance of the predominant features"
such as "M," "Mc," and "Mac" appearing in both MCDONALD’S and MACJOY I.
marks. Instead of taking into account these differences, the IPO unreasonably
shrugged off these differences in the device, letters and marks in the trademark THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT’S "MACJOY &
sought to be registered. The IPO brushed aside and ignored the following DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO PETITIONER’S
irrefutable facts and circumstances showing differences between the marks of "McDONALD’S MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY
MACJOY and MCDONALD’S. They are, as averred by the petitioner [now TEST WHICH HAS BEEN CONSISTENTLY APPLIED BY THIS HONORABLE COURT
respondent]: IN DETERMINING THE EXISTENCE OF CONFUSING SIMILARITY BETWEEN
COMPETING MARKS.
1. The word "MacJoy" is written in round script while the word "McDonald’s" is
written in single stroke gothic; A. The McDonald’s Marks belong to a well-known and established "family of
marks" distinguished by the use of the prefix "Mc" and/or "Mac" and the
corporate "M" logo design.
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B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner’s As regards the respondent’s argument that the petition raises only questions of
McDonald’s Marks and the Respondent’s "Macjoy & Device" mark. As such, the fact which are not proper in a petition for review, suffice it to say that the
marks are confusingly similar under the Dominancy Test. contradictory findings of the IPO and the CA constrain us to give due course to
the petition, this being one of the recognized exceptions to Section 1, Rule 45 of
C. Petitioner’s McDonald’s Marks are well-known and world-famous marks which the Rules of Court. True, this Court is not the proper venue to consider factual
must be protected under the Paris Convention. issues as it is not a trier of facts.12 Nevertheless, when the factual findings of
the appellate court are mistaken, absurd, speculative, conjectural, conflicting,
II. tainted with grave abuse of discretion, or contrary to the findings culled by the
court of origin,13 as here, this Court will review them.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO
DATED 28 DECEMBER 1998 AND ITS ORDER DATED 14 JANUARY 2000 WERE The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a
NOT BASED ON SUBSTANTIAL EVIDENCE. "trademark" as any distinctive word, name, symbol, emblem, sign, or device, or
any combination thereof adopted and used by a manufacturer or merchant on
In its Comment,9 the respondent asserts that the petition should be dismissed his goods to identify and distinguish them from those manufactured, sold, or
outright for being procedurally defective: first, because the person who signed dealt in by others.14
the certification against forum shopping in behalf of the petitioner was not
specifically authorized to do so, and second, because the petition does not Under the same law, the registration of a trademark is subject to the provisions
present a reviewable issue as what it challenges are the factual findings of the of Section 4 thereof, paragraph (d) of which is pertinent to this case. The
CA. In any event, the respondent insists that the CA committed no reversible provision reads:
error in finding no confusing similarity between the trademarks in question.
Section 4. Registration of trademarks, trade-names and service-marks on the
The petition is impressed with merit. principal register. – There is hereby established a register of trademarks,
tradenames and service-marks which shall be known as the principal register.
Contrary to respondent’s claim, the petitioner’s Managing Counsel, Sheila Lehr, The owner of the trade-mark, trade-name or service-mark used to distinguish
was specifically authorized to sign on behalf of the petitioner the Verification and his goods, business or services of others shall have the right to register the
Certification10 attached to the petition. As can be gleaned from the petitioner’s same on the principal register, unless it:
Board of Director’s Resolution dated December 5, 2002, as embodied in the
Certificate of the Assistant Secretary dated December 21, 2004,11 Sheila Lehr xxx xxx xxx
was one of those authorized and empowered "to execute and deliver for and on
behalf of [the petitioner] all documents as may be required in connection with x (d) Consists of or comprises a mark or trade-name which so resembles a mark
x x the protection and maintenance of any foreign patents, trademarks, trade- or trade-name registered in the Philippines or a mark or trade-name previously
names, and copyrights owned now or hereafter by [the petitioner], including, used in the Philippines by another and not abandoned, as to be likely, when
but not limited to, x x x documents required to institute opposition or applied to or used in connection with the goods, business or services of the
cancellation proceedings against conflicting trademarks, and to do such other applicant, to cause confusion or mistake or to deceive purchasers;
acts and things and to execute such other documents as may be necessary and
appropriate to effect and carry out the intent of this resolution." Indeed, the xxx xxx xxx
afore-stated authority given to Lehr necessarily includes the authority to execute
and sign the mandatorily required certification of non-forum shopping to support Essentially, the issue here is whether there is a confusing similarity between the
the instant petition for review which stemmed from the "opposition proceedings" MCDONALD’S marks of the petitioner and the respondent’s "MACJOY & DEVICE"
lodged by the petitioner before the IPO. Considering that the person who trademark when applied to Classes 29 and 30 of the International Classification
executed and signed the certification against forum shopping has the authority of Goods, i.e., food and ingredients of food.
to do so, the petition, therefore, is not procedurally defective.
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In determining similarity and likelihood of confusion, jurisprudence has

developed two tests, the dominancy test and the holistic test.15 The dominancy While we agree with the CA’s detailed enumeration of differences between the
test focuses on the similarity of the prevalent features of the competing two (2) competing trademarks herein involved, we believe that the holistic test is
trademarks that might cause confusion or deception.16 In contrast, the holistic not the one applicable in this case, the dominancy test being the one more
test requires the court to consider the entirety of the marks as applied to the suitable. In recent cases with a similar factual milieu as here, the Court has
products, including the labels and packaging, in determining confusing consistently used and applied the dominancy test in determining confusing
similarity.17 Under the latter test, a comparison of the words is not the only similarity or likelihood of confusion between competing trademarks.22
determinant factor.18 1awphi1.net
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where the
Here, the IPO used the dominancy test in concluding that there was confusing trademark "Big Mak" was found to be confusingly similar with the "Big Mac"
similarity between the two (2) trademarks in question as it took note of the mark of the herein the petitioner, the Court explicitly held:
appearance of the predominant features "M", "Mc" and/or "Mac" in both the
marks. In reversing the conclusion reached by the IPO, the CA, while seemingly This Court, xxx, has relied on the dominancy test rather than the holistic test.
applying the dominancy test, in fact actually applied the holistic test. The The dominancy test considers the dominant features in the competing marks in
appellate court ruled in this wise: determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product
Applying the Dominancy test to the present case, the IPO should have taken into arising from the adoption of the dominant features of the registered mark,
consideration the entirety of the two marks instead of simply fixing its gaze on disregarding minor differences. Courts will consider more the aural and visual
the single letter "M" or on the combinations "Mc" or "Mac". A mere cursory look impressions created by the marks in the public mind, giving little weight to
of the subject marks will reveal that, save for the letters "M" and "c", no other factors like prices, quality, sales outlets and market segments.
similarity exists in the subject marks.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying the
We agree with the [respondent] that it is entirely unwarranted for the IPO to dominancy test, concluded that the use by the respondent therein of the word
consider the prefix "Mac" as the predominant feature and the rest of the designs "MASTER" for its coffee product "FLAVOR MASTER" was likely to cause confusion
in [respondent’s] mark as details. Taking into account such paramount factors as with therein petitioner’s coffee products’ "MASTER ROAST" and "MASTER
color, designs, spelling, sound, concept, sizes and audio and visual effects, the BLEND" and further ruled:
prefix "Mc" will appear to be the only similarity in the two completely different
marks; and it is the prefix "Mc" that would thus appear as the miniscule detail. xxx, the totality or holistic test is contrary to the elementary postulate of the law
When pitted against each other, the two marks reflect a distinct and disparate on trademarks and unfair competition that confusing similarity is to be
visual impression that negates any possible confusing similarity in the mind of determined on the basis of visual, aural, connotative comparisons and overall
the buying public. (Words in brackets supplied.) impressions engendered by the marks in controversy as they are encountered in
the marketplace. The totality or holistic test only relies on visual comparisons
Petitioner now vigorously points out that the dominancy test should be the one between two trademarks whereas the dominancy test relies not only on the
applied in this case. visual but also on the aural and connotative comparisons and overall impressions
between the two trademarks.
We agree.
Applying the dominancy test to the instant case, the Court finds that herein
In trademark cases, particularly in ascertaining whether one trademark is petitioner’s "MCDONALD’S" and respondent’s "MACJOY" marks are confusingly
confusingly similar to another, no set rules can be deduced because each case similar with each other such that an ordinary purchaser can conclude an
must be decided on its merits.19 In such cases, even more than in any other association or relation between the marks.
litigation, precedent must be studied in the light of the facts of the particular
case.20 That is the reason why in trademark cases, jurisprudential precedents To begin with, both marks use the corporate "M" design logo and the prefixes
should be applied only to a case if they are specifically in point.21 "Mc" and/or "Mac" as dominant features. The first letter "M" in both marks puts
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emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which they are With the existence of confusing similarity between the subject trademarks, the
depicted i.e. in an arch-like, capitalized and stylized manner.25 resulting issue to be resolved is who, as between the parties, has the rightful
claim of ownership over the said marks.
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and
aurally catches the attention of the consuming public. Verily, the word "MACJOY" We rule for the petitioner.
attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti,"
"McDo," "Big Mac" and the rest of the MCDONALD’S marks which all use the A mark is valid if it is distinctive and hence not barred from registration under
prefixes Mc and/or Mac. the Trademark Law. However, once registered, not only the mark’s validity but
also the registrant’s ownership thereof is prima facie presumed.26
Besides and most importantly, both trademarks are used in the sale of fastfood
products. Indisputably, the respondent’s trademark application for the "MACJOY Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision
& DEVICE" trademark covers goods under Classes 29 and 30 of the International regarding the protection of industrial property of foreign nationals in this country
Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, as embodied in the Paris Convention28 under which the Philippines and the
spaghetti, etc. Likewise, the petitioner’s trademark registration for the petitioner’s domicile, the United States, are adherent-members, the petitioner
MCDONALD’S marks in the Philippines covers goods which are similar if not was able to register its MCDONALD’S marks successively, i.e., "McDonald’s" in 04
identical to those covered by the respondent’s application. October, 197129 ; the corporate logo which is the "M" or the golden arches
design and the "McDonald’s" with the "M" or golden arches design both in 30
Thus, we concur with the IPO’s findings that: June 197730 ; and so on and so forth.31

In the case at bar, the predominant features such as the "M," "Mc," and "Mac" On the other hand, it is not disputed that the respondent’s application for
appearing in both McDonald’s marks and the MACJOY & DEVICE" easily attract registration of its trademark "MACJOY & DEVICE" was filed only on March 14,
the attention of would-be customers. Even non-regular customers of their 1991 albeit the date of first use in the Philippines was December 7, 1987.32
fastfood restaurants would readily notice the predominance of the "M" design,
"Mc/Mac" prefixes shown in both marks. Such that the common awareness or Hence, from the evidence on record, it is clear that the petitioner has duly
perception of customers that the trademarks McDonalds mark and MACJOY & established its ownership of the mark/s.
DEVICE are one and the same, or an affiliate, or under the sponsorship of the
other is not far-fetched. Respondent’s contention that it was the first user of the mark in the Philippines
having used "MACJOY & DEVICE" on its restaurant business and food products
The differences and variations in styles as the device depicting a head of chicken since December, 1987 at Cebu City while the first McDonald’s outlet of the
with cap and bowtie and wings sprouting on both sides of the chicken head, the petitioner thereat was opened only in 1992, is downright unmeritorious. For the
heart-shaped "M," and the stylistic letters in "MACJOY & DEVICE;" in contrast to requirement of "actual use in commerce x x x in the Philippines" before one may
the arch-like "M" and the one-styled gothic letters in McDonald’s marks are of no register a trademark, trade-name and service mark under the Trademark Law33
moment. These minuscule variations are overshadowed by the appearance of pertains to the territorial jurisdiction of the Philippines and is not only confined
the predominant features mentioned hereinabove. to a certain region, province, city or barangay.

Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in Likewise wanting in merit is the respondent’s claim that the petitioner cannot
both marks, the inevitable conclusion is there is confusing similarity between the acquire ownership of the word "Mac" because it is a personal name which may
trademarks Mc Donald’s marks and "MACJOY AND DEVICE" especially not be monopolized as a trademark as against others of the same name or
considering the fact that both marks are being used on almost the same surname. As stated earlier, once a trademark has been registered, the validity of
products falling under Classes 29 and 30 of the International Classification of the mark is prima facie presumed. In this case, the respondent failed to
Goods i.e. Food and ingredients of food. overcome such presumption. We agree with the observations of the petitioner
regarding the respondent’s explanation that the word "MACJOY" is based on the
name of its president’s niece, Scarlett Yu Carcell. In the words of the petitioner:
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First of all, Respondent failed to present evidence to support the foregoing claim
which, at best, is a mere self-serving assertion. Secondly, it cannot be denied
that there is absolutely no connection between the name "Scarlett Yu Carcel"
and "MacJoy" to merit the coinage of the latter word. Even assuming that the
word "MacJoy" was chosen as a term of endearment, fondness and affection for
a certain Scarlett Yu Carcel, allegedly the niece of Respondent’s president, as
well as to supposedly bring good luck to Respondent’s business, one cannot help
but wonder why out of all the possible letters or combinations of letters available
to Respondent, its president had to choose and adopt a mark with the prefix
"Mac" as the dominant feature thereof. A more plausible explanation perhaps is
that the niece of Respondent’s president was fond of the food products and
services of the Respondent, but that is beside the point." 34

By reason of the respondent’s implausible and insufficient explanation as to how

and why out of the many choices of words it could have used for its trade-name
and/or trademark, it chose the word "MACJOY," the only logical conclusion
deducible therefrom is that the respondent would want to ride high on the
established reputation and goodwill of the MCDONALD’s marks, which, as
applied to petitioner’s restaurant business and food products, is undoubtedly
beyond question.

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

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

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

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

No pronouncement as to costs.

SO ORDERED.
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G.R. No. 143993 August 18, 2004 colorable imitation marks, namely, confusion of goods (product confusion) and
confusion of business (source or origin confusion). In Sterling Products
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,
INC., petitioners, the Court distinguished these two types of confusion, thus: [Rudolf] Callman
vs. notes two types of confusion. The first is the confusion of goods “in which event
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, the ordinarily prudent purchaser would be induced to purchase one product in
WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO, and GRACE the belief that he was purchasing the other.” x x x The other is the confusion of
HUERTO, respondents. 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,
Remedial Law; Appeals; A party intending to appeal from a judgment of the and the public would then be deceived either into that belief or into the belief
Court of Appeals may file with the Supreme Court a petition for review under that there is some connection between the plaintiff and defendant which, in fact,
Section 1 of Rule 45 raising only questions of law; Question of Law and Question does not exist.”
of Fact Distinguished.—A party intending to appeal from a judgment of the Court Same; Same; Two Tests in Determining Likelihood of Confusion, the Dominancy
of Appeals may file with this Court a petition for review under Section 1 of Rule Test and the Holistic Test.—In determining likelihood of confusion, jurisprudence
45 raising only questions of law. A question of law exists when the doubt or has developed two tests, the dominancy test and the holistic test. The
difference arises on what the law is on a certain state of facts. There is a dominancy test focuses on the similarity of the prevalent features of the
question of fact when the doubt or difference arises on the truth or falsity of the competing trademarks that might cause confusion. In contrast, the holistic test
alleged facts. requires the court to consider the entirety of the marks as applied to the
Trademarks and Trade Names; Infringement; Elements to Establish Trademark products, including the labels and packaging, in determining confusing similarity.
Infringement.—To establish trademark infringement, the following elements Same; Same; Court rejected the holistic test in Societe Des Produits Nestlé S.A.
must be shown: (1) the validity of plaintiff’s mark; (2) the plaintiff’s ownership of vs. Court of Appeals.—In the 2001 case of Societe Des Produits Nestlé, S.A. v.
the mark; and (3) the use of the mark or its colorable imitation by the alleged Court of Appeals, the Court explicitly rejected the holistic test in this wise: [T]he
infringer results in “likelihood of confusion.” Of these, it is the element of totality or holistic test is contrary to the elementary postulate of the law on
likelihood of confusion that is the gravamen of trademark infringement. trademarks and unfair competition that confusing similarity is to be determined
Same; Same; A mark is valid if it is “distinctive” and thus not barred from on the basis of visual, aural, connotative comparisons and overall impressions
registration under Section 4 of RA 166; Once registered, not only the mark’s engendered by the marks in controversy as they are encountered in the realities
validity but also the registrant’s ownership of the mark is prima facie presumed. of the marketplace.
—A mark is valid if it is “distinctive” and thus not barred from registration under Same; Same; While proof of actual confusion is the best evidence of
Section 4 of RA 166. However, once registered, not only the mark’s validity but infringement its absence is inconsequential.—Petitioners’ failure to present proof
also the registrant’s ownership of the mark is prima facie presumed. of actual confusion does not negate their claim of trademark infringement. As
Same; Same; A mark which is not registered in the Principal Register and thus noted in American Wire & Cable Co. v. Director of Patents, Section 22 requires
not distinctive has no real protection.—The Court also finds that petitioners have the less stringent standard of “likelihood of confusion” only. While proof of
duly established McDonald’s exclusive ownership of the “Big Mac” mark. actual confusion is the best evidence of infringement, its absence is
Although Topacio and the Isaiyas Group registered the “Big Mac” mark ahead of inconsequential.
McDonald’s, Topacio, as petitioners disclosed, had already assigned his rights to Same; Unfair Competition; Essential Elements of Unfair Competition.—The
McDonald’s. The Isaiyas Group, on the other hand, registered its trademark only essential elements of an action for unfair competition are: (1) confusing
in the Supplemental Register. A mark which is not registered in the Principal similarity in the general appearance of the goods, and (2) intent to deceive the
Register, and thus not distinctive, has no real protection. Indeed, we have held public and defraud a competitor. The confusing similarity may or may not result
that registration in the Supplemental Register is not even a prima facie evidence from similarity in the marks, but may result from other external factors in the
of the validity of the registrant’s exclusive right to use the mark on the goods packaging or presentation of the goods. The intent to deceive and defraud may
specified in the certificate. be inferred from the similarity of the appearance of the goods as offered for sale
Same; Same; Confusion of Goods and Confusion of Business Distinguished.— to the public. Actual fraudulent intent need not be shown.
Section 22 covers two types of confusion arising from the use of similar or
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 123

Same; Same; Trademark infringement is a form of unfair competition;

Trademark infringement constitutes unfair competition when there is not merely The Facts
likelihood of confusion but also actual or probable deception on the public
because of the general appearance of the goods.—Unfair competition is broader Petitioner McDonald's Corporation ("McDonald's") is a corporation organized
than trademark infringement and includes passing off goods with or without under the laws of Delaware, United States. McDonald's operates, by itself or
trademark infringement. Trademark infringement is a form of unfair through its franchisees, a global chain of fast-food restaurants. McDonald's4
competition.Trademark infringement constitutes unfair competition when there owns a family of marks5 including the "Big Mac" mark for its "double-decker
is not merely likelihood of confusion, but also actual or probable deception on hamburger sandwich."6 McDonald's registered this trademark with the United
the public because of the general appearance of the goods. There can be States Trademark Registry on 16 October 1979.7 Based on this Home
trademark infringement without unfair competition as when the infringer Registration, McDonald's applied for the registration of the same mark in the
discloses on the labels containing the mark that he manufactures the goods, Principal Register of the then Philippine Bureau of Patents, Trademarks and
thus preventing the public from being deceived that the goods originate from Technology ("PBPTT"), now the Intellectual Property Office ("IPO"). Pending
the trademark owner. approval of its application, McDonald's introduced its "Big Mac" hamburger
Same; Same; Passing off (or palming off) takes place where the defendant, by sandwiches in the Philippine market in September 1981. On 18 July 1985, the
imitative devices on the general appearance of the goods, misleads prospective PBPTT allowed registration of the "Big Mac" mark in the Principal Register based
purchasers into buying his merchandise under the impression that they are on its Home Registration in the United States.
buying that of his competitors.—Passing off (or palming off) takes place where
the defendant, by imitative devices on the general appearance of the goods, Like its other marks, McDonald's displays the "Big Mac" mark in items8 and
misleads prospective purchasers into buying his merchandise under the paraphernalia9 in its restaurants, and in its outdoor and indoor signages. From
impression that they are buying that of his competitors.Thus, the defendant 1982 to 1990, McDonald's spent P10.5 million in advertisement for "Big Mac"
gives his goods the general appearance of the goods of his competitor with the hamburger sandwiches alone.10
intention of deceiving the public that the goods are those of his competitor.
PETITION for review on certiorari of the decision and resolution of the Court of Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic
Appeals. corporation, is McDonald's Philippine franchisee.11

The facts are stated in the opinion of the Court. Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a domestic
     Abello, Concepcion, Regala and Cruz for petitioners. corporation which operates fast-food outlets and snack vans in Metro Manila and
     Vicente M. Joyas for respondents. [McDonald’s Corporation vs. L.C. Big Mak nearby provinces.12 Respondent corporation's menu includes hamburger
Burger, Inc., 437 SCRA 10(2004)] 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
CARPIO, J.: respondent corporation.14

The Case On 21 October 1988, respondent corporation applied with the PBPTT for the
registration of the "Big Mak" mark for its hamburger sandwiches. McDonald's
This is a petition for review1 of the Decision dated 26 November 1999 of the opposed respondent corporation's application on the ground that "Big Mak" was
Court of Appeals2 finding respondent L.C. Big Mak Burger, Inc. not liable for a colorable imitation of its registered "Big Mac" mark for the same food
trademark infringement and unfair competition and ordering petitioners to pay products. McDonald's also informed respondent Francis Dy ("respondent Dy"),
respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000 the chairman of the Board of Directors of respondent corporation, of its
denying reconsideration. The Court of Appeals' Decision reversed the 5 exclusive right to the "Big Mac" mark and requested him to desist from using the
September 1994 Decision3 of the Regional Trial Court of Makati, Branch 137, "Big Mac" mark or any similar mark.
finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement
and unfair competition.
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Having received no reply from respondent Dy, petitioners on 6 June 1990 sued There exist some distinctions between the names "B[ig] M[ac]" and "B[ig]
respondents in the Regional Trial Court of Makati, Branch 137 ("RTC"), for M[ak]" as appearing in the respective signages, wrappers and containers of the
trademark infringement and unfair competition. In its Order of 11 July 1990, the food products of the parties. But infringement goes beyond the physical features
RTC issued a temporary restraining order ("TRO") against respondents enjoining of the questioned name and the original name. There are still other factors to be
them from using the "Big Mak" mark in the operation of their business in the considered.
National Capital Region.15 On 16 August 1990, the RTC issued a writ of
preliminary injunction replacing the TRO.16 xxxx

In their Answer, respondents admitted that they have been using the name "Big Significantly, the contending parties are both in the business of fast-food chains
Mak Burger" for their fast-food business. Respondents claimed, however, that and restaurants. An average person who is hungry and wants to eat a
McDonald's does not have an exclusive right to the "Big Mac" mark or to any hamburger sandwich may not be discriminating enough to look for a McDonald's
other similar mark. Respondents point out that the Isaiyas Group of Corporations restaurant and buy a "B[ig] M[ac]" hamburger. Once he sees a stall selling
("Isaiyas Group") registered the same mark for hamburger sandwiches with the hamburger sandwich, in all likelihood, he will dip into his pocket and order a
PBPTT on 31 March 1979. One Rodolfo Topacio ("Topacio") similarly registered "B[ig] M[ak]" hamburger sandwich. Plaintiff McDonald's fast-food chain has
the same mark on 24 June 1983, prior to McDonald's registration on 18 July attained wide popularity and acceptance by the consuming public so much so
1985. Alternatively, respondents claimed that they are not liable for trademark that its air-conditioned food outlets and restaurants will perhaps not be mistaken
infringement or for unfair competition, as the "Big Mak" mark they sought to by many to be the same as defendant corporation's mobile snack vans located
register does not constitute a colorable imitation of the "Big Mac" mark. along busy streets or highways. But the thing is that what is being sold by both
Respondents asserted that they did not fraudulently pass off their hamburger contending parties is a food item – a hamburger sandwich which is for
sandwiches as those of petitioners' Big Mac hamburgers.17 Respondents sought immediate consumption, so that a buyer may easily be confused or deceived
damages in their counterclaim. 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,
In their Reply, petitioners denied respondents' claim that McDonald's is not the defendant corporation has its own secret ingredients to make its hamburger
exclusive owner of the "Big Mac" mark. Petitioners asserted that while the sandwiches as palatable and as tasty as the other brands in the market,
Isaiyas Group and Topacio did register the "Big Mac" mark ahead of McDonald's, considering the keen competition among mushrooming hamburger stands and
the Isaiyas Group did so only in the Supplemental Register of the PBPTT and multinational fast-food chains and restaurants. Hence, the trademark "B[ig]
such registration does not provide any protection. McDonald's disclosed that it M[ac]" has been infringed by defendant corporation when it used the name
had acquired Topacio's rights to his registration in a Deed of Assignment dated "B[ig] M[ak]" in its signages, wrappers, and containers in connection with its
18 May 1981.18 food business. xxxx

The Trial Court's Ruling 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
On 5 September 1994, the RTC rendered judgment ("RTC Decision") finding printed on the wrappers and containers of their food products also constitute an
respondent corporation liable for trademark infringement and unfair competition. act of unfair competition under Section 29 of the Trademark Law?
However, the RTC dismissed the complaint against private respondents and the
counterclaim against petitioners for lack of merit and insufficiency of evidence. The answer is in the affirmative. xxxx
The RTC held:
The xxx provision of the law concerning unfair competition is broader and more
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for plaintiff inclusive than the law concerning the infringement of trademark, which is of
McDonald's, and as such, it is entitled [to] protection against infringement. 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
xxxx whose goods or services are first associated therewith. xxx Notwithstanding the
distinction between an action for trademark infringement and an action for
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unfair competition, however, the law extends substantially the same relief to the respondents P1,600,000 as actual and compensatory damages and P300,000 as
injured party for both cases. (See Sections 23 and 29 of Republic Act No. 166) moral damages. The Court of Appeals held:

Any conduct may be said to constitute unfair competition if the effect is to pass Plaintiffs-appellees in the instant case would like to impress on this Court that
off on the public the goods of one man as the goods of another. The choice of the use of defendants-appellants of its corporate name – the whole "L.C. B[ig]
"B[ig] M[ak]" as tradename by defendant corporation is not merely for M[ak] B[urger], I[nc]." which appears on their food packages, signages and
sentimental reasons but was clearly made to take advantage of the reputation, advertisements is an infringement of their trademark "B[ig] M[ac]" which they
popularity and the established goodwill of plaintiff McDonald's. For, as stated in use to identify [their] double decker sandwich, sold in a Styrofoam box
Section 29, a person is guilty of unfair competition who in selling his goods shall packaging material with the McDonald's logo of umbrella "M" stamped thereon,
give them the general appearance, of goods of another manufacturer or dealer, together with the printed mark in red bl[o]ck capital letters, the words being
either as to the goods themselves or in the wrapping of the packages in which separated by a single space. Specifically, plaintiffs-appellees argue that
they are contained, or the devices or words thereon, or in any other feature of defendants-appellants' use of their corporate name is a colorable imitation of
their appearance, which would likely influence purchasers to believe that the their trademark "Big Mac".
goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer. Thus, plaintiffs have established their valid cause of xxxx
action against the defendants for trademark infringement and unfair competition
and for damages.19 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
The dispositive portion of the RTC Decision provides: 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
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's Corporation persons in the ordinary course of purchasing the genuine article. A careful
and McGeorge Food Industries, Inc. and against defendant L.C. Big Mak Burger, comparison of the way the trademark "B[ig] M[ac]" is being used by plaintiffs-
Inc., as follows: 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
1. The writ of preliminary injunction issued in this case on [16 August 1990] is ordinary purchasers would be misled by it. As pointed out by defendants-
made permanent; appellants, the plaintiffs-appellees' trademark is used to designate only one
product, a double decker sandwich sold in a Styrofoam box with the
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual "McDonalds" logo. On the other hand, what the defendants-appellants
damages in the amount of P400,000.00, exemplary damages in the amount of corporation is using is not a trademark for its food product but a business or
P100,000.00, and attorney's fees and expenses of litigation in the amount of corporate name. They use the business name "L.C. Big Mak Burger, Inc." in their
P100,000.00; restaurant business which serves diversified food items such as siopao, noodles,
pizza, and sandwiches such as hotdog, ham, fish burger and hamburger.
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B. Dy, Secondly, defendants-appellants' corporate or business name appearing in the
Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well as all food packages and signages are written in silhouette red-orange letters with the
counter-claims, are dismissed for lack of merit as well as for insufficiency of "b" and "m" in upper case letters. Above the words "Big Mak" are the upper case
evidence.20 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
Respondents appealed to the Court of Appeals. 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
The Ruling of the Court of Appeals upper case "m" appearing therein and a blue lower garment. Finally, the
defendants-appellants' food packages are made of plastic material.
On 26 November 1999, the Court of Appeals rendered judgment ("Court of
Appeals' Decision") reversing the RTC Decision and ordering McDonald's to pay xxxx
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whose names are Maxima and Kimsoy. With this explanation, it is up to the
xxx [I]t is readily apparent to the naked eye that there appears a vast difference plaintiffs-appellees to prove bad faith on the part of defendants-appellants. It is
in the appearance of the product and the manner that the tradename "Big Mak" a settled rule that the law always presumes good faith such that any person who
is being used and presented to the public. As earlier noted, there are glaring seeks to be awarded damages due to acts of another has the burden of proving
dissimilarities between plaintiffs-appellees' trademark and defendants-appellants' that the latter acted in bad faith or with ill motive. 21
corporate name. Plaintiffs-appellees' product carrying the trademark "B[ig]
M[ac]" is a double decker sandwich (depicted in the tray mat containing Petitioners sought reconsideration of the Court of Appeals' Decision but the
photographs of the various food products xxx sold in a Styrofoam box with the appellate court denied their motion in its Resolution of 11 July 2000.
"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' Hence, this petition for review.
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 Petitioners raise the following grounds for their petition:
commercial center, advertised and identified by its logo - the umbrella "M", and
its mascot – "Ronald McDonald". A typical McDonald's restaurant boasts of a I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS'
playground for kids, a second floor to accommodate additional customers, a CORPORATE NAME "L.C. BIG MAK BURGER, INC." IS NOT A COLORABLE
drive-thru to allow customers with cars to make orders without alighting from IMITATION OF THE MCDONALD'S TRADEMARK "BIG MAC", SUCH COLORABLE
their vehicles, the interiors of the building are well-lighted, distinctly decorated IMITATION BEING AN ELEMENT OF TRADEMARK INFRINGEMENT.
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" A. Respondents use the words "Big Mak" as trademark for their products and not
and enter it first before he can find a hamburger sandwich which carry the mark merely as their business or corporate name.
"Big Mac". On the other hand, defendants-appellants sell their goods through
snack vans xxxx B. As a trademark, respondents' "Big Mak" is undeniably and unquestionably
similar to petitioners' "Big Mac" trademark based on the dominancy test and the
Anent the allegation that defendants-appellants are guilty of unfair competition, idem sonans test resulting inexorably in confusion on the part of the consuming
We likewise find the same untenable. public.

Unfair competition is defined as "the employment of deception or any other II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE
means contrary to good faith by which a person shall pass off the goods INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE WORD MARK
manufactured by him or in which he deals, or his business, or service, for those "BIG MAC" AS AN INDICATION OF RESPONDENTS' INTENT TO DECEIVE OR
of another who has already established good will for his similar good, business DEFRAUD FOR PURPOSES OF ESTABLISHING UNFAIR COMPETITION.22
or services, or any acts calculated to produce the same result" (Sec. 29, Rep. Act
No. 166, as amended). Petitioners pray that we set aside the Court of Appeals' Decision and reinstate
the RTC Decision.
To constitute unfair competition therefore it must necessarily follow that there
was malice and that the entity concerned was in bad faith. 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
In the case at bar, We find no sufficient evidence adduced by plaintiffs-appellees contend that the Court of Appeals committed no reversible error in finding them
that defendants-appellants deliberately tried to pass off the goods manufactured not liable for trademark infringement and unfair competition and in ordering
by them for those of plaintiffs-appellees. The mere suspected similarity in the petitioners to pay damages.
sound of the defendants-appellants' corporate name with the plaintiffs-appellees'
trademark is not sufficient evidence to conclude unfair competition. Defendants- The Issues
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, The issues are:
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The evidence presented during the hearings on petitioners' motion for the
1. Procedurally, whether the questions raised in this petition are proper for a issuance of a writ of preliminary injunction shows that the plastic wrappings and
petition for review under Rule 45. plastic bags used by respondents for their hamburger sandwiches bore the
words "Big Mak." The other descriptive words "burger" and "100% pure beef"
2. On the merits, (a) whether respondents used the words "Big Mak" not only as were set in smaller type, along with the locations of branches.28 Respondents'
part of the corporate name "L.C. Big Mak Burger, Inc." but also as a trademark cash invoices simply refer to their hamburger sandwiches as "Big Mak."29 It is
for their hamburger products, and (b) whether respondent corporation is liable respondents' snack vans that carry the words "L.C. Big Mak Burger, Inc."30
for trademark infringement and unfair competition.23
It was only during the trial that respondents presented in evidence the plastic
The Court's Ruling wrappers and bags for their hamburger sandwiches relied on by the Court of
Appeals.31 Respondents' plastic wrappers and bags were identical with those
The petition has merit. 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
On Whether the Questions Raised in the Petition are Proper for a Petition for above and below the words "Big Mak," respectively. Since petitioners' complaint
Review 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
A party intending to appeal from a judgment of the Court of Appeals may file the disposition of the issues raised in this petition.
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 On the Issue of Trademark Infringement
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 Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"), the
alleged facts. 25 law applicable to this case,32 defines trademark infringement as follows:

Here, petitioners raise questions of fact and law in assailing the Court of Infringement, what constitutes. — Any person who [1] shall use, without the
Appeals' findings on respondent corporation's non-liability for trademark consent of the registrant, any reproduction, counterfeit, copy or colorable
infringement and unfair competition. Ordinarily, the Court can deny due course imitation of any registered mark or trade-name in connection with the sale,
to such a petition. In view, however, of the contradictory findings of fact of the offering for sale, or advertising of any goods, business or services on or in
RTC and Court of Appeals, the Court opts to accept the petition, this being one connection with which such use is likely to cause confusion or mistake or to
of the recognized exceptions to Section 1.26 We took a similar course of action deceive purchasers or others as to the source or origin of such goods or
in Asia Brewery, Inc. v. Court of Appeals27 which also involved a suit for services, or identity of such business; or [2] reproduce, counterfeit, copy, or
trademark infringement and unfair competition in which the trial court and the colorably imitate any such mark or trade-name and apply such reproduction,
Court of Appeals arrived at conflicting findings. counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
On the Manner Respondents Used connection with such goods, business or services, shall be liable to a civil action
"Big Mak" in their Business by the registrant for any or all of the remedies herein provided.33

Petitioners contend that the Court of Appeals erred in ruling that the corporate Petitioners base their cause of action under the first part of Section 22, i.e.
name "L.C. Big Mak Burger, Inc." appears in the packaging for respondents' respondents allegedly used, without petitioners' consent, a colorable imitation of
hamburger products and not the words "Big Mak" only. the "Big Mac" mark in advertising and selling respondents' hamburger
sandwiches. This likely caused confusion in the mind of the purchasing public on
The contention has merit. the source of the hamburgers or the identity of the business.
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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) Section 22 covers two types of confusion arising from the use of similar or
the use of the mark or its colorable imitation by the alleged infringer results in colorable imitation marks, namely, confusion of goods (product confusion) and
"likelihood of confusion."34 Of these, it is the element of likelihood of confusion confusion of business (source or origin confusion). In Sterling Products
that is the gravamen of trademark infringement.35 International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,49
the Court distinguished these two types of confusion, thus:
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark [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
A mark is valid if it is "distinctive" and thus not barred from registration under purchase one product in the belief that he was purchasing the other." xxx The
Section 436 of RA 166 ("Section 4"). However, once registered, not only the other is the confusion of business: "Here though the goods of the parties are
mark's validity but also the registrant's ownership of the mark is prima facie different, the defendant's product is such as might reasonably be assumed to
presumed.37 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
Respondents contend that of the two words in the "Big Mac" mark, it is only the and defendant which, in fact, does not exist."
word "Mac" that is valid because the word "Big" is generic and descriptive
(proscribed under Section 4[e]), and thus "incapable of exclusive Under Act No. 666,50 the first trademark law, infringement was limited to
appropriation."38 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
The contention has no merit. The "Big Mac" mark, which should be treated in its colorable imitation is used on different although related goods. To remedy this
entirety and not dissected word for word,39 is neither generic nor descriptive. situation, Congress enacted RA 166 on 20 June 1947. In defining trademark
Generic marks are commonly used as the name or description of a kind of infringement, Section 22 of RA 166 deleted the requirement in question and
goods,40 such as "Lite" for beer41 or "Chocolate Fudge" for chocolate soda expanded its scope to include such use of the mark or its colorable imitation that
drink.42 Descriptive marks, on the other hand, convey the characteristics, is likely to result in confusion on "the source or origin of such goods or services,
functions, qualities or ingredients of a product to one who has never seen it or or identity of such business."52 Thus, while there is confusion of goods when
does not know it exists,43 such as "Arthriticare" for arthritis medication.44 On the products are competing, confusion of business exists when the products are
the contrary, "Big Mac" falls under the class of fanciful or arbitrary marks as it non-competing but related enough to produce confusion of affiliation.53
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 On Whether Confusion of Goods and
trademark "Little Debbie" for snack cakes was found arbitrary or fanciful.46 Confusion of Business are Applicable

The Court also finds that petitioners have duly established McDonald's exclusive Petitioners claim that respondents' use of the "Big Mak" mark on respondents'
ownership of the "Big Mac" mark. Although Topacio and the Isaiyas Group hamburgers results in confusion of goods, particularly with respect to petitioners'
registered the "Big Mac" mark ahead of McDonald's, Topacio, as petitioners hamburgers labeled "Big Mac." Thus, petitioners alleged in their complaint:
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 1.15. Defendants have unduly prejudiced and clearly infringed upon the property
mark which is not registered in the Principal Register, and thus not distinctive, rights of plaintiffs in the McDonald's Marks, particularly the mark "B[ig] M[ac]".
has no real protection.47 Indeed, we have held that registration in the Defendants' unauthorized acts are likely, and calculated, to confuse, mislead or
Supplemental Register is not even a prima facie evidence of the validity of the deceive the public into believing that the products and services offered by
registrant's exclusive right to use the mark on the goods specified in the defendant Big Mak Burger, and the business it is engaged in, are approved and
certificate.48 sponsored by, or affiliated with, plaintiffs.54 (Emphasis supplied)

On Types of Confusion
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Since respondents used the "Big Mak" mark on the same goods, i.e. hamburger through the use of the "Big Mak" mark, with petitioners' high-end "Big Mac"
sandwiches, that petitioners' "Big Mac" mark is used, trademark infringement hamburgers, leading to likelihood of confusion in the identity of business.
through confusion of goods is a proper issue in this case.
Respondents further claim that petitioners use the "Big Mac" mark only on
Petitioners also claim that respondents' use of the "Big Mak" mark in the sale of petitioners' double-decker hamburgers, while respondents use the "Big Mak"
hamburgers, the same business that petitioners are engaged in, results in mark on hamburgers and other products like siopao, noodles and pizza.
confusion of business. Petitioners alleged in their complaint: 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
1.10. For some period of time, and without the consent of plaintiff McDonald's a price more expensive than the hamburgers of respondents. In contrast,
nor its licensee/franchisee, plaintiff McGeorge, and in clear violation of plaintiffs' respondents sell their Big Mak hamburgers in plastic wrappers and plastic bags.
exclusive right to use and/or appropriate the McDonald's marks, defendant Big Respondents further point out that petitioners' restaurants are air-conditioned
Mak Burger acting through individual defendants, has been operating "Big Mak buildings with drive-thru service, compared to respondents' mobile vans.
Burger", a fast food restaurant business dealing in the sale of hamburger and
cheeseburger sandwiches, french fries and other food products, and has caused These and other factors respondents cite cannot negate the undisputed fact that
to be printed on the wrapper of defendant's food products and incorporated in respondents use their "Big Mak" mark on hamburgers, the same food product
its signages the name "Big Mak Burger", which is confusingly similar to and/or is that petitioners' sell with the use of their registered mark "Big Mac." Whether a
a colorable imitation of the plaintiff McDonald's mark "B[ig] M[ac]", xxx. hamburger is single, double or triple-decker, and whether wrapped in plastic or
Defendant Big Mak Burger has thus unjustly created the impression that its styrofoam, it remains the same hamburger food product. Even respondents' use
business is approved and sponsored by, or affiliated with, plaintiffs. xxxx of the "Big Mak" mark on non-hamburger food products cannot excuse their
infringement of petitioners' registered mark, otherwise registered marks will lose
2.2 As a consequence of the acts committed by defendants, which unduly their protection under the law.
prejudice and infringe upon the property rights of plaintiffs McDonald's and
McGeorge as the real owner and rightful proprietor, and the licensee/franchisee, The registered trademark owner may use his mark on the same or similar
respectively, of the McDonald's marks, and which are likely to have caused products, in different segments of the market, and at different price levels
confusion or deceived the public as to the true source, sponsorship or affiliation depending on variations of the products for specific segments of the market. The
of defendants' food products and restaurant business, plaintiffs have suffered Court has recognized that the registered trademark owner enjoys protection in
and continue to suffer actual damages in the form of injury to their business product and market areas that are the normal potential expansion of his
reputation and goodwill, and of the dilution of the distinctive quality of the business. Thus, the Court has declared:
McDonald's marks, in particular, the mark "B[ig] M[ac]".55 (Emphasis supplied)
Modern law recognizes that the protection to which the owner of a trademark is
Respondents admit that their business includes selling hamburger sandwiches, entitled is not limited to guarding his goods or business from actual market
the same food product that petitioners sell using the "Big Mac" mark. Thus, competition with identical or similar products of the parties, but extends to all
trademark infringement through confusion of business is also a proper issue in cases in which the use by a junior appropriator of a trade-mark or trade-name is
this case. 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
Respondents assert that their "Big Mak" hamburgers cater mainly to the low- the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected
income group while petitioners' "Big Mac" hamburgers cater to the middle and with the activities of the infringer; or when it forestalls the normal potential
upper income groups. Even if this is true, the likelihood of confusion of business expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577).56
remains, since the low-income group might be led to believe that the "Big Mak" (Emphasis supplied)
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 On Whether Respondents' Use of the "Big Mak"
hand, respondents would benefit by associating their low-end hamburgers, Mark Results in Likelihood of Confusion
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In determining likelihood of confusion, jurisprudence has developed two tests, the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover
the dominancy test and the holistic test.57 The dominancy test focuses on the Rubber Co., 107 F. 2d 588; xxx) (Emphasis supplied.)
similarity of the prevalent features of the competing trademarks that might
cause confusion. In contrast, the holistic test requires the court to consider the The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,61
entirety of the marks as applied to the products, including the labels and Phil. Nut Industry, Inc. v. Standard Brands Inc.,62 Converse Rubber Corporation
packaging, in determining confusing similarity. 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
The Court of Appeals, in finding that there is no likelihood of confusion that Appeals,65 the Court explicitly rejected the holistic test in this wise:
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 [T]he totality or holistic test is contrary to the elementary postulate of the law
similarity exists in both name(s), but that more importantly, the overall on trademarks and unfair competition that confusing similarity is to be
presentation, or in their essential, substantive and distinctive parts is such as determined on the basis of visual, aural, connotative comparisons and overall
would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing impressions engendered by the marks in controversy as they are encountered in
the genuine article." The holistic test considers the two marks in their entirety, the realities of the marketplace. (Emphasis supplied)
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 The test of dominancy is now explicitly incorporated into law in Section 155.1 of
words.58 the Intellectual Property Code which defines infringement as the "colorable
imitation of a registered mark xxx or a dominant feature thereof."
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. 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
This Court, however, has relied on the dominancy test rather than the holistic same as "Big Mac." Second, the first word in "Big Mak" is exactly the same as
test. The dominancy test considers the dominant features in the competing the first word in "Big Mac." Third, the first two letters in "Mak" are the same as
marks in determining whether they are confusingly similar. Under the dominancy the first two letters in "Mac." Fourth, the last letter in "Mak" while a "k" sounds
test, courts give greater weight to the similarity of the appearance of the the same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter
product arising from the adoption of the dominant features of the registered "k" replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."
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 In short, aurally the two marks are the same, with the first word of both marks
factors like prices, quality, sales outlets and market segments. 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
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court ruled: 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
xxx It has been consistently held that the question of infringement of a last letters of both marks are the same.
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 Clearly, respondents have adopted in "Big Mak" not only the dominant but also
the main or essential or dominant features of another, and confusion and almost all the features of "Big Mac." Applied to the same food product of
deception is likely to result, infringement takes place. Duplication or imitation is hamburgers, the two marks will likely result in confusion in the public mind.
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., The Court has taken into account the aural effects of the words and letters
489, 495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The contained in the marks in determining the issue of confusing similarity. Thus, in
question at issue in cases of infringement of trademarks is whether the use of Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,66 the Court held:
the marks involved would be likely to cause confusion or mistakes in the mind of
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The following random list of confusingly similar sounds in the matter of with the word "B[ig]", was their intent to take advantage of Petitioners' xxx
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. "B[ig] M[ac]" trademark, with their alleged sentiment-focused "explanation"
1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly merely thought of as a convenient, albeit unavailing, excuse or defense for such
similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver an unfair choice of name.67
Flash" and "Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and
"Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and Absent proof that respondents' adoption of the "Big Mak" mark was due to
"Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon Amdur, in his book honest mistake or was fortuitous,68 the inescapable conclusion is that
"Trade-Mark Law and Practice", pp. 419-421, cities, as coming within the respondents adopted the "Big Mak" mark to "ride on the coattails" of the more
purview of the idem sonans rule, "Yusea" and "U-C-A", "Steinway Pianos" and established "Big Mac" mark.69 This saves respondents much of the expense in
"Steinberg Pianos", and "Seven-Up" and "Lemon-Up". In Co Tiong vs. Director of advertising to create market recognition of their mark and hamburgers.70
Patents, this Court unequivocally said that "Celdura" and "Cordura" are
confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Thus, we hold that confusion is likely to result in the public mind. We sustain
Phil. 795 that the name "Lusolin" is an infringement of the trademark "Sapolin", petitioners' claim of trademark infringement.
as the sound of the two names is almost the same. (Emphasis supplied)
On the Lack of Proof of
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater Actual Confusion
confusion, not only aurally but also visually.
Petitioners' failure to present proof of actual confusion does not negate their
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their sound. claim of trademark infringement. As noted in American Wire & Cable Co. v.
When one hears a "Big Mac" or "Big Mak" hamburger advertisement over the Director of Patents,71 Section 22 requires the less stringent standard of
radio, one would not know whether the "Mac" or "Mak" ends with a "c" or a "k." "likelihood of confusion" only. While proof of actual confusion is the best
evidence of infringement, its absence is inconsequential.72
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark making On the Issue of Unfair Competition
it one of the easily recognizable marks in the market today. This increases the
likelihood that consumers will mistakenly associate petitioners' hamburgers and Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
business with those of respondents'.
xxxx
Respondents' inability to explain sufficiently how and why they came to choose
"Big Mak" for their hamburger sandwiches indicates their intent to imitate Any person who will employ deception or any other means contrary to good
petitioners' "Big Mac" mark. Contrary to the Court of Appeals' finding, faith by which he shall pass off the goods manufactured by him or in which he
respondents' claim that their "Big Mak" mark was inspired by the first names of deals, or his business, or services for those of the one having established such
respondent Dy's mother (Maxima) and father (Kimsoy) is not credible. As goodwill, or who shall commit any acts calculated to produce said result, shall be
petitioners well noted: guilty of unfair competition, and shall be subject to an action therefor.

