G.R. No.

190065

August 16, 2010

DERMALINE, INC., Petitioner, vs. MYRA PHARMACEUTICALS, INC. Respondent. DECISION NACHURA, J.: This is a petition for review on certiorari1 seeking to reverse and set aside the Decision dated August 7, 20092 and the Resolution dated October 28, 20093 of the Court of Appeals (CA) in CA-G.R. SP No. 108627. The antecedent facts and proceedings On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual Property Office (IPO) an application for registration of the trademark "DERMALINE DERMALINE, INC." (Application No. 4-2006011536). The application was published for Opposition in the IPO E-Gazette on March 9, 2007. On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified Opposition4 alleging that the trademark sought to be registered by Dermaline so resembles its trademark "DERMALIN" and will likely cause confusion, mistake and deception to the purchasing public. Myra said that the registration of Dermalines trademark will violate Section 1235 of Republic Act (R.A.) No. 8293 (Intellectual Property Code of the Philippines). It further alleged that Dermalines use and registration of its applied trademark will diminish the distinctiveness and dilute the goodwill of Myras "DERMALIN," registered with the IPO way back July 8, 1986, renewed for ten (10) years on July 8, 2006. Myra has been extensively using "DERMALIN" commercially since October 31, 1977, and said mark is still valid and subsisting. Myra claimed that, despite Dermalines attempt to differentiate its applied mark, the dominant feature is the term "DERMALINE," which is practically identical with its own "DERMALIN," more particularly that the first eight (8) letters of the marks are identical, and that notwithstanding the additional letter "E" by Dermaline, the pronunciation for both marks are identical.

Further, both marks have three (3) syllables each, with each syllable identical in sound and appearance, even if the last syllable of "DERMALINE" consisted of four (4) letters while "DERMALIN" consisted only of three (3). Myra also pointed out that Dermaline applied for the same mark "DERMALINE" on June 3, 2003 and was already refused registration by the IPO. By filing this new application for registration, Dermaline appears to have engaged in a fishing expedition for the approval of its mark. Myra argued that its intellectual property right over its trademark is protected under Section 1476 of R.A. No. 8293. Myra asserted that the mark "DERMALINE DERMALINE, INC." is aurally similar to its own mark such that the registration and use of Dermalines applied mark will enable it to obtain benefit from Myras reputation, goodwill and advertising and will lead the public into believing that Dermaline is, in any way, connected to Myra. Myra added that even if the subject application was under Classification 447 for various skin treatments, it could still be connected to the "DERMALIN" mark under Classification 58 for pharmaceutical products, since ultimately these goods are very closely related. In its Verified Answer,9 Dermaline countered that a simple comparison of the trademark "DERMALINE DERMALINE, INC." vis--vis Myras "DERMALIN" trademark would show that they have entirely different features and distinctive presentation, thus it cannot result in confusion, mistake or deception on the part of the purchasing public. Dermaline contended that, in determining if the subject trademarks are confusingly similar, a comparison of the words is not the only determinant, but their entirety must be considered in relation to the goods to which they are attached, including the other features appearing in both labels. It claimed that there were glaring and striking dissimilarities between the two trademarks, such that its trademark "DERMALINE DERMALINE, INC." speaks for itself (Res ipsa loquitur). Dermaline further argued that there could not be any relation between its trademark for health and beauty services from Myras trademark classified under medicinal goods against skin disorders. The parties failed to settle amicably. Consequently, the preliminary conference was terminated and they were directed to file their respective position papers.10

On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No. 2008-7011 sustaining Myras opposition pursuant to Section 123.1(d) of R.A. No. 8293. It disposed WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED. Consequently, Application Serial No. 4-2006-011536 for the mark DERMALINE, DERMALINE, INC. Stylized Wordmark for Dermaline, Inc. under class 44 covering the aforementioned goods filed on 21 October 2006, is as it is hereby, REJECTED. Let the file wrapper of DERMALINE, DERMALINE, INC. Stylized Wordmark subject matter of this case be forwarded to the Bureau of Trademarks (BOT) for appropriate action in accordance with this Decision. SO ORDERED.12 Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under Resolution No. 2009-12(D)13 dated January 16, 2009. Expectedly, Dermaline appealed to the Office of the Director General of the IPO. However, in an Order14 dated April 17, 2009, the appeal was dismissed for being filed out of time. Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated April 17, 2009 and the rejection of Dermalines application for registration of trademark. The CA likewise denied Dermalines motion for reconsideration; hence, this petition raising the issue of whether the CA erred in upholding the IPOs rejection of Dermalines application for registration of trademark. The petition is without merit. A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by others.15 Inarguably, it is an intellectual property deserving protection by law. In trademark controversies, each case must be scrutinized according to its peculiar circumstances, such that jurisprudential precedents should only be made to apply if they are specifically in point.16

As Myra correctly posits, as a registered trademark owner, it has the right under Section 147 of R.A. No. 8293 to prevent third parties from using a trademark, or similar signs or containers for goods or services, without its consent, identical or similar to its registered trademark, where such use would result in a likelihood of confusion. In determining likelihood of confusion, case law has developed two (2) tests, the Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or deception.17 It is applied when the trademark sought to be registered contains the main, essential and dominant features of the earlier registered trademark, and confusion or deception is likely to result. Duplication or imitation is not even required; neither is it necessary that the label of the applied mark for registration should suggest an effort to imitate. The important issue is whether the use of the marks involved would likely cause confusion or mistake in the mind of or deceive the ordinary purchaser, or one who is accustomed to buy, and therefore to some extent familiar with, the goods in question.18 Given greater consideration are the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market segments.19 The test of dominancy is now explicitly incorporated into law in Section 155.1 of R.A. No. 8293 which provides 155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; (emphasis supplied) On the other hand, the Holistic Test entails a consideration of the entirety of the marks as applied to the products, including labels and packaging, in determining confusing similarity. The scrutinizing eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels so that a conclusion may be drawn as to whether one is confusingly similar to the other.20

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion, viz: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other; and (2) confusion of business (source or origin confusion), where, although the goods of the parties are different, the product, the mark of which registration is applied for by one party, is such as might reasonably be assumed to originate with the registrant of an earlier product, and the public would then be deceived either into that belief or into the belief that there is some connection between the two parties, though inexistent.21 In rejecting the application of Dermaline for the registration of its mark "DERMALINE DERMALINE, INC.," the IPO applied the Dominancy Test. It declared that both confusion of goods and service and confusion of business or of origin were apparent in both trademarks. It also noted that, per Bureau Decision No. 2007-179 dated December 4, 2007, it already sustained the opposition of Myra involving the trademark "DERMALINE" of Dermaline under Classification 5. The IPO also upheld Myras right under Section 138 of R.A. No. 8293, which provides that a certification of registration of a mark is prima facie evidence of the validity of the registration, the registrants ownership of the mark, and of the registrants exclusive right to use the same in connection with the goods and those that are related thereto specified in the certificate. We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are no set rules that can be deduced as what constitutes a dominant feature with respect to trademarks applied for registration; usually, what are taken into account are signs, color, design, peculiar shape or name, or some special, easily remembered earmarks of the brand that readily attracts and catches the attention of the ordinary consumer.22 Dermalines insistence that its applied trademark "DERMALINE DERMALINE, INC." had differences "too striking to be mistaken" from Myras "DERMALIN" cannot, therefore, be sustained. While it is true that the two marks are presented differently Dermalines mark is written with the first "DERMALINE" in script going diagonally upwards from left to right, with an upper case "D" followed by the rest of the letters in lower case, and the portion "DERMALINE, INC." is written in upper case letters, below and smaller than the long-hand portion; while Myras mark "DERMALIN" is

written in an upright font, with a capital "D" and followed by lower case letters the likelihood of confusion is still apparent. This is because they are almost spelled in the same way, except for Dermalines mark which ends with the letter "E," and they are pronounced practically in the same manner in three (3) syllables, with the ending letter "E" in Dermalines mark pronounced silently. Thus, when an ordinary purchaser, for example, hears an advertisement of Dermalines applied trademark over the radio, chances are he will associate it with Myras registered mark. Further, Dermalines stance that its product belongs to a separate and different classification from Myras products with the registered trademark does not eradicate the possibility of mistake on the part of the purchasing public to associate the former with the latter, especially considering that both classifications pertain to treatments for the skin.1avvphi1 Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market. The Court is cognizant that the registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of his business. Thus, we have held Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior appropriator of a trademark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be misled into thinking that the complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577).23 (Emphasis supplied) Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such that, considering the current proliferation of health and beauty products in the market, the purchasers would likely be misled that Myra has already expanded its business through Dermaline from merely carrying pharmaceutical topical applications for the skin to health and beauty services.

Verily, when one applies for the registration of a trademark or label which is almost the same or that very closely resembles one already used and registered by another, the application should be rejected and dismissed outright, even without any opposition on the part of the owner and user of a previously registered label or trademark. This is intended not only to avoid confusion on the part of the public, but also to protect an already used and registered trademark and an established goodwill.24 Besides, the issue on protection of intellectual property, such as trademarks, is factual in nature. The findings of the IPO, upheld on appeal by the same office, and further sustained by the CA, bear great weight and deserves respect from this Court. Moreover, the decision of the IPO had already attained finality when Dermaline failed to timely file its appeal with the IPO Office of the Director General. WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution dated October 28, 2009 of the Court of Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against petitioner. SO ORDERED.

G.R. No. 139983

March 26, 2008

jeans and bras, which application was duly approved for publication in the Official Gazette last November 18, 1982; That for valuable consideration, I hereby grant unto WILFRO P. LUMINLUN, Filipino, of legal age and with business address at No. 959 Soler Street, Binondo, Manila, a non-transferable, non-assignable, non-exclusive right and license to use said trademark OTTO for jeans only. This authority shall remain valid and existing for as long as I remain the owner of the trademark OTTO unless said WILFRO P. LUMINLUN should do or cause to be done any act which in any way prejudice or discredit the trademark OTTO not only in connection with its use for jeans but as well as for other products enumerated in my registration certificates/application documents. IN WITNESS WHEREOF, I have hereunto affixed my signature this 29th day of December, 1983. SGD. MANUEL P. SAMSON

MANUEL P. SAMSON, Petitioner, vs. COURT OF APPEALS and WILFRO LUMINLUN, Respondents. DECISION CARPIO, J.: The Case This is a petition for review of the Decision1 dated 6 September 1999 of the Court of Appeals in CA-G.R. CV No. 31904 reversing the Decision2 dated 15 May 1990 and the Order dated 7 December 1990 of the Regional Trial Court, Branch 160, Pasig City in Civil Case No. 58052. The Antecedent Facts On 26 February 1982, petitioner Manuel P. Samson (Samson) applied for the registration of the "OTTO" trademark with the Philippine Patent Office on belts, bags, t-shirts, blouses, briefs, pants, jackets, jeans, and bra. On 21 January 1983, respondent Wilfro Luminlun (Luminlun) likewise filed for the registration of the "OTTO" trademark on jeans, sportswear, skirts, and socks. On 29 December 1983, Samson executed the following document3 granting Luminlun the authority to use the "OTTO" trademark for jeans only: AUTHORITY TO USE TRADEMARK KNOW ALL MEN BY THESE PRESENTS: I, MANUEL P. SAMSON, Filipino, of legal age and a resident of Doa Betang Subdivision, Santolan, Metro Manila, am the registered owner of the trademark OTTO for bags, shoes, sandals and slippers under Registration Certificate No. 29840 issued on September 29, 1981, and the applicant in Application hearing Serial No. 47626 for the same trademark OTTO filed on February 26, 1982 for belts, bags, t-shirts, blouses, briefs, pants, jackets,

