G.R. No.

180677

February 18, 2013

VICTORIO
P.
vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.

DIAZ, Petitioner,

DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen of the
offense of infringement of a registered trademark. The acquittal of the accused should follow if the allegedly infringing
mark is not likely to cause confusion. Thereby, the evidence of the State does not satisfy the quantum of proof beyond
reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 2007 1 and November 22, 2007,2whereby
the Court of Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated filing of the
appellant's brief, and denied his motion for reconsideration. Thereby, the decision rendered on February 13, 2006 in
Criminal Case No. 00-0318 and Criminal Case No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City
(RTC) convicting him for two counts of infringement of trademark were affirmed. 3
Antecedents
On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Pias City, charging Diaz with
violation of Section 155, in relation to Section 170, of Republic Act No. 8293, also known as theIntellectual Property Code
of the Philippines (Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this
Honorable Court, the abovenamed accused, with criminal intent to defraud Levis Strauss (Phil.) Inc. (hereinafter referred
to as LEVIS), did then and there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating Levis registered trademarks or dominant features thereof
such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED
ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold,
offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps necessary to
carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or deceived the general
consuming public, without the consent, permit or authority of the registered owner, LEVIS, thus depriving and defrauding
the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage and prejudice of LEVIS.
CONTRARY TO LAW.4
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this
Honorable Court, the abovenamed accused, with criminal intent to defraud Levis Strauss (Phil.) Inc. (hereinafter referred
to as LEVIS), did then and there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating Levis registered trademarks or dominant features thereof

such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED
ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold,
offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps necessary to
carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or deceived the general
consuming public, without the consent, permit or authority of the registered owner, LEVIS, thus depriving and defrauding
the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage and prejudice of LEVIS.
CONTRARY TO LAW.5
The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to each information on June 21, 2000.6
1.
Evidence of the Prosecution
Levi Strauss and Company (Levis), a foreign corporation based in the State of Delaware, United States of America, had
been engaged in the apparel business. It is the owner of trademarks and designs of Levis jeans like LEVIS 501, the
arcuate design, the two-horse brand, the two-horse patch, the two-horse patch with pattern arcuate, and the composite
tab arcuate. LEVIS 501 has the following registered trademarks, to wit: (1) the leather patch showing two horses pulling a
pair of pants; (2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;" (3) the arcuate design that refers to "the
two parallel stitching curving downward that are being sewn on both back pockets of a Levis Jeans;" and (4) the tab or
piece of cloth located on the structural seam of the right back pocket, upper left side. All these trademarks were registered
in the Philippine Patent Office in the 1970s, 1980s and early part of 1990s. 7
Levi Strauss Philippines, Inc. (Levis Philippines) is a licensee of Levis. After receiving information that Diaz was selling
counterfeit LEVIS 501 jeans in his tailoring shops in Almanza and Talon, Las Pias City, Levis Philippines hired a private
investigation group to verify the information. Surveillance and the purchase of jeans from the tailoring shops of Diaz
established that the jeans bought from the tailoring shops of Diaz were counterfeit or imitations of LEVIS 501. Levis
Philippines then sought the assistance of the National Bureau of Investigation (NBI) for purposes of applying for a search
warrant against Diaz to be served at his tailoring shops. The search warrants were issued in due course. Armed with the
search warrants, NBI agents searched the tailoring shops of Diaz and seized several fake LEVIS 501 jeans from them.
Levis Philippines claimed that it did not authorize the making and selling of the seized jeans; that each of the jeans were
mere imitations of genuine LEVIS 501 jeans by each of them bearing the registered trademarks, like the arcuate design,
the tab, and the leather patch; and that the seized jeans could be mistaken for original LEVIS 501 jeans due to the
placement of the arcuate, tab, and two-horse leather patch. 8
2.
Evidence of the Defense
On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.
Diaz stated that he did not manufacture Levis jeans, and that he used the label "LS Jeans Tailoring" in the jeans that he
made and sold; that the label "LS Jeans Tailoring" was registered with the Intellectual Property Office; that his shops
received clothes for sewing or repair; that his shops offered made-to-order jeans, whose styles or designs were done in
accordance with instructions of the customers; that since the time his shops began operating in 1992, he had received no
notice or warning regarding his operations; that the jeans he produced were easily recognizable because the label "LS

Jeans Tailoring," and the names of the customers were placed inside the pockets, and each of the jeans had an "LSJT"
red tab; that "LS" stood for "Latest Style;" and that the leather patch on his jeans had two buffaloes, not two horses. 9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:
WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond
reasonable doubt of twice violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the Informations in
Criminal Case Nos. 00-0318 & 00-0319, respectively, and hereby sentences him to suffer in each of the cases the penalty
of imprisonment of TWO (2) YEARS of prision correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as
maximum, as well as pay a fine of P50,000.00 for each of the herein cases, with subsidiary imprisonment in case of
insolvency, and to suffer the accessory penalties provided for by law.
Also, accused Diaz is hereby ordered to pay to the private complainant Levis Strauss (Phils.), Inc. the following, thus:
1. P50,000.00 in exemplary damages; and
2. P222,000.00 as and by way of attorneys fees.
Costs de officio.
SO ORDERED.10
Ruling of the CA
Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his appellants
brief on time despite being granted his requested several extension periods.
Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.
Issue
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE
RULE ON TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE
PETITIONER FOR LATE FILING OF APPELLANTS BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his appellants brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellants brief in the CA "within fortyfive (45) days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the
record, seven (7) copies of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies
thereof upon the appellee." Section 1(e) of Rule 50 of the Rules of Court grants to the CA the discretion to dismiss an

appeal either motu proprio or on motion of the appellee should the appellant fail to serve and file the required number of
copies of the appellants brief within the time provided by the Rules of Court.12
The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the
appellants brief is not mandatory, but discretionary. Verily, the failure to serve and file the required number of copies of the
appellants brief within the time provided by the Rules of Court does not have the immediate effect of causing the outright
dismissal of the appeal. This means that the discretion to dismiss the appeal on that basis is lodged in the CA, by virtue of
which the CA may still allow the appeal to proceed despite the late filing of the appellants brief, when the circumstances
so warrant its liberality. In deciding to dismiss the appeal, then, the CA is bound to exercise its sound discretion upon
taking all the pertinent circumstances into due consideration.
The records reveal that Diazs counsel thrice sought an extension of the period to file the appellants brief. The first time
was on March 12, 2007, the request being for an extension of 30 days to commence on March 11, 2007. The CA granted
his motion under its resolution of March 21, 2007. On April 10, 2007, the last day of the 30-day extension, the counsel
filed another motion, seeking an additional 15 days. The CA allowed the counsel until April 25, 2007 to serve and file the
appellants brief. On April 25, 2007, the counsel went a third time to the CA with another request for 15 days. The CA still
granted such third motion for extension, giving the counsel until May 10, 2007. Notwithstanding the liberality of the CA, the
counsel did not literally comply, filing the appellants brief only on May 28, 2007, which was the 18th day beyond the third
extension period granted.
Under the circumstances, the failure to file the appellants brief on time rightly deserved the outright rejection of the
appeal. The acts of his counsel bound Diaz like any other client. It was, of course, only the counsel who was well aware
that the Rules of Court fixed the periods to file pleadings and equally significant papers like the appellants brief with the
lofty objective of avoiding delays in the administration of justice.
Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by the CA on
appeal because of the failure of his counsel to serve and file the appellants brief on time despite the grant of several
extensions the counsel requested. Diaz was convicted and sentenced to suffer two indeterminate sentences that would
require him to spend time in detention for each conviction lasting two years, as minimum, to five years, as maximum, and
to pay fines totaling P100,000.00 (with subsidiary imprisonment in case of his insolvency). His personal liberty is now no
less at stake. This reality impels us to look beyond the technicality and delve into the merits of the case to see for
ourselves if the appeal, had it not been dismissed, would have been worth the time of the CA to pass upon. After all, his
appellants brief had been meanwhile submitted to the CA. While delving into the merits of the case, we have uncovered a
weakness in the evidence of guilt that cannot be simply ignored and glossed over if we were to be true to our oaths to do
justice to everyone.
We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable negligence
tendered by Diazs counsel to justify the belated filing of the appellants brief as unworthy of serious consideration, Diaz
should not be made to suffer the dire consequence. Any accused in his shoes, with his personal liberty as well as his
personal fortune at stake, expectedly but innocently put his fullest trust in his counsels abilities and professionalism in the
handling of his appeal. He thereby delivered his fate to the hands of his counsel. Whether or not those hands were
efficient or trained enough for the job of handling the appeal was a learning that he would get only in the end. Likelier than
not, he was probably even unaware of the three times that his counsel had requested the CA for extensions. If he were
now to be left to his unwanted fate, he would surely suffer despite his innocence. How costly a learning it would be for
him! That is where the Court comes in. It is most important for us as dispensers of justice not to allow the inadvertence or
incompetence of any counsel to result in the outright deprivation of an appellants right to life, liberty or property.13

We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on the line, the
people whose futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of
professionalism of any member of the Law Profession. They reasonably expect a just result in every litigation. The courts
must give them that just result. That assurance is the peoples birthright. Thus, we have to undo Diazs dire fate.
Even as we now set aside the CAs rejection of the appeal of Diaz, we will not remand the records to the CA for its review.
In an appeal of criminal convictions, the records are laid open for review. To avoid further delays, therefore, we take it
upon ourselves to review the records and resolve the issue of guilt, considering that the records are already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:
Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection
are committed regardless of whether there is actual sale of goods or services using the infringing material.
The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore, the following:
1. The trademark being infringed is registered in the Intellectual Property Office;
2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;
3. The infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business
or services; or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services;
4. The use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or origin of such goods or services or the
identity of such business; and
5. The use or application of the infringing mark is without the consent of the trademark owner or the assignee
thereof.14
As can be seen, the likelihood of confusion is the gravamen of the offense of trademark infringement. 15 There are two
tests to determine likelihood of confusion, namely: the dominancy test, and the holistic test. The contrasting concept of
these tests was explained in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:

x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the competing
trademarks that might cause confusion. Infringement takes place when the competing trademark contains the essential
features of another. Imitation or an effort to imitate is unnecessary. The question is whether the use of the marks is likely
to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity.
The focus is not only on the predominant words but also on the other features appearing on the labels. 16
As to what test should be applied in a trademark infringement case, we said in McDonalds Corporation v. Macjoy
Fastfood Corporation17 that:
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can
be deduced because each case must be decided on its merits. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point.
The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an alleged trademark
infringement of jeans products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the
United States of America, claimed that Emerald Garments trademark of "STYLISTIC MR. LEE" that it used on its jeans
products was confusingly similar to the "LEE" trademark that H.D. Lee used on its own jeans products. Applying the
holistic test, the Court ruled that there was no infringement.
The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in
relation to jeans products. Accordingly, the jeans trademarks of Levis Philippines and Diaz must be considered as a whole
in determining the likelihood of confusion between them. The maong pants or jeans made and sold by Levis Philippines,
which included LEVIS 501, were very popular in the Philippines. The consuming public knew that the original LEVIS 501
jeans were under a foreign brand and quite expensive. Such jeans could be purchased only in malls or boutiques as
ready-to-wear items, and were not available in tailoring shops like those of Diazs as well as not acquired on a "made-toorder" basis. Under the circumstances, the consuming public could easily discern if the jeans were original or fake LEVIS
501, or were manufactured by other brands of jeans. Confusion and deception were remote, for, as the Court has
observed in Emerald Garments:
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your ordinary
household items like catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive.
Accordingly, the casual buyer is predisposed to be more cautious and discriminating in and would prefer to mull over his
purchase. Confusion and deception, then, is less likely. In Del Monte Corporation v. Court of Appeals, we noted that:
.... Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is
the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which
he pays a few centavos as he does in purchasing a more valuable thing. Expensive and valuable items are normally
bought only after deliberate, comparative and analytical investigation. But mass products, low priced articles in wide use,
and matters of everyday purchase requiring frequent replacement are bought by the casual consumer without great
care....
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk
for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable
and familiar with his preference and will not easily be distracted.

Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this
particular controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent
buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the "ordinary purchaser"
was defined as one "accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception of some persons in some measure acquainted with
an established design and desirous of purchasing the commodity with which that design has been associated . The test is
not found in the deception, or the possibility of deception, of the person who knows nothing about the design which has
been counterfeited, and who must be indifferent between that and the other. The simulation, in order to be objectionable,
must be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is familiar with the
article that he seeks to purchase.19
Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. His trademark
was visually and aurally different from the trademark "LEVI STRAUSS & CO" appearing on the patch of original jeans
under the trademark LEVIS 501. The word "LS" could not be confused as a derivative from "LEVI STRAUSS" by virtue of
the "LS" being connected to the word "TAILORING", thereby openly suggesting that the jeans bearing the trademark "LS
JEANS TAILORING" came or were bought from the tailoring shops of Diaz, not from the malls or boutiques selling original
LEVIS 501 jeans to the consuming public.
There were other remarkable differences between the two trademarks that the consuming public would easily perceive.
Diaz aptly noted such differences, as follows:
The prosecution also alleged that the accused copied the "two horse design" of the petitioner-private complainant but the
evidence will show that there was no such design in the seized jeans. Instead, what is shown is "buffalo design." Again,
a horse and a buffalo are two different animals which an ordinary customer can easily distinguish. x x x.
The prosecution further alleged that the red tab was copied by the accused. However, evidence will show that the red tab
used by the private complainant indicates the word "LEVIS" while that of the accused indicates the letters "LSJT" which
means LS JEANS TAILORING. Again, even an ordinary customer can distinguish the word LEVIS from the letters LSJT.
xxxx
In terms of classes of customers and channels of trade, the jeans products of the private complainant and the accused
cater to different classes of customers and flow through the different channels of trade. The customers of the private
complainant are mall goers belonging to class A and B market group while that of the accused are those who belong to
class D and E market who can only afford Php 300 for a pair of made-toorder pants. 20 x x x.
Moreover, based on the certificate issued by the Intellectual Property Office, "LS JEANS TAILORING" was a registered
trademark of Diaz. He had registered his trademark prior to the filing of the present cases. 21 The Intellectual Property
Office would certainly not have allowed the registration had Diazs trademark been confusingly similar with the registered
trademark for LEVIS 501 jeans.
Given the foregoing, it should be plain that there was no likelihood of confusion between the trademarks involved.
Thereby, the evidence of guilt did not satisfy the quantum of proof required for a criminal conviction, which is proof beyond
reasonable doubt. According to Section 2, Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not
mean such a degree of proof as, excluding possibility of error, produces absolute certainty. Moral certainty only is

required, or that degree of proof which produces conviction in an unprejudiced mind. Consequently, Diaz should be
acquitted of the charges.
WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of trademark charged in
Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for failure of the State to establish his guilt by proof beyond
reasonable doubt.
No pronouncement on costs of suit.
SO ORDERED.
LUCAS
Associate Justice
G.R. No. 185830

P.

BERSAMIN

June 5, 2013

ECOLE
DE
CUISINE
MANILLE
(CORDON
BLEU
OF
THE
vs.
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L., B.V., Respondents.

PHILIPPINES),

INC., Petitioner,

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 is the December 23, 2008 Decision2 of the Court of Appeals (CA) in CAG.R. SP No. 104672 which affirmed in toto the Intellectual Property Office (IPO) Director Generals April 21, 2008
Decision3 that declared respondent Renaud Cointreau & Cie (Cointreau) as the true and lawful owner of the mark "LE
CORDON BLEU & DEVICE" and thus, is entitled to register the same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the (now defunct) Bureau of
Patents, Trademarks, and Technology Transfer (BPTTT) of the Department of Trade and Industry a trademark application
for the mark "LE CORDON BLEU & DEVICE" for goods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the
International Classification of Goods and Services for the Purposes of Registrations of Marks ("Nice Classification")
(subject mark). The application was filed pursuant to Section 37 of Republic Act No. 166, as amended (R.A. No. 166), on
the basis of Home Registration No. 1,390,912, issued on November 25, 1986 in France. Bearing Serial No. 72264, such
application was published for opposition in the March-April 1993 issue of the BPTTT Gazette and released for circulation
on May 31, 1993.4
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition to the subject application, averring
that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE MANILLE," which it has been using since
1948 in cooking and other culinary activities, including in its restaurant business; and (b) it has earned immense and
invaluable goodwill such that Cointreaus use of the subject mark will actually create confusion, mistake, and deception to
the buying public as to the origin and sponsorship of the goods, and cause great and irreparable injury and damage to
Ecoles business reputation and goodwill as a senior user of the same. 5

On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the subject mark. It averred
that: (a) it has filed applications for the subject marks registration in various jurisdictions, including the Philippines; (b) Le
Cordon Bleu is a culinary school of worldwide acclaim which was established in Paris, France in 1895; (c) Le Cordon Bleu
was the first cooking school to have set the standard for the teaching of classical French cuisine and pastry making; and
(d) it has trained students from more than eighty (80) nationalities, including Ecoles directress, Ms. Lourdes L. Dayrit.
Thus, Cointreau concluded that Ecoles claim of being the exclusive owner of the subject mark is a fraudulent
misrepresentation.6
During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos. 60631 and 54352 for the
marks "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895 & DEVICE" for goods and services under
classes 21 and 41 of the Nice Classification, respectively.7
The Ruling of the Bureau of Legal Affairs
In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecoles opposition to the
subject mark, necessarily resulting in the rejection of Cointreaus application. 9 While noting the certificates of registration
obtained from other countries and other pertinent materials showing the use of the subject mark outside the Philippines,
the BLA did not find such evidence sufficient to establishCointreaus claim of prior use of the same in the Philippines. It
emphasized that the adoption and use of trademark must be in commerce in the Philippines and not abroad. It then
concluded that Cointreau has not established any proprietary right entitled to protection in the Philippine jurisdiction
because the law on trademarks rests upon the doctrine of nationality or territoriality.10
On the other hand, the BLA found that the subject mark, which was the predecessor of the mark "LE CORDON BLEU
MANILLE" has been known and used in the Philippines since 1948 and registered under the name "ECOLE DE CUISINE
MANILLE (THE CORDON BLEU OF THE PHILIPPINES), INC." on May 9, 1980. 11
Aggrieved, Cointreau filed an appeal with the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General reversed and set aside the BLAs decision, thus, granting
Cointreaus appeal and allowing the registration of the subject mark. 12 He held that while Section 2 of R.A. No. 166
requires actual use of the subject mark in commerce in the Philippines for at least two (2) months before the filing date of
the application, only the owner thereof has the right to register the same, explaining that the user of a mark in the
Philippines is not ipso facto its owner. Moreover, Section 2-A of the same law does not require actual use in the
Philippines to be able to acquire ownership of a mark.13
In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he considered Cointreaus
undisputed use of such mark since 1895 for its culinary school in Paris, France (in which petitioners own directress, Ms.
Lourdes L. Dayrit, had trained in 1977). Contrarily, he found that while Ecole may have prior use of the subject mark in the
Philippines since 1948, it failed to explain how it came up with such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject mark, rendering it beyond the mantle of protection of Section
4(d)14 of R.A. No. 166.15
Finding the IPO Director Generals reversal of the BLAs Decision unacceptable, Ecole filed a Petition for Review 16dated
June 7, 2008 with the CA.
Ruling of the CA

In its Decision dated December 23, 2008, the CA affirmed the IPO Director Generals Decision in toto. 17 It declared
Cointreau as the true and actual owner of the subject mark with a right to register the same in the Philippines under
Section 37 of R.A. No. 166, having registered such mark in its country of origin on November 25, 1986. 18
The CA likewise held that Cointreaus right to register the subject mark cannot be barred by Ecoles prior use thereof as
early as 1948 for its culinary school "LE CORDON BLEU MANILLE" in the Philippines because its appropriation of the
mark was done in bad faith. Further, Ecole had no certificate of registration that would put Cointreau on notice that the
former had appropriated or has been using the subject mark. In fact, its application for trademark registration for the same
which was just filed on February 24, 1992 is still pending with the IPO. 19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Courts resolution is whether the CA was correct in upholding the IPO Director Generals
ruling that Cointreau is the true and lawful owner of the subject mark and thus, entitled to have the same registered under
its name.
At this point, it should be noted that the instant case shall be resolved under the provisions of the old Trademark Law, R.A.
No. 166, which was the law in force at the time of Cointreaus application for registration of the subject mark.
The Courts Ruling
The petition is without merit.
In the petition, Ecole argues that it is the rightful owner of the subject mark, considering that it was the first entity that used
the same in the Philippines. Hence, it is the one entitled to its registration and not Cointreau.
Petitioners argument is untenable.
Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the owner thereof and must have actually
used the mark in commerce in the Philippines for two (2) months prior to the application for registration. Section 2-A 21 of
the same law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual
use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been
so appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Thus, as correctly mentioned by the CA, under R.A. No. 166, one may be an
owner of a mark due to its actual use but may not yet have the right to register such ownership here due to the owners
failure to use the same in the Philippines for two (2) months prior to registration. 22
Nevertheless, foreign marks which are not registered are still accorded protection against infringement and/or unfair
competition. At this point, it is worthy to emphasize that the Philippines and France, Cointreaus country of origin, are both
signatories to the Paris Convention for the Protection of Industrial Property (Paris Convention). 23Articles 6bis and 8 of the
Paris Convention state:
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to
refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation,

or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration
or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention
and used for identical or similar goods.1wphi1 These provisions shall also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or
not it forms part of a trademark. (Emphasis and underscoring supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to wit:
Section 37. Rights of foreign registrants. - Persons who are nationals of, domiciled in, or have a bona fide or effective
business or commercial establishment in any foreign country, which is a party to any international convention or treaty
relating to marks or trade-names, or the repression of unfair competition to which the Philippines may be a party, shall be
entitled to the benefits and subject to the provisions of this Act to the extent and under the conditions essential to give
effect to any such convention and treaties so long as the Philippines shall continue to be a party thereto, except as
provided in the following paragraphs of this section.
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.
xxxx
In view of the foregoing obligations under the Paris Convention, the Philippines is obligated to assure nationals of the
signatory-countries that they are afforded an effective protection against violation of their intellectual property rights in the
Philippines in the same way that their own countries are obligated to accord similar protection to Philippine
nationals.24 "Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris Convention,
whether or not the trade name forms part of a trademark, is protected "without the obligation of filing or registration." 25
In the instant case, it is undisputed that Cointreau has been using the subject mark in France since 1895, prior to Ecoles
averred first use of the same in the Philippines in 1948, of which the latter was fully aware thereof. In fact, Ecoles present
directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco Dayrit), had trained in Cointreaus Le Cordon Bleu
culinary school in Paris, France. Cointreau was likewise the first registrant of the said mark under various classes, both
abroad and in the Philippines, having secured Home Registration No. 1,390,912 dated November 25, 1986 from its
country of origin, as well as several trademark registrations in the Philippines. 26
On the other hand, Ecole has no certificate of registration over the subject mark but only a pending application covering
services limited to Class 41 of the Nice Classification, referring to the operation of a culinary school. Its application was
filed only on February 24, 1992, or after Cointreau filed its trademark application for goods and services falling under
different classes in 1990. Under the foregoing circumstances, even if Ecole was the first to use the mark in the Philippines,
it cannot be said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the same was already being used by Cointreau, albeit
abroad, of which Ecoles directress was fully aware, being an alumna of the latters culinary school in Paris, France.
Hence, Ecole cannot claim any tinge of ownership whatsoever over the subject mark as Cointreau is the true and lawful

owner thereof. As such, the IPO Director General and the CA were correct in declaring Cointreau as the true and lawful
owner of the subject mark and as such, is entitled to have the same registered under its name.
In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the Intellectual Property Code of
the Philippines, as amended, has already dispensed with the requirement of prior actual use at the time of
registration.27 Thus, there is more reason to allow the registration of the subject mark under the name of Cointreau as its
true and lawful owner.
As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the goods (or services) to
which it is affixed; to secure to him, who has been instrumental in bringing into the market a superior article of
merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent
fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his
product."28 As such, courts will protect trade names or marks, although not registered or properly selected as trademarks,
on the broad ground of enforcing justice and protecting one in the fruits of his toil. 29
WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008 Decision of the Court of Appeals in CA-G.R.
SP No. 104672 is hereby AFFIRMED in toto.
SO ORDERED.
ESTELA
Associate Justice
G.R. No. 192294

M.

PERLAS-BERNABE

November 21, 2012

GREAT
WHITE
vs.
DANILO M. CARALDE, JR., Respondent.

SHARK

ENTERPRISES,

INC., Petitioner,

DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the December 14, 2009
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 105787, which reversed and set aside the October 6, 2008
Decision2 of the Director General of the Intellectual Property Office (IPO), and directed him to grant the application for the
mark "SHARK & LOGO" filed by respondent Danilo M. Caralde, Jr. (Caralde).
The Factual Antecedents
On July 31, 2002, Caralde filed before the Bureau of Legal Affairs (BLA), IPO a trademark application seeking to register
the mark "SHARK & LOGO" for his manufactured goods under Class 25, such as slippers, shoes and sandals. Petitioner
Great White Shark Enterprises, Inc. (Great White Shark), a foreign corporation domiciled in Florida, USA, opposed 3 the
application claiming to be the owner of the mark consisting of a representation of a shark in color, known as "GREG
NORMAN LOGO" (associated with apparel worn and promoted by Australian golfer Greg Norman). It alleged that, being a
world famous mark which is pending registration before the BLA since February 19, 2002, 4 the confusing similarity
between the two (2) marks is likely to deceive or confuse the purchasing public into believing that Caralde's goods are
produced by or originated from it, or are under its sponsorship, to its damage and prejudice.