[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at a In particular, and without in any way limiting the scope of unfair competition,
more creative choice for a corporate name by using the names of his parents, the following shall be deemed guilty of unfair competition:
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 (a) Any person, who in selling his goods shall give them the general appearance
patriarchal society, and derived letters from said names in that order. Or, he of goods of another manufacturer or dealer, either as to the goods themselves
could have taken an equal number of letters (i.e., two) from each name, as is or in the wrapping of the packages in which they are contained, or the devices
the more usual thing done. Surely, the more plausible reason behind or words thereon, or in any feature of their appearance, which would be likely to
Respondents' choice of the word "M[ak]", especially when taken in conjunction influence purchasers to believe that the goods offered are those of a
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manufacturer or dealer, other than the actual manufacturer or dealer, or who

otherwise clothes the goods with such appearance as shall deceive the public The RTC described the respective marks and the goods of petitioners and
and defraud another of his legitimate trade, or any subsequent vendor of such respondents in this wise:
goods or any agent of any vendor engaged in selling such goods with a like
purpose; 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
(b) Any person who by any artifice, or device, or who employs any other means McDonald's logo and trademark in red with block capital letters printed on it. All
calculated to induce the false belief that such person is offering the services of letters of the "B[ig] M[ac]" mark are also in red and block capital letters. On the
another who has identified such services in the mind of the public; or 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
(c) Any person who shall make any false statement in the course of trade or wrapper. xxxx Further, plaintiffs' logo and mascot are the umbrella "M" and
who shall commit any other act contrary to good faith of a nature calculated to "Ronald McDonald's", respectively, compared to the mascot of defendant
discredit the goods, business or services of another. (Emphasis supplied) Corporation which is a chubby boy called "Macky" displayed or printed between
the words "Big" and "Mak."81 (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 Respondents point to these dissimilarities as proof that they did not give their
public and defraud a competitor.74 The confusing similarity may or may not hamburgers the general appearance of petitioners' "Big Mac" hamburgers.
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 The dissimilarities in the packaging are minor compared to the stark similarities
may be inferred from the similarity of the appearance of the goods as offered for in the words that give respondents' "Big Mak" hamburgers the general
sale to the public.75 Actual fraudulent intent need not be shown.76 appearance of petitioners' "Big Mac" hamburgers. Section 29(a) expressly
provides that the similarity in the general appearance of the goods may be in
Unfair competition is broader than trademark infringement and includes passing the "devices or words" used on the wrappings. Respondents have applied on
off goods with or without trademark infringement. Trademark infringement is a their plastic wrappers and bags almost the same words that petitioners use on
form of unfair competition.77 Trademark infringement constitutes unfair their styrofoam box. What attracts the attention of the buying public are the
competition when there is not merely likelihood of confusion, but also actual or words "Big Mak" which are almost the same, aurally and visually, as the words
probable deception on the public because of the general appearance of the "Big Mac." The dissimilarities in the material and other devices are insignificant
goods. There can be trademark infringement without unfair competition as when compared to the glaring similarity in the words used in the wrappings.
the infringer discloses on the labels containing the mark that he manufactures
the goods, thus preventing the public from being deceived that the goods Section 29(a) also provides that the defendant gives "his goods the general
originate from the trademark owner.78 appearance of goods of another manufacturer." Respondents' goods are
hamburgers which are also the goods of petitioners. If respondents sold egg
To support their claim of unfair competition, petitioners allege that respondents sandwiches only instead of hamburger sandwiches, their use of the "Big Mak"
fraudulently passed off their hamburgers as "Big Mac" hamburgers. Petitioners mark would not give their goods the general appearance of petitioners' "Big
add that respondents' fraudulent intent can be inferred from the similarity of the Mac" hamburgers. In such case, there is only trademark infringement but no
marks in question.79 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
Passing off (or palming off) takes place where the defendant, by imitative hamburgers, respondents have obviously clothed their goods with the general
devices on the general appearance of the goods, misleads prospective appearance of petitioners' goods.
purchasers into buying his merchandise under the impression that they are
buying that of his competitors.80 Thus, the defendant gives his goods the Moreover, there is no notice to the public that the "Big Mak" hamburgers are
general appearance of the goods of his competitor with the intention of products of "L.C. Big Mak Burger, Inc." Respondents introduced during the trial
deceiving the public that the goods are those of his competitor. plastic wrappers and bags with the words "L.C. Big Mak Burger, Inc." to inform
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the public of the name of the seller of the hamburgers. However, petitioners SO ORDERED.
introduced during the injunctive hearings plastic wrappers and bags with the
"Big Mak" mark without the name "L.C. Big Mak Burger, Inc." Respondents' Davide, C.J. (Chairman), Quisumbing, Ynares-Santiago and Azcuna, JJ., concur.
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.
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Same; Same; Same; Court finds that “NANNY” is confusingly similar to “NAN.”—
G.R. No. 172276 August 8, 2010 Applying the dominancy test in the present case, the Court finds that “NANNY” is
confusingly similar to “NAN.” “NAN” is the prevalent feature of Nestle’s line of
SOCIETE DES PRODUITS NESTLE, S.A., Petitioner, infant powdered milk products. It is written in bold letters and used in all
vs. products. The line consists of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly,
MARTIN T. DY, JR., Respondent. “NANNY” contains the prevalent feature “NAN.”  The first three letters of
“NANNY” are exactly the same as the letters of “NAN.” When “NAN” and
Intellectual Property Code of the Philippines; Trademarks; Trademark “NANNY” are pronounced, the aural effect is confusingly similar.
Infringement; The element of likelihood of confusion is the gravamen of Same; Same; Same; In determining the issue of confusing similarity, the Court
trademark infringement; Two types of confusion in trademark infringement: takes into account the AURAL effect of the letters contained in the marks.—In
confusion of goods and confusion of business; two types of confusion determining the issue of confusing similarity, the Court takes into account the
distinguished.—Among the elements, the element of likelihood of confusion is aural effect of the letters contained in the marks. In Marvex Commercial
the gravamen of trademark infringement. There are two types of confusion in Company, Inc. v. Petra Hawpia & Company, 18 SCRA 1178 (1966), the Court
trademark infringement: confusion of goods and confusion of business. In held: It is our considered view that the trademarks “SALONPAS” and “LIONPAS”
Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, are confusingly similar in sound. Both these words have the same suffix, “PAS”,
27 SCRA 1214 (1969), the Court distinguished the two types of confusion: which is used to denote a plaster that adheres to the body with curative powers.
Callman notes two types of confusion. The first is the confusion of goods “in “PAS,” being merely descriptive, furnishes no indication of the origin of the
which event the ordinarily prudent purchaser would be induced to purchase one article and therefore is open for appropriation by anyone (Ethepa vs. Director of
product in the belief that he was purchasing the other.” In which case, Patents, L-20635, March 31, 1966) and may properly become the subject of a
“defendant’s goods are then bought as the plaintiff’s, and the poorer quality of trademark by combination with another word or phrase.
the former reflects adversely on the plaintiff’s reputation.” The other is the Same; Same; Same; The scope of protection extends to protection from
confusion of business: “Here though the goods of the parties are different, the infringers with related goods, and to market areas that are the normal expansion
defendant’s product is such as might reasonably be assumed to originate with of business of the registered trademark owners.—The scope of protection
the plaintiff, and the public would then be deceived either into that belief or into afforded to registered trademark owners is not limited to protection from
the belief that there is some connection between the plaintiff and defendant infringers with identical goods. The scope of protection extends to protection
which, in fact, does not exist.” from infringers with related goods, and to market areas that are the normal
Same; Same; Same; Two Tests to Determine Likelihood of Confusion; the expansion of business of the registered trademark owners.
Dominancy test and Holistic Test.—There are two tests to determine likelihood Same; Same; Same; Factors in Determining whether Goods are Related.—In
of confusion: the dominancy test and holistic test. The dominancy test focuses Mighty Corporation v. E. & J. Gallo Winery, 434 SCRA 473 (2004), the Court held
on the similarity of the main, prevalent or essential features of the competing that, “Non-competing goods may be those which, though they are not in actual
trademarks that might cause confusion. Infringement takes place when the com- competition, are so related to each other that it can reasonably be assumed that
peting trademark contains the essential features of another. Imitation or an they originate from one manufacturer, in which case, confusion of business can
effort to imitate is unnecessary. The question is whether the use of the marks is arise out of the use of similar marks.” In that case, the Court enumerated
likely to cause confusion or deceive purchasers. The holistic test considers the factors in determining whether goods are related: (1) classification of the goods;
entirety of the marks, including labels and packaging, in determining confusing (2) nature of the goods; (3) descriptive properties, physical attributes or
similarity. The focus is not only on the predominant words but also on the other essential characteristics of the goods, with reference to their form, composition,
features appearing on the labels. texture or quality; and (4) style of distribution and marketing of the goods,
Same; Same; Same; Dominancy test is applicable in the present case.—In the including how the goods are displayed and sold.
light of the facts of the present case, the Court holds that the dominancy test is
applicable. In recent cases with similar factual milieus, the Court has consistently PETITION for review on certiorari of the decision and resolution of the Court of
applied the dominancy test. In Prosource International, Inc., the Court applied Appeals.
the dominancy test in holding that “PCO-GENOLS” is confusingly similar to   The facts are stated in the opinion of the Court.
“PYCNOGENOL.”   Sapalo, Velez, Bundang and Bulilan Law Offices for petitioner.
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  Frederick Bustamante for respondent.  [Societe Des Produits Nestle, S.A. vs. the complaint. Nestle appealed the 4 June 1990 order to the Court of Appeals.
Dy, Jr., 627 SCRA 223(2010)] In its 16 February 1993 Resolution, the Court of Appeals set aside the 4 June
DECISION 1990 order and remanded the case to the trial court for further proceedings.

CARPIO, J.: Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with
the trial court a motion to transfer the case to the RTC, Judicial Region 7,
The Case Branch 9, Cebu City, which was designated as a special court for intellectual
property rights.
This is a petition for review on certiorari under Rule 45 of the Rules of Court.
The petition challenges the 1 September 2005 Decision and 4 April 2006 The RTC’s Ruling
Resolution of the Court of Appeals in CA-G.R. CV No. 62730, finding respondent
Martin T. Dy, Jr. (Dy, Jr.) not liable for trademark infringement. The Court of In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for
Appeals reversed the 18 September 1998 Decision of the Regional Trial Court infringement. The trial court held:
(RTC), Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
If determination of infringement shall only be limited on whether or not the
The Facts mark used would likely cause confusion or mistake in the minds of the buying
public or deceive customers, such in [sic] the most considered view of this forum
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation would be highly unlikely to happen in the instant case. This is because upon
organized under the laws of Switzerland. It manufactures food products and comparison of the plaintiff’s NAN and defendant’s NANNY, the following features
beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7 would reveal the absence of any deceptive tendency in defendant’s NANNY: (1)
April 1969 by the then Bureau of Patents, Trademarks and Technology Transfer, all NAN products are contained tin cans [sic], while NANNY are contained in
Nestle owns the "NAN" trademark for its line of infant powdered milk products, plastic packs; (2) the predominant colors used in the labels of NAN products are
consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified under blue and white, while the predominant colors in the plastic packings of NANNY
Class 6 — "diatetic preparations for infant feeding." are blue and green; (3) the labels of NAN products have at the bottom portion
an elliptical shaped figure containing inside it a drawing of nestling birds, which
Nestle distributes and sells its NAN milk products all over the Philippines. It has is overlapped by the trade-name "Nestle", while the plastic packs of NANNY have
been investing tremendous amounts of resources to train its sales force and to a drawing of milking cows lazing on a vast green field, back-dropped with snow
promote the NAN milk products through advertisements and press releases. covered mountains; (4) the word NAN are [sic] all in large, formal and
conservative-like block letters, while the word NANNY are [sic] all in small and
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from irregular style of letters with curved ends; and (5) all NAN products are milk
Australia and repacks the powdered milk into three sizes of plastic packs bearing formulas intended for use of [sic] infants, while NANNY is an instant full cream
the name "NANNY." The packs weigh 80, 180 and 450 grams and are sold for powdered milk intended for use of [sic] adults.
P8.90, P17.50 and P39.90, respectively. NANNY is is also classified under Class 6
— "full cream milk for adults in [sic] all ages." Dy, Jr. distributes and sells the The foregoing has clearly shown that infringement in the instant case cannot be
powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of proven with the use of the "test of dominancy" because the deceptive tendency
Mindanao. of the unregistered trademark NANNY is not apparent from the essential
features of the registered trademark NAN.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using
"NANNY" and to undertake that he would stop infringing the "NAN" trademark. However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971,
Dy, Jr. did not act on Nestle’s request. On 1 March 1990, Nestle filed before the Aug. 31, 1982, the Supreme Court took the occasion of discussing what is
RTC, Judicial Region 7, Branch 31, Dumaguete City, a complaint against Dy, Jr. implied in the definition of "infringement" when it stated: "Implicit in this
for infringement. Dy, Jr. filed a motion to dismiss alleging that the complaint did definition is the concept that the goods must be so related that there is
not state a cause of action. In its 4 June 1990 order, the trial court dismissed likelihood either of confusion of goods or business. x x x But as to whether
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trademark infringement exists depends for the most part upon whether or not petroleum products and cigarettes. It rules that there is infringement of
the goods are so related that the public may be, or is actually, deceived and trademark involving two goods bearing the same mark or label, even if the said
misled that they came from the same maker or manufacturer. For non- goods are non-competing, if and only if they are so related that the public may
competing goods may be those which, though they are not in actual be, or is actually, deceived that they originate from the one maker or
competition, are so related to each other that it might reasonably be assumed manufacturer. Since petroleum products and cigarettes, in kind and nature, flow
that they originate from one manufacturer. Non-competing goods may also be through different trade channels, and since the possibility of confusion is unlikely
those which, being entirely unrelated, could not reasonably be assumed to have in the general appearances of each mark as a whole, the Court held in this case
a common source. In the former case of related goods, confusion of business that they cannot be so related in the context of infringement.
could arise out of the use of similar marks; in the latter case of non-related
goods, it could not." In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellee’s NAN and defendant-
Furthermore, in said case the Supreme Court as well discussed on when goods appellant’s NANNY belong to the same class being food products, the
may become so related for purposes of infringement when it stated: "Goods are unregistered NANNY should be held an infringement of Nestle’s NAN because
related when they belong to the same class or have same descriptive properties; "the use of NANNY would imply that it came from the manufacturer of NAN."
when they possess the same physical attributes or essential characteristics with Said court went on to elaborate further: "since the word "NANNY" means a
reference to their form, composition, texture or quality. They may also be "child’s nurse," there might result the not so remote probability that defendant’s
related because they serve the same purpose or are sold in grocery stores. x x x NANNY may be confused with infant formula NAN despite the aparent (sic)
disparity between the features of the two products as discussed above."
Considering that defendant’s NANNY belongs to the same class as that of
plaintiff’s NAN because both are food products, the defendant’s unregistered The trial court’s application of the doctrine laid down by the Supreme Court in
trade mark NANNY should be held an infringement to plaintiff’s registered the Esso Standard case aforementioned and the cases cited therein is quite
trademark NAN because defendant’s use of NANNY would imply that it came misplaced. The goods of the two contending parties in those cases bear similar
from the manufacturer of NAN. Furthermore, since the word "nanny" means a marks or labels: "Esso" for petroleum products and cigarettes, "Selecta" for
"child’s nurse," there might result the not so remote probability that defendant’s biscuits and milk, "X-7" for soap and perfume, lipstick and nail polish. In the
NANNY may be confused with infant formula NAN despite the aparent [sic] instant case, two dissimilar marks are involved — plaintiff-appellee’s "NAN" and
disparity between the features of the two products. defendant-appellant’s "NANNY." Obviously, the concept of related goods cannot
be utilized in the instant case in the same way that it was used in the Esso
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals. Standard case.

The Court of Appeals’ Ruling In the Esso Standard case, the Supreme Court even cautioned judges that in
resolving infringement or trademark cases in the Philippines, particularly in
In its 1 September 2005 Decision, the Court of Appeals reversed the trial court’s ascertaining whether one trademark is confusingly similar to or is a colorable
18 September 1998 Decision and found Dy, Jr. not liable for infringement. The imitation of another, precedent must be studied in the light of the facts of the
Court of Appeals held: particular case. Each case must be decided on its own merits. In the more
recent case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the
[T]he trial court appeared to have made a finding that there is no colorable High Court further stressed that due to the peculiarity of the facts of each
imitation of the registered mark "NAN" in Dy’s use of "NANNY" for his own milk infringement case, a judicial forum should not readily apply a certain test or
packs. Yet it did not stop there. It continued on applying the "concept of related standard just because of seeming similarities. The entire panoply of elements
goods." constituting the relevant factual landscape should be comprehensively examined.

The Supreme Court utlilized the "concept of related goods" in the said case of While it is true that both NAN and NANNY are milk products and that the word
Esso Standard Easter, Inc. versus Court of Appeals, et al. wherein two "NAN" is contained in the word "NANNY," there are more glaring dissimilarities in
contending parties used the same trademark "ESSO" for two different goods, i.e. the entirety of their trademarks as they appear in their respective labels and also
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in relation to the goods to which they are attached. The discerning eye of the The petition is meritorious.
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 Section 22 of Republic Act (R.A.) No. 166, as amended, states:
whether one is confusingly similar to the other. Even the trial court found these
glaring dissimilarities as above-quoted. We need not add more of these factual Infringement, what constitutes. — Any person who shall use, without the
dissimilarities. consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all offering for sale, or advertising of any goods, business or services on or in
infant preparations, while NANNY is a full cream milk for adults in [sic] all ages. connection with which such use is likely to cause confusion or mistake or to
NAN milk products are sold in tin cans and hence, far expensive than the full deceive purchasers or others as to the source or origin of such goods or
cream milk NANNY sold in three (3) plastic packs containing 80, 180 and 450 services, or identity of such business; or reproduce, counterfeit, copy or
grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of NAN colorably imitate any such mark or trade-name and apply such reproduction,
products are of the colors blue and white and have at the bottom portion an counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
elliptical shaped figure containing inside it a drawing of nestling birds, which is wrappers, receptacles or advertisements intended to be used upon or in
overlapped by the trade-name "Nestle." On the other hand, the plastic packs connection with such goods, business or services, shall be liable to a civil action
NANNY have a drawing of milking cows lazing on a vast green field, back- by the registrant for any or all of the remedies herein provided.
dropped with snow-capped mountains and using the predominant colors of blue
and green. The word NAN are [sic] all in large, formal and conservative-like Section 155 of R.A. No. 8293 states:
block letters, while the word NANNY are [sic] all in small and irregular style of
letters with curved ends. With these material differences apparent in the Remedies; Infringement. — Any person who shall, without the consent of the
packaging of both milk products, NANNY full cream milk cannot possibly be an owner of the registered mark:
infringement of NAN infant milk.1avvphi1
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable
Moreover, NAN infant milk preparation is more expensive than NANNY instant imitation of a registered mark or the same container or a dominant feature
full cream milk. The cheaper price of NANNY would give, at the very first thereof in connection with the sale, offering for sale, distribution, advertising of
instance, a considerable warning to the ordinary purchaser on whether he is any goods or services including other preparatory steps necessary to carry out
buying an infant milk or a full cream milk for adults. A cursory examination of the sale of any goods or services on or in connection with which such use is
the packaging would confirm the striking differences between the products in likely to cause confusion, or to cause mistake, or to deceive; or
question.
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a
In view of the foregoing, we find that the mark NANNY is not confusingly similar dominant feature thereof and apply such reproduction, counterfeit, copy or
to NAN. Dy therefore cannot be held liable for infringement. colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the sale, offering for sale, distribution, or advertising of goods or services on or in
Court of Appeals denied the motion for lack of merit. Hence, the present connection with which such use is likely to cause confusion, or to cause mistake,
petition. 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
Issue 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 issue is whether Dy, Jr. is liable for infringement. the infringing material.

The Court’s Ruling In Prosource International, Inc. v. Horphag Research Management SA, the Court
laid down the elements of infringement under R.A. Nos. 166 and 8293:
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·It is without the consent of the trademark or trade name owner or the assignee
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, thereof.
and 20 thereof, the following constitute the elements of trademark infringement:
Among the elements, the element of likelihood of confusion is the gravamen of
"(a) A trademark actually used in commerce in the Philippines and registered in trademark infringement. There are two types of confusion in trademark
the principal register of the Philippine Patent Office[;] infringement: confusion of goods and confusion of business. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, the Court
(b) [It] is used by another person in connection with the sale, offering for sale, distinguished the two types of confusion:
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 Callman notes two types of confusion. The first is the confusion of goods "in
others as to the source or origin of such goods or services, or identity of such which event the ordinarily prudent purchaser would be induced to purchase one
business; or such trademark is reproduced, counterfeited, copied or colorably product in the belief that he was purchasing the other." In which case,
imitated by another person and such reproduction, counterfeit, copy or colorable "defendant’s goods are then bought as the plaintiff’s, and the poorer quality of
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or the former reflects adversely on the plaintiff’s reputation." The other is the
advertisements intended to be used upon or in connection with such goods, confusion of business: "Here though the goods of the parties are different, the
business or services as to likely cause confusion or mistake or to deceive defendant’s product is such as might reasonably be assumed to originate with
purchasers[;] 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
(c) [T]he trademark is used for identical or similar goods[;] and which, in fact, does not exist."

(d) [S]uch act is done without the consent of the trademark registrant or There are two tests to determine likelihood of confusion: the dominancy test and
assignee." holistic test. The dominancy test focuses on the similarity of the main, prevalent
or essential features of the competing trademarks that might cause confusion.
On the other hand, the elements of infringement under R.A. No. 8293 are as Infringement takes place when the competing trademark contains the essential
follows: features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive
·The trademark being infringed is registered in the Intellectual Property Office; purchasers.
however, in infringement of trade name, the same need not be registered;
The holistic test considers the entirety of the marks, including labels and
·The trademark or trade name is reproduced, counterfeited, copied, or colorably packaging, in determining confusing similarity. The focus is not only on the
imitated by the infringer; predominant words but also on the other features appearing on the labels.

·The infringing mark or trade name is used in connection with the sale, offering In cases involving trademark infringement, no set of rules can be deduced. Each
for sale, or advertising of any goods, business or services; or the infringing mark case must be decided on its own merits. Jurisprudential precedents must be
or trade name is applied to labels, signs, prints, packages, wrappers, receptacles studied in the light of the facts of each particular case. In McDonald’s
or advertisements intended to be used upon or in connection with such goods, Corporation v. MacJoy Fastfood Corporation, the Court held:
business or services;
In trademark cases, particularly in ascertaining whether one trademark is
·The use or application of the infringing mark or trade name is likely to cause confusingly similar to another, no set rules can be deduced because each case
confusion or mistake or to deceive purchasers or others as to the goods or must be decided on its merits. In such cases, even more than in any other
services themselves or as to the source or origin of such goods or services or the litigation, precedent must be studied in the light of the facts of the particular
idenity of such business; and case. That is the reason why in trademark cases, jurisprudential precedents
should be applied only to a case if they are specifically in point.
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"Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of

In the light of the facts of the present case, the Court holds that the dominancy Patents, this Court unequivocally said that "Celdura" and "Condura" are
test is applicable. In recent cases with similar factual milieus, the Court has confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67
consistently applied the dominancy test. In Prosource International, Inc., the Phil. 795 that the name "Lusolin" is an infringement of the trademark "Sapolin,"
Court applied the dominancy test in holding that "PCO-GENOLS" is confusingly as the sound of the two names is almost the same."
similar to "PYCNOGENOL." The Court held:
In McDonald’s Corporation v. MacJoy Fastfood Corporation, the Court applied
The trial and appellate courts applied the Dominancy Test in determining the dominancy test in holding that "MACJOY" is confusingly similar to
whether there was a confusing similarity between the marks PYCNOGENOL and "MCDONALD’S." The Court held:
PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:
While we agree with the CA’s detailed enumeration of differences between the
"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix two (2) competing trademarks herein involved, we believe that the holistic test is
"GENOL" which on evidence, appears to be merely descriptive and furnish no not the one applicable in this case, the dominancy test being the one more
indication of the origin of the article and hence, open for trademark registration suitable. In recent cases with a similar factual milieu as here, the Court has
by the plaintiff through combination with another word or phrase such as consistently used and applied the dominancy test in determining confusing
PYCNOGENOL, Exhibits "A" to "A-3." Furthermore, although the letters "Y" similarity or likelihood of confusion between competing trademarks.
between P and C, "N" between O and C and "S" after L are missing in the
[petitioner’s] mark PCO-GENOLS, nevertheless, when the two words are xxxx
pronounced, the sound effects are confusingly similar not to mention that they
are both described by their manufacturers as a food supplement and thus, Applying the dominancy test to the instant case, the Court finds that herein
identified as such by their public consumers. And although there were petitioner’s "MCDONALD’S" and respondent’s "MACJOY" marks are are
dissimilarities in the trademark due to the type of letters used as well as the confusingly similar with each other that an ordinary purchaser can conclude an
size, color and design employed on their individual packages/bottles, still the association or relation between the marks.
close relationship of the competing product’s name is sounds as they were
pronounced, clearly indicates that purchasers could be misled into believing that To begin with, both marks use the corporate "M" design logo and the prefixes
they are the same and/or originates from a common source and manufacturer." "Mc" and/or "Mac" as dominant features. x x x

We find no cogent reason to depart from such conclusion. For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and
aurally catches the attention of the consuming public. Verily, the word "MACJOY"
This is not the first time the Court takes into account the aural effects of the attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti,"
words and letters contained in the marks in determining the issue of confusing "McDo," "Big Mac" and the rest of the MCDONALD’S marks which all use the
similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., cited in prefixes Mc and/or Mac.
McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the Court held:
Besides and most importantly, both trademarks are used in the sale of fastfood
"The following random list of confusingly similar sounds in the matter of products. Indisputably, the respondent’s trademark application for the "MACJOY
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. & DEVICE" trademark covers goods under Classes 29 and 30 of the International
1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries,
similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver spaghetti, etc. Likewise, the petitioner’s trademark registration for the
Flash" and Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and MCDONALD’S marks in the Philippines covers goods which are similar if not
"Cellonite"; "Chartreuse" and Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and identical to those covered by the respondent’s application.
"Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo Hoo." Leon Amdur, in his book
"Trade-Mark Law and Practice," pp. 419-421, cities [sic], as coming within the
purview of the idem sonans rule, "Yusea" and "U-C-A," "Steinway Pianos" and
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In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the Court applied the In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the
dominancy test in holding that "BIG MAK" is confusingly similar to "BIG MAC." dominancy test in holding that "FLAVOR MASTER" is confusingly similar to
The Court held: "MASTER ROAST" and "MASTER BLEND." The Court held:

This Court x x x has relied on the dominancy test rather than the holistic test. While this Court agrees with the Court of Appeals’ detailed enumeration of
The dominancy test considers the dominant features in the competing marks in differences between the respective trademarks of the two coffee products, this
determining whether they are confusingly similar. Under the dominancy test, Court cannot agree that totality test is the one applicable in this case. Rather,
courts give greater weight to the similarity of the appearance of the product this Court believes that the dominancy test is more suitable to this case in light
arising from the adoption of the dominant features of the registered mark, of its peculiar factual milieu.
disregarding minor differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to Moreover, the totality or holistic test is contrary to the elementary postulate of
factors like prices, quality, sales outlets and market segments. the law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and overall
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled: impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace. The totality or holistic test only relies on visual
x x x It has been consistently held that the question of infringement of a comparison between two trademarks whereas the dominancy test relies not only
trademark is to be determined by the test of dominancy. Similarity in size, form on the visual but also on the aural and connotative comparisons and overall
and color, while relevant, is not conclusive. If the competing trademark contains impressions between the two trademarks.
the main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation is For this reason, this Court agrees with the BPTTT when it applied the test of
not necessary; nor is it necessary that the infringing label should suggest an dominancy and held that:
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 From the evidence at hand, it is sufficiently established that the word MASTER is
question at issue in cases of infringement of trademarks is whether the use of the dominant feature of opposer’s mark. The word MASTER is printed across the
the marks involved would be likely to cause confusion or mistakes in the mind of middle portion of the label in bold letters almost twice the size of the printed
the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover word ROAST. Further, the word MASTER has always been given emphasis in the
Rubber Co., 107 F. 2d 588; x x x) TV and radio commercials and other advertisements made in promoting the
product. x x x In due time, because of these advertising schemes the mind of
xxxx the buying public had come to learn to associate the word MASTER with the
opposer’s goods.
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 x x x. It is the observation of this Office that much of the dominance which the
imitation of a registered mark x x x or a dominant feature thereof." word MASTER has acquired through Opposer’s advertising schemes is carried
over when the same is incorporated into respondent-applicant’s trademark
Applying the dominancy test, the Court finds that respondents’ use of the "Big FLAVOR MASTER. Thus, when one looks at the label bearing the trademark
Mak" mark results in likelihood of confusion. First, "Big Mak" sounds exactly the FLAVOR MASTER (exh. 4) one’s attention is easily attracted to the word
same as "Big Mac." Second, the first word in "Big Mak" is exactly the same as MASTER, rather than to the dissimilarities that exist. Therefore, the possibility of
the first word in "Big Mac." Third, the first two letters in "Mak" are the same as confusion as to the goods which bear the competing marks or as to the origins
the first two letters in "Mac." Fourth, the last letter "Mak" while a "k" sounds the thereof is not farfetched.
same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k"
replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan." Applying the dominancy test in the present case, the Court finds that "NANNY" is
confusingly similar to "NAN." "NAN" is the prevalent feature of Nestle’s line of
infant powdered milk products. It is written in bold letters and used in all
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products. The line consists of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, Certificates of Registration. — A certificate of registration of a mark shall be
"NANNY" contains the prevalent feature "NAN." The first three letters of prima facie evidence of validity of the registration, the registrant’s ownership of
"NANNY" are exactly the same as the letters of "NAN." When "NAN" and the mark, and of the registrant’s exclusive right to use the same in connection
"NANNY" are pronounced, the aural effect is confusingly similar. with the goods or services and those that are related thereto specified in the
certificate. (Emphasis supplied)
In determining the issue of confusing similarity, the Court takes into account the
aural effect of the letters contained in the marks. In Marvex Commercial In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, "Non-
Company, Inc. v. Petra Hawpia & Company, the Court held: 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
It is our considered view that the trademarks "SALONPAS" and "LIONPAS" are they originate from one manufacturer, in which case, confusion of business can
confusingly similar in sound. arise out of the use of similar marks." In that case, the Court enumerated
factors in determining whether goods are related: (1) classification of the goods;
Both these words have the same suffix, "PAS", which is used to denote a plaster (2) nature of the goods; (3) descriptive properties, physical attributes or
that adheres to the body with curative powers. "PAS," being merely descriptive, essential characteristics of the goods, with reference to their form, composition,
furnishes no indication of the origin of the article and therefore is open for texture or quality; and (4) style of distribution and marketing of the goods,
appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31, including how the goods are displayed and sold.
1966) and may properly become the subject of a trademark by combination with
another word or phrase. NANNY and NAN have the same classification, descriptive properties and
physical attributes. Both are classified under Class 6, both are milk products, and
xxxx both are in powder form. Also, NANNY and NAN are displayed in the same
section of stores — the milk section.
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. The Court agrees with the lower courts that there are differences between NAN
1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly and NANNY: (1) NAN is intended for infants while NANNY is intended for
similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver children past their infancy and for adults; and (2) NAN is more expensive than
Flash" and Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and NANNY. However, as the registered owner of the "NAN" mark, Nestle should be
"Cellonite"; "Chartreuse" and Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and free to use its mark on similar products, in different segments of the market,
"Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo Hoo." Leon Amdur, in his book and at different price levels. In McDonald’s Corporation v. L.C. Big Mak Burger,
"Trade-Mark Law and Practice," pp. 419-421, cities [sic], as coming within the Inc., the Court held that the scope of protection afforded to registered
purview of the idem sonans rule, "Yusea" and "U-C-A," "Steinway Pianos" and trademark owners extends to market areas that are the normal expansion of
"Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of business:
Patents, this Court unequivocally said that "Celdura" and "Condura" are
confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 xxx
Phil. 795 that the name "Lusolin" is an infringement of the trademark "Sapolin,"
as the sound of the two names is almost the same. Even respondent’s use of the "Big Mak" mark on non-hamburger food products
cannot excuse their infringement of petitioners’ registered mark, otherwise
The scope of protection afforded to registered trademark owners is not limited registered marks will lose their protection under the law.
to protection from infringers with identical goods. The scope of protection
extends to protection from infringers with related goods, and to market areas The registered trademark owner may use his mark on the same or similar
that are the normal expansion of business of the registered trademark owners. products, in different segments of the market, and at different price levels
Section 138 of R.A. No. 8293 states: depending on variations of the products for specific segments of the market. The
Court has recognized that the registered trademark owner enjoys protection in
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 142

product and market areas that are the normal potential expansion of his
business. Thus, the Court has declared:

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

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

Decision and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No.
62730 and REINSTATE the 18 September 1998 Decision of the Regional Trial
Court, Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.

SO ORDERED.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 143

G.R. No. 164321 March 23, 2011 Same; Same; The Holistic or Totality Test necessitates a consideration of the
entirety of the marks as applied to the products, including the labels and
SKECHERS, U.S.A., INC., Petitioner, packaging, in determining confusing similarity.—The Holistic or Totality Test
vs. necessitates a consideration of the entirety of the marks as applied to the
INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER PACIFIC products, including the labels and packaging, in determining confusing similarity.
TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or The discerning eye of the observer must focus not only on the predominant
STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES words, but also on the other features appearing on both labels so that the
TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA observer may draw conclusion on whether one is confusingly similar to the
and/or JEFFREY R. MORALES and/or any of its other proprietor/s, other.
directors, officers, employees and/or occupants of its premises located Same; Trademarks; The registered trademark owner may use its mark on the
at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, same or similar products, in different segments of the market, and at different
Parañaque City, Respondents. price levels depending on variations of the products for specific segments of the
market.—The registered trademark owner may use its mark on the same or
x - - - - - - - - - - - - - - - - - - - - - - -x similar products, in different segments of the market, and at different price
levels depending on variations of the products for specific segments of the
TRENDWORKS INTERNATIONAL CORPORATION, Petitioner- market. The purchasing public might be mistaken in thinking that petitioner had
Intervenor, ventured into a lower market segment such that it is not inconceivable for the
vs. public to think that Strong or Strong Sport Trail might be associated or
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER PACIFIC connected with petitioner’s brand, which scenario is plausible especially since
TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or both petitioner and respondent manufacture rubber shoes.
STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES
TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA MOTIONS FOR RECONSIDERATION of a decision of the Supreme Court.
and/or JEFFREY R. MORALES and/or any of its other proprietor/s,    The facts are stated in the resolution of the Court.
directors, officers, employees and/or occupants of its premises located   Quisumbing, Torres for petitioner.
at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue,   Poblador, Bautista & Reyes for petitioner-in-intervention.
Parañaque City, Respondents.   Verzosa, Gutierrez, Nolasco, Montenegro & Associates for respondents.
[Skechers, U.S.A., Inc. vs. Inter Pacific Industrial Corp., 646 SCRA 448(2011)]
Intellectual Property Code (R.A. 8293); Trademark Infringement; The essential
element of infringement under R.A. 8293 is that the infringing mark is likely to RESOLUTION
cause confusion.—The essential element of infringement under R.A. No. 8293 is
that the infringing mark is likely to cause confusion. In determining similarity PERALTA, J.:
and likelihood of confusion, jurisprudence has developed tests—the Dominancy
Test and the Holistic or Totality Test. For resolution are the twin Motions for Reconsideration1 filed by petitioner and
Same; Same; The Dominancy Test focuses on the similarity of the prevalent or petitioner-intervenor from the Decision rendered in favor of respondents, dated
dominant features of the competing trademarks that might cause confusion, November 30, 2006.
mistake, and deception in the mind of the purchasing public.—The Dominancy
Test focuses on the similarity of the prevalent or dominant features of the At the outset, a brief narration of the factual and procedural antecedents that
competing trademarks that might cause confusion, mistake, and deception in the transpired and led to the filing of the motions is in order.
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. The present controversy arose when petitioner filed with Branch 24 of the
Given more consideration are the aural and visual impressions created by the Regional Trial Court (RTC) of Manila an application for the issuance of search
marks on the buyers of goods, giving little weight to factors like prices, quality, warrants against an outlet and warehouse operated by respondents for
sales outlets, and market segments. infringement of trademark under Section 155, in relation to Section 170 of
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 144

Republic Act No. 8293, otherwise known as the Intellectual Property Code of the On November 30, 2006, this Court rendered a Decision12 dismissing the
Philippines.2 In the course of its business, petitioner has registered the petition.
trademark "SKECHERS"3 and the trademark "S" (within an oval design)4 with
the Intellectual Property Office (IPO). Both petitioner and petitioner-intervenor filed separate motions for
reconsideration.
Two search warrants5 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 In petitioner’s motion for reconsideration, petitioner moved for a reconsideration
the "S" logo were seized. of the earlier decision on the following grounds:

Later, respondents moved to quash the search warrants, arguing that there was (a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS CASE
no confusing similarity between petitioner’s "Skechers" rubber shoes and its DUE TO THE SIGNIFICANCE AND REPERCUSSIONS OF ITS DECISION.
"Strong" rubber shoes.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE
On November 7, 2002, the RTC issued an Order6 quashing the search warrants UNAUTHORIZED REPRODUCTIONS OF THE "S" TRADEMARK OWNED BY
and directing the NBI to return the seized goods. The RTC agreed with PETITIONER WERE INTENDED FOR DISTRIBUTION IN THE PHILIPPINE
respondent’s view that Skechers rubber shoes and Strong rubber shoes have MARKET TO THE DETRIMENT OF PETITIONER – RETURNING THE GOODS TO
glaring differences such that an ordinary prudent purchaser would not likely be RESPONDENTS WILL ADVERSELY AFFECT THE GOODWILL AND REPUTATION
misled or confused in purchasing the wrong article. OF PETITIONER.

Aggrieved, petitioner filed a petition for certiorari7 with the Court of Appeals (c) THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH ACTED
(CA) assailing the RTC Order. On November 17, 2003, the CA issued a Decision8 WITH GRAVE ABUSE OF DISCRETION.
affirming the ruling of the RTC.
(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE THE
Subsequently, petitioner filed the present petition9 before this Court which puts EVIDENCE PRESENTED DURING THE SEARCH WARRANT APPLICATION
forth the following assignment of errors: PROCEEDINGS.

A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF (e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS CASE, AS IT IS
DISCRETION IN CONSIDERING MATTERS OF DEFENSE IN A CRIMINAL TRIAL BASED ON A DIFFERENT FACTUAL MILIEU. PRELIMINARY FINDING OF GUILT
FOR TRADEMARK INFRINGEMENT IN PASSING UPON THE VALIDITY OF THE (OR ABSENCE THEREOF) MADE BY THE SEARCH WARRANT COURT AND THE
SEARCH WARRANT WHEN IT SHOULD HAVE LIMITED ITSELF TO A COURT OF APPEALS WAS IMPROPER.
DETERMINATION OF WHETHER THE TRIAL COURT COMMITTED GRAVE ABUSE
OF DISCRETION IN QUASHING THE SEARCH WARRANTS. (f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION. THE LAW
IS CLEAR. THE DOMINANCY TEST SHOULD BE USED.
B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN FINDING THAT RESPONDENTS ARE NOT GUILTY OF (g) THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION.13
TRADEMARK INFRINGEMENT IN THE CASE WHERE THE SOLE TRIABLE ISSUE
IS THE EXISTENCE OF PROBABLE CAUSE TO ISSUE A SEARCH WARRANT.10 On the other hand, petitioner-intervenor’s motion for reconsideration raises the
following errors for this Court’s consideration, to wit:
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 (a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED
the Philippines. CONTRARY TO LAW AND JURISPRUDENCE IN ADOPTING THE ALREADY-
REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE OF CONFUSING
SIMILARITY;
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The essential element of infringement under R.A. No. 8293 is that the infringing
(b) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED mark is likely to cause confusion. In determining similarity and likelihood of
CONTRARY TO LAW IN HOLDING THAT THERE IS NO PROBABLE CAUSE FOR confusion, jurisprudence has developed tests  the Dominancy Test and the
TRADEMARK INFRINGEMENT; AND Holistic or Totality Test. The Dominancy Test focuses on the similarity of the
prevalent or dominant features of the competing trademarks that might cause
(c) THE COURT OF APPEALS SANCTIONED THE TRIAL COURT’S DEPARTURE confusion, mistake, and deception in the mind of the purchasing public.
FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHEN Duplication or imitation is not necessary; neither is it required that the mark
IT UPHELD THE QUASHAL OF THE SEARCH WARRANT ON THE BASIS SOLELY sought to be registered suggests an effort to imitate. Given more consideration
OF A FINDING THAT THERE IS NO CONFUSING SIMILARITY.14 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
A perusal of the motions submitted by petitioner and petitioner-intervenor would segments.16
show that the primary issue posed by them dwells on the issue of whether or
not respondent is guilty of trademark infringement. 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
After a thorough review of the arguments raised herein, this Court reconsiders packaging, in determining confusing similarity. The discerning eye of the
its earlier decision. 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
The basic law on trademark, infringement, and unfair competition is Republic Act whether one is confusingly similar to the other.17
(R.A.) No. 8293. Specifically, Section 155 of R.A. No. 8293 states:
Relative to the question on confusion of marks and trade names, jurisprudence
Remedies; Infringement. — Any person who shall, without the consent of the has noted two (2) types of confusion, viz.: (1) confusion of goods (product
owner of the registered mark: confusion), where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other; and (2)
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable confusion of business (source or origin confusion), where, although the goods of
imitation of a registered mark or the same container or a dominant feature the parties are different, the product, the mark of which registration is applied
thereof in connection with the sale, offering for sale, distribution, advertising of for by one party, is such as might reasonably be assumed to originate with the
any goods or services including other preparatory steps necessary to carry out registrant of an earlier product, and the public would then be deceived either
the sale of any goods or services on or in connection with which such use is into that belief or into the belief that there is some connection between the two
likely to cause confusion, or to cause mistake, or to deceive; or parties, though inexistent.18

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a Applying the Dominancy Test to the case at bar, this Court finds that the use of
dominant feature thereof and apply such reproduction, counterfeit, copy or the stylized "S" by respondent in its Strong rubber shoes infringes on the mark
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or already registered by petitioner with the IPO. While it is undisputed that
advertisements intended to be used in commerce upon or in connection with the petitioner’s stylized "S" is within an oval design, to this Court’s mind, the
sale, offering for sale, distribution, or advertising of goods or services on or in dominant feature of the trademark is the stylized "S," as it is precisely the
connection with which such use is likely to cause confusion, or to cause mistake, stylized "S" which catches the eye of the purchaser. Thus, even if respondent
or to deceive, shall be liable in a civil action for infringement by the registrant for did not use an oval design, the mere fact that it used the same stylized "S", the
the remedies hereinafter set forth: Provided, That the infringement takes place same being the dominant feature of petitioner’s trademark, already constitutes
at the moment any of the acts stated in Subsection 155.1 or this subsection are infringement under the Dominancy Test.
committed regardless of whether there is actual sale of goods or services using
the infringing material.15 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
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 146

been used in so many existing trademarks, the most popular of which is the the "tongue" of both shoes appears the stylized "S" in practically the same
trademark "S" enclosed by an inverted triangle, which the CA says is identifiable location and size. Moreover, at the back of petitioner’s shoes, near the heel
to Superman. Such reasoning, however, misses the entire point, which is that counter, appears "Skechers Sport Trail" written in white lettering. However, on
respondent had used a stylized "S," which is the same stylized "S" which respondent’s shoes appears "Strong Sport Trail" noticeably written in the same
petitioner has a registered trademark for. The letter "S" used in the Superman white lettering, font size, direction and orientation as that of petitioner’s shoes.
logo, on the other hand, has a block-like tip on the upper portion and a round On top of the heel collar of petitioner’s shoes are two grayish-white semi-
elongated tip on the lower portion. Accordingly, the comparison made by the CA transparent circles. Not surprisingly, respondent’s shoes also have two grayish-
of the letter "S" used in the Superman trademark with petitioner’s stylized "S" is white semi-transparent circles in the exact same location.lihpwa1
not appropriate to the case at bar.
Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in
Furthermore, respondent did not simply use the letter "S," but it appears to this applying the holistic test, ruled that there was no colorable imitation, when it
Court that based on the font and the size of the lettering, the stylized "S" utilized cannot be any more clear and apparent to this Court that there is colorable
by respondent is the very same stylized "S" used by petitioner; a stylized "S" imitation. The dissimilarities between the shoes are too trifling and frivolous that
which is unique and distinguishes petitioner’s trademark. Indubitably, the it is indubitable that respondent’s products will cause confusion and mistake in
likelihood of confusion is present as purchasers will associate the respondent’s the eyes of the public. Respondent’s shoes may not be an exact replica of
use of the stylized "S" as having been authorized by petitioner or that petitioner’s shoes, but the features and overall design are so similar and alike
respondent’s product is connected with petitioner’s business. that confusion is highly likely.1avvphi1

Both the RTC and the CA applied the Holistic Test in ruling that respondent had In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc.,22 this
not infringed petitioner’s trademark. For its part, the RTC noted the following Court, in a case for unfair competition, had opined that even if not all the details
supposed dissimilarities between the shoes, to wit: 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
1. The mark "S" found in Strong Shoes is not enclosed in an "oval design." wit:

2. The word "Strong" is conspicuously placed at the backside and insoles. 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
3. The hang tags and labels attached to the shoes bears the word "Strong" for plaintiff Converse Rubber Corporation and manufactured, sold or marketed by
respondent and "Skechers U.S.A." for private complainant; plaintiff Edwardson Manufacturing Corporation, except for their respective
brands, of course. We fully agree with the trial court that "the respective
4. Strong shoes are modestly priced compared to the costs of Skechers Shoes.19 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
While there may be dissimilarities between the appearances of the shoes, to this of a few meters, it is impossible to distinguish "Custombuilt" from "Chuck
Court’s mind such dissimilarities do not outweigh the stark and blatant Taylor." These elements are more than sufficient to serve as basis for a charge
similarities in their general features. As can be readily observed by simply of unfair competition. Even if not all the details just mentioned were identical,
comparing petitioner’s Energy20 model and respondent’s Strong21 rubber shoes, with the general appearances alone of the two products, any ordinary, or even
respondent also used the color scheme of blue, white and gray utilized by perhaps even a not too perceptive and discriminating customer could be
petitioner. Even the design and "wavelike" pattern of the midsole and outer sole deceived, and, therefore, Custombuilt could easily be passed off for Chuck
of respondent’s shoes are very similar to petitioner’s shoes, if not exact patterns Taylor. Jurisprudence supports the view that under such circumstances, the
thereof. At the side of the midsole near the heel of both shoes are two imitator must be held liable. x x x23
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 Neither can the difference in price be a complete defense in trademark
side of respondent’s shoes, near the upper part, appears the stylized "S," placed infringement. In McDonald’s Corporation v. L.C. Big Mak Burger. Inc.,24 this
in the exact location as that of the stylized "S" on petitioner’s shoes. On top of Court held:
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 147

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.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 148

G.R. No. 78413 November 8, 1989 No. 166, as amended, a person entitled to the exclusive use of a registered mark
or trade-name may recover damages in a civil action from any person who
CAGAYAN VALLEY ENTERPRISES, INC., Represented by its President, infringes his rights. He may also, upon proper showing, be granted injunction.
Rogelio Q. Lim, petitioner, Same; Same; Same; Corporations; When the corporation is the mere alter ego
vs. or business conduit of a person, the law will regard the corporation as an
THE HON. COURT OF APPEALS and LA TONDEÑA, INC., respondents. association of persons, or in the case of two corporations, merge them into one.
—Petitioner cannot avoid the effect of the admission and/or acknowledgment
Efren M. Cacatian for petitioners. made by Diego Lim in the said case. While a corporation is an entity separate
and distinct from its stockholders and from other corporations with which it may
San Jose, Enrique, Lacas, Santos and Borje for private respondent. 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
Statutes; Interpretation of; The proposition that R.A. No. 623 as amended the corporation as an association of persons, or in the case of two corporations,
protects only the containers of soft drinks enumerated by petitioner and those merge them into one. When the corporation is the mere alter ego or business
similar thereto is unwarranted; Rule of ejusdem generis, not applicable in the conduit of a person, it may be disregarded.
case at bar; Reasons.—The proposition that Republic Act No. 623, as amended Same; Same; Same; Same; Petitioner is a mere continuation and successor of
protects only the containers of the soft drinks enumerated by petitioner and Cagayan Valley District; The corporation, in the case at bar, has no separate and
those similar thereto, is unwarranted and specious. The rule of ejusdem generis distinct personality from its members; Reasons.—It is thus clear that herein
cannot be applied in this case. To limit the coverage of the law only to those petitioner is a mere continuation and successor of Cagayan Valley Distillery. It is
enumerated or of the same kind or class as those specifically mentioned will likewise indubitable that the admission made in the former case, as earlier
defeat the very purpose of the law. Such rule of ejusdem generis is to be explained, is binding on it as cogent proof that even before the filing of this case
resorted to only for the purpose of determining what the intent of the legislature it had actual knowledge that the bottles in dispute were registered containers of
was in enacting the law. If that intent clearly appears from other parts of the LTI. As held in La Campana Coffee Factory, Inc., et al. vs. Kaisahan Ng Mga
law, and such intent thus clearly manifested is contrary to the result which Manggagawa sa La Campana (KKM), et al., where the main purpose in forming
would be reached by the appreciation of the rule of ejusdem generis, the latter the corporation was to evade one’s subsidiary liability for damages in a criminal
must give way. case, the corporation may not be heard to say that it has a personality separate
Same; Same; Same; Executive construction, entitled to great weight and and distinct from its members, because to allow it to do so would be to sanction
consideration; Reasons.—While executive construction is not necessarily binding the use of the fiction of corporate entity as a shield to further an end subversive
upon the courts, it is entitled to great weight and consideration. The reason for of justice.
this is that such construction comes from the particular branch of government Same; Same; Contempt; Double Jeopardy; An appeal from a verdict of acquittal
called upon to implement the particular law involved. in a contempt proceeding does not constitute civil contempt.—Anent the several
Same; Same; Trademarks; Infringements; Damages; A person entitled to the motions of private respondent LTI to have petitioner cited for contempt, we
exclusive use of a registered mark or tradename may recover damages in a civil reject the argument of petitioner that an appeal from a verdict of acquittal in a
action from any person who infringes his rights.—While Republic Act No. 623, as contempt proceeding constitutes double jeopardy. A failure to do something
amended, provides for a criminal action in case of violation, a civil action for ordered by the court for the benefit of a party constitutes civil contempt.
damages is proper under Article 20 of the Civil Code which provides that every Same; Same; Same; Injunction; Writ of injunction directing petitioner to desist
person who, contrary to law, wilfully, or negligently causes damage to another, from using the subject bottles was properly issued by the Court; Rule of
shall indemnify the latter for the same. This particular provision of the Civil Case procedure to always strive to settle the entire controversy in a single proceeding.
was clearly meant to complement all legal provisions which may have —Section 3 of Republic Act No. 623, as amended, creates a prima facie
inadvertently failed to provide for indemnification or reparation of damages presumption against Cagayan for its unlawful use of the bottles registered in the
when proper or called for. In the Language of the Code Commission “(t)he name of LTI. Corollarily, the writ of injunction directing petitioner to desist from
foregoing rule pervades the entire legal system, and renders it impossible that a using the subject bottles was properly issued by the trial court. Hence, said writ
person who suffers damage because another has violated some legal provisions, could not be simply disregarded by Cagayan without adducing proof sufficient to
should find himself without relief.” Moreover, under Section 23 of Republic Act overcome the aforesaid presumption. Also, based on the findings of respondent
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 149

court, and the records before us being sufficient for arbitrament, without 1. LTI has no cause of action due to its failure to comply with Section 21 of
remanding the incident to the court a quo petitioner can be adjudged guilty of Republic Act No. 166 which requires the giving of notice that its aforesaid marks
contempt and imposed a sanction in this appeal since it is a cherished rule of are registered by displaying and printing the words "Registered in the Phil.
procedure for this Court to always strive to settle the entire controversy in a Patent Office" or "Reg Phil. Pat. Off.," hence no suit, civil or criminal, can be filed
single proceeding. We so impose such penalty concordant with the preservative against Cagayan;
principle and as demanded by the respect due the orders, writs and processes of
the courts of justice. 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
PETITION for certiorari to review the decision of the Court of Appeals. Campos, among those contemplated therein. What is protected under said law are
Jr., J. [Cagayan Valley Enterprises, Inc. vs. Court of Appeals, 179 SCRA beverages like Coca-cola, Royal Tru-Orange, Lem-o-Lime and similar beverages
218(1989)] the bottles whereof bear the words "Reg Phil. Pat. Off.;"

REGALADO, J.: 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
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 4. There was no infringement of the goods or products of LTI since Cagayan
the decision of the trial court, and its resolution dated May 5, 1987 denying uses its own labels and trademark on its product.
petitioner's motion for reconsideration.
In its subsequent pleadings, Cagayan contended that the bottles they are using
The following antecedent facts generative of the present controversy are not in are not the registered bottles of LTI since the former was using the bottles
dispute. 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
Sometime in 1953, La Tondeña, Inc. (hereafter, LTI for short) registered with to the certificate of registration of LTI for said bottles.
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 On December 18, 1981, the lower court issued a writ of preliminary injunction,
Miguel". This registration was subsequently renewed on December 4, 1974. 2 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
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 After a protracted trial, which entailed five (5) motions for contempt filed by LTI
Enterprises, Inc. (Cagayan, for brevity) for using the 350 c.c., white flint bottles against Cagayan, the trial court rendered judgment 7 in favor of Cagayan, ruling
with the mark "La Tondeña Inc." and "Ginebra San Miguel" stamped or blown-in that the complaint does not state a cause of action and that Cagayan was not
therein by filling the same with Cagayan's liquor product bearing the label guilty of contempt. Furthermore, it awarded damages in favor of Cagayan.
"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 LTI appealed to the Court of Appeals which, on December 5, 1986 rendered a
Act No. 5700. On the same date, LTI further filed an ex parte petition for the decision in favor of said appellant, the dispositive portion whereof reads:
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 WHEREFORE, the decision appealed from is hereby SET ASIDE and judgment is
against Cagayan and its officers and employees from using the 350 c.c. bottles rendered permanently enjoining the defendant, its officers and agents from
with the marks "La Tondeña" and "Ginebra San Miguel." 4 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
Cagayan, in its answer, 5 alleged the following defenses: containers for defendant's products.
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The writ of preliminary injunction issued by the trial court is therefore made V. The Honorable Court of Appeals gravely erred in accommodating the appeal
permanent. on the dismissals of the five (5) contempt charges.