On 19 March 1984, the Philippine Patent Office issued to Samson a Certificate of Registration for the mark "OTTO" in the principal register for use on belts, bags, t-shirts, blouses, briefs, pants, jackets, jeans, and bra. In a letter4 dated 29 March 1989, Samson, through counsel, informed Luminlun that he was revoking the latters authority to use the trademark "OTTO." Samson advised Luminlun to "cease and desist from further manufacturing and distributing OTTO jeans" otherwise he would confiscate jeans using the unauthorized "OTTO" trademark. Samson likewise demanded the payment of royalties, thus: Dear Mr. Luminlun: On behalf of my client, Mr. Manuel P. Samson, this is to demand that you CEASE and DESIST from further manufacturing and distributing OTTO jeans effective as of receipt of this notice considering that my aforesaid client had already revoked the authority granted to you for the use of the trademark OTTO in jeans. A copy of the Revocation of Authority To Use Trademark filed in the Patent Office on March 21, 1989 is attached. Further, you have to account for the sale of OTTO jeans beginning January 1984 up to March 1989 as we will get a percentage thereof for the royalty

due to my client of not less than P5,000,000.00 for your use of said trademark for more than five (5) years. Kindly give us the name and address of your sales outlet in order that they maybe properly appraised (sic) of this development. Should you fail to heed this advice, we will be constrained to file an action for damages and we will pray for issuance of injunction against you and for the confiscation and removal of jeans with the use of an unauthorized trademark OTTO. I trust for your compliance within five (5) days from receipt hereof to obviate being embroiled in a costly and cumbersome litigation. Very truly yours, SGD. NELSON Y. NG Samson also filed with the Philippine Patent Office a Revocation of Authority to Use Trademark.5 As a result, Luminlun filed a complaint before the Regional Trial Court, Pasig City questioning the validity of Samsons revocation of his authority to use the "OTTO" trademark. Luminlun likewise prayed that he be compensated for the loss of sales he suffered since the sales outlets refused to accept his deliveries for fear that the goods would be confiscated and removed from their stores. On 10 April 1989, the trial court issued an Order restraining Samson from "proceeding and carrying out the confiscation and the removal of jeans with trademark OTTO pending hearing on the petition for preliminary injunction." On 19 April 1989, Samson filed an "Opposition to Motion for Issuance of preliminary injunction and/or Motion to Lift Restraining Order." After presentation of evidence and submission of memoranda by both parties, on 28 April 1989, the trial court issued an Order granting Luminluns prayer for preliminary injunction. On 9 May 1989, Samson filed his Answer. Samson raised, among others, the defenses that: (1) Luminlun failed to pay royalties for the use of the

trademark; and (2) Luminlun violated the terms and conditions of the Authority to Use Trademark when he used the "OTTO" trademark for other products. The Ruling of the Trial Court In its Decision dated 15 May 1990, the trial court dismissed Luminluns complaint. The dispositive portion of the decision reads: WHEREFORE, foregoing considered, the complaint is ordered DISMISSED. With costs against plaintiff. The writ of preliminary injunction earlier issued by the Court is set aside and recalled. On the counterclaim, plaintiff is ordered to pay defendant attorneys fees of P25,000.00. SO ORDERED.6 The trial court ruled that Samson was justified in revoking the authority of Luminlun to use the trademark. The trial court found that Luminluns acts of manufacturing and selling products bearing the trademark "OTTO LTD." like skirts, shorts, pants, jeans, as as well as products with the trademark "OTTO" like belts, buttons, and bags, clearly violated the authority granted by Samson to use the "OTTO" trademark for jeans only. The trial court, however, ruled that Samson failed to prove that he was entitled to royalties. Upon motion for reconsideration of both parties, the trial court in an Order dated 7 December 19907 affirmed its decision with the modification of an award of moral damages of P20,000 in favor of Samson. The Ruling of the Court of Appeals On appeal, the Court of Appeals reversed the ruling of the trial court. The appellate court found that Samson revoked the authority on the sole ground that Luminlun failed to pay royalties. According to the appellate court, Samson could not validly revoke the authority based on this ground since he failed to prove that royalties were due him. The appellate court further ruled that Luminlun suffered losses as a result of the revocation and

thus awarded damages. The dispositive portion of the Court of Appeals decision reads: WHEREFORE, judgment is hereby rendered setting aside the decision appealed from and a new one issue making the injunction permanent and ordering appellee to pay appellant the following sums of money: a) actual and compensatory damages in the amount of P2,257,872.20. b) attorneys fees in the amount of P50,000.00. Costs against appellee. SO ORDERED.8 The Issues Thus, in this petition, Samson raises the following assignment of errors:9 (a) The Court of Appeals erred in concluding that the revocation of the Authority to Use Trademark made by Samson was unjustified; (b) The Court of Appeals erred in awarding actual or compensatory damages of P2,257,872.20 in spite of the total absence of evidence to show that Luminlun sustained such damages as a consequence of the revocation of the Authority to Use Trademark; (c) The Court of Appeals erred in awarding attorneys fees of P50,000 in spite of the absence of any legal ground for such award; and d) The Court of Appeals erred in not sustaining the trial courts award of moral damages and attorneys fees in favor of Samson. The Courts Ruling The resolution of this case hinges on whether Samson was justified in revoking Luminluns authority to use the "OTTO" trademark. We rule in the affirmative.

In finding for respondent Luminlun, the appellate court rationalized: x x x In appellees Opposition to Motion for Issuance of Preliminary Injunction and/or Motion to Lift Restraining Order dated April 18, 1989 (p. 37, Records), it is clearly stated that he revoked the Authority to Use Trademark on the sole ground that appellant failed to pay royalty tax, thus: "x x x. When plaintiff unjustly and illegally failed, refused and neglected and still fails, refuse, and neglects to pay royalty tax, defendant revoked the grant of authority and the same was filed with the Patent Office on March 21, 1989, a copy of which was served on plaintiff and received by him contained in a letter dated March 29, 1989. (at page 3 of Opposition) xxx xxx xxx

"It is defendant who is entitled to the issuance of injunction to restrain plantiff from further manufacturing and distributing OTTO jeans after plaintiffs authority had been revoked for failure to comply with his obligation to pay royalty tax due to defendant." As correctly pointed out by appellant, the issue that appellee had been allegedly affected and his products allegedly discredited by appellants use of the trademark OTTO and OTTO Ltd. was but a belated attempt on the part of the appellee to justify his illegal act of revoking the Authority to Use Trademark issued to the appellant. It was only after realizing the weakness of his sole ground for revoking the authority that he raised said issue. It is evident that when appellee executed the Revocation of Authority to Use Trademark on March 28, 1989 he was not concerned with appellants use of the trademark OTTO Ltd. on appellants product and the trademark OTTO on belts and buttons because there was no prejudice on his part. Otherwise, he could have mentioned the same in the Revocation and in the demand letter dated March 29, 1989 of his counsel, Atty Nelson Y. Ng.10 (Emphasis supplied) We disagree with the appellate courts ruling. The authority granted to Luminlun to use the "OTTO" trademark was limited for use on jeans only. Under the agreement, Samson could revoke the authority if Luminlun "should do or cause to be done any act which would in

any way prejudice or discredit the trademark OTTO not only in connection with its use for jeans but as well as for other products" enumerated in Samsons registration certificates. As correctly found by the trial court, Luminlun manufactured "OTTO" belts, buttons, and bags as well as "OTTO LTD." clothing in violation of the terms and conditions of the authority which affected Samson and discredited his products, thus: On the second issue, the Court finds that defendant has been affected and his products discredited by plaintiffs use of trademark "OTTO" and OTTO LTD." on other products, aside from jeans. Plaintiff admitted manufacturing and selling products bearing the trademark "OTTO LTD." like skirts, shorts, pants, jeans; also plaintiff manufactures and sells products with the trademark "OTTO", like belts, buttons and bags. (Exh. "3"; also pp. 67, 68, 69, 91, rec.) The authority given to plaintiff was a non-transferable, nonassignable, non-exclusive right and license to use said trademark "OTTO" for jeans only x x x". (Underlining supplied) Clearly, plaintiff failed to comply with the terms and conditions enumerated in the agreement. Plaintiff had the option to use the trademark "OTTO" but he had done acts constituting bad faith, necessarily discrediting the interest of defendant on his products which were duly registered with the Philippine Patent Office, such as: Exh. "6," photograph of over all with trademark "OTTO"; Exh. "7", issue of Panorama Magazine; Exh. "7-A", trousers with "OTTO LTD.", Exh. "8", t-shirt with brand "OTTO [LTD.]"; Exh. "14", pants bearing "OTTO [LTD.]", Exh. "14A" & Exh. "14-B"; belt and pant with "OTTO LTD." & "OTTO"; Exh. "15" Cash invoice, pants "OTTO"; Exh. "17"- .", jeans classic with trademark "OTTO". Defendant therefore was justified when he served notice of revocation of the authority of plaintiff to use the trademark.11 (Emphasis supplied) Under the circumstances and in accordance with the terms and conditions of the Authority to Use Trademark, we find that Samson was justified in revoking Luminluns authority to use the "OTTO" trademark. However, the appellate court chose to ignore Luminluns glaring violation of the terms and conditions of the Authority. The appellate court instead resorted to hair-splitting and ruled that Samson could not justify the revocation since he did not raise this ground in his "Opposition to Motion

for Issuance of Preliminary Injunction and/or Motion to Lift Restraining Order." We find such reasoning flawed. The records reveal that Samson, in his Answer, raised, among others, the affirmative defense that he had the right to revoke the Authority to Use Trademark because Luminlun manufactured other "OTTO" products aside from jeans: Defendant had every right and prerogative to revoke the authority granted to plaintiff on the use of the trademark for "OTTO" for jeans only when plaintiff failed to pay a single centavo of royalty and had likewise violated the grant of authority by illegally manufacturing and distributing aside from jeans, other products like jackets, skirts, shirts, blouses and shorts which are not covered by the grant of authority granted to him.12 (Emphasis supplied) We find that Samson seasonably raised this defense and we do not see any basis for the apellate courts ruling that Samson could not invoke this ground. The appellate court further makes issue of the fact that Samson did not mention in both the Revocation of Authority to Use Trademark and his demand letter dated 29 March 1989 that Luminluns manufacture of other "OTTO" products such as belts and buttons was prejudicial to him and was the cause for the revocation. We note that the Revocation of Authority simply mentioned that "it was Luminluns failure to comply with his undertaking when the authority was executed as the reason for the revocation." The fact that Samson did not indicate the specific reason for the revocation is of no moment and should not be taken against him.lavvphil Thus, we find no basis for the appellate courts conclusion that when Samson executed the Revocation of Authority he was not concerned with Luminluns use of the "OTTO" trademark on other products because there was no prejudice on his part. Samson was affected and his products discredited by Luminluns unauthorized manufacture of other "OTTO" products. Thus, in its Order resolving the Motions for Reconsideration filed by the parties, the trial court stated:

x x x it is not denied defendant was given the authority by the Patent Office and has been the registered owner of the trademark "OTTO" under principal register no. 33064 and 29840 and supplemental register 7390 and 4166. The license was issued to the defendant for the protection of his rights as a registered owner of the trademark in order to identify the lawful user. It was intended to protect the public to be deceived of the use of the products. On the issue of the violation of the conditions involving the claim of royalty, the Court said that defendant has been affected and his products discredited by the plaintiffs use of trademark "OTTO" and "OTTO LTD," on other products. Plaintiff had admitted manufacturing and selling products with the same trademark on skirts, shorts, pants and jeans. Bad faith was evident from the acts of plaintiff. The authority of plaintiff to use the trademark "OTTO" for jeans was revoked for violation of the terms of the agreement.13 (Emphasis supplied) Considering that Samson was justified in revoking the authority of Luminlun to use the "OTTO" trademark, it necessarily follows that the damages awarded by the appellate court in favor of Luminlun have no basis. WHEREFORE, we GRANT the Petition. We SET ASIDE the assailed Decision and Resolution of the Court of Appeals and REINSTATE the 15 May 1990 Decision and the 7 December 1990 Order of the Regional Trial Court, Branch 160, Pasig City. SO ORDERED.

G.R. No. 161051

July 23, 2009

COMPANIA GENERAL DE TABACOS DE FILIPINAS and LA FLOR DE LA ISABELA, INC., Petitioners, vs. HON. VIRGILIO A. SEVANDAL, as Director and DTI Adjudication Officer, ATTY. RUBEN S. EXTRAMADURA, as Hearing Officer - Office of the Legal Affairs, Department of Trade and Industry, TABAQUERIA DE FILIPINAS, INC., and GABRIEL RIPOLL, JR., Respondents. DECISION VELASCO, JR., J.: The Case This Petition for Review on Certiorari under Rule 45 seeks the reversal of the June 16, 2003 Decision1 and December 1, 2003 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 42881. The CA denied petitioners Petition for Certiorari (With Urgent Application for Temporary Restraining Order and/or Writ of Preliminary Injunction) and their motion for reconsideration. The Facts Petitioner Compania General de Tabacos de Filipinas, also known as "Tabacalera," is a foreign corporation organized and existing under the laws of Spain. It is the owner of 24 trademarks registered with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) of the Department of Trade and Industry (DTI). Tabacalera authorized petitioner La Flor de la Isabela, Inc. to manufacture and sell cigars and cigarettes using the Tabacalera trademarks. Respondent Gabriel Ripoll, Jr. was an employee of petitioners for 28 years and was the General Manager before he retired sometime in 1993.3 In the same year, Ripoll organized Tabaqueria de Filipinas, Inc. (Tabaqueria), a domestic corporation also engaged in the manufacture of tobacco products like cigars.4 Ripoll is the managing director of Tabaqueria.