In his Answer,5 Caralde explained that the subject marks are distinctively different from one another and easily
distinguishable. When compared, the only similarity in the marks is in the word "shark" alone, differing in other factors
such as appearance, style, shape, size, format, color, ideas counted by marks, and even in the goods carried by the
parties.
Pending the inter partes proceedings, Great White Sharks trademark application was granted and it was issued
Certificate of Registration No. 4-2002-001478 on October 23, 2006 for clothing, headgear and footwear, including socks,
shoes and its components.6
The Ruling of the BLA Director
On June 14, 2007, the BLA Director rendered a Decision 7 rejecting Caralde's application, ratiocinating, as follows:
Prominent in both competing marks is the illustration of a shark.1wphi1 The dominant feature in opposer's mark is the
illustration of a shark drawn plainly. On the other hand, the dominant feature in respondent's mark is a depiction of shark
shaded darkly, with its body designed in a way to contain the letters "A" and "R" with the tail suggestive of the letter "K."
Admittedly, there are some differences between the competing marks. Respondent's mark contains additional features
which are absent in opposer's mark. Their dominant features, i.e., that of an illustration of a shark, however, are of such
degree that the overall impression it create [sic] is that the two competing marks are at least strikingly similar to each
another [sic], hence, the likelihood of confusion of goods is likely to occur. x x x x
Moreover, the goods of the competing marks falls [sic] under the same Class 25. Opposer's mark GREG NORMAN
LOGO, which was applied for registration on February 19, 2002, pertains to clothing apparel particularly hats, shirts and
pants. Respondent, on the other hand, later applied for the registration of the mark SHARK & LOGO on July 3, 2002
(should be July 31, 2002) for footwear products particularly slippers, shoes, sandals. Clearly, the goods to which the
parties use their marks belong to the same class and are related to each other." 8 (Italics ours)
The BLA Director, however, found no merit in Great White Shark's claim that its mark was famous and well-known for
insufficiency of evidence.
The Ruling of the IPO Director General
On appeal, the IPO Director General affirmed 9 the final rejection of Caralde's application, ruling that the competing marks
are indeed confusingly similar. Great White Shark's mark is used in clothing and footwear, among others, while Caralde's
mark is used on similar goods like shoes and slippers. Moreover, Great White Shark was first in applying for registration of
the mark on February 19, 2002, followed by Caralde on July 31, 2002. Furthermore, Great White Sharks mark consisted
of an illustration of a shark while Caralde's mark had a composite figure forming a silhouette of a shark. Thus, as to
content, word, sound and meaning, both marks are similar, barring the registration of Caralde's mark under Section
123.1(d) of Republic Act No. 8293, otherwise known as the Intellectual Property Code (IP Code). Nonetheless, while
Great White Shark submitted evidence of the registration of its mark in several other countries, the IPO Director General
considered its mark as not well-known for failing to meet the other criteria laid down under Rule 102 10 of the Rules and
Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers.
The Ruling of the Court of Appeals
However, on petition for review, the CA reversed and set aside the foregoing Decision and directed the IPO to grant
Caralde's application for registration of the mark "SHARK & LOGO." The CA found no confusing similarity between the
subject marks notwithstanding that both contained the shape of a shark as their dominant feature. It observed that

Caralde's mark is more fanciful and colorful, and contains several elements which are easily distinguishable from that of
the Great White Shark. It further opined that considering their price disparity, there is no likelihood of confusion as they
travel in different channels of trade.11
Issues Before The Court
THE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENT'S MARK SUBJECT OF THE APPLICATION
BEING OPPOSED BY THE PETITIONER IS NOT CONFUSINGLY SIMILAR TO PETITIONER'S REGISTERED MARK
THE COURT OF APPEALS ERRED IN RULING THAT THE COST OF GOODS COULD NEGATE LIKELIHOOD OF
CONFUSION THE COURT OF APPEALS ERRED IN REVERSING THE PREVIOUS RESOLUTIONS OF THE
DIRECTOR GENERAL AND THE BLA12
The Court's Ruling
In the instant petition for review on certiorari, Great White Shark maintains that the two (2) competing marks are
confusingly similar in appearance, shape and color scheme because of the dominant feature of a shark which is likely to
deceive or cause confusion to the purchasing public, suggesting an intention on Caralde's part to pass-off his goods as
that of Great White Shark and to ride on its goodwill. This, notwithstanding the price difference, targets market and
channels of trade between the competing products. Hence, the CA erred in reversing the rulings of the IPO Director
General and the BLA Director who are the experts in the implementation of the IP Code.
The petition lacks merit.
A trademark device is susceptible to registration if it is crafted fancifully or arbitrarily and is capable of identifying and
distinguishing the goods of one manufacturer or seller from those of another. Apart from its commercial utility, the
benchmark of trademark registrability is distinctiveness. 13 Thus, a generic figure, as that of a shark in this case, if
employed and designed in a distinctive manner, can be a registrable trademark device, subject to the provisions of the IP
Code.
Corollarily, Section 123.1(d) of the IP Code provides that a mark cannot be registered if it is identical with a registered
mark belonging to a different proprietor with an earlier filing or priority date, with respect to the same or closely related
goods or services, or has a near resemblance to such mark as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion, case law has developed the Dominancy Test and the Holistic or
Totality Test. The Dominancy Test focuses on the similarity of the dominant features of the competing trademarks that
might cause confusion, mistake, and deception in the mind of the ordinary purchaser, and gives more consideration to the
aural and visual impressions created by the marks on the buyers of goods, giving little weight to factors like prices, quality,
sales outlets, and market segments. In contrast, the Holistic or Totality Test considers the entirety of the marks as applied
to the products, including the labels and packaging, and focuses not only on the predominant words but also on the other
features appearing on both labels to determine whether one is confusingly similar to the other 14 as to mislead the ordinary
purchaser. The "ordinary purchaser" refers to one "accustomed to buy, and therefore to some extent familiar with, the
goods in question."15
Irrespective of both tests, the Court finds no confusing similarity between the subject marks. While both marks use the
shape of a shark, the Court noted distinct visual and aural differences between them. In Great White Shark's "GREG
NORMAN LOGO," there is an outline of a shark formed with the use of green, yellow, blue and red 16lines/strokes, to wit:

In contrast, the shark in Caralde's "SHARK & LOGO" mark 17 is illustrated in l et t er s outlined in the form of a shark with
the letter "S" forming the head, the letter "H" forming the fins, the letters "A" and "R" forming the body, and the letter "K"
forming the tail. In addition, the latter mark includes several more elements such as the word "SHARK" in a different font
underneath the shark outline, layers of waves, and a tree on the right side, and liberally used the color blue with some
parts in red, yellow, green and white.18 The whole design is enclosed in an elliptical shape with two linings, thus:

As may be gleaned from the foregoing, the visual dissimilarities between the two (2) marks are evident and significant,
negating the possibility of confusion in the minds of the ordinary purchaser, especially considering the distinct aural
difference between the marks.
Finally, there being no confusing similarity between the subject marks, the matter of whether Great White Sharks mark
has gained recognition and acquired becomes unnecessary.19 Besides, both the BLA Director and the IPO Director
General have ruled that Great White Shark failed to meet the criteria under Rule 102 of the Rules and Regulations on
Trademarks, Service Marks, Trade Names and Marked or Stamped Containers to establish that its mark is well-known,
and the latter failed to show otherwise.
WHEREFORE, the Court resolves to DENY the instant petition and AFFIRM the assailed December 14, 2009 Decision of
the Court of Appeals (CA) for failure to show that the CA committed reversible error in setting aside the Decision of the
IPO Director General and allowing the registration of the mark "SHARK & LOGO" by respondent Danilo M. Caralde, Jr.
SO ORDERED.
ESTELA
Associate Justice
G.R. No. L-75420 November 15, 1991

M.

PERLAS-BERNABE

KABUSHI
KAISHA
ISETAN,
also
known
and
trading
as
ISETAN
CO.,
LTD., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS, and ISETANN DEPARTMENT STORE,
INC., respondents.

GUTIERREZ, JR., J.:p

This is a petition for review on certiorari which seeks to set aside - (1) the decision of the Court of Appeals dated June 2,
1986 in AC-G.R. SP No. 008873 entitled "Kabushi Kaisha Isetan, also known and trading as Isetan Company Limited v.
Isetann Department Store, Inc." dismissing the petitioner's appeal from the decision of the Director of Patents; and (2) the
Resolution dated July 11, 1986 denying the petitioner's motion for reconsideration.
As gathered from the records, the facts are as follows:
Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing under the laws of Japan with business
address at 14-1 Shinjuku, 3-Chrome, Shinjuku, Tokyo, Japan. It is the owner of the trademark "Isetan" and the "Young
Leaves Design".
The petitioner alleges that it first used the trademark Isetan on November 5, 1936. It states that the trademark is a
combination of "Ise" taken from "Iseya" the first name of the rice dealer in Kondo, Tokyo in which the establishment was
first located and "Tan" which was taken from "Tanji Kosuge the First". The petitioner claims to have expanded its line of
business internationally from 1936 to 1974. The trademark "Isetan" and "Young Leaves Design" were registered in Japan
covering more than 34 classes of goods. On October 3, 1983, the petitioner applied for the registration of "Isetan" and
"Young Leaves Design" with the Philippine Patent Office under Permanent Serial Nos. 52422 and 52423 respectively.
(Rollo, p. 43)
Private respondent, Isetann Department Store, on the other hand, is a domestic corporation organized and existing under
the laws of the Philippines with business address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines.
It claims that it used the word "Isetann" as part of its corporated name and on its products particularly on shirts in Joymart
Department Store sometime in January 1979. The suffix "Tann" means an altar, the place of offering in Chinese and this
was adopted to harmonize the corporate name and the corporate logo of two hands in cup that symbolizes the act of
offering to the Supreme Being for business blessing.
On May 30, 1980 and May 20, 1980, the private respondent registered "Isetann Department Store, Inc." and Isetann and
Flower Design in the Philippine Patent Office under SR. Reg. No. 4701 and 4714, respectively, as well as with the Bureau
of Domestic Trade under Certificate of Registration No. 32020. (Rollo, pp. 43-44)
On November 28, 1980, the petitioner filed with the Phil. Patent Office two (2) petitions for the cancellation of Certificates
of Supplemental Registration Nos. SR-4714 and SR-4701 stating among others that:
. . . except for the additional letter "N" in the word "Isetan", the mark registered by the registrant is exactly
the same as the trademark ISETAN owned by the petitioner and that the young leaves registered by the
registrant is exactly the same as the young leaves design owned by the petitioner.

The petitioner further alleged that private respondent's act of registering a trademark which is exactly the same as its
trademark and adopting a corporate name similar to that of the petitioner were with the illegal and immoral intention of
cashing in on the long established goodwill and popularity of the petitioner's reputation, thereby causing great and
irreparable injury and damage to it (Rollo, p. 521). It argued that both the petitioner's and respondent's goods move in the
same channels of trade, and ordinary people will be misled to believe that the products of the private respondent
originated or emanated from, are associated with, or are manufactured or sold, or sponsored by the petitioner by reason
of the use of the challenged trademark.
The petitioner also invoked the Convention of Paris of March 20, 1883 for the Protection of Industrial Property of which the
Philippines and Japan are both members. The petitioner stressed that the Philippines' adherence to the Paris Convention
committed to the government to the protection of trademarks belonging not only to Filipino citizens but also to those
belonging to nationals of other member countries who may seek protection in the Philippines. (Rollo, p. 522)
The petition was docketed as Inter Partes Cases Nos. 1460 and 1461 (Rollo, p. 514)
Meanwhile, the petitioner also filed with the Securities and Exchange Commission (SEC) a petition to cancel the mark
"ISETAN" as part of the registered corporate name of Isetann Department Store, Inc. which petition was docketed as SEC
Case No. 2051 (Rollo, p. 524) On May 17, 1985, this petition was denied in a decision rendered by SEC's Hearing Officer,
Atty. Joaquin C. Garaygay.
On appeal, the Commission reversed the decision of the Hearing Officer on February 25, 1986. It directed the private
respondent to amend its Articles of Incorporation within 30 days from finality of the decision.
On April 15, 1986, however, respondent Isetann Department Store filed a motion for reconsideration. (Rollo, pp. 325-353).
And on September 10, 1987, the Commission reversed its earlier decision dated February 25, 1986 thereby affirming the
decision rendered by the Hearing Officer on May 17, 1985. The Commission stated that since the petitioner's trademark
and tradename have never been used in commerce on the petitioner's products marketed in the Philippines, the
trademark or tradename have not acquired a reputation and goodwill deserving of protection from usurpation by local
competitors. (Rollo, p. 392).
This SEC decision which denied and dismissed the petition to cancel was submitted to the Director of Patents as part of
the evidence for the private respondent.
On January 24, 1986, the Director of Patents after notice and hearing rendered a joint decision in Inter Partes Cases Nos.
1460 and 1461, the dispositive portion of which reads:
WHEREFORE, all the foregoing considered, this Office is constrained to hold that the herein Petitioner
has not successfully made out a case of cancellation. Accordingly, Inter Partes Cases Nos. 1460 and
1461 are, as they are hereby, DISMISSED. Hence, Respondent's Certificate of Supplemental Registration
No. 4714 issued on May 20, 1980 covering the tradename "ISETANN DEPT. STORE, INC. & FLOWER
DESIGN" are, as they are hereby, ordered to remain in full force and effect for the duration of their term
unless sooner or later terminated by law.
The corresponding application for registration in the Principal Register of the Trademark and of the
tradename aforesaid are hereby given due course.
Let the records of these cases be transmitted to the Trademark Examining Division for appropriate action
in accordance with this Decision.

On February 21, 1986, Isetan Company Limited moved for the reconsideration of said decision but the motion was denied
on April 2, 1986 (Rollo, pp. 355-359).
From this adverse decision of the Director of Patents, the petitioner appealed to the Intermediate Appellate Court (now
Court of Appeals).
On June 2, 1986, the IAC dismissed the appeal on the ground that it was filed out of time.
The petitioner's motion for reconsideration was likewise denied in a resolution dated July 11, 1986.
Hence, this petition.
Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on the ground that it was filed fourteen (14)
days late. However, on motion for reconsideration, whereby the petitioner appealed to this Court on equitable grounds
stating that it has a strong and meritorious case, the petition was given due course in a resolution dated May 19, 1988 to
enable us to examine more fully any possible denial of substantive justice. The parties were then required to submit their
memoranda. (Rollo, pp. 2-28; Resolution, pp. 271; 453)
After carefully considering the records of this case, we reiterate our July 8, 1987 resolution dismissing the petition. There
are no compelling equitable considerations which call for the application of the rule enunciated in Serrano v. Court of
Appeals (139 SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148 [1990]) that
considerations of substantial justice manifest in the petition may relax the stringent application of technical rules so as not
to defeat an exceptionally meritorious petition.
There is no dispute and the petitioner does not question the fact that the appeal was filed out of time.
Not only was the appeal filed late in the Court of Appeals, the petition for review was also filed late with us. In common
parlance, the petitioner's case is "twice dead" and may no longer be reviewed.
The Court of Appeals correctly rejected the appeal on the sole ground of late filing when it ruled:
Perfection of an appeal within the time provided by law is jurisdictional, and failure to observe the period
is fatal.
The decision sought to be appealed is one rendered by the Philippine Patent Office, a quasi-judicialbody.
Consequently, under Section 23(c) of the Interim Rules of Court, the appeal shall be governed by the
provisions of Republic Act No. 5434, which provides in its Section 2;
Sec. 2. Appeals to Court of Appeals. - Appeals to the Court of Appeals shall be filed within fifteen (15)
days from notice of the ruling, award, order, decision or judgment or from the date of its last publication, if
publication is required by law for its effectivity; or in case a motion for reconsideration is filed within that
period of fifteen (15) days, then within ten (10) days from notice or publication, when required by law, of
the resolution denying the motion for reconsideration. No more than one motion for reconsideration shall
be allowed any party. If no appeal is filed within the periods here fixed, the ruling, award, order, decision
or judgment shall become final and may be executed as provided by existing law.

Attention is invited to that portion of Section 2 which states that in case a motion for reconsideration is
filed, an appeal should be filed within ten (10) days from notice of the resolution denying the motion for
reconsideration.
The petitioner received a copy of the Court of Appeals' resolution denying and received by us on August 8, 1986, its
motion for reconsideration on July 17, 1986. It had only up to August 1, 1986 to file a petition for review with us. The
present petition was posted on August 2, 1986. There is no question that it was, again, filed late because the petitioner
filed an ex-parte motion for admission explaining the delay.
The decision of the Patent Office has long become final and executory. So has the Court of Appeal decision.
Regarding the petitioner's claims of substantial justice which led us to give due course, we decline to disturb the rulings of
the Patent Office and the Court of Appeals.
A fundamental principle of Philippine Trademark Law is that actual use in commerce in the Philippines is a pre-requisite to
the acquisition of ownership over a trademark or a tradename.
The trademark Law, Republic Act No. 166, as amended, under which this case heard and decided provides:
SEC. 2. What are registrable.- Trademark, tradenames and service marks owned by persons,
corporation, partnerships or associations domiciled in the Philippines and by persons, corporations,
partnerships or associations domicided in any foreign country may be registered in accordance with the
provisions of this Act: Provided, That said trademarks, tradenames, or service marks are actually in use in
commerce and services not less than two months in the Philippines before the time the applications for
registration are filed: And provided, further, That the country of which the applicant for registration is a
citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is officially
certified, with a certified true copy of the foreign law translated into the English language, by the
government of the foreign country to the Government of the Republic of the Philippines. (As amended by
R.A. No. 865).
SEC. 2-A. Ownership of trademarks, tradenames and service marks; how acquired. - Anyone who lawfully
produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any
lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service
rendered, may appropriate to his exclusive use a trademark, a tradename, or a service mark not so
appropriated by another, to distinguish his merchandise, business or service from the merchandise,
business or service of others. The ownership or possession of a trademark, tradename, service mark,
heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the
same manner and to the same extent as are other property rights known to the law. (As amended by R.A.
No. 638)"
These provisions have been interpreted in Sterling
Actiengesellschaft (27 SCRA 1214 [1969]) in this way:

Products

International,

Inc.

v.

Farbenfabriken

Bayer

A rule widely accepted and firmly entrenched because it has come down through the years is that actual
use in commerce or business is a prerequisite to the acquisition of the right of ownership over a
trademark.
xxx xxx xxx

... Adoption alone of a trademark would not give exclusive right thereto. Such right grows out of their
actual use. Adoption is not use. One way make advertisements, issue circulars, give out price lists on
certain goods; but these alone would not give exclusive right of use.For trademark is a creation of use.
The underlying reason for all these is that purchasers have come to understand the mark as indicating the
origin of the wares. Flowing from this is the trader's right to protection in the trade he has built up and the
goodwill he has accumulated from use of the trademark. ...
In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it in commerce.
We ruled in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]):
3. The Trademark Law is very clear. It requires actual commercial use of the mark prior to its
registration. - There is no dispute that respondent corporation was the first registrant, yet it failed to fully
substantiate its claim that it used in trade or business in the Philippines the subject mark; it did not
present proof to invest it with exclusive, continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The invoices (Exhibits 7, 7-a, and 8-b) submitted
by respondent which were dated way back in 1957 show that the zippers sent to the Philippines were to
be used as "samples" and "of no commercial value". The evidence for respondent must be clear, definite
and free from incosistencies. (Sy Ching v. Gaw Lui. 44 SCRA 148-149) "Samples" are not for sale and
therefore, the fact of exporting them to the Philippines cannot be considered to be equivalent to the "use"
contemplated by the law. Respondent did not expect income from such "samples". "There were no
receipts to establish sale, and no proof were presented to show that they were subsequently sold in the
Philippines." (Pagasa Industrial Corp. v. Court of Appeals, 118 SCRA 526 [1982]; Emphasis Supplied)
The records show that the petitioner has never conducted any business in the Philippines. It has never promoted its
tradename or trademark in the Philippines. It has absolutely no business goodwill in the Philippines. It is unknown to
Filipinos except the very few who may have noticed it while travelling abroad. It has never paid a single centavo of tax to
the Philippine government. Under the law, it has no right to the remedy it seeks.
There can be no question from the records that the petitioner has never used its tradename or trademark in the
Philippines.
The petitioner's witnesses, Mr. Mayumi Takayama and Mr. Hieoya Murakami, admitted that:
1) The petitioner's company is not licensed to do business in the Philippines;
2) The petitioner's trademark is not registered under Philippine law; and
3) The petitioner's trademark is not being used on products in trade, manufacture, or business in the Philippines.
It was also established from the testimony of Atty. Villasanta, petitioner's witness, that the petitioner has never engaged in
promotional activities in the Philippines to popularize its trademark because not being engaged in business in the
Philippines, there is no need for advertising. The claim of the petitioner that millions of dollars have been spent in
advertising the petitioner's products, refers to advertising in Japan or other foreign places. No promotional activities have
been undertaken in the Philippines, by the petitioner's own admission.
Any goodwill, reputation, or knowledge regarding the name Isetann is purely the work of the private respondent. Evidence
was introduced on the extensive promotional activities of the private respondent.

It might be pertinent at this point to stress that what is involved in this case is not so much a trademark as a tradename.
Isetann Department Store, Inc. is the name of a store and not of product sold in various parts of the country. This case
must be differentiated from cases involving products bearing such familiar names as "colgate", "Singer". "Toyota", or
"Sony" where the products are marketed widely in the Philippines. There is not product with the name "Isetann"
popularized with that brand name in the Philippines. Unless one goes to the store called Isetann in Manila, he would never
know what the name means. Similarly, until a Filipino buyer steps inside a store called "Isetan" in Tokyo or Hongkong, that
name would be completely alien to him. The records show that among Filipinos, the name cannot claim to be
internationally well-known.
The rule is that the findings of facts of the Director of Patents are conclusive on the Supreme Court, provided they are
supported by substantial evidence. (Chua Che v. Phil. Patent Office, 13 SCRA 67 [1965]; Chung Te v. Ng Kian Giab, 18
SCRA 747 [1966]; Marvex Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966]; Lim Kiah v. Kaynee, Co. 25
SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34 SCRA 570 [1970]).
The conclusions of the Director of Patents are likewise based on applicable law and jurisprudence:
What is to be secured from unfair competition in a given territory is the trade which one has in that
particular territory. There is where his business is carried on where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by infringement.
There is nothing new in what we now say. Plaintiff itself concedes (Brief for Plaintiff-Appellant, p. 88)
that the principle of territoriality of the Trademark Law has been recognized in the Philippines, citing
Ingenohl v. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the law of trademarks "rests upon the
doctrine of nationality or territoriality." (2 Callmann, Unfair Competition and Trademarks, 1945 ed., p.
1006) (Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellachaft, 27 SCRA 1214
[1969]; Emphasis supplied)
The mere origination or adoption of a particular tradename without actual use thereof in the market is insufficient to give
any exclusive right to its use (Johnson Mfg. Co. v. Leader Filling Stations Corp. 196 N.E. 852, 291 Mass. 394), even
though such adoption is publicly declared, such as by use of the name in advertisements, circulars, price lists, and on
signs and stationery. (Consumers Petrolum Co. v. Consumers Co. of ILL. 169 F 2d 153)
The Paris Convention for the Protection of Industrial Property does not automatically exclude all countries of the world
which have signed it from using a tradename which happens to be used in one country. To illustrate - If a taxicab or bus
company in a town in the United Kingdom or India happens to use the tradename "Rapid Transportation", it does not
necessarily follow that "Rapid" can no longer be registered in Uganda, Fiji, or the Philippines.
As stated by the Director of Patents Indeed, the Philippines is a signatory to this Treaty and, hence, we must honor our obligation thereunder
on matters concerning internationally known or well known marks. However, this Treaty provision clearly
indicated the conditions which must exist before any trademark owner can claim and be afforded rights
such as the Petitioner herein seeks and those conditions are that:
a) the mark must be internationally known or well known;
b) the subject of the right must be a trademark, not a patent or copyright or anything else;

c) the mark must be for use in the same or similar kinds of goods; and
d) the person claiming must be the owner of the mark (The Parties Convention Commentary on the Paris
Convention. Article by Dr. Bogach, Director General of the World Intellectual Property Organization,
Geneva, Switzerland, 1985)
The respondent registered its trademark in 1979. It has continuously used that name in commerce. It has established a
goodwill through extensive advertising. The people who buy at Isetann Store do so because of Isetann's efforts. There is
no showing that the Japanese firm's registration in Japan or Hongkong has any influence whatsoever on the Filipino
buying public.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.
Fernan, C.J., Paras and Bidin, JJ., concur.

Separate Opinions

PADILLA, J., separate opinion:

It appears that on 28 November 1980, petitioner filed with the Philippines Patent Office two (2) petitions for cancellation of
Certificates of Supplemental Registration Nos. SR-4717 and SR-4701, docketed therein as inter Partes Cases Nos. 1460
and 1461.
On 24 January 1986, the Director of Patents rendered a joint decision dismissing the petitions in the aforesaid cases.
Petitioner moved for reconsideration on 21 February 1986 but the motion was denied on 2 April 1986.
Petitioner appealed to the Intermediate Appellate Court (now Court of Appeals), the appeal docketed therein as AC-G.R.
SP NO. 08873. On 2 June 1986, the appellate court rendered a decision dismissing the appeal for having been filed out of
time. It held:
In the case at bar, appellant admits that it received on April 11, 1986, a copy of the Resolution dated April
2, 1986, denying its motion for reconsideration. Under the law, therefore, appellant had only up to April 21,
1986 within which to file its notice of appeal to this Court. Upon these premises, it becomes all but too
obvious that the notice of appeal which was filed only on May 5, 1986, was filed when the decision sought
to be appealed had already become final. The notice of appeal was in fact filed 24 days after receipt of
the Resolution denying appellant's motion for reconsideration, which period is beyong the original period
of 15 days provided for under Section 2 of Republic Act No. 5434 and, of course, also of the 15 days
provided under Batas Pambansa Bilang 129.

Petitioner moved for reconsideration but its motion was denied in the resolution of the Court of Appeals dated 11 July
1986.
Hence, the present petition for review on certiorari.
In Bello vs. Fernando, G.R. No. L-16970, 30 January 1962, 4 SCRA 135, the Court speaking thru Mr. Justice J.B.L. Reyes
held:
The right to appeal is not a natural right nor a part of due process; it is merely a statutory privilege, and
may be exercised onlu in the manner and in accordance with the provisions of the law (Aguila v. Navarro,
55 Phil, 898; Santiago v. Valenzuela, 78 Phil. 397) ...; and compliance with the (this) period for appeal is
considered absolutely indispensable for the prevention of needless delays and to the orderly and speedy
discharge of judicial business (Altavas Conlu v. C.A., L-14027, January 29, 1960), so that if said period is
not complied with, the judgment becomes final and executory and the appellate court does not acquire
jurisdiction over the appeal (Layda v. Legaspi, 38 Phil. 83; Pampolina v. Suiza, 12 Phil. 99; Caisip v.
Cabangon, L-14684, Aug. 26, 1960).
"Indeed, this Court had ruled, time and again, that compliance with the reglementary period for perfecting an appeal is not
merely mandatory, but jurisdictional." (Aguilar vs. Blanco, G.R. No. L-32392, 31 August 1988, 165 SCRA 180).
The perfection of an appeal within the reglementary period is not, therefore, a mere technicality but mandatory and
jurisdictional. Since petitioner's appeal to the Court of Appeals from the decision of the Director of Patents was admittedly
filed out of time, and there was no compelling reason given as to why the appeal was filed out of time, the appellate court
acquired no jurisdiction over said appeal and the decision of the Director of Patents had become final and executory. I
see, therefore, no need or reason to go into the merits of the abortive appeal.
The decision of the Court of Appeals dismissing the peititioner's appeal should, therefore, be AFFIRMED and the present
petition should be DISMISSED.