Defendant is ordered to pay the amounts of: 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.
(1) P15,000.00 as nominal or temperate damages; Instead it awarded nominal or temperate, exemplary damages and attorney's
fees without proof of bad faith. 9
(2) P50,000.00 as exemplary damages;
The pertinent provisions of Republic Act No. 623, as amended by Republic Act
(3) P10,000.00 as attorney's fees; and No. 5700, provides:

(4) Costs of suit. 8 SECTION 1. Persons engaged or licensed to engage in the manufacture,
bottling, or selling of soda water, mineral or aerated waters, cider, milk, cream
On December 23, 1986, Cagayan filed a motion for reconsideration which was or other lawful beverages in bottles, boxes, casks, kegs, or barrels and other
denied by the respondent court in its resolution dated May 5, 1987, hence the similar containers, or in the manufacturing, compressing or selling of gases such
present petition, with the following assignment of errors: as oxygen, acytelene, nitrogen, carbon dioxide ammonia, hydrogen, chloride,
helium, sulphur, dioxide, butane, propane, freon, melthyl chloride or similar
I. The Court of Appeals gravely erred in the decision granting that "there is, gases contained in steel cylinders, tanks, flasks, accumulators or similar
therefore, no need for plaintiff to display the words "Reg. Phil. Pat. Off." in order containers, with the name or the names of their principals or products, or other
for it to succeed in bringing any injunction suit against defendant for the illegal marks of ownership stamped or marked thereon, may register with the
use of its bottles. Rep. Act No. 623, as amended by Rep. Act No. 5700 simply Philippine Patent Office a description of the names or marks, and the purpose
provides and requires that the marks or names shall be stamped or marked on for which the containers so marked and used by them, under the same
the containers." conditions, rules, and regulations, made applicable by law or regulation to the
issuance of trademarks.
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 SEC. 2. It shall be unlawful for any person, without the written consent of the
the marks "Property of La Tondeña, Inc., Ginebra San Miguel," and those simply manufacturer, bottler, or seller, who has succesfully registered the marks of
marked La Tondeña Inc., Ginebra San Miguel'. By omitting the words "property ownership in accordance with the provisions of the next preceding section, to fill
of" plaintiff did not open itself to violation of Republic Act No. 623, as amended, such bottles, boxes, kegs, barrels, steel cylinders, tanks, flasks, accumulators or
as having registered its marks or names it is protected under the law." 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
III. The Honorable Court of Appeals gravely erred in deciding that the words "La or not, to use the same, for drinking vessels or glasses or drain pipes,
Tondeña, Inc. and Ginebra San Miguel" are sufficient notice to the defendant foundation pipes, for any other purpose than that registered by the
which should have inquired from the plaintiff or the Philippine Patent Office, if it manufacturer, bottler or seller. Any violation of this section shall be punished by
was lawful for it to re-use the empty bottles of the plaintiff. a fine of not more than one thousand pesos or imprisonment of not more than
one year or both.
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 SEC. 3. The use by any person other than the registered manufacturer, bottler
"La Tondeña, Inc." alone, short for the description contained in the sworn or seller, without written permission of the latter of any such bottle, cask, barrel,
statement of Mr. Carlos Palanca, Jr., which was a requisite of its original and keg, box, steel cylinders, tanks, flask, accumulators, or other similar containers,
renewal registrations. 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
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stamped and registered as herein provided, shall give rise to a prima facie
presumption that such use or possession is unlawful. 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
The above-quoted provisions grant protection to a qualified manufacturer who by Republic Act No. 5700, is without merit. The title of the law itself, which
successfully registered with the Philippine Patent Office its duly stamped or reads " An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes,
marked bottles, boxes, casks and other similar containers. The mere use of Casks, Kegs, Barrels and Other Similar Containers" clearly shows the legislative
registered bottles or containers without the written consent of the manufacturer intent to give protection to all marked bottles and containers of all lawful
is prohibited, the only exceptions being when they are used as containers for beverages regardless of the nature of their contents. The words "other lawful
"sisi," bagoong," "patis" and similar native products. 10 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,
It is an admitted fact that herein petitioner Cagayan buys from junk dealers and although regulated, is not prohibited by law, hence it is within the purview and
retailers bottles which bear the marks or names La Tondeña Inc." and "Ginebra coverage of Republic Act No. 623, as amended.
San Miguel" and uses them as containers for its own liquor products. The
contention of Cagayan that the aforementioned bottles without the words Republic Act No. 623, as amended, has for its purpose the protection of the
"property of" indicated thereon are not the registered bottles of LTI, since they health of the general public and the prevention of the spread of contagious
do not conform with the statement or description in the supporting affidavits diseases. It further seeks to safeguard the property rights of an important sector
attached to the original registration certificate and renewal, is untenable. 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
Republic Act No. 623 which governs the registration of marked bottles and Identifying the containers he uses in the manufacture, preservation, packing or
containers merely requires that the bottles, in order to be eligible for sale of his products so that he may secure their registration with the Bureau of
registration, must be stamped or marked with the names of the manufacturers Commerce and Industry and thus prevent other persons from using them. Said
or the names of their principals or products, or other marks of ownership. No Act 3070 was substantially reenacted as Republic Act No. 623. 17
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 The proposition that Republic Act No. 623, as amended, protects only the
marks of ownership sought to be registered and a bottle showing the name or containers of the soft drinks enumerated by petitioner and those similar thereto,
other mark or ownership, irremovably stamped or marked, shall be submitted. is unwarranted and specious. The rule of ejusdem generis cannot be applied in
11 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
The term "Name or Other Mark of Ownership" 12 means the name of the of the law. Such rule of ejusdem generis is to be resorted to only for the
applicant or the name of his principal, or of the product, or other mark of purpose of determining what the intent of the legislature was in enacting the
ownership. The second set of bottles of LTI without the words "property of" law. If that intent clearly appears from other parts of the law, and such intent
substantially complied with the requirements of Republic Act No. 623, as thus clearly manifested is contrary to the result which would be reached by the
amended, since they bear the name of the principal, La Tondeña Inc., and of its appreciation of the rule of ejusdem generis, the latter must give way. 18
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 Moreover, the above conclusions are supported by the fact that the Philippine
the protection of the law. The owner of a trade-mark or trade-name, and in this Patent Office, which is the proper and competent government agency vested
case the marked containers, does not abandon it by making minor modifications with the authority to enforce and implement Republic Act No. 623, registered the
in the mark or name itself. 13 With much more reason will this be true where bottles of respondent LTI as containers for gin and issued in its name a
what is involved is the mere omission of the words "property of" since even certificate of registration with the following findings:
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 It appearing, upon due examination that the applicant is entitled to have the
without the words "property of," are sufficient notice to the public that those said MARKS OR NAMES registered under R.A. No. 623, the said marks or names
bottles so marked are owned by LTI.
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have been duly registered this day in the PATENT OFFICE under the said Act, for recovered under the provisions of this Act, unless the defendant has actual
gin, Ginebra San Miguel. 19 notice of the registration.

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 Even assuming that said provision is applicable in this case, the failure of LTI to
implement the particular law involved. 20 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
Just as impuissant is petitioners contention that respondent court erred in against the infringer for other reliefs to which the plaintiff may be entitled. The
holding that there is no need for LTI to display the words "Reg Phil. Pat. Off." in failure to give notice of registration will not deprive the aggrieved party of a
order to succeed in its injunction suit against Cagayan for the illegal use of the cause of action against the infringer but, at the most, such failure may bar
bottles. To repeat, Republic Act No. 623 governs the registration of marked recovery of damages but only under the provisions of Republic Act No. 166.
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 However, in this case an award of damages to LTI is ineluctably called for.
principals or products or other marks of ownership. The owner upon registration Petitioner cannot claim good faith. The record shows that it had actual
of its marked bottles, is vested by law with an exclusive right to use the same to knowledge that the bottles with the blown-in marks "La Tondeña Inc." and
the exclusion of others, except as a container for native products. A violation of "Ginebra San Miguel" are duly registered. In Civil Case No. 102859 of the Court
said right gives use to a cause of action against the violator or infringer. 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
While Republic Act No. 623, as amended, provides for a criminal action in case rendered in favor of plaintiff therein on the basis of the admission and/or
of violation, a civil action for damages is proper under Article 20 of the Civil Code acknowledgment made by the defendant that the bottles marked only with the
which provides that every person who, contrary to law, wilfully or negligently words "La Tondeña Inc." and "Ginebra San Miguel" are registered bottles of LTI.
causes damage to another, shall indemnify the latter for the same. This 22
particular provision of the Civil Case was clearly meant to complement all legal
provisions which may have inadvertently failed to provide for indemnification or Petitioner cannot avoid the effect of the admission and/or acknowledgment
reparation of damages when proper or called for. In the language of the Code made by Diego Lim in the said case. While a corporation is an entity separate
Commission "(t)he foregoing rule pervades the entire legal system, and renders and distinct from its stock-holders and from other corporations with which it may
it impossible that a person who suffers damage because another has violated be connected, where the discreteness of its personality is used to defeat public
some legal provisions, should find himself without relief." 21 Moreover, under convenience, justify wrong, protect fraud, or defend crime, the law will regard
Section 23 of Republic Act No. 166, as amended, a person entitled to the the corporation as an association of persons, or in the case of two corporations,
exclusive use of a registered mark or tradename may recover damages in a civil merge them into one. When the corporation is the mere alter ego or business
action from any person who infringes his rights. He may also, upon proper conduit of a person, it may be disregaded. 23
showing, be granted injunction.
Petitioner's claim that it is separate and distinct from the former Cagayan Valley
It is true that the aforesaid law on trademarks provides: Distillery is belied by the evidence on record. The following facts warrant the
conclusion that petitioner, as a corporate entity, and Cagayan Valley Distillery
SEC. 21. Requirements of notice of registration of trade-mark.-The registrant of are one and the same. to wit: (1) petitioner is being managed by Rogelio Lim,
a trade-mark, heretofore registered or registered under the provisions of this the son of Diego Lim, the owner and manager of Cagayan Valley Distellery; (2) it
Act, shall give notice that his mark is registered by displaying with the same as is a family corporation; 24 (3) it is an admitted fact that before petitioner was
used the words 'Registered in the Philippines Patent Office' or 'Reg Phil. Pat. incorporated it was under a single proprietorship; 25 (4) petitioner is engaged in
Off.'; and in any suit for infringement under this Act by a registrant failing so to the same business as Cagayan Valley Distillery, the manufacture of wines and
mark the goods bearing the registered trade-mark, no damages shall be liquors; and (5) the factory of petitioner is located in the same place as the
factory of the former Cagayan Valley Distillery.
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It is thus clear that herein petitioner is a mere continuation and successor of On this incident, two considerations must be borne in mind. Firstly, an injunction
Cagayan Valley Distillery. It is likewise indubitable that the admission made in duly issued must be obeyed, however erroneous the action of the court may be,
the former case, as earlier explained, is binding on it as cogent proof that even until its decision is overruled by itself or by a higher court. 30 Secondly, the
before the filing of this case it had actual knowledge that the bottles in dispute American rule that the power to judge a contempt rests exclusively with the
were registered containers of LTI As held in La Campana Coffee Factory, Inc., et court contemned does not apply in this Jurisdiction. The provision of the present
al. vs. Kaisahan Ng Mga Manggagawa sa La Campana (KKM), et al., 26 where Section 4, Rule 71 of the Rules of Court as to where the charge may be filed is
the main purpose in forming the corporation was to evade one's subsidiary permissive in nature and is merely declaratory of the inherent power of courts to
liability for damages in a criminal case, the corporation may not be heard to say punish contumacious conduct. Said rules do not extend to the determination of
that it has a personality separate and distinct from its members, because to the jurisdiction of Philippine courts. 31 In appropriate case therefore, this Court
allow it to do so would be to sanction the use of the fiction of corporate entity as may, in the interest of expedient justice, impose sanctions on contemners of the
a shield to further an end subversive of justice. lower courts.

Anent the several motions of private respondent LTI to have petitioner cited for Section 3 of Republic Act No. 623, as amended, creates a prima facie
contempt, we reject the argument of petitioner that an appeal from a verdict of presumption against Cagayan for its unlawful use of the bottles registered in the
acquittal in a contempt, proceeding constitutes double jeopardy. A failure to do name of LTI Corollarily, the writ of injunction directing petitioner to desist from
something ordered by the court for the benefit of a party constitutes civil using the subject bottles was properly issued by the trial court. Hence, said writ
contempt. 27 As we held in Converse Rubber Corporation vs. Jacinto Rubber & could not be simply disregarded by Cagayan without adducing proof sufficient to
Plastics Co., Inc.: overcome the aforesaid presumption. Also, based on the findings of respondent
court, and the records before us being sufficient for arbitrament without
...True it is that generally, contempt proceedings are characterized as criminal in remanding the incident to the court a quo petitioner can be adjudged guilty of
nature, but the more accurate juridical concept is that contempt proceedings contempt and imposed a sanction in this appeal since it is a cherished rule of
may actually be either civil or criminal, even if the distinction between one and procedure for this Court to always strive to settle the entire controversy in a
the other may be so thin as to be almost imperceptible. But it does exist in law. single proceeding, 32 We so impose such penalty concordant with the
It is criminal when the purpose is to vindicate the authority of the court and preservative principle and as demanded by the respect due the orders, writs and
protect its outraged dignity. It is civil when there is failure to do something processes of the courts of justice.
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; WHEREFORE, judgment is hereby rendered DENYING the petition in this case
Harden vs. Director of Prisons, 81 Phil. 741.) And with this distinction in mind, and AFFIRMING the decision of respondent Court of Appeals. Petitioner is
the fact that the injunction in the instant case is manifestly for the benefit of hereby declared in contempt of court and ORDERED to pay a fine of One
plaintiffs makes of the contempt herein involved civil, not criminal. Accordingly, Thousand Pesos (P1,000.00), with costs.
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 SO ORDERED.

The contempt involved in this case is civil and constructive in nature, it having Paras, Padilla and Sarmiento, JJ., concur.
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: Melencio-Herrera (Chairperson), J., is on leave.

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
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G.R. No. 120961 October 17, 1996 incorporeal right is distinct from the property in the material object subject to it.
—It is to be pointed out that a trademark refers to a word, name, symbol,
DISTILLERIA WASHINGTON, INC. or WASHINGTON DISTILLERY, INC., emblem, sign or device or any combination thereof adopted and used by a
petitioner, merchant to identify, and distinguish from others, his goods of commerce. It is
vs. basically an intellectual creation that is susceptible to ownership and,
THE HONORABLE COURT OF APPEALS and LA TONDEÑA DISTILLERS, consistently therewith, gives rise to its own elements of jus posidendi, jus
INC., respondents. utendi, jus fruendi, jus disponendi, and jus abutendi, along with the applicable
jus lex, comprising that ownership. The incorporeal right, however, is distinct
Trademarks and Tradenames; R.A. No. 623 extends trademark protection in the from the property in the material object subject to it. Ownership in one does not
use of containers duly registered with the Philippine Patent Office.—It is a fact necessarily vest ownership in the other. Thus, the transfer or assignment of the
that R.A. No. 623 extends trademark protection in the use of containers duly intellectual property will not necessarily constitute a conveyance of the thing it
registered with the Philippine Patent Office. covers, nor would a conveyance of the latter imply the transfer or assignment of
Same; The mere use of registered bottles or containers without the written the intellectual right.
consent of the manufacturer is prohibited, the only exceptions being when they Same; R.A. 623 does not disallow the sale or transfer of ownership of the
are used as containers for “sisi,” “bagoong,” “patis” and similar native products. marked bottles or containers.—R.A. No. 623 evidently does not disallow the sale
—At the outset, the Court must state that it sees no cogent reason for either or transfer of ownership of the marked bottles or containers. In fact, the
departing from or changing the basic rule it laid down in Cagayan Valley contrary is implicit in the law; thus — “Sec. 5. No action shall be brought under
Enterprises, Inc. vs. Court of Appeals. The Court has there held: “The above- this Act against any person to whom the registered manufacturer, bottler or
quoted provisions grant protection to a qualified manufacturer who successfully seller, has transferred by way of sale, any of the containers herein referred to,
registered with the Philippine Patent Office its duly stamped or marked bottles, but the sale of the beverage contained in the said containers shall not include
boxes, casks and other similar containers. The mere use of registered bottles or the sale of the containers unless specifically so provided.
containers without the written consent of the manufacturer is prohibited, the Same; Statutory Construction; The statement in Section 5 of R.A. 623 to the
only exceptions being when they are used as containers for ‘sisi,’ ‘bagoong,’ effect that the “sale of beverage contained in the said containers shall not
‘patis’ and similar native products. include the sale of the containers unless specifically so provided” is not a rule of
Same; Replevin; Words and Phrases; Replevin is a possessory action the gist of proscription — it is a rule of construction that, in keeping with the spirit and
which focuses on the right of possession that, in turn, is dependent on a legal intent of the law, establishes at best a presumption (of non-conveyance of the
basis that, not infrequently, looks to the ownership of the object sought to be container) and which by no means can be taken to be either interdictive or
replevied.—Given the nature of the action in Cagayan, as well as its factual conclusive in character.—It cannot be gainsaid that ownership of the containers
milieu, the Court indeed hardly has had a choice but to sustain the registrant’s does pass on to the consumer albeit subject to the statutory limitations on the
right to the injunctive writ against the unauthorized use of its containers. The use of the registered containers and to the trademark rights of the registrant.
case before us, however, goes beyond just seeking to have such use stopped The statement in Section 5 of R.A. 623 to the effect that the “sale of beverage
but it so takes on even the ownership issue as well. Parenthetically, petitioner is contained in the said containers shall not include the sale of the containers
not here being charged with a violation of Section 2 of R.A. No. 623 or of the unless specifically so provided” is not a rule of proscription. It is a rule of
Trademark Law. The instant suit is one for replevin (manual delivery) where the construction that, in keeping with the spirit and intent of the law, establishes at
claimant must be able to show convincingly that he is either the owner or clearly best a presumption (of non-conveyance of the container) and which by no
entitled to the possession of the object sought to be recovered. Replevin is a means can be taken to be either interdictive or conclusive in character. Upon the
possessory action the gist of which focuses on the right of possession that, in other hand, LTDI’s sales invoice, stipulating that the “sale does not include the
turn, is dependent on a legal basis that, not infrequently, looks to the ownership bottles with the blown-in marks of ownership of La Tondeña Distillers,” cannot
of the object sought to be replevied. affect those who are not privies thereto.
Same; Same; Same; Trademark refers to a word, name, symbol, emblem, sign Same; While it may be unwarranted for the registrant to simply seize the empty
or device or any combination thereof adopted and used by a merchant to containers from one engaged in the unauthorized use of said containers, it
identify, and distinguish from others, his goods of commerce; Trademark is would be legally absurd to still allow the latter to recover possession
basically an intellectual creation that is susceptible to ownership but the thereof — the practical and feasible alternative is to merely require the payment
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 155

of just compensation to the latter.—While it may be unwarranted then for LTDI attendant facts and circumstances, be held lawfully transferred to the buyers
to simply seize the empty containers, this Court finds it to be legally absurd, upon the sale of the gin and containers at a single price.
however, to still allow petitioner to recover the possession thereof. The fact of
the matter is that R.A. 623, as amended, in affording trademark protection to After hearing the parties, the trial court rendered its decision, dated 03
the registrant, has additionally expressed a prima facie presumption of illegal December 1991, holding against LTDI; viz:
use by a possessor whenever such use or possession is without the written
permission of the registered manufacturer, a provision that is neither arbitrary WHEREFORE, premises considered, the complaint is hereby DISMISSED and
nor without appropriate rationale. Indeed, the appellate court itself has made a plaintiff is ordered:
finding of such unauthorized use by petitioner. The Court sees no other logical
purpose for petitioner’s insistence to keep the bottles, except for such continued 1. To return to defendant the 18,157 empty bottles seized by virtue of the
use. The practical and feasible alternative is to merely require the payment of writ for the Seizure of Personal Property issued by this Court on November 6,
just compensation to petitioner for the bottles seized from it by LTDI. 1987;
Conventional wisdom, along with equity and justice to both parties, dictates it.
2. In the event of failure to return said empty bottles, plaintiff is ordered to
PETITION for review on certiorari of a decision of the Court of Appeals. indemnify defendant in the amount of P18,157.00 representing the value of the
bottles.
  The facts are stated in the opinion of the Court.
  Estelito P. Mendoza and Orlando A. Santiago for petitioner. 3. Costs against plaintiff. 1
  Cesar P. Borje and Heinrich V. Garena for La Tondeña Distillers, Inc. [Distilleria
Washington, Inc. vs. Court of Appeals, 263 SCRA 303(1996)] LTDI appealed the decision to the Court of Appeals (CA-G.R. CV No. 36971). The
appellate court reversed the court a quo and ruled against Washington; thus:
VITUG, J.:p
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. The
The initiatory suit was instituted on 02 November 1987 with the trial court appellant, being the owner, is authorized to retain in its possession the 18,157
(docketed Civil Case No. 87-42639) for manual delivery with damages instituted bottles registered in its name delivered to it by the sheriff following their seizure
by La Tondeña Distillers, Inc. ("LTDI"), against Distilleria Washington from the appellee pursuant to the writ of replevin issued by the trial court on
("Washington"). LTDI, under a claim of ownership, sought to seize from November 6, 1987. Costs against the appellee. 2
Distilleria Washington 18,157 empty "350 c.c. white flint bottles" bearing the
blown-in marks of "La Tondeña Inc." and "Ginebra San Miguel." The court, on Washington is now before this Court assailing the reversal of the trial court's
application of LTDI, issued an order of replevin on 05 November 1987 for the decision. In its petition, Washington points out that —
seizure of the empty gin bottles from Washington. These bottles, it was averred,
were being used by Washington for its own "Gin Seven" products without the 4.00.a. Under the undisputed facts, petitioner is the lawful owner of the
consent of LTDI. personal properties (18,157 empty bottles) involved in the petition. Respondent
LTDI is precluded by law from claiming the same;
LTDI asserted that, being the owner and registrant of the bottles, it was entitled
to the protection so extended by Republic Act ("R.A.") No. 623, as amended, 4.00.b. The decision and resolution appealed from violate equity and applicable
notwithstanding its sale of the Ginebra San Miguel gin product contained in said canons in the interpretation and construction of statutes; and
bottles.
4.00.c. Liquor products are not covered by Republic Act. No. 623. The holding
Washington countered that R.A. No. 623, invoked by LTDI, should not apply to of the Court in Cagayan Valley Enterprises, Inc. vs. Honorable Court of Appeals,
gin, an alcoholic beverage which is unlike that of "soda water, mineral or 179 SCRA 218 [1989] should be reviewed and reconsidered in light of the
aerated water, ciders, milks, cream, or other lawful beverages" mentioned in the Constitution and House Bill No. 20585. 3
law, and that, in any case, ownership of the bottles should, considering the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 156

It is a fact that R.A. No. 623 extends trademark protection in the use of marked bottles, boxes, casks and other similar containers. The mere use of
containers duly registered with the Philippine Patent Office. The pertinent registered bottles or containers without the written consent of the manufacturer
provisions of R.A. 623, as amended, so reads: is prohibited, the only exceptions being when they are used as containers for
"sisi," "bagoong," "patis" and similar native products.
Sec. 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 It is an admitted fact that herein petitioner Cagayan buys form junk dealers and
lawful beverages in bottles, boxes, casks, kegs, or barrels, and other similar retailers bottles which bear the marks or names "La Tondeña, Inc." and "Ginebra
containers, or in the manufacture, compressing or selling of gases such as San Miguel" and uses them as containers for its own liquor products. The
oxygen, acetylene, nitrogen, carbon dioxide, ammonia, hydrogen, chloride, contention of Cagayan that the aforementioned bottles without the words
helium, sulphur dioxide, butane, propane, freon, methyl chloride or similar gases "properly of" indicated thereon are not the registered bottles of LTI, since they
contained in steel cylinders, tanks, flasks, accumulators or similar containers, do not conform with the statement or description in the supporting affidavits
with their names or the names of their principals or products, or other marks of attached to the original registration certificate and renewal, is untenable.
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 Republic Act No. 623 which governs the registration of marked bottles and
containers so marked are used by them, under the same conditions, rules, and containers merely requires that the bottles, in order to be eligible for
regulations, made applicable by law or regulation to the issuance of trademarks. 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
Sec. 2. It shall be unlawful for any person, without the written consent of the drawings or labels are required but, instead, two photographs of the container,
manufacturer, bottler, or seller, who has successfully registered the marks of duly signed by the applicant, showing clearly and legibly the names and other
ownership in accordance with the provisions of the next preceding section, to fill marks of ownership sought to be registered and a bottle showing the name or
such bottles, boxes, kegs, barrels, steel cylinders, tanks, flasks, accumulators, or other mark or ownership, irremovably stamped or marked, shall be submitted.
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 xxx xxx xxx
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 The claim of petitioner that hard liquor is not included under the term "other
seller. Any violation of this section shall be punished by a fine of not more than lawful beverages" as provided in Section 1 of Republic Act No. 623, as amended
one thousand pesos or imprisonment of not more than one year or both. 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,
Sec. 3. The use by any person other than the registered manufacturer, bottler Casks, Kegs, Barrels and Other Similar Containers" clearly shows the legislative
or seller, without written permission of the latter of any such bottle, cask, barrel, intent to give protection to all marked bottles and containers of all lawful
keg, box, steel cylinders, tanks, flask, accumulators, or other similar containers, beverages regardless of the nature of their contents. The words "other lawful
or the possession thereof without written permission of the manufacturer, by beverages" is used in its general sense, referring to all beverages not prohibited
any junk dealer or dealer in casks, barrels, kegs, boxes, steel cylinders, tanks, by law. Beverage is defined as a liquor or liquid for drinking. Hard liquor,
flasks, accumulators or other similar containers, the same being duly marked or although regulated, is not prohibited by law, hence it is within the purview and
stamped and registered as herein provided, shall give rise to a prima facie coverage of Republic Act No. 623, as amended. 6
presumption that such use or possession is unlawful. 4
Given the nature of the action in Cagayan, as well as its factual milieu, the Court
As the outset, the Court must state that is sees no cogent reason for either indeed hardly has had a choice but to sustain the registrant's right to the
departing from or changing the basic rule it laid down in Cagayan Valley injunctive writ against the unauthorized use of its containers. The case before
Enterprises, Inc., vs. Court of Appeals. 5 The Court has there held: us, however, goes beyond just seeking to have such use stopped but it so takes
on even the ownership issue as well. Parenthetically, petitioner is not here being
The above-quoted provisions grant protection to a qualified manufacturer who charged with a violation of Section 2 of R.A. No. 623 or of the Trademark Law.
successfully registered with the Philippine Patent Office its duly stamped or The instant suit is one for replevin (manual delivery) where the claimant must be
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 157

able to show convincingly that he is either the owner or clearly entitled to the provided" is not a rule of proscription. It is a rule of construction that, in keeping
possession of the object sought to be recovered. Replevin is a possessory action with the spirit and intent of the law, establishes at best a presumption (of non-
the gist of which focuses on the right of possession that, in turn, is dependent conveyance of the container) and which by no means can be taken to be either
on a legal basis that, not infrequently, looks to the ownership of the object interdictive or conclusive in character. Upon the other hand, LTDI's sales invoice,
sought to be replevied. 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
It is to be pointed out that a trademark refers to a word, name, symbol, thereto.
emblem, sign or device or any combination thereof adopted and used by a
merchant to identify, and distinguish from others, his goods of commerce. It is While it may be unwarranted then for LTDI to simply seize the empty containers,
basically an intellectual creation that is susceptible to ownership 7 and, this Court finds it to be legally absurd, however, to still allow petitioner to
consistently therewith, gives rise to its own elements of jus posidendi, jus recover the possession thereof. The fact of the matter is that R.A. 623, as
utendi, jus fruendi, jus disponendi, and jus abutendi, along with the applicable amended, in affording trademark protection to the registrant, has additionally
jus lex, comprising that ownership. The incorporeal right, however, is distinct expressed a prima facie presumption of illegal use by a possessor whenever
from the property in the material object subject to it. Ownership in one does not such use or possession is without the written permission of the registered
necessarily vest ownership in the other. Thus, the transfer or assignment of the manufacturer, a provision that is neither arbitrary nor without appropriate
intellectual property will not necessarily constitute a conveyance of the thing it rationale. Indeed, the appellate court itself has made a finding of such
covers, nor would a conveyance of the latter imply the transfer or assignment of unauthorized use by petitioner. The Court sees no other logical purpose for
the intellectual right. 8 petitioner's insistence to keep the bottles, except for such continued use. The
practical and feasible alternative is to merely require the payment of just
R.A. No. 623 evidently does not disallow the sale or transfer of ownership of the compensation to petitioner for the bottles seized from it by LTDI. Conventional
marked bottles or containers. In fact, the contrary is implicit in the law; thus — wisdom, along with equity and justice to both parties, dictates it.

Sec. 5. No action shall be brought under this Act against any person to whom WHEREFORE, the decision of the appellate court is MODIFIED by ordering LTDI
the registered manufacturer, bottler or seller, has transferred by way of sale, to pay petitioner just compensation for the seized bottles. Instead, however, of
any of the containers herein referred to, but the sale of the beverage contained remanding the case to the Court of Appeals to receive evidence on, and
in the said containers shall not include the sale of the containers unless thereafter resolve, the assessment thereof, this Court accepts and accordingly
specifically so provided. adopts the quantification of P18,157.00 made by the trial court. No costs.

Sec. 6. The provisions of this Act shall not be interpreted as prohibiting the use SO ORDERED.
of bottles as containers for "sisi," "bagoong," "patis," and similar native
products. Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.

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 to
the consumer albeit subject to the statutory limitation on the use of the
registered containers and to the trademark right of the registrant. The statement
in Section 5 of R.A. 623 to the effect that the "sale of beverage contained in the
said containers shall not include the sale of the containers unless specifically so
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 158

G.R. No. 120961 October 2, 1997 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
DISTILLERIA WASHINGTON, INC. OR WASHINGTON DISTILLERY, had transferred ownership over its marked bottles or containers when it sold its
INC., petitioner, gin products to the public. While others may argue that Section 5 is applicable
vs. only to the immediate transferee of the marked bottles or container, this matter
LA TONDEÑA DISTILLERS, INC. and THE HONORABLE COURT OF is best discussed where the applicability of Sec. 5, R.A. 623 is squarely raised. It
APPEALS, respondents. 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
Trademarks and Trade Names; Republic Act No. 623; It is implicit that Sections Law.
2 and 3 of R.A. 623 apply only when the “registered manufacturer, bottler, or Same; Same; Monopolies; To disallow a small distiller the use of recycled bottles
seller” retain ownership of the bottles, and when the bottles have been would necessarily deprive it a share of the market which a big and established
“transferred by way of sale,” Section 5 applies, thereby precluding the institution distillery seeks to monopolize—in the country’s march toward economic
of any action under Sections 2 and 3.—A careful reading of Sections 2, 3 and 5 development and independence, it is essential that a balance protecting small
of R.A. 623 would lead to the conclusion that they contemplate situations industries and large scale businesses be maintained.—It may not be amiss to
separate and distinct from each other. Section 2 prohibits any person from state that La Tondeña is a big and established distillery which already has
using, selling or otherwise disposing of registered containers without the written captured a big share of the gin market, estimated to be 90%. Distilleria
consent of the registrant. Such rights belong exclusively to the registrant. Under Washington, on the other hand, together with other small distillers-around 40 in
Section 3, mere possession of such registered containers without the written number—concedes that it cannot fight this giant but only asks a share of the
consent of the registrant is prima facie presumed unlawful. It appears—and this market. It cannot afford to manufacture its own bottles and just have to rely on
is the critical point—that Sections 2 and 3 apply only when the “filling” up of the recycled bottles to sell its products. To disallow the use of these recycled
bottle or the “use” of the bottle is “without the written permission” of the products would necessarily deprive it a share of the market which La Tondeña
“registered manufacturer, bottler, or seller,” who has registered the marks of seeks to monopolize. We recognize the role of large industry in the growth of
“ownership” of the bottles. It is thus implicit that Sections 2 and 3 apply only our nascent economy. However, small industries likewise play a vital role in
when the “registered manufacturer, bottler, or seller” retain ownership of the economic growth, playing a significant part in the success of such tiger
bottles. Upon the other hand, when the bottles have been “transferred by way economies as Korea, Taiwan and Thailand. Industries, big and small, should
of sale,” Section 5 applies, thereby precluding the institution of any action adopt symbiotic relationship, not the animosity of Goliath and David. Our holding
“under this Act,” meaning to say, any action under Sections 2 and 3. today merely recognizes that in the country’s march toward economic
Same; Same; Ownership; The transferee of the marked bottles transferred by development and independence, it is essential that a balance protecting small
way of sale is allowed to enjoy all the rights of an owner in regard to such industries and large scale businesses be maintained.
bottles.—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 MOTION for reconsideration of a decision of the Supreme Court.
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 facts are stated in the resolution of the Court.
the power of the owner to alienate, encumber, transform and even destroy the      Estelito P. Mendoza and Orlando A. Santiago for petitioner.
thing owned; and the jus vindicandi or the right to exclude from the possession      Cesar P. Borje and Heinrich V. Garena for private respondent. [Distilleria
of the thing owned any other person to whom the owner has not transmitted Washington, Inc. vs. La Tondeña Distillers, Inc., 280 SCRA 116(1997)]
such thing. What is proscribed is the use of the bottles in infringement of
another’s trademark or incorporeal rights. RESOLUTION
Same; Same; Where the marked bottles are transferred by way of sale, the
registered owner relinquishes all its proprietary rights over the bottles in favor of KAPUNAN, J.:
the person who obtains them in due course.—Since the Court has found that the
bottles have been transferred by way of sale, then La Tondeña has relinquished On October 17, 1996, this Court rendered a decision in the above-entitled case,
all its proprietary rights over the bottles in favor of Distilleria Washington who the dispositive portion of which reads, as follows:
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in the subsequent memorandum filed thereafter, convinces us the merits of its

WHEREFORE, the decision of the appellate court is MODIFIED by ordering LTDI position.
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 To recall, La Tondeña Distillers, Inc. (La Tondeña, for short) filed before the
thereafter resolve, the assessment thereof, this Court accepts and accordingly Regional Trial Court for the recovery, under its claim of ownership, of possession
adopts the quantification of P18,157.00 made by the trial court. No costs. or replevin against Distilleria Washington, Inc. or Washington Distillery, Inc.
(Distilleria Washington) of 18,157 empty "350 c.c. white flint bottles" bearing the
With the denial of the motion for reconsideration, petitioner sought a second blown-in marks of "La Tondeña Inc." and "Ginebra San Miguel," averring that
reconsideration with leave of court of our decision raising new issues, to wit: Distilleria Washington was using the bottles for its own "Gin Seven" products
without the consent of Distilleria Washington in violation of Republic Act 623.
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 The trial court in its decision dismissed the complaint, upholding Distilleria
passed to the consumer, ultimately, to Washington Distillery, Inc., thereby Washington's contention that a purchaser of liquor pays only a single price for
upholding the finding of the Regional Trial Court and reversing the ruling of the the liquor and the bottle and is not required to return the bottle at any time.
Court of Appeals; nonetheless, while ruling that the ownership over the bottles
had passed to Washington Distillery, Inc., it held that Washington Distillery, Inc. The Court of Appeals reversed the trial court's decision, ruling that under
may not use the bottles because of the "trademark protection to the registrant" Republic Act 623, the use of marked bottles by any person other than the
(La Tondeña Distillers, Inc.). Instead of directing the return of the bottles to manufacturer, bottler or seller, without the latter's written consent, is unlawful.
Washington Distillery, Inc., the Court ordered La Tondeña Distillers, Inc. to pay It emphasized that the marks of La Tondeña's ownership stamped or blown-in to
Washington Distillery, Inc. the amount of P18,157.00. 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
2.00. The decision of the Supreme Court itself therefore raises new issues. As good faith.
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 While our decision of October 17, 1996 affirmed with modification the Court of
the registrant," La Tondeña Distillers, Inc. afforded by R.A. No. 623, as Appeals' decision, we at least implicitly acknowledged that there was a valid
amended? 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
3.00. The "Motion for Reconsideration" of the petitioner Washington Distillery, presumption of illegal use under R.A. 623.
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 In seeking reconsideration of the decision of this Court, petitioner advances,
be said that "no substantial argument," not previously raised, is made in the among others, the following arguments:
"Motion for Reconsideration" to warrant a modification of the Court's decision.
(1) If, as the Court found in its decision of October 17, 1996, Distilleria
On May 21, 1997, the Court resolved to set for hearing the motion for Washington had acquired ownership of the bottles, La Tondeña's suit for
reconsideration on May 28, 1997 for its judicious disposition. Thereafter, the replevin, where the sole issue is possession, should be denied.
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 (2) Since the right of ownership over the bottles gives rise, according to the
which proscribes the filing of an action against any person to whom registered Court's own language, to its own elements of jus posidendi, jus utendi, jus
manufacturer, bottler or seller has transferred by way of sale, any of the fruendi, jus disponendi, and jus abutendi, along with the applicable jus lex, to
containers." The parties complied. allow La Tondeña to keep the bottles is to deny Distilleria Washington, the very
attributes or elements of its ownership.
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
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(3) There is no showing — and it cannot be assumed — that if Distilleria recovered. Replevin is a possessory action. The gist of which focuses on the
Washington would have possession of the bottles, it will exercise the other right of possession that in turn, is dependent on a legal basis that, not
attributes of ownership, along with the applicable jus lex over the "marks of infrequently, looks to the ownership of the object sought to be replevied.
ownership stamped or marked" on the bottles.
Since replevin as a possessory action is dependent upon ownership, it is relevant
(4) The provision in Sec. 3 of Republic Act 623 to the effect that the use by to ask: Did La Tondeña Distillers, Inc. transfer ownership of its marked bottles or
any person other than the registered manufacturer, bottler or seller without the containers when it sold its products in the market? Were the marked bottles or
written permission of the latter of any such bottle, etc. shall give rise to a prima containers part of the products sold to the public?
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 In our decision sought to be reconsidered, we categorically answered the
applicable. question in the affirmative in this wise:

Additionally, petitioner argues with persuasion the following points in its R.A. No. 623 does not disallow the sale or transfer of ownership of the marked
memorandum: bottles or containers. In fact, the contrary is implicit in the law thus:

(5) It is absurd to hold the buyer such as Distilleria Washington, liable for Sec. 5. . . . .
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 Sec. 6. . . . .
payment in full.
Scarcely disputed are certain and specific industry practices in the sale of gin.
(6) To hold the buyer liable under Sections 2 and 3 would grant La Tondeña The manufacturer sells the product in marked containers, through dealers, to
the extraordinary right not only of possession and use of the bottles which it has the public in supermarkets, grocery shops, retail stores and other sales outlets.
sold and no longer owns, but also to sell said bottles ad infinitum, thus enriching They buyer takes the item; he is neither required to return the bottle nor
itself unjustly. 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
(7) It is manifestly unjust and unconscionable that millions of buyers of commercial users. It cannot be gainsaid that ownership of the containers does
Ginebra San Miguel, who pay not only for the gin but also for the bottles pass on the consumer albeit subject to the statutory limitations on the use of the
containing it should run the risk of criminal prosecution by the mere fact of registered containers and to the trademark rights of the registrant. The
possession of the empty bottles after consuming the liquor. 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
Distilleria Washington's motion raises the novel issue that if, as we ruled in our specifically so provided" is not a rule of proscription. It is a rule of construction
decision of October 17, 1996, petitioner became the owner over the bottles that, in keeping with the spirit and intent of the law, establishes at best a
seized from it by replevin, then it has the right to their possession and use as presumption (of non-conveyance of the container) and which by no means can
attributes of ownership, unless their use violates the trademark or incorporeal be taken to be either interdictive or conclusive in character. Upon the other
rights accorded private respondent by R.A. 623 which has not really been hand, LTDI's sales invoice, stipulating that the "sale does not include the bottles
established in this case. with the blown-in marks of ownership of La Tondeña Distillers,' cannot affect
those who are not privies thereto.
As pointed out in our decision,
In plain terms, therefore, La Tondeña not only sold its gin products but also the
Parenthetically, petitioner is not here being charged with violation of Sec. 2 of marked bottles or containers, as well. And when these products were transferred
R.A. 623 or the Trademark Law. The instant case is one for replevin (manual by way of sale, then ownership over the bottles and all its attributes (jus utendi,
delivery) where the claimant must be able to show convincingly that he is either jus abutendi, just fruendi, jus disponendi) passed to the buyer. It necessarily
the owner or clearly entitled to the possession of the object sought to be
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 161

follows that the transferee has the right to possession of the bottles unless he and in concluding that use or possession thereof without the written permission
uses them in violation of the original owner's registered or incorporeal rights. . of the registered owner would constitute prima facie presumption of illegal use,
this Court invoked Sections 2 and 3 of the same law.
After practically saying that La Tondeña has surrendered ownership and
consequently, possession of the marked bottles or container, it is incongruous A careful reading of Sections 2, 3 and 5 of R.A. 623 would lead to the conclusion
and, certainly, it does not seem fair and just to still allow La Tondeña, citing the that they contemplate situations separate and distinct from each other. Section
prima facie presumption of illegal use under Sec. 3 of R.A. 623., to retain 2 prohibits any person from using, selling or otherwise disposing of registered
possession of the seized bottles by simply requiring payment of just containers without the written consent of the registrant. Such rights belong
compensation to petitioner. exclusively to the registrant. Under Section 3, mere possession of such
registered containers without the written consent of the registrant is prima facie
The pertinent provisions of R.A. 623 are as follows: presumed unlawful.

Sec. 2. It shall be unlawful for any person, without the written consent of the It appears — and this is the critical point — that Sections 2 and 3 apply only
manufacturer, bottler, or seller (emphasis supplied) who has successfully when the "filling" up of the bottle or the "use" of the bottle is "without the
registered the marks of ownership in accordance with the provisions of the next written permission" of the "registered manufacturer, bottler, or seller," who has
preceding section, to fill such bottles, boxes, kegs, barrels, steel cylinders, tanks, registered the marks of "ownership" of the bottles. It is thus implicit that
flasks, accumulators, or other similar containers so marked or stamped, for the Sections 2 and 3 apply only when the "registered manufacturer, bottler, or
purpose of sale, or to sell, dispose of, buy or traffic in, or wantonly destroy the seller" retain ownership of the bottles.
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 Upon the other hand, when the bottles have been "transferred by way of sale,"
manufacturer, bottler or seller. Any violation of this section shall be punished by Section 5 applies, thereby precluding the institution of any action "under this
a fine of not more than one thousand pesos or imprisonment of not more than Act," meaning to say, any action under Sections 2 and 3.
one year or both.
The general rule on ownership, therefore, must apply and petitioner be allowed
Sec. 3. The use by any person other than the registered manufacturer, bottler to enjoy all the rights of an owner in regard the bottles in question, to wit: the
or seller, without written permission of the latter (emphasis supplied) of any jus utendi or the right to receive from the thing what it produces; the jus
such bottle, cask, barrel, keg, box, steel cylinders, tanks, flask, accumulators, or abutendi or the right to consume the thing by its use; the jus disponendi or the
other similar containers, or the possession thereof without written permission of power of the owner to alienate, encumber, transform and even destroy the thing
the manufacturer, by any junk dealer or dealer in casks, barrels, keg, boxes, owned; and the jus vindicandi or the right to exclude from the possession of the
steel cylinders, tanks, flask, accumulators or other similar containers, the same thing owned any other person to whom the owner has not transmitted such
being duly marked or stamped and registered as herein provided, shall give rise thing. What is proscribed is the use of the bottles in infringement of another's
to a prima facie presumption that such use or possession is unlawful. trademark or incorporeal rights.

xxx xxx xxx 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
Sec. 5. No action shall be brought under this Act (emphasis supplied) against favor of Distilleria Washington who has obtained them in due course. Now as
any person to whom the registered manufacturer, bottler or seller, has owner, it can exercise all attributes of ownership over the bottles. This is the
transferred by way of sale, (emphasis supplied) any of the containers herein import of the decision that La Tondeña had transferred ownership over its
referred to, but the sale of the beverage contained in the said containers shall marked bottles or containers when it sold its gin products to the public. While
not include the sale of the containers unless specifically so provided. 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
In resolving that petitioner is the owner of the bottles, this Court applied Section applicability of Sec. 5, R.A. 623 is squarely raised. It must be recalled, however,
5 of R.A. 623; and in withholding possession of the bottles from the petitioner
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 162

that this is a case of replevin, not a violation of the "trademark protection of the animosity of Goliath and David. Our holding today merely recognizes that in the
registrant" under R.A. 623 or of the Trademark Law. country's march toward economic development and independence, it is essential
that a balance protecting small industries and large scale businesses be
A query may be posed: Would use of the bottles constitute a violation of the maintained.
incorporeal rights of La Tondeña Distillers, Inc. over its "marks of ownership"
embossed on the bottles? While apparently relevant, it would be improper and IN VIEW OF THE FOREGOING, the Court RESOLVED to RECONSIDER its
premature for this Court to rule on the point because: Decision promulgated on October 17, 1996 and render another judgment
REVERSING in toto the Decision of the Court of Appeals promulgated on January
First, violation of the "marks of ownership" of La Tondeña Distillers, Inc. on the 11, 1995 and its Resolution of June 23, 1995. The decision of the Regional Trial
bottler has not been put in issue, the parties did not have the opportunity to Court of December 3, 1991 is REINSTATED.
ventilate their respective positions on the matter. Thus, a ruling would be
violative of due process. SO ORDERED.