On October 1, 1993, petitioners filed a Letter-Complaint5 with the Securities and Exchange Commission praying for the cancellation of the corporate name of Tabaqueria on the following ground: Tabaqueria, being engaged in the same business as Tabacalera, cannot be allowed to continue using "tabaqueria" which will confuse and deceive the public into believing that Tabaqueria is operated and managed by, and part of, Tabacalera and that its business is approved, sponsored by, and affiliated with, Tabacalera. Thereafter, petitioners also filed with the Department of Justice (DOJ)-Task Force on Anti-Intellectual Property Piracy a criminal complaint against Ripoll for Infringement of Trademark and Unfair Competition for violation of Articles 188 and 189 of the Revised Penal Code. The case was docketed as I.S. No. 94C-07941, entitled Compania General de Tabacos de Filipinas & La Flor de la Isabela, Inc. (Attys. Ferdinand S. Fider and Ma. Dolores T. Syquia v. Gabriel Ripoll, Jr. (Tabaqueria de Filipinas, Inc.). On February 8, 1994, petitioners filed with the DTI a Complaint dated February 4, 19946 for Unfair Competition, docketed as Administrative Case No. 94-19 and entitled Compania General de Tabacos de Filipinas and La Flor de la Isabela, Inc. v. Tabaqueria de Filipinas, Inc. and Gabriel Ripoll, Jr. Petitioners alleged in the Complaint that Tabaqueria deliberately sought to adopt/simulate the Tabacalera trademarks to confuse the public into believing that the Tabaqueria cigars are the same or are somehow connected with the Tabacalera products.7 In the Complaint petitioners sought, among others, the issuance of a "preliminary order requiring respondents to refrain from manufacturing, distributing and/or selling the Tabaqueria products."8 In their Answer dated April 9, 1994, Tabaqueria and Ripoll opposed the issuance of injunctive relief pending investigation on the ground that petitioners allegation of unfair competition is unproved and unsubstantiated. They alleged that petitioners failed to establish the following elements required for the issuance of an injunctive writ: The party applying for preliminary injunction must show (a) The invasion of the right sought to be protected is material and substantial; (b) The right of

complainant is clear and unmistakable; and (c) There is an urgent and paramount necessity for the writ to prevent serious damage. (Director of Forest Administration vs. Fernandez, 192 SCRA 121 [1990]; Phil. Virginia Tobacco Administration vs. De los Angeles, 164 SCRA 543 [1988])9 Meanwhile, on September 1, 1994, the DOJ issued a Resolution10 in I.S. No. 94C-07941, the dispositive portion of which reads: Accordingly, it is hereby recommended that the complaint for unfair competition and/or infringement of trademark be dismissed against respondent Gabriel Ripoll Jr. for insufficiency of evidence. Petitioners moved reconsideration of the above resolution, but their motion was denied in a Letter dated October 18, 1994.11 Later, the Secretary of Justice reversed the Resolution dated September 1, 1994. Upon reconsideration, the Secretary, however, issued a Letter dated February 5, 199712 reaffirming the Resolution dated September 1, 1994. On March 24, 1995, petitioners filed a Motion to Issue Cease and Desist Order13 with the DTI, praying for the issuance of an order: (1) directing private respondents to immediately cease and desist from manufacturing, distributing, and selling cigar products bearing the marks and design of petitioners; (2) for the immediate seizure of all cigar products of private respondents bearing the marks and design of petitioners; and (3) for the immediate closure of private respondents establishment involved in the production of those products. In response, private respondents filed an Opposition to Complainants Motion to Issue Cease and Desist Order, with Motion to Dismiss Complaint dated March 30, 1995.14 Private respondents anchored their motion to dismiss on the ground of forum shopping due to petitioners filing of prior cases of infringement and unfair competition with the DOJ. As to the Motion to Issue Cease and Desist Order, private respondents claimed that such motion was premature considering that the alleged evidence for the issuance of the order was just then marked. Moreover, they alleged that the acts that petitioners sought to be restrained would not cause irreparable injury to them.

Subsequently, the DTI issued a Temporary Restraining Order dated September 18, 199515 with a validity period of 20 days from receipt by private respondents. In an Order dated April 30, 1996, the Office of Legal Affairs of the DTI ruled that there was no similarity in the general appearance of the products of the parties and that consumers would not be misled. In the same order, the DTI partially granted petitioners prayer for the issuance of a writ of preliminary injunction. The pertinent portions of the DTI Order state: DETERMINATION OF SIMILARITY IN GENERAL APPEARANCE AND LIKELIHOOD OF CONFUSION; PRODUCT COMPARISON; USUAL PURCHASER x x x [L]et us now determine if there is similarity in general appearance between Tabacalera products and Respondents products, such that it will likely mislead, confuse or deceive the usual purchasers of cigars into buying Respondents products thinking that what they are buying are the Tabacalera products they intended to buy. The competing products should be viewed in their totality. But certain features, have to be excluded first. That is what the Supreme Court did in determining similarity between SAN MIGUEL PALE PILSEN (of San Miguel Corporation) and BEER PALE PILSEN (of Asia Brewery, Inc.) in the case of Asia Brewery, Inc. vs. C.A. and San Miguel Corp. (G.R. No. 103543, prom. July 5, 1993). In said case, the Supreme Court found that the two competing beer products have certain features in common. Therefore, the two competing products are similar as far as those features are concerned. But the Supreme Court excluded said features. Apparently the Court wanted to distinguish between "similarity as a matter of fact" and "similarity as a matter of law", the latter having a limited scope considering the many exclusions that have to be made. Hereunder are the said features and the reasons cited by the Supreme Court for their exclusion: COMMON FEATURES REASONS FOR EXCLUSION 1. The container is steinie bottle. It is a standard type of bottle and therefore lacks exclusivity. It is of functional or common use. It is universally used. 2. The color of the bottle is amber.

It is a functional feature. Its function is to prevent the transmission of light into the said bottle and thus protect the beer inside the bottle. 3. The phrase "pale pilsen" is carried in their trademark. This phrase is a generic one even if respective included in their trademarks. 4. The bottle has a capacity of 320 ML and is printed on the label. It is a metrication and standardization requirement of the defunct Metric System Board (now a function of the Bureau of Product Standards, DTI). 5. The color of the words and design on the label is white. It is the most economical to use on the label and easiest to bake in the furnace. Hence, a functional feature. 6. Rectangular shape of the label. It is the usual configuration of labels. 7. The bottle's shape is round with a neck. It is commonly and universally used. In the same case of Supreme Court stated the following, citing Callman, Unfair Competition, Trademarks and Monopolies: "Protection against imitation should be properly confined to non-functional features. Even if purely functional elements are slavishly copied, the resemblance will not support an action for unfair competition, and the first user cannot claim secondary meaning protection. Nor can the first user predicate his claim in reliance of any such unpatented functional feature, even at large expenditure of money." Following the Supreme Courts way of determining similarity, OLA will exclude the features which arise from industry practices of cigar manufacturers worldwide, features commonly used by cigar manufacturers, standard features, functional features, features arising from labeling rights and obligations, and generic words and phrases. All of these features have been listed and/or discussed above. Now this needs clarification. When we say that we are excluding the logo because it is a functional and universal feature, what we mean to say is that, the fact that both products bear a logo (and therefore they are similar in that respect), will be excluded; but the design, words, drawings of the respective logo of the contending parties

will be considered. This clarification is also true for the other excluded features. Before we view the products in their totality, we will first compare the products as to their respective details. The competing products of the Parties consist of around thirty-two (32) wooden boxes. We note the following glaring differences/distinctions:

1. As to the logo engraved on the top and/or back of the cover of the box: TABACALERAS: Tabacalera uses two variants of their logo, one for the ordinary plywood boxes and another for the narra boxes. The logo on the ordinary plywood box is as follows: There are word/phrases thereon, namely: 1st line the brand "TABACALERA" (in big letters); 2nd line the representation "THE FINEST CIGARS SINCE 1881"; 3rd line the representation "HAND MADE 100% TOBACCO"; 4th line the address "MANILA, PHILIPPINES"; 5th line the code "A-4-2". Between the 2nd line and 3rd line is inscribed the crest and coat of arms of Tabacalera which consists of a shield placed vertically, and divided into 4 parts with inscriptions/drawings in each part. Within the center of the shield is an oval vertically placed with drawings in it. The crest consists of the uppermost part of a watchtower used in ancient times in watching for enemies coming. As regards the logo on the narra boxes, it is oblong or egg-shaped, in two parallel lines interrupted at its sides with semi-oblong two parallel lines and inscripted within such latter parallel lines on the left side is "100% TABACO" and on the right side "HECHO A MANO". On the lower portion between the

oblong lines are the words "COMPANIA GENERAL DE TABACOS DE FILIPINAS MANILA, PHILIPPINES, A-4-2". Within the center of the smaller oblong is inscribed the crest and coat (described already above). At each side of the crest/coat are tobacco leaves tied together. On top of the crest is the corporate name "LA FLOR DE LA ISABELA" and this makes the logo confusing because it does not explain the respective role of the two firms mentioned in the logo, such as which one is the manufacturer, the distributor, the licensor, licensee, and trademarks owner. RESPONDENTS: A bar curved into a U-shape. It is flanked at the bottom and on its sides with tobacco leaves curved into a "U" also and joined together as in a "laurel". Engraved at the center of said bar is the coat consists of a "shield", on top of which is the crest consists of a princes crown with a cross on top. The "shield" is divided at its center by a line drawn horizontally with small circles marked at intervals. At the upper portion of said dividing line is a rooster (adopted by Mr. Ripoll from the coat of arms of his clan Exh. "48") and the lower portion contains three tobacco leaves (representing Mr. Ripolls 3 sons) joined into one. Encircling the crest and coat is the corporate name "TABAQUERIA DE FILIPINAS, INC." as well as the brand "FLOR DE MANILA". Immediately below the leaves shaped as in a "laurel" is the phrase "HECHO A MANO 100% TOBACO". 2. As to the brand of the product: TABACALERAS: The brand "TABACALERA" is printed in big white Roman letters with black shadows on a red rectangular background, and the latter is set over a gold and red rectangular background with a design which appears to be an inverted letter "Z" leaning to the right side, and said "Z" is used repeatedly forming a "chain" that surrounds the said red background. Said "Z" also fills the left and right sides of the label. The same brand and markings appear on three sides of the box. The back side bears the Government Warning that cigar smoking is dangerous to health. The brand "FLOR DE MANILA" is not used on Tabacaleras products except on a cardboard pack of cigars, which is just slightly bigger than a pack of 100 mm cigarettes. (Exh. "DD").

RESPONDENTS: The brand "FLOR DE MANILA" is printed in red letters with black shadows on a white rectangular background, and the latter is set over a gold rectangular background filled with a red design that looks like the letter "P" with its head touching the ground. These brand and markings appear on two sides of the box. The other two sides are occupied by the seal of guaranty and by the said Government Warning. Both Complainants and Respondents have no trademark registration yet of the brand "Flor de Manila". 3. As to markings on edges of ordinary plywood box: TABACALERAS: The phrase "FLOR FINA" is printed in red Roman letters over a white rectangular background, and the latter is set over a red background with 2 parallel gold lines and the above-mentioned "Z" design in gold used repeatedly forming a straight chain. A tiny company logo colored blue and yellow is marked at intervals. RESPONDENTS: The phrase "TABACO FINO" is printed in red letters with strokes that resemble those in Chinese letters, on a white rectangular background, and the latter is set over a gold background with red designs that look like ornate letters "X" and "J". A tiny company logo is marked at intervals. 4. As to "seal of guaranty": TABACALERAS: Colored green and white; with the phrase "REPUBLIC OF THE PHILIPPINES" in big letters and the phrase "sello de garantia de la Flor de la Isabela, Inc."; pasted horizontally at the middle of the left portion of the cigar box if viewed from its top. RESPONDENTS:

g. The phrase "FLOR FINA" with the said "Z" design. Colored gold and red; with the phrase in big letters "sello de garantia"; bears in big print the company logo; pasted vertically at the middle of the left portion of the cigar box if viewed from its top. 5. As to predominant colors: TABACALERAS: Red, gold, and green, in that order. Has blue and yellow. RESPONDENTS: Gold and red, in that order. No green, blue and yellow. 6. Other differences/distinctions Tabacalera products have the following features: a. The corporate name "LA FLOR DE LA ISABELA" (engraved on the narra wood boxes; also printed on the seal of guaranty). b. The brand "TABACALERA" surrounded by said "Z" design. c. The representation "THE FINEST CIGARS SINCE 1881". d. The address "MANILA, PHILIPPINES". e. The code "A-4-2". f. The phrase "REPUBLIC OF THE PHILIPPINES" in the seal of guaranty. Below said phrase is a mountain which resembles the mountain printed in the old Philippine money. This appears to be a misrepresentation that the Philippine government is a co-guarantor in the seal of guaranty. This seal of guaranty was possibly copied from the seal of guaranty of Cuban-made boxes of cigars. But in Cuba, the government really guarantees the cigars made in Cuba because cigars are one of the main exports of that country. In the Philippines, the government does not guaranty cigars made in the Philippines. We note that respondent court failed to take into consideration several factors which should have affected its conclusion, to wit: age, training and education of the usual purchaser, the nature and cost of the article, whether the article is bought for immediate consumption and also the condition under which it is usually purchased. Among those, what essentially determines the attitude of the purchaser, specifically his inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in purchasing a more valuable thing. Expensive and valuable items are normally bought after deliberate, comparative and analytical investigation. But mass products, low priced articles as in wide use, and the matters of everyday purchase requiring frequent replacement are bought by the causal consumer without great care. Certainly, not everybody buys cigars. Very few people buy cigars for they are expensive, have health implications, and its smoke annoys non-smokers. It is really not the "sari-sari" store variety. OLA takes judicial notice that even big department stores and malls do not ordinarily sell cigars. The usual purchasers of cigars are older people not necessarily an elder or professional, besides those cigar aficionados and cigar lovers, who are able and willing to pay and are capable of discerning the products they buy. Definitely the "impulse buyers" (those who make a very quick decision (e.g., 6 seconds) to buy a certain product) are not the usual purchasers of cigars. "The ordinary purchasers must be thought of as having, and credited with, at least a modicum of intelligence to be able to see the obvious differences between the two trademarks in question." (Fruit of the Loom, Inc. vs. C.A., 133 SCRA 405). From this Supreme Court decision we can say that if the buyer can see the obvious differences between two trademarks, there is These seven (7) features are NOT found in Respondents products. One of the rules in adjudicating unfair competition cases was laid down by the Supreme Court in the case of Del Monte Corp. vs. C.A. et al. (181 SCRA 410) as follows:

more reason for him to see the obvious differences of the whole of the two products themselves even if sold at a glance. Viewing briefly the competing products in their totality, the two are readily distinguished by their respective brand as appearing in the box: "TABACALERA" is the brand of the Tabacalera products while "FLOR DE MANILA" is the brand of Respondents products. In fact, per Certification of BIR dated March 15, 1994, "Flor de Manila" is the brand registered by the Respondents with said bureau (Annex "B", Answer). The Complainants allege in the Complaint (Par. 1.12) that Respondents are using the word "TABAQUERIA" as the brand of their products. This allegation is belied by an inspection of the boxes of Respondents none of them shows that the word "TABAQUERIA" was detached from the firm name "TABAQUERIA DE FILIPINAS, INC." and used separately as a brand. Also readily distinguishing the two products are their respective distinctive logo: Tabacaleras logo is quite big and ornate while Respondents logo is quite small and simple. Their respective seal of guaranty are also conspicuous. Tabacaleras seal of guaranty is colored green and white and pasted horizontally while that of Respondents is colored gold and red and pasted vertically. The other glaring differences between the two, which we have listed above, are revealed at once upon a brief look at the competing products. Confusion becomes more remote when we consider the usual buyers of cigars. We have already discussed that above. They know their brand and they will not be confused by the various words, marks, and designs on the products. This is specially true for purchasers who have been using Tabacalera products for a long time (Tabacalera products have been available since 1881 [per logo of Tabacalera] or 1917 [per Complaint]), and therefore know very well their favorite brand. If they switch to Respondents products, it is not because they are deceived and confused but because they find Respondents products to their taste. We should also consider that cigars are expensive. Hereunder are sample prices of Respondents products (Exhs. "EEE" and "III"): a. Chest Coronas Largas 25 P/ 619.75 b. Corona 50 739.75 c. Corona Largas 50 959.75 d. Corona Humidor De Luxe 50 1,749.75

Tabacalera products are priced higher. The point we are driving at is that with these high prices (which are like prices of writs watches, electric fans, tape recorders, and other electrical/electronic appliances), the usual purchasers will be cautious in buying and he will give the product he is buying that examination that corresponds to the amount of money that he will part with. Therefore, there is definitely no similarity in the general appearance of the competing products and hence there is no likelihood that purchasers will be *misled+, deceived and confused into buying Respondents products thinking that they are buying the Tabacalera products that they intended to buy. Complainants allege in their Complaint that they have been using the trademark (brand) "FLOR DE MANILA" for their products since 1992. However, Complainants presented only a pack of cigars made by La Flor de la Isabela, Inc., with the brand "Flor de Manila", colored white and gray, and the size is just slightly bigger than a pack of 100 mm. cigarettes. (Exh. "DD"). Buyers cannot possibly make the mistake of buying Respondents wooden boxes of cigars thinking that what they are buying is this carton pack of cigars of La Flor de la Isabela, Inc. xxxx In view of all the foregoing, the injunction prayed for cannot be granted in toto but only partially, i.e., with respect to the barrel type of container, the existence of which has to be explained and justified further by Respondents, and certain features in the packaging which are confusingly similar to the containers/packaging of Complainants products x x x.16 (Emphasis supplied.) The DTI disposed of the complaint this way: WHEREFORE: 1. Respondents are hereby enjoined and restrained from further manufacturing and using the wooden barrel type of container as container for their cigars (typified by Exh. "DDD-1"). However, current stocks thereof, which are in their finished product state, now in possession of Respondents distributors or retailers may be sold/disposed of in the

ordinary course of business, but those still in the possession of Respondents shall be transferred to the box containers. 2. In connection with the label used on the sides of the boxes (which contain the dominant colors gold and red), Respondents are ordered to: a. change either the gold or the red with another color (not blue); or b. maintain the said gold and red color combination but add another dominant color (not blue). This injunction no. 2 covers only products yet to be manufactured and not products which are already in the possession of Respondents distributors/retailers. This injunction is for the purpose only of making said label of Respondents very distinct. 3. In connection with the narra wood boxes, Respondents are ordered to make distinctive and conspicuous etchings/engravings on the top and/or sides of the said bozes. The etchings/engravings thereon (which are stripe/s) shall be transferred to other exterior parts of the boxes or done away with. This injunction no. 3 covers only products yet to be manufactured and not products which are already in their finished-product state and already in the possession of Respondents distributors/retailers. This injunction is for the purpose only of making said narra wood boxes of Respondents very distinct, hence, the present boxes can no longer be used by Respondents unless the above-stated changes thereon, as herein ordered, are complied with. xxxx SO ORDERED.17 On June 10, 1996, petitioners filed a Motion for Reconsideration dated June 4, 199618 of the above Order contending that: (1) the DTI erroneously passed upon the entire merits of the case where the only pending issue for resolution is the issuance of a preliminary injunction; (2) the findings of facts of the Order are not in accordance with the evidence presented by the parties; and (3) the DTI misapplied the law and jurisprudence applicable on the issues in the instant case.1awph!1 The Motion was denied by the DTI in an Order dated December 10, 1996.19

Thus, on December 26, 1996, petitioners filed a Petition for Certiorari (With Urgent Application for Temporary Restraining Order and/or Writ of Preliminary Injunction) dated December 19, 199620 with the CA. Petitioners raised substantially the same issues as in their Motion for Reconsideration dated June 4, 1996. The case was docketed as CA-G.R. SP No. 42881 entitled Compania General de Tabacos de Filipinas and La Flor de la Isabela, Inc. v. Hon. Virgilio A. Sevandal, as Director and DTI Adjudication Officer, Atty. Ruben S. Extramadura,as Hearing Officer Office of the Legal Affairs, Department of Trade and Industry, Tabaqueria De Filipinas, Inc. and Gabriel Ripoll, Jr. The CA, thus, issued the assailed decision dated June 16, 2003 wherein it determined the issues as: 1) Whether or not the Order dated April 30, 1996 disposed of the merits of the case; and 2) Whether or not public respondent committed grave abuse of discretion in refusing to grant petitioners prayer for injunctive relief.21 The CA ruled that the findings of the DTI were premature having passed upon the main issues of the case when the pending incident was only a motion for preliminary injunction. The CA added that the evidence necessary in such a hearing was a mere sampling, not being conclusive of the principal action itself. Thus, the CA ruled that the DTI had prejudged the case and that its findings were premature, to wit: By holding thus, public respondent OLA-DTI had pre-judged the main case. In fact, there was practically nothing left for the Hearing Officer to try except for private respondents claim for attorneys fees. xxxx We therefore rule that public respondent OLA-DTIs finding was premature.22 (Emphasis supplied) As to the second issue, the CA ruled that the dismissal of the infringement of trademarks and unfair competition case against respondent Ripoll, Jr., renders petitioners right to an injunctive relief doubtful. Thus, the issuance of an injunction in that case would not be proper. The CA further ruled that

petitioners failed to show that there was an urgent and paramount necessity for the issuance of the writ having failed to substantiate their claim that the abrupt drop in the sales of their products was the direct result of the acts of respondents.23 Thus, the CA denied the petition.24 The petitioners then filed a Motion for Reconsideration dated July 4, 200325 to the above decision. This motion was denied for lack of merit in the assailed resolution. Hence, we have this petition.

The Court of Appeals gravely erred in ruling that there is no urgent and paramount necessity for the issuance of a writ of injunction.26 The Orders of the DTI were not rendered in grave abuse of discretion amounting to lack of or in excess of jurisdiction Petitioners argue that because the CA ruled that the DTI had prejudged the main case, the Decision of the DTI was, therefore, issued in grave abuse of discretion amounting to lack of or in excess of jurisdiction. Thus, petitioners conclude that the DTI Orders dated April 30, 1996 and December 10, 1996 must be considered as null and void.27 There is no merit in such contention.

The Courts Ruling This petition must be denied. The Issues I. The Court of Appeals gravely erred in not declaring the Orders of Public Respondent dated 30 April 1996 and 10 December 1996 as completely null and void for having been rendered with Grave Abuse of Discretion amounting to Lack [or] Excess of Jurisdiction. In First Womens Credit Corporation v. Perez,28 we defined grave abuse of discretion as: By grave abuse of discretion is meant such capricious and whimsical exercise of judgment which is equivalent to an excess or lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. We further clarified such principle later in Buan v. Matugas:29 There is grave abuse of discretion only when there is a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary and despotic manner by reason of passion and personal hostility, and it must be so patent or gross as to constitute an evasion of a positive duty or a virtual refusal to perform the duty or to act at all in contemplation of law. Not every error in the proceedings, or every erroneous conclusion of law or fact, is grave abuse of discretion. (Emphasis supplied)1avvphi1 Petitioners must prove that the elements above-mentioned were present in the rendering of the questioned Orders of the DTI in order to establish grave abuse of discretion. The mere fact that the CA ruled that the DTI prejudged the main case filed before it does not by itself establish grave abuse of discretion.

II. The Court of Appeals gravely erred in not ruling that the invasion of/to petitioners rights are substantial and material. III. The Court of Appeals gravely erred in ruling that the petitioners right to the exclusive use of the Tabacalera Trademarks and Design was not shown to be clear and unmistakable. IV.

Moreover, there is no grave abuse of discretion in the instant case because the DTI merely tried to justify the issuance of the writ of preliminary injunction. Sometimes a discussion in passing of the issues to be resolved on the merits is necessary in order to deny or grant an application for the writ. This cannot, however, be considered as a whimsical or capricious exercise of discretion. The next three issues shall be discussed simultaneously for being interrelated. Petitioners failed to establish that they are entitled to a writ of preliminary injunction Section 3 of Rule 58 provides for the grounds for the issuance of a preliminary injunction: Sec. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is established: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. Thus, the Court has repeatedly held that, in order that an injunctive relief may be issued, the applicant must show that: "(1) the right of the complainant is clear and unmistakable; (2) the invasion of the right sought to be protected is material and substantial; and (3) there is an urgent and paramount necessity for the writ to prevent serious damage."30

In establishing the above elements, it bears pointing out that the Court used the term "and" in enumerating the said elements. In Mapa v. Arroyo,31 this Court defined the term "and" as follows: In the present case, the employment of the word "and" between "facilities, improvements, infrastructures" and "other forms of development," far from supporting petitioners theory, enervates it instead since it is basic in legal hermeneutics that "and" is not meant to separate words but is a conjunction used to denote a joinder or union. While in Republic v. David,32 we applied the above definition with regard an enumeration of conditions or requisites in this wise: The conditions that were allegedly violated by respondent are contained in paragraph 10 of the Deed of Conditional Sale, as follows: "10. The Contract shall further [provide] the following terms and conditions: xxxx (c) The VENDEE, and his heirs and/or successors, shall actually occupy and be in possession of the PROPERTY at all times" xxxx The use of the conjunctive and in subparagraph (c) is not by any chance a surplusage. Neither is it meant to be without any legal signification. Its use is confirmatory of the restrictive intent that the houses provided by petitioner should be for the exclusive use and benefit of the SSS employee-beneficiary. It is easily discernible, therefore, that both "actual occupancy" and "possession at all times" -- not just one or the other -- were imposed as conditions upon respondent. The word and -- whether it is used to connect words, phrases or full sentences -- must be accepted in its common and usual meaning as "binding together and as relating to one another." And implies a conjunction, joinder or union. (Emphasis supplied) In the instant case, the import of the use of the term "and" means that all of the elements mentioned above must concur in order that an injunctive writ

may be issued. The absence of even one of the elements would be fatal in petitioners application for the writ. In finding that the third element was absent, that there is no urgent and paramount necessity for the writ to prevent serious damage to petitioners, the CA ruled that: Second, petitioners have failed to show that there is an urgent and paramount necessity for the issuance of writ of injunction to prevent serious damage. In Olalia vs. Hizon (196 SCRA 665, 672), the Supreme Court held: "While, to reiterate, the evidence to be submitted at the hearing on the motion for preliminary injunction need not be conclusive and complete, we find that the private respondent has not shown, at least tentatively, that she has been irrepairably injured during the five month period the petitioner was operating under the trade name of Pampangas Pride. On this ground alone, we find that the preliminary injunction should not have been issued by the trial court. It bears repeating that as a preliminary injunction is intended to prevent irreparable injury to the plaintiff, that possibility should be clearly established, if only provisionally, to justify the restraint of the act complained against. No such injury has been shown by the private respondent. Consequently, we must conclude that the issuance of the preliminary injunction in this case, being utterly without basis, was tainted with grave abuse of discretion that we can correct on certiorari." In the case at bench, petitioner failed to substantiate their claim that the abrupt drop in sales was the result of the acts complained of against private respondent.33 (Emphasis supplied.) Petitioners claim that as a result of private respondents "fraudulent and malicious entry into the market, Petitioners sales dropped by twenty-five [percent] (25%)."34 Petitioners further aver that the writ of preliminary injunction is necessary as the general appearance of private respondents products is confusingly similar to that of petitioners products. Petitioners claim that this has resulted in a marked drop in their sales. Thus, petitioners argue that unless private respondents use similar marks, packaging, and labeling as that of petitioners products, they will continue to suffer damages.35