# Separate Opinions
PADILLA, J., separate opinion:
It appears that on 28 November 1980, petitioner filed with the Philippines Patent Office two (2) petitions for cancellation of
Certificates of Supplemental Registration Nos. SR-4717 and SR-4701, docketed therein as inter Partes Cases Nos. 1460
and 1461.
On 24 January 1986, the Director of Patents rendered a joint decision dismissing the petitions in the aforesaid cases.
Petitioner moved for reconsideration on 21 February 1986 but the motion was denied on 2 April 1986.
Petitioner appealed to the Intermediate Appellate Court (now Court of Appeals), the appeal docketed therein as AC-G.R.
SP NO. 08873. On 2 June 1986, the appellate court rendered a decision dismissing the appeal for having been filed out of
time. It held:

In the case at bar, appellant admits that it received on April 11, 1986, a copy of the Resolution dated April
2, 1986, denying its motion for reconsideration. Under the law, therefore, appellant had only up to April 21,
1986 within which to file its notice of appeal to this Court. Upon these premises, it becomes all but too
obvious that the notice of appeal which was filed only on May 5, 1986, was filed when the decision sought
to be appealed had already become final. The notice of appeal was in fact filed 24 days after receipt of
the Resolution denying appellant's motion for reconsideration, which period is beyong the original period
of 15 days provided for under Section 2 of Republic Act No. 5434 and, of course, also of the 15 days
provided under Batas Pambansa Bilang 129.
Petitioner moved for reconsideration but its motion was denied in the resolution of the Court of Appeals dated 11 July
1986.
Hence, the present petition for review on certiorari.
In Bello vs. Fernando, G.R. No. L-16970, 30 January 1962, 4 SCRA 135, the Court speaking thru Mr. Justice J.B.L. Reyes
held:
The right to appeal is not a natural right nor a part of due process; it is merely a statutory privilege, and
may be exercised onlu in the manner and in accordance with the provisions of the law (Aguila v. Navarro,
55 Phil, 898; Santiago v. Valenzuela, 78 Phil. 397) ...; and compliance with the (this) period for appeal is
considered absolutely indispensable for the prevention of needless delays and to the orderly and speedy
discharge of judicial business (Altavas Conlu v. C.A., L-14027, January 29, 1960), so that if said period is
not complied with, the judgment becomes final and executory and the appellate court does not acquire
jurisdiction over the appeal (Layda v. Legaspi, 38 Phil. 83; Pampolina v. Suiza, 12 Phil. 99; Caisip v.
Cabangon, L-14684, Aug. 26, 1960).
"Indeed, this Court had ruled, time and again, that compliance with the reglementary period for perfecting an appeal is not
merely mandatory, but jurisdictional." (Aguilar vs. Blanco, G.R. No. L-32392, 31 August 1988, 165 SCRA 180).
The perfection of an appeal within the reglementary period is not, therefore, a mere technicality but mandatory and
jurisdictional. Since petitioner's appeal to the Court of Appeals from the decision of the Director of Patents was admittedly
filed out of time, and there was no compelling reason given as to why the appeal was filed out of time, the appellate court
acquired no jurisdiction over said appeal and the decision of the Director of Patents had become final and executory. I
see, therefore, no need or reason to go into the merits of the abortive appeal.
The decision of the Court of Appeals dismissing the peititioner's appeal should, therefore, be AFFIRMED and the present
petition should be DISMISSED.
E.Y. INDUSTRIAL SALES, INC. G.R. No. 184850
and ENGRACIO YAP,
Petitioners, Present:
CORONA, C.J., Chairperson,
VELASCO, JR.,
- versus - LEONARDO - DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
SHEN DAR ELECTRICITY AND Promulgated:
MACHINERY CO., LTD.,
Respondent. October 20, 2010
x-----------------------------------------------------------------------------------------x

DECISION
VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21, 2008 Decision [1] and the October 6,
2008 Resolution[2] 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, 2007 [3] 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. 4-1999005393 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,
2006[4] 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.

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. 4-1997-121492 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. 4-1999-005393, 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. 4-1997-121492.[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]

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]

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. 4-1999005393 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.
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;

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. 2006157 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 duty-bound 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, 1995[34]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.
b.
c.

Business name and address;

Taxpayer Identification Number;
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
(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
(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.

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.
xxxx
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 thatactual 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.
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 x[38]

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 CAG.R. SP No. 99356 are hereby REVERSEDand 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.

MELBAROSE R. SASOT AND ALLANDALE R. SASOT, petitioners, vs. PEOPLE OF THE PHILIPPINES, THE
HONORABLE COURT OF OF APPEALS, andREBECCA G. SALVADOR, Presiding Judge, RTC, Branch 1,
Manila, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
The case subject of the present special civil action for certiorari is a criminal prosecution against petitioners for unfair
competition under Article 189 of the Revised Penal Code, filed before the Regional Trial Court (RTC) of Manila (Branch 1),
and docketed as Criminal Case No. 98-166147.[1]

Some time in May 1997, the National Bureau of Investigation (NBI) conducted an investigation pursuant to a
complaint by the NBA Properties, Inc., against petitioners for possible violation of Article 189 of the Revised Penal Code
on unfair competition. In its Report dated June 4, 1997, the NBI stated that NBA Properties, Inc., is a foreign corporation
organized under the laws of the United States of America, and is the registered owner of NBA trademarks and names of
NBA basketball teams such as USA BASKETBALL, CHICAGO BULLS, ORLANDO MAGIC, LOS ANGELES LAKERS,
ROCKETS, PHOENIX SUNS, BULLETS, PACERS, CHARLOTTE HORNETS, BLAZERS, DENVER NUGGETS,
SACRAMENTO KINGS, MIAMI HEAT, UTAH JAZZ, DETROIT PISTONS, MILWAUKEE BUCKS, SEATTLE SONICS,
TORONTO RAPTORS, ATLANTA HAWKS, CAVS, DALLAS MAVERICKS, MINNESOTA TIMBERWOLVES,and LOS
ANGELES CLIPPERS. These names are used on hosiery, footwear, t-shirts, sweatshirts, tank tops, pajamas, sport shirts,
and other garment products, which are allegedly registered with the Bureau of Patents, Trademarks and Technology
Transfer. The Report further stated that during the investigation, it was discovered that petitioners are engaged in the
manufacture, printing, sale, and distribution of counterfeit NBA garment products. Hence, it recommended petitioners
prosecution for unfair competition under Article 189 of the Revised Penal Code. [2]
In a Special Power of Attorney dated October 7, 1997, Rick Welts, as President of NBA Properties, Inc., constituted
the law firm of Ortega, Del Castillo, Bacorro, Odulio, Calma & Carbonell, as the companys attorney-in-fact, and to act for
and on behalf of the company, in the filing of criminal, civil and administrative complaints, among others. [3] The Special
Power of Attorney was notarized by Nicole Brown of New York County and certified by Norman Goodman, County Clerk
and Clerk of the Supreme Court of the State of New York. Consul Cecilia B. Rebong of the Consulate General of the
Philippines, New York, authenticated the certification. [4] Welts also executed a Complaint-Affidavit on February 12, 1998,
before Notary Public Nicole J. Brown of the State of New York. [5]
Thereafter, in a Resolution dated July 15, 1998, Prosecution Attorney Aileen Marie S. Gutierrez recommended the
filing of an Information against petitioners for violation of Article 189 of the Revised Penal Code. [6] The accusatory portion
of the Information reads:
That on or about May 9, 1997 and on dates prior thereto, in the City of Manila, Philippines, and within the jurisdiction of this
Honorable Court, above named accused ALLANDALE SASOT and MELBAROSE SASOT of Allandale Sportslines, Inc., did then
and there willfully, unlawfully and feloniously manufacture and sell various garment products bearing the appearance of NBA names,
symbols and trademarks, inducing the public to believe that the goods offered by them are those of NBA to the damage and prejudice
of the NBA Properties, Inc., the trademark owner of the NBA.
CONTRARY TO LAW.[7]
Before arraignment, petitioners filed a Motion to Quash the Information on the following grounds:
I. THAT THE FACTS CHARGED DO NOT CONSTITUTE AN OFFENSE
II. AND THIS HONORABLE COURT HAD NO JURISDICTION OVER THE OFFENSE CHARGED OR THE PERSON
OF THE ACCUSED[8]
In support of the foregoing, petitioners argue that the fiscal should have dismissed Weltss complaint because under
the rules, the complaint must be sworn to before the prosecutor and the copy on record appears to be only a fax
transmittal.[9] They also contend that complainant is a foreign corporation not doing business in the Philippines, and cannot
be protected by Philippine patent laws since it is not a registered patentee. Petitioners aver that they have been using the
business name ALLANDALE SPORTSLINE, INC. since 1972, and their designs are original and do not appear to be
similar to complainants, and they do not use complainants logo or design. [10]

The trial prosecutor of the RTC-Manila (Branch 1), Jaime M. Guray, filed his Comment/Opposition to the motion to
quash, stating that he has the original copy of the complaint, and that complainant has an attorney-in-fact to represent it.
Prosecutor Guray also contended that the State is entitled to prosecute the offense even without the participation of the
private offended party, as the crime charged is a public crime. [11]
The trial court sustained the prosecutions arguments and denied petitioners motion to quash in its Order dated March
5, 1999.[12]
Petitioners filed a special civil action for certiorari with the Court of Appeals (CA) docketed as CA-G.R. SP No. 52151
which was dismissed per its Decision dated January 26, 2000. [13]According to the CA, the petition is not the proper remedy
in assailing a denial of a motion to quash, and that the grounds raised therein should be raised during the trial of the case
on the merits.[14] The dispositive portion of the assailed Decision reads:
WHEREFORE, premises considered, the petition for certiorari is hereby DISMISSED. Respondent court is hereby ordered to conduct
further proceedings with dispatch in Criminal Case No. 98-166147.
SO ORDERED.[15]
Petitioners sought reconsideration of the Decision but this was denied by the CA. [16]
Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court, with issues raised as follows:
1. WHETHER A FOREIGN CORPORATION NOT ENGAGED AND LICENSE (sic) TO DO BUSINESS IN THE
PHILIPPINES MAY MAINTAIN A CAUSE OF ACTION FOR UNFAIR COMPETITION.
2. WHETHER AN OFFICER OF A FOREIGN CORPORATION MAY ACT IN BEHALF OF A CORPORATION
WITHOUT AUTHORITY FROM ITS BOARD OF DIRECTORS.
3. WHETHER A FOREIGN CORPORATION NOT ENGAGED IN BUSINESS AND WHOSE EMBLEM IT SOUGHT
TO PROTECT IS NOT IN ACTUAL USE IS ENTITLED TO THE PROTECTION OF THE PHILIPPINE LAW.
4. WHETHER THE RESPONDENT REGIONAL TRIAL COURT CORRECTLY ASSUMED JURISDICTION OVER
THE CASE AND THE PERSONS OF THE ACCUSED.
5. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION WHEN IT DISMISSED THE PETITION.[17]
Petitioners reiterate the argument that the complaint filed by Rick Welts of the NBA Properties, Inc., is defective and
should have been dismissed by the fiscal because it should have been personally sworn to by the complainant before the
investigating prosecutor. They also reiterate the claim that Welts failed to show any board resolution showing his authority
to institute any action in behalf of the company, and that the NBAs trademarks are not being actually used in the
Philippines, hence, they are of public dominion and cannot be protected by Philippine patent laws. Petitioners further
contend that they have not committed acts amounting to unfair competition. [18]
The Office of the Solicitor General appeared in behalf of the People, and filed its Amended Comment to the petition,
praying for its dismissal, arguing that the CA did not commit any grave abuse of discretion in dismissing the petition for
reasons stated in its Decision dated January 26, 2000. [19]

The petition must be denied.

The Court has consistently held that a special civil action for certiorari is not the proper remedy to assail the denial of
a motion to quash an information. [20] The proper procedure in such a case is for the accused to enter a plea, go to trial
without prejudice on his part to present the special defenses he had invoked in his motion to quash and, if after trial on the
merits, an adverse decision is rendered, to appeal therefrom in the manner authorized by law. [21] Thus, petitioners should
not have forthwith filed a special civil action for certiorari with the CA and instead, they should have gone to trial and
reiterate the special defenses contained in their motion to quash. There are no special or exceptional circumstances [22] in
the present case such that immediate resort to a filing of a petition for certiorari should be permitted. Clearly, the CA did
not commit any grave abuse of discretion in dismissing the petition.
Moreover, the Court does not find any justification for the quashal of the Information filed against petitioners.
For one, while petitioners raise in their motion to quash the grounds that the facts charged do not constitute an
offense and that the trial court has no jurisdiction over the offense charged or the person of the accused, [23] their
arguments focused on an alleged defect in the complaint filed before the fiscal, complainants capacity to sue and
petitioners exculpatory defenses against the crime of unfair competition.
Section 3, Rule 117 of the 1985 Rules of Criminal Procedure, which was then in force at the time the alleged criminal
acts were committed, enumerates the grounds for quashing an information, to wit:
a) That the facts charged do not constitute an offense;
b) That the court trying the case has no jurisdiction over the offense charged or the person of the accused;
c) That the officer who filed the information had no authority to do so;
d) That it does not conform substantially to the prescribed form;
e) That more than one offense is charged except in those cases in which existing laws prescribe a single punishment for
various offenses;
f) That the criminal action or liability has been extinguished;
g) That it contains averments which, if true, would constitute a legal excuse or justification; and
h) That the accused has been previously convicted or in jeopardy of being convicted, or acquitted of the offense charged.
Nowhere in the foregoing provision is there any mention of the defect in the complaint filed before the fiscal and the
complainants capacity to sue as grounds for a motion to quash.
For another, under Section 3, Rule 112 of the 1985 Rules of Criminal Procedure, a complaint is substantially
sufficient if it states the known address of the respondent, it is accompanied by complainants affidavit and his witnesses
and supporting documents, and the affidavits are sworn to before any fiscal, state prosecutor or government official
authorized to administer oath, or in their absence or unavailability, a notary public who must certify that he personally
examined the affiants and that he is satisfied that they voluntarily executed and understood their affidavits . All these have
been duly satisfied in the complaint filed before Prosecution Attorney Aileen Marie S. Gutierrez. It must be noted that even

the absence of an oath in the complaint does not necessarily render it invalid. [24] Want of oath is a mere defect of form,
which does not affect the substantial rights of the defendant on the merits. [25]
In this case, Weltss Complaint-Affidavit contains an acknowledgement by Notary Public Nicole Brown of the State of
New York that the same has been subscribed and sworn to before her on February 12, 1998, [26] duly authenticated by the
Philippine Consulate. While the copy on record of the complaint-affidavit appears to be merely a photocopy thereof,
Prosecution Attorney Gutierrez stated that complainants representative will present the authenticated notarized original in
court,[27] and Prosecutor Guray manifested that the original copy is already on hand. [28] It is apt to state at this point that the
prosecutor enjoys the legal presumption of regularity in the performance of his duties and functions, which in turn gives
his report the presumption of accuracy.[29]
Moreover, records show that there are other supporting documents from which the prosecutor based his
recommendation, to wit:
(1) The NBI Report dated June 4, 1997, containing an account of the investigation conducted from April 30, 1997 to May 9,
1997, and the subsequent search and seizure of several items from petitioners establishment; [30]
(2) The letter dated May 8, 1997 from the law firm of Ortega, Del Castillo, Bacorro, Odulio, Calma & Carbonell to the
NBI, seeking assistance in stopping the illegal manufacture, distribution and sale of fake products bearing the NBA
trademark, and in prosecuting the proprietors of aforesaid factory; [31] and
(3) The Joint Affidavit executed by Rechie D. Malicse and Dalisay P. Bal-ot of the Pinkerton Consulting Services (Phils.)
Inc., which was certified to by Prosecution Attorney Gutierrez, attesting to their findings that petitioners were found
to be manufacturing, printing, selling, and distributing counterfeit NBA garment products. [32]
Consequently, if the information is valid on its face, and there is no showing of manifest error, grave abuse of
discretion and prejudice on the part of public prosecutor, as in the present case, the trial court should respect such
determination.[33]
More importantly, the crime of Unfair Competition punishable under Article 189 of the Revised Penal Code [34] is a
public crime. It is essentially an act against the State and it is the latter which principally stands as the injured party. The
complainants capacity to sue in such case becomes immaterial.
In La Chemise Lacoste, S.A. vs. Fernandez,[35] a case akin to the present dispute, as it involved the crime of Unfair
Competition under Article 189 of the Revised Penal Code, and the quashal of search warrants issued against
manufacturers of garments bearing the same trademark as that of the petitioner, the Court succinctly ruled that:
More important is the nature of the case which led to this petition. What preceded this petition for certiorari was a letter-complaint
filed before the NBI charging Hemandas with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If
prosecution follows after the completion of the preliminary investigation being conducted by the Special Prosecutor the
information shall be in the name of the People of the Philippines and no longer the petitioner which is only an aggrieved party
since a criminal offense is essentially an act against the State. It is the latter which is principally the injured party although
there is a private right violated. Petitioner's capacity to sue would become, therefore, of not much significance in the main
case. We cannot allow a possible violator of our criminal statutes to escape prosecution upon a far-fetched contention that the
aggrieved party or victim of a crime has no standing to sue.
In upholding the right of the petitioner to maintain the present suit before our courts for unfair competition or infringement of
trademarks of a foreign corporation, we are moreover recognizing our duties and the rights of foreign states under the Paris

Convention for the Protection of Industrial Property to which the Philippines and France are parties. We are simply interpreting and
enforcing a solemn international commitment of the Philippines embodied in a multilateral treaty to which we are a party and which
we entered into because it is in our national interest to do so.[36] (Emphasis supplied)
Lastly, with regard to petitioners arguments that the NBA Properties, Inc., is not entitled to protection under Philippine
patent laws since it is not a registered patentee, that they have not committed acts amounting to unfair competition for the
reason that their designs are original and do not appear to be similar to complainants, and they do not use complainants
logo or design, the Court finds that these are matters of defense that are better ventilated and resolved during trial on the
merits of the case.
WHERFORE, the petition is DENIED for lack of merit. Let the records of this case be REMANDED to the Regional
Trial Court of Manila (Branch 24) where Criminal Case No. 98-166147 is presently assigned, for further proceedings with
reasonable dispatch.
SO ORDERED.
G.R. No. 75067 February 26, 1988
PUMA
SPORTSCHUHFABRIKEN
RUDOLF
DASSLER,
K.G., petitioner
vs.
THE INTERMEDIATE APPELLATE COURT and MIL-ORO MANUFACTURING CORPORATION, respondents.

GUTIERREZ, JR., J.:

This is a petition for review by way of certiorari of the Court of Appeals' decision which reversed the order of the Regional
Trial Court and dismissed the civil case filed by the petitioner on the grounds of litis pendentia and lack of legal capacity to
sue.
On July 25, 1985, the petitioner, a foreign corporation duly organized and existing under the laws of the Federal Republic
of Germany and the manufacturer and producer of "PUMA PRODUCTS," filed a complaint for infringement of patent or
trademark with a prayer for the issuance of a writ of preliminary injunction against the private respondent before the
Regional Trial Court of Makati.
Prior to the filing of the said civil suit, three cases were pending before the Philippine Patent Office, namely:
Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v. MIL-ORO MANUFACTURING
CORPORATION, respondent-applicant which is an opposition to the registration of petitioner's trademark
'PUMA and DEVICE' in the PRINCIPAL REGISTER;
Inter Partes Case No. 1675 similarly entitled, 'PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER,
K.G., petitioner, versus MIL-ORO MANUFACTURING CORPORATION, respondent-registrant,' which is a
case for the cancellation of the trademark registration of the petitioner; and
Inter Partes Case No. 1945 also between the same parties this time the petitioner praying for the
cancellation of private respondent's Certificate of Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51
-52, Rollo)

On July 31, 1985, the trial court issued a temporary restraining order, restraining the private respondent and the Director
of Patents from using the trademark "PUMA' or any reproduction, counterfeit copy or colorable imitation thereof, and to
withdraw from the market all products bearing the same trademark.
On August 9, 1985, the private respondent filed a motion to dismiss on the grounds that the petitioners' complaint states
no cause of action, petitioner has no legal personality to sue, and litis pendentia.
On August 19, 1985, the trial court denied the motion to dismiss and at the same time granted the petitioner's application
for a writ of injunction. The private respondents appealed to the Court of Appeals.
On June 23, 1986, the Court of Appeals reversed the order of the trial court and ordered the respondent judge to dismiss
the civil case filed by the petitioner.
In reversing the order of the trial court, the Court of Appeals ruled that the requisites of lis pendens as ground for the
motion to dismiss have been met. It said:
Obviously, the parties are Identical. They are the same protagonists. As to the second requisite, which is
Identity of rights and reliefs prayed for, both sides maintain that they are the rightful owners of the
trademark "PUMA" for socks and belts such that both parties seek the cancellation of the trademark of the
other (see prayer in private respondent's complaint, pp, 54-55, Rollo, Annex "A" to the Petition). Inevitably,
in either the lower court or in the Patent Office, there is a need to resolve the issue as to who is the
rightful owner of the TRADEMARK 'PUMA' for socks and belts.After all,the right to register a trademark
must be based on ownership thereof (Operators Inc. v. Director of Patents, L-17910, Oct. 29,1965,15
SCRA 147). Ownership of the trademark is an essential requisite to be proved by the applicant either in a
cancellation case or in a suit for infringement of trademark. The relief prayed for by the parties in Inter
Partes Cases Nos. 1259, 1675 and 1945 and Civil Case No. 11189 before respondent court seek for the
cancellation of usurper's trademark, and the right of the legal owner to have exclusive use of said
trademark. From the totality of the obtaining circumstances, the rights of the respective parties are
dependent upon the resolution of a single issue, that is, the rightful ownership of the trademark in
question. The second requisite needed to justify a motion to dismiss based on lis pendens is present.
As to the third requisite, the decisions and orders of administrative agencies rendered pursuant to their
quasi-judicial authority have upon their finality the character of res judicata (Brilliantes v. Castro, 99 Phil.
497). The rule which forbids the re-opening of a matter once judicially determined by competent authority
applies as well to judicial acts of public executive and administrative officers and boards acting within their
jurisdiction as to the judgments of Courts having general judicial powers (Brilliantes vs. Castro, supra). It
may be recalled that the resolution and determination of the issue on ownership are both within the
jurisdiction of the Director of Patents and the Regional Trial Court (Sec 25, RA 166). It would thus be
confusing for two (2) different forums to hear the same case and resolve a main and determinative issue
with both forums risking the possibility of arriving at different conclusions. In the construction of laws and
statutes regarding jurisdiction, one must interpret them in a complementary manner for it is presumed that
the legislature does not intend any absurdity in the laws it makes (Statutory Construction, Martin, p. 133).
Ms is precisely the reason why both decisions of the Director of Patents and Regional Trial Court are
appealable to the Intermediate Appellate Court (Sec. 9, BP 129), as both are co-equal in rank regarding
the cases that may fall within their jurisdiction.
The record reveals that on March 31, 1986, the Philippine Patent Office rendered a decision in Inter
Partes Cases Nos. 1259 and 1675 whereby it concluded that petitioner is the prior and actual adaptor of

the trademark 'PUMA and DEVICE used on sports socks and belts, and that MIL-ORO CORPORATION is
the rightful owner thereof. ... (pp. 6-7, CA decision, pp. 51-52, Rollo)
With regard to the petitioner's legal capacity to sue, the Court of Appeals likewise held that it had no such capacity
because it failed to allege reciprocity in its complaint:
As to private respondent's having no legal personality to sue, the record discloses that private respondent
was suing under Sec. 21-A of Republic Act No. 166, as amended (p. 50, Annex "A", Petition). This is the
exception to the general rule that a foreign corporation doing business in the Philippines must secure a
license to do business before said foreign corporation could maintain a court or administrative suit (Sec.
133, Corporation Code, in relation to Sec. 21-A, RA 638, as amended). However, there are some
conditions which must be met before that exception could be made to apply, namely: (a) the trademark of
the suing corporation must be registered in the Philippines, or that it be the assignee thereof: and (b) that
there exists a reciprocal treatment to Philippine Corporations either by law or convention by the country of
origin of the foreign corporation (Sec. 21-A Trademark Law). Petitioner recognizes that private respondent
is the holder of several certificates of registration, otherwise, the former would not have instituted
cancellation proceedings in the Patent's Office. Petitioner actually zeroes on the second requisite
provided by Section 21-A of the Trademark Law which is the private respondent's failure to allege
reciprocity in the complaint. ...
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further ruled:
Failure to allege reciprocity, it being an essential fact under the trademark law regarding its capacity to
sue before the Philippine courts, is fatal to the foreign corporations' cause. The Concurring Opinion of
Chief Justice Aquino on the same case is more emphatic when he said:
Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of its complaint for unfair
competition that its action 'is being filed under the provisions of Section 21-A of Republic
Act No. 166, as amended.' Respondent is bound by the allegation in its complaint. It
cannot sue under Section 21-A because it has not complied with the requirements hereof
that (1) its trademark Leviton has been registered with the Patent Office and (2) that it
should show that the State of New York grants to Philippine Corporations the privilege to
bring an action for unfair competition in that state. Respondent 'Leviton has to comply
with those requirements before it can be allowed to maintain an action for unfair
competition. (p. 9, CA decision). (p. 55, Rollo).
The Court of Appeals further ruled that in issuing the writ of preliminary injunction, the trial court committed grave abuse of
discretion because it deprived the private respondent of its day in court as the latter was not given the chance to present
its counter-evidence.
In this petition for review, the petitioner contends that the Court of appeals erred in holding that: (1) it had no legal capacity
to sue; (2) the doctrine of lis pendens is applicable as a ground for dismissing the case and (3) the writ of injunction was
improperly issued.
Petitioner maintains that it has substantially complied with the requirements of Section 21-A of Republic Act R.A. No. 166,
as amended. According to the petitioner, its complaint specifically alleged that it is not doing business in the Philippines
and is suing under the said Repulbic Act; that Section 21-A thereof provides that "the country of which the said corporation
or juristic person is a citizen, or in which it is domiciled, by treaty, convention or law, grants a similar privilege to corporate

or juristic persons of the Philippines" but does not mandatorily require that such reciprocity between the Federal Republic
of Germany and the Philippines be pleaded; that such reciprocity arrangement is embodied in and supplied by the Union
Convention for the Protection of Industrial Property Paris Convention) to which both the Philippines and Federal Republic
of Germany are signatories and that since the Paris 'Convention is a treaty which, pursuant to our Constitution, forms part
of the law of the land, our courts are bound to take judicial notice of such treaty, and, consequently, this fact need not be
averred in the complaint.
We agree.
In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled:
But even assuming the truth of the private respondents allegation that the petitioner failed to allege
material facto in its petition relative to capacity to sue, the petitioner may still maintain the present suit
against respondent Hernandes. As early as 1927, this Court was, and it still is, of the view that a foreign
corporation not doing business in the Philippines needs no license to sue before Philippine courts for
infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v.
Reyes (51 Phil. 11 5), this Court held that a foreign corporation which has never done any business in the
Philippines and which is unlicensed and unregistered to do business here, but is widely and favorably
known in the Philippines through the use therein of its products bearing its corporate and tradename, has
a legal right to maintain an action in the Philippines to restrain the residents and inhabitants thereof from
organizing a corporation therein bearing the same name as the foreign corporation, when it appears that
they have personal knowledge of the existence of such a foreign corporation, and it is apparent that the
purpose of the proposed domestic corporation is to deal and trade in the same goods as those of the
foreign corporation.
Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton, Co. (234 F. 2d 633), this Court further
said:
By the same token, the petitioner should be given the same treatment in the Philippines as we make
available to our own citizens. We are obligated to assure to nationals of 'countries of the Union' an
effective protection against unfair competition in the same way that they are obligated to similarly protect
Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20,1980 issued a memorandum addressed
to the Director of the Patents Office directing the latter -xxx xxx xxx
... [T]o 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, Gloria 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.