Second, the question calls for a factual investigation which this Court has Bellosillo and Hermosisima, Jr., JJ., concur.
generally not taken upon itself to undertake because it is not a trier of facts; and
Davide, Jr., J., took no part.
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
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 163

Casks, Kegs, Barrels and Other Similar Containers,” as amended by RA No. 5700,
G.R. No. 123248 October 16, 1997 was meant to protect the intellectual property rights of the registrants of the
containers and prevent unfair trade practices and fraud on the public. However,
TWIN ACE HOLDINGS CORPORATION, petitioner, the exemption granted in Sec. 6 thereof was deemed extremely necessary to
vs. provide assistance and incentive to the backyard, cottage and small-scale
COURT OF APPEALS, and LORENZANA FOOD CORPORATION, manufacturers of indigenous native products such as patis, sisi and toyo who do
respondents. 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
Trademarks and Tradenames; R.A. No. 623; Registered containers of hard daily condiments or viands. If the contention of petitioner is accepted, i.e., to
liquor such as rhum, gin, brandy and the like are protected by R.A. No. 623.— construe the exemption as to apply to criminal liability only but not to civil
The question of whether registered containers of hard liquor such as rhum, gin, liability, the very purpose for which the exemption was granted will be defeated.
brandy and the like are protected by RA No. 623 has already been settled in None of the small-scale manufacturers of the indigenous native products
Cagayan Valley Enterprises, Inc. v. Court of Appeals. In that case, the Court protected would possibly wish to use the registered bottles if they are vulnerable
dealt squarely with the issue and ruled in the affirmative reasoning that hard to civil suits. The effect is a virtual elimination of the clear and unqualified
liquor, although regulated, is not prohibited by law, hence, still within the exemption embodied in Sec. 6. It is worthy to note that House Bill No. 20585
purview of the phrase “other lawful beverages” protected by RA No. 623, as was completely rejected because it sought to expressly and directly eliminate
amended. Consequently petitioner therein Cagayan Valley Enterprises, Inc. was that which petitioner indirectly proposes to do with this petition.
enjoined from using the 350 ml. white flint bottles of La Tondeña, Inc., with the Same; Same; Evidence; Judicial Notice; The Supreme Court takes judicial notice
marks of ownership “La Tondeña, Inc.” and “Ginebra San Miguel” for its own of the standard practice today that the cost of the container is included in the
liquor products. selling price of the product such that the buyer of liquor or any such product
Same; Same; Injunctions; It is inconceivable that an act specifically allowed by from any store is not required to return the bottle nor is the liquor placed in a
law, in other words legal, can be the subject of injunctive relief and damages.— plastic container that possession of the bottle is retained by the store.—
But while we adopt the foregoing precedent and rule in accordance therewith, Petitioner cannot seek refuge in Sec. 5 of RA No. 623 to support its claim of
we will not decide this case in favor of petitioner because it is quite clear that continuing ownership over the subject bottles. In United States v. Manuel we
respondent falls within the exemption granted in Sec. 6 which states: “The held that since the purchaser at his discretion could either retain or return the
provisions of this Act shall not be interpreted as prohibiting the use of bottles as bottles, the transaction must be regarded as a sale of the bottles when the
containers for “sisi,” “bagoong,” “patis,” and similar native products.” Petitioner purchaser actually exercised that discretion and decided not to return them to
itself alleges that respondent LORENZANA uses the subject 350 ml., 375 ml. and the vendor. We also take judicial notice of the standard practice today that the
750 ml. bottles as containers for processed foods and other related products cost of the container is included in the selling price of the product such that the
such as patis, toyo, bagoong, vinegar and other food seasonings. Hence, Sec. 6 buyer of liquor or any such product from any store is not required to return the
squarely applies in private respondent’s favor. Obviously, the contention of bottle nor is the liquor placed in a plastic container that possession of the bottle
TWIN ACE that the exemption refers only to criminal liability but not to civil is retained by the store.
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. PETITION for review on certiorari of a decision of the Court of Appeals.
Besides, the interpretation offered by petitioner defeats the very purpose for
which the exemption was provided. The facts are stated in the opinion of the Court.
Same; Same; The exemption granted in Sec. 6 of R.A. 623 was deemed      Ocampo, Quiroz, Pesayco & Associates for petitioner.
extremely necessary to provide assistance and incentive to the backyard,      Buenaluz, Urbano Law Office for private respondent. [Twin Ace Holdings
cottage and small-scale manufacturers of indigenous native products such as Corporation vs. Court of Appeals, 280 SCRA 884(1997)]
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 BELLOSILLO, J.:
who use the products as their daily condiments or viands.—Republic Act No.
623, “An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes,
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 164

TWIN ACE HOLDINGS CORPORATION (TWIN ACE) is a manufacturer, distiller

and bottler of distillery products, e.g., rhum, gin, brandy, whiskey, vodka, liquor We deny the petition. The question of whether registered containers of hard
and cordial under the name and style of Tanduay Distillers, Inc. (TANDUAY). liquor such as rhum, gin, brandy and the like are protected by RA No. 623 has
Lorenzana Food Corporation (LORENZANA), on the other hand, manufactures already been settled in Cagayan Valley Enterprises, Inc. v. Court of Appeals. 7 In
and exports processed foods and other related products, e.g., patis, toyo, that case, the Court dealt squarely with the issue and ruled in the affirmative
bagoong, vinegar and other food seasonings. On 16 January 1992 TWIN ACE reasoning that hard liquor, although regulated, is not prohibited by law, hence,
filed a complaint for replevin 1 to recover three hundred eighty thousand still within the purview of the phrase "other lawful beverages" protected by RA
(380,000) bottles of 350 ml., 375 ml, and 750 ml. allegedly owned by it but No. 623, as amended. Consequently petitioner therein Cagayan Valley
detained and used by LORENZANA as containers for native products without its Enterprises, Inc. was enjoined from using the 350 ml. white flint bottles of La
express permission, in violation of RA No. 623. 2 This law prohibits the use of Tondeña, Inc., with the marks of ownership "La Tondeña, Inc." and "Ginebra
registered bottles and other containers for any purpose other than that for which San Miguel" for its own liquor products.
they were registered without the express permission of the owner.
But while we adopt the foregoing precedent and rule in accordance therewith,
LORENZANA moved to dismiss the complaint on the ground that RA No. 623 we will not decide this case in favor of petitioner because it is quite clear that
could not be invoked by TWIN ACE because the law contemplated containers of respondent falls within the exemption granted in Sec. 6 which states: "The
non-alcoholic beverages only. But, assuming arguendo that the law applied in provisions of this Act shall not be interpreted as prohibiting the use of bottles as
TWIN ACE's favor, the right of LORENZANA to use the bottles as containers for containers for "sisi," "bagoong," "patis," and similar native products."
its patis and other native products was expressly sanctioned by Sec. 6 3 of the
same law and upheld by this Court in Cagayan Valley Enterprises, Inc. v. Court Petitioner itself alleges that respondent LORENZANA uses the subject 350 ml.,
of Appeals. 4 375 ml. and 750 ml. bottles as containers for processed foods and other related
products such as patis, toyo, bagoong, vinegar and other food seasonings.
On 16 March 1992 the Regional Trial Court of Manila dismissed the complaint. 5 Hence, Sec. 6 squarely applies in private respondent's favor. Obviously, the
TWIN ACE appealed to respondent Court of Appeals which affirmed the action of contention of TWIN ACE that the exemption refers only to criminal liability but
the trial court. In its Decision dated 22 December 1995 6 respondent court ruled not to civil liability is without merit. It is inconceivable that an act specifically
that while bottles and containers of alcoholic beverages were indeed covered allowed by law, in other words legal, can be the subject of injunctive relief and
within the protective mantle of RA No. 623, as correctly argued by TWIN ACE, damages. Besides, the interpretation offered by petitioner defeats the very
nevertheless the Supreme Court in Cagayan Valley Enterprises, Inc. v. Court of purpose for which the exemption was provided.
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 Republic Act No. 623, "An Act to Regulate the Use of Duly Stamped or Marked
products. Hence, no injunctive relief and damages could be obtained against Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers," as amended
LORENZANA for exercising what was precisely allowed by the law. 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
Petitioner TWIN ACE contends that Sec. 6 notwithstanding, respondent public. 9 However, the exemption granted in Sec. 6 thereof was deemed
LORENZANA is obliged to pay just compensation for the use of the subject extremely necessary to provide assistance and incentive to the backyard,
bottles because Sec. 6 exempts the user from criminal sanction only but does cottage and small-scale manufacturers of indigenous native products such as
not shield him from civil liability arising from the use of the registered bottles patis, sisi and toyo who do not have the capital to buy brand new bottles as
without the express consent of the registered owner. Such civil liability arises containers nor afford to pass the added cost to the majority of poor Filipinos
from the fact that Sec. 5 of RA No 623 expressly reserves for the registered who use the products as their daily condiments or viands. 10 If the contention of
owner the ownership of the containers notwithstanding the sale of the beverage petitioner is accepted, i.e., to construe the exemption as to apply to criminal
contained therein. Private respondent, on the other hand, contends that liability only but not to civil liability, the very purpose for which the exemption
petitioner's bottles used as containers for hard liquor are not protected by RA was granted will be defeated. None of the small-scale manufacturers of the
No. 623. But even assuming the applicability of the law, LORENZANA invokes the indigenous native products protected would possibly wish to use the registered
exemption granted in Sec. 6 thereof. bottles if they are vulnerable to civil suits. The effect is a virtual elimination of
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 165

the clear and unqualified exemption embodied in Sec. 6. It is worthy to note that
House Bill No. 20585 11 was completely rejected because it sought to expressly Republic Act ("R.A.") No. 623 has been enacted not only to protect the
and directly eliminate that which petitioner indirectly proposes to do with this intellectual property rights of the registrant of marked bottles or containers but
petition. to prevent unfair trade practices and fraud on the public. 1 While the ownership
of such marked bottles could pass on to the consumer, the latter's rights
Petitioner cannot seek refuge in Sec. 5 12 of RA No. 623 to support its claim of thereover, however, must be understood as being subject to the statutory
continuing ownership over the subject bottles. In United States v. Manuel 13 we limitations on the use of the registered article and to the trademark rights of the
held that since the purchaser at his discretion could either retain or return the registrant, such as that imposed by R.A. No. 623 which prohibits the use of
bottles, the transaction must be regarded as a sale of the bottles when the registered bottles or containers, without the written consent of the registrant,
purchaser actually exercised that discretion and decided not to return them to except, like in the instant case, for its filling-in of native products like "sisi,"
the vendor. We also take judicial notice of the standard practice today that the "bagoong," and "patis."
cost of the container is included in the selling price of the product 14 such that
the buyer of liquor or any such product from any store is not required to return I agree, accordingly, that petitioner's claim for just compensation for the marked
the bottle nor is the liquor placed in a plastic container that possession of the bottles is untenable given the foregoing disquisition.
bottle is retained by the store. 15

WHEREFORE, the questioned decision and resolution of the Court of Appeals are
AFFIRMED. Costs against petitioner.

SO ORDERED.

Davide, Jr., Kapunan and Hermosisima, Jr., JJ., concur.

Separate Opinions
VITUG, J., separate and concurring:

Republic Act ("R.A.") No. 623 has been enacted not only to protect the
intellectual property rights of the registrant of marked bottles or containers but
to prevent unfair trade practices and fraud on the public. 1 While the ownership
of such marked bottles could pass on to the consumer, the latter's rights
thereover, however, must be understood as being subject to the statutory
limitations on the use of the registered article and to the trademark rights of the
registrant, such as that imposed by R.A. No. 623 which prohibits the use of
registered bottles or containers, without the written consent of the registrant,
except, like in the instant case, for its filling-in of native products like "sisi,"
"bagoong," and "patis."

I agree, accordingly, that petitioner's claim for just compensation for the marked
bottles is untenable given the foregoing disquisition.

Separate Opinions

VITUG, J., separate and concurring:

 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 166

G.R. No. 118192 October 23, 1997 cannot conclude that petitioners were impelled solely by a desire to inflict
needless and unjustified vexation and injury on UNIVERSAL’s business interests.
PRO LINE SPORTS CENTER, INC., and QUESTOR CORPORATION, A resort to judicial processes is not per se evidence of ill will upon which a claim
petitioners, for damages may be based. A contrary rule would discourage peaceful recourse
vs. to the courts of justice and induce resort to methods less than legal, and
COURT OF APPEALS, UNIVERSAL ATHLETICS INDUSTRIAL PRODUCTS, perhaps even violent.
INC., and MONICO SEHWANI, respondents. Same; Same; One who makes use of his own legal right does no injury, and if
damage results from a person’s exercising his legal rights, it is damnum absque
Actions; Malicious Prosecution; The two essential elements of malicious injuria.—We are more disposed, under the circumstances, to hold that PRO LINE
prosecution are absence of probable cause and legal malice on the part of the as the authorized agent of QUESTOR exercised sound judgment in taking the
defendant.—PRO LINE and QUESTOR cannot be adjudged liable for damages for necessary legal steps to safeguard the interest of its principal with respect to the
the alleged unfounded suit. The complainants were unable to prove two (2) trademark in question. If the process resulted in the closure and padlocking of
essential elements of the crime of malicious prosecution, namely, absence of UNIVERSAL’s factory and the cessation of its business operations, these were
probable cause and legal malice on the part of petitioners. unavoidable consequences of petitioners’ valid and lawful exercise of their right.
Same; Same; Criminal Procedure; Words and Phrases; “Probable Cause,” One who makes use of his own legal right does no injury. Qui jure suo utitur
Defined.—UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was nullum damnum facit. If damage results from a person’s exercising his legal
bereft of probable cause. Probable cause is the existence of such facts and rights, it is damnum absque injuria.
circumstances as would excite the belief in a reasonable mind, acting on the Same; Same; The expenses and annoyance of litigation form part of the social
facts within the knowledge of the prosecutor, that the person charged was guilty burden of living in a society which seeks to attain social control through law.—
of the crime for which he was prosecuted. In the case before us, then Minister Admittedly, UNIVERSAL incurred expenses and other costs in defending itself
of Justice Ricardo C. Puno found probable cause when he reversed the Provincial from the accusation. But, as Chief Justice Fernando would put it, “the expenses
Fiscal who initially dismissed the complaint and directed him instead to file the and annoyance of litigation form part of the social burden of living in a society
corresponding Information for unfair competition against private respondents which seeks to attain social control through law.” Thus we see no cogent reason
herein. for the award of damages, exorbitant as it may seem, in favor of UNIVERSAL. To
Same; Same; Same; Same; Unfair Competition; Trademarks and Tradenames; do so would be to arbitrarily impose a penalty on petitioners’ right to litigate.
That a corporation other than the certified owner of the trademark is engaged in Actions; Unfair Competition; To hold that the act of selling is an indispensable
the unauthorized manufacture of products bearing the same trademark element of the crime of unfair competition is illogical because if the law punishes
engenders a reasonable belief that a criminal offense for unfair competition is the seller of imitation goods, then with more reason should the law penalize the
being committed.—The existence of probable cause for unfair competition by manufacturer.—Arguably, respondents’ act may constitute unfair competition
UNIVERSAL is derivable from the facts and circumstances of the case. The even if the element of selling has not been proved. To hold that the act of
affidavit of Graciano Lacanaria, a former employee of UNIVERSAL, attesting to selling is an indispensable element of the crime of unfair competition is illogical
the illegal sale and manufacture of “Spalding” balls and seized “Spalding” because if the law punishes the seller of imitation goods, then with more reason
products and instruments from UNIVERSAL’s factory was sufficient prima facie should the law penalize the manufacturer. In U.S. v. Manuel, the Court ruled
evidence to warrant the prosecution of private respondents. That a corporation that the test of unfair competition is whether certain goods have been
other than the certified owner of the trademark is engaged in the unauthorized intentionally clothed with an appearance which is likely to deceive the ordinary
manufacture of products bearing the same trademark engenders a reasonable purchasers exercising ordinary care. In this case, it was observed by the Minister
belief that a criminal offense for unfair competition is being committed. of Justice that the manufacture of the “Spalding” balls was obviously done to
Same; Same; A resort to judicial processes is not per se evidence of ill will upon deceive would-be buyers. The projected sale would have pushed through were it
which a claim for damages may be based; Malice is an inexcusable intent to not for the timely seizure of the goods made by the NBI. That there was intent
injure, oppress, vex, annoy or humiliate.—Petitioners PRO LINE and QUESTOR to sell or distribute the product to the public cannot also be disputed given the
could not have been moved by legal malice in instituting the criminal complaint number of goods manufactured and the nature of the machinery and other
for unfair competition which led to the filing of the Information against Sehwani. equipment installed in the factory.
Malice is an inexcusable intent to injure, oppress, vex, annoy or humiliate. We
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 167

Same; Counterclaims; A counterclaim partakes of the nature of a complaint This petition stemmed from a criminal case for unfair competition filed by Pro
and/or a cause of action against the plaintiffs.—We nonetheless affirm the Line Sports Center, Inc. (PRO LINE) and Questor Corporation (QUESTOR)
dismissal of petitioners’ counterclaim for damages. A counterclaim partakes of against Monico Sehwani, president of Universal Athletics and Industrial Products,
the nature of a complaint and/or a cause of action against the plaintiffs. It is in Inc. (UNIVERSAL). In that case Sehwani was exonerated. As a retaliatory move,
itself a distinct and independent cause of action, so that when properly stated as Sehwani and UNIVERSAL filed a civil case for damages against PRO LINE and
such, the defendant becomes, in respect to the matter stated by him, an actor, QUESTOR for what they perceived as the wrongful and malicious filing of the
and there are two simultaneous actions pending between the same parties, criminal action for unfair competition against them.
where each is at the same time both a plaintiff and defendant. A counterclaim
stands on the same footing and is to be tested by the same rules, as if it were
an independent action. But first, the dramatis personae. By virtue of its merger with A.G. Spalding Bros.,
Same; Same; Malicious Prosecution; A counterclaim for damages in an action for Inc., on 31 December 1971, 1 petitioner QUESTOR, a US-based corporation,
malicious prosecution is barred by res judicata where there is a judgment of became the owner of the trademark "Spalding" appearing in sporting goods,
dismissal in the criminal case which involved the criminal and civil aspects of the implements and apparatuses. Co-petitioner PRO LINE, a domestic corporation, is
case.—Petitioners’ counterclaim for damages based on the illegal and the exclusive distributor of "Spalding" sports products in the Philippines. 2
unauthorized manufacture of “Spalding” balls certainly constitutes an Respondent UNIVERSAL, on the other had, is a domestic corporation engaged in
independent cause of action which can be the subject of a separate complaint the sale and manufacture of sporting goods while co-respondent Monico
for damages against UNIVERSAL. However, this separate civil action cannot Sehwani is impleaded in his capacity as president of the corporation.
anymore be pursued as it is already barred by res judicata, the judgment in the
criminal case (against Sehwani) involving both the criminal and civil aspects of On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General Manager
the case for unfair competition. To recall, petitioners PRO LINE and QUESTOR, of PRO LINE, sent a letter-complaint to the National Bureau of Investigation
upon whose initiative the criminal action for unfair competition against (NBI) regarding the alleged manufacture of fake "Spalding" balls by UNIVERSAL.
respondent UNIVERSAL was filed, did not institute a separate civil action for On 23 February 1981 the NBI applied for a search warrant with the then Court
damages nor reserve their right to do so. Thus the civil aspect for damages was of First Instance, Br. 23, Pasig, Rizal, then presided over by Judge Rizalina
deemed instituted in the criminal case. No better manifestation of the intent of Bonifacio Vera. On that same day Judge Vera issued Search Warrant No. 2-81
petitioners to recover damages in the criminal case can be expressed than their authorizing the search of the premises of UNIVERSAL in Pasig. In the course of
active participation in the prosecution of the civil aspect of the criminal case the search, some 1,200 basketballs and volleyballs marked "Spalding" were
through the intervention of their private prosecutor. Obviously, such intervention seized and confiscated by the NBI. Three (3) days later, on motion of the NBI,
could only be for the purpose of recovering damages or indemnity because the Judge Vera issued another order, this time to seal and padlock the molds,
offended party is not entitled to represent the People of the Philippines in the rubber mixer, boiler and other instruments at UNIVERSAL's factory. All these
prosecution of a public offense. were used to manufacture the fake "Spalding" products, but were simply too
PETITION for review on certiorari of a decision of the Court of Appeals. heavy to be removed from the premises and brought under the actual physical
custody of the court. However, on 28 April 1981, on motion of UNIVERSAL,
The facts are stated in the opinion of the Court. Judge Vera ordered the lifting of the seal and padlock on the machineries,
     Sycip, Salazar, Hernandez & Gatmaitan for petitioner. prompting the People of the Philippines, the NBI together with PRO LINE and
     Makalintal, Barot, Torres & Ibarra for private respondents. [Pro Line Sports QUESTOR, to file with the Court of Appeals a joint petition for certiorari and
Center, Inc. vs. Court of Appeals, 281 SCRA 162(1997)] prohibition with preliminary injunction (CA G.R. No. 12413) seeking the
annulment of the order of 28 April 1981. On 18 May 1981, the appellate court
BELLOSILLO, J.: issued a temporary restraining order enjoining Judge Vera from implementing
her latest order.
This case calls for revisit of the demesne of malicious prosecution and its
implications. Meanwhile, on 26 February 1981, PRO LINE and QUESTOR filed a criminal
complaint for unfair competition against respondent Monico Sehwani together
with Robert, Kisnu, Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 168

Reyes before the Provincial Fiscal of Rizal (I. S. No. 81-2040). The complaint petition in G.R. No. 63055 finding that the dismissal by the trial court of Crim.
was dropped on 24 June 1981 for the reason that it was doubtful whether Case No. 45284 was based on the merits of the case which amounted to an
QUESTOR had indeed acquired the registration rights over the mark "Spalding" acquittal of Sehwani. Considering that the issue raised in G.R. No. 58714 had
from A.G. Spalding Bros., Inc., and complainants failed to adduce an actual already been rendered moot and academic by the dismissal of Crim. Case No.
receipt for the sale of "Spalding" balls by UNIVERSAL. 3 45284 and the fact that the petition in G.R. No. 63055 seeking a review of such
dismissal had also been denied, the Court likewise dismissed the petition in G.R.
On 9 July 1981 a petition for review seeking reversal of the dismissal of the No. 58714. The dismissal became final and executory with the entry of judgment
complaint was filed with the Ministry of Justice. While this was pending, the made on 10 August 1983.
Court of Appeals rendered judgment on 4 August 1981 in CA G.R. No. 12413
affirming the order of Judge Vera which lifted the seal and padlock on the Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with the
machineries of UNVERSAL. The People, NBI, PRO LINE and QUESTOR Regional Trial Court of Pasig 4 charging that PRO LINE and QUESTOR
challenged the decision of the appellate court before this Court in G.R. No. maliciously and without legal basis committed the following acts to their damage
57814. On 31 August 1981 we issued a temporary restraining order against the and prejudice: (a) procuring the issuance by the Pasig trial court of Search
Court of Appeals vis-a-vis the aforesaid decision. Warrant No. 2-81 authorizing the NBI to raid the premises of UNIVERSAL; (b)
procuring an order from the same court authorizing the sealing and padlocking
In connection with the criminal complaint for unfair competition, the Minister of of UNIVERSAL's machineries and equipment resulting in the paralyzation and
Justice issued on 10 September 1981 a Resolution overturning the earlier virtual closure of its operations: (c) securing a temporary restraining order from
dismissal of the complaint and ordered the Provincial Fiscal of Rizal to file an the Court of Appeals to prevent the implementation of the trial court's order of
Information for unfair competition against Monico Sehwani. The Information was 28 April 1981 which authorized the lifting of the seal and padlock on the subject
accordingly filed on 29 December 1981 with then Court of First Instance of Rizal, machineries and equipment to allow UNIVERSAL to resume operations; (d)
docketed as Crim. Case No. 45284, and raffled to Br. 21 presided over by Judge securing a temporary restraining order from the High Tribunal against the Court
Gregorio Pineda. of Appeals and charging the latter with grave abuse of discretion for holding that
the order of 28 April 1981 was judiciously issued, thus prolonging the continued
Sehwani pleaded not guilty to the charge. But, while he admitted to having closure of UNIVERSAL's business; (e) initiating the criminal prosecution of
manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed Monico Sehwani for unfair competition under Art. 189 of the Penal Code; and,
that this was only for the purpose of complying with the requirement of (g) appealing the order of acquittal in Crim. Case No. 45284 directly to the
trademark registration with the Philippine Patent Office. He cited Chapter 1, Rule Supreme Court with no other purpose than to delay the proceedings of the case
43 of the Rules of Practice on Trademark Cases, which requires that the mark and prolong the wrongful invasion of UNIVERSAL's rights and interests.
applied for be used on applicant's goods for at least sixty (60) days prior to the
filing of the trademark application and that the applicant must show substantial Defendants PRO LINE and QUESTOR denied all the allegations in the complaint
investment in the use of the mark. He also disclosed that UNIVERSAL applied for and filed a counterclaim for damages based mainly on the unauthorized and
registration with the Patent Office on 20 February 1981. illegal manufacture by UNIVERSAL of athletic balls bearing the trademark
"Spalding."
After the prosecution rested its case, Sehwani filed a demurrer to evidence
arguing that the act of selling the manufactured goods was an essential and The trial court granted the claim of UNIVERSAL declaring that the series of acts
constitutive element of the crime of unfair competition under Art. 189 of the complained of were "instituted with improper, malicious, capricious motives and
Revised Penal Code, and the prosecution was not able to prove that he sold the without sufficient justification." It ordered PRO LINE and QUESTOR jointly and
products. In its Order of 12 January 1981 the trial court granted the demurrer severally to pay UNIVERSAL and Sehwani P676,000.00 as actual and
and dismissed the charge against Sehwani. compensatory damages, P250,000.00 as moral damages, P250,000.00 as
exemplary damages 5 and P50,000.00 as attorney's fees. The trial court at the
PRO LINE and QUESTOR impugned before us in G.R. No. 93055 the dismissal of same time dismissed the counterclaim of PRO LINE and QUESTOR.
the criminal case. In our Resolution of 2 March 1983 we consolidated G.R. No.
63055 with G.R. No. 57814 earlier filed. On 20 April 1983 we dismissed the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 169

The Court of Appeals affirmed the decision of the lower court but reduced the (Alexander v. Sy Bok, 97 Phil. 57). This is substantially the same rules obtaining
amount of moral damages to P150,000.00 and exemplary damages to in statutes and judicial construction since 1903 when Act No. 666 was approved
P100,000.00. (Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) . . . . 8

Two (2) issues are raised before us: (a) whether private respondents Sehwani The existence of probable cause for unfair competition by UNIVERSAL is
and UNIVERSAL are entitled to recover damages for the alleged wrongful derivable from the facts and circumstances of the case. The affidavit of Graciano
recourse to court proceedings by petitioners PRO LINE and QUESTOR; and, (b) Lacanaria, a former employee of UNIVERSAL, attesting to the illegal sale and
whether petitioners' counterclaim should be sustained. manufacture of "Spalding " balls and seized "Spalding" products and instruments
from UNIVERSAL's factory was sufficient prima facie evidence to warrant the
PRO LINE and QUESTOR cannot be adjudged liable for damages for the alleged prosecution of private respondents. That a corporation other than the certified
unfounded suit. The complainants were unable to prove two (2) essential owner of the trademark is engaged in the unauthorized manufacture of products
element of the crime of malicious prosecution, namely, absence of probable bearing the same trademark engenders a reasonable belief that a criminal
cause and legal malice on the part of petitioners. offense for unfair competition is being committed.

UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was bereft of Petitioners PRO LINE and QUESTOR could not have been moved by legal malice
probable cause. Probable cause is the existence of such facts and circumstances in instituting the criminal complaint for unfair competition which led to the filing
as would excite the belief in a reasonable mind, acting on the facts within the of the Information against Sehwani. Malice is an inexcusable intent to injure,
knowledge of the prosecutor, that the person charged was guilty of the crime for oppress, vex, annoy or humiliate. We cannot conclude that petitioners were
which he was prosecuted. 6 In the case before us, then Minister of Justice impelled solely by a desire to inflict needless and unjustified vexation and injury
Ricardo C. Puno found probable cause wen he reversed the Provincial Fiscal who on UNIVERSAL's business interests. A resort to judicial processes is not per se
initially dismissed the complaint and directed him instead to file the evidence of ill will upon which a claim for damages may be based. A contrary
corresponding Information for unfair competition against private respondents rule would discourage peaceful recourse to the courts of justice and induce
herein. 7 The relevant portions of the directive are quoted hereunder: resort to methods less than legal, and perhaps even violent. 9

The intent on the part of Universal Sports to deceive the public and to defraud a We are more disposed, under the circumstances, to hold that PRO LINE as the
competitor by the use of the trademark "Spalding" on basketballs and volleyballs authorized agent of QUESTOR exercised sound judgment in taking the necessary
seems apparent. As President of Universal and as Vice President of the legal steps to safeguard the interest of its principal with respect to the
Association of Sporting Goods Manufacturers, Monico Sehwani should have trademark in question. If the process resulted in the closure and padlocking of
known of the prior registration of the trademark "Spalding" on basketballs and UNIVERSAL's factory and the cessation of its business operations, these were
volleyballs when he filed the application for registration of the same trademark unavoidable consequences of petitioners' valid and lawful exercise of their right.
on February 20, 1981, in behalf of Universal, with the Philippine Patent Office. One who makes use of his own legal right does no injury. Qui jure suo utitur
He was even notified by the Patent Office through counsel on March 9, 1981, nullum damnum facit. If damage results from a person's exercising his legal
that "Spalding" was duly registered with said office in connection with sporting rights, it is damnum absque injuria. 10
goods, implements and apparatus by A.G. Spalding & Bros., Inc. of the U.S.A.
Admittedly, UNIVERSAL incurred expenses and other costs in defending itself
That Universal has been selling these allegedly misbranded "Spalding" balls has from the accusation. But, as Chief Justice Fernando would put it, "the expenses
been controverted by the firms allegedly selling the goods. However, there is and annoyance of litigation form part of the social burden of living in a society
sufficient proof that Universal manufactured balls with the trademark "Spalding" which seeks to attain social control through law." 11 Thus we see no cogent
as admitted by Monico himself and as shown by the goods confiscated by virtue reason for the award of damages, exorbitant as it may seem, in favor of
of the search warrant. UNIVERSAL. To do so would be to arbitrarily impose a penalty on petitioners'
right to litigate.
Jurisprudence abounds to the effect that either a seller or a manufacturer of
imitation goods may be liable for violation of Section 29 of Rep. Act No. 166
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 170

The criminal complaint for unfair competition, including all other legal remedies is already barred by res judicata, the judgment in the criminal case (against
incidental thereto, was initiated by petitioners in their honest belief that the Sehwani) involving both the criminal and civil aspects of the case for unfair
charge was meritorious. For indeed it was. The law brands business practices competition. 16 To recall, petitioners PRO LINE and QUESTOR, upon whose
which are unfair, unjust or deceitful not only as contrary to public policy but also initiative the criminal action for unfair competition against respondent
as inimical to private interests. In the instant case, we find quite aberrant UNIVERSAL was filed, did not institute a separate civil action for damages nor
Sehwani's reason for the manufacture of 1,200 "Spalding" balls, i.e., the pending reserve their right to do so. Thus the civil aspect for damages was deemed
application for trademark registration UNIVERSAL with the Patent Office, when instituted in the criminal case. No better manifestation of the intent of
viewed in the light of his admission that the application for registration with the petitioners to recover damages in the criminal case can be expressed than their
Patent Office was filed on 20 February 1981, a good nine (9) days after the active participation in the prosecution of the civil aspect of the criminal case
goods were confiscated by the NBI. This apparently was an afterthought but through the intervention of their private prosecutor. Obviously, such intervention
nonetheless too late a remedy. Be that as it may, what is essential for could only be for the purpose of recovering damages or indemnity because the
registrability is proof of actual use in commerce for at least sixty (60) days and offended party is not entitled to represent the People of the Philippines in the
not the capability to manufacture and distribute samples of the product to prosecution of a public offense. 17 Section 16, Rule 110, of the Rules of Court
clients. requires that the intervention of the offended party in the criminal action can be
made only if he has not waived the civil action nor expressly reserved his right
Arguably, respondents' act may constitute unfair competition even if the element to institute it separately. 18 In an acquittal on the ground that an essential
of selling has not been proved. To hold that the act of selling is an indispensable element of the crime was not proved, it is fundamental that the accuse cannot
element of the crime of unfair competition is illogical because if the law punishes be held criminally nor civilly liable for the offense. Although Art. 28 of the New
the seller of imitation goods, then with more reason should the law penalize the Civil Code 19 authorizes the filing of a civil action separate and distinct from the
manufacturer. In U.S. v. Manuel, 12 the Court ruled that the test of unfair criminal proceedings, the right of petitioners to institute the same is not
competition is whether certain goods have been intentionally clothed with an unfettered. Civil liability arising from the crime is deemed instituted and
appearance which is likely to deceive the ordinary purchasers exercising ordinary determined in the criminal proceedings where the offended party did not waive
care. In this case, it was observed by the Minister of Justice that the nor reserve his right to institute it separately. 20 This is why we now hold that
manufacture of the "Spalding" balls was obviously done to deceive would-be the final judgment rendered therein constitutes a bar to the present
buyers. The projected sale would have pushed through were it not for the timely counterclaim for damages based upon the same cause. 21
seizure of the goods made by the NBI. That there was intent to sell or distribute
the product to the public cannot also be disputed given the number of goods WHEREFORE, the petition is partly GRANTED. The decision of respondent Court
manufactured and the nature of the machinery and other equipment installed in of Appeals is MODIFIED by deleting the award in favor of private respondents
the factory. UNIVERSAL and Monico Sehwani of actual, moral and exemplary damages as
well as attorney's fees.
We nonetheless affirm the dismissal of petitioners' counterclaim for damages. A
counterclaim partakes of the nature of a complaint and/or a cause of action The dismissal of petitioners' counterclaim is AFFIRMED. No pronouncement as to
against the plaintiffs. 13 It is in itself a distinct and independent cause of action, costs.
so that when properly stated as such, the defendant becomes, in respect to the
matter stated by him, an actor, and there are two simultaneous actions pending SO ORDERED.
between the same parties, where each is at the same time both a plaintiff and
defendant. 14 A counterclaim stands on the same footing and is to be tested by Davide, Jr., Vitug and Kapunan, JJ., concur.
the same rules, as if it were an independent action. 15

Petitioners' counterclaim for damages based on the illegal and unauthorized

manufacture of "Spalding" balls certainly constitutes an independent cause of
action which can be the subject of a separate complaint for damages against
UNIVERSAL. However, this separate civil action cannot anymore be pursued as it
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G.R. No. L-30266 June 29, 1984 which the defendant actually made out of the infringement; or (3) the court may
award as damages a reasonable percentage based upon the amount of gross
UNIVERSAL RUBBER PRODUCTS, INC., petitioner, sales of the defendant of the value of the services in connection with which the
vs. mark or tradename was issued in the infringement of the rights of the
HON. COURT OF APPEALS, CONVERSE RUBBER CORPORARION, complaining party.
EDWARDSON MANUFACTURING CO., INC. AND HON. PEDRO C. Same; Same; Same; Same; Injunction; Nature of complaint for unfair
NAVARRO, respondents. competition; Determination of amount of damages allowable after final
determination of the unfair labor case, renders nugatory complainant’s rights
Marcial O.T. Balgos for petitioner. under Sec. 23 of RA 166.—The argument that the petitioner should first be
found guilty of unfair competition before an accounting for purposes of
Sycip, Salazar, Feliciano, Hernandez & Castillo for private respondents. ascertaining the amount of damages recoverable can proceed, stands without
merit. The complaint for unfair competition is basically a suit for “injunction and
Mercantile Law; Unfair Competition; General Rule that on obtaining an injunction damages”. Injunction, for the purpose of enjoining the unlawful competitor from
for infringement of a trademark complainant is entitled to an accounting and proceeding further with the unlawful competition, and damages, in order to
recovery of defendant’s profits on the goods sold under the trademark as part of allow the aggrieved party to recover the damage he has suffered by virtue of the
his property right.—As a general rule, on obtaining an injunction for said unlawful competition. Hence, the election of the complainant (private
infringement of a trademark, complainant is entitled to an accounting and respondent herein) for the accounting of petitioner’s (defendant below) gross
recovery of defendant’s profits on the goods sold under that mark, as incident sales as damages per R.A. 166, appears most relevant. For Us, to determine the
to, and a part of, his property right, and this rule applies in cases of unfair amount of damages allowable after the final determination of the unfair labor
competition. In such case, the infringer or unfair trader is required in equity to case would not only render nugatory the rights of complainant under Sec. 23 of
account for and yield up his gains on a principle analogous to that which charges R.A. 166, but would be a repetitious process causing only unnecessary delay.
as trustee with the profits acquired by the wrongful use of the property of the Same; Same; Corporation Law; Foreign corporation without license to do
cestui que trust, and defendant’s profits are regarded as an equitable measure business in the Philippines, not disqualified from filing and prosecuting an action
of the compensation plaintiff should receive for the past harm suffered by him. for unfair competition; Nature of suit filed.—Petitioner also assails that private
Same; Same; Subpoena duces tecum of books or documents; A party is entitled respondent is a foreign corporation not licensed to do business in the Philippines
to issuance of subpoena duces tecum when there is clear and unequivocal proof and that respondent Edwardson is merely its licensee; that respondent Converse
that the book or document to be produced are relevant and material; Quashal of has no goodwill to speak of and that it has no registrable right over its own
subpoena duces tecum, requirement for.—Well-settled is Our jurisprudence that, name. We have already answered this issue squarely in Our decision of the case
in order to entitle a party to the issuance of a “subpoena duces tecum”, it must of Converse Rubber Corporation vs. Jacinto Rubber & Plastic Co., Inc. where We
appear, by clear and unequivocal proof, that the book or document sought to be explained: “The disability of a foreign corporation from suing in the Philippines is
produced contains evidence relevant and material to the issue before the court, limited to suits to enforce any legal or contract rights arising from, or growing
and that the precise book, paper or document containing such evidence has out, of any business which it has transacted in the Philippine Islands. x x x On
been so designated or described that it may be identified. A “subpoena duces the other hand, where the purpose of a suit is ‘to protect its reputation, its
tecum” once issued by the court may be quashed upon motion if the issuance corporate name, its goodwill, whenever that reputation, corporate name or
thereof is unreasonable and oppressive, or the relevancy of the books, goodwill have, through the natural development of its trade, established
documents or things does not appear, or if the persons in whose behalf the themselves’, an unlicensed foreign corporation may sue in the Philippines. So
subpoena is issued fails to advance the reasonable cost of production thereof. interpreted by the Supreme Court, it is clear that Section 29 of the Corporation
Same; Same; Damages; Basis of amount of damages suffered by aggrieved Law does not disqualify plaintiff-appellee Converse Rubber, which does not have
party due to unfair competition.—In recovering the loss suffered by the a branch office in any part of the Philippines and is not ‘doing business’ in the
aggrieved party due to “unfair competition”, Sec. 23 of R.A. 166 grants the Philippines, from filing and prosecuting this action for unfair competition.”
complainant three options within which to ascertain the amount of damages Same; Same; Moot and Academic; Dismissal of case as moot and academic due
recoverable, either (1) the reasonable profit which the complaining party would to burning of establishment together with all records sought to be produced by
have made, had the defendant not infringed his said rights; or (2) the profit the subpoena duces tecum.—As we said earlier, the establishment of the
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petitioner burned down together with all the records sought to be produced by
the questioned “subpoena duces tecum”, hence this case has become moot and On May 15, 1968, herein petitioner filed in the court a quo a motion for
academic. We have no recourse but to dismiss the same. reconsideration seeking the said court to reconsider its order denying the motion
to quash the subpoena duces tecum. This, too, was opposed by the private
PETITION to review the decision of the Court of Appeals. [Universal Rubber respondents. Acting on this motion, as well as on the opposition thereto,
Products, Inc. vs. Court of Appeals, 130 SCRA 104(1984)] respondent Judge. issued the second controverted order on June 28, 1968,
denying the motion for reconsideration.
GUERRERO, J.:
Consequently, on August 6, 1968, petitioner Universal Rubber Products, Inc.
This petition for review concerns a "subpoena duces tecum which was issued by filed its present petition for certiorari with preliminary injunction, alleging that in
the trial court against the treasurer of the herein petitioner, the propriety of so denying its motion to quash the subpoena duces tecum and its subsequent
which was upheld by the defunct Court of Appeals (now Intermediate Appellate motion for reconsideration, respondent Judge acted with grave abuse of
Court). discretion amounting to an excess of jurisdiction. 1

The facts of this case as stated in the decision of the then Court of Appeals are Pending the resolution of the appealed case, the Court of Appeals issued on
as follows: September 25, 1968 a temporary restraining order directing the respondent
Judge of the trial court to refrain from implementing his order dated May 6,
Records disclose that the two respondent corporations herein sued the present 1968 in Civil Case No. 9686. 2
petitioner before the Court of First Instance of Rizal for unfair competition with
damages and attorney's fees. In due time herein petitioner, who was the On November 12, 1968, the respondent Court rendered its decision denying the
defendant in that court suit, answered the complaint and joined issues with the petition for certiorari filed by petitioner for lack of merit. The dispositive portion
plaintiffs therein, forthwith respondent Judge, to whom that lawsuit was of the said decision reads: 3
assigned, proceeded with the trial thereof.
WHEREFORE, for lack of merit, the present petition for certiorari with preliminary
After they have presented about nine witnesses and various pieces of injunction is hereby denied and the temporary restraining order issued by this
documentary evidence, herein private respondents made a request to the Court on September 25, 1968 is now lifted, with costs against the petitioner.
respondent Judge to issue a subpoena duces tecum against the treasurer of
herein petitioner. Acting favorably on that request, said respondent Judge issued SO ORDERED.
a subpoena duces tecum on February 13, 1968, directing the treasurer of the
present petitioner to bring with him to the lower court on February 26, 1968 and Petitioner argues three errors to support his petition, to wit: 4
March 8, 1968 at 2:30 p.m. "all sales invoices, sales books and ledgers wherein
are recorded the sales of Plymouth Star Player rubber shoes from the time the I
corporation started manufacturing and selling said shoes up to the present.
The respondent court erred when it found the fact of the petition and its
On March 4, 1968, petitioner filed a motion in the court below praying that the annexes as not demonstrating clear abuse of discretion by respondent Judge.
subpoena duces tecum dated February 13, 1968 be quashed on the grounds
that: (1) the said subpoena is both Unreasonable and oppressive as the books II
and documents caned for are numerous and voluminous; (2) there is no good
cause shown for the issuance thereof; and (3) the books and documents are not The respondent court erred when it refused to sustain the contention of
relevant to the case pending below. The private respondents herein opposed petitioner that the issuance by the respondent judge of the subpoena duces
that motion of the petitioner. Acting on the said motion and on the opposition tecum was an arbitrary exercise of judicial power.
thereto, respondent Judge issued the first controverted order on May 6, 1968,
denying the motion to quash the subpoena duces tecum. III
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are regarded as an equitable measure of the compensation plaintiff should

The respondent court erred when it did not consider the subpoena duces tecum receive for the past harm suffered by him. 6
issued by the respondent judge as a fishing bill when it refused to order its
quashal. Well-settled is Our jurisprudence that, in order to entitle a party to the issuance
of a "subpoena duces tecum ", it must appear, by clear and unequivocal proof,
The issues summarized, We are called upon to answer whether the issuance of that the book or document sought to be produced contains evidence relevant
the "subpoena duces tecum" is proper in a suit for unfair competition. and material to the issue before the court, and that the precise book, paper or
document containing such evidence has been so designated or described that it
Private respondent claims the affirmative because (1) the subpoena duces tecum may be identified. 7 A "subpoena duces tecum once issued by the court may be
in question specifically designates the books and documents that should be quashed upon motion if the issuance thereof is unreasonable and oppressive or
produced in court and they are 4 sales invoices, sales books and ledgers where the relevancy of the books, documents or things does not appear, or if the
are recorded the sales of Plymouth Star Player Rubber Shoes from the time the persons in whose behalf the subpoena is issued fails to advance the reasonable
corporation started manufacturing and selling shoes (that is from April 1, 1963) cost of production thereof. 8
up to the present; and (2) the relevancy of the books subject to the
controverted subpoena duces tecum cannot be seriously denied, because if and In the instant case, in determining whether the books subject to the subpoena
when herein respondent corporations are ultimately adjudged to be entitled to duces tecum are relevant and reasonable in relation to the complaint of private
recover compensatory damages from the petitioner, there would be no factual respondent for unfair competition, We have to examine Republic Act No. 166,'
basis for the amount of such damages unless those books and documents are which provides:
laid open for the court's scrutiny.
CHAPTER V.—Rights and Remedies
On the other hand, petitioner submits a contrary opinion and insists that the
question of liability of petitioner should be determined first before discovery by xxx xxx xxx
means of a subpoena duces tecum is allowed: that respondent Converse is a
foreign corporation not licensed to do business in the Philippines and that Sec. 23.Actions, and damages and injunction for infringement. — Any person
Edwardson is merely its licensee that respondent Converse has no goodwill to entitled to the exclusive use of a registered mark or trade name may recover
speak of and that it has no registrable right over its own names; that the damages in a civil action from any person who infringes his rights and the
questioned subpoena duces tecum issued by respondent judge was merely a measure of the damages suffered shag be either the reasonable profit which the
"Fishing Bill." complaining party would have made, had the defendant not infringed his said
rights, or the profit which the defendant actually made out of the infringment
In the meantime, while this present petition remains pending before this Court, management, or in the event such measure of damages cannot be readily
petitioner manifested on April 2, 1977 5 that their establishment was totally ascertained with reasonable certainty, their the court may award as damages a
burned together with all the records which is sought to be produced in court by reasonable percentage based upon the amount of gross sales of the defendant
the questioned "subpoena duces tecum" on May 3, 1970. In effect, it renders of the value of the services in connection with which the mark or trade name
the present petition moot and academic. However, the legal principles arising was used in the infringement of the rights of the complaining party. In cases
from the issues deserve Our discussion and resolution. 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.
As a general rule, on obtaining an injunction for infringement of a trademark,
complainant is entitled to an accounting and recovery of defendant's profits on The complaining party, upon proper showing may also be granted injunction.
the goods sold under that mark, as incident to, and a part of, his property right,
and this rule applies in cases of unfair competition. In such case, the infringer or In recovering the loss suffered by the aggrieved party due to unfair
unfair trader is required in equity to account for and yield up his gains on a competition," Sec. 23 of R.A. 166 grants the complainant three options within
principle analogous to that which charges as trustee with the profits acquired by which to ascertain the amount of damages recoverable, either (1) the
the wrongful use of the property of the cestuique trust, and defendant's profits reasonable profit which the complaining party would have made, had the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 174

defendant not infringed his said rights; or (2) the profit which the defendant foreign corporation may sue in the Philippines. So interpreted by the Supreme
actually made out of the infringement; or (3) the court may award as damages a Court, it is clear that Section 29 of the Corporation Law does not disqualify
reasonable percentage based upon the amount of gross sales of the defendant plaintiff-appellee Converse Rubber, which does not have a branch office in any
of the value of the services in connection with which the mark or tradename was part of the Philippines and is not "doing business" in the Philippines, from filing
issued in the infringement of the rights of the complaining party. and prosecuting this action for unfair competition.

In giving life to this remedial statute, We must uphold the order of the court a As We said earlier, the establishment of the petitioner burned down together
quo denying the motion. of the petitioner to quash the "subpoena duces tecum" with all the records sought to be produced by the questioned "subpoena duces
previously issued against the petitioner. In a suit for unfair competition, it is only tecum," hence this case has become moot and academic. We have no recourse
through the issuance of the questioned "subpoena duces tecum " that the but to dismiss the same.
complaining party is afforded his full rights of redress.
WHEREFORE, the instant petition is DISMISSED for becoming moot and
The argument that the petitioner should first be found guilty unfair competition academic. No costs.
before an accounting for purposes of ascertaining the amount of damages
recoverable can proceed, stands without merit.. The complaint for unfair SO ORDERED.
competition is basically a suit for "injunction and damages". 10 Injunction, for
the purpose of enjoining the unlawful competitor from proceeding further with Makasiar (Chairman), Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ.,
the unlawful competition, and damages, in order to allow the aggrieved party to concur.
recover the damage he has suffered by virtue of the said unlawful competition.
Hence, the election of the complainant (private respondent herein) for the Aquino, J., concurs in the result.
accounting of petitioner's (defendant below) gross sales as damages per R.A.
166, appears most relevant. For Us, to determine the amount of damages
allowable after the final determination of the unfair labor case would not only
render nugatory the rights of complainant under Sec. 23 of R.A. 166, but would
be a repetitious process causing only unnecessary delay.

The sufficiency in the description of the books sought to be produced in court by

the questioned "subpoena duces tecum is not disputed in this case, hence, We
hold that the same has passed the test of sufficient description.