Petitioners postulations are bereft of merit. Petitioners failed to present one iota of evidence in support of their allegations. They failed to present evidence that indeed their sales dropped by an alleged 25% and that such losses resulted from the alleged infringement by private respondents. Without presenting evidence to prove their allegations, petitioners arguments cannot be given any merit. Thus, we ruled in Olalia v. Hizon:36 A preliminary injunction is an order granted at any stage of an action prior to final judgment, requiring a person to refrain from a particular act. As the term itself suggest, it is merely temporary, subject to the final disposition of the principal action. The justification for the preliminary injunction is urgency. It is based on evidence tending to show that the action complained of must be stayed lest the movant suffer irreparable injury or the final judgment granting him relief sought become ineffectual. Necessarily, that evidence need only be a "sampling," as it were, and intended merely to give the court an idea of the justification for the preliminary injunction pending the decision of the case on the merits. The evidence submitted at the hearing on the motion for the preliminary injunction is not conclusive of the principal action, which has yet to be decided. Due to the absence of the third requisite for the issuance of a preliminary injunction, petitioners application for the injunctive writ must already fail; the absence or presence of the other requisites need no longer be discussed. Such denial is grounded on the oft-repeated principle enunciated in Vera v. Arca,37 where this Court held that: As far back as March 23, 1909, more than 60 years ago, this Court, in the leading case of Devesa v. Arbes, made the categorical pronouncement that the issuance of an injunction is addressed to the sound discretion of the Court, the exercise of which is controlled not so much by the then applicable sections of the Code of Civil Procedure, now the Rules of Court, but by the accepted doctrines, one of which is that it should not be granted while the rights between the parties are undetermined except in extraordinary cases where material and irreparable injury will be done. For it is an action in equity appropriate only when there can be no

compensation in damages for the injury thus sustained and where no adequate remedy in law exists. Such a holding reflected the prevailing American doctrine that there is no power "the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion or more dangerous in a doubtful case," being "the strong arm of equity, that never ought to be extended," except where the injury is great and irreparable. While in Olalia,38 we reiterated the above ruling, as follows: It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages. Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it. We again ruled in Hernandez v. National Power Corporation:39 At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is no power the exercise of which is more delicate and which calls for greater circumspection than the issuance of an injunction. It should only be extended in cases of great injury where courts of law cannot afford an adequate or commensurate remedy in damages; "in cases of extreme urgency; where the right is very clear; where considerations of relative inconvenience bear strongly in complainants favor; where there is a willful and unlawful invasion of plaintiffs right against his protest and remonstrance, the injury being a continuing one, and where the effect of the mandatory injunction is rather to reestablish and maintain a preexisting continuing relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new relation." (Emphasis supplied) Clearly, it was incumbent upon the petitioners to support with evidence their claim for the issuance of a preliminary injunction. They failed to do so. Hence, the instant petition must fail.

WHEREFORE, the petition is hereby DENIED. The assailed June 16, 2003 Decision and December 1, 2003 Resolution of the CA in CA-G.R. SP No. 42881 are AFFIRMED. Costs against petitioners. SO ORDERED.

G.R. No. 184850

October 20, 2010 From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the Sales Contract dated April 20, 2002,8 for example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40-ft. containers worth of air compressors identified in the Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In the corresponding Bill of Ladings, the items were described merely as air compressors.9 There is no documentary evidence to show that such air compressors were marked "VESPA." On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997121492 with the IPO for the mark "VESPA, Chinese Characters and Device" for use on air compressors and welding machines.10 On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999005393, also for the mark "VESPA," for use on air compressors.11 On January 18, 2004, the IPO issued COR No. 4-1999-005393 in favor of EYIS.12 Thereafter, on February 8, 2007, Shen Dar was also issued COR No. 4-1997121492.13 In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS COR with the BLA.14 In the Petition, Shen Dar primarily argued that the issuance of the COR in favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA) 8293, otherwise known as the Intellectual Property Code (IP Code), having first filed an application for the mark. Shen Dar further alleged that EYIS was a mere distributor of air compressors bearing the mark "VESPA" which it imported from Shen Dar. Shen Dar also argued that it had prior and exclusive right to the use and registration of the mark "VESPA" in the Philippines under the provisions of the Paris Convention.15 In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the mark "VESPA" being the sole assembler and fabricator of air compressors since the early 1990s. They further alleged that the air compressors that Shen Dar allegedly supplied them bore the mark "SD" for Shen Dar and not "VESPA." Moreover, EYIS argued that Shen Dar, not being the owner of the mark, could not seek protection from the provisions of the Paris Convention or the IP Code.16

E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners, vs. SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent. DECISION VELASCO, JR., J.: The Case This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21, 2008 Decision1 and the October 6, 2008 Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y. Industrial Sales, Inc. and Engracio Yap. The assailed decision reversed the Decision dated May 25, 20073 issued by the Director General of the Intellectual Property Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO Director General upheld Certificate of Registration (COR) No. 4-1999-005393 issued by the IPO for the trademark "VESPA" in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the cancellation of COR No. 4-1997-121492, also for the trademark "VESPA," issued in favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of the IPO Director General, in effect, affirmed the Decision dated May 29, 20064 issued by the Director of the Bureau of Legal Affairs (BLA) of the IPO. The Facts EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and other industrial tools and equipment.5 Petitioner Engracio Yap is the Chairman of the Board of Directors of EYIS.6 Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air compressors.7 Both companies claimed to have the right to register the trademark "VESPA" for air compressors.

Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS and against Shen Dar, the dispositive portion of which reads: WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED. Consequently, Certificate of Registration No. 4-1999[005393] for the mark "VESPA" granted in the name of E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby upheld. Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative, Financial and Human Resource Development Services Bureau for issuance and appropriate action in accordance with this DECISION and a copy thereof furnished to the Bureau of Trademarks for information and update of its records. SO ORDERED.17

Let a copy of this Decision as well as the records of this case be furnished and returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors of the Bureau of Trademarks, the Administrative, Financial and Human Resources Development Services Bureau, and the Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes.19 Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised the following issues: 1. Whether Shen Dar is guilty of forum shopping; 2. Whether the first-to-file rule applies to the instant case; 3. Whether Shen Dar presented evidence of actual use;

Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In the appeal, Shen Dar raised the following issues: 1. Whether the BLA Director erred in ruling that Shen Dar failed to present evidence; 2. Whether the registration of EYIS application was proper considering that Shen Dar was the first to file an application for the mark; and 3. Whether the BLA Director correctly ruled that EYIS is the true owner of the mark.18 Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the COR issued in favor of EYIS while cancelling the COR of Shen Dar, the dispositive portion of which reads: WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No. 4-1999-005393 for the mark VESPA for air compressor issued in favor of Appellee is hereby upheld. Consequently, Certificate of Registration No. 4-1997-121492 for the mark VESPA, Chinese Characters & Device for goods air compressor and spot welding machine issued in favor of Appellant is hereby ordered cancelled.

4. Whether EYIS is the true owner of the mark "VESPA"; 5. Whether the IPO Director General erred in cancelling Shen Dars COR No. 4-1997-121492 without a petition for cancellation; and 6. Whether Shen Dar sustained damages.20 In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar. The dispositive portion states: WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision of the Director General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED and SET ASIDE. In lieu thereof, a new one is entered: a) ordering the cancellation of Certificate of Registration No. 4-1999-005393 issued on January 19, 2004 for the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b) ordering the restoration of the validity of Certificate of Registration No. 4-1997-121492 for the trademark VESPA in favor of Shen Dar Electricity and Machinery Co., Ltd. No pronouncement as to costs. SO ORDERED.21

In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer its evidence before the BLA, such evidence was properly attached to the Petition for Cancellation. As such, Shen Dars evidence may be properly considered. The CA also enunciated that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293, which prohibits the registration of a trademark in favor of a party when there is an earlier filed application for the same mark. The CA further ruled that Shen Dar should be considered to have prior use of the mark based on the statements made by the parties in their respective Declarations of Actual Use. The CA added that EYIS is a mere importer of the air compressors with the mark "VESPA" as may be gleaned from its receipts which indicated that EYIS is an importer, wholesaler and retailer, and therefore, cannot be considered an owner of the mark.22 EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed resolution. Hence, the instant appeal. Issues EYIS and Yap raise the following issues in their petition: A. Whether the Director General of the IPO correctly upheld the rights of Petitioners over the trademark VESPA. B. Whether the Director General of the IPO can, under the circumstances, order the cancellation of Respondents certificate of registration for VESPA, which has been fraudulently obtained and erroneously issued. C. Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the IPO, which affirm the rights of Petitioner EYIS over the trademark VESPA and when such findings are supported by the evidence on record. D. Whether this Honorable Court may review questions of fact considering that the findings of the Court of Appeals and the IPO are in conflict and the conclusions of the appellee court are contradicted by the evidence on record.23

The Ruling of the Court The appeal is meritorious. First Issue: Whether this Court may review the questions of fact presented Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court is not a trier of facts. However, such rule is subject to exceptions. In New City Builders, Inc. v. National Labor Relations Commission,24 the Court ruled that: We are very much aware that the rule to the effect that this Court is not a trier of facts admits of exceptions. As we have stated in Insular Life Assurance Company, Ltd. vs. CA: [i+t is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. However, the Court had recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. (Emphasis supplied.)

In the instant case, the records will show that the IPO and the CA made differing conclusions on the issue of ownership based on the evidence presented by the parties. Hence, this issue may be the subject of this Courts review. Second Issue: Whether evidence presented before the BLA must be formally offered Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support of its allegations as required under Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes Proceedings, having failed to formally offer its evidence during the proceedings before it. The BLA ruled: At the outset, we note petitioners failure to adduce any evidence in support of its allegations in the Petition for Cancellation. Petitioner did not file nor submit its marked evidence as required in this Bureaus Order No. 2006-157 dated 25 January 2006 in compliance with Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes Proceedings.25 x x x In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series of 2005, which states: Section 2.4. In all cases, failure to file the documentary evidences in accordance with Sections 7 and 8 of the rules on summary proceedings shall be construed as a waiver on the part of the parties. In such a case, the original petition, opposition, answer and the supporting documents therein shall constitute the entire evidence for the parties subject to applicable rules. The CA concluded that Shen Dar needed not formally offer its evidence but merely needed to attach its evidence to its position paper with the proper markings,26 which it did in this case. The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall establish the procedure for the application for the registration of a trademark, as well as the opposition to it:

Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following functions: xxxx 10.3. The Director General may by Regulations establish the procedure to govern the implementation of this Section. Thus, the Director General issued Office Order No. 79, Series of 2005 amending the regulations on Inter Partes Proceedings, Sec. 12.1 of which provides: Section 12. Evidence for the Parties 12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and the documents submitted, shall constitute the entire evidence for the petitioner or opposer. The verified answer, rejoinder if any, and the duly marked affidavits and documents submitted shall constitute the evidence for the respondent. Affidavits, documents and other evidence not submitted and duly marked in accordance with the preceding sections shall not be admitted as evidence. The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which, in turn, provide: Section 7. Filing of Petition or Opposition 7.1. The petition or opposition, together with the affidavits of witnesses and originals of the documents and other requirements, shall be filed with the Bureau, provided, that in case of public documents, certified copies shall be allowed in lieu of the originals. The Bureau shall check if the petition or opposition is in due form as provided in the Regulations particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5, Section 3; Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3 and 4. For petition for cancellation of layout design (topography) of integrated circuits, Rule 3, Section 3 applies as to the form and requirements. The affidavits, documents and other evidence shall be marked consecutively as "Exhibits" beginning with the letter "A".