The memorandum is a clear manifestation of our avowed adherence to a policy of cooperation and amity
with an nations. It is not, as wrongly alleged by the private respondent, a personal policy of Minister Luis
Villafuerte which expires once he leaves the Ministry of trade. For a treaty or convention is not a mere
moral obligation to be enforced or not at the whims of an incumbent head of a Ministry. It creates a legally
binding obligation on the parties founded on the generally accepted principle of international law of pacta
sunt servanda which has been adopted as part of the law of our land. (Constitution, Art. II, Sec. 3). The
memorandum reminds the Director of Patents of his legal duty to obey both law and treaty. It must also be
obeyed. (at pp. 389-390, La Chemise Lacoste, S.A. v. Fernandez, supra).
In the case of of Cerverse Rubber Corporation V. Universal Rubber Products, Inc. (174 SCRA 165), we likewise reaafirmed our adherence to the Paris Convention:
The ruling in the aforecited case is in consonance with the Convention of Converse Rubber Corporation v.
Universal Rubber Products, Inc. (I 47 SCRA 165), we likewise re-affirmed our adherence to the Paris
Convention: the Union of Paris for the Protection of Industrial Property to which the Philippines became a
party on September 27, 1965. Article 8 thereof provides that 'a trade name [corporation name] shall be
protected in all the countries of the Union without the obligation of filing or registration, whether or not it
forms part of the trademark.'
The object of the Convention is to accord a national of a member nation extensive protection 'against
infringement and other types of unfair competition [Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F. 2d 633]."
(at p. 165)
The mandate of the aforementioned Convention finds implementation in Section 37 of RA No. 166,
otherwise known as the trademark Law:
Rights of Foreign Registrants. Persons who are nationals of, domiciled in, or have a bona fide or
effective business or commercial establishment in any foreign country, which is a party to an international
convention or treaty relating to marks or tradenames on the represssion of unfair competition to which the
Philippines may be party, shall be entitled to the benefits and subject to the provisions of this Act ...
Tradenames of persons described in the first paragraph of this section shall be protected without the
obligation of filing or registration whether or not they form part of marks.
We, therefore, hold that the petitioner had the legal capacity to file the action below.
Anent the issue of lis pendens as a ground for a motion to dismiss, the petitioner submits that the relief prayed for in its
civil action is different from the relief sought in the Inter Partes cases. More important, however, is the fact that for lis
pendens to be a valid ground for the dismissal of a case, the other case pending between the same parties and having
the same cause must be a court action. As we have held in Solancho v. Ramos (19 SCRA 848):
As noted above, the defendants contend that the pendency of an administrative between themselves and
the plaintiff before the Bureau of Lands is a sufficient ground to dismiss the action. On the other hand, the
plaintiff, believing that this ground as interposed by the defendants is a sufficient ground for the dismissal
of his complaint, filed a motion to withdraw his free patent application No. 16649.
This is not what is contemplated under the law because under section 1(d), Rule 16 (formerly Rule 8) of
the Rules of Court, one of the grounds for the dismissal of an action is that "there is another action

pending between the same parties for the same cause." Note that the Rule uses the phrase another
action. This phrase should be construed in line with Section 1 of Rule 2, which defines the word action,
thus-Action means an ordinary suit in a court of justice by which one party prosecutes another
for the enforcement or protection of alright, or the prevention or redress of a wrong. Every
other remedy is a special proceeding.
It is,therefore,very clear that the Bureau of Land is not covered under the aforementioned provisions of
the Rules of Court. (at p. 851)
Thus, the Court of Appeals likewise erred in holding that the requisites of lis pendens were present so as to justify the
dismissal of the case below.
As regards the propriety of the issuance of the writ of preliminary injunuction, the records show that herein private
respondent was given the opportunity to present its counter-evidence against the issuance thereof but it intentionally
refused to do so to be consistent with its theory that the civil case should be dismissed in the first place.
Considering the fact that "PUMA" is an internationally known brand name, it is pertinent to reiterate the directive to lower
courts, which equally applies to administrative agencies, found in La Chemise Lacoste, S.A. v. Fernandez, supra):
One final point. It is essential that we stress our concern at the seeming inability of law enforcement
officials to stem the tide of fake and counterfeit consumer items flooding the Philippine market or exported
abroad from our country. The greater victim is not so much the manufacturer whose product is being
faked but the Filipino consuming public and in the case of exportations, our image abroad. No less than
the President, in issuing Executive Order No. 913 dated October 7, 1983 to strengthen the powers of the
Minister of Trade and Industry for the protection of consumers, stated that, among other acts, the
dumping of substandard, imitated, hazardous, and cheap goods, the infringement of internationally known
tradenames and trademarks, and the unfair trade Practices of business firms have reached such
proportions as to constitute economic sabotage. We buy a kitchen appliance, a household tool, perfume,
face powder, other toilet articles, watches, brandy or whisky, and items of clothing like jeans, T-shirts,
neckties, etc. the list is quite lengthy pay good money relying on the brand name as guarantee of its
quality and genuine nature only to explode in bitter frustration and helpless anger because the purchased
item turns out to be a shoddy imitation, albeit a clever looking counterfeit, of the quality product. Judges
all over the country are well advised to remember that court processes should not be used as instruments
to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the hands of the law as it seeks
to protect the Filipino consuming public and frustrate executive and administrative implementation of
solemn commitments pursuant to international conventions and treaties. (at p. 403)
WHEREFORE, the appealed decision of the Court of Appeals dated June 23, 1986 is REVERSED and SET ASIDE and
the order of the Regional Trial Court of Makati is hereby Reinstated.
SO ORDERED.

TANDUAY DISTILLERS, INC.,

Petitioner,

G.R. NO. 164324

PRESENT:

- versus -

GINEBRA SAN MIGUEL, INC.,

RESPONDENT.

PUNO, C.J., CHAIRPERSON,

CARPIO,
CORONA,
LEONARDO-DE CASTRO, AND
BERSAMIN, JJ.
PROMULGATED:
AUGUST 14, 2009

X--------------------------------------------------X
DECISION
CARPIO, J.:
The Case
TANDUAY DISTILLERS, INC. (TANDUAY) FILED THIS PETITION FOR REVIEW ON CERTIORARI [1] ASSAILING THE
COURT OF APPEALS DECISION DATED 9 JANUARY 2004[2] AS WELL AS THE RESOLUTION DATED 2 JULY 2004[3] IN
CA-G.R. SP NO. 79655 DENYING THE MOTION FOR RECONSIDERATION. IN THE ASSAILED DECISION, THE COURT OF
APPEALS (CA) AFFIRMED THE REGIONAL TRIAL COURTS ORDERS [4] DATED 23 SEPTEMBER 2003 AND 17 OCTOBER
2003 WHICH RESPECTIVELY GRANTED GINEBRA SAN MIGUEL, INC.S (SAN MIGUEL) PRAYER FOR THE ISSUANCE
OF A TEMPORARY RESTRAINING ORDER (TRO) AND WRIT OF PRELIMINARY INJUNCTION. THE REGIONAL TRIAL
COURT OF MANDALUYONG CITY, BRANCH 214 (TRIAL COURT), ENJOINED TANDUAY FROM COMMITTING THE
ACTS COMPLAINED OF, AND, SPECIFICALLY, TO CEASE AND DESIST FROM MANUFACTURING, DISTRIBUTING,
SELLING, OFFERING FOR SALE, ADVERTISING, OR OTHERWISE USING IN COMMERCE THE MARK GINEBRA, AND
MANUFACTURING, PRODUCING, DISTRIBUTING, OR OTHERWISE DEALING IN GIN PRODUCTS WHICH HAVE THE
GENERAL APPEARANCE OF, AND WHICH ARE CONFUSINGLY SIMILAR WITH, SAN MIGUELS MARKS, BOTTLE
DESIGN, AND LABEL FOR ITS GIN PRODUCTS.[5]

THE FACTS

Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor business since 1854. In 2002,
Tanduay developed a new gin product distinguished by its sweet smell, smooth taste, and affordable price. Tanduay claims that it
engaged the services of an advertising firm to develop a brand name and a label for its new gin product. The brand name eventually
chosen was Ginebra Kapitan with the representation of a revolutionary Kapitan on horseback as the dominant feature of its label.
Tanduay points out that the label design of Ginebra Kapitan in terms of color scheme, size and arrangement of text, and other label

features were precisely selected to distinguish it from the leading gin brand in the Philippine market, Ginebra San Miguel. Tanduay
also states that the Ginebra Kapitan bottle uses a resealable twist cap to distinguish it from Ginebra San Miguel and other local gin
products with bottles which use the crown cap or tansan.[6]
AFTER FILING THE TRADEMARK APPLICATION FOR GINEBRA KAPITAN WITH THE INTELLECTUAL PROPERTY
OFFICE (IPO) AND AFTER SECURING THE APPROVAL OF THE PERMIT TO MANUFACTURE AND SELL GINEBRA
KAPITAN FROM THE BUREAU OF INTERNAL REVENUE, TANDUAY BEGAN SELLING GINEBRA KAPITAN IN
NORTHERN AND SOUTHERN LUZON AREAS IN MAY 2003. IN JUNE 2003, GINEBRA KAPITAN WAS ALSO LAUNCHED
IN METRO MANILA.[7]
ON 13 AUGUST 2003, TANDUAY RECEIVED A LETTER FROM SAN MIGUELS COUNSEL. THE LETTER INFORMED
TANDUAY TO IMMEDIATELY CEASE AND DESIST FROM USING THE MARK GINEBRA AND FROM COMMITTING
ACTS THAT VIOLATE SAN MIGUELS INTELLECTUAL PROPERTY RIGHTS.[8]
ON 15 AUGUST 2003, SAN MIGUEL FILED A COMPLAINT FOR TRADEMARK INFRINGEMENT, UNFAIR COMPETITION
AND DAMAGES, WITH APPLICATIONS FOR ISSUANCE OF TRO AND WRIT OF PRELIMINARY INJUNCTION AGAINST
TANDUAY BEFORE THE REGIONAL TRIAL COURT OF MANDALUYONG. THE CASE WAS RAFFLED TO BRANCH 214
AND DOCKETED AS IP CASE NO. MC-03-01 AND CIVIL CASE NO. MC-03-073.[9]
ON 25 AND 29 AUGUST AND 4 SEPTEMBER 2003, THE TRIAL COURT CONDUCTED HEARINGS ON THE TRO. SAN
MIGUEL SUBMITTED FIVE AFFIDAVITS, BUT ONLY ONE AFFIANT, MERCEDES ABAD, WAS PRESENTED FOR CROSSEXAMINATION BECAUSE THE TRIAL COURT RULED THAT SUCH EXAMINATION WOULD BE INCONSISTENT WITH
THE SUMMARY NATURE OF A TRO HEARING. [10] SAN MIGUEL SUBMITTED THE FOLLOWING PIECES OF EVIDENCE:
[11]

1. Affidavit of Mercedes Abad, President and Managing Director of the research firm NFO Trends, Inc. (NFO
Trends), to present, among others, market survey results which prove that gin drinkers associate the term Ginebra
with San Miguel, and that the consuming public is being misled that Ginebra Kapitan is a product of San Miguel;
2. MARKET SURVEY RESULTS CONDUCTED BY NFO TRENDS TO DETERMINE THE BRAND ASSOCIATIONS OF THE
MARK GINEBRA AND TO PROVE THAT THE CONSUMING PUBLIC IS CONFUSED AS TO THE MANUFACTURER OF
GINEBRA KAPITAN;
3. AFFIDAVIT OF RAMON CRUZ, SAN MIGUELS GROUP PRODUCT MANAGER, TO PROVE, AMONG OTHERS, THE
PRIOR RIGHT OF SAN MIGUEL TO THE MARK GINEBRA AS SHOWN IN VARIOUS APPLICATIONS FOR, AND
REGISTRATIONS OF, TRADEMARKS THAT CONTAIN THE MARK GINEBRA. HIS AFFIDAVIT INCLUDED DOCUMENTS
SHOWING THAT THE MARK GINEBRA HAS BEEN USED ON SAN MIGUELS GIN PRODUCTS SINCE 1834;
4. AFFIDAVITS OF LEOPOLDO GUANZON, JR., SAN MIGUELS TRADE AND PROMO MERCHANDISING HEAD FOR
NORTH LUZON AREA, AND JUDERICK CRESCINI, SAN MIGUELS DISTRICT SALES SUPERVISOR FOR SOUTH LUZONEAST AREA, TO PROVE, AMONG OTHERS, THAT TANDUAYS SALESMEN OR DISTRIBUTORS MISREPRESENT
GINEBRA KAPITAN AS SAN MIGUELS PRODUCT AND THAT NUMEROUS RETAILERS OF SAN MIGUELS GIN
PRODUCTS ARE CONFUSED AS TO THE MANUFACTURER OF GINEBRA KAPITAN; AND
5. AFFIDAVIT OF JOSE REGINALD PASCUAL, SAN MIGUELS DISTRICT SALES SUPERVISOR FOR THE NORTHGREATER MANILA AREA, TO PROVE, AMONG OTHERS, THAT GIN DRINKERS CONFUSE SAN MIGUEL TO BE THE
MANUFACTURER OF GINEBRA KAPITAN DUE TO THE USE OF THE DOMINANT FEATURE GINEBRA.
Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which motion was denied by the trial court. Tanduay presented
witnesses who affirmed their affidavits in open court, as follows:[12]

1. RAMONCITO BUGIA, GENERAL SERVICES MANAGER OF TANDUAY. ATTACHED TO HIS AFFIDAVIT

WERE VARIOUS CERTIFICATES OF REGISTRATION OF TRADEMARKS CONTAINING THE WORD
GINEBRA OBTAINED BY TANDUAY AND OTHER LIQUOR COMPANIES, TO PROVE THAT THE WORD
GINEBRA IS REQUIRED TO BE DISCLAIMED BY THE IPO. THE AFFIDAVIT ALSO ATTESTED THAT
THERE ARE OTHER LIQUOR COMPANIES USING THE WORD GINEBRA AS PART OF THEIR
TRADEMARKS FOR GIN PRODUCTS ASIDE FROM SAN MIGUEL AND TANDUAY.
2. HERBERT ROSALES, VICE PRESIDENT OF J. SALCEDO AND ASSOCIATES, INC., THE ADVERTISING AND
PROMOTIONS COMPANY HIRED BY TANDUAY TO DESIGN THE LABEL OF GINEBRA KAPITAN. HIS AFFIDAVIT
ATTESTED THAT THE LABEL WAS DESIGNED TO MAKE IT LOOK ABSOLUTELY DIFFERENT FROM THE GINEBRA
SAN MIGUEL LABEL.
ON 23 SEPTEMBER 2003, THE TRIAL COURT ISSUED A TRO PROHIBITING TANDUAY FROM MANUFACTURING,
SELLING AND ADVERTISING GINEBRA KAPITAN.[13] THE DISPOSITIVE PORTION READS IN PART:
WHEREFORE, the application for temporary restraining order is hereby GRANTED and made effective
immediately. Plaintiff is directed to post a bond of ONE MILLION PESOS (Php 1,000,000.00) within five (5) days
from issuance hereof, otherwise, this restraining order shall lose its efficacy. Accordingly, defendant Tanduay
Distillers, Inc., and all persons and agents acting for and in behalf are enjoined to cease and desist from
manufacturing, distributing, selling, offering for sale and/or advertising or otherwise using in commerce the mark
GINEBRA KAPITAN which employs, thereon, or in the wrappings, sundry items, cartons and packages thereof, the
mark GINEBRA as well as from using the bottle design and labels for its gin products during the effectivity of this
temporary restraining order unless a contrary order is issued by this Court.[14]

On 3 October 2003, Tanduay filed a petition for certiorari with the CA. [15] Despite Tanduays Urgent Motion to Defer Injunction
Hearing, the trial court continued to conduct hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show cause why no writ of
preliminary injunction should be issued. [16] On 17 October 2003, the trial court granted San Miguels application for the issuance of a
writ of preliminary injunction.[17] The dispositive portion of the Order reads:
WHEREFORE, the plaintiffs application for a writ of preliminary injunction is GRANTED. Upon plaintiffs filing of
an injunctive bond executed to the defendant in the amount of P20,000,000.00 (TWENTY MILLION) PESOS, let a
Writ of Preliminary Injunction issue enjoining the defendant, its employees, agents, representatives, dealers, retailers
or assigns, and any all persons acting on its behalf, from committing the acts complained of, and, specifically, to
cease and desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using in
commerce the mark GINEBRA, and manufacturing, producing, distributing or otherwise dealing in gin products
which have the general appearance of, and which are confusingly similar with, plaintiffs marks, bottle design and
label for its gin products.
SO ORDERED.[18]

On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the injunction order. On 10 November 2003, the CA
issued a TRO enjoining the trial court from implementing its injunction order and from further proceeding with the case. [19] On 23
December 2003, the CA issued a resolution directing the parties to appear for a hearing on 6 January 2004 to determine the need for
the issuance of a writ of preliminary injunction.[20]
ON 9 JANUARY 2004, THE CA RENDERED A DECISION DISMISSING TANDUAYS PETITION AND SUPPLEMENTAL
PETITION. ON 28 JANUARY 2004, TANDUAY MOVED FOR RECONSIDERATION WHICH WAS DENIED IN A
RESOLUTION DATED 2 JULY 2004.[21]
AGGRIEVED BY THE DECISION DISMISSING THE PETITION AND SUPPLEMENTAL PETITION AND BY THE
RESOLUTION DENYING THE MOTION FOR RECONSIDERATION, TANDUAY ELEVATED THE CASE BEFORE THIS
COURT.

THE TRIAL COURTS ORDERS

In the Order dated 23 September 2003, the trial court stated that during the hearings conducted on 25 and 29 August and on 4 and 11
September 2003, the following facts have been established:

1.

San Miguel has registered the trademark Ginebra San Miguel;

2. THERE IS A CLOSE RESEMBLANCE BETWEEN GINEBRA SAN MIGUEL AND GINEBRA

KAPITAN;
3. THE CLOSE SIMILARITY BETWEEN GINEBRA SAN MIGUEL AND GINEBRA KAPITAN MAY
GIVE RISE TO CONFUSION OF GOODS SINCE SAN MIGUEL AND TANDUAY ARE COMPETITORS
IN THE BUSINESS OF MANUFACTURING AND SELLING LIQUORS; AND
GINEBRA, WHICH IS A WELL-KNOWN TRADEMARK, WAS ADOPTED BY TANDUAY TO BENEFIT FROM THE
REPUTATION AND ADVERTISEMENT OF THE ORIGINATOR OF THE MARK GINEBRA SAN MIGUEL, AND TO CONVEY
TO THE PUBLIC THE IMPRESSION OF SOME SUPPOSED CONNECTION BETWEEN THE MANUFACTURER OF THE GIN
PRODUCT SOLD UNDER THE NAME GINEBRA SAN MIGUEL AND THE NEW GIN PRODUCT GINEBRA KAPITAN. [22]

Based on these facts, the trial court concluded that San Miguel had demonstrated a clear, positive, and existing right to be protected by
a TRO. Otherwise, San Miguel would suffer irreparable injury if infringement would not be enjoined. Hence, the trial court granted
the application for a TRO and set the hearing for preliminary injunction.[23]
IN THE ORDER DATED 17 OCTOBER 2003, THE TRIAL COURT GRANTED THE APPLICATION FOR A WRIT OF
PRELIMINARY INJUNCTION. THE TRIAL COURT RULED THAT WHILE A CORPORATION ACQUIRES A TRADE NAME

FOR ITS PRODUCT BY CHOICE, IT SHOULD NOT SELECT A NAME THAT IS CONFUSINGLY SIMILAR TO ANY OTHER
NAME ALREADY PROTECTED BY LAW OR IS PATENTLY DECEPTIVE, CONFUSING, OR CONTRARY TO EXISTING
LAW.[24]
THE TRIAL COURT POINTED OUT THAT SAN MIGUEL AND ITS PREDECESSORS HAVE CONTINUOUSLY USED
GINEBRA AS THE DOMINANT FEATURE OF ITS GIN PRODUCTS SINCE 1834. ON THE OTHER HAND, TANDUAY FILED
ITS TRADEMARK APPLICATION FOR GINEBRA KAPITAN ONLY ON 7 JANUARY 2003. THE TRIAL COURT DECLARED
THAT SAN MIGUEL IS THE PRIOR USER AND REGISTRANT OF GINEBRA WHICH HAS BECOME CLOSELY
ASSOCIATED TO ALL OF SAN MIGUELS GIN PRODUCTS, THEREBY GAINING POPULARITY AND GOODWILL FROM
SUCH NAME.[25]
THE TRIAL COURT NOTED THAT WHILE THE SUBJECT TRADEMARKS ARE NOT IDENTICAL, IT IS OBVIOUSLY
CLEAR THAT THE WORD GINEBRA IS THE DOMINANT FEATURE IN THE TRADEMARKS. THE TRIAL COURT STATED
THAT THERE IS A STRONG INDICATION THAT CONFUSION IS LIKELY TO OCCUR SINCE ONE WOULD INEVITABLY
BE LED TO CONCLUDE THAT BOTH PRODUCTS ARE AFFILIATED WITH SAN MIGUEL DUE TO THE DISTINCTIVE
MARK GINEBRA WHICH IS READILY IDENTIFIED WITH SAN MIGUEL. THE TRIAL COURT CONCLUDED THAT
ORDINARY PURCHASERS WOULD NOT EXAMINE THE LETTERINGS OR FEATURES PRINTED ON THE LABEL BUT
WOULD SIMPLY BE GUIDED BY THE PRESENCE OF THE DOMINANT MARK GINEBRA. ANY DIFFERENCE WOULD
PALE IN SIGNIFICANCE IN THE FACE OF EVIDENT SIMILARITIES IN THE DOMINANT FEATURES AND OVERALL
APPEARANCE OF THE PRODUCTS. THE TRIAL COURT EMPHASIZED THAT THE DETERMINATIVE FACTOR WAS
WHETHER THE USE OF SUCH MARK WOULD LIKELY CAUSE CONFUSION ON THE PART OF THE BUYING PUBLIC,
AND NOT WHETHER IT WOULD ACTUALLY CAUSE CONFUSION ON THE PART OF THE PURCHASERS. THUS,
TANDUAYS CHOICE OF GINEBRA AS PART OF THE TRADEMARK OF GINEBRA KAPITAN TENDED TO SHOW
TANDUAYS INTENTION TO RIDE ON THE POPULARITY AND ESTABLISHED GOODWILL OF GINEBRA SAN MIGUEL.
[26]

THE TRIAL COURT HELD THAT TO CONSTITUTE TRADEMARK INFRINGEMENT, IT WAS NOT NECESSARY THAT
EVERY WORD SHOULD BE APPROPRIATED; IT WAS SUFFICIENT THAT ENOUGH BE TAKEN TO DECEIVE THE PUBLIC
IN THE PURCHASE OF A PROTECTED ARTICLE.[27]
THE TRIAL COURT CONCEDED TO TANDUAYS ASSERTION THAT THE TERM GINEBRA IS A GENERIC WORD; HENCE,
IT IS NON-REGISTRABLE BECAUSE GENERIC WORDS ARE BY LAW FREE FOR ALL TO USE. HOWEVER, THE TRIAL
COURT RELIED ON THE PRINCIPLE THAT EVEN IF A WORD IS INCAPABLE OF APPROPRIATION AS A TRADEMARK,
THE WORD MAY STILL ACQUIRE A PROPRIETARY CONNOTATION THROUGH LONG AND EXCLUSIVE USE BY A
BUSINESS ENTITY WITH REFERENCE TO ITS PRODUCTS. THE PURCHASING PUBLIC WOULD ASSOCIATE THE
WORD TO THE PRODUCTS OF A BUSINESS ENTITY. THE WORD THUS ASSOCIATED WOULD BE ENTITLED TO
PROTECTION AGAINST INFRINGEMENT AND UNFAIR COMPETITION. THE TRIAL COURT HELD THAT THIS
PRINCIPLE COULD BE MADE TO APPLY TO THIS CASE BECAUSE SAN MIGUEL HAS SHOWN THAT IT HAS
ESTABLISHED GOODWILL OF CONSIDERABLE VALUE, SUCH THAT ITS GIN PRODUCTS HAVE ACQUIRED A WELLKNOWN REPUTATION AS JUST GINEBRA. IN ESSENCE, THE WORD GINEBRA HAS BECOME A POPULAR BY-WORD
AMONG THE CONSUMERS AND THEY HAD CLOSELY ASSOCIATED IT WITH SAN MIGUEL. [28]
ON THE OTHER HAND, THE TRIAL COURT HELD THAT TANDUAY FAILED TO SUBSTANTIATE ITS CLAIM AGAINST
THE ISSUANCE OF THE INJUNCTIVE RELIEF.[29]
THE RULING OF THE COURT OF APPEALS

In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the determination of whether
the TRO and the writ of preliminary injunction were issued by the trial court with grave abuse of discretion amounting to lack of
jurisdiction.[30]
TO WARRANT THE ISSUANCE OF A TRO, THE CA RULED THAT THE AFFIDAVITS OF SAN MIGUELS WITNESSES AND
THE FACT THAT THE REGISTERED TRADEMARK GINEBRA SAN MIGUEL EXISTS ARE ENOUGH TO MAKE A FINDING

THAT SAN MIGUEL HAS A CLEAR AND UNMISTAKABLE RIGHT TO PREVENT IRREPARABLE INJURY BECAUSE GIN
DRINKERS CONFUSE SAN MIGUEL TO BE THE MANUFACTURER OF GINEBRA KAPITAN.[31]
THE CA ENUMERATED THE REQUISITES FOR AN INJUNCTION: (1) THERE MUST BE A RIGHT IN ESSE OR THE
EXISTENCE OF A RIGHT TO BE PROTECTED AND (2) THE ACT AGAINST WHICH THE INJUNCTION IS TO BE
DIRECTED IS A VIOLATION OF SUCH RIGHT. THE CA STATED THAT THE TRADEMARKS GINEBRA SAN MIGUEL AND
GINEBRA KAPITAN ARE NOT IDENTICAL, BUT IT IS CLEAR THAT THE WORD GINEBRA IS THE DOMINANT FEATURE
IN BOTH TRADEMARKS. THERE WAS A STRONG INDICATION THAT CONFUSION WAS LIKELY TO OCCUR. ONE
WOULD BE LED TO CONCLUDE THAT BOTH PRODUCTS ARE AFFILIATED WITH SAN MIGUEL BECAUSE THE
DISTINCTIVE MARK GINEBRA IS IDENTIFIED WITH SAN MIGUEL. IT IS THE MARK WHICH DRAWS THE ATTENTION
OF THE BUYER AND LEADS HIM TO CONCLUDE THAT THE GOODS ORIGINATED FROM THE SAME
MANUFACTURER.[32]
THE CA OBSERVED THAT THE GIN PRODUCTS OF GINEBRA SAN MIGUEL AND GINEBRA KAPITAN POSSESS THE
SAME PHYSICAL ATTRIBUTES WITH REFERENCE TO THEIR FORM, COMPOSITION, TEXTURE, OR QUALITY. THE CA
UPHELD THE TRIAL COURTS RULING THAT SAN MIGUEL HAS SUFFICIENTLY ESTABLISHED ITS RIGHT TO PRIOR
USE AND REGISTRATION OF THE MARK GINEBRA AS A DOMINANT FEATURE OF ITS TRADEMARK. GINEBRA HAS
BEEN IDENTIFIED WITH SAN MIGUELS GOODS, THEREBY, IT ACQUIRED A RIGHT IN SUCH MARK, AND IF
ANOTHER INFRINGED THE TRADEMARK, SAN MIGUEL COULD INVOKE ITS PROPERTY RIGHT.[33]

The Issue

The central question for resolution is whether San Miguel is entitled to the writ of preliminary injunction granted by the trial court as
affirmed by the CA. For this reason, we shall deal only with the questioned writ and not with the merits of the case pending before the
trial court.