Petitioner also assails that private respondent is a foreign corporation not

licensed to do business in the Philippines and that respondent Edwardson is
merely its licensee; that respondent Converse has no goodwill to speak of and
that it has no registrable right over its own name. We have already answered
this issue squarely in Our decision of the case of Converse Rubber Corporation
vs. Jacinto Rubber & Plastic Co., Inc., 11 where We explained:

The disability of a foreign corporation from suing in the Philippines is limited to

suits to enforce any legal of contract rights arising from, or growing out, of any
business which it has transacted in the Philippine Islands ... On the other hand,
where the purpose of the suit is "to protect its reputation, its corporate name, its
goodwill, whenever that reputation, corporate name or goodwill have, through
the natural development of its trade, established themselves", an unlicensed
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 175

G.R. Nos. L-27425 & L-30505 April 28, 1980 protection to the goodwill of a manufacturer or dealer. It attaches no fetish to
the word ‘competition’. In plain language it declares that a ‘person who has
CONVERSE RUBBER CORPORATION and EDWARDSON identified in the public the goods he manufactures or deals in, his business or
MANUFACTURING CORPORATION, plaintiffs-appellants, services from those of others, whether or not a right in the goodwill of the said
vs. goods, business or services so identified, which will be protected in the same
JACINTO RUBBER & PLASTICS CO., INC., and ACE RUBBER & PLASTICS manner as other property rights.’ It denominates as ‘unfair competition’ ‘any
CORPORATION, defendants-appellants. acts’ calculated to result in the passing off of other goods ‘for those of the one
having established such goodwill.’ Singularly absent is a requirement that the
Sycip, Salazar, Luna & Associates plaintiff-appellants. goodwill sought to be protected in an action for unfair competition must have
been established in an actual competitive situation. Nor does the law require
Juan R. David for defendants-appellants. that the deception or other means contrary to good faith or any acts calculated
to pass off other goods for those of one who has established a goodwill must
Tradenames and Trademarks; Patents; Elements considered in resolution of the have been committed in an actual competitive situation.
issue of unfair competition in rubber shoes products.—From said examination, Same; Same; Jurisdiction; A non-resident foreign corporation may sue in the
We find the shoes manufactured by defendants to contain, as found by the trial Philippines for unfair competition.—“The futility of the error assigned by
court, practically all the features of those of the plaintiff Converse Rubber defendants-appellants becomes more evident in light of the explicit provision of
Corporation and manufactured, sold or marketed by plaintiff Edwardson Section 21 (a) of Republic Act No. 166, as amended, that a foreign corporation,
Manufacturing Corporation, except for their respective brands, of course. We whether or not licensed to transact business in the Philippines may bring an
fully agree with the trial court that “the respective designs, shapes, the colors of action for unfair competition provided the country of which it ‘is a citizen, or in
the ankle patches, the bands, the toe patch and the soles of the two products which it is domiciled, by treaty, convention or law, grants a similar privilege to
are exactly the same . . . (such that) “at a distance of a few meters, it is juristic persons in the Philippines.’ The Convention of Paris for the Protection of
impossible to distinguish “Custombuilt” from “Chuck Taylor”. These elements are Industrial Property, to which the Philippines adheres, provides, on a reciprocal
more than sufficient to serve as basis for a charge of unfair competition. Even if basis that citizens of a union member may file an action for unfair competition
not all the details just mentioned were identical, with the general appearances and infringement of trademarks, patents, etc. (61 O. G. 8010) in any of the
alone of the two products, any ordinary, or even perhaps even a not too union members. The United States of America, of which Converse Rubber is a
perceptive and discriminating customer could be deceived, and, therefore, citizen, is also a signatory to this Convention. Section 1126 (b) and (h) of Public
Custombuilt could easily be passed off for Chuck Taylor. Jurisprudence supports Law 489 of the United States of America allows corporations organized under
the view that under such circumstances, the imitator must be held liable. the laws of the Philippines to file an action for unfair competition in the United
Same; Same; The fact that the shoes manufactured by petitioner were not sold States of America, whether or not it is licensed to do business in the United
in local markets from 1949 to 1967 does not mean that one cannot be held States. (Annex ‘H’ of Partial Stipulation of Facts, Record on Appeal, p. 192).
guilty of unfair competition for manufacturing products that appear similar as Same; Same; Damages; An award of 15% of gross sales as compensatory
the petitioner’s products.—It is the theory of defendants-appellants, however, damages against a competitor found guilty of unfair competition is reasonable.—
that plaintiffs-appellees have failed to establish a case of unfair competition We are of the considered opinion that the trial court was overly liberal to the
because “inasmuch as the former (Converse Chuck Taylor) was not sold in the defendants-appellants. The P160,000.00 awarded by His Honor as compensatory
local markets from 1949 to 1967, no competition, fair or unfair, could have been damages for the years 1962 to 1965 are utterly inadequate. Even the 5% of the
offered to it by the latter product (Custombuilt Challenger) during the said gross sales of “Custombuilt” shoes from 1966 until its injunction is fully obeyed
period.” While the argument, it may be conceded, makes sense as a proposition are short of what the law contemplates in cases of this nature. We hold that
in practical logic, as indeed, it served as a legal defense in jurisprudence in the considering that the gross sales of defendants-appellants increased to
past, the modern view, as contended by plaintiffs “represents a tendency to P16,474,103.76, (as admitted in defendants-appellants’ own brief, p. 2), only
mold, and even to expand; legal remedies in this field to conform to ethical 75% of which, plaintiffs-appellants generously assert corresponded to
practices.” Custombuilt sales, it would be but fair and just to award plaintiffs-appellants
Same; Same; Same.—Additionally. We quote with approval counsel’s contention 15% of such 75% as compensatory damages from 1962 up to the finality of this
thus: “In no uncertain terms, the statute on unfair competition extends decision. In other words, 75% of P16,474,103.76 would be P12,355,577.82 and
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15% of this last amount would be P1,853,336.67, which should be awarded to BARREDO, J.:
plaintiffs-appellants for the whole period already stated, without any interest,
without prejudice to plaintiffs-appellants seeking by motion in the trial court in Direct appeal in G.R. No. L-27425 by both plaintiffs and defendants from the
this same case any further damage should defendants-appellants continue to decision of the Court of First Instance of Rizal in its Civil Case No. 9380, a case
disobey the injunction herein affirmed after the finality of this decision. alleged unfair competition, the dispositive part of which reads:
Same; Same; Same; Same.—We feel that this award is reasonable. It is not
farfetched to assume that the net profit of the emitator which, after all is what Upon the foregoing, judgment is hereby rendered:
the law contemplates as basis for damages if it were only actually ascertainable,
in the manufacture of rubber shoes should not be less than 20 to 25% of the 1. Permanently restraining the defendants, their agents, employees and
gross sales. Regrettably, neither of the parties presented positive evidence in other persons acting in their behalf from manufacturing and selling in the
this respect, and the Court is left to use as basis its own projection in the light of Philippines rubber shoes having the same or confusingly similar appearance as
usual business practices. We could, to be sure, return this case to the lower plaintiff Converse Rubber's Converse Chuck Taylor All Star' rubber shoes,
court for further evidence on this point, but inasmuch as this litigation started particularly from manufacturing and selling in the Philippines rubber Shoes with
way back about fourteen years ago and it would take more years before any (a) ankle patch with a five-pointed blue star against a white background, (b) red
final disposition is made hereof should take their course, We are convinced that and blue bands, (c) white toe patch with raised diamond shaped areas, and (d)
the above straight computation, without any penalty of interest, is in accordance brown sole of the same or similar design as the sole of "Converse Chuck Taylor
with the spirit of the law governing this case. All Star" rubber-soled canvas footwear;
Contempt; Criminal Procedure; Constitutional Law; Injunction; Patents; Failure
to obey an injunction issued by the court for the benefit of the plaintiff will make 2. Ordering defendant Jacinto Rubber & Plastics Company, Inc. to change
the disobedient party liable for civil contempt, not criminal contempt which the design and appearance of "Custombuilt" shoes in accordance with the sketch
arises only when an order is issued to reindicate or protect the court’s authority submitted by defendant Jacinto Rubber to plaintiff Converse Rubber on October
or dignity. Double jeopardy cannot be successfully pleaded in civil contempt 3, 1964 and to desist from using a star both as a symbol and as a word;
proceedings.—To be sure, appellees are almost in the right track in contending
that the first denial order of the trial court found them not guilty. What they 3. Ordering defendant Jacinto Rubber & Plastics Company, Inc. to pay
have overlooked however is that such a finding cannot be equated with an plaintiffs the sum of P160,000.00 as compensatory damages for the years 1962
acquittal in a criminal case that bars a subsequent jeopardy. True it is that to 1965 plus 5% of the gross sales of "Custombuilt" shoes from 1966 until
generally, contempt proceeding are characterized as criminal in nature, but the defendant Jacinto Rubber & Plastics Company, Inc. stop selling "Custombuilt"
more accurate juridical concept is that contempt proceedings may actually be shoes of the present design and appearance;
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 4. Ordering defendants jointly and severally to pay plaintiffs P10,000.00 as
the purpose is to vindicate the authority of the court and protect its outraged attorney's fees.
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., SO ORDERED. (Pages 228-229, Record on Appeal.)
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 plaintiffs praying for a bigger amount of damages and defendants asking that
injunction in the instant case is manifestly for the benefit of plaintiffs makes of the decision be declared null and void for lack of jurisdiction, or, alternatively,
the contempt herein involved civil not criminal. Accordingly, the conclusion is that the same be reversed completely by dismissing the complaint; and another
inevitable that appellees have been virtually found by the trial court guilty of civil direct appeal, in G. R. No. L-30505 by above defendant Jacinto Rubber & Plastics
contempt, not criminal contempt, hence the rule on double jeopardy may not be Co., Inc. and, a new party, Philippine Marketing and Management Corporation
invoked. from the same trial court's order in the same main civil case finding them in
APPEAL from decision of the of the Court of First Instance of Rizal. [Converse contempt of court "in disregarding the permanent injunction" contained in the
Rubber Corp. vs. Jacinto Rubber & Plastics Co., Inc., 97 SCRA 158(1980)] appealed decision.
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RE G. R. NO L-27425 performance by defendant Ace Rubber of its obligations under the licensing
agreement. Both documents, it should be noted, contained the following
Being comprehensive and well prepared, We consider it sufficient to quote the covenants:
following portions of the impugned decision as basis for the resolution of the
conflicting appeals aforementioned: 9. (a) Ace acknowledges that Converse is the exclusive owner of the said
Converse - names and design, as used in connection with the manufacture,
This is an action for unfair competition. Plaintiff Converse Rubber Corporation, advertising and sale of footwear: that Converse has the exclusive right to use
(is) an American Corporation, manufacturer (of) canvas rubber shoes under the said Converse names in such connection throughout the world. subject to the
trade name "Converse Chuck Taylor All Star"; in the Philippines, it has an terms of this Agreement; and that neither Ace nor any person acting by, through
exclusive licensee, plaintiff Edwardson Manufacturing Corporation, for the or under Ace will, at anytime, question or dispute said ownership or the
manufacture and sale in the Philippines of its product. Plaintiff Converse is the exclusive rights of Converse with respect thereto
owner of trademarks and patent, registered with United States Patent Office,
covering the words. "All Star", the representation and design of a five-pointed (b) Nothing herein shall be deemed to constitute a warranty by Converse as
star, and the design of the sole. The trademark "Chuck Taylor" was registered to the non-existence of infringements of Converse-names in the Republic of the
by plaintiff Converse with the Philippines Patent Office on March 3, 1966. Since Philippines. The term "infringement"as used in this Agreement shall include
1946, "Chuck Taylor" is being sold in the Philippines. It has been used practices which give rise to a cause of action for damages or to injunctive relief
exclusively by Philippine basketball teams competing in international under Sections 23 and 29 of R. A. No. 166 of the Republic of the Philippines or
competitions. It is also popular among players in various basketball leagues, like any other applicable law of said Republic. During the term thereof, Ace at its
the MICAA and the NCAA, because of its high quality and attractive style. "Chuck expense shall diligently investigate all infringements of the use of said Converse-
Taylor" currently retails at P46.00 per pair. names, whether or not such infringements violate laws pertaining to the
registration of trademarks or trade names, and shall notify Converse promptly as
Defendant Jacinto Rubber & Plastics Company, Inc., a local corporation, likewise, to any infringements of said Converse names within said territory, and shall at
manufactures and sells canvas rubber shoes. It sells its product under the trade its expense use its best efforts to prevent such infringements by an reasonable
names "Custombuilt Viscount", "Custombuilt Challenger", and "Custombuilt means, including the prosecution of litigation where necessary or advisable. Any
Jayson's". Its trademark "Custombuilt Jayson's" was registered by the Philippines award for damages which Ace may recover in such litigation shall accrue to the
Patent Office on November 29, 1957. The gross sales from 1962 to 1965 of benefit of, and shall be owned and retained by Ace.
"Custombuilt" shoes total P16,474,103.76."Custombuilt" is retailed at P11.00.
14. Ace shall not,during the term hereof, manufacture or sell footwear which
In 1963, plaintiff Converse and defendant Jacinto entered into protracted would, by reason of its appearance and/or design, be likely, or tend, to be
negotiations for a licensing agreement whereby defendant Jacinto would be the confused by the public with any of the Converse-named products to be
exclusive license of plaintiff Converse in the Philippines for the manufacture and manufactured and sold hereunder, or shall in any manner, infringe Converse
sale of "Chuck Taylor" shoes but with the right to continue manufacturing and designs. If at any time and from time to time the manufacture of footwear under
selling its own products. One of the points taken up by parties was the design Converse-names for sale hereunder does not fully utilize Ace's production
and general appearance of "Custombuilt" shoes. Plaintiff Converse insisted on capacity, Ace shalt on Converse's order, within the limits of such surplus
the condition that defendant Jacinto change the design of "Custombuilt" shoes capacity, manufacture footwear of kinds and in amounts specified by Converse,
so as to give "Custombuilt" a general appearance different from "Chuck Taylor." at a price no higher than the lowest price at which similar footwear has been
After an extensive discussion, defendant Jacinto gave into to the demand of sold to customer of Ace during the period of one (1) year immediately preceding
plaintiff Converse; it submitted to plaintiff Converse for the latter's approval a the date of such order, and upon no less favorable discounts and terms of sale
sketch of a new design for "Custombuilt". This design was accepted by plaintiff than similar footwear is customarily offered by Ace to its most favored customer,
Converse. Defendant Jacinto Rubber then proposed that the licensing agreement payable in United States funds, if the earned royalty hereunder is then so
be made in favor of its affiliates, defendant Ace Rubber. On January 22, 1965, payable, otherwise in Republic of the Philippines funds.
defendant Ace Rubber signed the licensing agreement while defendant Jacinto
Rubber and Arturo Jacinto signed the guarantee agreement to secure the
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20. It being the mutual intention of the parties that Converse's exclusive so, he will most likely think that the competing products, because they are
property interests in the Converse-names shall at all times be protected to the strikingly Identical in design and appearance are manufactured by one and the
full extent of the law, Ace agrees that it will execute all amendments to this same manufacturer. Clearly, this case satisfied the test of unfair competition.
Agreement which may be proposed from time to time by Converse for the Priority in registration in the Philippines of a trademark is not material in an
purpose of fully protecting said interests. action for unfair competition as distinguished from an action for infringement of
trademark. The basis of an action for unfair competition is confusing and
However, the licensing agreement did not materialize, because Hermogenes misleading similarity in general appearance, not similarity of trademarks.
Jacinto refused to sign the guarantee.
The Court is not impressed by defendants' good faith in claiming that they have
Plaintiff Converse and plaintiff Edwardson then executed licensing agreement, the right to continue manufacturing "Custombuilt" of Identical design and
making plaintiff Edwardson the exclusive Philippine licensee for the manufacture appearance as "Chuck Taylor". While it is true that the licensing agreement
and sale of "Chuck Taylor." On June 18, 1966, plaintiffs sent a written demand between plaintiff Converse and defendant did not materialize, the execution of
to defendants to stop manufacturing and selling "Custombuilt" shoes of Identical the documents by the defendants constitute an admission on the part of plaintiff
appearance as "Chuck Taylor". Defendants did not reply to plaintiffs' letter. Converse Rubber's property right in design and appearance of "Chuck Taylor".
Hence, this suit. The covenants, quoted above, show that defendants acknowledged that plaintiff
Converse Rubber "is the exclusive owner of the said Converse-names and
Plaintiffs contend that "Custombuilt" shoes are Identical in design and General design." Defendants further covenanted not to "manufacture or sell footwear
appearance to "Chuck Taylor" and, claiming prior Identification of "Chuck Taylor" which would by reason of its appearance and/or design, be likely, or tend, to be
in the mind of the buying public in the Philippines, they contend that defendants confused by the public with any of the Converse-named products ... or shall, in
are guilty of unfair competition by selling "Custombuilt" of the design and with any manner, infringe Converse designs". That defendants are fully aware that
the general appearance of "Chuck Taylor". The design and appearance of both "Custombuilt" is Identical in design and appearance to "Chuck Taylor" has
products, as shown by the samples and photographs of both products, are not conclusively been admitted by them in their correspondence with plaintiff
disputed. Defendants insist that (a) there is no similarity in design and general Converse leading to the submission by defendants to plaintiff Converse of a
appearance between "Custombuilt" and "Chuck Taylor", pointing out that sketch of a new design that should give "Custombuilt" an appearance different
"Custombuilt" is readily Identifiable by the tradename "Custombuilt" appearing from that of "Chuck Taylor".
on the ankle patch, the heel patch, and on the sole. It is also vigorously
contended by defendants that the registration of defendant Jacinto Rubber's Aside from the written admission of defendants, the facts clearly indicate that
trademark "Custombuilt" being prior to the registration in the Philippines of defendants copied the design of "Chuck Taylor" with intent to gain "Chuck
plaintiff Converse Rubber's trademark "Chuck Taylor", plaintiffs have no cause of Taylor", as has been noted earlier, was ahead ot Custombuilt' in the Philippines
action. It appears that defendant started to manufacture and sell "Custombuilt" market and has been enjoining a high reputation for quality and style. Even
of its present design and with its present appearance in 1962. On the other defendants' own exhibits leave no room for doubt that defendants copied the
hand, as earlier mentioned, "Chuck Taylor" started to be sold in the Philippines design and appearance of "Chuck Taylor" for the purpose of cashing in on the
in 1946 and has been enjoying a reputation for quality among basketball players reputation of "Chuck Taylor". The samples of defendants' product show, indeed,
in the Philippines. as announced by defendants' counsel the "metamorphosis" of defendants'
product. In the beginning, the design of defendants' product was entirely
The Court sees no difficulty in finding that the competing products are Identical different from its present design and the design of "Chuck Taylor". It was only in
in appearance except for the trade names. The respective designs, the shapes 1962, or 16 years after "Chuck Taylor" has been in the market, that defendants
and the color of the ankle patch, the bands, the toe patch and the sole of the adopted the present design of "Custombuilt". It is also noteworthy that
two products are exactly the same. At a distance of a few meters, it is "Custombuilt" sells at P35 less than "Chuck Taylor"; thus the casual buyer is led
impossible to distinguish Custombuilt' from "Chuck Taylor". The casual buyer is to believe that he is buying the same product at a lower price. Not surprisingly,
thus liable to mistake one for the other. Only by a close-examination and by the volume of sales of "Custombuilt" increased from 35% to 75% of defendants'
paying attention to the trade names will the ordinary buyer be able to tell that total sales after they incorporated in their product the design and appearance of
the product is either "Custombuilt" or "Chuck Taylor", as the case may be. Even "Chuck Taylor".
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those sold by defendants, and We find the conclusions of the trial court to be
It is thus clear that defendants are guilty of unfair competition by giving correct in all respects. In fact, in their brief, defendants do not contest at all the
"Custombuilt" the same general appearance as "Chuck Taylor". It is equally clear findings of the trial court insofar as material Identity between the two kinds of
that defendants in so doing are guilty of bad faith. There remains for the Court shoes in question is concerned. We have Ourselves examined the exhibits in
to consider the damages that defendants should be liable for to plaintiffs. detail, particularly, the comparative pictures and other representations if the
Plaintiffs claim compensatory damages equivalent to 30% of the gross sales of shoes in question, and We do not hesitate in holding that he plaintiffs complaint
"Custombuilt" and attorney's fees in the amount of P25,000.00. By defendants' of unfair competition is amply justified.
own evidence, the gross sales of "Custombuilt" from 1962, the year defendants
adopted the present design of their product, to 1965 total P16,474,103.76. If the From said examination, We find the shoes manufactured by defendants to
Court should grant plaintiffs' prayer for compensatory damages equivalent to contain, as found by the trial court, practically all the features of those of the
30% of defendants' gross sales, the compensatory damages would amount to plaintiff Converse Rubber Corporation and manufactured, sold or marketed by
P4,942,231.13. Considering the amount of gross sales of "Custombuilt", an plaintiff Edwardson Manufacturing Corporation, except for heir respective
award to plaintiffs for 30% of defendants' annual gross sales would seriously brands, of course. We fully agree with the trial court that "the respective
ripple, if not bankrupt, defendant companies. The Court is aware that designs, shapes, the colors of the ankle patches, the bands, the toe patch and
defendants' investment is substantial and that defendants support a substantial the soles of the two products are exactly the same ... (such that) at a distance
number of employees and laborers. This being so, the Court is of the opinion of a few meters, it is impossible to distinguish "Custombuilt" from "Chuck
that plaintiffs are entitled to only one (1) per cent of annual gross sales of Taylor". These elements are more than sufficient to serve as basis for a charge
"Custombuilt" shoes of current design. As for attorney s fees, the Court is of the of unfair competition. Even if not all the details just mentioned were Identical,
opinion that, P10,000.00 is reasonable. (Pages 217-228, Record on Appeal.) with the general appearances alone of the two products, any ordinary, or even
perhaps even a not too perceptive and discriminating customer could be
Defendants-appellants have assigned the following alleged errors: deceived, and, therefore, Custombuilt could easily be passed off for Chuck
Taylor. Jurisprudence supports the view that under such circumstances, the
I imitator must be held liable. In R. F. & J. Alexander & Co. Ltd. et al. vs. Ang et
al., 97 Phil. 157, at p. 160, this Court held:
THE COURT A QUO ERRED IN ASSUMING JURISDICTION OVER THE
COMPLAINT OF PLAINTIFFS-APPELLEES. By "purchasers" and "public" likely to be deceived by the appearance of the
goods, the statute means the "ordinary purchaser". And although this Court
II apparently shifted its position a bit in Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190,
by referring to simulations likely to mislead "the ordinarily intelligent buyer", it
THE COURT A QUO ERRED IN ARRIVING AT THE CONCLUSION THAT THE turned to the general accepted doctrine in E. Spinner & Co. vs. Neuss Hesslein,
DEFENDANTS ARE GUILTY OF UNFAIR COMPETITION WHEN DEFENDANT 54 Phil. 224, where it spoke of "the casual purchasers" "who knows the goods
JACINTO RUBBER & PLASTICS CO., INC., MANUFACTURED AND SOLD RUBBER- only by name."
SOLED CANVASS SHOES UNDER ITS REGISTERED TRADE MARK
"CUSTOMBUILT". It stands to reason that when the law speaks of purchasers' it generally refers to
ordinary or average purchasers.
III
... in cases of unfair competition, while the requisite degree of resemblance or
THE COURT A QUO ERRED IN ADJUDICATING IN FAVOR OF THE PLAINTIFF similarity between the names, brands, or other indicia is not capable of exact
THE SUM OF P160,000.00 AS COMPENSATORY DAMAGES AND P10,000.00 AS definition, it may be stated generally that the similarity must be such, but need
ATTORNEY'S FEES. (Pp. A & B, Brief for Defendants-Appellants.) only be such, as is likely to mislead purchasers of ordinary caution and
prudence; or in other words, the ordinary buyer, into the belief that the goods or
We have carefully gone over the records and reviewed the evidence to satisfy wares are those, or that the name or business is that, of another producer or
Ourselves of the similarity of the shoes manufactured and sold by plaintiffs with tradesman. It is not necessary in either case that the resemblance be sufficient
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to deceive experts, dealers, or other persons specially familiar with the (c) Any person who shall make any false statement in the course of trade or
trademark or goods involved. Nor is it material that a critical inspection and who shall commit any other act contrary to good faith of a nature calculated to
comparison would disclose differences, or that persons seeing the trademarks or discredit the goods, business or services of another.
articles side by side would not be deceived (52 Am. Jur. pp. 600-601). (Brief for
Plaintiffs as Appellees, pp. 28-29, p. 71, Record.) It is the theory of defendants-appellants, however, that plaintiffs-appellees have
failed to establish a case of unfair competition because "inasmuch as the former
Indeed, the very text of the law on unfair competition in this country is clear (Converse Chuck Taylor) was not sold in the local markets from 1949 to 1967,
enough. It is found in Chapter VI of Republic Act 166 reading thus: no competition, fair or unfair, could have been offered to it by the latter product
(Custombuilt Challenger) during the said period." While the argument, it may be
SEC. 29. Unfair competition, rights and remedies. - A person who has Identified conceded, makes sense as a proposition in practical logic, as indeed, it served as
in the mind of the public the goods he manufactures or deals in, his business or a legal defense in jurisprudence in the past, the modern view, as contended by
services from those of others, whether or not a mark or trade name is plaintiffs "represents a tendency to mold, and even to expand; legal remedies in
employed, has a property right in the goodwill of the said goods, business or this field to conform to ethical practices." (Brief of Plaintiffs as Appellees, pp. 16-
services so Identified, which will be protected in the same manner as other 17.) As a matter of fact, in Ang vs. Toribio, 74 Phil. 129, this Court aptly pointed
property rights. Such a person shall have the remedies provided in section out:
twenty-three, Chapter V hereof.
... As trade has developed and commercial changes have come about, the law of
Any person who shall employ deception or any other means contrary to good unfair competition has expanded to keep pace with the times and the elements
faith by which he shall pass off the goods manufactured by him or in which he of strict competition in itself has ceased to be the determining factor. The owner
deals, or his business, or services of those of the one having established such of a trademark or trade-name has property right in which he is entitled to
goodwill, or who shall commit any acts calculated to produce said result, shall be protection, since there is damage to him from confusion of reputation or
guilty of unfair competition, and shall be subject to an action therefor. goodwill in the mind of the public as well as from confusion of goods. The
modern trend is to give emphasis to the unfairness of the acts and to classify
In particular, and without in any way limiting the scope of unfair competition, and treat the issue as fraud.
the following shall be deemed guilty of unfair competition:
Additionally, We quote with approval counsel's contention thus:
(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 In no uncertain terms, the statute on unfair competition extends protection to
themselves or in the wrapping of the packages in which they are contained, or the goodwill of a manufacturer or dealer. It attaches no fetish to the word
the devices or words thereon, or in any other feature of their appearance, which "competition". In plain language it declares that a "person who has Identified in
would be likely to influence purchasers to believe that the goods offered are the public the goods he manufactures or deals in, his business or services from
those of a manufacturer or dealer other than the actual manufacturer or dealer, those of others, whether or not a right in the goodwill of the said goods,
or who otherwise clothes the goods with such appearance as shall deceive the business or services so Identified, which will be protected in the same manner
public and defraud another of his legitimate trade, or any subsequent vendor of as other property rights." It denominates as "unfair competition" "any acts"
such goods or any agent of any vendor engaged in selling such goods with a like calculated to result in the passing off of other goods "for those of the one having
purpose; established such goodwill." Singularly absent is a requirement that the goodwill
sought to be protected in an action for unfair competition must have been
(b) Any person who by any artifice, or device, or who employs any other established in an actual competitive situation. Nor does the law require that the
means calculated to induce the false belief that such person is offering the deception or other means contrary to good faith or any acts calculated to pass
services of another who has Identified such services in the mind of the public; or off other goods for those of one who has established a goodwill must have been
committed in an actual competitive situation.
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To read such conditions, as defendants-appellants seek to do, in the plain In Commissioner of Internal Revenue v. United States Lines Company, this Court
prescription of the law is to re-construct it. Indeed, good-will established in other did not hold that an unlicensed foreign corporation may not sue in the
than a competitive milieu is no less a property right that deserves protection Philippines. The Court simply held that a foreign shipping company, represented
from unjust appropriation or injury. This, to us, is precisely the clear sense of by a local agent, is doing business in the Philippines so as to subject it to the
the law when it declares without equivocation that a "person who has Identified "operation of our revenue and tax."
in the mind of the public the goods he manufactures or deals in, his business or
services from those of others, has a property right in the goodwill of the said Western Equipment and Supply Co. v. Reyes, 51 Phil. 115, made clear that the
goods, business or services so Identified, which will be protected in the same disability of a foreign corporation from suing in the Philippines is limited to suits
manner as other property rights." "to enforce any legal or contract rights arising from, or growing out, of any
business which it has transacted in thePhilippine Islands." ... On the other hand,
Plaintiffs-appellees have a established goodwill. This goodwill, the trial court where the purpose of a suit is "to protect its reputation, its corporate name, its
found, defendants-appellants have pirated in clear bad faith to their unjust goodwill, whenever that reputation, corporate name or goodwill have, through
enrichment. It is strange that defendants-appellants now say that they should be the natural development of its trade, established themselves," an unlicensed
spared from the penalty of the law, because they were not really in competition foreign corporation may sue in the Philippines (at page 128). So interpreted by
with plaintiffs-appellees. (Pp. 21-22, Id.) the Supreme Court, it is clear that Section 69 of the Corporation Law does not
disqualify plaintiff-appellee Converse Rubber, which does not have a branch
In a desperate attempt to escape liability, in their first assigned error, office in any part of the Philippines and is not "doing business" in the Philippines
defendants-appellants assail the jurisdiction of the trial court, contending that (Record on Appeal, pp. 190-191), from filing and prosecuting this action for
inasmuch as Converse Rubber Corporation is a non-resident corporation, it has unfair competition.
no legal right to sue in the courts of the Philippines, citing Marshall-Wells Co. vs.
Elser & C ., 46 Phil. 70 and Commissioner of Internal Revenue vs. United States The futility of the error assigned by defendants-appellants becomes more
Lines Co., G. R. No. L-16850, May 30, 1962 (5 SCRA 175) and, furthermore, that evident in light of the explicit provision of Section 21 (a) of Republic Act No. 166,
plaintiff Edwardson Manufacturing Corporation, although "a domestic as amended, that a foreign corporation, whether or not licensed to transact
corporation, is nothing but a licensee of Converse Rubber Corporation in the business in the Philippines may bring an action for unfair competition provided
local manufacturing, advertisement, sale and distribution of the rubber-soled the country of which it "is a citizen, or in which it is domiciled, by treaty,
footwear", hence, it is equally without such personality. (p. 18, Brief of convention or law, grants a similar privilege to juristic persons in the
Defendants-Appellants). Philippines." The Convention of Paris for the Protection of Industrial Property, to
which the Philippines adheres, provides, on a reciprocal basis that citizens of a
We are not impressed. The easy and, We hold to be correct, refutation of union member may file an action for unfair competition and infringement of
defendants' position is stated adequately and understandably in plaintiffs' brief trademarks, patents, etc. (610. G. 8010) in and of the union members. The
as appellees as follows: United States of America, of which Converse Rubber is a citizen, is also a
signatory to this Convention. Section 1126 (b) and (h) of Public Law 489 of the
The disability under Section 69 of the Corporation Law of an unlicensed foreign United States of America allows corporations organized under the laws of the
corporation refers to transacting business in the Philippines and maintaining a Philippines to file an action for unfair competition in the United States of
"suit for the recovery of any debt, claim, or demand whatever" arising from its America, whether or not it is licensed to do business in the United States.
transacting business in the Philippines. In Marshall-Wells, this Court precisely (Annex "H" of Partial Stipulation of Facts, Record on Appeal, p. 192).
rejected a reading of Section 69 of the Corporation Law as "would give it a literal
meaning", i.e., "No foreign corporation shall be permitted by itself or assignee As regards the other plaintiff-appellee, Edwardson Manufacturing Corporation, it
any suit for the recovery of any deed, claim, or demand unless it shall have the is indisputable that it has a direct interest in the success of this action: as
license prescribed by Section 68 of the Law." "The effect of the statute," exclusive licensee of Converse Rubber in the manufacture and sale of "Chuck
declared this Court, "preventing foreign corporations from doing business and Taylor" shoes in the Philippines, naturally it would be directly affected by the
from bringing actions in the local courts, except on compliance with elaborate continued manufacture and sale by defendants-appellants of shoes that are
requirements, must not be unduly extended or improperly applied (at page 75).
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 182

confusingly Identical in appearance and design with "Chuck Taylor." (Brief of In the light of the foregoing provision, We find difficulty in seeing the basis of
Plaintiffs as Appellees, pp. 11-14.) the trial court for reducing the 30%, claimed by plaintiffs, of the gross earnings
of defendants from the sale of Custombuilt from 1962 to merely 1% as the
As can be seen, what is actually the only controversial matter in this case is that measure of compensatory damages to which plaintiffs are entitled for that
which refers to the assessment ot damages by the trial court, which both period. Perhaps, as His Honor pessimistically argued, defendants would suffer
plaintiffs and defendants consider erroneous, defendants maintaining, of course, crippling of their business. But it is quite clear from the circumstances
that it is excessive, even baseless, while, on the other hand, plaintiffs posit that surrounding their act of deliberately passing off the rubber shoes produced by
it is far short from what the law and the relevant circumstances require. them for those over which plaintiffs had priorly established goodwill, that
defendants had tremendously increased their volume of business and profits in
Under Section 29 of the Republic Act 166, aforequoted, it will be observed that the imitated shoes and have precisely incurred, strictly speaking, the liability of
the first paragraph thereof refers to the property rights in goodwill of a "person the damages to be paid by them be doubled, per the last sentence of Section
who has Identified in the mind of the public goods he manufactures or deals in, 23.
his business or offices from those of others, whether or not a mark or trade
name is employed", while the second paragraph speaks of "any person who shall We are of the considered opinion that the trial court was overly liberal to the
employ deception or any other means contrary to good faith by which he shall defendants-appellants. The P160,000.00 awarded by His Honor as compensatory
pass off the goods manufactured by him ... for those of the one having damages for the years 1962 to 1965 are utterly inadequate. Even the 5% of the
established such goodwill." This second paragraph, which may be read together gross sales of "Custombuilt" shoes from 1966 until its injunction is fully obeyed
with the first paragraph, makes the deceiver or imitator "guilty of unfair are short of what the law contemplates in cases of this nature. We hold that
competition and shall be subjected to an action therefore", meaning what the considering that the gross sales of defendants-appellants increased to
first paragraph refers to as the "remedies provided in Section twenty-three, P16,474,103.76, (as admitted in defendants-appellants' own brief, p. 2), only
Chapter V" of the Act. It is implicit in the decision of the trial court and the briefs 75% of which, plaintiffs-appellants generously assert corresponded to
of the parties that everyone here concerned has acted on the basis of the Custombuilt sales, it would be but fair and just to award plaintiffs-appellants
assumptions just stated. 15% of such 75% as compensatory damages from 1962 up to the finality of this
decision. In other words, 75% of P16,474,103.76 would be P12,355,577.82 and
Now, Section 23 reads: 15% of this last amount would be P1,853,336.67, which should be awarded to
plaintiffs-appellants for the whole period already stated, without any interest,
Actions, and damages and injunction for infringement. - Any person entitled to without prejudice to plaintiffs-appellants seeking by motion in the trial court in
the exclusive use of a registered mark or trade name may recover damages in a this same case any further damage should defendants-appellants continue to
civil action from any person who infringes his rights, and the measure of the disobey the injunction herein affirmed after the finality of this decision.
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 We feel that this award is reasonable. It is not farfetched to assume that the net
profit which the defendant actually made out of the infringement, or in the event profit of the imitator which, after all is what the law contemplates as basis for
such measure of damages cannot be readily ascertained with reasonable damages if it were only actually ascertainable, in the manufacture of rubber
certainty, then the court may award as damages a reasonable percentage based shoes should not be less than 20 to 25% of the gross sales. Regrettably, neither
upon the amount of gross sales of the defendant of the value of the services in of the parties presented positive evidence in this respect, and the Court is left to
connection with which the mark or trade name was used in the infringement of use as basis its own projection in the light of usual business practices. We could,
the rights of the complaining party. In cases where actual intent to mislead the to be sure, return this case to the lower court for further evidence on this point,
public or to defraud the complaining party shall be shown, in the discretion of but, inasmuch as this litigation started way back about fourteen years ago and it
the court, the damages may be doubled. would take more years before any final disposition is made hereof should take
the course, We are convinced that the above straight computation, without any
The complaining party, upon proper showing, may also be granted injunction. penalty of interest, is in accordance with the spirit of the law governing this
case.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 183

In re G. R. No. L-30505
As a matter ot fact, it is quite obvious that an action for unfair competition with
The subject matter of this appeal is the order of the trial court, incident to its prayer for an injunction partakes of the nature of an action for injunction within
main decision We have just reviewed above, dismissing "for lack 6f jurisdiction the contemplation of Section 4 of Rule 39, and this cited provision states
the contempt charge filed by plaintiffs against defendant Jacinto Rubber & explicitly that "unless otherwise ordered by the court, a judgment in an action
Plastics Co. Inc., Ace Rubber & Plastics Corporation; Philippine & Management for injunction - shall not be stayed after its rendition and before an appeal is
Corporation and their respective corporate officers. taken or during the pendency of an appeal." In the above-mentioned case of
Cia. General de Tabacos, the Court held:
Importantly, it is necessary to immediately clear up the minds of appellees in
regard to some aspects of the argument on double jeopardy discussed by their The applicant contends here: First, that the injunction is indefinite and uncertain
distinguished counsel in his preliminary argument in his brief (pp. 9-13). It is to such an extent that a person of ordinary intelligence would be unable to
contended therein that inasmuch as the denial orders of August 23, 1967, comply with it and still protect his acknowledged rights; second, that the
December 29, 1967 and January 24, 1968 have the character of acquittals, injunction is void for the reason that the judgment of the court on which it 's
contempt proceedings being criminal in nature, this appeal subjects appellees to based is not responsive to the pleadings or to the evidence in the case and has
double jeopardy. Such contention misses, however, the important consideration nothing in the record to support it; third, that the court erred in assuming
that the said denial orders, were, as explained by His Honor himself in his last jurisdiction and fining defendant after an appeal had been taken from the
two orders, based on the assumption that he had lost jurisdiction over the judgment of the court and the perpetual injunction issued thereon. There are
incident by virtue of the earlier perfection of the appeals of both parties from the other objections that need no particular discussion.
decision on the merits.
Discussing these questions generally it may be admitted, as we stated in our
It is thus the effect of this assumption, revealed later by the trial judge, on the decision in the main case (G. R No. 10251, ante p. 485) that, while the
first order of August 23, 1967 that needs clarificatory disquisition, considering complaint set forth an action on a trade-name and for unfair competition,
that the said first order was exclusively based on "the interests of justice" and accepting the plaintiff's interpretation of it, the trial court based its judgment on
"lack of merit" and made no reference at all to jurisdiction. If indeed the trial the violation of a trade-mark, although the complaint contained no allegation
court had lost jurisdiction, it would be clear that said order could have no legal with respect to a trade-mark and no issue was joined on that subject by the
standing, and the argument of double jeopardy would have no basis. pleadings and no evidence was introduced on the trial with respect thereto.
There Aas however, some evidence in the case with respect to the plaintiff's
But after mature deliberation, and in the light of Cia General de Tabacos de ownership of the trade-name "Isabela," for the violation of which the plaintiff
Filipinas vs. Alhambra Cigar & Cigarette Manufacturing Co., 33 Phil. 503, cited by was suing, and there was some evidence which might support an action of
appellant's counsel in his brief, We are convinced that the trial court in the case unfair competition, if such an action could be sustained under the statute.
at bar had jurisdiction to entertain and decide the motion for contempt in Therefore, although the judgment of the trial court was based on the violation of
question. Indeed, the enforcement of either final or preliminary-made-final a trade-mark, there was some evidence to sustain the judgment if it had been
injunctions in decisions of trial courts are immediately executory. The reason for founded on a violation of the trade-name or on unfair competition. The
this rule lies in the nature itself of the remedy. If a preliminary injunction, judgment, as we have already found in the main case, was erroneous and was
especially one issued after a hearing is enforceable immediately to protect the reversed for that reason; but having some evidence to sustain it, it was not void
rights of the one asking for it, independently of the pendency of the main action, and the injunction issued in that action was one which the court had power to
there is no reason why when that preliminary injunction is made final after issue. Although the judgment was clearly erroneous and without basis in law, it
further and fuller hearing the merits of the plaintiff's cause of action, its was, nevertheless a judgment of a court of competent jurisdiction which had
enforceability should lesser, force. The same must be true with stronger basis in authority to render that particular judgment and to issue a permanent injunction
the case of a permanent injunction issued as part ot the judgment. The aim is to thereon.
stop the act complained of immediately because the court has found it necessary
to serve the interests of justice involved in the litigation already resolve by it xxx xxx xxx
after hearing and reception of the evidence of both parties.
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... The question is not was the judgment correct on the law and the facts, but Philippine Marketing and Management Corporation. Instead it presented, over
was it a valid judgment? If so, and if the injunction issued thereon was definite the objection of the plaintiffs, the affidavit of its executive vice-president,
and certain and was within the subject matter of the judgment, the defendant Geronimo Jacinto, who affirmed that defendant Jacinto Rubber had no
was bound to obey it, however erroneous it may have been. (Pp. 505-506, 506, knowledge of, or participation in, the acts complained of in the motion to declare
33 Phil.) them in contempt of Court and that it has not in any way violated any order of
this Court. On its part, the Philippine Marketing and Management Corporation
It is interesting to note that while the trial court was of the opinion that it had presented as a witness its general manager, Aniceto Tan, who testified that the
lost jurisdiction over the motion for contempt, upon insistence of the plaintiffs, in Philippine Marketing and Management Corporation is not an agent or sister
its order of January 24, 1968, it made the following findings of fact: corporation of defendant Jacinto Rubber; that he came to know of the pendency
of this case and the issuance of the permanent injunction only on December 19,
It is not controverted on December 14, 1966, the Philippine Marketing and 1966 when served with a copy of plaintiffs' motion; and that the Philippine
Management sold to Virginia Ventures 12 pairs of "Custombuilt" rubber shoes Marketing and Management Corporation buys the "Custombuilt Rubber" shoes
bearing an Identical design and general appearance as that prohibited in the from defendant Jacinto Rubber which it resells to the general public. It is
injunction. It is likewise not controverted that subsequent to December 14, 1966 noteworthy, however, that this particular witness made several admissions in the
the sale of the said rubber shoes was advertised by Philippine Marketing and course of his testimony which shed light on the question at issue. Thus, he
Management Corporation in several metropolitan newspapers even during the admitted that prior to the formal organization of the Philippine Marketing and
pendency of the contempt proceedings. Management Corporation in January 1966 he was the sales manager of
defendant Jacinto Rubber; that after the organization of the said corporation, he
The only issue of fact is whether or not in selling and advertising the sale of the was informed that defendant Jacinto Rubber would discontinue its sales
prescribed shoes the Philippine Marketing and Management Corporation operations and instead give the exclusive distribution of the shoes to the
conspired with the defendants, particularly defendant Jacinto Rubber, or acted Philippine Marketing and Management Corporation; and that he was then
as its agent, employee or in any other capacity with knowledge of the issuance offered the position of sales manager of Philippine Marketing and Management
of the said permanent injunction. On this point, the evidence of the plaintiffs because of his extensive experience in the distribution of "Custombuilt" rubber
shows that Hermogenes Jacinto, Arturo Jacinto, Fernando Jacinto and Milagros shoes. Also, he testified that the subscribed capital stock of the Philippine
J. Jose constitute the majority of the board of directors of the Philippine Marketing and Management Corporation is only P100,000.00 out of which
Marketing and Management Corporation; that Hermogenes Jacinto is the P25,000.00 has been paid whereas its average monthly purchases of
president, Arturo Jacinto is the vice-president, and Fernando Jacinto and "Custombuilt" rubber shoes is between P300,000.00 to P400,000.00 or between
Milagros J. Jose are directors, of defendant Jacinto Rubber; that Milagros J. Jose P4,000,000.00 to P5,000,000.00 annually. Such huge purchases Philippine
is the treasurer of the Philippine Marketing and Management Corporation; and Marketing and Management Corporation is able to make, in spite of its meager
that Ramon V. Tupas, corporate secretary of the Philippine Marketing and capital, because defendant Jacinto Rubber allows it to buy on credit.
Management Corporation, actively assisted by Atty. Juan T. David, counsel of
record of the defendants, in defending the defendants in this case. It also Considering the substantial Identity of the responsible corporate officers of the
appears from the different advertisements published in the metropolitan papers defendant Jacinto Rubber and the Philippine Marketing and Management
that Philippine Marketing and Management Corporation is the exclusive Corporation, the huge volume of alleged purchases of "Custombuilt" shoes by
distributor of the questioned "Custombuilt" rubber shoes. Moreover, during the the Philippine Marketing and Management Corporation compared to its paid in
trial of this case on the merits the defendants admitted that the Philippine capital, and the cessation of the sales operations of defendant Jacinto Rubber
Marketing and Management Corporation is a sister corporation of defendant after the organization of the former, the Court is convinced beyond reasonable
Jacinto Rubber, both corporations having Identical stockholders, and doubt that the Philippine Marketing and Management Corporation is the selling
Hermogenes Jacinto and Fernando Jacinto are stockholders and incorporators of arm or branch of defendant Jacinto Rubber and that both corporations are
the Philippine Marketing and Management Corporation. controlled by substantially the same persons, the Jacinto family. The contention
of the Philippine Marketing and Management Corporation that it sold the 12 pairs
On the other hand, the defendants, particularly defendant Jacinto Rubber, of "Custombuilt" shoes on December 14, 1966 without knowledge of the
presented no evidence to disprove its intra-corporate relationship with the issuance of the injunction is belied by its conduct of continuing the sale and the
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advertisement of said shoes even during the pendency of the contempt however is that such a finding cannot be equated with an acquittal in a criminal
proceedings. This conduct clearly reveals the wilfulness and contumacy with case that bars a subsequent jeopardy. True it is that generally, contempt
which it had disregarded the injunction. Besides, it is inherently improbable that proceedings are characterized as criminal in nature, but the more accurate
defendant Jacinto Rubber and Atty. Ramon B. Tupas did not inform the juridical concept is that contempt proceedings may actually be either civil or
Philippine Marketing and Management Corporation of the issuance of the criminal, even if the distinction between one and the other may be so thin as to
injunction, a fact which undoubtedly has a material adverse effect on its be almost imperceptible. But it does exist in law. It is criminal when the purpose
business. 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
Upon the foregoing, the Court is convinced that defendants and Philippine benefit of a party. (3 Moran, Rules of Court, pp. 343-344, 1970 ed; see also
Marketing and Management Corporation are guilty of contempt of court in Perkins vs. Director of Prisons, 58 Phil. 272; Harden vs. Director of Prisons, 81
disregarding the permanent injunction issued by this Court in its decision on the Phil. 741.) And with this distinction in mind, the fact that the injunction in the
merits of the main case. However, for the reasons stated in the Order of instant case is manifestly for the benefit of plaintiffs makes of the contempt
December 29, 1967, the Court maintains that it has lost jurisdiction over the herein involved civil, not criminal. Accordingly, the conclusion is inevitable that
case. (Pp. 115-120, Record on Appeal.) 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.
Stated differently, since the trial court had jurisdiction to take cognizance of the
motion, its findings of facts should as a rule bind the parties, and, in this WHEREFORE, judgment is hereby rendered - in G. R. No. L-27425 - affirming the
connection, appellees do not seriously challenge said findings. And since We are decision of the trial court with the modification of the amount of the damages
holding that the trial court had jurisdiction, the above findings may be awarded to plaintiffs in the manner hereinabove indicated; and in G.R. No. L-
determinative of the factual issues among the parties herein. We are thus faced 30505 - the three orders of dismissal of the trial court of the contempt charges
with the following situations: against appellees are all hereby reversed, and on the basis of the factual
findings made by said court in its last order of January 24, 1968, appellees are
The first order of dismissal of August 23, 1967, albeit issued with jurisdiction, hereby declared in contempt of court and the records of the contempt
was incomplete because it contained no statements of facts and law on which it proceedings (G. R. No. L-30505) are ordered returned to the trial court for
was based in violation of the pertinent constitutional precept. It could not stand further proceedings in line with the above opinion, namely for the imposition of
as it was. the proper penalty, its decision being incomplete in that respect. Costs against
appellees in G. R. No. L-27425, no costs in G. R. No. L-30505. These decisions
The second of December 29, 1967 was still incomplete, with the added flaw that may be executed separately.
his Honor declared himself therein as having lost jurisdiction.
Concepcion Jr., Guerrero and De Castro, JJ., concur.
On other hand, while the third order of January 24, 1968 filled the ommissions
of the first two orders, it, however, the reiterated the erroneous ruling of the Antonio, J., is on leave.
second order regarding lost of jurisdiction of the court over the incident. Aquino, J., concur in the result.

Combining the three orders, it can be seen that the result is that the trial court
found from the evidence that its injunction had been violated, but it erroneously
considered itself devoid of authority to impose the appropriate penalty, for want
of jurisdiction. Upon these premises, We hold that the factual findings of the trial
court in its third order may well stand as basis tor the imposition of the proper
penalty.