Section 8. Answer 8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall issue an order for the respondent to file an answer together with the affidavits of witnesses and originals of documents, and at the same time shall notify all parties required to be notified in the IP Code and these Regulations, provided, that in case of public documents, certified true copies may be submitted in lieu of the originals. The affidavits and documents shall be marked consecutively as "Exhibits" beginning with the number "1". Section 9. Petition or Opposition and Answer must be verified Subject to Rules 7 and 8 of these regulations, the petition or opposition and the answer must be verified. Otherwise, the same shall not be considered as having been filed. In other words, as long as the petition is verified and the pieces of evidence consisting of the affidavits of the witnesses and the original of other documentary evidence are attached to the petition and properly marked in accordance with Secs. 7.1 and 8.1 abovementioned, these shall be considered as the evidence of the petitioner. There is no requirement under the abovementioned rules that the evidence of the parties must be formally offered to the BLA. In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the Regulations on Inter Partes Proceedings, the BLA is not bound by technical rules of procedure. The evidence attached to the petition may, therefore, be properly considered in the resolution of the case. Third Issue: Whether the IPO Director General can validly cancel Shen Dars Certificate of Registration In his Decision, the IPO Director General stated that, despite the fact that the instant case was for the cancellation of the COR issued in favor of EYIS, the interests of justice dictate, and in view of its findings, that the COR of Shen Dar must be cancelled. The Director General explained:

Accordingly, while the instant case involves a petition to cancel the registration of the Appellees trademark VESPA, the interest of justice requires that Certificate of Registration No. 4-1997-121492 be cancelled. While the normal course of proceedings should have been the filing of a petition for cancellation of Certificate of Registration No. 4-1997-121492, that would involve critical facts and issues that have already been resolved in this case. To allow the Applicant to still maintain in the Trademark Registry Certificate of Registration No. 4-1997-121492 would nullify the exclusive rights of Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the trademark registration system.27 Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for cancellation as required under Sec. 151 of RA 8293. Office Order No. 79, Series of 2005, provides under its Sec. 5 that: Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases.The rules of procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not be bound by strict technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of proceedings which is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases, and which will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis supplied.) The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies are not bound by technical rules of procedure. Such principle, however, is tempered by fundamental evidentiary rules, including due process. Thus, we ruled in Aya-ay, Sr. v. Arpaphil Shipping Corp.:28 That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of procedure in the adjudication of cases does not mean that the basic rules on proving allegations should be entirely dispensed with. A party alleging a critical fact must still support his allegation with substantial evidence. Any decision based on unsubstantiated allegation cannot stand as it will offend due process.

x x x The liberality of procedure in administrative actions is subject to limitations imposed by basic requirements of due process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in administrative procedure "does not go so far as to justify orders without a basis in evidence having rational probative value." More specifically, as held in Uichico v. NLRC: It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis:29 While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. The evidence presented must at least have a modicum of admissibility for it to have probative value. Not only must there be some evidence to support a finding or conclusion, but the evidence must be substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Thus, even though technical rules of evidence are not strictly complied with before the LA and the NLRC, their decision must be based on evidence that must, at the very least, be substantial. The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the cancellation of Shen Dars COR. It must be emphasized that, during the hearing for the cancellation of EYIS COR before the BLA, Shen Dar tried to establish that it, not EYIS, was the true owner of the mark "VESPA" and, thus, entitled to have it registered. Shen Dar had more than sufficient opportunity to present its evidence and argue its case, and it did. It was given its day in court and its right to due process was respected. The IPO Director Generals disregard of the procedure for the cancellation of a registered mark was a valid exercise of his discretion. Fourth Issue: Whether the factual findings of the IPO are binding on the CA

Next, petitioners challenge the CAs reversal of the factual findings of the BLA that Shen Dar and not EYIS is the prior user and, therefore, true owner of the mark. In arguing its position, petitioners cite numerous rulings of this Court where it was enunciated that the factual findings of administrative bodies are given great weight if not conclusive upon the courts when supported by substantial evidence. We agree with petitioners that the general rule in this jurisdiction is that the factual findings of administrative bodies deserve utmost respect when supported by evidence. However, such general rule is subject to exceptions. In Fuentes v. Court of Appeals,30 the Court established the rule of conclusiveness of factual findings of the CA as follows: Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of Appeals x x x is limited to the review and revision of errors of law allegedly committed by the appellate court, as its findings of fact are deemed conclusive. As such this Court is not dutybound to analyze and weigh all over again the evidence already considered in the proceedings below. This rule, however, is not without exceptions." The findings of fact of the Court of Appeals, which are as a general rule deemed conclusive, may admit of review by this Court: (1) when the factual findings of the Court of Appeals and the trial court are contradictory; (2) when the findings are grounded entirely on speculation, surmises, or conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or impossible; (4) when there is grave abuse of discretion in the appreciation of facts; (5) when the appellate court, in making its findings, goes beyond the issues of the case, and such findings are contrary to the admissions of both appellant and appellee;

(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts; (7) when the Court of Appeals fails to notice certain relevant facts which, if properly considered, will justify a different conclusion; (8) when the findings of fact are themselves conflicting; (9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings are contradicted by the evidence on record. (Emphasis supplied.) Thereafter, in Villaflor v. Court of Appeals,31 this Court applied the above principle to factual findings of quasi-judicial bodies, to wit: Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court of Appeals, enumerated in Fuentes vs. Court of Appeals, can also be applied to those of quasi-judicial bodies x x x. (Emphasis supplied.) Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO Director General which it opined, when correctly appreciated, would alter the result of the case. An examination of the IPO Decisions, however, would show that no such evidence was overlooked. First, as to the date of first use of the mark by the parties, the CA stated: To begin with, when respondents-appellees filed its application for registration of the VESPA trademark on July 28, 1999, they stated under oath, as found in their DECLARATION OF ACTUAL USE, that their first use of the mark was on December 22, 1998. On the other hand, [Shen Dar] in its application dated June 09, 1997 stated, likewise under oath in their DECLARATION OF ACTUAL USE, that its first use of the mark was in June 1996. This cannot be made any clearer. [Shen Dar] was not only the first to file an application for registration but likewise first to use said registrable mark.32

Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the statements of the parties in their respective Declarations of Actual Use. Such conclusion is premature at best. While a Declaration of Actual Use is a notarized document, hence, a public document, it is not conclusive as to the fact of first use of a mark. The declaration must be accompanied by proof of actual use as of the date claimed. In a declaration of actual use, the applicant must, therefore, present evidence of such actual use. The BLA ruled on the same issue, as follows: More importantly, the private respondents prior adoption and continuous use of the mark VESPA on air compressors is bolstered by numerous documentary evidence consisting of sales invoices issued in the name of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners date of first use on January 1, 1997 indicated in its trademark application filed on June 9, 1997 as well as the date of first use in June of 1996 as indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit 385). The use by respondent registrant in the concept of owner is shown by commercial documents, sales invoices unambiguously describing the goods as "VESPA" air compressors. Private respondents have sold the air compressors bearing the "VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas since the early 1990s. We carefully inspected the evidence consisting of three hundred seventy-one (371) invoices and shipment documents which show that VESPA air compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City, to name a few. There is no doubt that it is through private respondents efforts that the mark "VESPA" used on air compressors has gained business goodwill and reputation in the Philippines for which it has validly acquired trademark rights. Respondent E.Y. Industrials right has been preserved until the passage of RA 8293 which entitles it to register the same.33 Comparatively, the BLAs findings were founded upon the evidence presented by the parties. An example of such evidence is Invoice No. 12075 dated March 29, 199534 where EYIS sold four units of VESPA air compressors to Veteran Paint Trade Center. Shen Dar failed to rebut such evidence. The truth, as supported by the evidence on record, is that EYIS was first to use the mark.

Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and the proof submitted was appropriately considered by the BLA, ruling as follows: On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA" on the concept of an owner as early as 1991. Although Respondent E.Y. indicated in its trademark application that its first use was in December 22, 1998, it was able to prove by clear and positive evidence of use prior to such date. In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966, the High Court clarified: Where an applicant for registration of a trademark states under oath the date of his earliest use, and later on he wishes to carry back his first date of use to an earlier date, he then takes on the greater burden of presenting "clear and convincing evidence" of adoption and use as of that earlier date. (B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.)35 The CA further found that EYIS is not a manufacturer of air compressors but merely imports and sells them as a wholesaler and retailer. The CA reasoned: Conversely, a careful perusal of appellees own submitted receipts shows that it is not manufacturer but an importer, wholesaler and retailer. This fact is corroborated by the testimony of a former employee of appellees. Admittedly too, appellees are importing air compressors from [Shen Dar] from 1997 to 2004. These matters, lend credence to *Shen Dars+ claim that the letters SD followed by a number inscribed in the air compressor is only to describe its type, manufacturer business name and capacity. The VESPA mark is in the sticker which is attached to the air compressors. The ruling of the Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs. General Milling Corporation et al., is quite enlightening, thus We quote: "The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or other mark of ownership, unless such importer is actually the owner thereof in the country from which the goods are imported. Thus, this Court, has on several occasions ruled that where the applicants alleged ownership is not shown in any notarial document and the applicant appears to be merely an importer or distributor

of the merchandise covered by said trademark, its application cannot be granted."36 This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an importer, wholesaler and retailer does not preclude its being a manufacturer. Sec. 237 of the National Internal Revenue Code states: Section 237. Issuance of Receipts or Sales or Commercial Invoices.All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, however, That where the receipt is issued to cover payment made as rentals, commissions, compensation or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client. The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period. The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance with the provisions of this Section. (Emphasis supplied.) Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of Internal Revenue defined a Sales Invoice and identified its required information as follows: Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold or services rendered and the prices charged therefor used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer of goods and services. It contains the same information found in the Official Receipt.

Official Receipt (OR) is a receipt issued for the payment of services rendered or goods sold. It contains the following information: a. Business name and address;

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of: (i) The same goods or services, or (ii) Closely related goods or services, or

b. Taxpayer Identification Number; c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and date of issuance of receipts. There is no requirement that a sales invoice should accurately state the nature of all the businesses of the seller. There is no legal ground to state that EYIS "declaration" in its sales invoices that it is an importer, wholesaler and retailer is restrictive and would preclude its being a manufacturer. From the above findings, there was no justifiable reason for the CA to disregard the factual findings of the IPO. The rulings of the IPO Director General and the BLA Director were supported by clear and convincing evidence. The facts cited by the CA and Shen Dar do not justify a different conclusion from that of the IPO. Hence, the findings of the BLA Director and the IPO Director General must be deemed as conclusive on the CA. Fifth Issue: Whether EYIS is the true owner of the mark "VESPA" In any event, given the length of time already invested by the parties in the instant case, this Court must write finis to the instant controversy by determining, once and for all, the true owner of the mark "VESPA" based on the evidence presented. RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states: Section 123. Registrability. - 123.1. A mark cannot be registered if it: xxxx xxxx Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the presumptive ownership of the registrant and be held as the owner of the mark. As aptly stated by the Court in Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies, Inc.:37 Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive ownership of the registrant and may very well entitle the former to be declared owner in an appropriate case. (iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion. (Emphasis supplied.) Under this provision, the registration of a mark is prevented with the filing of an earlier application for registration. This must not, however, be interpreted to mean that ownership should be based upon an earlier filing date. While RA 8293 removed the previous requirement of proof of actual use prior to the filing of an application for registration of a mark, proof of prior and continuous use is necessary to establish ownership of a mark. Such ownership constitutes sufficient evidence to oppose the registration of a mark. Sec. 134 of the IP Code provides that "any person who believes that he would be damaged by the registration of a mark x x x" may file an opposition to the application. The term "any person" encompasses the true owner of the markthe prior and continuous user.

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has come down through the years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of ownership. xxxx By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for registration of the same. Registration merely creates a prima facie presumption of the validity of the registration, of the registrants ownership of the trademark and of the exclusive right to the use thereof. Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary. Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of the mark. The exhaustive discussion on the matter made by the BLA sufficiently addresses the issue: Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in buying, importing, selling, industrial machineries and tools, manufacturing, among others since its incorporation in 1988. (Exhibit "1"). Indeed private respondents have submitted photographs (Exhibit "376", "377", "378", "379") showing an assembly line of its manufacturing or assembly process.1avvphi1 More importantly, the private respondents prior adoption and continuous use of the mark "VESPA" on air compressors is bolstered by numerous documentary evidence consisting of sales invoices issued in the name of respondent EY Industrial and Bills of Lading. (Exhibits "4" to "375"). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners date of first use in January 1, 1997 indicated in its trademark application filed in June 9, 1997 as well as the date of first use in June of 1996 as indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit "385"). The use by respondent-registrant in the concept of owner is shown by commercial documents, sales invoices unambiguously describing the goods

as "VESPA" air compressors. Private respondents have sold the air compressors bearing the "VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas since the early 1990s. We carefully inspected the evidence consisting of three hundred seventy one (371) invoices and shipment documents which show that "VESPA" air compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City to name a few. There is no doubt that it is through private respondents efforts that the mark "VESPA" used on air compressors has gained business goodwill and reputation in the Philippines for which it has validly acquired trademark rights. Respondent EY Industrials right has been preserved until the passage of RA 8293 which entitles it to register the same. x x x38 On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen Dar failed to present sufficient evidence to prove its own prior use of the mark "VESPA." We cite with approval the ruling of the BLA: [Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air compressors. The thrust of *Shen Dars+ argument is that respondent E.Y. Industrial Sales, Inc. is a mere distributor of the "VESPA" air compressors. We disagree.

This conclusion is belied by the evidence. We have gone over each and every document attached as Annexes "A", "A" 1-48 which consist of Bill of Lading and Packing Weight List. Not one of these documents referred to a "VESPA" air compressor. Instead, it simply describes the goods plainly as air compressors which is type "SD" and not "VESPA". More importantly, the earliest date reflected on the Bill of Lading was on May 5, 1997. (Annex "A"-1). [Shen Dar] also attached as Annex "B" a purported Sales Contract with respondent EY Industrial Sales dated April 20, 2002. Surprisingly, nowhere in the document does it state that respondent EY Industrial agreed to sell "VESPA" air compressors. The document only mentions air compressors which if genuine merely bolsters respondent Engracio Yaps contention that [Shen Dar] approached them if it could sell the "Shen Dar" or "SD" air compressor. (Exhibit "386") In its position paper, [Shen Dar] merely mentions of Bill of Lading constituting respondent as consignee in 1993 but never submitted the same for consideration of this Bureau. The

document is also not signed by [Shen Dar]. The agreement was not even drafted in the letterhead of either [Shen Dar] nor [sic] respondent registrant. Our only conclusion is that [Shen Dar] was not able to prove to be the owner of the VESPA mark by appropriation. Neither was it able to prove actual commercial use in the Philippines of the mark VESPA prior to its filing of a trademark application in 9 June 1997.39 As such, EYIS must be considered as the prior and continuous user of the mark "VESPA" and its true owner. Hence, EYIS is entitled to the registration of the mark in its name. WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and October 6, 2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The Decision dated May 25, 2007 issued by the IPO Director General in Inter Partes Case No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA Director of the IPO are hereby REINSTATED. No costs. SO ORDERED.