The Ruling of the Court

Clear and Unmistakable Right
SECTION 1, RULE 58 OF THE RULES OF COURT DEFINES A PRELIMINARY INJUNCTION AS AN ORDER GRANTED AT
ANY STAGE OF A PROCEEDING PRIOR TO THE JUDGMENT OR FINAL ORDER, REQUIRING A PARTY OR A COURT,
AGENCY, OR A PERSON TO REFRAIN FROM A PARTICULAR ACT OR ACTS.
A PRELIMINARY INJUNCTION IS A PROVISIONAL REMEDY FOR THE PROTECTION OF SUBSTANTIVE RIGHTS AND
INTERESTS. IT IS NOT A CAUSE OF ACTION IN ITSELF BUT MERELY AN ADJUNCT TO THE MAIN CASE. ITS
OBJECTIVE IS TO PREVENT A THREATENED OR CONTINUOUS IRREPARABLE INJURY TO SOME OF THE PARTIES
BEFORE THEIR CLAIMS CAN BE THOROUGHLY INVESTIGATED AND ADVISEDLY ADJUDICATED. IT IS RESORTED
TO ONLY WHEN THERE IS A PRESSING NEED TO AVOID INJURIOUS CONSEQUENCES WHICH CANNOT BE
REMEDIED UNDER ANY STANDARD COMPENSATION.[34]

Section 3, Rule 58 of the Rules of Court provides:

SECTION 3. GROUNDS FOR ISSUANCE OF A WRIT 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.
Before an injunctive writ is issued, it is essential that the following requisites are present: (1) the existence of a right to be protected
and (2) the acts against which the injunction is directed are violative of the right. The onus probandi is on the movant to show that the
invasion of the right sought to be protected is material and substantial, that the right of the movant is clear and unmistakable, and that
there is an urgent and paramount necessity for the writ to prevent serious damage. [35]
San Miguel claims that the requisites for the valid issuance of a writ of preliminary injunction were clearly established. The clear and
unmistakable right to the exclusive use of the mark Ginebra was proven through the continuous use of Ginebra in the manufacture,
distribution, marketing and sale of gin products throughout the Philippines since 1834. To the gin-drinking public, the word Ginebra
does not simply indicate a kind of beverage; it is now synonymous with San Miguels gin products. [36]

San Miguel contends that Ginebra can be appropriated as a trademark, and there was no error in the trial courts provisional ruling
based on the evidence on record. Assuming that Ginebra is a generic word which is proscribed to be registered as a trademark under
Section 123.1(h)[37] of Republic Act No. 8293 or the Intellectual Property Code (IP Code), [38] it can still be appropriated and registered
as a trademark under Section 123.1(j)[39] in relation to Section 123.2[40] of the IP Code, considering that Ginebra is also a mark which
designates the kind of goods produced by San Miguel.[41] San Miguel alleges that although Ginebra, the Spanish word for gin, may be
a term originally incapable of exclusive appropriation, jurisprudence dictates that the mark has become distinctive of San Miguels
products due to its substantially exclusive and continuous use as the dominant feature of San Miguels trademarks since 1834. Hence,
San Miguel is entitled to a finding that the mark is deemed to have acquired a secondary meaning. [42] San Miguel states that Tanduay
failed to present any evidence to disprove its claims; thus, there is no basis to set aside the grant of the TRO and writ of preliminary
injunction.[43]
San Miguel states that its disclaimer of the word Ginebra in some of its registered marks is without prejudice to, and did not affect, its
existing or future rights over Ginebra, especially since Ginebra has demonstrably become distinctive of San Miguels products. [44] San
Miguel adds that it did not disclaim Ginebra in all of its trademark registrations and applications like its registration for Ginebra Cruz
de Oro, Ginebra Ka Miguel, Ginebra San Miguel bottle, Ginebra San Miguel, and Barangay Ginebra. [45]

Tanduay asserts that not one of the requisites for the valid issuance of a preliminary injunction is present in this case. Tanduay argues
that San Miguel cannot claim the exclusive right to use the generic word Ginebra for its gin products based on its registration of the
composite marks Ginebra San Miguel, Ginebra S. Miguel 65, and La Tondea Cliq! Ginebra Mix, because in all of these registrations,
San Miguel disclaimed any exclusive right to use the non-registrable word Ginebra for gin products. [46] Tanduay explains that the word
Ginebra, which is disclaimed by San Miguel in all of its registered trademarks, is an unregistrable component of the composite mark
Ginebra San Miguel. Tanduay argues that this disclaimer further means that San Miguel does not have an exclusive right to the generic
word Ginebra.[47] Tanduay states that the word Ginebra does not indicate the source of the product, but it is merely descriptive of the
name of the product itself and not the manufacturer thereof.[48]
Tanduay submits that it has been producing gin products under the brand names Ginebra 65, Ginebra Matador, and Ginebra Toro
without any complaint from San Miguel. Tanduay alleges that San Miguel has not filed any complaint against other liquor companies
which use Ginebra as part of their brand names such as Ginebra Pinoy, a registered trademark of Webengton Distillery; Ginebra
Presidente and Ginebra Luzon as registered trademarks of Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra Santiago
as registered trademarks of Distileria Limtuaco & Co., Inc. [49] Tanduay claims that the existence of these products, the use and
registration of the word Ginebra by other companies as part of their trademarks belie San Miguels claim that it has been the exclusive
user of the trademark containing the word Ginebra since 1834.
Tanduay argues that before a court can issue a writ of preliminary injunction, it is imperative that San Miguel must establish a clear
and unmistakable right that is entitled to protection. San Miguels alleged exclusive right to use the generic word Ginebra is far from
clear and unmistakable. Tanduay claims that the injunction issued by the trial courtwas based on its premature conclusion that Ginebra
Kapitan infringes Ginebra San Miguel.[50]
In Levi Strauss & Co. v. Clinton Apparelle, Inc.,[51] we held:
While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial
court, this discretion must be exercised based upon the grounds and in the manner provided by law. The exercise of
discretion by the trial court in injunctive matters is generally not interfered with save in cases of manifest abuse. And
to determine whether there was grave abuse of discretion, a scrutiny must be made of the bases, if any, considered
by the trial court in granting injunctive relief. Be it stressed that injunction is the strong arm of equity which must be
issued with great caution and deliberation, and only in cases of great injury where there is no commensurate remedy
in damages.[52]

The CA upheld the trial courts ruling that San Miguel has sufficiently established its right to prior use and registration of the word
Ginebra as a dominant feature of its trademark.The CA ruled that based on San Miguels extensive, continuous, and substantially
exclusive use of the word Ginebra, it has become distinctive of San Miguels gin products; thus, a clear and unmistakable right was
shown.
We hold that the CA committed a reversible error. The issue in the main case is San Miguels right to the exclusive use of the mark
Ginebra. The two trademarks Ginebra San Miguel and Ginebra Kapitan apparently differ when taken as a whole, but according to San
Miguel, Tanduay appropriates the word Ginebra which is a dominant feature of San Miguels mark.
It is not evident whether San Miguel has the right to prevent other business entities from using the word Ginebra. It is not settled (1)
whether Ginebra is indeed the dominant feature of the trademarks, (2) whether it is a generic word that as a matter of law cannot be

appropriated, or (3) whether it is merely a descriptive word that may be appropriated based on the fact that it has acquired a secondary
meaning.
The issue that must be resolved by the trial court is whether a word like Ginebra can acquire a secondary meaning for gin products so
as to prohibit the use of the word Ginebra by other gin manufacturers or sellers. This boils down to whether the word Ginebra is a
generic mark that is incapable of appropriation by gin manufacturers.
In Asia Brewery, Inc. v. Court of Appeals,[53] the Court ruled that pale pilsen are generic words, pale being the actual name of the color
and pilsen being the type of beer, a light bohemian beer with a strong hops flavor that originated in Pilsen City in Czechoslovakia and
became famous in the Middle Ages, and hence incapable of appropriation by any beer manufacturer. [54] Moreover, Section 123.1(h) of
the IP Code states that a mark cannot be registered if it consists exclusively of signs that are generic for the goods or services that they
seek to identify.
In this case, a cloud of doubt exists over San Miguels exclusive right relating to the word Ginebra. San Miguels claim to the exclusive
use of the word Ginebra is clearly still in dispute because of Tanduays claim that it has, as others have, also registered the word
Ginebra for its gin products. This issue can be resolved only after a full-blown trial.

In Ong Ching Kian Chuan v. Court of Appeals,[55] we held that in the absence of proof of a legal right and the injury sustained by the
movant, the trial courts order granting the issuance of an injunctive writ will be set aside, for having been issued with grave abuse of
discretion.
We find that San Miguels right to injunctive relief has not been clearly and unmistakably demonstrated. The right to the exclusive use
of the word Ginebra has yet to be determined in the main case. The trial courts grant of the writ of preliminary injunction in favor of
San Miguel, despite the lack of a clear and unmistakable right on its part, constitutes grave abuse of discretion amounting to lack of
jurisdiction.
Prejudging the Merits of the Case

Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary injunction, has prejudged the merits of the case since
nothing is left to be decided by the trial court except the amount of damages to be awarded to San Miguel. [56]
San Miguel claims that neither the CA nor the trial court prejudged the merits of the case. San Miguel states that the CA did not rule
on the ultimate correctness of the trial courts evaluation and appreciation of the evidence before it, but merely found that the assailed
Orders of the trial court are supported by the evidence on record and that Tanduay was not denied due process. [57] San Miguel argues
that the CA only upheld the trial courts issuance of the TRO and writ of preliminary injunction upon a finding that there was sufficient
evidence on record, as well as legal authorities, to warrant the trial courts preliminary findings of fact. [58]
The instructive ruling in Manila International Airport Authority v. Court of Appeals[59] states:

Considering the far-reaching effects of a writ of preliminary injunction, the trial court should have exercised more
prudence and judiciousness in its issuance of the injunction order. We remind trial courts that while generally the
grant of a writ of preliminary injunction rests on the sound discretion of the court taking cognizance of the
case, extreme caution must be observed in the exercise of such discretion. The discretion of the court a quo to grant
an injunctive writ must be exercised based on the grounds and in the manner provided by law. Thus, the Court
declared inGarcia v. Burgos:
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. (Emphasis in the
original)

WE BELIEVE THAT THE ISSUED WRIT OF PRELIMINARY INJUNCTION, IF ALLOWED, DISPOSES OF THE CASE ON
THE MERITS AS IT EFFECTIVELY ENJOINS THE USE OF THE WORD GINEBRA WITHOUT THE BENEFIT OF A FULLBLOWN TRIAL. IN RIVAS V. SECURITIES AND EXCHANGE COMMISSION,[60]WE RULED THAT COURTS SHOULD AVOID
ISSUING A WRIT OF PRELIMINARY INJUNCTION WHICH WOULD IN EFFECT DISPOSE OF THE MAIN CASE WITHOUT
TRIAL. THE ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION HAD THE EFFECT OF GRANTING THE MAIN
PRAYER OF THE COMPLAINT SUCH THAT THERE IS PRACTICALLY NOTHING LEFT FOR THE TRIAL COURT TO TRY
EXCEPT THE PLAINTIFFS CLAIM FOR DAMAGES.

Irreparable Injury
TANDUAY POINTS OUT THAT THE SUPPOSED DAMAGES THAT SAN MIGUEL WILL SUFFER AS A RESULT OF
TANDUAYS INFRINGEMENT OR UNFAIR COMPETITION CANNOT BE CONSIDERED IRREPARABLE BECAUSE THE
DAMAGES ARE SUSCEPTIBLE OF MATHEMATICAL COMPUTATION. TANDUAY INVOKES SECTION 156.1 OF THE IP
CODE[61] AS THE BASIS FOR THE COMPUTATION OF DAMAGES.[62]
SAN MIGUEL AVERS THAT IT STANDS TO SUFFER IRREPARABLE INJURY IF THE MANUFACTURE AND SALE OF
TANDUAYS GINEBRA KAPITAN ARE NOT ENJOINED. SAN MIGUEL CLAIMS THAT THE ROUGH ESTIMATE OF THE
DAMAGES[63] IT WOULD INCUR IS SIMPLY A GUIDE FOR THE TRIAL COURT IN COMPUTING THE APPROPRIATE
DOCKET FEES. SAN MIGUEL ASSERTS THAT THE FULL EXTENT OF THE DAMAGE IT WOULD SUFFER IS DIFFICULT
TO MEASURE WITH ANY REASONABLE ACCURACY BECAUSE IT HAS INVESTED HUNDREDS OF MILLIONS OVER A
PERIOD OF 170 YEARS TO ESTABLISH GOODWILL AND REPUTATION NOW BEING ENJOYED BY THE GINEBRA SAN
MIGUEL MARK.[64] SAN MIGUEL REFUTES TANDUAYS CLAIM THAT THE INJURY WHICH SAN MIGUEL STANDS TO
SUFFER CAN BE MEASURED WITH REASONABLE ACCURACY AS THE LEGAL FORMULA TO DETERMINE SUCH
INJURY IS PROVIDED IN SECTION 156.1 OF THE IP CODE. SAN MIGUEL REASONS THAT IF TANDUAYS CLAIM IS
UPHELD, THEN THERE WOULD NEVER BE A PROPER OCCASION TO ISSUE A WRIT OF PRELIMINARY INJUNCTION

IN RELATION TO COMPLAINTS FOR INFRINGEMENT AND UNFAIR COMPETITION, AS THE INJURY WHICH THE
OWNER OF THE MARK SUFFERS, OR STANDS TO SUFFER, WILL ALWAYS BE SUSCEPTIBLE OF MATHEMATICAL
COMPUTATION.[65]
IN LEVI STRAUSS & CO. V. CLINTON APPARELLE, INC.,[66] THIS COURT UPHELD THE APPELLATE COURTS RULING
THAT THE DAMAGES LEVI STRAUSS & CO. HAD SUFFERED OR CONTINUES TO SUFFER MAY BE COMPENSATED IN
TERMS OF MONETARY CONSIDERATION. THIS COURT, QUOTINGGOVERNMENT SERVICE INSURANCE SYSTEM V.
FLORENDO,[67] HELD:
x x x a writ of injunction should never issue when an action for damages would adequately compensate the injuries caused. The very
foundation of the jurisdiction to issue the writ of injunction rests in the probability of irreparable injury, inadequacy of pecuniary
compensation and the prevention of the multiplicity of suits, and where facts are not shown to bring the case within these conditions,
the relief of injunction should be refused.

Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has failed to prove the
probability of irreparable injury which it will stand to suffer if the sale of Ginebra Kapitan is not enjoined. San Miguel has not
presented proof of damages incapable of pecuniary estimation. At most, San Miguel only claims that it has invested hundreds of
millions over a period of 170 years to establish goodwill and reputation now being enjoyed by the Ginebra San Miguel mark such that
the full extent of the damage cannot be measured with reasonable accuracy. Without the submission of proof that the damage is
irreparable and incapable of pecuniary estimation, San Miguels claim cannot be the basis for a valid writ of preliminary injunction.
WHEREFORE, WE GRANT THE PETITION. WE SET ASIDE THE DECISION OF THE COURT OF APPEALS DATED 9
JANUARY 2004 AND THE RESOLUTION DATED 2 JULY 2004 IN CA-G.R. SP NO. 79655. WE DECLARE VOID THE ORDER
DATED 17 OCTOBER 2003 AND THE CORRESPONDING WRIT OF PRELIMINARY INJUNCTION ISSUED BY BRANCH 214
OF THE REGIONAL TRIAL COURT OF MANDALUYONG CITY IN IP CASE NO. MC-03-01 AND CIVIL CASE NO. MC-03073.

THE REGIONAL TRIAL COURT OF MANDALUYONG CITY, BRANCH 214, IS DIRECTED TO CONTINUE
EXPEDITIOUSLY WITH THE TRIAL TO RESOLVE THE MERITS OF THE CASE.

SO ORDERED.
SUPERIOR COMMERCIAL ENTERPRISES,
INC.,

G.R. No. 169974

Petitioner,
-

Present:
versus -

CARPIO, J., Chairperson,

BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

KUNNAN ENTERPRISES LTD. AND SPORTS

CONCEPT & DISTRIBUTOR, INC.,
Promulgated:
Respondents. -- April 20, 2010
x-----------------------------------------------------------------------------------------x

DECISION
BRION, J.:

We review in this petition for review on certiorari[1] the (1) decision[2] of the Court of Appeals (CA) in CA-G.R. CV No.
60777 that reversed the ruling of the Regional Trial Court of Quezon City, Branch 85 ( RTC),[3] and dismissed the petitioner Superior
Commercial Enterprises, Inc.s (SUPERIOR) complaint for trademark infringement and unfair competition (with prayer for preliminary
injunction) against the respondents Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor, Inc. (SPORTS
CONCEPT); and (2) the CA resolution[4] that denied SUPERIORs subsequent motion for reconsideration. The RTC decision that the
CA reversed found the respondents liable for trademark infringement and unfair competition, and ordered them to pay
SUPERIOR P2,000,000.00 in damages, P500,000.00 as attorneys fees, and costs of the suit.

THE FACTUAL ANTECEDENTS

On February 23, 1993, SUPERIOR[5] filed a complaint for trademark infringement and unfair competition with preliminary
injunction against KUNNAN[6] and SPORTS CONCEPT[7] with the RTC, docketed as Civil Case No. Q-93014888.

In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles, company names and
business names[8] KENNEX,[9] KENNEX & DEVICE,[10] PRO KENNEX[11] and PRO-KENNEX (disputed trademarks).[12] Second, it
also asserted its prior use of these trademarks, presenting as evidence of ownership the Principal and Supplemental Registrations of
these trademarks in its name. Third, SUPERIOR also alleged that it extensively sold and advertised sporting goods and products
covered by its trademark registrations. Finally, SUPERIOR presented as evidence of its ownership of the disputed trademarks the

preambular clause of the Distributorship Agreement dated October 1, 1982 (Distributorship Agreement) it executed with KUNNAN,
which states:
Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark registered by the
[sic] Superior in the Philippines. Whereas, the [sic] Superior is desirous of having been appointed [sic] as the sole
distributor by KUNNAN in the territory of the Philippines. [Emphasis supplied.][13]
In its defense, KUNNAN disputed SUPERIORs claim of ownership and maintained that SUPERIOR as mere distributor
from October 6, 1982 until December 31, 1991fraudulently registered the trademarks in its name. KUNNAN alleged that it was
incorporated in 1972, under the name KENNEX Sports Corporation for the purpose of manufacturing and selling sportswear and
sports equipment; it commercially marketed its products in different countries, including the Philippines since 1972.[14] It created and
first used PRO KENNEX, derived from its original corporate name, as a distinctive trademark for its products in 1976. KUNNAN also
alleged that it registered the PRO KENNEX trademark not only in the Philippines but also in 31 other countries, and widely promoted
the KENNEX and PRO KENNEX trademarks through worldwide advertisements in print media and sponsorships of known tennis
players.

On October 1, 1982, after the expiration of its initial distributorship agreement with another company, [15] KUNNAN
appointed SUPERIOR as its exclusive distributor in the Philippines under a Distributorship Agreement whose pertinent provisions
state:[16]
Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered by the Superior in
the Philippines. Whereas, the Superior is desirous of having been appointed [sic] as the sole distributor by
KUNNAN in the territory of the Philippines.
Now, therefore, the parties hereto agree as follows:
1.

KUNNAN in accordance with this Agreement, will appoint the sole distributorship right to Superior in
the Philippines, and this Agreement could be renewed with the consent of both parties upon the time of
expiration.

2.

The Superior, in accordance with this Agreement, shall assign the ownership of KENNEX trademark,
under the registration of Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on the effects [ sic]
of its ten (10) years contract of distributorship, and it is required that the ownership of the said trademark
shall be genuine, complete as a whole and without any defects.

3.

KUNNAN will guarantee to the Superior that no other third parties will be permitted to supply the KENNEX
PRODUCTS in the Philippines except only to the Superior. If KUNNAN violates this stipulation, the transfer of
the KENNEX trademark shall be null and void.

4.

If there is a necessity, the Superior will be appointed, for the protection of interest of both parties, as the agent
in the Philippines with full power to exercise and granted the power of attorney, to pursue any case of Pirating,
Infringement and Counterfeiting the [sic] KENNEX trade mark in the Philippine territory.

5.

The Superior will be granted from [sic] KUNNANs approval before making and selling any KENNEX
products made in the Philippines and the other countries, and if this is the situation, KUNNAN is entitled to
have a royalty of 5%-8% of FOB as the right.

6.

Without KUNNANs permission, the Superior cannot procure other goods supply under KENNEX brand of
which are not available to supply [sic] by KUNNAN. However, in connection with the sporting goods, it is
permitted that the Superior can procure them under KENNEX brand of which are not available to be supplied
by KUNNAN. [Emphasis supplied.]

Even though this Agreement clearly stated that SUPERIOR was obligated to assign the ownership of the KENNEX
trademark to KUNNAN, the latter claimed that the Certificate of Registration for the KENNEX trademark remained with SUPERIOR
because Mariano Tan Bon Diong (Mr. Tan Bon Diong), SUPERIORs President and General Manager, misled KUNNANs officers into
believing that KUNNAN was not qualified to hold the same due to the many requirements set by the Philippine Patent Office that
KUNNAN could not meet.[17] KUNNAN further asserted that SUPERIOR deceived it into assigning its applications for registration of
the PRO KENNEX trademark in favor ofSUPERIOR, through an Assignment Agreement dated June 14, 1983 whose pertinent
provisions state:[18]
1.
In consideration of the distributorship relationship between KUNNAN and Superior, KUNNAN, who
is the seller in the distributorship relationship, agrees to assign the following trademark applications owned by
itself in the Philippines to Superior who is the buyer in the distributorship relationship.
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2.
Superior shall acknowledge that KUNNAN is still the real and truthful owner of the
abovementioned trademarks, and shall agree that it will not use the right of the abovementioned trademarks
to do anything which is unfavourable or harmful to KUNNAN.
3.
Superior agrees that it will return back the abovementioned trademarks to KUNNAN without
hesitation at the request of KUNNAN at any time. KUNNAN agrees that the cost for the concerned assignment of
the abovementioned trademarks shall be compensated by KUNNAN.
4.
Superior agrees that the abovementioned trademarks when requested by KUNNAN shall be clean and
without any incumbency.
5.
Superior agrees that after the assignment of the abovementioned trademarks, it shall have no right to
reassign or license the said trademarks to any other parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement and unfair competition case before the RTC, KUNNAN filed
with the now defunct Bureau of Patents, Trademarks and Technology Transfer [19] separate Petitions for the Cancellation of
Registration Trademark Nos. 41032, SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709, 3710,

3811, 3812, 3813 and 3814, as well as Opposition to Application Serial Nos. 84565 and 84566, docketed as Inter Partes Cases Nos.
4101 and 4102 (Consolidated Petitions for Cancellation) involving the KENNEX and PRO KENNEX trademarks.[20] In essence,
KUNNAN filed the Petition for Cancellation and Opposition on the ground that SUPERIOR fraudulently registered and appropriated
the disputed trademarks; as mere distributor and not as lawful owner, it obtained the registrations and assignments of the disputed
trademarks in violation of the terms of the Distributorship Agreement and Sections 2-A and 17 of Republic Act No. 166, as amended.
[21]

On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR, KUNNAN appointed
SPORTS CONCEPT as its new distributor.Subsequently, KUNNAN also caused the publication of a Notice and Warning in the
Manila Bulletins January 29, 1993 issue, stating that (1) it is the owner of the disputed trademarks; (2) it terminated its Distributorship
Agreement

with SUPERIOR;

and

(3)

it

appointed

SPORTS

CONCEPT

as

its

exclusive

distributor. This

notice

promptedSUPERIOR to file its Complaint for Infringement of Trademark and Unfair Competition with Preliminary Injunction against
KUNNAN.[22]

The RTC Ruling

On March 31, 1998, the RTC issued its decision [23] holding KUNNAN liable for trademark infringement and unfair competition. The
RTC also issued a writ of preliminary injunction enjoining KUNNAN and SPORTS CONCEPT from using the disputed trademarks.

The RTC found that SUPERIOR sufficiently proved that it was the first user and owner of the disputed trademarks in the
Philippines, based on the findings of the Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR was rightfully
entitled to register the mark KENNEX as user and owner thereof. It also considered the Whereas clause of the Distributorship
Agreement, which categorically stated that KUNNAN intends to acquire ownership of [the] KENNEX trademark registered
by SUPERIORin the Philippines. According to the RTC, this clause amounts to KUNNANs express recognition of SUPERIORs
ownership of the KENNEX trademarks.[24]
KUNNAN and SPORTS CONCEPT appealed the RTCs decision to the CA where the appeal was docketed as CA-G.R. CV No.
60777. KUNNAN maintained that SUPERIORwas merely its distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based on its prior use and numerous valid registrations.