To be sure, appellees are almost in the right track in contending that the first
denial order of the trial court found them not guilty. What they have overlooked
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 186

G.R. No. 144309 November 23, 2001 connection with one specific offense to be determined personally by the judge
after examination under oath or affirmation of the complainant and the
SOLID TRIANGLE SALES CORPORATION and ROBERT SITCHON, witnesses he may produce, and particularly describing the place to be searched
petitioners, and the things to be seized. [Emphasis supplied.]
vs. Criminal Procedure; Preliminary Investigation; Words and Phrases; A preliminary
THE SHERIFF OF RTC QC, Branch 93; SANLY CORPORATION, ERA investigation, by definition, also requires a finding by the authorized officer of
RADIO AND ELECTRICAL SUPPLY, LWT CO., INCORPORATED; ROD the commission of a crime.—A preliminary investigation, by definition, also
CASTRO, VICTOR TUPAZ and the PEOPLE OF THE PHILIPPINES, requires a finding by the authorized officer of the commission of a crime.
respondents. Previous to the 2000 revision, Section 1 of Rule 112 of the Rules of Court
defined a preliminary investigation as “an inquiry or proceeding to determine
Searches and Seizures; Search Warrants; Only judges have the power to issue whether there is sufficient ground to engender a well-founded belief that a crime
search warrants.—It is undisputed that only judges have the power to issue cognizable by the Regional Trial Court has been committed and the respondent
search warrants. This function is exclusively judicial. Article III of the is probably guilty thereof, and should be held for trial.”
Constitution unequivocally states: SEC. 2. The right of the people to be secure in Same; Same; Search Warrants; The proceedings for the issuance/quashal of a
their persons, houses, papers, and effects against unreasonable searches and search warrant before a court on the one hand, and the preliminary investigation
seizures of whatever nature and for any purpose shall be inviolable, and no before an authorized officer on the other, are proceedings entirely independent
search warrant or warrant of arrest shall issue except upon probable cause to be of each other.—The proceedings for the issuance/quashal of a search warrant
determined personally by the judge after examination under oath or affirmation before a court on the one hand, and the preliminary investigation before an
of the complainant and the witnesses he may produce, and particularly authorized officer on the other, are proceedings entirely independent of each
describing the place to be searched and the persons or things to be seized. other. One is not bound by the other’s finding as regards the existence of a
[Emphasis supplied.] crime. The purpose of each proceeding differs from the other. The first is to
Same; Same; Inherent in the courts’ power to issue search warrants is the determine whether a warrant should issue or be quashed, and the second,
power to quash warrants already issued.—Inherent in the courts’ power to issue whether an information should be filed in court.
search warrants is the power to quash warrants already issued. In this Same; Same; Same; When the court, in determining probable cause for issuing
connection, this Court has ruled that the motion to quash should be filed in the or quashing a search warrant, finds that no offense has been committed, it does
court that issued the warrant unless a criminal case has already been instituted not interfere with or encroach upon the proceedings in the preliminary
in another court, in which case, the motion should be filed with the latter. The investigation.—When the court, in determining probable cause for issuing or
ruling has since been incorporated in Rule 126 of the Revised Rules of Criminal quashing a search warrant, finds that no offense has been committed, it does
Procedure: SEC. 14. Motion to quash a search warrant or to suppress evidence; not interfere with or encroach upon the proceedings in the preliminary
where to file.—A motion to quash a search warrant and/or to suppress evidence investigation. The court does not oblige the investigating officer not to file an
obtained thereby may be filed in and acted upon only by the court where the information for the court’s ruling that no crime exists is only for purposes of
action has been instituted. If no criminal action has been instituted, the motion issuing or quashing the warrant. This does not, as petitioners would like to
may be filed in and resolved by the court that issued the search warrant. believe, constitute a usurpation of the executive function. Indeed, to shirk from
However, if such court failed to resolve the motion and a criminal case is this duty would amount to an abdication of a constitutional obligation.
subsequently filed in another court, the motion shall be resolved by the latter Same; Same; Same; The effect of the quashal of the warrant on the ground that
court. no offense has been committed is to render the evidence obtained by virtue of
Same; Same; In the determination of probable cause, the court must necessarily the warrant “inadmissible for any purpose in any proceeding,” including the
resolve whether or not an offense exists to justify the issuance or quashal of the preliminary investigation.—The effect of the quashal of the warrant on the
search warrant.—In the determination of probable cause, the court must ground that no offense has been committed is to render the evidence obtained
necessarily resolve whether or not an offense exists to justify the issuance or by virtue of the warrant “inadmissible for any purpose in any proceeding,”
quashal of the search warrant. Prior to the revision of December 1, 2000, Rule including the preliminary investigation. Article III of the Constitution provides.
126 of the Rules of Court provided: SEC. 3. Requisites for issuing search SEC. 3. (1) x x x. (2) Any evidence obtained in violation of this or the preceding
warrant.—A search warrant shall not issue but upon probable cause in section [Section 2] shall be inadmissible for any purpose in any proceeding. It
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may be true that, as a result of the quashal of the warrant, the private
complainant is deprived of vital evidence to establish his case, but such is the The facts are stated in the opinion of the Court.
inevitable consequence.      S.P. Rivera & Associates and Romulo, Mabanta, Buenaventura, Sayoc &
Same; Same; Same; It is puerile to argue that the court that issued the warrant Delos Angeles for petitioners. [Solid Triangle Sales Corporation vs. The Sheriff of
cannot entertain motions to suppress evidence while a preliminary investigation RTC QC, Br. 93, 370 SCRA 491(2001)]
is ongoing.—The Court finds this interpretation too contrived. Section 14, Rule
126 precisely covers situations like the one at bar. Section 14 expressly provides KAPUNAN, J.:
that a motion to quash a search warrant and/or to suppress evidence obtained
thereby may be filed in and acted upon only by the court where the action has The petition at bar stems from two cases, Search Warrant Case No. Q-3324 (99)
been instituted. Under the same section, the court which issued the search before Branch 93 of the Quezon City Regional Trial Court (RTC), and Civil Case
warrant may be prevented from resolving a motion to quash or suppress No. Q-93-37206 for damages and injunctions before Branch 91 of the same
evidence only when a criminal case is subsequently filed in another court, in court.
which case, the motion is to be resolved by the latter court. It is therefore
puerile to argue that the court that issued the warrant cannot entertain motions The facts are set forth in the Decision of the Court of Appeals dated July 6,
to suppress evidence while a preliminary investigation is ongoing. Such 1999:
erroneous interpretation would place a person whose property has been seized
by virtue of an invalid warrant without a remedy while the goods procured by x x x on January 28, 1999, Judge Apolinario D. Bruselas, Jr., Presiding Judge of
virtue thereof are subject of a preliminary investigation. RTC, Branch 93, Quezon City, upon application of the Economic Intelligence and
Intellectual Property Code; Unfair Competition; There is no unfair competition Investigation Bureau (EIIB), issued Search Warrant No. 3324 (99) against Sanly
under Section 168 of the Intellectual Property Code where a person did not pass Corporation (Sanly), respondent, for violation of Section 168 of R.A. No. 8293
off the subject goods as that of another.—We disagree with petitioners and find (unfair competition).
that the evidence presented before the trial court does not prove unfair
competition under Section 168 of the Intellectual Property Code. Sanly By virtue of Search Warrant No. 3324 (99), EIIB agents seized 451 boxes of
Corporation did not pass off the subject goods as that of another. Indeed, it Mitsubishi photographic color paper from respondent Sanly. . .
admits that the goods are genuine Mitsubishi photographic paper, which it
purchased from a supplier in Hong Kong. Petitioners also allege that private Forthwith, Solid Triangle, through Robert Sitchon, its Marketing and
respondents “made it appear that they were duly authorized to sell or distribute Communication Manager, filed with the Office of the City Prosecutor, Quezon
Mitsubishi Photo Paper in the Philippines.” Assuming that this act constitutes a City, an affidavit complaint for unfair competition against the members of the
crime, there is no proof to establish such an allegation. Board of Sanly and LWT Co., Inc. (LWT), docketed as I.S. No. 1-99-2870.
Actions; Pleadings and Practice; Affidavits of Merit; An affidavit of merit is not
necessary where the petition is verified by an authorized officer who personally Sitchon alleged that ERA Radio and Electrical Supply (ERA), owned and operated
knows the facts.—We agree with petitioners, however, that the Court of Appeals by LWT, is in conspiracy with Sanly in selling and/or distributing Mitsubishi brand
went beyond the issues when it ruled that there were no grounds for the photo paper to the damage and prejudice of Solid Triangle, [which claims to be
issuance of an order of preliminary attachment. The only issue raised with the sole and exclusive distributor thereof, pursuant to an agreement with the
respect to the preliminary attachment was whether the application for the writ Mitsubishi Corporation].
should have been denied because the same was not supported by an affidavit of
the applicant corporation, through its authorized officer, who personally knows On February 4, 1999, petitioner Solid Triangle filed with Judge Bruselas' sala an
the facts. Whether there are sufficient grounds to justify the order is a matter urgent ex parte motion for the transfer of custody of the seized Mitsubishi photo
best left to the trial court, which apparently has yet to hear the matter. Thus, we color paper stored in the office of EIIB.
sustain the Court of Appeals’ original decision holding that an affidavit of merit is
not necessary since the petition is verified by an authorized officer who On February 8, 1999, respondents Sanly, LWT and ERA moved to quash the
personally knows the facts. search warrant which was denied by Judge Bruselas in an order dated March 5,
PETITION for review on certiorari of a decision of the Court of Appeals. 1999.
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3) The Deputy Sheriff of this Court to take custody of the seized goods and
The said respondents filed a motion for reconsideration which was granted by cause their delivery to the person from whom the goods were seized without
Judge Bruselas in the first assailed order of March 18, 1999. Respondent Judge further lost [sic] of time;
held that there is doubt whether the act complained of (unfair competition) is
criminal in nature. Let a copy of this order be served by personal service upon Mr. Robert Sitchon
and Solid Triangle Sales Corporation. Serve copies also to EIIB and the
Petitioner Solid Triangle filed a motion for reconsideration contending that the respondents Rod Castro and Sanly Corporation.
quashal of the search warrant is not proper considering the pendency of the
preliminary investigation in I.S. No. 1-99-2870 for unfair competition wherein the SO ORDERED.1
seized items will be used as evidence.
Alleging grave abuse of discretion, petitioners questioned before the Court of
On March 26, 1999, Judge Bruselas issued the second assailed order denying Appeals the orders of Branch 93 of the Quezon City RTC granting private
Solid Triangle's motion for reconsideration. respondents' motion for reconsideration and denying that of petitioners', as well
as the order dated April 20, 1999 directing petitioners to, among other things,
On March 29, 1999, petitioner Solid Triangle filed with Branch 91 of the same show cause why they should not be held in contempt. Petitioners also assailed
Court, presided by Judge Lita S. Tolentino-Genilo, Civil Case No. Q-99-37206 for the order of the Quezon City RTC, Branch 91 denying their application for a writ
damages and injunction with prayer for writs of preliminary injunction and of attachment. Upon the filing of the petition on April 26, 1999, the Court of
attachment. Impleaded as defendants were Sanly, LWT and ERA. Appeals issued a temporary restraining order to prevent Judge Bruselas from
implementing the Order dated April 20, 1999.
On March 30, 1999, the defendants filed their opposition to the application for
the issuance of writs of injunction and attachment. On July 6, 1999, the Court of Appeals rendered judgment initially granting
certiorari. It held that the quashing of the warrant deprived the prosecution of
On March 31, 1999, Judge Genilo denied petitioner's application for a preliminary vital evidence to determine probable cause.
attachment on the ground that the application is not supported with an affidavit
by the applicant, through its authorized officer, who personally knows the facts. Admittedly, the City Prosecutor of Quezon City has filed a complaint for unfair
competition against private respondents and that the undergoing preliminary
Meanwhile, on April 20, 1999, Judge Bruselas issued the third assailed order, the investigation is in progress. In the said proceedings, the prosecution inevitably
dispositive portion of which reads: will present the seized items to establish a prima facie case of unfair competition
against private respondents.
WHEREFORE, the foregoing premises considered, the court directs
Considering that Judge Bruselas quashed the search warrant, he practically
1) EIIB, Mr. Robert Sitchon and Solid Triangle Sales Corporation to divulge deprived the prosecution of its evidence so vital in establishing the existence of
and report to the court the exact location of the warehouse where the goods probable cause.
subject of this proceeding are presently kept within seventy-two hours from
receipt hereof; Petitioners' reliance on Vlasons Enterprises Corporation vs. Court of Appeals
[155 SCRA 186 (1987).] is in order. Thus:
2) Mr. Robert Sitchon and Solid Triangle Sales Corporation to appear and
show cause why they should not be held in contempt of court for failure to obey The proceeding for the seizure of property in virtue of a search warrant does not
a lawful order of the court at a hearing for the purpose on 12 May 1999 at 8:30 end with the actual taking of the property by the proper officers and its delivery,
o'clock in the morning; usually constructive, to the court. The order for the issuance of the warrant is
not a final one and cannot constitute res judicata (Cruz vs. Dinglasan, 83 Phil.
333). Such an order does not ascertain and adjudicate the permanent status or
character of the seized property. By its very nature, it is provisional,
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 189

interlocutory (Marcelo vs. de Guzman, 114 SCRA 657). It is merely the first step
in the process to determine the character and title of the property. That Undisputedly, the seized goods from Sanly are genuine and not mere imitations.
determination is done in the criminal action involving the crime or crimes in This is admitted by petitioners in their application for a search warrant and
connection with which the search warrant was issued. Hence, such a criminal supporting affidavits, Annexes "A" to "D", inclusive, in their April 27, 1999
action should be prosecuted, or commenced if not yet instituted, and Submission of Annexes to this Court. It bears stressing that there is no showing
prosecuted. The outcome of the criminal action will dictate the disposition of the or allegation that Sanly has presented, sold, or passed off its photographic paper
seized property.2 as goods which come from Solid Triangle. There is no attempt on its part to
deceive.
The appellate court further ruled that the affidavit of merits is not necessary for
the order of preliminary attachment to issue considering that the petition itself is Both Sanly and Solid Triangle sell genuine Mitsubishi products. Solid Triangle
under oath: acquires its goods from Japan on the basis of its exclusive distributorship with
Mitsubishi Corporation. While Sanly buys its goods from Hongkong, claiming it is
The denial was based on the ground that the application is not supported by an a parallel importer, not an unfair competitor. As defined, a parallel importer is
affidavit of the applicant corporation, through its authorized officer, who one which imports, distributes, and sells genuine products in the market,
personally knows the facts. independently of an exclusive distributorship or agency agreement with the
manufacturer. And, this is precisely what Sanly states as its commercial status.
We cannot go along with respondent judge's theory. In Consul vs. Consul [17
SCRA 667 (1996)], the Supreme Court held: Records show that Sanly sold its photographic paper purchased from Hongkong
without altering its appearance. It is distributed in the same Mitsubishi box with
Affidavit of merits has a known purpose: Courts and parties should not require its logo and distinguishing marks as marketed in Japan. The same brown paper
the machinery of justice to grind anew, if the prospects of a different conclusion with the Mitsubishi seal is wrapped around its products. Copies of the
cannot be reasonably reached should relief from judgment be granted. We look importation documents and the certification on imports issued by the Philippine
back at the facts here. The petition for relief is verified by petitioner himself. The government recognized Societe' Generale' d' Surveillance (SGS) were appended
merits of petitioner's case are apparent in the recitals of the petition. Said to the motion to quash search warrant.
petition is under oath. That oath, we believe, elevates the petition to the same
category as a separate affidavit. To require defendant to append an affidavit of Thus, on factual basis, the real dispute is actually between Solid Triangle and
merits to his verified petition to the circumstances, is to compel him to do the the manufacturer Mitsubishi. If Solid Triangle feels aggrieved, it should sue
unnecessary. Therefore, the defect pointed by the court below is one of forms, Mitsubishi for damages, if at all for breach of its distributorship. But that is
not of substance. Result: Absence of a separate affidavit is of de minimis between them.
importance.3
Certainly, there is here no probable cause to justify the issuance of a search
Upon motion by respondents, however, the Court of Appeals reversed itself. In warrant based on a criminal action for "unfair competition."
its "Amendatory Decision," the appellate court held that there was no probable
cause for the issuance of the search warrant. Accordingly, the evidence obtained Therefore, since there is no probable cause for unfair competition in this case,
by virtue of said warrant was inadmissible in the preliminary investigation. then the quashal of the search warrant by respondent Judge Bruselas is valid.
This being the case, there is merit in the motion for reconsideration.
x x x Under Sections 168 and 170 of R.A. 8293 (the Intellectual Property Code),
there is unfair competition if the alleged offender has given to his goods the In ascertaining the legality of a search warrant and the validity of the search and
general appearance of the goods of another manufacturer or dealer and sells or seizure conducted by the EIIB agents by virtue of the warrant, it is essential that
passes them off as goods of that manufacturer or dealer in order to deceive or a crime has been committed or is being committed and that the things seized
defraud the general public or the legitimate trader. Also, if he makes false are fruits of the crime or the means by which it is committed.
statements in the course of trade to discredit the goods, business, or services of
another.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 190

The validity of a search and seizure is of constitutional dimensions. The right to In assailing the Amendatory Decision of the Court of Appeals, petitioners argue
privacy and the sanctity of a person's house, papers and effects against that:
unreasonable searches and seizures are not only ancient. They are also
zealously protected. I.

xxx xxx xxx THE JUDGE WHO ISSUED A SEARCH WARRANT THAT HAS ALREADY BEEN
IMPLEMENTED CANNOT QUASH THE WARRANT ANYMORE, AT LEAST WITHOUT
Solid Triangle contends that the quashal of the search warrant deprived it of its WAITING FOR THE FINDINGS OF THE CITY PROSECUTOR WHO HAS THE
right to prove a prima facie case of unfair competition in the preliminary EXCLUSIVE JURISDICTION TO DETERMINE PROBABLE CAUSE.
investigation. We initially agreed with it.
II.
While Solid Triangle has the right to present every single piece of evidence it can
gather and muster, however, it has no right to prove its case through the use of IN THE PARALLEL IMPORTATION EFFECTED BY THE RESPONDENTS WITH
illegally seized evidence secured in derogation of a constitutionally guaranteed DECEIT AND BAD FAITH, THERE EXISTS PROBABLE CAUSE THAT THE CRIME
right. OF UNFAIR COMPETITION UNDER THE INTELLECTUAL PROPERTY CODE HAS
BEEN COMMITTED BY THE RESPONDENTS.
The constitutional provision that any evidence obtained in violation of the
provision against unreasonable searches and seizures "shall be inadmissible for III.
any purpose in any proceeding" finds application here. The goods seized without
probable cause are fruits of the poisonous tree and cannot be used for the PETITIONERS' APPLICATION FOR A WRIT OF ATTACHMENT CANNOT BE
purpose of proving unfair competition during preliminary investigation DENIED ON THE GROUND THAT AN AFFIDAVIT OF MERITS IS NOT APPENDED
proceedings. TO THE COMPLAINT, AS THE COURT OF APPEALS HAS ALREADY RULED, AND
ON THE GROUND THAT THERE IS NO JUSTIFICATION FOR IT BECAUSE THE
The case of Vlasons Enterprises Corporation vs. Court of Appeals does not apply QUESTIONS PERTINENT THERETO ARE NOT BEFORE THE COURT OF APPEALS
since it involved a different set of facts and issues. BUT BEFORE THE TRIAL COURT.

On the contrary, it is the case of People vs. Court of Appeals [216 SCRA 101 IV.
(1992)] that governs, where the Supreme Court ruled that with the quashal of
the search warrant, the seized goods could not be used as evidence for any PETITIONERS CANNOT BE HELD LIABLE FOR CONTEMPT IN NOT RETURNING
purpose, in any proceeding.4 THE GOODS SUBJECT OF THE SEARCH WARRANT NOTWITHSTANDING THE
REFUSAL OF THE COURT OF APPEALS TO RULE ON THIS POINT FURTHER
As regards the preliminary attachment, the appellate court found that there was WHICH IS A GRIEVOUS ERROR TO THE PREJUDICE OF THE PETITIONERS.6
no ground for the issuance of the writ because:
Petitioners contend that the Constitution does not authorize the judge to reverse
x x x Sanly does not deny that it sells Mitsubishi photographic color paper. But himself and quash the warrant, "especially after goods had been seized pursuant
there is no showing that it attempts to depart from country, defraud Solid to the search warrant, and the prosecution is poised to push forward with the
Triangle or the buying public, conceal or dispose of unjustly detained personal goods as evidence."7 In finding that doubt exists that a crime has been
property, or commit any of the acts provided in Rule 57 of the 1997 Rules of committed, it is argued that the judge "trench[ed] upon the prerogative and
Civil Procedure as grounds for the issuance of a writ of preliminary attachment.5 duty of the city prosecutor."8

Petitioners moved for reconsideration but the same was denied by the Court of The contention has no merit.
Appeals in its Resolution dated August 4, 2000.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 191

It is undisputed that only judges have the power to issue search warrants.9 This that the item(s), article(s) or object(s) sought in connection with said offense or
function is exclusively judicial. Article III of the Constitution unequivocally states: subject to seizure and destruction by law is in the place to be searched.12

SECTION 2. The right of the people to be secure in their persons, houses, In Kenneth Roy Savage/K Angelin Export Trading vs. Taypin,13 the Court was
papers, and effects against unreasonable searches and seizures of whatever confronted with a search warrant that was issued purportedly in connection with
nature and for any purpose shall be inviolable, and no search warrant or warrant unfair competition involving design patents. The Court held that the alleged
of arrest shall issue except upon probable cause to be determined personally by crime is not punishable under Article 189 of the Revised Penal Code, and
the judge after examination under oath or affirmation of the complainant and accordingly, quashed the search warrant issued for the non-existent crime.
the witnesses he may produce, and particularly describing the place to be
searched and the persons or things to be seized. [Emphasis supplied.] In the issuance of search warrants, the Rules of Court requires a finding of
probable cause in connection with one specific offense to be determined
Inherent in the courts' power to issue search warrants is the power to quash personally by the judge after examination of the complainant and the witnesses
warrants already issued. In this connection, this Court has ruled that the motion he may produce, and particularly describing the place to be searched and the
to quash should be filed in the court that issued the warrant unless a criminal things to be seized. Hence, since there is no crime to speak of, the search
case has already been instituted in another court, in which case, the motion warrant does not even begin to fulfill these stringent requirements and is
should be filed with the latter.10 The ruling has since been incorporated in Rule therefore defective on its face. x x x.
126 of the Revised Rules of Criminal Procedure:
A preliminary investigation, by definition, also requires a finding by the
SECTION 14. Motion to quash a search warrant or to suppress evidence; authorized officer of the commission of a crime. Previous to the 2000 revision,
where to file. — A motion to quash a search warrant and/or to suppress Section 1 of Rule 112 of the Rules of Court defined a preliminary investigation as
evidence obtained thereby may be filed in and acted upon only by the court "an inquiry or proceeding to determine whether there is sufficient ground to
where the action has been instituted. If no criminal action has been instituted, engender a well-founded belief that a crime cognizable by the Regional Trial
the motion may be filed in and resolved by the court that issued the search Court has been committed and the respondent is probably guilty thereof, and
warrant. However, if such court failed to resolve the motion and a criminal case should be held for trial.''14
is subsequently filed in another court, the motion shall be resolved by the latter
court. Section 2 of the same Rule enumerates who may conduct preliminary
investigations:
In the determination of probable cause, the court must necessarily resolve
whether or not an offense exists to justify the issuance or quashal of the search SECTION 2. Officers authorized to conduct preliminary investigations. — The
warrant. Prior to the revision of December 1, 2000, Rule 126 of the Rules of following may conduct preliminary investigations:
Court provided:
(a) Provincial or city fiscals and their assistants;
SECTION 3. Requisites for issuing search warrant. — A search warrant shall
not issue but upon probable cause in connection with one specific offense to be (b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Courts;
determined personally by the judge after examination under oath or affirmation
of the complainant and the witnesses he may produce, and particularly (c) National and Regional state prosecutors; and
describing the place to be searched and the things to be seized [Emphasis
supplied.]11 (d) Such other officers as may be authorized by law.

Note that probable cause is defined as: Their authority to conduct preliminary investigations shall include all crimes
cognizable by the proper court in their respective territorial jurisdictions.15
. . .the existence of such facts and circumstances which could lead a reasonably
discreet and prudent man to believe that an offense has been committed and
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 192

The determination of probable cause during a preliminary investigation has been a crime has been committed and that probable cause exists for purposes of filing
described as an executive function.16 the information.

The proceedings for the issuance/quashal of a search warrant before a court on Petitioners also argue that Section 14, Rule 126 of the Revised Rules of Criminal
the one hand, and the preliminary investigation before an authorized officer on Procedure, supra, while intended "to resolve conflicts of responsibility between
the other, are proceedings entirely independent of each other. One is not bound courts," "does not expressly cover the situation where the criminal complaint is
by the other's finding as regards the existence of a crime. The purpose of each pending with the prosecutor." In such a case, petitioners submit, the public
proceeding differs from the other. The first is to determine whether a warrant prosecutor should be allowed to resolve the question of whether or not probable
should issue or be quashed, and the second, whether an information should be cause exists.17
filed in court.
The Court finds this interpretation too contrived. Section 14, Rule 126 precisely
When the court, in determining probable cause for issuing or quashing a search covers situations like the one at bar. Section 14 expressly provides that a motion
warrant, finds that no offense has been committed, it does not interfere with or to quash a search warrant and/or to suppress evidence obtained thereby may be
encroach upon the proceedings in the preliminary investigation. The court does filed in and acted upon only by the court where the action has been instituted.
not oblige the investigating officer not to file an information for the court's ruling Under the same section, the court which issued the search warrant may be
that no crime exists is only for purposes of issuing or quashing the warrant. This prevented from resolving a motion to quash or suppress evidence only when a
does not, as petitioners would like to believe, constitute a usurpation of the criminal case is subsequently filed in another court, in which case, the motion is
executive function. Indeed, to shirk from this duty would amount to an to be resolved by the latter court. It is therefore puerile to argue that the court
abdication of a constitutional obligation. that issued the warrant cannot entertain motions to suppress evidence while a
preliminary investigation is ongoing. Such erroneous interpretation would place a
The effect of the quashal of the warrant on the ground that no offense has been person whose property has been seized by virtue of an invalid warrant without a
committed is to render the evidence obtained by virtue of the warrant remedy while the goods procured by virtue thereof are subject of a preliminary
"inadmissible for any purpose in any proceeding," including the preliminary investigation
investigation. Article III of the Constitution provides:
We now turn to the question of whether the facts, as presented before the trial
SECTION 3. (1) . . . court, constitute an offense.

(2) Any evidence obtained in violation of this or the preceding section Private respondents are alleged to have committed unfair competition in
[Section 2] shall be inadmissible for any purpose in any proceeding. violation of Section 168 of the Intellectual Property Code, which states:

It may be true that, as a result of the quashal of the warrant, the private SECTION 168. Unfair Competition, Rights, Regulation and Remedies. — 168.1
complainant is deprived of vital evidence to establish his case, but such is the A person who has identified in the mind of the public goods he manufactures or
inevitable consequence. deals in, his business or services from those of others, whether or not a
registered mark is employed, has a property right in the goodwill of the said
Nevertheless, the inadmissibility of the evidence obtained through an illegal goods, business or services so identified, which will be protected in the same
warrant does not necessarily render the preliminary investigation academic. The manner as other property rights.
preliminary investigation and the filing of the information may still proceed if,
because of other (admissible) evidence, there exists "sufficient ground to 168.2 Any person who shall employ deception or any other means contrary to
engender a well-founded belief that a crime has been committed and the good faith by which he shall pass off the goods manufactured by him or in which
respondent is probably guilty thereof, and should be held for trial." The finding he deals, or his business, or services for those of the one having established
by the court that no crime exists does not preclude the authorized officer such goodwill, or who shall commit any acts calculated to produce said result,
conducting the preliminary investigation from making his own determination that shall be guilty of unfair competition, and shall be subject to an action therefor.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 193

168.3 In particular, and without in any way limiting the scope of protection
against unfair competition, the following shall be deemed guilty of unfair (b) Respondents even covered the boxes with newspapers to conceal true
competition: identity.

(a) Any person, who is selling his goods and gives them the general (c) Being also engaged in the sale of photo equipments [sic] and having
appearance of goods of another manufacturer or dealer, either as to the goods had the occasion of participating in the same exhibit with petitioner Solid
themselves or in the wrapping of the packages in which they are contained, or Triangle several times already, respondents certainly knew that petitioner Solid
the devices or words thereon, or in any other feature of their appearance, which Triangle is the sole and exclusive importer and distributor of Mitsubishi Photo
would be likely to influence purchasers to believe that the goods offered are Paper.
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 (d) Two agents of the EIIB were also able to confirm from a salesgirl of
public and defraud another of his legitimate trade, or any subsequent vendor of respondents that substantial quantity of stocks of Mitsubishi Photo Paper are
such goods or any agent of any vendor engaged in selling such goods with a lie available at respondents' store and that the products are genuine, as they are
purpose; duly authorized to sell and distribute it to interested customers.

(b) Any person who by any artifice, or device, or who employs any other (e) No better proof of unfair competition is the seizure of the goods, 451
means calculated to induce the false belief that such person is offering the boxes of Mitsubishi photographic color paper.18
service of another who has identified such services in the mind of the public; or
Petitioners further expound:
(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 47. We may categorize the acts of the respondents as "underground sales
discredit the goods, business or services of another. and marketing" of genuine goods, undermining the property rights of petitioner
Solid Triangle. The Court of Appeals itself recognized the rights of a dealer. The
168.4 The remedies provided by Sections 156, 157 and 161 shall apply mutatis acts of the respondents were made to appropriate unjustly the goodwill of
mutandis. petitioner Solid Triangle, and goodwill is protected by the law on unfair
competition.
The same law, in Section 170, provides the penalty for violation of Section 168:
48. Petitioner Solid Triangle has established a trade or business in which it
SECTION 170. Penalties. — Independent of the civil and administrative had acquired goodwill and reputation that will be protected, and so, to permit
sanctions imposed by law, a criminal penalty of imprisonment from two (2) years respondents to continue importing and distributing Mitsubishi Photo Paper,
to five (5) years and a fine ranging from Fifty thousand pesos (50,000) to Two would be to countenance the unlawful appropriation of the benefit of a goodwill
hundred thousand pesos (200,000), shall be imposed on any person who is which petitioner Solid Triangle has acquired and permit the respondent to grab
found guilty of committing any of the acts mentioned in Section 155, Section the reputation or goodwill of the business of another.
168 and Subsection 169.1.
49. . . petitioners have a valid cause to complain against respondents for the
Petitioners submit that "the importation of even genuine goods can constitute a criminal violation of the Intellectual Property Law when the latter made it appear
crime under the Intellectual Property Code so long as fraud or deceit is present." that they were duly authorized to sell or distribute Mitsubishi Photo Paper in the
The intent to deceive in this case, according to petitioners, is "patent" "from the Philippines, when in truth and in fact they were not, and when they were hiding
following undisputed facts": their importation from the petitioners by such acts as removing the Emulsion
Number and Type and covering the boxes with old newspapers.19
(a) Before marketing its product, the respondents totally obliterated and
erased the Emulsion Number and Type that was printed on the box/carton of the We disagree with petitioners and find that the evidence presented before the
product because of which the source of the goods can no longer be traced. trial court does not prove unfair competition under Section 168 of the
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 194

Intellectual Property Code. Sanly Corporation did not pass off the subject goods
as that of another. Indeed, it admits that the goods are genuine Mitsubishi SO ORDERED.
photographic paper, which it purchased from a supplier in Hong Kong.20
Petitioners also allege that private respondents "made it appear that they were Davide, Jr., C.J., Puno, Pardo, and Ynares-Santiago, JJ., concur.
duly authorized to sell or distribute Mitsubishi Photo Paper in the Philippines."
Assuming that this act constitutes a crime, there is no proof to establish such an
allegation.

We agree with petitioners, however, that the Court of Appeals went beyond the
issues when it ruled that there were no grounds for the issuance of an order of
preliminary attachment. The only issue raised with respect to the preliminary
attachment was whether the application for the writ should have been denied
because the same was not supported by an affidavit of the applicant
corporation, through its authorized officer, who personally knows the facts.
Whether there are sufficient grounds to justify the order is a matter best left to
the trial court, which apparently has yet to hear the matter. Thus, we sustain
the Court of Appeals' original decision holding that an affidavit of merit is not
necessary since the petition is verified by an authorized officer who personally
knows the facts.

Similarly premature is whether petitioners' failure to return the goods to

respondents constituted indirect contempt. The assailed order dated April 20,
1999 was a "show cause" order. Before any hearing on the order could be held,
petitioners promptly filed a petition for certiorari. Clearly, the trial court had yet
to rule on the matter, and for this Court now to hold petitioners' act
contemptuous would preempt said court.

WHEREFORE, the petition is GRANTED IN PART. The Amendatory Decision of

the Court of Appeals dated March 31, 2000, as well as its Resolution dated
August 4, 2000, is AFFIRMED insofar as it holds that (1) the Quezon City
Regional Trial Court, Branch 93, has the power to determine the existence of a
crime in quashing a search warrant and, (2) the evidence does not support a
finding that the crime of unfair competition has been committed by respondents;
and REVERSED insofar as it holds that (1) there are no grounds to warrant the
issuance of a writ of preliminary attachment and (2) petitioners are guilty of
contempt. The case is remanded for further proceedings to the courts of origin,
namely, Branch 91 of RTC, Quezon City for resolution of the application for a
writ of attachment, and Branch 93 of the same court for resolution of the
application to cite petitioners for contempt.

Petitioners are ordered to return to respondent Sanly Corporation the 451 boxes
of Mitsubishi photographic color paper seized by virtue of Search Warrant No.
3324 (99) issued by the Quezon City Regional Trial Court, Branch 93.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 195

G.R. No. 161823 March 22, 2007 and Article 189 (1) of the Revised Penal Code, petitioner may apply for a search
warrant in any court where any element of the alleged offense was committed,
SONY COMPUTER ENTERTAINMENT, INC., Petitioner, including any of the courts within the National Capital Region (Metro Manila).
vs.
SUPERGREEN, INCORPORATED, Respondent. PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
Search Warrants; Jurisdictions; Intellectual Property Code of the Philippines
(R.A. No. 8293); Unfair Competition; Continuing Crimes; A Regional Trial Court The facts are stated in the opinion of the Court.
has no jurisdiction to issue a warrant for a search outside its territorial      Bengzon, Negre, Untalan for petitioner.
jurisdiction—the RTC of Manila has no authority to issue a search warrant for      Jorge Cesar M. Sandiego for respondent. [Sony Computer Entertainment,
offenses committed in Cavite; The instant case involves a transitory or Inc. vs. Supergreen, Incorporated, 518 SCRA 750(2007)]
continuing offense of unfair competition under Section 168 of R.A. No. 8293.—
To start, we cautioned that our pronouncement in Malaloan should be read into DECISION
the Judiciary Reorganization Act of 1980 conferring on the regional trial courts
and their judges a territorial jurisdiction, regional in scope. Both the main QUISUMBING, J.:
decision and the dissent in Malaloan recognized this. Now, in the present case,
respondent’s premises in Cavite, within the Fourth Judicial Region, is definitely This petition for review seeks to reverse the Decision1 dated June 30, 2003 of
beyond the territorial jurisdiction of the RTC of Manila, in the National Capital the Court of Appeals in CA-G.R. SP No. 67612 and the Resolution2 dated
Region. Thus, the RTC of Manila does not have the authority to issue a search January 16, 2004, denying reconsideration. The Court of Appeals had denied the
warrant for offenses committed in Cavite. Hence, petitioner’s reliance in petition for certiorari assailing the trial court’s quashal of the search warrant.
Malaloan is misplaced. Malaloan involved a court in the same judicial region
where the crime was committed. The instant case involves a court in another The case stemmed from the complaint filed with the National Bureau of
region. Any other interpretation re-defining territorial jurisdiction would amount Investigation (NBI) by petitioner Sony Computer Entertainment, Inc., against
to judicial legislation. Nonetheless, we agree with petitioner that this case respondent Supergreen, Incorporated. The NBI found that respondent engaged
involves a transitory or continuing offense of unfair competition under Section in the reproduction and distribution of counterfeit "PlayStation" game software,
168 of Republic Act No. 8293. consoles and accessories in violation of Sony Computer’s intellectual property
Unfair Competition; Elements of Unfair Competition under Art. 189 (1) of the rights. Thus, NBI applied with the Regional Trial Court (RTC) of Manila, Branch 1
Revised Penal Code.—Pertinent too is Article 189 (1) of the Revised Penal Code for warrants to search respondent’s premises in Parañaque City and Cavite. On
that enumerates the elements of unfair competition, to wit: (a) That the April 24, 2001, the RTC of Manila issued Search Warrants Nos. 01-1986 to 01-
offender gives his goods the general appearance of the goods of another 1988 covering respondent’s premises at Trece-Tanza Road, Purok 7, Barangay
manufacturer or dealer; (b) That the general appearance is shown in the (1) de Ocampo, Trece Martires City, Cavite, and Search Warrants Nos. 01-1989 to
goods themselves, or in the (2) wrapping of their packages, or in the (3) device 01-1991 covering respondent’s premises at Room 302, 3rd Floor Chateau de
or words therein, or in (4) any other feature of their appearance; (c) That the Baie Condominium, 149 Roxas Boulevard corner Airport Road, Parañaque City.
offender offers to sell or sells those goods or gives other persons a chance or The NBI simultaneously served the search warrants on the subject premises and
opportunity to do the same with a like purpose; and (d) That there is actual seized a replicating machine and several units of counterfeit "PlayStation"
intent to deceive the public or defraud a competitor. consoles, joy pads, housing, labels and game software.
Same; Where a person’s imitation of the general appearance of another person’s
goods was done allegedly in Cavite but it sold the goods allegedly in Metro On June 11, 2001, respondent filed a motion to quash Search Warrants Nos. 01-
Manila, the alleged acts would constitute a transitory or continuing offense.— 1986 to 01-1988 and/or release of seized properties on the ground that the
Respondent’s imitation of the general appearance of petitioner’s goods was done search warrant failed to particularly describe the properties to be seized. The
allegedly in Cavite. It sold the goods allegedly in Mandaluyong City, Metro trial court denied the motion for lack of merit.
Manila. The alleged acts would constitute a transitory or continuing offense.
Thus, clearly, under Section 2 (b) of Rule 126, Section 168 of Rep. Act No. 8293
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 196

On August 4, 2001, respondent filed another motion to quash, this time, III
questioning the propriety of the venue. Petitioner opposed the motion on the
ground that it violated the omnibus motion rule wherein all objections not WHETHER OR NOT THE OFFENSES INVOLVED IN THE SUBJECT SEARCH
included shall be deemed waived. In an Order3 dated October 5, 2001, the trial WARRANTS ARE "CONTINUING CRIMES" WHICH MAY BE VALIDLY TRIED IN
court affirmed the validity of Search Warrants Nos. 01-1989 to 01-1991 covering ANOTHER JURISDICTION WHERE THE OFFENSE WAS PARTLY COMMITTED.7
respondent’s premises in Parañaque City, but quashed Search Warrants Nos. 01-
1986 to 01-1988 covering respondent’s premises in Cavite. The trial court held In sum, we are asked to resolve whether the quashal of Search Warrants Nos.
that lack of jurisdiction is an exception to the omnibus motion rule and may be 01-1986 to 01-1988 was valid.
raised at any stage of the proceedings. The dispositive portion of the order read,
Citing Malaloan v. Court of Appeals,8 where this Court clarified that a search
Accordingly, Search Warrants Nos. 01-1986, 01-1987 and 01-1988 are hereby warrant application is only a special criminal process and not a criminal action,
ordered quashed and set aside. petitioner contends that the rule on venue for search warrant application is not
jurisdictional. Hence, failure to raise the objection waived it. Moreover, petitioner
The National Bureau of Investigation and/or any other person in actual custody maintains that applying for search warrants in different courts increases the
of the goods seized pursuant thereto are hereby directed to return the same to possibility of leakage and contradictory outcomes that could defeat the purpose
the respondents. for which the warrants were issued.

SO ORDERED.4 Petitioner further asserts that even granting that the rules on search warrant
applications are jurisdictional, the application filed either in the courts of the
Petitioner elevated the matter to the Court of Appeals, which dismissed the National Capital Region or Fourth Judicial Region is still proper because the
petition for certiorari. The appellate court ruled that under Section 2,5 Rule 126 crime was continuing and committed in both Parañaque City and Cavite.
of the Rules of Court, the RTC of Manila had no jurisdiction to issue a search
warrant enforceable in Cavite, and that lack of jurisdiction was not deemed Respondent counters that Section 2 is explicit on where applications should be
waived. Petitioner moved for reconsideration but the same was denied. The filed and provided the territorial limitations on search warrants. Respondent
Court of Appeals disposed, as follows: claims that Malaloan is no longer applicable jurisprudence with the promulgation
of the 2000 Rules of Criminal Procedure. Even granting that petitioner has
WHEREFORE, the instant Petition is hereby denied and accordingly DISMISSED. compelling reasons, respondent maintains that petitioner cannot file the
application with the RTC of Manila because Cavite belongs to another judicial
SO ORDERED.6 region. Respondent also argues that the doctrine on continuing crime is
applicable only to the institution of a criminal action, not to search warrant
Petitioner now comes before us raising the following issues: applications which is governed by Rule 126, and in this case Section 2.

I To start, we cautioned that our pronouncement in Malaloan should be read into

the Judiciary Reorganization Act of 19809 conferring on the regional trial courts
WHETHER OR NOT VENUE IN SEARCH WARRANT APPLICATIONS INVOLVES and their judges a territorial jurisdiction, regional in scope. Both the main
TERRITORIAL JURISDICTION. decision and the dissent in Malaloan recognized this.

II Now, in the present case, respondent’s premises in Cavite, within the Fourth
Judicial Region, is definitely beyond the territorial jurisdiction of the RTC of
WHETHER OR NOT THE CORRECTNESS OF VENUE IN AN APPLICATION FOR Manila, in the National Capital Region. Thus, the RTC of Manila does not have
SEARCH WARRANT IS DEEMED WAIVED IF NOT RAISED BY THE RESPONDENT the authority to issue a search warrant for offenses committed in Cavite. Hence,
IN ITS MOTION TO QUASH. petitioner’s reliance in Malaloan is misplaced. Malaloan involved a court in the
same judicial region where the crime was committed. The instant case involves a
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 197

court in another region. Any other interpretation re-defining territorial

jurisdiction would amount to judicial legislation.10 (b) That the general appearance is shown in the (1) goods themselves, or in the
(2) wrapping of their packages, or in the (3) device or words therein, or in (4)
Nonetheless, we agree with petitioner that this case involves a transitory or any other feature of their appearance;
continuing offense of unfair competition under Section 168 of Republic Act No.
8293,11 which provides, (c) That the offender offers to sell or sells those goods or gives other persons a
chance or opportunity to do the same with a like purpose; and
SEC. 168. Unfair Competition, Rights, Regulation and Remedies. – …
(d) That there is actual intent to deceive the public or defraud a competitor.12
168.2. Any person who shall employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in which Respondent’s imitation of the general appearance of petitioner’s goods was done
he deals, or his business, or services for those of the one having established allegedly in Cavite. It sold the goods allegedly in Mandaluyong City, Metro
such goodwill, or who shall commit any acts calculated to produce said result, Manila. The alleged acts would constitute a transitory or continuing offense.
shall be guilty of unfair competition, and shall be subject to an action therefor. Thus, clearly, under Section 2 (b) of Rule 126, Section 168 of Rep. Act No. 8293
and Article 189 (1) of the Revised Penal Code, petitioner may apply for a search
168.3. In particular, and without in any way limiting the scope of protection warrant in any court where any element of the alleged offense was committed,
against unfair competition, the following shall be deemed guilty of unfair including any of the courts within the National Capital Region (Metro Manila).13
competition:
WHEREFORE, the petition is GRANTED. The Decision dated June 30, 2003 and
(a) Any person, who is selling his goods and gives them the general appearance the Resolution dated January 16, 2004 of the Court of Appeals in CA-G.R. SP No.
of goods of another manufacturer or dealer, either as to the goods themselves 67612 are SET ASIDE. The Order dated October 5, 2001 of the Regional Trial
or in the wrapping of the packages in which they are contained, or the devices Court of Manila, Branch 1, is PARTLY MODIFIED. Search Warrants Nos. 01-1986
or words thereon, or in any other feature of their appearance, which would be to 01-1988 are hereby declared valid.
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 SO ORDERED.
otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with a like
purpose;

(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another.

Pertinent too is Article 189 (1) of the Revised Penal Code that enumerates the
elements of unfair competition, to wit:

(a) That the offender gives his goods the general appearance of the goods of
another manufacturer or dealer;
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 198

G.R. No. 202423 January 28, 2013 of Republic Act No. (RA) 8293, otherwise known as the "Intellectual Property
Code of the Philippines."6
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-ONG,
Petitioners, The disputed marks in this case are the "HIPOLITO & SEA HORSE &
vs. TRIANGULAR DEVICE," "FAMA," and other related marks, service marks and
VICENTE LO, Respondent. trade names of Casa Hipolito S.A. Portugal appearing in kerosene burners.
Respondent Vicente Lo and Philippine Burners Manufacturing Corporation
Intellectual Properties; Trademarks; Trade Names; The law on trademarks and (PBMC) filed a complaint against the officers of Wintrade Industrial
trade names precisely precludes a person from profiting from the business SalesCorporation (Wintrade), including petitioners Chester Uyco, Winston
reputation built by another and from deceiving the public as to the origins of Uychiyong and Cherry Uyco-Ong, and of National Hardware, including Mario Sy
products.—The evidence shows that petitioners, who are officers of Wintrade, Chua, for violation of Section 169.1, in relation to Section 170, of RA 8293.
placed the words “Made in Portugal” and “Original Portugal” with the disputed
marks knowing fully well—because of their previous dealings with the Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes
Portuguese company—that these were the marks used in the products of Casa para Gass, Lda. (Gasirel), the owner of the disputed marks, executed a deed of
Hipolito S.A. Portugal. More importantly, the products that Wintrade sold were assignment transferring these marks in his favor, to be used in all countries
admittedly produced in the Philippines, with no authority from Casa Hipolito S.A. except for those in Europe and America.7 In a test buy, Lo purchased from
Portugal. The law on trademarks and trade names precisely precludes a person National Hardware kerosene burners with the subject marks and the
from profiting from the business reputation built by another and from deceiving designations "Made in Portugal" and "Original Portugal" in the wrappers. These
the public as to the origins of products. These facts support the consistent products were manufactured by Wintrade. Lo claimed that as the assignee for
findings of the State Prosecutor, the DOJ and the CA that probable cause exists the trademarks, he had not authorized Wintrade to use these marks, nor had
to charge the petitioners with false designation of origin. The fact that the Casa Hipolito S.A. Portugal. While a prior authority was given to Wintrade’s
evidence did not come from Lo, but had been given by the petitioners, is of no predecessor-in-interest, Wonder Project & Development Corporation (Wonder),
significance. Casa Hipolito S.A. Portugal had already revoked this authority through a letter of
cancellation dated May 31, 1993.8 The kerosene burners manufactured by
MOTION FOR RECONSIDERATION of a resolution of the Supreme Court. Wintrade have caused confusion, mistake and deception on the part of the
   The facts are stated in the resolution of the Court. buying public. Lo stated that the real and genuine burners are those
 Angara, Abello, Concepcion, Regala & Cruz for petitioners. manufactured by its agent, PBMC.
  Sapalo, Velez, Bundang & Bulilan Law Offices for respondent. [Uyco vs. Lo, 689
SCRA 378(2013)] In their Answer, the petitioners stated that they are the officers of Wintrade
which owns the subject trademarks and their variants. To prove this assertion,
RESOLUTION they submitted as evidence the certificates of registration with the Intellectual
Property Office. They alleged that Gasirel, not Lo, was the real party-in-interest.
BRION, J.: They allegedly derived their authority to use the marks from Casa Hipolito S.A.
Portugal through Wonder, their predecessor-in-interest. Moreover, PBMC had
We resolve the motion for reconsideration1 dated October 22, 2012 filed by already ceased to be a corporation and, thus, the licensing agreement between
petitioners Chester Uyco, Winston Uychiyong and Cherry C. Uyco-Ong to set PBMC and Lo could not be given effect, particularly because the agreement was
aside the Resolution2 dated September 12, 2012 of this Court, which affirmed not notarized and did not contain the provisions required by Section 87 of RA
the decision3 dated March 9, 2012 and the resolution4 dated June 21, 2012 of 8293. The petitioners pointed out that Lo failed to sufficiently prove that the
the Court of Appeals (CA) in CA-G.R. SP No. 111964. The CA affirmed the burners bought from National Hardware were those that they manufactured. But
resolution5 dated September 1, 2008 of the Department of Justice (DOJ). Both at the same time, they also argued that the marks "Made in Portugal" and
the CA and the DOJ found probable cause to charge the petitioners with false "Original Portugal" are merely descriptive and refer to the source of the design
designation of origin, in violation of Section 169.1, in relation with Section 170, and the history of manufacture.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 199

In a separate Answer, Chua admitted that he had dealt with Wintrade for several The admission in the petitioners’ Joint Affidavit is not in any way hypothetical, as
years and had sold its products. He had not been aware that Wintrade had lost they would have us believe. They narrate incidents that have happened. They
the authority to manufacture, distribute, and deal with products containing the refer to Wintrade’s former association with Casa Hipolito S.A. Portugal; to their
subject marks, and he was never informed of Wintrade’s loss of authority. Thus, decision to produce the burners in the Philippines; to their use of the disputed
he could have not been part of any conspiracy. marks; and to their justification for their use. It reads as follows:

After the preliminary investigation, the Chief State Prosecutor found probable 24. As earlier mentioned, the predecessor-in-interest of Wintrade was the former
cause to indict the petitioners for violation of Section 169.1, in relation with exclusive licensee of Casa Hipolito SA of Portugal since the 1970’s, and that
Section 170, of RA 8293. This law punishes any person who uses in commerce Wintrade purchased all the rights on the said trademarks prior to the closure of
any false designation of origin which is likely to cause confusion or mistake as to said company. Indeed, the burners sold by Wintrade used to be imported from
the origin of the product. The law seeks to protect the public; thus, even if Lo Portugal, but Wintrade later on discovered the possibility of obtaining these
does not have the legal capacity to sue, the State can still prosecute the burners from other sources or of manufacturing the same in the Philippines.
petitioners to prevent damage and prejudice to the public.
Wintrade’s decision to procure these burners from sources other than Portugal is
On appeal, the DOJ issued a resolution affirming the finding of probable case. It certainly its management prerogative. The presence of the words "made in
gave credence to Lo’s assertion that he is the proper assignee of the subject Portugal" and "original Portugal" on the wrappings of the burners and on the
marks. More importantly, it took note of the petitioners’ admission that they burners themselves which are manufactured by Wintrade is an allusion to the
used the words "Made in Portugal" when in fact, these products were made in fact that the origin of the design of said burners can be traced back to Casa
the Philippines. Had they intended to refer to the source of the design or the Hipolito SA of Portugal, and that the history of the manufacture of said burners
history of the manufacture, they should have explicitly said so in their are rooted in Portugal. These words were not intended to deceive or cause
packaging. It then concluded that the petitioners’ defenses would be better mistake and confusion in the minds of the buying public.9
ventilated during the trial and that the admissions of the petitioners make up a
sufficient basis for probable cause. Chua, the owner of National Hardware — the place where the test buy was
conducted — admits that Wintrade has been furnishing it with kerosene burners
The CA found no grave abuse of discretion on the part of the DOJ and affirmed with the markings "Made in Portugal" for the past 20 years, to wit:
the DOJ’s ruling.
5. I hereby manifests (sic) that I had been dealing with Wintrade Industrial Sales
When the petitioners filed their petition before us, we denied the petition for Corporation (WINTRADE for brevity) for around 20 years now by buying
failure to sufficiently show any reversible error in the assailed judgment to products from it. I am not however aware that WINTRADE was no longer
warrant the exercise of the Court’s discretionary power. authorized to deal, distribute or sell kerosene burner bearing the mark
HIPOLITO and SEA HORSE Device, with markings "Made in Portugal" on the
We find no reversible error on the part of the CA and the DOJ to merit wrapper as I was never informed of such by WINTRADE nor was ever made
reconsideration. The petitioners reiterate their argument that the products aware of any notices posted in the newspapers informing me of such fact. Had I
bought during the test buy bearing the trademarks in question were not been informed, I would have surely stopped dealing with WINTRADE.101âwphi1
manufactured by, or in any way connected with, the petitioners and/or
Wintrade. They also allege that the words "Made in Portugal" and "Original Thus, the evidence shows that petitioners, who are officers of Wintrade, placed
Portugal" refer to the origin of the design and not to the origin of the goods. the words "Made in Portugal" and "Original Portugal" with the disputed marks
knowing fully well — because of their previous dealings with the Portuguese
The petitioners again try to convince the Court that they have not manufactured company — that these were the marks used in the products of Casa Hipolito S.A.
the products bearing the marks "Made in Portugal" and "Original Portugal" that Portugal. More importantly, the products that Wintrade sold were admittedly
were bought during the test buy. However, their own admission and the produced in the Philippines, with no authority from Casa Hipolito S.A. Portugal.
statement given by Chua bear considerable weight. The law on trademarks and trade names precisely precludes a person from
profiting from the business reputation built by another and from deceiving the
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public as to the origins of products. These facts support the consistent findings
of the State Prosecutor, the DOJ and the CA that probable cause exists to
charge the petitioners with false designation of origin. The fact that the evidence
did not come from Lo, but had been given by the petitioners, is of no
significance.