G.R. No. 185917

June 1, 2011

term. The registration was later assigned to Romeo Chuateco, a member of the family that owned New York Garments. Fredco alleged that it was formed and registered with the Securities and Exchange Commission on 9 November 1995 and had since then handled the manufacture, promotion and marketing of "Harvard" clothing articles. Fredco alleged that at the time of issuance of Registration No. 56561 to Harvard University, New York Garments had already registered the mark "Harvard" for goods under Class 25. Fredco alleged that the registration was cancelled on 30 July 1998 when New York Garments inadvertently failed to file an affidavit of use/non-use on the fifth anniversary of the registration but the right to the mark "Harvard" remained with its predecessor New York Garments and now with Fredco. Harvard University, on the other hand, alleged that it is the lawful owner of the name and mark "Harvard" in numerous countries worldwide, including the Philippines. Among the countries where Harvard University has registered its name and mark "Harvard" are: 1. Argentina 26. South Korea 2. Benelux4 27. Malaysia 3. Brazil 28. Mexico 4. Canada 29. New Zealand 5. Chile 30. Norway 6. China P.R. 31. Peru 7. Colombia 32. Philippines 8. Costa Rica 33. Poland 9. Cyprus 34. Portugal 10. Czech Republic 35. Russia 11. Denmark 36. South Africa 12. Ecuador 37. Switzerland 13. Egypt 38. Singapore 14. Finland 39. Slovak Republic 15. France 40. Spain 16. Great Britain 41. Sweden 17. Germany 42. Taiwan 18. Greece 43. Thailand 19. Hong Kong 44. Turkey 20. India 45. United Arab Emirates 21. Indonesia 46. Uruguay

FREDCO MANUFACTURING CORPORATION Petitioner, vs. PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY), Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for review1 assailing the 24 October 2008 Decision2 and 8 January 2009 Resolution3 of the Court of Appeals in CA-G.R. SP No. 103394. The Antecedent Facts On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a corporation organized and existing under the laws of the Philippines, filed a Petition for Cancellation of Registration No. 56561 before the Bureau of Legal Affairs of the Intellectual Property Office (IPO) against respondents President and Fellows of Harvard College (Harvard University), a corporation organized and existing under the laws of Massachusetts, United States of America. The case was docketed as Inter Partes Case No. 14-2005-00094. Fredco alleged that Registration No. 56561 was issued to Harvard University on 25 November 1993 for the mark "Harvard Veritas Shield Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs under Classes 16, 18, 21, 25 and 28 of the Nice International Classification of Goods and Services. Fredco alleged that the mark "Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and slacks was first used in the Philippines on 2 January 1982 by New York Garments Manufacturing & Export Co., Inc. (New York Garments), a domestic corporation and Fredcos predecessor-ininterest. On 24 January 1985, New York Garments filed for trademark registration of the mark "Harvard" for goods under Class 25. The application matured into a registration and a Certificate of Registration was issued on 12 December 1988, with a 20-year term subject to renewal at the end of the

22. Ireland 47. United States of America 23. Israel 48. Venezuela 24. Italy49. Zimbabwe 25. Japan 50. European Community5 The name and mark "Harvard" was adopted in 1639 as the name of Harvard College6 of Cambridge, Massachusetts, U.S.A. The name and mark "Harvard" was allegedly used in commerce as early as 1872. Harvard University is over 350 years old and is a highly regarded institution of higher learning in the United States and throughout the world. Harvard University promotes, uses, and advertises its name "Harvard" through various publications, services, and products in foreign countries, including the Philippines. Harvard University further alleged that the name and the mark have been rated as one of the most famous brands in the world, valued between US $750,000,000 and US $1,000,000,000. Harvard University alleged that in March 2002, it discovered, through its international trademark watch program, Fredcos website www.harvardusa.com. The website advertises and promotes the brand name "Harvard Jeans USA" without Harvard Universitys consent. The websites main page shows an oblong logo bearing the mark "Harvard Jeans USA," "Established 1936," and "Cambridge, Massachusetts." On 20 April 2004, Harvard University filed an administrative complaint against Fredco before the IPO for trademark infringement and/or unfair competition with damages.lawphi1 Harvard University alleged that its valid and existing certificates of trademark registration in the Philippines are: 1. Trademark Registration No. 56561 issued on 25 November 1993 for "Harvard Veritas Shield Design" for goods and services in Classes 16, 18, 21, 25 and 28 (decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs) of the Nice International Classification of Goods and Services; 2. Trademark Registration No. 57526 issued on 24 March 1994 for "Harvard Veritas Shield Symbol" for services in Class 41; Trademark Registration No. 56539 issued on 25 November 1998 for "Harvard" for services in Class 41; and 3. Trademark Registration No. 66677 issued on 8 December 1998 for "Harvard Graphics" for goods in Class 9. Harvard University further alleged

that it filed the requisite affidavits of use for the mark "Harvard Veritas Shield Symbol" with the IPO. Further, on 7 May 2003 Harvard University filed Trademark Application No. 4-2003-04090 for "Harvard Medical International & Shield Design" for services in Classes 41 and 44. In 1989, Harvard University established the Harvard Trademark Licensing Program, operated by the Office for Technology and Trademark Licensing, to oversee and manage the worldwide licensing of the "Harvard" name and trademarks for various goods and services. Harvard University stated that it never authorized or licensed any person to use its name and mark "Harvard" in connection with any goods or services in the Philippines. In a Decision7 dated 22 December 2006, Director Estrellita Beltran-Abelardo of the Bureau of Legal Affairs, IPO cancelled Harvard Universitys registration of the mark "Harvard" under Class 25, as follows: WHEREFORE, premises considered, the Petition for Cancellation is hereby GRANTED. Consequently, Trademark Registration Number 56561 for the trademark "HARVARD VE RI TAS SHIELD SYMBOL" issued on November 25, 1993 to PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY) should be CANCELLED only with respect to goods falling under Class 25. On the other hand, considering that the goods of RespondentRegistrant falling under Classes 16, 18, 21 and 28 are not confusingly similar with the Petitioners goods, the Respondent-Registrant has acquired vested right over the same and therefore, should not be cancelled. Let the filewrapper of the Trademark Registration No. 56561 issued on November 25, 1993 for the trademark "HARVARD VE RI TAS SHIELD SYMBOL", subject matter of this case together with a copy of this Decision be forwarded to the Bureau of Trademarks (BOT) for appropriate action. SO ORDERED.8 Harvard University filed an appeal before the Office of the Director General of the IPO. In a Decision9 dated 21 April 2008, the Office of the Director General, IPO reversed the decision of the Bureau of Legal Affairs, IPO. The Director General ruled that more than the use of the trademark in the Philippines, the applicant must be the owner of the mark sought to be

registered. The Director General ruled that the right to register a trademark is based on ownership and when the applicant is not the owner, he has no right to register the mark. The Director General noted that the mark covered by Harvard Universitys Registration No. 56561 is not only the word "Harvard" but also the logo, emblem or symbol of Harvard University. The Director General ruled that Fredco failed to explain how its predecessor New York Garments came up with the mark "Harvard." In addition, there was no evidence that Fredco or New York Garments was licensed or authorized by Harvard University to use its name in commerce or for any other use. The dispositive portion of the decision of the Office of the Director General, IPO reads: WHEREFORE, premises considered, the instant appeal is GRANTED. The appealed decision is hereby REVERSED and SET ASIDE. Let a copy of this Decision as well as the trademark application and records be furnished and returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors of the Bureau of Trademarks and the Administrative, Financial and Human Resources Development Services Bureau, and the library of the Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes. SO ORDERED.10 Fredco filed a petition for review before the Court of Appeals assailing the decision of the Director General. The Decision of the Court of Appeals In its assailed decision, the Court of Appeals affirmed the decision of the Office of the Director General of the IPO. The Court of Appeals adopted the findings of the Office of the Director General and ruled that the latter correctly set aside the cancellation by the Director of the Bureau of Legal Affairs of Harvard Universitys trademark registration under Class 25. The Court of Appeals ruled that Harvard University was able to substantiate that it appropriated and used the marks "Harvard" and "Harvard Veritas Shield Symbol" in Class 25 way ahead of

Fredco and its predecessor New York Garments. The Court of Appeals also ruled that the records failed to disclose any explanation for Fredcos use of the name and mark "Harvard" and the words "USA," "Established 1936," and "Cambridge, Massachusetts" within an oblong device, "US Legend" and "Europes No. 1 Brand." Citing Shangri-La International Hotel Management, Ltd. v. Developers Group of Companies, Inc.,11 the Court of Appeals ruled: One who has imitated the trademark of another cannot bring an action for infringement, particularly against the true owner of the mark, because he would be coming to court with unclean hands. Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take advantage of the goodwill established by the true owner.12 The dispositive portion of the decision of the Court of Appeals reads: WHEREFORE, premises considered, the petition for review is DENIED. The Decision dated April 21, 2008 of the Director General of the IPO in Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby AFFIRMED. SO ORDERED.13 Fredco filed a motion for reconsideration. In its Resolution promulgated on 8 January 2009, the Court of Appeals denied the motion for lack of merit. Hence, this petition before the Court. The Issue The issue in this case is whether the Court of Appeals committed a reversible error in affirming the decision of the Office of the Director General of the IPO. The Ruling of this Court The petition has no merit.

There is no dispute that the mark "Harvard" used by Fredco is the same as the mark "Harvard" in the "Harvard Veritas Shield Symbol" of Harvard University. It is also not disputed that Harvard University was named Harvard College in 1639 and that then, as now, Harvard University is located in Cambridge, Massachusetts, U.S.A. It is also unrefuted that Harvard University has been using the mark "Harvard" in commerce since 1872. It is also established that Harvard University has been using the marks "Harvard" and "Harvard Veritas Shield Symbol" for Class 25 goods in the United States since 1953. Further, there is no dispute that Harvard University has registered the name and mark "Harvard" in at least 50 countries. On the other hand, Fredcos predecessor-in-interest, New York Garments, started using the mark "Harvard" in the Philippines only in 1982. New York Garments filed an application with the Philippine Patent Office in 1985 to register the mark "Harvard," which application was approved in 1988. Fredco insists that the date of actual use in the Philippines should prevail on the issue of who has the better right to register the marks. Under Section 2 of Republic Act No. 166,14 as amended (R.A. No. 166), before a trademark can be registered, it must have been actually used in commerce for not less than two months in the Philippines prior to the filing of an application for its registration. While Harvard University had actual prior use of its marks abroad for a long time, it did not have actual prior use in the Philippines of the mark "Harvard Veritas Shield Symbol" before its application for registration of the mark "Harvard" with the then Philippine Patents Office. However, Harvard Universitys registration of the name "Harvard" is based on home registration which is allowed under Section 37 of R.A. No. 166.15 As pointed out by Harvard University in its Comment: Although Section 2 of the Trademark law (R.A. 166) requires for the registration of trademark that the applicant thereof must prove that the same has been actually in use in commerce or services for not less than two (2) months in the Philippines before the application for registration is filed, where the trademark sought to be registered has already been registered in a foreign country that is a member of the Paris Convention, the requirement of proof of use in the commerce in the Philippines for the said period is not necessary. An applicant for registration based on home certificate of registration need not even have used the mark or trade name in this country.16

Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco alleged that Harvard Universitys registration "is based on home registration for the mark Harvard Veritas Shield for Class 25."17 In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293),18 "[m]arks registered under Republic Act No. 166 shall remain in force but shall be deemed to have been granted under this Act x x x," which does not require actual prior use of the mark in the Philippines. Since the mark "Harvard Veritas Shield Symbol" is now deemed granted under R.A. No. 8293, any alleged defect arising from the absence of actual prior use in the Philippines has been cured by Section 239.2.19 In addition, Fredcos registration was already cancelled on 30 July 1998 when it failed to file the required affidavit of use/non-use for the fifth anniversary of the marks registration. Hence, at the time of Fredcos filing of the Petition for Cancellation before the Bureau of Legal Affairs of the IPO, Fredco was no longer the registrant or presumptive owner of the mark "Harvard." There are two compelling reasons why Fredcos petition must fail. First, Fredcos registration of the mark "Harvard" and its identification of origin as "Cambridge, Massachusetts" falsely suggest that Fredco or its goods are connected with Harvard University, which uses the same mark "Harvard" and is also located in Cambridge, Massachusetts. This can easily be gleaned from the following oblong logo of Fredco that it attaches to its clothing line: Fredcos registration of the mark "Harvard" should not have been allowed because Section 4(a) of R.A. No. 166 prohibits the registration of a mark "which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs x x x." Section 4(a) of R.A. No. 166 provides: Section 4. Registration of trade-marks, trade-names and service- marks on the principal register. There is hereby established a register of trade-mark, trade-names and service-marks which shall be known as the principal register. The owner of a trade-mark, a trade-name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal register, unless it:

(a) Consists of or comprises immoral, deceptive or scandalous manner, or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute; (b) x x x (emphasis supplied) Fredcos use of the mark "Harvard," coupled with its claimed origin in Cambridge, Massachusetts, obviously suggests a false connection with Harvard University. On this ground alone, Fredcos registration of the mark "Harvard" should have been disallowed. Indisputably, Fredco does not have any affiliation or connection with Harvard University, or even with Cambridge, Massachusetts. Fredco or its predecessor New York Garments was not established in 1936, or in the U.S.A. as indicated by Fredco in its oblong logo. Fredco offered no explanation to the Court of Appeals or to the IPO why it used the mark "Harvard" on its oblong logo with the words "Cambridge, Massachusetts," "Established in 1936," and "USA." Fredco now claims before this Court that it used these words "to evoke a lifestyle or suggest a desirable aura of petitioners clothing lines." Fredcos belated justification merely confirms that it sought to connect or associate its products with Harvard University, riding on the prestige and popularity of Harvard University, and thus appropriating part of Harvard Universitys goodwill without the latters consent. Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham Act,20 the trademark law of the United States. These provisions are intended to protect the right of publicity of famous individuals and institutions from commercial exploitation of their goodwill by others.21 What Fredco has done in using the mark "Harvard" and the words "Cambridge, Massachusetts," "USA" to evoke a "desirable aura" to its products is precisely to exploit commercially the goodwill of Harvard University without the latters consent. This is a clear violation of Section 4(a) of R.A. No. 166. Under Section 17(c)22 of R.A. No. 166, such violation is a ground for cancellation of Fredcos registration of the mark "Harvard" because the registration was obtained in violation of Section 4 of R.A. No. 166. Second, the Philippines and the United States of America are both signatories to the Paris Convention for the Protection of Industrial Property

(Paris Convention). The Philippines became a signatory to the Paris Convention on 27 September 1965. Articles 6bis and 8 of the Paris Convention state: ARTICLE 6bis (i) The countries of the Union undertake either administratively if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration and to prohibit the use of a trademark which constitutes a reproduction, imitation or translation, liable to create confusion or a mark considered by the competent authority of the country as being already the mark of a person entitled to the benefits of the present Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith. ARTICLE 8 A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark. (Emphasis supplied) Thus, this Court has ruled that the Philippines is obligated to assure nationals of countries of the Paris Convention that they are afforded an effective protection against violation of their intellectual property rights in the Philippines in the same way that their own countries are obligated to accord similar protection to Philippine nationals.23 Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No. 166, as follows: Section 37. Rights of foreign registrants. Persons who are nationals of, domiciled in, or have a bona fide or effective business or commercial establishment in any foreign country, which is a party to any international convention or treaty relating to marks or trade-names, or the repression of unfair competition to which the Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act to the extent and under the conditions essential to give effect to any such convention and

treaties so long as the Philippines shall continue to be a party thereto, except as provided in the following paragraphs of this section. xxxx Trade-names of persons described in the first paragraph of this section shall be protected without the obligation of filing or registration whether or not they form parts of marks.24 x x x x (Emphasis supplied) Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris Convention, whether or not the trade name forms part of a trademark, is protected "without the obligation of filing or registration." "Harvard" is the trade name of the world famous Harvard University, and it is also a trademark of Harvard University. Under Article 8 of the Paris Convention, as well as Section 37 of R.A. No. 166, Harvard University is entitled to protection in the Philippines of its trade name "Harvard" even without registration of such trade name in the Philippines. This means that no educational entity in the Philippines can use the trade name "Harvard" without the consent of Harvard University. Likewise, no entity in the Philippines can claim, expressly or impliedly through the use of the name and mark "Harvard," that its products or services are authorized, approved, or licensed by, or sourced from, Harvard University without the latters consent. Article 6bis of the Paris Convention has been administratively implemented in the Philippines through two directives of the then Ministry (now Department) of Trade, which directives were upheld by this Court in several cases.25 On 20 November 1980, then Minister of Trade Secretary Luis Villafuerte issued a Memorandum directing the Director of Patents to reject, pursuant to the Paris Convention, all pending applications for Philippine registration of signature and other world-famous trademarks by applicants other than their original owners.26 The Memorandum states: Pursuant to the Paris Convention for the Protection of Industrial Property to which the Philippines is a signatory, you are hereby directed to reject all pending applications for Philippine registration of signature and other

world-famous trademarks by applicants other than its original owners or users. The conflicting claims over internationally known trademarks involve such name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus. It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be asked to surrender their certificates of registration, if any, to avoid suits for damages and other legal action by the trademarks foreign or local owners or original users. You are also required to submit to the undersigned a progress report on the matter. For immediate compliance.27 In a Memorandum dated 25 October 1983, then Minister of Trade and Industry Roberto Ongpin affirmed the earlier Memorandum of Minister Villafuerte. Minister Ongpin directed the Director of Patents to implement measures necessary to comply with the Philippines obligations under the Paris Convention, thus: 1. Whether the trademark under consideration is well-known in the Philippines or is a mark already belonging to a person entitled to the benefits of the CONVENTION, this should be established, pursuant to Philippine Patent Office procedures in inter partes and ex parte cases, according to any of the following criteria or any combination thereof: (a) a declaration by the Minister of Trade and Industry that the trademark being considered is already well-known in the Philippines such that permission for its use by other than its original owner will constitute a reproduction, imitation, translation or other infringement; (b) that the trademark is used in commerce internationally, supported by proof that goods bearing the trademark are sold on an international scale, advertisements, the establishment of factories, sales offices, distributorships, and the like, in different countries, including volume or other measure of international trade and commerce;

(c) that the trademark is duly registered in the industrial property office(s) of another country or countries, taking into consideration the dates of such registration; (d) that the trademark has been long established and obtained goodwill and general international consumer recognition as belonging to one owner or source; (e) that the trademark actually belongs to a party claiming ownership and has the right to registration under the provisions of the aforestated PARIS CONVENTION. 2. The word trademark, as used in this MEMORANDUM, shall include tradenames, service marks, logos, signs, emblems, insignia or other similar devices used for identification and recognition by consumers. 3. The Philippine Patent Office shall refuse all applications for, or cancel the registration of, trademarks which constitute a reproduction, translation or imitation of a trademark owned by a person, natural or corporate, who is a citizen of a country signatory to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY. x x x x28 (Emphasis supplied) In Mirpuri, the Court ruled that the essential requirement under Article 6bis of the Paris Convention is that the trademark to be protected must be "wellknown" in the country where protection is sought.29 The Court declared that the power to determine whether a trademark is well-known lies in the competent authority of the country of registration or use.30 The Court then stated that the competent authority would either be the registering authority if it has the power to decide this, or the courts of the country in question if the issue comes before the courts.31 To be protected under the two directives of the Ministry of Trade, an internationally well-known mark need not be registered or used in the Philippines.32 All that is required is that the mark is well-known internationally and in the Philippines for identical or similar goods, whether or not the mark is registered or used in the Philippines. The Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.:33

The fact that respondents marks are neither registered nor used in the Philippines is of no moment. The scope of protection initially afforded by Article 6bis of the Paris Convention has been expanded in the 1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, wherein the World Intellectual Property Organization (WIPO) General Assembly and the Paris Union agreed to a nonbinding recommendation that a well-known mark should be protected in a country even if the mark is neither registered nor used in that country. Part I, Article 2(3) thereof provides: (3) [Factors Which Shall Not Be Required] (a) A Member State shall not require, as a condition for determining whether a mark is a well-known mark: (i) that the mark has been used in, or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, the Member State: (ii) that the mark is well known in, or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, any jurisdiction other than the Member State; or (iii) that the mark is well known by the public at large in the Member State.34 (Italics in the original decision; boldface supplied) Indeed, Section 123.1(e) of R.A. No. 8293 now categorically states that "a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here," cannot be registered by another in the Philippines. Section 123.1(e) does not require that the well-known mark be used in commerce in the Philippines but only that it be well-known in the Philippines. Moreover, Rule 102 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers, which implement R.A. No. 8293, provides: Rule 102. Criteria for determining whether a mark is well-known. In determining whether a mark is well-known, the following criteria or any combination thereof may be taken into account:

(a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies; (b) the market share, in the Philippines and in other countries, of the goods and/or services to which the mark applies; (c) the degree of the inherent or acquired distinction of the mark; (d) the quality-image or reputation acquired by the mark; (e) the extent to which the mark has been registered in the world; (f) the exclusivity of registration attained by the mark in the world; (g) the extent to which the mark has been used in the world; (h) the exclusivity of use attained by the mark in the world; (i) the commercial value attributed to the mark in the world; (j) the record of successful protection of the rights in the mark; (k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and (l) the presence or absence of identical or similar marks validly registered for or used on identical or similar goods or services and owned by persons other than the person claiming that his mark is a well-known mark. (Emphasis supplied) Since "any combination" of the foregoing criteria is sufficient to determine that a mark is well-known, it is clearly not necessary that the mark be used in commerce in the Philippines. Thus, while under the territoriality principle a mark must be used in commerce in the Philippines to be entitled to protection, internationally well-known marks are the exceptions to this rule. In the assailed Decision of the Office of the Director General dated 21 April 2008, the Director General found that:

Traced to its roots or origin, HARVARD is not an ordinary word. It refers to no other than Harvard University, a recognized and respected institution of higher learning located in Cambridge, Massachusetts, U.S.A. Initially referred to simply as "the new college," the institution was named "Harvard College" on 13 March 1639, after its first principal donor, a young clergyman named John Harvard. A graduate of Emmanuel College, Cambridge in England, John Harvard bequeathed about four hundred books in his will to form the basis of the college library collection, along with half his personal wealth worth several hundred pounds. The earliest known official reference to Harvard as a "university" rather than "college" occurred in the new Massachusetts Constitution of 1780. Records also show that the first use of the name HARVARD was in 1638 for educational services, policy courses of instructions and training at the university level. It has a Charter. Its first commercial use of the name or mark HARVARD for Class 25 was on 31 December 1953 covered by UPTON Reg. No. 2,119,339 and 2,101,295. Assuming in arguendo, that the Appellate may have used the mark HARVARD in the Philippines ahead of the Appellant, it still cannot be denied that the Appellants use thereof was decades, even centuries, ahead of the Appellees. More importantly, the name HARVARD was the name of a person whose deeds were considered to be a cornerstone of the university. The Appellants logos, emblems or symbols are owned by Harvard University. The name HARVARD and the logos, emblems or symbols are endemic and cannot be separated from the institution.35 Finally, in its assailed Decision, the Court of Appeals ruled: Records show that Harvard University is the oldest and one of the foremost educational institutions in the United States, it being established in 1636. It is located primarily in Cambridge, Massachusetts and was named after John Harvard, a puritan minister who left to the college his books and half of his estate. The mark "Harvard College" was first used in commerce in the United States in 1638 for educational services, specifically, providing courses of instruction and training at the university level (Class 41). Its application for registration with the United States Patent and Trademark Office was filed on September 20, 2000 and it was registered on October 16, 2001. The marks "Harvard"

and "Harvard Ve ri tas Shield Symbol" were first used in commerce in the the United States on December 31, 1953 for athletic uniforms, boxer shorts, briefs, caps, coats, leather coats, sports coats, gym shorts, infant jackets, leather jackets, night shirts, shirts, socks, sweat pants, sweatshirts, sweaters and underwear (Class 25). The applications for registration with the USPTO were filed on September 9, 1996, the mark "Harvard" was registered on December 9, 1997 and the mark "Harvard Ve ri tas Shield Symbol" was registered on September 30, 1997.36 We also note that in a Decision37 dated 18 December 2008 involving a separate case between Harvard University and Streetward International, Inc.,38 the Bureau of Legal Affairs of the IPO ruled that the mark "Harvard" is a "well-known mark." This Decision, which cites among others the numerous trademark registrations of Harvard University in various countries, has become final and executory. There is no question then, and this Court so declares, that "Harvard" is a well-known name and mark not only in the United States but also internationally, including the Philippines. The mark "Harvard" is rated as one of the most famous marks in the world. It has been registered in at least 50 countries. It has been used and promoted extensively in numerous publications worldwide. It has established a considerable goodwill worldwide since the founding of Harvard University more than 350 years ago. It is easily recognizable as the trade name and mark of Harvard University of Cambridge, Massachusetts, U.S.A., internationally known as one of the leading educational institutions in the world. As such, even before Harvard University applied for registration of the mark "Harvard" in the Philippines, the mark was already protected under Article 6bis and Article 8 of the Paris Convention. Again, even without applying the Paris Convention, Harvard University can invoke Section 4(a) of R.A. No. 166 which prohibits the registration of a mark "which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs x x x." WHEREFORE, we DENY the petition. We AFFIRM the 24 October 2008 Decision and 8 January 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 103394. SO ORDERED.