The argument that the words "Made in Portugal" and "Original Portugal" refer to
the origin of the design and not to the origin of the goods does not negate the
finding of probable cause; at the same time, it is an argument that the
petitioners are not barred by this Resolution from raising as a defense during the
hearing of the case.

WHEREFORE, premises considered, we hereby DENY the motion for

reconsideration for lack of merit.

SO ORDERED.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 201

G.R. No. L-37494 March 30, 1982 infringement of trademarks); but the Fiscal may accede to a reinvestigation at
his discretion.—From what has been said above, the applicability of Section 13,
MANUEL SY Y LIM, petitioner, paragraph 2 of Rule 110, in relation to Section 12, Rule 119, to the case at bar is
vs. clear. It is justified by petitioner’s own theory that the offense of infringement as
HON. COURT OF APPEALS, HON. EDUARDO P. CAGUIOA, as Judge of charged in the second information was also sufficiently included in the first
the CFI of Bulacan, HON. PEDRO D. OPIANA as Provincial Fiscal of information as a separate offense. But with respect thereto, the trial court made
Bulacan, ATTYS. DAKILA CASTRO and CRISTINO CARREON, as Counsel no decision, either of acquittal or conviction. It felt that under the information as
for SEA COMMERCIAL COMPANY, INC., respondents. so worded, conviction was not legally possible obviously for not sufficiently
informing the accused of the nature and cause of the accusation against him,
Criminal Procedure; Where accused was charged with unfair competition, but which is one of his constitutional rights, although factually, the assessment of
the trial court, being of the opinion that the crime is infringement of trademark, the evidence by the court tended towards justifying conviction. Verily, the
neither acquittal nor found the accused guilty, but ordered the filing of a new situation fits into what is contemplated by the provisions of the Rules of Court
and proper information, there can be no double jeopardy.—In the opinion of the already referred to, which do not call for a new or separate preliminary
trial court, the first information did not properly charge the offense of investigation, which petitioner contends is indispensable, to which the Solicitor
infringement of trademark, for what was expressly charged was unfair General expressed agreement.
competition. In proceeding in accordance with the above quoted provisions of Same; Same.—However, if petitioner insists on another preliminary
the Rules of Court, the trial court evidently felt it can not properly convict the investigation, the same may be granted by way of “reinvestigation”, the Solicitor
accused of infringement of trademark, although it found evidence sufficient to General who actually represents also the prosecution having expressed
justify filing the proper information for said offense. But, undoubtedly, the court conformity to the holding of one. Let it not be said that We are not mindful of
found it not proper to acquit the accused of said offense. Hence there can be no the rule that all doubts should be resolved in favor of the accused, a rule which
double jeopardy as to the offense charged in the second information on the itself should be liberally construed in his favor.
ground of a prior acquittal for the same offense. Barredo, J.:
Same; Same.—It is, therefore, absolutely correct to hold that there is on the
basis of the facts as stated above, no double jeopardy even on the premise that I concur in the result.
“registration” is not an essential element of the offense charged in the second
information as contended by petitioner. It becomes more so if registration is a Aquino, J., dissenting:
necessary element as submitted by the Solicitor General with whom We are
inclined to agree, although an express ruling on the matter need no longer be Criminal Procedure; The crime of unfair competition and selling articles with an
made for not being material nor decisive. imitation trademark are distinct and separate offenses.—But if he was a mere
Same; There can be no double jeopardy where there was neither acquittal nor seller, it would not follow that he was not criminally liable for selling those hand
conviction, but merely an order to file a new information for the correct offense. pumps. The seller of goods with an imitation trademark is punished under
—What makes the ruling cited by petitioner not applicable to the present is that paragraph 2 of article 188. That explains why Judge Caguioa ordered Sy’s
in the cases cited, acquittal was for the offense specifically charged without the prosecution under that statutory provision. Consequently, Sy’s arraignment and
trial court expressly finding that for the other offense also charged but not trial for the offense of unfair competition did not place him in jeopardy of being
expressly 30 by the statutory designation of the offense, evidence exists to convicted of the crime of selling hand pumps with an imitation trademark and
justify his being held to answer for such offense, in accordance with Section 12, his instant prosecution for the latter offense, a different offense, does not place
Rule 119 of the Rules of Court, as the trial court in the instant case very him in double jeopardy.
explicitly did. It is this circumstance that, clearly and undisputably would prevent Same; Trial for unfair competition amounts to a preliminary investigation for the
double jeopardy to attach, for there is neither acquittal nor conviction, not even offense of selling goods with an imitation trademark.—I am also of the opinion
dismissal of the case, which might result in double jeopardy arising to ban the that Sy’s trial for unfair competition in Criminal Case No. 0290-V amounted to a
proceedings contemplated in the aforecited provisions of the Rules of Court. preliminary investigation of Sy by a Judge of the Court of First Instance for the
Same; A new preliminary investigation is not called for where court orders filing offense of selling goods with an imitation or substitute trademark within the
of correct information involving a cognate offense (unfair competition to meaning of section 13, Rule 112 of the Rules of Court. Hence, he is not entitled
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 202

to another preliminary investigation for that offense to be conducted by the decision for one of the offenses in a separate decision, then rendering at a later
fiscal. If another preliminary investigation is to be given to Sy by the fiscal by time another decision for the other offense or offenses.
requiring the filing of the affidavits of the complainant and Sy and their Same; Accused in case at bar should be allowed only to present additional
witnesses, as provided in Republic Act No. 5180 and Presidential Decrees Nos. evidence on the information to be filed as a mere amendment of the first.—So I
77 and 911, then the same facts alleged in the first preliminary investigation and suggest the following: 1) the trial court should be directed to render a decision
during the trial of the unfair competition case would be brought out. on the charge of violation of the offense of substituting and altering trademarks
Ericta, J., dissenting: penalized under Article 188, paragraph 2 of the Code, as charged in the
information; 2) the second information may be admitted by the trial court under
Criminal Procedure; Another trial is unnecessary as the first information for Rule 110, Section 13, 1st paragraph, of the Rules of Court, as an amendment of
which accused was charged sufficiently with the offense of substituting and the first information, the amendment being only on a matter of form; and 3) to
altering trademarks. Opinion that the offended trademark must be alleged as a avoid undue prejudice or undue surprise, the trial court may allow the reopening
registered trademark is not correct as offense of altering a trademark can be of the case with respect to the charge of violating Article 188, paragraph 2 of
committed even the trademark violated is not registered.—I am of the firm belief the Code so that the defendant may present any additional evidence which he
that the first information sufficiently informs the accused of the offense of may deem necessary for his defense.
substituting and altering trademarks penalized under Article 188, paragraph 2, of
the Code. PETITION for certiorari to review the decision of the Court of Appeals. [Sy vs.
Court of Appeals, 113 SCRA 334(1982)]
Same; Same.—The first information alleges, among others, that the defendant,
“for the purpose of deceiving or defrauding the Sea Commercial Company, Inc. DE CASTRO, J.:p
(complainant), of its legitimate trade or the public in general, did then and there
wilfully, unlawfully and feloniously sell or offer for sale hand pumps of inferior Petition for certiorari seeking the review of the decision of the Court of Appeals 1
quality and labelled JETMATIC DRAGON HAND PUMP x x x which induced the sustaining the order of the Court of First instance of Bulacan denying the motion
public to believe that the JETMATIC DRAGON HAND PUMP offered are those of to quash filed by petitioner to an information for violation of Article 188,
the Sea Commercial Company, Inc., to the damage and prejudice of the Sea paragraph 2 of the Revised Penal Code,
Commercial Company, Inc., and the general public.”
Same; Same.—I do not share the view of the Solicitor General that an allegation It appears that petitioner was charged with violation of Article 189, paragraph 1,
in the information that the trademark in question is registered is necessary. of the Revised Penal Code in an information quoted as follows:
Registration is not an element of the offense as defined by the statute. An
information is sufficient if it alleges the elements of the offense defined in the That in or about during the period from June, 1970 to October, 1970, in the
statute. Whether or not proof during the trial of registration of the trademark is municipality of Valenzuela, province of Bulacan, Philippines and within the
necessary for conviction is a question which We are not now called upon to jurisdiction of this Honorable Court, the said accused Manuel Sy y Lim, in unfair
resolve. At any rate, the trial court already pronounced in the dispositive portion competition and for the purpose of deceiving or defrauding the Sea Commercial
of the decision that there is prima facie evidence “that the accused has violated Company, Incorporated, a domestic corporation duly organized under the laws
Article 188, paragraph 2 of the Revised Penal Code.” Such prima facie evidence of the Philippines, of its legitimate trade or the public in general did then and
may already include proof of registration of the trademark. The complainant there wilfully, unlawfully and feloniously sell or offer for sale hand pumps of
could not have been using his trademark for quite sometime without having inferior quality and labeled JETMATIC DRAGON HAND PUMP and at a lower price
registered the same in accordance with law. and giving them the general appearance of the JETMATIC DRAGON hand pumps
Same; An accused may be charged, tried and convicted for two or more of the Sea Commercial Company, Incorporated, as to the outside appearance,
separate offenses if not timely objection is made by the accused.—In actual including, among others, the color, the embossed words PAT No. 463490 on the
practice, when a defendant is accused of two or more separate and distinct spout the embossed word MODEL chamber assembly, the embossed words
offenses in one and the same information without objection and all the offenses JETMATIC DRAGON HAND PUMP on the lateral surface of the cylinder assembly
charged are proven, the trial court renders a joint decision on the two or more and many other parts both as to the design and the materials used which
offenses charged. But there is no law prohibiting the trial judge from rendering a induced the public to believe that the JETMATIC DRAGON HAND pumps offered
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 203

are those of the Sea Commercial Company, Incorporated, to the damage and I
prejudice of the said Sea Commercial Company, Incorporated and the general
public. 2 THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER
IS NOT PLACED IN DOUBLE JEOPARDY BY HIS PROSECUTION UNDER THE
After trial, the trial court rendered judgment the dispositive portion of which SECOND INFORMATION IN QUESTION.
reads:
II
WHEREFORE, the prosecution having failed to prove that the accused gave his
goods the general appearance of the goods of another manufacturer or dealer, THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER
this Court finds him not guilty of the same and acquits him of the charge of COULD BE VALIDLY ARRAIGNED AND TRIED UNDER THE SECOND
violating Article 189, paragraph 1 of the Revised Penal Code. However, the Court INFORMATION WITHOUT A PRELIMINARY INVESTIGATION HAVING BEEN
finds that the evidence submitted in this case, show prima facie that the accused PREVIOUSLY CONDUCTED THEREON BY THE FISCAL, AS INSISTED UPON.
has violated Article 188, No, 2, of the Revised Penal Code and the Court,
therefore, orders the Fiscal to prepare the corresponding information charging III
the accused Manuel Sy y Lim with violation of Article 188, No. 2 of the Revised
Penal Code and to file the same within five (5) days from today. 3 THE HONORABLE COURT OF APPEALS ERRED IN DENYING PETITIONER'S PLEA
FOR certiorari AND mandamus TOWARD QUASHING THE SECOND
The respondent Fiscal filed the information as ordered by the trial court, alleging INFORMATION IN QUESTION. 6
as follows:
1. It is the contention of petitioner that by the filing of the second information,
That in or about or during the period from June, 1970 to October, 1970, in the he would be placed in double jeopardy because under the first information, he
municipality of Valenzuela, province of Bulacan, Philippines, and within the could have been convicted of the offense charged in the second information.
jurisdiction of this Honorable Court, the said accused Manuel Sy y Lim, in Since he was acquitted under the first information, to charge him again for the
infringement of trademark and for the purpose of deceiving or defrauding the same offense as aforestated would according to petitioner, constitute double
Sea Commercial Company, Incorporated, a domestic corporation duly organized jeopardy.
under the laws of and doing business in the Philippines, of its legitimate trade
and/or the public in general, did then and there wilfully, unlawfully and Petitioner supports this contention by pointing out that the only difference
feloniously sell and/or offer for sale hand pumps of inferior quality and labeled between the two informations, in so far as the charge of infringement of
JETMATIC DRAGON HAND PUMP at a lower price, accused knowing fully well trademark is concerned, is that in the first information, there is no allegation
that the mark JETMATIC DRAGON HAND PUMP has been fraudulently used in that the trademark is registered while in the second information, the allegation is
the said hand pumps, thereby giving them the general appearance of the old made that the trademark is registered. He contends, however, that registration
and/or being offered for sale are those of the Sea Commercial Company, is not an element of the crime as defined in Article 188, par. 2, of the Revised
Incorporated, when in fact they are not to the damage and prejudice of the said Penal Code. The absence of allegation of registration of the trademark is,
Sea Commercial Company, Incorporated and the general public. 4 therefore, no impediment to his conviction for infringement of trademark under
the first information which, in all other respects, alleged what would constitute
To the above information, petitioner filed a motion to quash alleging that it did the aforesaid offense. Although by express designation of the offense, what was
not conform to the prescribed form; that the Court had no jurisdiction over the charged therein is unfair competition, it is the allegation of the information that
case because no preliminary investigation was conducted, thereby depriving determines what offense is being actually charged.
accused of due process; and that the new information would place accused in
double jeopardy. 5 As already stated, this motion was denied. In advancing the above propositions, petitioner would treat the two offenses of
infringement of trademark and unfair competition as separate and distinct, not
In the instant case, petitioner makes the following assignment of errors: as one necessarily included in, or including, the other. Upon this premise, it
cannot be successfully contended that what happened with respect to the
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offense of infringement of trademark, assuming it was also charged in the first he cannot be a second time tried for one of those incidents without being twice
information as a separate offense, is, by no manner of reasoning, one of put in jeopardy. He also cites another case 8 for the proposition that the charge
acquittal for said offense. The trial court precisely found sufficient evidence with in the second information for an act already alleged in the first information
which to indict him for said offense and accordingly ordered the filing of a more which flowed from an identical or a single criminal intent, in this case the single
proper information, proceeding in accordance with Section 13 paragraph 2, of criminal act of unfair competition, should not be divided into separate crimes, as
Rule 110 and Section 12, of Rule 119 of the Rules of Court, which are quoted: would happen if a separate crime of infringement of trademark is to be
prosecuted again, More specifically, he cites the case of a charge for illegal
If it appears at any time before judgment that a mistake has been made in importation of explosives as not allowing a subsequent prosecution for illegal
charging the proper offense the court may dismiss the original complaint or possession of the same explosives. 9 This holds true, according to petitioner, if
information and order the filing of a new one charging the proper offense, the description of the offense is merely changed in the second information but
provided the defendant would not be placed thereby in double jeopardy, and which would not make for any substantial difference between the description in
may also require the witnesses to give bail for their appearance at the trial. the first information and that in the second information. citing Chief Justice
Moran. 10
SEC. 12. When mistake has been made in charging the proper offense. — When
it appears at any time after trial has begun and before judgment is taken, that a What makes the ruling cited by petitioner not applicable to the present is that in
mistake has been made in charging the proper offense, and the defendant the cases cited, acquittal was for the offense specifically charged without the
cannot be convicted of the offense charged, nor of any other offense necessarily trial court expressly finding that for the other offense also charged but not
included therein, the defendant must not be discharged, if there appears to be a expressly so by the statutory designation of the offense, evidence exists to
good cause to detain him in custody, but the court must commit him to answer justify his being held to answer for such offense, in accordance with Section 12,
for the proper offense, and may also require the witnesses to give bail for their Rule 119 of the Rules of Court, as the trial court in the instant case very
appearance at the trial. explicitly did. It is this circumstance that, clearly and undisputably would prevent
double jeopardy to attach, for there is neither acquittal nor conviction, not even
In the opinion of the trial court, the first information did not properly charge the dismissal of the case, which might result in double jeopardy arising to ban the
offense of infringement of trademark, for what was expressly charged was unfair proceedings contemplated in the aforecited provisions of the Rules of Court.
competition. In proceeding in accordance with the above quoted provisions of
the Rules of Court, the trial court evidently felt it can not properly convict the From what has been said above, the applicability of Section 13, paragraph 2 of
accused of infringement of trademark, although it found evidence sufficient to Rule 110, in relation to Section 12, Rule 119, to the case at bar is clear. It is
justify filing the proper information for said offense. But, undoubtedly, the court justified by petitioner's own theory that the offense of infringement as charged
found it not proper to acquit the accused of said offense. Hence there can be no in the second information was also sufficiently included in the first information as
double jeopardy as to the offense charged in the second information on the a separate offense. But with respect thereto, the trial court made no decision,
ground of a prior acquittal for the same offense. either of acquittal or conviction. It felt that under the information as so worded,
conviction was not legally possible obviously for not sufficiently informing the
It is, therefore, absolutely correct to hold that there is on the basis of the facts accused of the nature and cause of the accusation against him, which is one of
as stated above, no double jeopardy even on the premise that "registration" is his constitutional rights, although factually, the assessment of the evidence by
not an essential element of the offense charged in the second information as the court tended towards justifying conviction. Verily, the situation fits into what
contended by petitioner. It becomes more so if registration is a necessary is contemplated by the provisions of the Rules of Court already referred to,
element as submitted by the Solicitor General with whom We are inclined to which do not call for a new or separate preliminary investigation, which
agree, although an express ruling on the matter need no longer be made for not petitioner contends is indispensable, to which the Solicitor General expressed
being material nor decisive. agreement.

Upon a slightly different theory, petitioner would, likewise invoke his right What evidently led the Solicitor General to give his conformity to the stand taken
against double jeopardy. Thus he cites the case of U.S. vs. Lim Suco 7 which by petitioner as to the necessity of a new preliminary investigation is his belief
hold that after conviction for a crime which has various incidents included in it, that "judgment has already been rendered acquitting the accused", while the
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Rules of Court cited speaks of "before judgment." But as already intimated, as to

the offense of infringement of trademark, which petitioner himself contends was
also charged in the first information, the Court rendered no judgment yet, either
for acquittal or for conviction, as it appeared to the trial judge that the accused
cannot properly be convicted for said offense, even if conviction was warranted
by the evidence, a mistake having been made, as he read the information, and
with reason, in charging the proper offense.

However, if petitioner insists on another preliminary investigation, the same may

be granted by way of "reinvestigation", the Solicitor General who actually
represents also the prosecution having expressed conformity to the holding of
one, Let it not be said that We are not mindful of the rule that all doubts should
be resolved in favor of the accused, a rule which itself should be liberally
construed in his favor.

WHEREFORE, as recommended by the Solicitor General, the decision appealed

from is modified as to give petitioner the right of preliminary investigation before
he is arraigned and tried under the second information for violation of Article
188, paragraph 2, of the Revised Penal Code. No costs.

SO ORDERED.

Concepcion, Jr., Abad Santos and Escolin, JJ., concur.

Barredo (Chairman), J., concurs in the result.

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G.R. Nos. 160054-55 July 21, 2004 R.A. No. 8293.—We find no merit in the claim of petitioner that R.A. No. 166
was expressly repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293,
MANOLO P. SAMSON, petitioner, reads—SEC. 239. Repeals.—239.1. All Acts and parts of Acts inconsistent
vs. herewith, more particularly Republic Act No. 165, as amended; Republic Act No.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge, 166, as amended; and Articles 188 and 189 of the Revised Penal Code;
Regional Trial Court of Quezon City, Branch 90, PEOPLE OF THE Presidential Decree No. 49, including Presidential Decree No. 285, as amended,
PHILIPPINES and CATERPILLAR, INC., respondents. are hereby repealed. (Emphasis added) Notably, the aforequoted clause did not
expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used
the phrases “parts of Acts” and “inconsistent herewith”; and it would have
Intellectual Property Code (Republic Act [R.A.] 8293); Jurisdiction; Jurisdiction simply stated “Republic Act No. 165, as amended; Republic Act No. 166, as
over cases for infringement of registered marks, unfair competition, false amended; and Articles 188 and 189 of the Revised Penal Code; Presidential
designation of origin and false description or representation, is lodged with the Decree No. 49, including Presidential Decree No. 285, as amended are hereby
Regional Trial Court.—Under Section 170 of R.A. No. 8293, which took effect on repealed.” It would have removed all doubts that said specific laws had been
January 1, 1998, the criminal penalty for infringement of registered marks, rendered without force and effect. The use of the phrases “parts of Acts” and
unfair competition, false designation of origin and false description or “inconsistent herewith” only means that the repeal pertains only to provisions
representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty which are repugnant or not susceptible of harmonization with R.A. No. 8293.
Thousand Pesos to Two Hundred Thousand Pesos, to wit: SEC. 170. Penalties.— Section 27 of R.A. No. 166, however, is consistent and in harmony with Section
Independent of the civil and administrative sanctions imposed by law, a criminal 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over
penalty of imprisonment from two (2) years to five (5) years and a fine ranging violations of intellectual property rights with the Metropolitan Trial Courts, it
from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos would have expressly stated so under Section 163 thereof.
(P200,000.00), shall be imposed on any person who is found guilty of Same; Same; Same; Same; R.A. No. 8293 and R.A. No. 166 are special laws
committing any of the acts mentioned in Section 155 [Infringement], Section conferring jurisdiction over violations of intellectual property rights to the
168 [Unfair Competition] and Section 169.1 [False Designation of Origin and Regional Trial Courts which should therefore prevail over R.A. No. 7691, which is
False Description or Representation]. Corollarily, Section 163 of the same Code a general law.—The settled rule in statutory construction is that in case of
states that actions (including criminal and civil) under Sections 150, 155, 164, conflict between a general law and a special law, the latter must prevail.
166, 167, 168 and 169 shall be brought before the proper courts with Jurisdiction conferred by a special law to Regional Trial Courts must prevail over
appropriate jurisdiction under existing laws, thus—SEC. 163. Jurisdiction of that granted by a general law to Municipal Trial Courts. In the case at bar, R.A.
Court.—All actions under Sections 150, 155, 164 and 166 to 169 shall be No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over violations
brought before the proper courts with appropriate jurisdiction under existing of intellectual property rights to the Regional Trial Court. They should therefore
laws. (Emphasis supplied) The existing law referred to in the foregoing provision prevail over R.A. No. 7691, which is a general law. Hence, jurisdiction over the
is Section 27 of R.A. No. 166 (The Trademark Law) which provides that instant criminal case for unfair competition is properly lodged with the Regional
jurisdiction over cases for infringement of registered marks, unfair competition, Trial Court even if the penalty therefor is imprisonment of less than 6 years, or
false designation of origin and false description or representation, is lodged with from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00.
the Court of First Instance (now Regional Trial Court)—SEC. 27. Jurisdiction of Same; Same; Same; Same; The passing remark in Mirpuri v. Court of Appeals,
Court of First Instance.—All actions under this Chapter [V—Infringement] and 318 SCRA 516 (1999), on the repeal of R.A. No. 166 by R.A. No. 8293 was
Chapters VI [Unfair Competition] and VII [False Designation of Origin and False merely a backgrounder to the enactment of the present Intellectual Property
Description or Representation], hereof shall be brought before the Court of First Code and cannot thus be construed as a jurisdictional pronouncement in cases
Instance. for violation of intellectual property rights.—The case of Mirpuri v. Court of
Same; Same; Statutes; Statutory Construction; Section 239 of R.A. No. 8293 did Appeals, invoked by petitioner finds no application in the present case. Nowhere
expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used in Mirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No.
the phrases “parts of Acts” and “inconsistent here-with”—the use of the phrases 8293. Neither did we make a categorical ruling therein that jurisdiction over
“parts of Acts” and “inconsistent herewith” only means that the repeal pertains cases for violation of intellectual property rights is lodged with the Municipal Trial
only to provisions which are repugnant or not susceptible of harmonization with Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 207

8293 was merely a backgrounder to the enactment of the present Intellectual      Poblador, Bautista & Reyes for private respondent.
Property Code and cannot thus be construed as a jurisdictional pronouncement      The Solicitor General for the People. [Samson vs. Daway, 434 SCRA
in cases for violation of intellectual property rights. 612(2004)]
Same; Same; Prejudicial Questions; Independent Civil Actions; There is no DECISION
prejudicial question if the civil and criminal action can, according to law, proceed
independently of each other; An action for unfair competition is an independent
civil action under Article 33 of the Civil Code, and, as such, it does not operate YNARES-SANTIAGO, J.:
as a prejudicial question that will justify the suspension of the criminal case.—
There is no prejudicial question if the civil and the criminal action can, according Assailed in this petition for certiorari is the March 26, 2003 Order1 of the
to law, proceed independently of each other. Under Rule 111, Section 3 of the Regional Trial Court of Quezon City, Branch 90, which denied petitioner’s – (1)
Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 motion to quash the information; and (2) motion for reconsideration of the
and 2176 of the Civil Code, the independent civil action may be brought by the August 9, 2002 Order denying his motion to suspend the arraignment and other
offended party. It shall proceed independently of the criminal action and shall proceedings in Criminal Case Nos. Q-02-108043-44. Petitioner also questioned
require only a preponderance of evidence. In the case at bar, the common its August 5, 2003 Order2 which denied his motion for reconsideration.
element in the acts constituting unfair competition under Section 168 of R.A. No.
8293 is fraud. Pursuant to Article 33 of the Civil Code, in cases of defamation, The undisputed facts show that on March 7, 2002, two informations for unfair
fraud, and physical injuries, a civil action for damages, entirely separate and competition under Section 168.3 (a), in relation to Section 170, of the
distinct from the criminal action, may be brought by the injured party. Hence, Intellectual Property Code (Republic Act No. 8293), similarly worded save for the
Civil Case No. Q-00-41446, which as admitted by private respondent also relate dates and places of commission, were filed against petitioner Manolo P. Samson,
to unfair competition, is an independent civil action under Article 33 of the Civil the registered owner of ITTI Shoes. The accusatory portion of said informations
Code. As such, it will not operate as a prejudicial question that will justify the read:
suspension of the criminal cases at bar.
Criminal Procedure; Suspension of Arraignment; While the pendency of a That on or about the first week of November 1999 and sometime prior or
petition for review is a ground for suspension of the arraignment, the deferment subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of
is limited to a period of 60 days reckoned from the filing of the petition with the this Honorable Court, above-named accused, owner/proprietor of ITTI
reviewing office, after which the trial court is bound to arraign the accused or to Shoes/Mano Shoes Manufactuirng Corporation located at Robinson’s Galleria,
deny the motion to defer arraignment.—Section 11 (c), Rule 116 of the Revised EDSA corner Ortigas Avenue, Quezon City, did then and there willfully,
Rules on Criminal Procedure provides—SEC. 11. Suspension of arraignment.— unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR
Upon motion by the proper party, the arraignment shall be suspended in the products such as footwear, garments, clothing, bags, accessories and
following cases—x x x x x x x x x (c) A petition for review of the resolution of the paraphernalia which are closely identical to and/or colorable imitations of the
prosecutor is pending at either the Department of Justice, or the Office of the authentic Caterpillar products and likewise using trademarks, symbols and/or
President; Provided, that the period of suspension shall not exceed sixty (60) designs as would cause confusion, mistake or deception on the part of the
days counted from the filing of the petition with the reviewing office. While the buying public to the damage and prejudice of CATERPILLAR, INC., the prior
pendency of a petition for review is a ground for suspension of the arraignment, adopter, user and owner of the following internationally: "CATERPILLAR", "CAT",
the aforecited provision limits the deferment of the arraignment to a period of "CATERPILLAR & DESIGN", "CAT AND DESIGN", "WALKING MACHINES" and
60 days reckoned from the filing of the petition with the reviewing office. It "TRACK-TYPE TRACTOR & DESIGN."
follows, therefore, that after the expiration of said period, the trial court is
bound to arraign the accused or to deny the motion to defer arraignment. CONTRARY TO LAW.3

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. On April 19, 2002, petitioner filed a motion to suspend arraignment and other
proceedings in view of the existence of an alleged prejudicial question involved
The facts are stated in the opinion of the Court. in Civil Case No. Q-00-41446 for unfair competition pending with the same
     Napoleon M. Malimas for petitioner. branch; and also in view of the pendency of a petition for review filed with the
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Secretary of Justice assailing the Chief State Prosecutor’s resolution finding Corollarily, Section 163 of the same Code states that actions (including criminal
probable cause to charge petitioner with unfair competition. In an Order dated and civil) under Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought
August 9, 2002, the trial court denied the motion to suspend arraignment and before the proper courts with appropriate jurisdiction under existing laws, thus –
other proceedings.
SEC. 163. Jurisdiction of Court. – All actions under Sections 150, 155, 164 and
On August 20, 2002, petitioner filed a twin motion to quash the informations and 166 to 169 shall be brought before the proper courts with appropriate
motion for reconsideration of the order denying motion to suspend, this time jurisdiction under existing laws. (Emphasis supplied)
challenging the jurisdiction of the trial court over the offense charged. He
contended that since under Section 170 of R.A. No. 8293, the penalty4 of The existing law referred to in the foregoing provision is Section 27 of R.A. No.
imprisonment for unfair competition does not exceed six years, the offense is 166 (The Trademark Law) which provides that jurisdiction over cases for
cognizable by the Municipal Trial Courts and not by the Regional Trial Court, per infringement of registered marks, unfair competition, false designation of origin
R.A. No. 7691. and false description or representation, is lodged with the Court of First Instance
(now Regional Trial Court) –
In its assailed March 26, 2003 Order, the trial court denied petitioner’s twin
motions.6 A motion for reconsideration thereof was likewise denied on August 5, SEC. 27. Jurisdiction of Court of First Instance. – All actions under this Chapter
2003. [V – Infringement] and Chapters VI [Unfair Competition] and VII [False
Designation of Origin and False Description or Representation], hereof shall be
Hence, the instant petition alleging that respondent Judge gravely abused its brought before the Court of First Instance.
discretion in issuing the assailed orders.
We find no merit in the claim of petitioner that R.A. No. 166 was expressly
The issues posed for resolution are – (1) Which court has jurisdiction over repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293, reads –
criminal and civil cases for violation of intellectual property rights? (2) Did the
respondent Judge gravely abuse his discretion in refusing to suspend the SEC. 239. Repeals. – 239.1. All Acts and parts of Acts inconsistent herewith,
arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44 on more particularly Republic Act No. 165, as amended; Republic Act No. 166, as
the ground of – (a) the existence of a prejudicial question; and (b) the pendency amended; and Articles 188 and 189 of the Revised Penal Code; Presidential
of a petition for review with the Secretary of Justice on the finding of probable Decree No. 49, including Presidential Decree No. 285, as amended, are hereby
cause for unfair competition? repealed. (Emphasis added)

Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its
criminal penalty for infringement of registered marks, unfair competition, false entirety, otherwise, it would not have used the phrases "parts of Acts" and
designation of origin and false description or representation, is imprisonment "inconsistent herewith;" and it would have simply stated "Republic Act No. 165,
from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two Hundred as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the
Thousand Pesos, to wit: Revised Penal Code; Presidential Decree No. 49, including Presidential Decree
No. 285, as amended are hereby repealed." It would have removed all doubts
SEC. 170. Penalties. – Independent of the civil and administrative sanctions that said specific laws had been rendered without force and effect. The use of
imposed by law, a criminal penalty of imprisonment from two (2) years to five the phrases "parts of Acts" and "inconsistent herewith" only means that the
(5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two repeal pertains only to provisions which are repugnant or not susceptible of
hundred thousand pesos (P200,000.00), shall be imposed on any person who is harmonization with R.A. No. 8293.6 Section 27 of R.A. No. 166, however, is
found guilty of committing any of the acts mentioned in Section 155 consistent and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293
[Infringement], Section 168 [Unfair Competition] and Section 169.1 [False intended to vest jurisdiction over violations of intellectual property rights with
Designation of Origin and False Description or Representation]. the Metropolitan Trial Courts, it would have expressly stated so under Section
163 thereof.
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Moreover, the settled rule in statutory construction is that in case of conflict Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may
between a general law and a special law, the latter must prevail. Jurisdiction be brought by the offended party. It shall proceed independently of the criminal
conferred by a special law to Regional Trial Courts must prevail over that action and shall require only a preponderance of evidence.
granted by a general law to Municipal Trial Courts.7
In the case at bar, the common element in the acts constituting unfair
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws8 conferring competition under Section 168 of R.A. No. 8293 is fraud.12 Pursuant to Article
jurisdiction over violations of intellectual property rights to the Regional Trial 33 of the Civil Code, in cases of defamation, fraud, and physical injuries, a civil
Court. They should therefore prevail over R.A. No. 7691, which is a general action for damages, entirely separate and distinct from the criminal action, may
law.9 Hence, jurisdiction over the instant criminal case for unfair competition is be brought by the injured party. Hence, Civil Case No. Q-00-41446, which as
properly lodged with the Regional Trial Court even if the penalty therefor is admitted13 by private respondent also relate to unfair competition, is an
imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from independent civil action under Article 33 of the Civil Code. As such, it will not
P50,000.00 to P200,000.00. operate as a prejudicial question that will justify the suspension of the criminal
cases at bar.
In fact, to implement and ensure the speedy disposition of cases involving
violations of intellectual property rights under R.A. No. 8293, the Court issued Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure provides –
A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial
Courts as Intellectual Property Courts. On June 17, 2003, the Court further SEC. 11. Suspension of arraignment. – Upon motion by the proper party, the
issued a Resolution consolidating jurisdiction to hear and decide Intellectual arraignment shall be suspended in the following cases –
Property Code and Securities and Exchange Commission cases in specific
Regional Trial Courts designated as Special Commercial Courts. xxxxxxxxx

The case of Mirpuri v. Court of Appeals,10 invoked by petitioner finds no (c) A petition for review of the resolution of the prosecutor is pending at either
application in the present case. Nowhere in Mirpuri did we state that Section 27 the Department of Justice, or the Office of the President; Provided, that the
of R.A. No. 166 was repealed by R.A. No. 8293. Neither did we make a period of suspension shall not exceed sixty (60) days counted from the filing of
categorical ruling therein that jurisdiction over cases for violation of intellectual the petition with the reviewing office.
property rights is lodged with the Municipal Trial Courts. The passing remark in
Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a While the pendency of a petition for review is a ground for suspension of the
backgrounder to the enactment of the present Intellectual Property Code and arraignment, the aforecited provision limits the deferment of the arraignment to
cannot thus be construed as a jurisdictional pronouncement in cases for violation a period of 60 days reckoned from the filing of the petition with the reviewing
of intellectual property rights. office. It follows, therefore, that after the expiration of said period, the trial court
is bound to arraign the accused or to deny the motion to defer arraignment.
Anent the second issue, petitioner failed to substantiate his claim that there was
a prejudicial question. In his petition, he prayed for the reversal of the March 26, In the instant case, petitioner failed to establish that respondent Judge abused
2003 order which sustained the denial of his motion to suspend arraignment and his discretion in denying his motion to suspend. His pleadings and annexes
other proceedings in Criminal Case Nos. Q-02-108043-44. For unknown reasons, submitted before the Court do not show the date of filing of the petition for
however, he made no discussion in support of said prayer in his petition and review with the Secretary of Justice.14 Moreover, the Order dated August 9,
reply to comment. Neither did he attach a copy of the complaint in Civil Case No. 2002 denying his motion to suspend was not appended to the petition. He thus
Q-00-41446 nor quote the pertinent portion thereof to prove the existence of a failed to discharge the burden of proving that he was entitled to a suspension of
prejudicial question. his arraignment and that the questioned orders are contrary to Section 11 (c),
Rule 116 of the Revised Rules on Criminal Procedure. Indeed, the age-old but
At any rate, there is no prejudicial question if the civil and the criminal action familiar rule is that he who alleges must prove his allegations.
can, according to law, proceed independently of each other.11 Under Rule 111,
Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in
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In sum, the dismissal of the petition is proper considering that petitioner has not
established that the trial court committed grave abuse of discretion. So also, his
failure to attach documents relevant to his allegations warrants the dismissal of
the petition, pursuant to Section 3, Rule 46 of the Rules of Civil Procedure,
which states:

SEC. 3. Contents and filing of petition; effect of non-compliance with

requirements. — The petition shall contain the full names and actual addresses
of all the petitioners and respondents, a concise statement of the matters
involved, the factual background of the case, and the grounds relied upon for
the relief prayed for.

It shall be filed in seven (7) clearly legible copies together with proof of service
thereof on the respondent with the original copy intended for the court indicated
as such by the petitioner, and shall be accompanied by a clearly legible duplicate
original or certified true copy of the judgment, order, resolution, or ruling
subject thereof, such material portions of the record as are referred to therein,
and other documents relevant or pertinent thereto.

xxxxxxxxx

The failure of the petitioner to comply with any of the foregoing requirements
shall be sufficient ground for the dismissal of the petition. (Emphasis added)

WHEREFORE, in view of all the foregoing, the petition is dismissed.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 211

upon him (See Standard Oil Co. of New Mexico, Inc. v. Standard Oil Co. of
G.R. No. 96161 February 21, 1992 California, 56 F 2d 973, 977). A corporation can no more use a corporate name
in violation of the rights of others than an individual can use his name legally
PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS acquired so as to mislead the public and injure another.
INDUSTRIAL DEVELOPMENT, INC., petitioners, Same; Same; Same; The right to the exclusive use of a corporate name with
vs. freedom from infringement by similarity is determined by priority of adoption.—
COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION and The right to the exclusive use of a corporate name with freedom from
STANDARD PHILIPS CORPORATION, respondents. infringement by similarity is determined by priority of adoption (1 Thompson, p.
80 citing Munn v. Americana Co., 82 N., Eq. 63, 88 Atl. 30; San Francisco Oyster
Emeterio V. Soliven & Associates for petitioners. House v. Mihich, 75 Wash. 274; 134 Pac. 921). In this regard, there is no doubt
with respect to Petitioners’ prior adoption of the name “PHILIPS” as part of its
Narciso A. Manantan for private respondent. corporate name. Petitioners Philips Electrical and Philips Industrial were
incorporated on 29 August 1956 and 25 May 1956, respectively, while
Corporation Law; Trademarks; A corporation’s right to use its corporate and Respondent Standard Philips was issued a Certificate of Registration on 19 April
trade name is a property right, a right in rem which it may assert and protect 1982, twenty-six (26) years later (Rollo, p. 16). Petitioner PEBV has also used
against the world in the same manner as it may protect its tangible property, the trademark “PHILIPS” on electrical lamps of all types and their accessories
real or personal against trespass or conversion.—As early as Western Equipment since 30 September 1922, as evidenced by Certificate of Registration No. 1651.
and Supply Co. v. Reyes, 51 Phil. 115 (1927), the Court declared that a Same; Same; Same; In determining the existence of confusing similarity in
corporation’s right to use its corporate and trade name is a property right, a corporate name, the test is whether the similarity is such as to mislead a person
right in rem, which it may assert and protect against the world in the same using ordinary care and discrimination.—The second requisite no less exists in
manner as it may protect its tangible property, real or personal, against trespass this case. In determining the existence of confusing similarity in corporate
or conversion. It is regarded, to a certain extent, as a property right and one names, the test is whether the similarity is such as to mislead a person using
which cannot be impaired or defeated by subsequent appropriation by another ordinary care and discrimination. In so doing, the Court must look to the record
corporation in the same field. as well as the names themselves (Ohio Nat. Life Ins. Co. v. Ohio Life Ins. Co.,
Same; Same; Same; The general rule as to corporations is that each corporation 210 NE 2d 298). While the corporate names of Petitioners and Private
must have a name by which it is to sue and be sued and do all legal acts.—A Respondent are not identical, a reading of Petitioner’s corporate names, to wit:
name is peculiarly important as necessary to the very existence of a corporation PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS
(American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to conclude that
Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington “PHILIPS” is, indeed, the dominant word in that all the companies affiliated or
Distilling Co. 40 W Va 530, 23 SE 792). Its name is one of its attributes, an associated with the principal corporation, PEBV, are known in the Philippines and
element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. abroad as the PHILIPS Group of Companies. Same; Same; Same; Same; It is
3-4). The general rule as to corporations is that each corporation must have a settled that proof of actual confusion need not be shown; It suffices that
name by which it is to sue and be sued and do all legal acts. The name of a confusion is probably or likely to occur.—Respondents maintain, however, that
corporation in this respect designates the corporation in the same manner as the Petitioners did not present an iota of proof of actual confusion or deception of
name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, the public much less a single purchaser of their product who has been deceived
96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); or confused or showed any likelihood of confusion. It is settled, however, that
and the right to use its corporate name is as much a part of the corporate proof of actual confusion need not be shown. It suffices that confusion is
franchise as any other privilege granted. probably or likely to occur.
Same; Same; Same; A corporation can no more use a corporate name in Same; Same; Same; A corporation has an exclusive right to the use of its name
violation of the rights of others than an individual can use his name legally which may be protected by injunction upon a principle similar to that upon which
acquired so as to mislead the public and injure another.—A corporation acquires persons are protected in the use of trademarks and tradenames.—What is lost
its name by choice and need not select a name identical with or similar to one sight of, however, is that PHILIPS is a trademark or trade name which was
already appropriated by a senior corporation while an individual’s name is thrust registered as far back as 1922. Petitioners, therefore, have the exclusive right to
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its use which must be free from any infringement by similarity. A corporation has
an exclusive right to the use of its name, which may be protected by injunction As a result of Private Respondent's refusal to amend its Articles of Incorporation,
upon a principle similar to that upon which persons are protected in the use of Petitioners filed with the SEC, on 6 February 1985, a Petition (SEC Case No.
trademarks and tradenames (18 C.J.S 574). Such principle proceeds upon the 2743) praying for the issuance of a Writ of Preliminary Injunction, alleging,
theory that it is a fraud on the corporation which has acquired a right to that among others, that Private Respondent's use of the word PHILIPS amounts to
name and perhaps carried on its business thereunder, that another should an infringement and clear violation of Petitioners' exclusive right to use the same
attempt to use the same name, or the same name with a slight variation in such considering that both parties engage in the same business.
a way as to induce persons to deal with it in the belief that they are dealing with
the corporation which has given a reputation to the name. In its Answer, dated 7 March 1985, Private Respondent countered that Petitioner
PEBV has no legal capacity to sue; that its use of its corporate name is not at all
PETITION for review of the decision and resolution of the Court of Appeals. similar to Petitioners' trademark PHILIPS when considered in its entirety; and
[Philips Export B.V. vs. Court of Appeals, 206 SCRA 457(1992)] that its products consisting of chain rollers, belts, bearings and cutting saw are
grossly different from Petitioners' electrical products.
MELENCIO-HERRERA, J.:
After conducting hearings with respect to the prayer for Injunction; the SEC
Petitioners challenge the Decision of the Court of Appeals, dated 31 July 1990, in Hearing Officer, on 27 September 1985, ruled against the issuance of such Writ.
CA-GR Sp. No. 20067, upholding the Order of the Securities and Exchange
Commission, dated 2 January 1990, in SEC-AC No. 202, dismissing petitioners' On 30 January 1987, the same Hearing Officer dismissed the Petition for lack of
prayer for the cancellation or removal of the word "PHILIPS" from private merit. In so ruling, the latter declared that inasmuch as the SEC found no
respondent's corporate name. sufficient ground for the granting of injunctive relief on the basis of the
testimonial and documentary evidence presented, it cannot order the removal or
Petitioner Philips Export B.V. (PEBV), a foreign corporation organized under the cancellation of the word "PHILIPS" from Private Respondent's corporate name
laws of the Netherlands, although not engaged in business here, is the on the basis of the same evidence adopted in toto during trial on the merits.
registered owner of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM Besides, Section 18 of the Corporation Code (infra) is applicable only when the
under Certificates of Registration Nos. R-1641 and R-1674, respectively issued corporate names in question are identical. Here, there is no confusing similarity
by the Philippine Patents Office (presently known as the Bureau of Patents, between Petitioners' and Private Respondent's corporate names as those of the
Trademarks and Technology Transfer). Petitioners Philips Electrical Lamps, Inc. Petitioners contain at least two words different from that of the Respondent.
(Philips Electrical, for brevity) and Philips Industrial Developments, Inc. (Philips Petitioners' Motion for Reconsideration was likewise denied on 17 June 1987.
Industrial, for short), authorized users of the trademarks PHILIPS and PHILIPS
SHIELD EMBLEM, were incorporated on 29 August 1956 and 25 May 1956, On appeal, the SEC en banc affirmed the dismissal declaring that the corporate
respectively. All petitioner corporations belong to the PHILIPS Group of names of Petitioners and Private Respondent hardly breed confusion inasmuch
Companies. as each contains at least two different words and, therefore, rules out any
possibility of confusing one for the other.
Respondent Standard Philips Corporation (Standard Philips), on the other hand,
was issued a Certificate of Registration by respondent Commission on 19 May On 30 January 1990, Petitioners sought an extension of time to file a Petition for
1982. Review on Certiorari before this Court, which Petition was later referred to the
Court of Appeals in a Resolution dated 12 February 1990.
On 24 September 1984, Petitioners filed a letter complaint with the Securities &
Exchange Commission (SEC) asking for the cancellation of the word "PHILIPS" In deciding to dismiss the petition on 31 July 1990, the Court of
from Private Respondent's corporate name in view of the prior registration with Appeals 1 swept aside Petitioners' claim that following the ruling in Converse
the Bureau of Patents of the trademark "PHILIPS" and the logo "PHILIPS Rubber Corporation v. Universal Converse Rubber Products, Inc., et al, (G. R.
SHIELD EMBLEM" in the name of Petitioner, PEBV, and the previous registration No. L-27906, January 8, 1987, 147 SCRA 154), the word PHILIPS cannot be
of Petitioners Philips Electrical and Philips Industrial with the SEC. used as part of Private Respondent's corporate name as the same constitutes a
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dominant part of Petitioners' corporate names. In so holding, the Appellate Court A corporation acquires its name by choice and need not select a name identical
observed that the Converse case is not four-square with the present case with or similar to one already appropriated by a senior corporation while an
inasmuch as the contending parties in Converse are engaged in a similar individual's name is thrust upon him (See Standard Oil Co. of New Mexico, Inc.
business, that is, the manufacture of rubber shoes. Upholding the SEC, the v. Standard Oil Co. of California, 56 F 2d 973, 977). A corporation can no more
Appellate Court concluded that "private respondents' products consisting of use a corporate name in violation of the rights of others than an individual can
chain rollers, belts, bearings and cutting saw are unrelated and non-competing use his name legally acquired so as to mislead the public and injure another
with petitioners' products i.e. electrical lamps such that consumers would not in (Armington vs. Palmer, 21 RI 109. 42 A 308).
any probability mistake one as the source or origin of the product of the other."
Our own Corporation Code, in its Section 18, expressly provides that:
The Appellate Court denied Petitioners' Motion for Reconsideration on 20
November 1990, hence, this Petition which was given due course on 22 April No corporate name may be allowed by the Securities and Exchange Commission
1991, after which the parties were required to submit their memoranda, the if the proposed name is identical or deceptively or confusingly similar to that of
latest of which was received on 2 July 1991. In December 1991, the SEC was any existing corporation or to any other name already protected by law or is
also required to elevate its records for the perusal of this Court, the same not patently deceptive, confusing or contrary to existing law. Where a change in a
having been apparently before respondent Court of Appeals. corporate name is approved, the commission shall issue an amended certificate
of incorporation under the amended name. (Emphasis supplied)
We find basis for petitioners' plea.
The statutory prohibition cannot be any clearer. To come within its scope, two
As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927), requisites must be proven, namely:
the Court declared that a corporation's right to use its corporate and trade name
is a property right, a right in rem, which it may assert and protect against the (1) that the complainant corporation acquired a prior right over the use of
world in the same manner as it may protect its tangible property, real or such corporate name; and
personal, against trespass or conversion. It is regarded, to a certain extent, as a
property right and one which cannot be impaired or defeated by subsequent (2) the proposed name is either:
appropriation by another corporation in the same field (Red Line Transportation
Co. vs. Rural Transit Co., September 8, 1934, 20 Phil 549). (a) identical; or

A name is peculiarly important as necessary to the very existence of a (b) deceptively or confusingly similar
corporation (American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317,
46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank to that of any existing corporation or to any other name already protected by
vs. Huntington Distilling Co. 40 W Va 530, 23 SE 792). Its name is one of its law; or
attributes, an element of its existence, and essential to its identity (6 Fletcher
[Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation (c) patently deceptive, confusing or contrary to existing law.
must have a name by which it is to sue and be sued and do all legal acts. The
name of a corporation in this respect designates the corporation in the same The right to the exclusive use of a corporate name with freedom from
manner as the name of an individual designates the person (Cincinnati infringement by similarity is determined by priority of adoption (1 Thompson, p.
Cooperage Co. vs. Bate. 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. 80 citing Munn v. Americana Co., 82 N. Eq. 63, 88 Atl. 30; San Francisco Oyster
Starbird. 10 NH 123); and the right to use its corporate name is as much a part House v. Mihich, 75 Wash. 274, 134 Pac. 921). In this regard, there is no doubt
of the corporate franchise as any other privilege granted (Federal Secur. Co. vs. with respect to Petitioners' prior adoption of' the name ''PHILIPS" as part of its
Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. corporate name. Petitioners Philips Electrical and Philips Industrial were
Portuguese Beneficial Association, 18 RI 165, 26 A 36). incorporated on 29 August 1956 and 25 May 1956, respectively, while
Respondent Standard Philips was issued a Certificate of Registration on 12 April
1982, twenty-six (26) years later (Rollo, p. 16). Petitioner PEBV has also used
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the trademark "PHILIPS" on electrical lamps of all types and their accessories may become articles of commerce except food, drugs and cosmetics and to
since 30 September 1922, as evidenced by Certificate of Registration No. 1651. carry on such business as manufacturer, distributor, dealer, indentor, factor,
manufacturer's representative capacity for domestic or foreign companies.
The second requisite no less exists in this case. In determining the existence of (emphasis ours)
confusing similarity in corporate names, the test is whether the similarity is such
as to mislead a person, using ordinary care and discrimination. In so doing, the For its part, Philips Electrical also includes, among its primary purposes, the
Court must look to the record as well as the names themselves (Ohio Nat. Life following:
Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298). While the corporate names of
Petitioners and Private Respondent are not identical, a reading of Petitioner's To develop manufacture and deal in electrical products, including electronic,
corporate names, to wit: PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, mechanical and other similar products . . . (p. 30, Record of SEC Case No. 2743)
INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to
conclude that "PHILIPS" is, indeed, the dominant word in that all the companies Given Private Respondent's aforesaid underlined primary purpose, nothing could
affiliated or associated with the principal corporation, PEBV, are known in the prevent it from dealing in the same line of business of electrical devices,
Philippines and abroad as the PHILIPS Group of Companies. products or supplies which fall under its primary purposes. Besides, there is
showing that Private Respondent not only manufactured and sold ballasts for
Respondents maintain, however, that Petitioners did not present an iota of proof fluorescent lamps with their corporate name printed thereon but also advertised
of actual confusion or deception of the public much less a single purchaser of the same as, among others, Standard Philips (TSN, before the SEC, pp. 14, 17,
their product who has been deceived or confused or showed any likelihood of 25, 26, 37-42, June 14, 1985; pp. 16-19, July 25, 1985). As aptly pointed out by
confusion. It is settled, however, that proof of actual confusion need not be Petitioners, [p]rivate respondent's choice of "PHILIPS" as part of its corporate
shown. It suffices that confusion is probably or likely to occur (6 Fletcher [Perm name [STANDARD PHILIPS CORPORATION] . . . tends to show said respondent's
Ed], pp. 107-108, enumerating a long line of cases). intention to ride on the popularity and established goodwill of said petitioner's
business throughout the world" (Rollo, p. 137). The subsequent appropriator of
It may be that Private Respondent's products also consist of chain rollers, belts, the name or one confusingly similar thereto usually seeks an unfair advantage, a
bearing and the like, while petitioners deal principally with electrical products. It free ride of another's goodwill (American Gold Star Mothers, Inc. v. National
is significant to note, however, that even the Director of Patents had denied Gold Star Mothers, Inc., et al, 89 App DC 269, 191 F 2d 488).
Private Respondent's application for registration of the trademarks "Standard
Philips & Device" for chain, rollers, belts, bearings and cutting saw. That office In allowing Private Respondent the continued use of its corporate name, the SEC
held that PEBV, "had shipped to its subsidiaries in the Philippines equipment, maintains that the corporate names of Petitioners PHILIPS ELECTRICAL LAMPS.
machines and their parts which fall under international class where "chains, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC. contain at least two words
rollers, belts, bearings and cutting saw," the goods in connection with which different from that of the corporate name of respondent STANDARD PHILIPS
Respondent is seeking to register 'STANDARD PHILIPS' . . . also belong" ( Inter CORPORATION, which words will readily identify Private Respondent from
Partes Case No. 2010, June 17, 1988, SEC Rollo). Petitioners and vice-versa.

Furthermore, the records show that among Private Respondent's primary True, under the Guidelines in the Approval of Corporate and Partnership Names
purposes in its Articles of Incorporation (Annex D, Petition p. 37, Rollo) are the formulated by the SEC, the proposed name "should not be similar to one already
following: used by another corporation or partnership. If the proposed name contains a
word already used as part of the firm name or style of a registered company;
To buy, sell, barter, trade, manufacture, import, export, or otherwise acquire, the proposed name must contain two other words different from the company
dispose of, and deal in and deal with any kind of goods, wares, and merchandise already registered" (Emphasis ours). It is then pointed out that Petitioners
such as but not limited to plastics, carbon products, office stationery and Philips Electrical and Philips Industrial have two words different from that of
supplies, hardware parts, electrical wiring devices, electrical component parts, Private Respondent's name.
and/or complement of industrial, agricultural or commercial machineries,
constructive supplies, electrical supplies and other merchandise which are or
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What is lost sight of, however, is that PHILIPS is a trademark or trade name WHEREFORE, the Decision of the Court of Appeals dated 31 July 1990, and its
which was registered as far back as 1922. Petitioners, therefore, have the Resolution dated 20 November 1990, are SET ASIDE and a new one entered
exclusive right to its use which must be free from any infringement by similarity. ENJOINING private respondent from using "PHILIPS" as a feature of its
A corporation has an exclusive right to the use of its name, which may be corporate name, and ORDERING the Securities and Exchange Commission to
protected by injunction upon a principle similar to that upon which persons are amend private respondent's Articles of Incorporation by deleting the word
protected in the use of trademarks and tradenames (18 C.J.S. 574). Such PHILIPS from the corporate name of private respondent.
principle proceeds upon the theory that it is a fraud on the corporation which
has acquired a right to that name and perhaps carried on its business No costs.
thereunder, that another should attempt to use the same name, or the same
name with a slight variation in such a way as to induce persons to deal with it in SO ORDERED.
the belief that they are dealing with the corporation which has given a
reputation to the name (6 Fletcher [Perm Ed], pp. 39-40, citing Borden Ice Paras, Padilla, Regalado and Nocon, JJ., concur.
Cream Co. v. Borden's Condensed Milk Co., 210 F 510). Notably, too, Private
Respondent's name actually contains only a single word, that is, "STANDARD",
different from that of Petitioners inasmuch as the inclusion of the term
"Corporation" or "Corp." merely serves the Purpose of distinguishing the
corporation from partnerships and other business organizations.

The fact that there are other companies engaged in other lines of business using
the word "PHILIPS" as part of their corporate names is no defense and does not
warrant the use by Private Respondent of such word which constitutes an
essential feature of Petitioners' corporate name previously adopted and
registered and-having acquired the status of a well-known mark in the
Philippines and internationally as well (Bureau of Patents Decision No. 88-35
[TM], June 17, 1988, SEC Records).

In support of its application for the registration of its Articles of Incorporation

with the SEC, Private Respondent had submitted an undertaking "manifesting its
willingness to change its corporate name in the event another person, firm or
entity has acquired a prior right to the use of the said firm name or one
deceptively or confusingly similar to it." Private respondent must now be held to
its undertaking.

As a general rule, parties organizing a corporation must choose a name at their

peril; and the use of a name similar to one adopted by another corporation,
whether a business or a nonbusiness or non-profit organization if misleading and
likely to injure it in the exercise in its corporate functions, regardless of intent,
may be prevented by the corporation having the prior right, by a suit for
injunction against the new corporation to prevent the use of the name
(American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., 89 App
DC 269, 191 F 2d 488, 27 ALR 2d 948).
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G.R. No. L-54580 December 29, 1987 castings and forgings." On April 14, 1971, pursuant to trademark rules, the
petitioner filed with the said patent office an "Affidavit of Use" for said
ARMCO STEEL CORPORATION (OF THE PHILIPPINES), petitioner, trademark, which was subsequently accepted and for which the Patent Office
vs. issued the corresponding notice of acceptance of "Affidavit of Use."
SECURITIES AND EXCHANGE COMMISSION, ARMCO STEEL
CORPORATION (of Ohio, U.S.A.) and ARMCO MARSTEEL ALLOY ARMCO Marsteel-Alloy Corporation was also incorporated on July 11, 1972 under
CORPORATION, respondents. its original name Marsteel Alloy Company, Inc. but on March 28, 1973 its name
was changed to ARMCO-Marsteel Alloy Corporation hereinafter called ARMCO-
Trademarks; Patents; A trademark is entitled to protection in the use thereof in Marsteel, by amendment of its Articles of Incorporation after the ARMCO-Ohio
the Philippines; Owner has the right to the exclusive use and enjoyment of the purchased 40% of its capital stock. Both said corporations are engaged in the
term.—It is indisputable that ARMCO-STEEL-OHIO, having patented the term manufacture of steel products. Its article of incorporation in part reads as follows
'Armco' as part of its trademark on its steel products, is entitled to protection in as to its purposes: "to manufacture, process ... and deal in all kinds, form, and
the use thereof in the Philippines. The term' Armco' is now being used on the combinations of iron, steel or other metals and all or any products or articles
products being manufactured and sold in this country by ArmcoMarsteel by particularly consisting of iron, steel or other metals .... .
virtue of its tie-up with ARMCO-STEEL-OHIO. Clearly, the two companies have
the right to the exclusive use and enjoyment of said term. On the other hand ARMCO Steel Corporation was incorporated in the Philippines
Same; Armco Steel-Philippines and Armco Steel-Ohio have not only identical on April 25, 1973, hereinafter called ARMCO-Philippines. A pertinent portion of
name but also a similarity in line of business.—ARMCO STEEL-PHILIPPINES, has its articles of incorporation provides as among its purposes: "to contract,
not only an identical name but also a similar line of business, as shown above, fabricate ... manufacture ... regarding pipelines, steel frames ... ."
as that of ARMCO STEEL-OHIO. People who are buying and using products
bearing the trademark ' Armco' might be led to believe that such products are ARMCO-Ohio and ARMCO-Marsteel then filed a petition in the Securities and
manufactured by the respondent, when in fact, they might actually be produced Exchange Commission (SEC) to compel ARMCO-Philippines to change its
by the petitioners. Thus, the goodwill that should grow and inure to the benefit corporate name on the ground that it is very similar, if not exactly the same as
of petitioners could be impaired and prejudiced by the continued use of the the name of one of the petitioners, which is docketed as SEC Case No. 1187. In
same term by the respondent." due course an order was issued by the SEC on February 14, 1975 granting the
Civil Procedure; Order or resolution granting execution if a final judgment cannot petition, the dispositive part of which reads as follows:
be appealed.—Obviously, the petition for review is designed to further delay if
not simply evade compliance with the said final and executory SEC order. In view of the foregoing, the respondent, ARMCO STEEL CORPORATION, is
Petitioner also seeks a review of the orders of execution of the SEC of the said hereby ordered to take out 'ARMCO' and substitute another word in lieu thereof
February 14, 1975 order. An order or resolution granting execution of the final in its corporate name by amending the articles of incorporation to that effect,
judgment cannot be appealed otherwise there will be no end to the litigation. within thirty (30) days from date of receipt of a copy of this Order; after which,
three (3) copies of the amended articles of incorporation, duly certified by a
PETITION to review the decision of the Securities and Exchange Commission. majority of the board of directors and countersigned by the president and
secretary of the corporation, shall be submitted to this Commission, together
The facts are stated in the opinion of the Court. [Armco Steel Corporation (of with the corresponding filing fees, as required by law. 1
the Philippines) vs. Securities & Exchange Commission, 156 SCRA 822(1987)]
A motion for reconsideration of the said order was filed by said respondent on
GANCAYCO, J.: March 6. 1975 but this was denied in, an order of April 16, 1965 as the motion
was filed out of time, a copy of the questioned order having been received by
On July 1, 1965 ARMCO Steel Corporation, a corporation organized in Ohio, respondent on February 18, 1975 so that said order had become final and
U.S.A., hereinafter called ARMCO-OHIO, obtained from the Philippine Patent executory. 2 A motion for reconsideration filed by respondent to set aside said
Office, Certificate of Registration No. 11750 for its trademark consisting of the order of April 16, 1965 was also denied by the SEC on June 23, 1975. 3 An
word "ARMCO" and a triangular device for "ferrous metals and ferrous metal appeal was interposed by respondent to the Court of Appeals which was
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docketed as CA G.R. No. 04448-R but the appeal was dismissed in a resolution been substantially complied with by the petitioner. The grounds of the petition
of January 13, 1976, on the ground that the appeal was perfected beyond the are as follows:
reglementary period allowed by law.
I
On March 22, 1976 said respondent amended its articles of incorporation by
changing its name to "ARMCO structures, Inc." which was filed with and THE SECURITIES AND EXCHANGE COMMISSION ERRED WHEN IT DID NOT
approved by the SEC. CONSIDER ITS ORDER DATED FEBRUARY 14,1975 FUNCTUS OFFICIO
PURSUANT TO THE LEGAL MAXIM CESSANTE LEGIS RATIONE CESSAT ET IPSA
Nevertheless, in an order of January 6, 1977, the SEC issued an order requiring LEX' AFTER PETITIONER HAD SUBSTANTIALLY COMPLIED IN GOOD FAITH
respondent, its directors and officers to comply with the aforesaid order of the WITH SAID ORDER AND SAID COMPLIANCE HAD ACHIEVED THE PURPOSE OF
Commission of February 14, 1975 within ten (10) days from notice thereof. 5 THE ORDER, BY CHANGING ITS CORPORATE NAME WITH THE APPROVAL OF
SAID COMMISSION.
A manifestation and motion was filed by respondent informing SEC that it had
already changed its corporate name with the approval of the SEC to ARMCO II
Structures, Inc. in substantial compliance with the said order or in the alternative
prayed for a hearing to determine if there is a confusing similarity between the THE COMMISSION ERRED WHEN IT DID NOT FIND THAT ITS APPROVAL OF
names of the petitioners on one hand and the ARMCO Structures, Inc. on the PETITIONER'S AMENDED ARTICLES OF INCORPORATION CHANGING
other. PETITIONER'S CORPORATE NAME FROM "ARMCO STEEL CORPORATION" TO
"ARMCO STRUCTURES, INCORPORATED" WAS REGULAR AND LEGAL.
Petitioners then filed a comment to said manifestation alleging that the change
of name of said respondent was not done in good faith and is not in accordance III
with the order of the Commission of February 14, 1975 so that drastic action
should be taken against the respondent and its officers. Subsequently, THE COMMISSION ERRED WHEN IT DID NOT FIND THAT PRIVATE
petitioners filed a motion to cite said respondent, its directors and officers in RESPONDENTS WERE NO LONGER ENTITLED TO THE RELIEF AWARDED BY
contempt for disobeying the orders of February 14, 1975 and January 6, 1977. THE ORDER DATED FEBRUARY 14,1975 CONSIDERING THAT SAID ORDER HAD
In an order of August 31, 1977, the SEC finding that the respondent, its BECOME FUNCTUS OFFICIO AND FURTHER ENFORCEMENT THEREOF WILL BE
directors, and officers have not complied with the final order of February 14, INEQUITABLE AS IT WILL DEPRIVE PETITIONER OF EQUAL PROTECTION OF
1975 required them to appeal before the Commission on September 22, 1977 at LAWS.
10:00 o'clock in the morning to show cause why they should not be punished for
contempt by the Commission. 6 IV

After the hearing the parties submitted their respective memoranda. In another THE COMMISSION ERRED WHEN, THERE BEING A DISPUTE AS TO WHETHER
order of January 17, 1979, the SEC finding that the respondent did not make the OR NOT THE PURPOSE OF THE ORDER DATED FEBRUARY 14,1975 HAD BEEN
proper disclosure of the circumstances when it amended its articles of COMPLIED WITH AND WHETHER THERE WAS STILL CONFUSING SIMILARITY
incorporation and submitted the same for the approval of the SEC thus said BETWEEN THE CORPORATE NAMES OF RESPONDENTS AND THE NEW NAME OF
respondent, its directors, and officers were ordered within ten (10) days from PETITIONER, IT DID NOT GRANT PETITIONER'S PRAYER THAT A HEART NG BE
notice to comply with the order of February 14, 1975. An appeal was interposed HELD TO THRESH THE ISSUE."
by the respondent to the SEC en banc. The Commission en banc in an order of
December 14, 1979 dismissed the appeal for lack of merit. 7 The Court finds no merit in the petition.

Hence, the herein petition for review filed by ARMCO-Philippines wherein it seeks The order of the public respondent SEC of February 14, 1975 which has long
the reversal of the orders of the SEC of December 14, 1979 and August 6, 1980 become final and executory clearly spells out that petitioner must "take out
and that the order of February 14, 1975 be declared functus oficio for having ARMCO and substitute another word in lieu thereof in its corporate name by
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amending the articles of incorporation to that effect, ... ." Far from complying thereby. Had petitioner revealed at the time of the registration of its amended
with said order petitioner amended its corporate name into ARMCO Structures, corporate name that there was the said order, the registration of the amended
Inc., and secured its approval by the SEC on March 22, 1976. That this corporate name could not have been accepted and approved by the persons in-
amendment was made by petitioner without the knowledge of the proper charge of the registration. The actuations in this respect of petitioner are far
authorities of the SEC is home by the fact that thereafter on January 6, 1977 an from regular much less in good faith.
order was issued by the SEC requiring petitioner, its board of directors, and
officers to comply with the order of the Commission of February 14, 1975. When The arguments of the petitioner that the SEC had approved the registration of
the attention of the SEC was called by petitioner that the change of corporate several other entities with one principal word common to all as "ARMCO," and
name had been undertaken by it to ARMCO Structures, Inc. and asked that it be that there is no confusing similarity between the corporate names of
considered as a substantial compliance with the order of February 14, 1975, the respondents and the new name of petitioner, would indeed in effect be
SEC in its order of January 17, 1979 speaking through its hearing officer Antonio reopening the final and executory order of the SEC of February 14, 1975 which
R. Manabat ruled as follows: had already foreclosed the issue. Indeed, in said final order the SEC made the
following findings which are conclusive and well-taken:
The Order of February 14, 1975, cannot but be clearer than what it purports to
require or demand from respondent. Under in no distinct terms, it enjoins the The only question for resolution in this case is whether therespondent's name
removal or deletion of the word 'Armco' from respondent's corporate name, ARMCO STEEL CORPORATION is similar, if not Identical with that of petitioner,
which was not so complied with. The Commission, therefore, cannot give its ARMCO STEEL CORPORATION (of Ohio, U.S.A.) and of petitioner, ARMCO-
imprimatur to the new corporate name because there was no compliance at all. MARSTEEL ALLOY CORPORATION, as to create uncertainty and confusion in the
minds of the public.
The fact that the Securities and Exchange Commission issued its certificate of
filing of amended articles of incorporation on March 22, 1976, is nothing but an By mere looking at the names it is clear that the name of petitioner, ARMCO
illusory approval of the change of corporate name and a self-induced protection STEEL CORPORATION (of Ohio, U.S.A.), and that of the respondent, ARMCO
from the Commission to further exact compliance of the Order of February 14, STEEL CORPORATION, are not only similar but Identical and the words "of Ohio,
1975. Craftily, the Securities and Exchange Commission and/or its administrative U.S.A.," are being used only to Identify petitioner ARMCO STEEL-OHIO as a U.S.
personnel were made to issue such certificate during its unguarded moment. corporation.
Verily, the certificate could not have been issued were it not for such lapses or
had respondent been in good faith by making the proper disclosures of the It is indisputable that ARMCO-STEEL-OHIO, having patented the term 'Armco' as
circumstances which led it to amend its articles of incorporation. part of its trademark on its steel products, is entitled to protection in the use
thereof in the Philippines. The term "Armco" is now being used on the products
Correctly pointed out by petitioners, a 'new determination as to whether or not being manufactured and sold in this country by Armco-Marsteel by virtue of its
there is confusing similarity between petitioners' names and that of 'Armco tie-up with ARMCO-STEEL-OHIO. Clearly, the two companies have the right to
Structures, Incorporated,' cannot be ordered without transgression on the rule the exclusive use and enjoyment of said term.
of, or the decisional law on, finality of judgment. 8
ARMCO STEEL-PHILIPPINES, has not only an Identical name but also a similar
The Court finds that the said amendment in the corporate name of petitioner is line of business, as shown above, as that of ARMCO STEEL- OHIO. People who
not in substantial compliance with the order of February 14, 1975. Indeed it is in are buying and using products bearing the trademark "Armco" might be led to
contravention therewith. To repeat, the order was for the removal of the word believe that such products are manufactured by the respondent, when in fact,
"ARMCO" from the corporate name of the petitioner which it failed to do. And they might actually be produced by the petitioners. Thus, the goodwill that
even if this change of corporate name was erroneously accepted and approved should grow and inure to the benefit of petitioners could be impaired and
in the SEC it cannot thereby legalize nor change what is clearly unauthorized if prejudiced by the continued use of the same term by the respondent.
not contemptuous act of petitioner in securing the registration of a new
corporate name against the very order of the SEC of February 14, 1975. Obviously, the petition for review is designed to further delay if not simply evade
Certainly the said order of February 14, 1975 is not rendered functus oficio compliance with the said final and executory SEC order. Petitioner also seeks a
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review of the orders of execution of the SEC of the said February 14, 1975
order. An order or resolution granting execution of the final judgment cannot be
appealed 9 otherwise there will be no end to the litigation. 10

WHEREFORE, the petition is DISMISSED for lack of merit with costs against
petitioner. This decision is immediately executory.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.

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G.R. No. L-27897 December 2, 1927 4.IT IS A RIGHT "IN REM."—Under such a state of facts, the, right to the use of
the corporate and trade name of a foreign corporation is a property right, a right
WESTERN EQUIPMENT AND SUPPLY COMPANY, WESTERN ELECTRIC in rem, which it may assert and protect in any of the courts of the world even in
COMPANY, INC., W. Z. SMITH and FELIX C. REYES, plaintiffs-appellees, countries where it does not personally transact any business.
vs. 5.IN SUCH A CASE, IT is THE TRADE WHICH is PROTECTED.—In such a case, it
FIDEL A. REYES, as Director of the Bureau of Commerce and Industry, is the trade and not the mark that is to be protected, and a trade-mark does not
HENRY HERMAN, PETER O'BRIEN, MANUEL B. DIAZ, FELIPE MAPOY acknowledge any territorial boundaries, but extends to every market where the
and ARTEMIO ZAMORA, defendants-appellants. trader's goods have become known and identified by the use of the mark.

J. W. Ferrier for appellants. APPEAL from a judgment of the Court of First Instance of Manila. Harvey, J.
DeWitt, Perkins and Bradly for appellees. [Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115(1927)]

STATEMENT
1.WHEN AN UNLICENSED FOREIGN CORPORATION CAN MAINTAIN ACTION.—A
foreign corporation which has never done any business in the Philippine Islands October 23, 1926, in the Court of First Instance of Manila, plaintiffs filed the
and which is unlicensed and unregistered to do business here, but is widely and following complaint against the defendants:
favorably known in the Islands through the use therein of its products bearing
its corporate and trade name, has a legal right to maintain an action in the Now come the plaintiffs in the above entitled case, by the undersigned their
Islands to restrain the residents and inhabitants thereof from organizing a attorneys, and to this Honorable Court respectfully show:
corporation therein bearing the same name as the foreign corporation, when it
appears that they have personal knowledge of the existence of such a foreign I. That the Western Equipment and Supply Company is a foreign
corporation, and it is apparent that the purpose of the proposed domestic corporation organized under the laws of the State of Nevada, United States of
corporation is to deal and trade in the same goods as those of the foreign America; that the Western Electric Company, Inc., is likewise a foreign
corporation. corporation organized under the laws of the State of New York, United States of
2.WHEN UNLICENSED FOREIGN CORPORATION CAN MAINTAIN ACTION America; and that the plaintiffs W. Z. Smith and Felix C. Reyes are both of lawful
AGAINST AN OFFICER OF THE GOVERNMENT.—An unregistered foreign age and residents of the City of Manila, Philippine Islands.
corporation which has not personally transacted business in the Philippine
Islands, but which has acquired valuable goodwill and high reputation therein II. That the defendant Fidel A. Reyes is the duly appointed and qualified
through the sale by importers and the extensive use within the Islands of its Director of the Bureau of Commerce and Industry and as such Director is
products bearing either its corporate name or trade-mark, has a legal right to charged with the duty of issuing and denying the issuance of certificates of
restrain an officer of the Government, who has full knowledge of those facts, incorporation to persons filing articles of incorporation with the Bureau of
from issuing a certificate of incorporation to residents of the Philippine Islands Commerce and Industry.
who are attempting to organize a corporation for the purpose of pirating the
corporate name of the foreign corporation and of engaging in the same III. That the defendants Henry Herman, Peter O' Brien, Manuel B. Diaz,
business, for the purpose of making the public believe that the goods which it Felipe Mapoy and Artemio Zamora are all of lawful age and are residents of the
proposes to sell are the goods of the foreign corporation and of defrauding it City of Manila, Philippines Islands.
and its local dealers of their legitimate trade.
3.NATURE AND PURPOSE OF SUCH AN ACTION.—The purpose of such a suit is IV. That on or about May 4, 1925, the plaintiff the Western Equipment and
to protect its reputation, corporate name and goodwill which have been Supply Company applied to the defendant Director of the Bureau of Commerce
established through the natural development of its trade over a long period of and Industry for the issuance of a license to engage in business in the Philippine
years, in the doing of which it does not seek to enforce any legal or contract Islands and, accordingly, on May 20, 1926, a provisional license was by said
rights arising from, or growing out of, any business which it has transacted in defendant issued in its favor, which license was made permanent on August 23,
the Philippine Islands. 1926.
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X. That on October 20, 1926, plaintiff W. Z. Smith was authorized by the

V. That from and since the issuance of said provisional license of May 20,. Board of Directors of the Western Electric Company, Inc., to take all necessary
1926, said plaintiff Western Equipment and Supply Company has been and still is steps for the issuance of a license to said company to engage in business in the
engaged in importing and selling in the Philippine Islands the electrical and Philippine Islands and to accept service of summons and process in all legal
telephone apparatus and supplies manufactured by the plaintiff Western Electric proceedings against said company, and on October 21, 1926, said plaintiff W. Z.
Company, Inc., its offices in the City of Manila being at No. 600 Rizal Avenue, in Smith filed a written application for the issuance of such license with the
the charge and management of the plaintiff Felix C. Reyes, its resident agent in defendant Director of Bureau of Commerce and Industry, which application,
the Philippine Islands. however, has not yet been acted upon by said defendant.

VI. That the electric and telephone apparatus and supplies manufactured by XI. That on October 18, 1926, the plaintiff W. Z. Smith formally lodged with
the plaintiff Western Electric Company, Inc., have been sold in foreign and the defendant Director of the Bureau of Commerce and Industry his protest, and
interstate commerce and have become well and thoroughly known to the trade opposed said attempted incorporation, by the defendants Henry Herman, Peter
in all countries of the world for the past fifty years; that at present time the O'Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora, of the `Western
greater part of all telephone equipment used in Manila and elsewhere in the Electric Company, Inc.,' as a domestic corporation, upon the ground among
Philippine Islands was manufactured by the said Western Electric Company, Inc., others, that the corporate name by which said defendants desire to be known,
and sold by it in commerce between the United States and the Philippine being identical with that of the plaintiff Western Equipment and Supply
Islands; that about three fourths of such equipment in use throughout the world Company, will deceive and mislead the public purchasing electrical and
are of the manufacture of said "Western Electric Company, Inc.," and bear its telephone apparatus and supplies. A copy of said protest is hereunto annexed,
corporate name; and that these facts are well known to the defendant Henry and hereby made a part hereof, marked Exhibit A.
Herman who for many years up to May 20, 1926, has himself been buying said
products from the plaintiff Western Electric Company, Inc., and selling them in XII. That the defendant Fidel A. Reyes, Director of the Bureau of Commerce
the Philippine Islands. and Industry has announced to these plaintiffs his intention to overrule the
protest of plaintiffs, and to issue to the other defendants a certificate of
VII. That the name `Western Electric Company, Inc., has been registered as incorporation constituting said defendants a body politic and corporate under the
a trade-mark under the provisions of the Act of Congress of February 20, 1905, name "Western Electric Company, Inc.," unless restrained by this Honorable
in the office of the Commissioner of Patents, at Washington, District of Court.
Columbia, and said trade-mark remains in force to this date.
XIII. That the issuance of a certificate of incorporation in favor of said
VIII. That on or about . . ., the defendants Henry Herman, Peter O' Brien, defendants under said name of "Western Electric Company, Inc.," would, under
Manuel B. Diaz, Felipe Mapoy and Artemio Zamora filed articles of incorporation the circumstances hereinbefore stated, constitute a gross abuse of the
with the defendant Director of the Bureau of Commerce and Industry with the discretionary powers conferred by law upon the defendant Director of the
intention of organizing a domestic corporation to be known as the "Western Bureau of Commerce and Industry.
Electric Company, Inc.," for the purpose principally of manufacturing, buying,
selling and generally dealing in electrical and telephone apparatus and supplies. XIV. That the issuance of said certificate of incorporation would, if carried
out, be in violation of plaintiff's rights and would cause them irreparable injury
IX. That the purpose of said defendant in attempting to incorporate under which could not be compensated in damages, and from which petitioner would
the corporate name of plaintiff Western Electric Company, Inc., is to profit and have no appeal or any plain, speedy and adequate remedy at law, other than
trade upon the plaintiff's business and reputation, by misleading and deceiving that herein prayed for.
the public into purchasing the goods manufactured or sold by them as those of
plaintiff Western Electric Company, Inc., in violation of the provisions of Act No. They prayed for a temporary injunction, pending the final decision of the court
666 of the Philippine Commission, particularly section 4 thereof. when it should be made permanent, restraining the issuance of the certificate of
incorporation in favor of the defendants under the name of Western Electric
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Company, Inc., or the use of that name for any purpose in the exploitation and America; and that the plaintiff W. Z. Smith and Felix C. Reyes, are both of lawful
sale of electric apparatus and supplies. The preliminary writ was issued. age and residents of the City of Manila, Philippine Islands.

For answer the defendant Fidel A. Reyes, as Director of the Bureau of Commerce II. That the defendant Fidel A. Reyes is the duly appointed and qualified
and Industry, admits the allegations of paragraphs 1, 2, 3 and 4 of the Director of the Bureau of Commerce and Industry and as such Director is charge
complaint, and as to paragraphs 5, 6 and 7, he alleges that he has no with the duty of issuing and/or denying the issuance of certificates of
information upon which to form a belief, and therefore denies them. He admits incorporation to persons filing articles of incorporation with the Bureau of
the allegations of paragraph 8, and denies paragraph 9. He denies the first part Commerce and Industry.
of paragraph 10, but admits that an application for a license to do business was
filed by the Western Electric Company, Inc., as alleged. He admits paragraphs III. That the defendants, Henry Herman, Peter O' Brien, Manuel B. Diaz,
11 and 12, and denies paragraphs 13 and 14, and further alleges that the Felipe Mapoy and Artemio Zamora are all of lawful age and all residents of the
present action is prematurely brought, in that it is an attempt to coerce his City of Manila, Philippine Islands.
discretion, and that the mere registration of the articles of incorporation of the
locally organized Western Electric Company, Inc., cannot in any way injure the IV. That on or about May 4, 1925, the plaintiff, the Western Equipment and
plaintiffs, and prays that the complaint be dismissed. Supply Company, through its duly authorized agent, the plaintiff, Felix C. Reyes,
applied to the defendant Director of the Bureau of Commerce and Industry for
For answer the defendants Herman, O' Brien, Diaz, Mapoy and Zamora admit the issuance of a license to engage in business in the Philippine Islands and on
the allegations of paragraphs 1, 2, 3, 4 and 5 of the complaint, and deny May 20, 1926, said defendant issued in favor of said plaintiff a provisional
paragraph 7, but allege that on October 15, 1926, the articles of incorporation in license for that purpose which was permanent on August 23, 1926.
question were presented to the Director of the Bureau of Commerce and
Industry for registration. They deny paragraphs 9 and 10, except as to the filing V. That the plaintiff, Western Electric Company, Inc., has ever been
of the application. They admit the allegations made in paragraph 11, but alleged licensed to engage in business in the Philippine Islands, and has never engaged
that W. Z. Smith was without any right or authority. Admit the allegations of in business therein.
paragraph 12, but deny the allegations of paragraphs 13 and 14, and allege that
the Western Electric Company, Inc., has never transacted business in the VI. That from and since the issuance of said provisional license of May 20,
Philippine Islands; that its foreign business has been turned over to the 1926, to the plaintiff, Western Equipment and Supply Company, said plaintiff has
International Standard Electric Corporation; that the action is prematurely been and still is engaged in importing and selling in the Philippine Islands
brought; and that the registration of the articles of incorporation in question electrical and telephone apparatus and supplies manufactured by the plaintiff
cannot in any way injure plaintiffs. Western Electric Company, Inc. (as well as those manufactured by other
factories), said Western Equipment and Supply Company's offices in the City of
Wherefore, such defendants pray that the preliminary injunction be dissolved, Manila being at No. 600 Rizal Avenue, and at the time of the filing of the
and plaintiffs' cause of action be dismissed, with costs. complaint herein was under the charge and management of the plaintiff, Felix C.
Reyes, its then resident agent in the Philippine Islands.
The case was tried and submitted upon the following stipulated facts:
VII. That the electrical and telephone apparatus and supplies manufactured
Now come the parties plaintiff and defendants in the above entitled cause, by by the plaintiff, Western Electric Company, Inc., have been sold in foreign and
their respective undersigned attorneys, and for the purpose of this action, agree interstate commerce for the past fifty years, and have acquired high trade
that the following facts are true: reputation throughout the world; that at the present time the greater part of all
telephone equipment used in Manila, and elsewhere in the Philippine Islands,
I. That the Western Equipment and Supply Company is a foreign was manufactured by the said plaintiff, Western Electric Company, Inc., and sold
corporation, organized under the laws of the State of Nevada, United States of by it for exportation to the Philippine Islands; that such equipment,
America; that the Western Electric Company, Inc., is likewise a foreign manufactured by the said Western Electric Company, Inc., and bearing its trade-
corporation organized under the laws of the State of New York, United States of mark "Western Electric" or its corporate name is generally sold and used
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throughout the world; that a Philippine Corporation known as the `Electric process in all legal proceedings against said company, and on October 21, 1926,
Supply Company, Inc.,' has been importing the manufactures of the plaintiff, said plaintiff, W. Z. Smith, filed a written application for the issuance of such
Western Electric Company, Inc., into the Philippine Islands for the purpose of license with the defendant Director of the Bureau of Commerce and Industry,
selling the same therein, and that the defendant Henry Herman, is the President which application, however, has not yet been acted upon by said defendant.
and General Manager of said corporation.
XII. That on October 18, 1926, the Philippine Telephone and Telegraph Co.,
VIII. That the words `Western Electric' have been registered by the plaintiff, by its general manager, the plaintiff W. Z. Smith. lodged with the defendant
Electric Company, Inc., as a trade-mark under the provisions of the Act of Director of the registration of the proposed corporation by the defendants Henry
Congress of February 20, 1905, in the office of the Commissioner of the Patents Herman, Peter O'Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora, to be
at Washington, District of Columbia, and said trade-mark remains in force as the known as the Western Electric Company, Inc., as a domestic corporation under
property of said plaintiff to this date. the Philippine Corporation Law. A copy of said protest, marked Exhibit A,
hereunto attached and is hereby made a part of this stipulation.
IX. That the plaintiff, Western Electric Company, Inc., is advertising its
manufacturers in its own name by means of advertising its manufactures in its XIII. That the defendant, Fidel A. Reyes, Director of the Bureau of Commerce
own name by means of advertisements inserted in periodicals which circulate and Industry, announced his intention of overrule said protest and will, unless
generally throughout the English and Spanish speaking portions of the world, judicially restrained therefrom, issue to the other defendants herein a certificate
and has never abandoned its corporate name or trade-mark, but, on the of incorporation, constituting said defendants a Philippine body politic and
contrary, all of its output bears said corporate name and trade-mark, either corporate under the name of "Western Electric Company, Inc."
directly upon the manufactured article or upon its container, including that sold
and used in the Philippine Islands. XIV. That the defendant, Henry Herman, acting in behalf of said corporation,
Electrical Supply Company, Inc., has written letters to Messrs. Fisher, DeWitt,
X. That on October 15, 1926, the defendants Henry Herman, Peter O'Brien, Perkins & Brady, acting as attorneys for plaintiff, Western Electric Company,
Manuel B. Diaz, Felipe Mapoy and Artemio Zamora signed and filed articles of Inc., copies of which are hereunto annexed and hereby made a part hereof,
incorporation with the defendant, Fidel A. Reyes, as Director of the Bureau of marked Exhibits B, C and D.
Commerce and Industry, with the intention of organizing a domestic corporation
under the Philippine Corporation Law to be known as the "Western Electric XV. That the defendants, while admitting the facts set out in paragraph VII
Company, Inc.," for the purpose, among other things or manufacturing, buying, and IX regarding the business done, merchandise sold and advertisements made
selling and dealing generally in electrical and telephone apparatus and supplies; throughout the world by the plaintiff Western Electric Company, Inc., insist and
that said defendants Peter O'Brien, Felipe Mapoy and Artemio Zamora are maintain that said allegations of fact are immaterial and irrelevant to the issues
employees of the said Electrical Supply Company, of which said defendant, in the present case, contending that such issued should be determined upon the
Henry Herman, is and has been, during the period covered by this stipulation, facts as they exist in the Philippine Islands alone.
the president and principal stockholder; and that they, together with the said
defendant Herman, signed said articles of incorporation for the incorporation of To which were attached Exhibits A, B, C and D.
a domestic company to be known and the "Western Electric Company, Inc.,"
with full knowledge of the existence of the plaintiff Western Electric Company, The lower court rendered judgment for the plaintiffs as prayed for in their
Inc., of its corporate name, of its trade-mark, "Western Electric," and of the fact complaint, and made the temporary injunction permanent, from which the
that the manufactures of said plaintiff bearing its trade-mark or corporate name defendants appeal and assign the following errors:
are in general use in the Philippine Islands and in the United States.
The lower court erred:
XI. That on October 20, 1926, the plaintiff, W. Z. Smith, was authorized by
the Board of Directors of the plaintiff, Western Electric Company, Inc., to take all (1) When it granted the writ of preliminary injunction (pages 9 and 10,
necessary steps for the issuance of a license to said company to engage in record; 12 to 14, B. of E.).
business in the Philippine Islands, and to accept service of summons and
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(2) When it held that the Western Electric Co., Inc., a foreign corporation,
had a right to bring the present suit in courts of the Philippine Islands, wherein it Has such foreign corporation a legal right to restrain an officer of the
is unregistered and unlicensed, as was done in the decision upon the petition for Government of the Philippine Islands, i. e., the Director of the Bureau of
a preliminary injunction (pages 97 to 115 record), and in repeating such holding Commerce and Industry from exercising his discretion, and from registering a
in the final decision herein (pages 51 and 52, B. of E.), as well as in basing such corporation so organized by residents and inhabitants of the Philippine Islands?
holding upon the decision of this Honorable Supreme Court in Marshall-Wells Co.
vs. Henry W. Elser & Co. (46 Phil., 70.) As to the first question, the appellees say that it should be revised, so as to read
as follows:
(3) When it found that the plaintiff, the Western Electric Co., Inc., has any
such standing in the Philippine Islands or before the courts thereof as to Has a foreign corporation which has never done business in the Philippine
authorize it to maintain an action therein under the present case. Islands, and which is unlicensed and unregistered therein, any right to maintain
an action to restrain residents and inhabitants of the Philippine Islands from
(4) When it found that the other plaintiffs herein have any rights in the organizing a corporation therein bearing the same name as such foreign
present controversy or any legal standing therein.lawphi1.net corporation, when said residents and inhabitants have knowledge of the
existence of such foreign corporation, having dealt with it, and sold its
(5) In ordering the issuance of a permanent injunction restraining the manufactures, and when said foreign corporation is widely and favorably known
defendant Fidel A. Reyes, as Director of the Bureau of Commerce and Industry, in the Philippine Islands through the use therein of its products bearing its
from issuing a certificate of incorporation in favor of the other defendants under corporate and trade name, and when the purpose of the proposed domestic
the name of "Western Electric Co., Inc.," or any similar name, and restraining corporation is to deal in precisely the same goods as those of the foreign
the other defendants from using the name "Western Electric Co., Inc.," or any corporation?
like name, in the manufacture of sale of electrical and telephone apparatus and
supplies or as a business name or style in the Philippine Islands. As to the second, the appellees say that the question as propounded by the
appellants is not fully and fairly stated, in that it overlooks and disregards
(6) In finding that the purpose of the defendants, other than the defendant paragraphs 12 and 13 of the stipulation of facts, and that the second question
Fidel A. Reyes, in seeking to secure the registration of a local corporation under should be revised to read as follows:
the name of "Western Electric Co., Inc.," was "certainly not an innocent one,"
thereby imputing to said defendants a fraudulent and wrongful intent. Has an unregistered corporation which has not transacted business in the
Philippine Islands, but which has acquired a valuable goodwill and high
(7) In failing to dismiss plaintiffs' complaint with costs against the plaintiffs. reputation therein, through the sale, by importers, and the extensive use within
the Islands of products bearing either its corporate name, or trade-mark
(8) In overruling and denying defendants' motion for a new trial. consisting of its corporate name, a legal right to restrain an officer of the
Commerce and Industry, with knowledge of those facts, from issuing a
certificate of incorporation to residents of the Philippine Islands who attempt to
organize a corporation for the purpose of pirating the corporate name of such
JOHNS, J.: foreign corporation, of engaging in the same business as such foreign
corporation, and of defrauding the public into thinking that its goods are those
The appellants say that the two questions presented are: of such foreign corporation, and of defrauding such foreign corporation and its
local dealers of their legitimate trade?
Has a foreign corporation, which has never done business in the Philippine
Islands, and which is unlicensed and unregistered therein, any right to maintain We agree with the revisions of both questions as made by the appellees, for the
an action to restrain residents and inhabitants of the Philippine Islands from reason that they are more in accord with the stipulated facts. First, it is
organizing a corporation therein bearing the same name as such foreign stipulated that the Western Electric Company, Inc., "has never engaged in
corporation? business in the Philippine Islands."
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granted against unfair competition the means and methods adopted by the
In the case of Marshall-Wells Co. vs. Henry W. Elser & Co. (46 Phil., 70, 76), this wrongdoer in order to divert the coveted trade from his rival have been such as
court held: were calculated to deceive and mislead the public into thinking that the goods or
business of the wrongdoer are the goods or business of the rival. Diversion of
The noncompliance of a foreign corporation with the statute may be pleaded as trade is really the fundamental thing here, and if diversion of trade be
an affirmative defense. Thereafter, it must appear from the evidence, first, that accomplished by any means which according to accepted legal canons are
the plaintiff is a foreign corporation, second, that it is doing business in the unfair, the aggrieved party is entitled to relief.
Philippines, and third, that it has not obtained the proper license as provided by
the statute. In Shaver vs. Heller & Merz Co. (48 C.C. A., 48; 108 Fed., 821; 65 L. R. A., 878,.
881), it is said:
If it had been stipulated that the plaintiff, Western Electric Company, Inc., had
been doing business in the Philippine Islands without first obtaining a license, The contention of counsel for the appellants here is a confusion of the bases of
another and a very different question would be presented. That company is not two classes of suits, — those for infringements of trade-marks, and those for
here seeking to enforce any legal or contract rights arising from, or growing out unfair competition in trade. . . . In the former, title to the trade-marks is
of, any business which it has transacted in the Philippine Islands. The sole indispensable to a good cause of action; in the latter, no proprietary interest in
purpose of the action: the words, names, or means by which the fraud is perpetrated is requisite to
maintain a suit to enjoin it. It is sufficient that the complainant is entitled to the
"Is to protect its reputation, its corporate name, its goodwill, whenever that custom — the goodwill — of a business, and that this goodwill is injured, or is
reputation, corporate name or goodwill have, through the natural development about to be injured, by the palming off of the goods of another as his.
of its trade, established themselves." And it contends that its rights to the use of
its corporate and trade name: The remaining question as to the jurisdiction of the courts over the defendant
Reyes, as Director of the Bureau of Commerce and Industry, has been adversely
Is a property right, a right in rem, which may assert and protect against all the decided to his contention in the case of Asuncion vs. De Yriarte (28 Phil., 67), in
world, in any of the courts of the world — even in jurisdictions where it does not which, among other things, it is said:
transact business — just the same as it may protect its tangible property, real or
personal, against trespass, or conversion. Citing sec. 10, Nims on Unfair If, therefore, the defendant erred in determining the question presented when
Competition and Trade-Marks and cases cited; secs. 21-22, Hopkins on Trade- the articles were offered for registration, then that error will be corrected by this
Marks, Trade Names and Unfair Competition and cases cited." That point is court in this action and he will be compelled to register the articles as offered. If,
sustained by the authorities, and is well stated in Hanover Star Milling Co. vs. however, he did not commit an error, but decided that question correctly, then,
Allen and Wheeler Co. (208 Fed., 513), in which they syllabus says: of course, his action will be affirmed to the extent that we will deny the relief
prayed for.
Since it is the trade and not the mark that is to be protect, a trade-mark
acknowledges no territorial boundaries of municipalities or states or nations, but It is very apparent that the purpose and intent of Herman and his associates in
extends to every market where the trader's goods have become known and seeking to incorporate under the name of Western Electric Company, Inc., was
identified by the use of the mark. to unfairly and unjustly compete in the Philippine Islands with the Western
Electric Company, Inc., in articles which are manufactured by, and bear the
In Walter E. Olsen & Co. vs. Lambert (42 Phil., 633, 640), this court said: name of, that company, all of which is prohibited by Act No. 666, and was made
known to the defendant Reyes by the letter known in the record to the
In order that competition in business should be unfair in the sense necessary to defendant Reyes by the letter known in the record as Exhibit A.
justify the granting of an injunction to restrain such competition it must appear
that there has been, or is likely to be, a diversion of trade from the business of As appellees say:
the complainant to that of the wrongdoer, or methods generally recognized as
unfair; . . . In most, if not all, of the cases in which relief has hitherto been
 I n t e l l e c t u a l P r o p e r t y L a w ( T r a d e m a r k ) P a g e | 226

These defendant, Herman and his associates, are actually asking the
Government of the Philippine Island to permit them to pirate the name of the
Western Electric Company, Inc., by incorporating thereunder, so that they may
deceive the people of the Philippine Islands into thinking that the goods they
propose to sell are goods of the manufacture of the real Western Electric
Company. It would be a gross prostitution of the powers of government to
utilize those powers in such a way as to authorize such a fraud upon the people
governed. It would be the grossest abuse of discretion to permit these
defendants to usurp the corporate mane of the plaintiff, and to trade thereupon
in these Islands, in fraud of the Philippine public and of the true owners of the
name and the goodwill incidental thereto.

The plaintiff, Western Electric Company, Inc., has been in existence as a

corporation for over fifty years, during which time it has established a reputation
all over the world including the Philippine Islands, for the kind and quality of its
manufactured articles, and it is very apparent that the whole purpose and intent
of Herman and his associates in seeking to incorporate another corporation
under the identical name of Western Electric Company, Inc., and for the same
identical purpose as that of the plaintiff, is to trespass upon and profit by its
good name and business reputation. The very fact that Herman and his
associates have sought the use of that particular name for that identical purpose
is conclusive evidence of the fraudulent intent with which it is done.

The judgment of the lower court is affirmed, with costs. So ordered.

Avanceña, C.J., Johnson, Street, Malcolm, Villamor, Ostrand and Villa-Real, JJ.,
concur.