Intervening Developments:
The IPO and CA Rulings

In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and Motion praying that the
decision of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the
Consolidated Petitions for Cancellation be made of record and be considered by the CA in resolving the case.[25] The BLA ruled
in this decision
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its rights
to the mark PRO KENNEX. It was proven that actual use by Respondent-Registrant is not in the concept of an
owner but as a mere distributor (Exhibits I, S to S-1, P and P-1 and Q and Q-2) and as enunciated in the case of
Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, a mere distributor of a product bearing a trademark, even if
permitted to use said trademark has no right to and cannot register the said trademark.
WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer (KUNNAN) is the prior user
and owner of the trademark PRO-KENNEX, the consolidated Petitions for Cancellation and the Notices of
Opposition are hereby GRANTED. Consequently, the trademark PRO-KENNEX bearing Registration Nos. 41032,
40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in favor of Superior Commercial Enterprises, Inc.,
herein
Respondent-Registrant
under
the
Principal
Register
and
SR
No.
6663
are
hereby CANCELLED. Accordingly, trademark application Nos. 84565 and 84566, likewise for the registration of
the mark PRO-KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the Administrative Finance
and Human Resources Development Services Bureau (AFHRDSB) for appropriate action in accordance with this
Decision and a copy thereof be furnished the Bureau of Trademarks (BOT) for information and update of its record.
[26]

On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director Generals decision on
appeal dated December 8, 2004, denyingSUPERIORs appeal, be given weight in the disposition of the case. [27] The dispositive
portion of the decision reads:[28]
WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35 dated 30
October 2003 rendered by the Director of the Bureau of Legal Affairs.Accordingly, the instant appeal is DENIED
and the appealed decision is hereby AFFIRMED.

We take judicial notice that SUPERIOR questioned the IPO Director Generals ruling before the Court of Appeals on a petition for
review under Rule 43 of the Rules of Court, docketed as CAG.R. SP No. 87928 (Registration Cancellation Case). On August 30,
2007, the CA rendered its decision dismissing SUPERIORs petition.[29] On December 3, 2007, the CA decision was declared final
and executory and entry of judgment was accordingly made. Hence, SUPERIORs registration of the disputed trademarks now
stands effectively cancelled.

The CA Ruling

On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and setting aside the RTCs decision of
March 31, 1998.[30] It dismissed SUPERIORs Complaint for Infringement of Trademark and Unfair Competition with Preliminary
Injunction on the ground that SUPERIOR failed to establish by preponderance of evidence its claim of ownership over the KENNEX
and PRO KENNEX trademarks. The CA found the Certificates of Principal and Supplemental Registrations and the whereas clause of
the Distributorship Agreement insufficient to support SUPERIORs claim of ownership over the disputed trademarks.

The CA stressed that SUPERIORs possession of the aforementioned Certificates of Principal Registration does not conclusively
establish its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact of registration alone; [31] at
best, registration merely raises a presumption of ownership that can be rebutted by contrary evidence. [32] The CA further emphasized
that the Certificates of Supplemental Registration issued in SUPERIORs name do not even enjoy the presumption of ownership
accorded to registration in the principal register; it does not amount to a prima facie evidence of the validity of registration or of the
registrants exclusive right to use the trademarks in connection with the goods, business, or services specified in the certificate. [33]
In contrast with the failure of SUPERIORs evidence, the CA found that KUNNAN presented sufficient evidence to
rebut SUPERIORs presumption of ownership over the trademarks. KUNNAN established that SUPERIOR, far from being the rightful
owner of the disputed trademarks, was merely KUNNANs exclusive distributor. This conclusion was based on three pieces of
evidence that, to the CA, clearly established that SUPERIOR had no proprietary interest over the disputed trademarks.

First, the CA found that the Distributorship Agreement, considered in its entirety, positively confirmed
that SUPERIOR sought to be the KUNNANs exclusive distributor.The CA based this conclusion on the following provisions of the
Distributorship Agreement:
(1) that SUPERIOR was desirous of [being] appointed as the sole distributor by KUNNAN in the territory of
the Philippines;
(2) that KUNNAN will appoint the sole distributorship right to Superior in the Philippines; and
(3) that no third parties will be permitted to supply KENNEX PRODUCTS in the Philippines except only
to Superior.

The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which states that KUNNAN
intends to acquire ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines without considering the
entirety of the Distributorship Agreement indicating that SUPERIOR had been merely appointed by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment Agreement to acknowledge
that KUNNAN is still the real and truthful owner of the [PRO KENNEX] trademarks, and that it shall agree that it will not use the
right of the abovementioned trademarks to do anything which is unfavourable or harmful to KUNNAN. To the CA, these provisions
are clearly inconsistent with SUPERIORs claim of ownership of the disputed trademarks. The CA also observed that although the
Assignment Agreement was a private document, its authenticity and due execution was proven by the similarity of Mr. Tan Bon
Diongs signature in the Distributorship Agreement and the Assignment Agreement.

Third, the CA also took note of SUPERIORs Letter dated November 12, 1986 addressed to Brig. Gen. Jose Almonte,
identifying itself as the sole and exclusive licensee and distributor in the Philippines of all its KENNEX and PRO-KENNEX
products. Attached to the letter was an agreement with KUNNAN, identifying the latter as the foreign manufacturer of all KENNEX
products. The CA concluded that in this letter, SUPERIOR acknowledged its status as a distributor in its dealings with KUNNAN, and
even in its transactions with third persons.

Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and had no right to the registration of the
disputed trademarks since the right to register a trademark is based on ownership. Citing Section 4 of Republic Act No. 166 [34] and
established jurisprudence,[35] the CA held that SUPERIOR as an exclusive distributor did not acquire any proprietary interest in the
principals (KUNNANs) trademark.

The CA denied SUPERIORs motion for reconsideration for lack of merit in its Resolution dated October 4, 2005.

THE PETITION

In the present petition, SUPERIOR raises the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS
NOT THE TRUE AND RIGHTFUL OWNER OF THE TRADEMARKS KENNEX AND PRO-KENNEX IN
THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER SUPERIOR IS A MERE DISTRIBUTOR OF RESPONDENT KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING
ASIDE THE DECISION OF THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-9314888, LIFTING THE PRELIMINARY INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN AND
SPORTS CONCEPT AND DISMISSING THE COMPLAINT FOR INFRINGEMENT OF TRADEMARK AND
UNFAIR COMPETITION WITH PRELIMINARY INJUNCTION

THE COURTS RULING

We do not find the petition meritorious.

On the Issue of Trademark Infringement

We first consider the effect of the final and executory decision in the Registration Cancellation Case on the present case. This decision
- rendered after the CA decision for trademark infringement and unfair competition in CA-G.R. CV No. 60777 (root of the present
case) - states:
As to whether respondent Kunnan was able to overcome the presumption of ownership in favor
of Superior, the former sufficiently established the fraudulent registration of the questioned trademarks
by Superior. The Certificates of Registration No. SR-4730 (Supplemental Register) and 33487 (Principal Register)
for the KENNEX trademark were fraudulently obtained by petitioner Superior. Even before PROKENNEX products
were imported by Superior into the Philippines, the same already enjoyed popularity in various countries and had
been distributed worldwide, particularly among the sports and tennis enthusiasts since 1976. Riding on the said
popularity, Superior caused the registration thereof in the Philippines under its name when it knew fully well that it
did not own nor did it manufacture the PROKENNEX products. Superior claimed ownership of the subject marks
and failed to disclose in its application with the IPO that it was merely a distributor of KENNEX and PROKENNEX
products in the Philippines.
While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to Kunnan in
exchange for the appointment by the latter as its exclusive distributor,Superior however breached its obligation and
failed to assign the same to Kunnan. In a letter dated 13 February 1987, Superior, through Mr. Tan Bon Diong,
misrepresented to Kunnan that the latter cannot own trademarks in the Philippines. Thus, Kunnan was misled into
assigning to Superior its (Kunnans) own application for the disputed trademarks. In the same assignment document,

however. Superior was bound to ensure that the PROKENNEX trademarks under Registration Nos. 40326, 39254,
and 49998 shall be returned to Kunnan clean and without any incumbency when requested by the latter.
In fine, We see no error in the decision of the Director General of the IPO which affirmed the decision of the
Director of the Bureau of Legal Affairs canceling the registration of the questioned marks in the name of petitioner
Superior and denying its new application for registration, upon a finding that Superior is not the rightful owner of
the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the KENNEX and PRO KENNEX trademarks should be cancelled
because SUPERIOR was not the owner of, and could not in the first place have validly registered these trademarks. Thus, as of
the finality of the CA decision on December 3, 2007, these trademark registrations were effectively cancelled and SUPERIOR was no
longer the registrant of the disputed trademarks.

Section 22 of Republic Act No. 166, as amended (RA 166),[36] the law applicable to this case, defines trademark
infringement as follows:
Section 22. Infringement, what constitutes. Any person who [1] shall use, without the consent of
the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon orin connection with such
goods, business or services, shall be liable to a civil action by the registrant for any or all of the
remedies herein provided. [Emphasis supplied]

Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for infringement. Corollary to this, Section 19
of RA 166 provides that any right conferred upon the registrant under the provisions of RA 166 [37] terminates when the judgment or
order of cancellation has become final, viz:
Section 19. Cancellation of registration. - If the Director finds that a case for cancellation has been made out he
shall order the cancellation of the registration. The order shall not become effective until the period for appeal has
elapsed, or if appeal is taken, until the judgment on appeal becomes final. When the order or judgment becomes
final, any right conferred by such registration upon the registrant or any person in interest of record shall
terminate. Notice of cancellation shall be published in the Official Gazette. [Emphasis supplied.]

Thus, we have previously held that the cancellation of registration of a trademark has the effect of depriving the registrant of
protection from infringement from the moment judgment or order of cancellation has become final.[38]

In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect
of SUPERIORs case has been rendered moot and academic in view of the finality of the decision in the Registration Cancellation
Case. In short, SUPERIOR is left without any cause of action for trademark infringement since the cancellation of registration of a
trademark deprived it of protection from infringement from the moment judgment or order of cancellation became final. To be sure, in
a trademark infringement, title to the trademark is indispensable to a valid cause of action and such title is shown by its certificate of
registration.[39] With its certificates of registration over the disputed trademarks effectively cancelled with finality, SUPERIORs case
for trademark infringement lost its legal basis and no longer presented a valid cause of action.

Even assuming that SUPERIORs case for trademark infringement had not been rendered moot and academic, there can be no
infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of the disputed trademarks in the
Registration Cancellation Case. Even prior to the cancellation of the registration of the disputed trademarks, SUPERIOR as a mere
distributor and not the owner cannot assert any protection from trademark infringement as it had no right in the first place to the
registration of the disputed trademarks. In fact, jurisprudence holds that in the absence of any inequitable conduct on the part of the
manufacturer, an exclusive distributor who employs the trademark of the manufacturer does not acquire proprietary rights of the
manufacturer, and a registration of the trademark by the distributor as such belongs to the manufacturer, provided the fiduciary
relationship does not terminate before application for registration is filed. [40] Thus, the CA in the Registration Cancellation Case
correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its
name. Well-entrenched in our jurisdiction is the rule that the right to register a trademark should be based on
ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for the
registration of the same. Under the Trademark Law, only the owner of the trademark, trade name or service mark
used to distinguish his goods, business or service from the goods, business or service of others is entitled to register
the same.An exclusive distributor does not acquire any proprietary interest in the principals trademark and cannot
register it in his own name unless it is has been validly assigned to him.

In addition, we also note that the doctrine of res judicata bars SUPERIORs present case for trademark infringement. The
doctrine of res judicata embraces two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39, Section 47, and
the second is "conclusiveness of judgment" under paragraph (c) thereof.

In

the

present

case,

the

second

concept

conclusiveness

of

judgment

applies. Under

the

concept

of res

judicata by conclusiveness of judgment, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of

the rights of the parties or their privies in all later suits on points and matters determined in the former suit. [41] Stated differently,
facts and issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties, even
if the latter suit may involve a different cause of action. [42] This second branch of the principle of res judicata bars the re-litigation of
particular facts or issues in another litigation between the same parties on a different claim or cause of action. [43]

Because the Registration Cancellation Case and the present case involve the same parties, litigating with respect to and
disputing the same trademarks, we are bound to examine how one case would affect the other. In the present case, even if the causes of
action of the Registration Cancellation Case (the cancellation of trademark registration) differs from that of the present case (the
improper or unauthorized use of trademarks), the final judgment in the Registration Cancellation Case is nevertheless conclusive on
the particular facts and issues that are determinative of the present case.

To establish trademark infringement, the following elements must be proven: (1) the validity of plaintiffs mark; (2) the
plaintiffs ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in likelihood
of confusion.[44]

Based on these elements, we find it immediately obvious that the second element the plaintiffs ownership of the mark was
what the Registration Cancellation Case decided with finality. On this element depended the validity of the registrations that, on their
own, only gave rise to the presumption of, but was not conclusive on, the issue of ownership.[45]
In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a mere
distributor and could not have been the owner, and was thus an invalid registrant of the disputed trademarks. Significantly,
these are the exact terms of the ruling the CA arrived at in the present petition now under our review. Thus, whether with one or the
other, the ruling on the issue of ownership of the trademarks is the same. Given, however, the final and executory ruling in the
Registration Cancellation Case on the issue of ownership that binds us and the parties, any further discussion and review of the issue
of ownership although the current CA ruling is legally correct and can stand on its own merits becomes a pointless academic
discussion.

On the Issue of Unfair Competition

Our review of the records shows that the neither the RTC nor the CA made any factual findings with respect to the issue of
unfair competition. In its Complaint,SUPERIOR alleged that:[46]
17. In January 1993, the plaintiff learned that the defendant Kunnan Enterprises, Ltd., is intending to appoint the
defendant Sports Concept and Distributors, Inc. as its alleged distributor for sportswear and sporting goods bearing
the trademark PRO-KENNEX. For this reason, on January 20, 1993, the plaintiff, through counsel, wrote the
defendant Sports Concept and Distributors Inc. advising said defendant that the trademark PRO-KENNEX was
registered and owned by the plaintiff herein.
18. The above information was affirmed by an announcement made by the defendants in The Manila Bulletin issue
of January 29, 1993, informing the public that defendant Kunnan Enterprises, Ltd. has appointed the defendant
Sports Concept and Distributors, Inc. as its alleged distributor of sportswear and sporting goods and equipment
bearing the trademarks KENNEX and PRO-KENNEX which trademarks are owned by and registered in the name of
plaintiff herein as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained herein, were designed to and are of the nature so as to create
confusion with the commercial activities of plaintiff in the Philippines and is liable to mislead the public as to the
nature and suitability for their purposes of plaintiffs business and the defendants acts are likely to discredit the
commercial activities and future growth of plaintiffs business.

From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the
public of the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the
public. The essential elements of unfair competition[47] are (1) confusing similarity in the general appearance of the goods; and (2)
intent to deceive the public and defraud a competitor.[48]

Jurisprudence also formulated the following true test of unfair competition: whether the acts of the defendant have the intent
of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular trade
to which the controversy relates. One of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent
to deceive, actual or probable must be shown before the right to recover can exist.[49]

In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold ( i.e. sportswear,
sporting goods and equipment) as those ofSUPERIOR. In addition, there is no evidence of bad faith or fraud imputable to KUNNAN
in using the disputed trademarks. Specifically, SUPERIOR failed to adduce any evidence to show that KUNNAN by the above-cited
acts intended to deceive the public as to the identity of the goods sold or of the manufacturer of the goods sold. InMcDonalds
Corporation v. L.C. Big Mak Burger, Inc., [50] we held that there can be trademark infringement without unfair competition such as

when the infringer discloses on the labels containing the mark that he manufactures the goods, thus preventing the public from
being deceived that the goods originate from the trademark owner. In this case, no issue of confusion arises because the same
manufactured products are sold; only the ownership of the trademarks is at issue. Furthermore, KUNNANs January 29, 1993 notice by
its terms prevents the public from being deceived that the goods originated from SUPERIOR since the notice clearly indicated that
KUNNAN is the manufacturer of the goods bearing the trademarks KENNEX and PRO KENNEX. This notice states in full:[51]
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned trademarks KENNEX
and PRO KENNEX for sportswear and sporting goods and equipment.Kunnan Enterprises Ltd. has registered the
trademarks KENNEX and PRO KENNEX in the industrial property offices of at least 31 countries worldwide where
KUNNAN Enterprises Ltd. has been selling its sportswear and sporting goods and equipment bearing the KENNEX
and PRO KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had terminated its Distributorship Agreement
with Superior Commercial Enterprises, Inc. on December 31, 1991. As a result,Superior Commercial Enterprises,
Inc. is no longer authorized to sell sportswear and sporting goods and equipment manufactured by Kunnan
Enterprises Ltd. and bearing the trademarks KENNEX and PRO KENNEX.
xxxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its exclusive
Philippine distributor of sportswear and sporting goods and equipment bearing the trademarks KENNEX and PRO
KENNEX. The public is advised to buy sporting goods and equipment bearing these trademarks only from
SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that the products they are buying are
manufactured by Kunnan Enterprises Ltd. [Emphasis supplied.]

Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods that SUPERIOR
asserts are being unfairly sold by KUNNAN under trademarks registered in SUPERIORs name, the latter is left with no effective right
to make a claim. In other words, with the CAs final ruling in the Registration Cancellation Case, SUPERIORs case no longer presents
a valid cause of action. For this reason, the unfair competition aspect of the SUPERIORs case likewise falls.
WHEREFORE,

premises

considered,

we DENY Superior Commercial

Enterprises,

Inc.s petition

for

review

on certiorari for lack of merit. Cost against petitionerSuperior Commercial Enterprises, Inc.
SO ORDERED.
G.R. No. 159938

March 31, 2006

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES, INC., MAKATI

SHANGRI-LA HOTEL & RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners,

vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
DECISION
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La International Hotel Management, Ltd.
(SLIHM), et al. assail and seek to set aside the Decision dated May 15, 2003 1 of the Court of Appeals (CA) in CA-G.R. CV
No. 53351 and its Resolution 2 of September 15, 2003 which effectively affirmed with modification an earlier decision of the
Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-91-8476, an action for infringement and damages, thereat
commenced by respondent Developers Group of Companies, Inc. (DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI claims ownership of said mark
and logo in the Philippines on the strength of its prior use thereof within the country. As DGCI stresses at every turn, it filed
on October 18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2
and 4 of Republic Act (RA) No. 166, 3 as amended, an application for registration covering the subject mark and logo. On
May 31, 1983, the BPTTT issued in favor of DGCI the corresponding certificate of registration therefor, i.e., Registration
No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S" logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels and hotel-related
transactions since 1969. As far back as 1962, it adopted the name "Shangri-La" as part of the corporate names of all
companies organized under the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok Group has used the
name "Shangri-La" in all Shangri-La hotels and hotel-related establishments around the world which the Kuok Family
owned.
To centralize the operations of all Shangri-la hotels and the ownership of the "Shangri-La" mark and "S" logo, the Kuok
Group had incorporated in Hong Kong and Singapore, among other places, several companies that form part of the
Shangri-La International Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and Resort, Inc., and
Makati Shangri-La Hotel and Resort, Inc. were incorporated in the Philippines beginning 1987 to own and operate the two
(2) hotels put up by the Kuok Group in Mandaluyong and Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies adopted and used the distinctive
lettering of the name "Shangri-La" as part of their trade names.
From the records, it appears that Shangri-La Hotel Singapore commissioned a Singaporean design artist, a certain Mr.
William Lee, to conceptualize and design the logo of the Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean architectural structures as well as keep to the
legendary Shangri-la theme with the mountains on top being reflected on waters below and the connecting centre [sic] line
serving as the horizon. This logo, which is a bold, striking definitive design, embodies both modernity and sophistication in
balance and thought.

Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used consistently and continuously by
all Shangri-La hotels and companies in their paraphernalia, such as stationeries, envelopes, business forms, menus,
displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact registered, the "Shangri-La" mark and "S"
logo in the patent offices in different countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter Partes Case No. 3145, praying for the
cancellation of the registration of the "Shangri-La" mark and "S" logo issued to respondent DGCI on the ground that the
same were illegally and fraudulently obtained and appropriated for the latter's restaurant business. They also filed in the
same office Inter Partes Case No. 3529, praying for the registration of the same mark and logo in their own names.
Until 1987 or 1988, the petitioners did not operate any establishment in the Philippines, albeit they advertised their hotels
abroad since 1972 in numerous business, news, and/or travel magazines widely circulated around the world, all readily
available in Philippine magazines and newsstands. They, too, maintained reservations and booking agents in airline
companies, hotel organizations, tour operators, tour promotion organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI filed a complaint for Infringement and Damages
with the RTC of Quezon City against the herein petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel &
Resort, Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-91-8476 and eventually raffled to Branch
99 of said court. The complaint with prayer for injunctive relief and damages alleged that DGCI has, for the last eight (8)
years, been the prior exclusive user in the Philippines of the mark and logo in question and the registered owner thereof
for its restaurant and allied services. As DGCI alleged in its complaint, SLIHM, et al., in promoting and advertising their
hotel and other allied projects then under construction in the country, had been using a mark and logo confusingly similar,
if not identical, with its mark and "S" logo. Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo, from
using the "Shangri-La" mark and "S" logo in their hotels in the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and illegally using the "Shangri-La" mark
and "S" logo, adding that the legal and beneficial ownership thereof pertained to SLIHM and that the Kuok Group and its
related companies had been using this mark and logo since March 1962 for all their corporate names and affairs. In this
regard, they point to the Paris Convention for the Protection of Industrial Property as affording security and protection to
SLIHM's exclusive right to said mark and logo. They further claimed having used, since late 1975, the internationallyknown and specially-designed "Shangri-La" mark and "S" logo for all the hotels in their hotel chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of Preliminary Injunction enjoining the
petitioners from using the subject mark and logo. The preliminary injunction issue ultimately reached the Court in G.R. No.
104583 entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In a decision 4 dated March 8, 1993, the
Court nullified the writ of preliminary injunction issued by the trial court and directed it to proceed with the main case and
decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion to suspend proceedings on account of the
pendency before the BPTTT of Inter Partes Case No. 3145 for the cancellation of DGCI's certificate of registration. For its
part, respondent DGCI filed a similar motion in that case, invoking in this respect the pendency of its infringement case
before the trial court. The parties' respective motions to suspend proceedings also reached the Court via their respective
petitions in G.R. No. 114802, entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. and G.R. No.
111580, entitled Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et al., which were
accordingly consolidated.

In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to the core issue of whether, despite the
petitioners' institution of Inter Partes Case No. 3145 before the BPTTT, herein respondent DGCI "can file a subsequent
action for infringement with the regular courts of justice in connection with the same registered mark," ruled in the
affirmative, but nonetheless ordered the BPTTT to suspend further proceedings in said inter partes case and to await the
final outcome of the main case.
Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's lone witness was Ramon
Syhunliong, President and Chairman of DGCI's Board of Directors. Among other things, this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading and restaurant businesses but only the
restaurant business bears the name "Shangri-La" and uses the same and the "S-logo" as service marks. The
restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly known as the "Carvajal Restaurant"
until December 1982, when respondent took over said restaurant business.
2. He had traveled widely around Asia prior to 1982, and admitted knowing the Shangri-La Hotel in Hong Kong as
early as August 1982.
3. The "S-logo" was one of two (2) designs given to him in December 1982, scribbled on a piece of paper by a
jeepney signboard artist with an office somewhere in Balintawak. The unnamed artist supposedly produced the
two designs after about two or three days from the time he (Syhunliong) gave the idea of the design he had in
mind.
4. On October 15, 1982, or before the unknown signboard artist supposedly created the "Shangri-La" and "S"
designs, DGCI was incorporated with the primary purpose of "owning or operating, or both, of hotels and
restaurants".
5. On October 18, 1982, again prior to the alleged creation date of the mark and logo, DGCI filed an application
for trademark registration of the mark "SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with the BPTTT. On
said date, respondent DGCI amended its Articles of Incorporation to reflect the name of its restaurant, known and
operating under the style and name of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained
Certificate of Registration No. 31904 for the "Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more particularly petitioner SLIHM's, use of the mark and logo
in dispute constitutes an infringement of DGCI's right thereto, came out with its decision 6 on March 8, 1996 rendering
judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against [SLIHM, et al.] a) Upholding the validity of the registration of the service mark "Shangri-la" and "S-Logo" in the name of
[respondent];
b) Declaring [petitioners'] use of said mark and logo as infringement of [respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees, assignees and other persons acting under their
authority and with their permission, to permanently cease and desist from using and/or continuing to use said
mark and logo, or any copy, reproduction or colorable imitation

thereof, in the promotion, advertisement, rendition of their hotel and allied projects and services or in any other
manner whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any premises, objects, materials and paraphernalia
used by them and/or destroy any and all prints, signs, advertisements or other materials bearing said mark and
logo in their possession and/or under their control; and
e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in the amounts of P2,000,000.00 as
actual and compensatory damages, P500,000.00 as attorney's fee and expenses of litigation.
Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and Technology Transfer for his
information and appropriate action in accordance with the provisions of Section 25, Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their recourse was docketed as CA G.R. SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of May 15, 2003, 7 affirmed that of the lower court with
the modification of deleting the award of attorney's fees. The appellate court predicated its affirmatory action on the
strength or interplay of the following premises:
1. Albeit the Kuok Group used the mark and logo since 1962, the evidence presented shows that the bulk use of
the tradename was abroad and not in the Philippines (until 1987). Since the Kuok Group does not have proof of
actual use in commerce in the Philippines (in accordance with Section 2 of R.A. No. 166), it cannot claim
ownership of the mark and logo in accordance with the holding in Kabushi Kaisha Isetan v. IAC 8, as reiterated in
Philip Morris, Inc. v. Court of Appeals.9
2. On the other hand, respondent has a right to the mark and logo by virtue of its prior use in the Philippines and
the issuance of Certificate of Registration No. 31904.
3. The use of the mark or logo in commerce through the bookings made by travel agencies is unavailing since the
Kuok Group did not establish any branch or regional office in the Philippines. As it were, the Kuok Group was not
engaged in commerce in the Philippines inasmuch as the bookings were made through travel agents not owned,
controlled or managed by the Kuok Group.
4. While the Paris Convention protects internationally known marks, R.A. No. 166 still requires use in commerce
in the Philippines. Accordingly, and on the premise that international agreements, such as Paris Convention, must
yield to a municipal law, the question on the exclusive right over the mark and logo would still depend on actual
use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the CA in its equally assailed Resolution of
September 15, 2003.10
As formulated by the petitioners, the issues upon which this case hinges are:

1. Whether the CA erred in finding that respondent had the right to file an application for registration of the
"Shangri-La" mark and "S" logo although respondent never had any prior actual commercial use thereof;
2. Whether the CA erred in finding that respondent's supposed use of the identical "Shangri-La" mark and "S" logo
of the petitioners was not evident bad faith and can actually ripen into ownership, much less registration;
3. Whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in
their operations;
4. Whether the CA erred in refusing to consider that petitioners are entitled to protection under both R.A. No. 166,
the old trademark law, and the Paris Convention for the Protection of Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the right to legally own the "Shangri-La" mark and "S"
logo by virtue of and despite their ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of respondent despite the absence of any evidence to
support the same, and in failing to award relief in favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their use of the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our attention to, namely:
1. Whether the certification against forum-shopping submitted on behalf of the petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in nature hence improper for resolution in the instant
petition for review on certiorari.
DGCI claims that the present petition for review should be dismissed outright for certain procedural defects, to wit: an
insufficient certification against forum shopping and raising pure questions of fact. On both counts, we find the instant
petition formally and substantially sound.
In its Comment, respondent alleged that the certification against forum shopping signed by Atty. Lee Benjamin Z. Lerma
on behalf and as counsel of the petitioners was insufficient, and that he was not duly authorized to execute such
document. Respondent further alleged that since petitioner SLIHM is a foreign entity based in Hong Kong, the Director's
Certificate executed by Mr. Madhu Rama Chandra Rao, embodying the board resolution which authorizes Atty. Lerma to
act for SLIHM and execute the certification against forum shopping, should contain the authentication by a consular officer
of the Philippines in Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the certification on non-forum shopping may be signed, for
and in behalf of a corporation, by a specifically authorized lawyer who has personal knowledge of the facts required to be
disclosed in such document. The reason for this is that a corporation can only exercise its powers through its board of
directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed
only by natural persons duly authorized for the purpose. 12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against forum shopping does not require
any consular certification if the petitioner is a foreign entity. Nonetheless, to banish any lingering doubt, petitioner SLIHM

furnished this Court with a consular certification dated October 29, 2003 authenticating the Director's Certificate
authorizing Atty. Lerma to execute the certification against forum shopping, together with petitioners' manifestation of
February 9, 2004.
Respondent also attacks the present petition as one that raises pure questions of fact. It points out that in a petition for
review under Rule 45 of the Rules of Court, the questions that may properly be inquired into are strictly circumscribed by
the express limitation that "the petition shall raise only questions of law which must be distinctly set forth." 13 We do not,
however, find that the issues involved in this petition consist purely of questions of fact. These issues will be dealt with as
we go through the questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application for registration of the "Shangri-La" mark
and "S" logo because it did not have prior actual commercial use thereof. To respondent, such an argument raises a
question of fact that was already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and registrant of the subject mark and logo in the
Philippines. Taken in proper context, the trial court's finding on "prior use" can only be interpreted to mean that respondent
used the subject mark and logo in the country before the petitioners did. It cannot be construed as being a factual finding
that there was prior use of the mark and logo before registration.
Secondly, the question raised is not purely factual in nature. In the context of this case, it involves resolving whether a
certificate of registration of a mark, and the presumption of regularity in the performance of official functions in the
issuance thereof, are sufficient to establish prior actual use by the registrant. It further entails answering the question of
whether prior actual use is required before there may be a valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up to December 31,
1997, hence, the law in force at the time of respondent's application for registration of trademark, the root of ownership of
a trademark is actual use in commerce. Section 2 of said law requires that before a trademark can be registered, it must
have been actually used in commerce and service for not less than two months in the Philippines prior to the filing of an
application for its registration.
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. 14
Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v. Macagba, 15 are:
1. Registration in the Principal Register gives rise to a presumption of the validity of the registration, the
registrant's ownership of the mark, and his right to the exclusive use thereof. x x x
2. Registration in the Principal Register is limited to the actual owner of the trademark and proceedings therein
pass on the issue of ownership, which may be contested through opposition or interference proceedings, or,
after registration, in a petition for cancellation. xxx
[Emphasis supplied]1avvphil.et
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. 16
While the present law on trademarks17 has dispensed with the requirement of prior actual use at the time of registration,
the law in force at the time of registration must be applied, and thereunder it was held that as a condition precedent to
registration of trademark, trade name or service mark, the same must have been in actual use in the Philippines before
the filing of the application for registration. 18 Trademark is a creation of use and therefore actual use is a pre-requisite to
exclusive ownership and its registration with the Philippine Patent Office is a mere administrative confirmation of the
existence of such right.19
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 faciepresumption of
the validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use
thereof.20 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, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly commissioned to
create the mark and logo submitted his designs only in December 1982. 21 This was two-and-a-half months after the filing
of the respondent's trademark application on October 18, 1982 with the BPTTT. It was also only in December 1982 when
the respondent's restaurant was opened for business. 22 Respondent cannot now claim before the Court that the certificate
of registration itself is proof that the two-month prior use requirement was complied with, what with the fact that its very
own witness testified otherwise in the trial court. And because at the time (October 18, 1982) the respondent filed its
application for trademark registration of the "Shangri-La" mark and "S" logo, respondent was not using these in the
Philippines commercially, the registration is void.
Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo was in evident bad faith and
cannot therefore ripen into ownership, much less registration. While the respondent is correct in saying that a finding of
bad faith is factual, not legal, 23 hence beyond the scope of a petition for review, there are, however, noted exceptions
thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or impossible; 24
2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts; 26
4. When the findings of fact are conflicting; 27 and
5. When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondent.28
And these are naming but a few of the recognized exceptions to the rule.
The CA itself, in its Decision of May 15, 2003, found that the respondent's president and chairman of the board, Ramon
Syhunliong, had been a guest at the petitioners' hotel before he caused the registration of the mark and logo, and
surmised that he must have copied the idea there:

Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of [petitioners'] hotel (Kowloon
Shangri-la) abroad? The mere fact that he was a visitor of [petitioners'] hotel abroad at one time (September 27, 1982)
establishes [petitioners'] allegation that he got the idea there. 29
Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have been copied, the CA
tries to make it appear that the adoption of the same mark and logo could have been coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The word "Shangri-la" refers to a (a) remote beautiful
imaginary place where life approaches perfection or (b) imaginary mountain land depicted as a utopia in the novel Lost
Horizon by James Hilton. The Lost Horizon was a well-read and popular novel written in 1976. It is not impossible that the
parties, inspired by the novel, both adopted the mark for their business to conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old English print. 30
To jump from a recognition of the fact that the mark and logo must have been copied to a rationalization for the possibility
that both the petitioners and the respondent coincidentally chose the same name and logo is not only contradictory, but
also manifestly mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old English" print that the CA
makes it out to be, but is obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that the
parties would come up with the exact same lettering for the word "Shangri-La" and the exact same logo to boot. As
correctly observed by the petitioners, to which we are in full accord:
x x x When a trademark copycat adopts the word portion of another's trademark as his own, there may still be some doubt
that the adoption is intentional. But if he copies not only the word but also the word's exact font and lettering style and in
addition, he copies also the logo portion of the trademark, the slightest doubt vanishes. It is then replaced by the certainty
that the adoption was deliberate, malicious and in bad faith. 31
It is truly difficult to understand why, of the millions of terms and combination of letters and designs available, the
respondent had to choose exactly the same mark and logo as that of the petitioners, if there was no intent to take
advantage of the goodwill of petitioners' mark and logo. 32
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. 33 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.
This point is further bolstered by the fact that under either Section 17 of R.A. No. 166, or Section 151 of R.A. No. 8293, or
Article 6bis(3) of the Paris Convention, no time limit is fixed for the cancellation of marks registered or used in bad
faith.34 This is precisely why petitioners had filed an inter partes case before the BPTTT for the cancellation of
respondent's registration, the proceedings on which were suspended pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in nature, namely, whether
the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their operations.
The question, however, is not whether there had been widespread prior use, which would have been factual, but whether
that prior use entitles the petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in
nature.
It has already been established in the two courts below, and admitted by the respondent's president himself, that
petitioners had prior widespread use of the mark and logo abroad:

There is, to be sure, an impressive mass of proof that petitioner SLIHM and its related companies abroad used the
name and logo for one purpose or another x x x. 35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the mark and logo but held that such use
did not confer to them ownership or exclusive right to use them in the Philippines." 36 To petitioners' mind, it was error for
the CA to rule that their worldwide use of the mark and logo in dispute could not have conferred upon them any right
thereto. Again, this is a legal question which is well worth delving into.
R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are registrable. - Trademarks, trade names and service marks owned by persons, corporations,
partnerships or associations domiciled in the Philippines and by persons, corporations, partnerships or associations
domiciled in any foreign country may be registered in accordance with the provisions of this Act: Provided, That said
trademarks trade names, or service marks are actually in use in commerce and services not less than two months in
the Philippines before the time the applications for registration are filed: And provided, further, That the country of which
the applicant for registration is a citizen grants by law substantially similar privileges to citizens of the Philippines, and
such fact is officially certified, with a certified true copy of the foreign law translated into the English language, by the
government of the foreign country to the Government of the Republic of the Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks; how acquired. - Anyone who lawfully produces
or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in
commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to
his exclusive use a trademark, a trade name, or a servicemark not so appropriated by another, to distinguish his
merchandise, business or service from the merchandise, business or services of others. The ownership or possession of
a trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as are other property rights known to this law.
[Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the said trade name and
"S" logo in the Philippines. Hence, consistent with its finding that the bulk of the petitioners' evidence shows that the
alleged use of the Shangri-La trade name was done abroad and not in the Philippines, it is understandable for that court
to rule in respondent's favor. Unfortunately, however, what the CA failed to perceive is that there is a crucial difference
between the aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides for what
is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and must have actually used the mark in
commerce in the Philippines for 2 months prior to the application for registration. Since "ownership" of the trademark is
required for registration, Section 2-A of the same law sets out to define how one goes about acquiring ownership thereof.
Under Section 2-A, it is clear that actual use in commerce is also the test of ownership but the provision went further by
saying that the mark must not have been so appropriated by another. Additionally, it is significant to note that Section 2-A
does not require that the actual use of a trademark must be within the Philippines. Hence, under R.A. No. 166, as
amended, one may be an owner of a mark due to actual use thereof but not yet have the right to register such ownership
here due to failure to use it within the Philippines for two months.
While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant, neither did respondent DGCI,
since the latter also failed to fulfill the 2-month actual use requirement. What is worse, DGCI was not even the owner of
the mark. For it to have been the owner, the mark must not have been already appropriated ( i.e., used) by someone else.

At the time of respondent DGCI's registration of the mark, the same was already being used by the petitioners, albeit
abroad, of which DGCI's president was fully aware.
It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo as a mere corporate
name or as the name of their hotels, instead of using them as a trademark or service mark, then such name and logo are
not trademarks. The two concepts of corporate name or business name and trademark or service mark, are not mutually
exclusive. It is common, indeed likely, that the name of a corporation or business is also a trade name, trademark or
service mark. Section 38 of R.A. No. 166 defines the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction of this Act, unless the contrary is plainly apparent
from the context - The term "trade name" includes individual names and surnames, firm names, trade names, devices or
words used by manufacturers, industrialists, merchants, agriculturists, and others to identify their business, vocations or
occupations; the names or titles lawfully adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other organizations engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or device or any combination thereof adopted and
used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in
by others.
The term "service mark" means a mark used in the sale or advertising of services to identify the s ervices of one person
and distinguish them from the services of others and includes without limitation the marks, names, symbols,
titles, designations, slogans, character names, and distinctive features of radio or other advertising. [Emphasis
supplied]
Clearly, from the broad definitions quoted above, the petitioners can be considered as having used the "Shangri-La" name
and "S" logo as a tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows the firm resolve of the Philippines to
observe and follow the Paris Convention by incorporating the relevant portions of the Convention such that persons who
may question a mark (that is, oppose registration, petition for the cancellation thereof, sue for unfair competition) include
persons whose internationally well-known mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation of a mark that is sought to be registered or is actually
registered.37
However, while the Philippines was already a signatory to the Paris Convention, the IPC only took effect on January 1,
1988, and in the absence of a retroactivity clause, R.A. No. 166 still applies. 38 Under the prevailing law and jurisprudence
at the time, the CA had not erred in ruling that:
The Paris Convention mandates that protection should be afforded to internationally known marks as signatory to the
Paris Convention, without regard as to whether the foreign corporation is registered, licensed or doing business in the
Philippines. It goes without saying that the same runs afoul to Republic Act No. 166, which requires the actual use in
commerce in the Philippines of the subject mark or devise. The apparent conflict between the two (2) was settled by the
Supreme Court in this wise "Following universal acquiescence and comity, our municipal law on trademarks regarding the requirement of actual
use in the Philippines must subordinate an international agreement inasmuch as the apparent clash is being decided
by a municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93;

Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made
part of the law of the land does not by any means imply the primacy of international law over national law in the municipal
sphere. Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing
equal, not superior, to national legislative enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p.
16)."39 [Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless, with the double infirmity
of lack of two-month prior use, as well as bad faith in the respondent's registration of the mark, it is evident that the
petitioners cannot be guilty of infringement. It would be a great injustice to adjudge the petitioners guilty of infringing a
mark when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the enforcement of their
rights as part of the Kuok Group of Companies and as official repository, manager and operator of the subject mark and
logo. Besides, R.A. No. 166 did not require the party seeking relief to be the owner of the mark but "any person who
believes that he is or will be damaged by the registration of a mark or trade name." 40
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals dated May
15, 2003 and September 15, 2003, respectively, and the Decision of the Regional Trial Court of Quezon City dated March
8, 1996 are hereby SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is ordered
DISMISSED.
SO ORDERED.
G.R. No. L-28554 February 28, 1983
UNNO
COMMERCIAL
ENTERPRISES,
INCORPORATED, petitioner,
vs.
GENERAL MILLING CORPORATION and TIBURCIO S. EVALLE, in his capacity as Director of Patents,respondents.
Salem & Dionisio Law Office for petitioner.
Siguion Reyna, Montecillo, Bello & Ongsiako for private respondent.

TEEHANKEE, J.:
The Court affirms respondent Director of Patent's decision declaring respondent General Milling Corporation as the prior
user of the trademark "All Montana" on wheat flour in the Philippines and ordering the cancellation of the certificate of
registration for the same trademark previously issued in favor of petitioner Unno Commercial Enterprises, Incorporated, it
appearing that Unno Commercial Enterprises, Inc. merely acted as exclusive distributor of All Montana wheat flour in the
Philippines. Only the owner of a trademark, trade name or service mark may applly for its registration and an importer,
broker, indentor or distributor acquires no rights to the trademark of the goods he is dealing with in the absence of a valid
transfer or assignment of the trade mark.
On December 11, 1962, respondent General Milling Corporation filed an application for the registration of the trademark
"All Montana" to be used in the sale of wheat flour. In view of the fact that the same trademark was previously, registered
in favor of petitioner Unno Commercial Enterprises, Inc., the Chief Trademark Examiner of the Philippines Patent Office

declared an interference proceeding 1 between respondent corporation's application (Serial No. 9732), as Junior - PartyApplicant and petitioner company's registration (Registration No. 9589), as Senior Party-Applicant, docketed in the
Philippines Patent Office as Inter Partes Case No. 313, to determine which party has previously adopted and used the
trademark "All Montana".
Respondent General Milling Corporation, in its application for registration, alleged that it started using the trademark "All
Montana" on August 31, 1955 and subsequently was licensed to use the same by Centennial Mills, Inc. by virtue of a deed
of assignment executed on September 20, 1962. On the other hand petitioner Unno Commercial Enterprises, Inc. argued
that the same trademark had been registered in its favor on March 8, 1962 asserting that it started using the trademark on
June 30, 1956, as indentor or broker for S.H. Huang Bros. & Co., a local firm.
The Director of Patents, after hearing, ruled in favor of respondent General Milling Corporation and rendered its decision
as follows:
However, there is testimony in the record (t.s.n., pp. 11-12, Jan.17,1967, testimony of Jose Uy) to the
effect that, indispensable, "ALL MONTANA" wheat flour is a premium flour produced from premium wheat
coming from the State of Montana, U.S.A. It is apparent that the trademark is primarily geographically
descriptive of the goods. It is therefore a matter overlooked by the Trademark Examiner, and it is
incumbent upon him to determine if the applicant should claim and is qualified to claim distinctiveness
under Section 4(f) of the Trademark Statute. Otherwise, it is registrable on the Supplemental Register and
should thus be registered therein.
WHEREFORE, the Junior Party-Applicant is adjudged prior -user of the trademark ALL MONTANA, but
'because it is primarily geographically descriptive, the application is herein remanded to the Chief
Trademark Examiner for proper proceeding before issuance of the certificate of registration.
The certificate of registration issued to the Senior Party is ordered cancelled.
IT IS SO ORDERED.
After its motion for reconsideration was denied, petitioner brought the instant petition seeking the reversal of the decision
and praying that it be declared the owner and prior user of the trademark "All Montana" on wheat flour.
Petitioner based its claim of ownership over the trademark in question by the fact that it acted as an indentor or broker for
S. H. Huang Bros. & Co., a local importer of wheat flour, offering as evidence the various shipments, documents, invoices
and other correspondence of Centennial Mills, Inc., shipping thousand of bags of wheat flour bearing the trademark "All
Montana" to the Philippines. Petitioner argued that these documents, invoices and correspondence proved the fact that it
has been using the trademark "All Montana" as early as 1955 in the concept of an owner and maintained that anyone,
whether he is only an importer, broker or indentor can appropriate, use and own a particular mark of its own choice
although he is not the manufacturer of the goods he deals with. Relying on the provisions of Section 2-A of the
Trademarks Law 2 (Republic Act 166), petitioner insists that "the appropriation and ownership of a particular trademark is
not merely confined to producers or manufacturers but likewise to anyone who lawfully deals in merchandise who renders
any lawful service in commerce, like petitioner in the case at bar. 3
The right to register trademark is based on ownership. 4 When the applicant is not the owner of the trademark being
applied for, he has no right to apply for the registration of the same. 5 Under the Trademark Law only the owner of the
trademark, trade name or service mark used to distinguish his goods, business or service from the goods, business or
service of others is entitled to register the same. 6

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. A
local importer, however, may make application for the registration of a foreign trademark, trade name or service mark if he
is duly authorized by the actual owner of the name or other mark of ownership. 7
Thus, this Court, has on several occasions ruled that where the applicant's 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. 8
Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act No. 166) allows one "who lawfully produces or deals
in merchandise ... or who engages in any lawful business or who renders any lawful service in commerce, by actual use
thereof . . . (to) appropriate to his exclusive use a trademark, or a service mark not so appropriated by another. " In the
case at bar, the evidence showed that the trademark "All Montana" was owned and registered in the name of Centennial
Mills, Inc. which later transferred it to respondent General Milling Corporation by way of a deed of assignment. It is
undisputed that way back in March, 1955, Centennial Mills, Inc. under the tradename Wenatchee Milling Co., exported
flour to the Philippines, through its distributor, herein petitioner Unno Commercial Enterprises, Inc. which acted as indentor
or broker for the firm S. H. Huang Bros. & Co. However, because of increased taxes and subsidies, Centennial Mills
discontinued shipments of flour in the Philippines and eventually sold its brands for wheat flour, including "All Montana"
brand to respondent General Milling Corporation in consideration of 1,000 shares of stock of respondent corporation with
a par value of P100.00 per share or a total of P100,000.00. Respondent General Milling Corporation, since the start of the
operation in 1961 of its flour mills located in Lapu-lapu City, Cebu has been manufacturing and selling "All Montana" flour
in the Philippines.
As against petitioner's argument that respondent failed to establish convincingly the ownership of the trademark "All
Montana" by its assignor Centennial Mills, Inc., the Director of Patents correctly found that ample evidence was presented
that Centennial Mills, Inc. was the owner and prior user in the Philippines of the trademark "All Montana" through a local
importer and broker. The Deed of Assignment itself constitutes sufficient proof of its ownership of the trademark "All
Montana," showing that Centennial Mills was a corporation duly organized and existing under and by virtue of the laws of
the State of Oregon, U.S.A. with principal place and business at Portland, Oregon, U.S.A. and the absolute and registered
owner of several trademarks for wheat flour, i.e. (Imperial, White Lily, Duck, General, Swan, White Horse, Vinta, El Paro,
Baker's Joy, Choice, Red Bowl All Montana and Dollar.) all of which were assigned by it to respondent General Milling
Corporation. The deed of assignment was signed by its president, Dugald MacGregor, duly acknowledged before James
Hunt, a notary public for the State of Oregon, accompanied by a certification issued by the Secretary of State of the State
of Oregon stating that the said James Hunt is a duly qualified Notary Public with full power and authority to take
acknowledgments of all oaths and that full faith and credit should be given to his official acts as notary public.
The Director of Patents likewise correctly rejected petitioner's contention that in a 1954 conference in Manila the
ownership and use by petitioner of the brand "All Montana" was agreed upon, on the contrary finding that "Details of that
meeting were, however, explained by Mr. Dugald MacGregor, President of Centennial Mills, Inc., as the Junior Party's
rebuttal witness. Mr. MacGregor confirmed holding such conference in a restaurant in Manila with representatives of the
Senior Party, namely; Messrs. Jose Uy, Francisco Gonzales and S. H. Huang although he could not remember the name
of the restaurant. He further explained that his company owned the trademark; that it had been using the mark in the
United States; and that ownership of the mark had never been conferred upon any other company, much less the Senior
Party"; and "Inasmuch as it was not the owner of the trademark, the Senior Party could not be regarded as having used
and adopted it, and had no right to apply for its registration. It acknowledged that it was a mere importer of flour, and a
mere importer and distributor acquires no rights in the mark used on the imported goods by the foreign exporter in the
absence of an assignment of any kind ... Trademarks used and adopted on goods manufactured or packed in a foreign
country in behalf of a domestic importer, broker, or indentor and distributor are presumed to be owned by the

manufacturer or packer, unless there is a written agreement clearly showing that ownership vests in the importer, broker,
indentor or distributor.
Thus, petitioner's contention that it is the owner of the mark "All Montana" because of its certificate of registration issued
by the Director of Patents, must fail, since ownership of a trademark is not acquired by the mere fact of registration
alone. 9 Registration merely creates a prima facie presumption of the validity of the registration, of the registrant's
ownership of the trademark and of the exclusive right to the use thereof. 10 Registration does not perfect a trademark
right. 11 As conceded itself by petitioner, evidence may be presented to overcome the presumption. Prior use by one will
controvert a claim of legal appropriation, by subsequent users. In the case at bar, the Director of Patents found that
"ample evidence was presented in the record that Centennial Mills, Inc. was the owner and prior user in the Philippines of
the trademark 'All Montana' through a local importer and broker. Use of a trademark by a mere importer, indentor or
exporter (the Senior Party herein) inures to the benefit of the foreign manufacturer whose goods are Identified by the
trademark. The Junior Party has hereby established a continuous chain of title and, consequently, prior adoption and use"
and ruled that "based on the facts established, it is safe to conclude that the Junior Party has satisfactorily discharged the
burden of proving priority of adoption and use and is entitled to registration." It is well-settled that we are precluded from
making further inquiry, since the findings of fact of the Director of Patents in the absence of any showing that there was
grave abuse of discretion is binding on us 12 and the findings of facts by the Director of Patents are deemed conclusive in
the Supreme Court provided that they are supported by substantial evidence. 13 Petitioner has failed to show that the
findings of fact of the Director of Patents are not substantially supported by evidence nor that any grave abuse of
discretion was committed.
Finally, the Court finds without merit petitioner's argument that the Director of Patents could not order the cancellation of'
its certificate of registration in an interference proceeding and that the question of whether or not a certificate of
registration is to be cancelled should have been brought in cancellation proceedings. Under Rule 178 of the Rules of the
Patent Office in Trademark Cases, 14 the Director of Patents is expressly authorized to order the cancellation of a
registered mark or trade name or name or other mark of ownership in an inter partes case, such as the interference
proceeding at bar. 15
WHEREFORE, the appealed decision is hereby affirmed. No costs.
SOCIETE DES PRODUITS G.R. No. 172276
NESTLE, S.A.,
Petitioner,
Present:
CARPIO, J., Chairperson,
NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.
MARTIN T. DY, JR., Promulgated:
Respondent. August 8, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 1 September 2005 Decision
and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy, Jr.) not
liable for trademark infringement. The Court of Appeals reversed the 18 September 1998 Decision of the Regional Trial Court (RTC),
Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
The Facts

Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation organized under the laws of Switzerland. It manufactures
food products and beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7 April 1969 by the then Bureau of
Patents, Trademarks and Technology Transfer, Nestle owns the NAN trademark for its line of infant powdered milk products,
consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified under Class 6 diatetic preparations for infant feeding.

Nestle distributes and sells its NAN milk products all over the Philippines. It has been investing tremendous amounts of resources to
train its sales force and to promote the NAN milk products through advertisements and press releases.

Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia and repacks the powdered milk into three sizes of
plastic packs bearing the name NANNY.The packs weigh 80, 180 and 450 grams and are sold for P8.90, P17.50 and P39.90,
respectively. NANNY is is also classified under Class 6 full cream milk for adults in [sic] all ages. Dy, Jr. distributes and sells the
powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.

In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using NANNY and to undertake that he would stop infringing
the NAN trademark. Dy, Jr. did not act onNestles request. On 1 March 1990, Nestle filed before the RTC, Judicial Region 7, Branch
31, Dumaguete City, a complaint against Dy, Jr. for infringement. Dy, Jr. filed a motion to dismiss alleging that the complaint did not
state a cause of action. In its 4 June 1990 order, the trial court dismissed the complaint. Nestle appealed the 4 June 1990 order to the
Court of Appeals. In its 16 February 1993 Resolution, the Court of Appeals set aside the 4 June 1990 order and remanded the case to
the trial court for further proceedings.

Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the trial court a motion to transfer the case to the RTC,
Judicial Region 7, Branch 9, Cebu City, which was designated as a special court for intellectual property rights.

The RTCs Ruling

In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for infringement. The trial court held:
If determination of infringement shall only be limited on whether or not the mark used would likely cause confusion
or mistake in the minds of the buying public or deceive customers, such in [sic] the most considered view of this
forum would be highly unlikely to happen in the instant case. This is because upon comparison of the plaintiffs
NAN and defendants NANNY, the following features would reveal the absence of any deceptive tendency in
defendants NANNY: (1) all NAN products are contained tin cans [sic], while NANNY are contained in plastic
packs;(2) the predominant colors used in the labels of NAN products are blue and white, while the predominant
colors in the plastic packings of NANNY are blue and green; (3) the labels of NAN products have at the bottom
portion an elliptical shaped figure containing inside it a drawing of nestling birds, which is overlapped by the tradename Nestle, while the plastic packs of NANNY have a drawing of milking cows lazing on a vast green field, backdropped with snow covered mountains; (4) the word NAN are [sic] all in large, formal and conservative-like block
letters, while the word NANNY are [sic] all in small and irregular style of letters with curved ends; and (5) all NAN
products are milk formulas intended for use of [sic] infants, while NANNY is an instant full cream powdered milk
intended for use of [sic] adults.

The foregoing has clearly shown that infringement in the instant case cannot be proven with the use of the test of
dominancy because the deceptive tendency of the unregistered trademark NANNY is not apparent from the essential
features of the registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971, Aug. 31, 1982, the Supreme Court
took the occasion of discussing what is implied in the definition of infringement when it stated: Implicit in this
definition is the concept that the goods must be so related that there is likelihood either of confusion of goods or
business. x x x But as to whether trademark infringement exists depends for the most part upon whether or not the
goods are so related that the public may be, or is actually, deceived and misled that they came from the same maker
or manufacturer. For non-competing goods may be those which, though they are not in actual competition, are so
related to each other that it might reasonably be assumed that they originate from one manufacturer. Non-competing
goods may also be those which, being entirely unrelated, could not reasonably be assumed to have a common
source. In the former case of related goods, confusion of business could arise out of the use of similar marks; in the
latter case of non-related goods, it could not.
Furthermore, in said case the Supreme Court as well discussed on when goods may become so related for purposes
of infringement when it stated: Goods are related when they belong to the same class or have same descriptive
properties; when they possess the same physical attributes or essential characteristics with reference to their form,
composition, texture or quality. They may also be related because they serve the same purpose or are sold in grocery
stores. x x x
Considering that defendants NANNY belongs to the same class as that of plaintiffs NAN because both are food
products, the defendants unregistered trade mark NANNY should be held an infringement to plaintiffs registered
trademark NAN because defendants use of NANNY would imply that it came from the manufacturer of
NAN. Furthermore, since the word nanny means a childs nurse, there might result the not so remote probability that
defendants NANNY may be confused with infant formula NAN despite the aparent [sic] disparity between the
features of the two products.

Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.

The Court of Appeals Ruling

In its 1 September 2005 Decision, the Court of Appeals reversed the trial courts 18 September 1998 Decision and found Dy,
Jr. not liable for infringement. The Court of Appeals held:
[T]he trial court appeared to have made a finding that there is no colorable imitation of the registered mark NAN
in Dys use of NANNY for his own milk packs. Yet it did not stop there. It continued on applying the concept of
related goods.
The Supreme Court utlilized the concept of related goods in the said case of Esso Standard Easter, Inc. versus Court
of Appeals, et al. wherein two contending parties used the same trademark ESSO for two different goods, i.e.
petroleum products and cigarettes. It rules that there is infringement of trademark involving two goods bearing the
same mark or label, even if the said goods are non-competing, if and only if they are so related that the public may
be, or is actually, deceived that they originate from the one maker or manufacturer. Since petroleum products and
cigarettes, in kind and nature, flow through different trade channels, and since the possibility of confusion is
unlikely in the general appearances of each mark as a whole, the Court held in this case that they cannot be so
related in the context of infringement.
In applying the concept of related goods in the present case, the trial court haphazardly concluded that since
plaintiff-appellees NAN and defendant-appellants NANNY belong to the same class being food products, the
unregistered NANNY should be held an infringement of Nestles NAN because the use of NANNY would imply that
it came from the manufacturer of NAN. Said court went on to elaborate further: since the word NANNY means a
childs nurse, there might result the not so remote probability that defendants NANNY may be confused with infant
formula NAN despite the aparent (sic) disparity between the features of the two products as discussed above.
The trial courts application of the doctrine laid down by the Supreme Court in the Esso Standard case
aforementioned and the cases cited therein is quite misplaced. The goods of the two contending parties in those
cases bear similar marks or labels: Esso for petroleum products and cigarettes, Selecta for biscuits and milk, X-7 for
soap and perfume, lipstick and nail polish. In the instant case, two dissimilar marks are involved plaintiffappellees NAN and defendant-appellants NANNY. Obviously, the concept of related goods cannot be utilized in the
instant case in the same way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that in resolving infringement or trademark
cases in the Philippines, particularly in ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, precedent must be studied in the light of the facts of the particular case. Each case must be
decided on its own merits. In the more recent case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the
High Court further stressed that due to the peculiarity of the facts of each infringement case, a judicial forum should
not readily apply a certain test or standard just because of seeming similarities. The entire panoply of elements
constituting the relevant factual landscape should be comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the word NAN is contained in the word
NANNY, there are more glaring dissimilarities in the entirety of their trademarks as they appear in their respective
labels and also in relation to the goods to which they are attached. The discerning eye of the observer must focus not
only on the predominant words but also on the other features appearing in both labels in order that he may draw his
conclusion whether one is confusingly similar to the other. Even the trial court found these glaring dissimilarities as
above-quoted. We need not add more of these factual dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all infant preparations, while
NANNY is a full cream milk for adults in [sic] all ages. NAN milk products are sold in tin cans and hence, far
expensive than the full cream milk NANNY sold in three (3) plastic packs containing 80, 180 and 450 grams and

worth P8.90, P17.50 and P39.90 per milk pack.The labels of NAN products are of the colors blue and white and
have at the bottom portion an elliptical shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name Nestle. On the other hand, the plastic packs NANNY have a drawing of milking cows
lazing on a vast green field, back-dropped with snow-capped mountains and using the predominant colors of blue
and green. The word NAN are [sic] all in large, formal and conservative-like block letters, while the word NANNY
are [sic] all in small and irregular style of letters with curved ends. With these material differences apparent in the
packaging of both milk products, NANNY full cream milk cannot possibly be an infringement of NAN infant milk.
Moreover, NAN infant milk preparation is more expensive than NANNY instant full cream milk. The cheaper price
of NANNY would give, at the very first instance, a considerable warning to the ordinary purchaser on whether he is
buying an infant milk or a full cream milk for adults. A cursory examination of the packaging would confirm the
striking differences between the products in question.
In view of the foregoing, we find that the mark NANNY is not confusingly similar to NAN. Dy therefore cannot be
held liable for infringement.

Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court of Appeals denied the motion for lack of
merit. Hence, the present petition.

Issue

The issue is whether Dy, Jr. is liable for infringement.

The Courts Ruling

The petition is meritorious.

Section 22 of Republic Act (R.A.) No. 166, as amended, states:

Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the sale, offering
for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall
be liable to a civil action by the registrant for any or all of the remedies herein provided.

Section 155 of R.A. No. 8293 states:

Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any
goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution,
or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter
set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this
subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.

In Prosource International, Inc. v. Horphag Research Management SA, the Court laid down the elements of infringement under R.A.
Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following
constitute the elements of trademark infringement:
(a) A trademark actually used in commerce in the Philippines and registered in the principal
register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering for sale, or advertising of
any goods, business or services or in connection with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as to the source or origin of such goods or services,
or identity of such business; or such trademark is reproduced, counterfeited, copied
or colorably imitated by another person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services as to likely cause
confusion or mistake or to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant or assignee.
On the other hand, the elements of infringement under R.A. No. 8293 are as follows:
The trademark being infringed is registered in the Intellectual Property Office; however,
in infringement of trade name, the same need not be registered;
The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated
by the infringer;

The infringing mark or trade name is used in connection with the sale, offering for sale,
or advertising of any goods, business or services; or the infringing mark or trade name is applied to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or
in connection with such goods, business or services;
The use or application of the infringing mark or trade name is likely to cause confusion or
mistake or to deceive purchasers or others as to the goods or services themselves or as to the
source or origin of such goods or services or the idenity of such business; and
It is without the consent of the trademark or trade name owner or the assignee thereof.

Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement. There are two types of
confusion in trademark infringement: confusion of goods and confusion of business. In Sterling Products International, Inc.
v. Farbenfabriken Bayer Aktiengesellschaft, the Court distinguished the two types of confusion:
Callman notes two types of confusion. The first is the confusion of goods in which event the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the other. In which case,
defendants goods are then bought as the plaintiffs, and the poorer quality of the former reflects adversely on the
plaintiffs reputation. The other is theconfusion of business: Here though the goods of the parties are different, the
defendants product is such as might reasonably be assumed to originate with the plaintiff, and the public would then
be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant
which, in fact, does not exist.

There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The dominancy test focuses on the
similarity of the main, prevalent or essential features of the competing trademarks that might cause confusion. Infringement takes
place when the competing trademark contains the essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive purchasers.

The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is
not only on the predominant words but also on the other features appearing on the labels.

In cases involving trademark infringement, no set of rules can be deduced. Each case must be decided on its own
merits. Jurisprudential precedents must be studied in the light of the facts of each particular case. In McDonalds Corporation
v. MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules
can be deduced because each case must be decided on its merits. In such cases, even more than in any other

litigation, precedent must be studied in the light of the facts of the particular case. That is the reason why in
trademark cases, jurisprudential precedents should be applied only to a case if they are specifically in point.

In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In recent cases with similar factual
milieus, the Court has consistently applied the dominancy test. In Prosource International, Inc., the Court applied the dominancy test
in holding that PCO-GENOLS is confusingly similar to PYCNOGENOL. The Court held:
The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity
between the marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA
affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix GENOL which on
evidence, appears to be merely descriptive and furnish no indication of the origin of the article and
hence, open for trademark registration by the plaintiff through combination with another word or
phrase such as PYCNOGENOL, Exhibits A to A-3.Furthermore, although the letters Y between P
and C, N between O and C and S after L are missing in the [petitioners] mark PCO-GENOLS,
nevertheless, when the two words are pronounced, the sound effects are confusingly similar not to
mention that they are both described by their manufacturers as a food supplement and thus,
identified as such by their public consumers. And although there were dissimilarities in the
trademark due to the type of letters used as well as the size, color and design employed on their
individual packages/bottles, still the close relationship of the competing products name is sounds
as they were pronounced, clearly indicates that purchasers could be misled into believing that they
are the same and/or originates from a common source and manufacturer.
We find no cogent reason to depart from such conclusion.
This is not the first time the Court takes into account the aural effects of the words and letters contained in the marks
in determining the issue of confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., cited
in McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court held:
The following random list of confusingly similar sounds in the matter of trademarks, culled
from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce our view that
SALONPAS and LIONPAS are confusingly similar in sound: Gold Dust and Gold
Drop; Jantzen and Jass-Sea; Silver Flash and Supper Flash; Cascarete and Celborite; Celluloid
and Cellonite; Chartreuse and Charseurs; Cutex and Cuticlean; Hebe and Meje; Kotex
and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book Trade-Mark Law and Practice, pp.
419-421, cities [sic], as coming within the purview of the idem sonans rule, Yusea and U-C-A,
Steinway Pianos and Steinberg Pianos, and Seven-Up and Lemon-Up.In Co Tiong vs. Director of
Patents, this Court unequivocally said that Celdura and Condura are confusingly similar in sound;
this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name Lusolin is an
infringement of the trademark Sapolin, as the sound of the two names is almost the same.

In McDonalds Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy test in holding that MACJOY is
confusingly similar to MCDONALDS. The Court held:
While we agree with the CAs detailed enumeration of differences between the two (2) competing trademarks herein
involved, we believe that the holistic test is not the one applicable in this case, the dominancy test being the one
more suitable. In recent cases with a similar factual milieu as here, the Court has consistently used and applied the
dominancy test in determining confusing similarity or likelihood of confusion between competing trademarks.
xxxx
Applying the dominancy test to the instant case, the Court finds that herein petitioners MCDONALDS and
respondents MACJOY marks are are confusingly similar with each other that an ordinary purchaser can conclude an
association or relation between the marks.
To begin with, both marks use the corporate M design logo and the prefixes Mc and/or Mac as dominant
features. x x x
For sure, it is the prefix Mc, and abbreviation of Mac, which visually and aurally catches the attention of the
consuming public. Verily, the word MACJOY attracts attention the same way as did
McDonalds, MacFries, McSpaghetti, McDo, Big Mac and the rest of the MCDONALDS marks which all use the
prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the
respondents trademark application for the MACJOY & DEVICE trademark covers goods under Classes 29 and 30 of
the International Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti,
etc. Likewise, the petitioners trademark registration for the MCDONALDS marks in the Philippines covers goods
which are similar if not identical to those covered by the respondents application.

In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court applied the dominancy test in holding that BIG MAK is
confusingly similar to BIG MAC. The Court held:
This Court x x x has relied on the dominancy test rather than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the appearance of the product arising from the
adoption of the dominant features of the registered mark, disregarding minor differences. Courts will consider more
the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices,
quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:
x x x It has been consistently held that the question of infringement of a trademark is to be
determined by the test of dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or essential or dominant features of

another, and confusion and deception is likely to result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn Rubber Corporation
vs. Honover Rubber Co., 107 F. 2d 588; xx x)
xxxx
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code
which defines infringement as the colorable imitation of a registered mark x x xor a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use of the Big Mak mark results in likelihood of
confusion. First, Big Mak sounds exactly the same as Big Mac. Second, the first word in Big Mak is exactly the
same as the first word in Big Mac. Third, the first two letters in Mak are the same as the first two letters in
Mac. Fourth, the last letter Mak while a k sounds the same as c when the word Mak is pronounced. Fifth, in Filipino,
the letter k replaces c in spelling, thus Caloocan is spelled Kalookan.

In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the dominancy test in holding that FLAVOR MASTER is
confusingly similar to MASTER ROAST and MASTER BLEND. The Court held:
While this Court agrees with the Court of Appeals detailed enumeration of differences between the respective
trademarks of the two coffee products, this Court cannot agree that totality test is the one applicable in this
case. Rather, this Court believes that the dominancy test is more suitable to this case in light of its peculiar factual
milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they are encountered in the realities of the
marketplace. The totality or holistic test only relies on visual comparison between two trademarks whereas the
dominancy test relies not only on the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:

From the evidence at hand, it is sufficiently established that the word MASTER is the dominant
feature of opposers mark. The word MASTER is printed across the middle portion of the label in
bold letters almost twice the size of the printed word ROAST. Further, the word MASTER has
always been given emphasis in the TV and radio commercials and other advertisements made in
promoting the product. x x x In due time, because of these advertising schemes the mind of the
buying public had come to learn to associate the word MASTER with the opposers goods.
x x x. It is the observation of this Office that much of the dominance which the word MASTER
has acquired through Opposers advertising schemes is carried over when the same is incorporated

into respondent-applicants trademark FLAVOR MASTER. Thus, when one looks at the label
bearing the trademark FLAVOR MASTER (exh. 4) ones attention is easily attracted to the word
MASTER, rather than to the dissimilarities that exist. Therefore, the possibility of confusion as to
the goods which bear the competing marks or as to the origins thereof is not farfetched.

Applying the dominancy test in the present case, the Court finds that NANNY is confusingly similar to NAN. NAN is the prevalent
feature of Nestles line of infant powdered milk products. It is written in bold letters and used in all products. The line consists of PRENAN, NAN-H.A., NAN-1, and NAN-2. Clearly, NANNY contains the prevalent feature NAN. The first three letters of NANNY are
exactly the same as the letters of NAN. When NAN and NANNY are pronounced, the aural effect is confusingly similar.
In determining the issue of confusing similarity, the Court takes into account the aural effect of the letters contained in the
marks. In Marvex Commercial Company, Inc. v. PetraHawpia & Company, the Court held:

It is our considered view that the trademarks SALONPAS and LIONPAS are confusingly similar in sound.
Both these words have the same suffix, PAS, which is used to denote a plaster that adheres to the body with curative
powers. PAS, being merely descriptive, furnishes no indication of the origin of the article and therefore is open for
appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31, 1966) and may properly become the
subject of a trademark by combination with another word or phrase.
xxxx
The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will reinforce our view that SALONPAS and LIONPAS are confusingly
similar in sound: Gold Dust and Gold Drop; Jantzen and Jass-Sea; Silver Flash and Supper
Flash; Cascarete and Celborite; Celluloid and Cellonite; Chartreuse and Charseurs; Cutex and Cuticlean; Hebe
and Meje; Kotex and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book Trade-Mark Law and Practice, pp.
419-421, cities [sic], as coming within the purview of the idem sonans rule, Yusea and U-C-A, Steinway Pianos and
Steinberg Pianos, and Seven-Up and Lemon-Up. In Co Tiong vs. Director of Patents, this Court unequivocally said
that Celdura and Condura are confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil.
795 that the name Lusolin is an infringement of the trademark Sapolin, as the sound of the two names is almost the
same.

The scope of protection afforded to registered trademark owners is not limited to protection from infringers with identical goods. The
scope of protection extends to protection from infringers with related goods, and to market areas that are the normal expansion of
business of the registered trademark owners. Section 138 of R.A. No. 8293 states:
Certificates of Registration. A certificate of registration of a mark shall be prima facie evidence of validity of the
registration, the registrants ownership of the mark, and of the registrants exclusive right to use the same in

connection with the goods or services and those that are related thereto specified in the certificate. (Emphasis
supplied)

In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, Non-competing goods may be those which, though they are not in
actual competition, are so related to each other that it can reasonably be assumed that they originate from one manufacturer, in which
case, confusion of business can arise out of the use of similar marks. In that case, the Court enumerated factors in determining whether
goods are related: (1) classification of the goods; (2) nature of the goods; (3) descriptive properties, physical attributes or essential
characteristics of the goods, with reference to their form, composition, texture or quality; and (4) style of distribution and marketing of
the goods, including how the goods are displayed and sold.

NANNY and NAN have the same classification, descriptive properties and physical attributes. Both are classified under Class 6, both
are milk products, and both are in powder form. Also, NANNY and NAN are displayed in the same section of stores the milk section.

The Court agrees with the lower courts that there are differences between NAN and NANNY: (1) NAN is intended for infants while
NANNY is intended for children past their infancy and for adults; and (2) NAN is more expensive than NANNY. However, as the
registered owner of the NAN mark, Nestle should be free to use its mark on similar products, in different segments of the market, and
at different price levels. In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court held that the scope of protection afforded
to registered trademark owners extends to market areas that are the normal expansion of business:
xxx
Even respondents use of the Big Mak mark on non-hamburger food products cannot excuse their infringement of
petitioners registered mark, otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or similar products, in different segments of
the market, and at different price levels depending on variations of the products for specific segments of the
market. The Court has recognized that the registered trademark owner enjoys protection in product and
market areas that are the normal potential expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a trademark is entitled is not
limited to guarding his goods or business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by a junior appropriator of a 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 sq; 53 Am. Jur. 576) or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR, 77, 84;
52 Am. Jur. 576, 577). (Emphasis supplied)

WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision and 4 April 2006 Resolution of the Court
of Appeals in CA-G.R. CV No. 62730 andREINSTATE the 18 September 1998 Decision of the Regional Trial Court, Judicial Region
7, Branch 9, Cebu City, in Civil Case No. CEB-19345.

SO ORDERED.

PHILIP MORRIS, INC., BENSON &

HEDGES
(CANADA),
INC.,
and
FABRIQUES DE TABAC REUNIES, S.A.,
(now known as PHILIP MORRIS
PRODUCTS S.A.),
Petitioners,

G.R. No. 158589

Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,

- versus -

AZCUNA, and
GARCIA, JJ.

FORTUNE TOBACCO CORPORATION,

Respondent.

Promulgated:

June 27, 2006

x------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson
& Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the
reversal and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619,
to wit:
1. Decision dated January 21, 2003[1] affirming an earlier decision of the Regional Trial
Court of Pasig City, Branch 166, in its Civil Case No. 47374, which dismissed the
complaint for trademark infringement and damages thereat commenced by the
petitioners against respondent Fortune Tobacco Corporation; and

2. Resolution dated May 30, 2003[2] denying petitioners motion for reconsideration.

Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States
of America, is, per Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine Patents
Office (PPO), the registered owner of the trademark MARK VII for cigarettes. Similarly, petitioner Benson &
Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark MARK
TEN for cigarettes as evidenced by PPOCertificate of Registration No. 11147. And as can be seen in
Trademark Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss
company Fabriques de Tabac Reunies, S.A., is the assignee of the trademark LARK, which was originally
registered in 1964 by Ligget and Myers Tobacco Company. On the other hand, respondent Fortune Tobacco
Corporation, a company organized in the Philippines, manufactures and sells cigarettes using the
trademark MARK.

The legal dispute between the parties started when the herein petitioners, on the claim that an
infringement of their respective trademarks had been committed, filed, on August 18, 1982, a Complaint

for Infringement of Trademark and Damages against respondent Fortune Tobacco Corporation, docketed as
Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:

In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners]
alleged that they are foreign corporations not doing business in the Philippines and are suing
on an isolated transaction. xxx they averred that the countries in which they are domiciled
grant xxx to corporate or juristic persons of the Philippines the privilege to bring action for
infringement, xxx without need of a license to do business in those countries. [Petitioners]
likewise manifested [being registered owners of the trademark MARK VII and MARK TEN for
cigarettes as evidenced by the corresponding certificates of registration and an applicant for
the registration of the trademark LARK MILDS]. xxx. [Petitioners] claimed that they have
registered the aforementioned trademarks in their respective countries of origin and that, by
virtue of the long and extensive usage of the same, these trademarks have already gained
international fame and acceptance. Imputing bad faith on the part of the
[respondent], petitioners claimed that the [respondent], without any previous consent from
any of the [petitioners], manufactured and sold cigarettes bearing the identical and/or
confusingly similar trademark MARK xxx Accordingly, they argued that [respondents] use of
the trademark MARK in its cigarette products have caused and is likely to cause confusion or
mistake, or would deceive purchasers and the public in general into buying these products
under the impression and mistaken belief that they are buying [petitioners] products.

Invoking the provisions of the Paris Convention for the Protection of Industrial and
Intellectual Property (Paris Convention, for brevity), to which the Philippines is a signatory
xxx, [petitioners] pointed out that upon the request of an interested party, a country of the
Union may prohibit the use of a trademark which constitutes a reproduction, imitation, or
translation of a mark already belonging to a person entitled to the benefits of the said
Convention. They likewise argued that, in accordance with Section 21-A in relation to Section
23 of Republic Act 166, as amended, they are entitled to relief in the form of damages xxx
[and] the issuance of a writ of preliminary injunction which should be made permanent to
enjoin perpetually the [respondent] from violating [petitioners] right to the exclusive use of
their aforementioned trademarks.

[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred
[among other things] xxx that MARK is a common word, which cannot particularly identify a
product to be the product of the [petitioners] xxx

xxx xxx xxx.

Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of
the [petitioners] prayer for the issuance of a writ of preliminary injunction was negatively
resolved by the court in an Order xxx dated March 28, 1973. [The incidental issue of the
propriety of an injunction would eventually be elevated to the CA and would finally be
resolved by the Supreme Court in its Decision dated July 16, 1993 in G.R. No. 91332]. xxx.

xxx xxx xxx

After the termination of the trial on the merits xxx trial court rendered
its Decision xxx dated November 3, 1999 dismissing the complaint and counterclaim after
making a finding that the [respondent] did not commit trademark infringement against the
[petitioners]. Resolving first the issue of whether or not [petitioners] have capacity to
institute the instant action, the trial court opined that [petitioners] failure to present
evidence to support their allegation that their respective countries indeed grant Philippine
corporations reciprocal or similar privileges by law xxx justifies the dismissal of the
complaint xxx. It added that the testimonies of [petitioners] witnesses xxx essentially
declared that [petitioners] are in fact doing business in the Philippines, but [petitioners]
failed to establish that they are doing so in accordance with the legal requirement of first
securing a license. Hence, the court declared that [petitioners] are barred from maintaining
any action in Philippine courts pursuant to Section 133 of the Corporation Code.

The issue of whether or not there was infringement of the [petitioners] trademarks by the
[respondent] was likewise answered xxx in the negative. It expounded that in order for a
name, symbol or device to constitute a trademark, it must, either by itself or by association,
point distinctly to the origin or ownership of the article to which it is applied and be of such
nature as to permit an exclusive appropriation by one person. Applying such principle to the
instant case, the trial court was of the opinion that the words MARK, TEN, LARK and the
Roman Numerals VII, either alone or in combination of each other do not by themselves or
by association point distinctly to the origin or ownership of the cigarettes to which they
refer, such that the buying public could not be deceived into believing that [respondents]
MARK cigarettes originated either from the USA, Canada, or Switzerland.

Emphasizing that the test in an infringement case is the likelihood of confusion or deception,
the trial court stated that the general rule is that an infringement exists if the resemblance
is so close that it deceives or is likely to deceive a customer exercising ordinary caution in
his dealings and induces him to purchase the goods of one manufacturer in the belief that
they are those of another. xxx. The trial court ruled that the [petitioners] failed to pass these
tests as it neither presented witnesses or purchasers attesting that they have bought
[respondents] product believing that they bought [petitioners] MARK VII, MARK TEN or LARK,
and have also failed to introduce in evidence a specific magazine or periodical circulated
locally, which promotes and popularizes their products in the Philippines. It, moreover,
elucidated that the words consisting of the trademarks allegedly infringed by [respondent]

failed to show that they have acquired a secondary meaning as to identify them as
[petitioners] products. Hence, the court ruled that the [petitioners] cannot avail themselves
of the doctrine of secondary meaning.

As to the issue of damages, the trial court deemed it just not to award any to either party
stating that, since the [petitioners] filed the action in the belief that they were aggrieved by
what they perceived to be an infringement of their trademark, no wrongful act or omission
can be attributed to them. xxx.[3] (Words in brackets supplied)

Maintaining to have the standing to sue in the local forum and that respondent has committed trademark
infringement, petitioners went on appeal to the CA whereat their appellate recourse was docketed as CAG.R. CV No. 66619.

Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the
matter of their legal capacity to sue in this country for trademark infringement, nevertheless affirmed the
trial courts decision on the underlying issue of respondents liability for infringement as it found that:

xxx the appellants [petitioners] trademarks, i.e., MARK VII, MARK TEN and LARK, do
not qualify as well-known marks entitled to protection even without the benefit of actual use
in the local market and that the similarities in the trademarks in question are insufficient as
to cause deception or confusion tantamount to infringement. Consequently, as regards the
third issue, there is likewise no basis for the award of damages prayed for by the appellants
herein.[4] (Word in bracket supplied)

With

their

motion

for

reconsideration

having

been

denied

by

the

CA

in

its

equally

challenged Resolution of May 30, 2003, petitioners are now with this Court via this petition for review
essentially raising the following issues: (1) whether or not petitioners, as Philippine registrants of
trademarks, are entitled to enforce trademark rights in this country; and (2) whether or not respondent has
committed trademark infringement against petitioners by its use of the mark MARK for its cigarettes,
hence liable for damages.

In its Comment,[5] respondent, aside from asserting the correctness of the CAs finding on its liability
for trademark infringement and damages, also puts in issue the propriety of the petition as it allegedly
raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises
both questions of fact and law contrary to the prescription against raising factual questions in a petition for
review on certiorari filed before the Court. A question of law exists when the doubt or difference arises as
to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises
as to the truth or falsity of alleged facts.[6]

Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts.
[7]

Unless the factual findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted

with grave abuse of discretion, or contrary to the findings culled by the court of origin, [8] we will not disturb
them.

It is petitioners posture, however, that their contentions should

be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed
facts.

Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn
therefrom by the CA is correct is one of law. [9] But, even if we consider and accept as pure questions of law
the issues raised in this petition, still, the Court is not inclined to disturb the conclusions reached by the
appellate court, the established rule being that all doubts shall be resolved in favor of the correctness of
such conclusions.[10]

Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in
accordance with law and established jurisprudence in arriving at its assailed decision.

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 in by others. [11] Inarguably, a trademark deserves protection. For,
as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:[12]
The protection of trademarks is the laws recognition of the psychological function of
symbols. If it is true that we live by symbols, it is no less true that we purchase goods by
them. A trade-mark is a merchandising short-cut which induces a purchaser to select what
he wants, or what he has been led to believe what he wants. The owner of a mark exploits
this human propensity by making every effort to impregnate the atmosphere of the market
with the drawing power of a congenial symbol. Whatever the means employed, the aim is
the same - to convey through the mark, in the minds of potential customers, the desirability
of the commodity upon which it appears. Once this is attained, the trade-mark owner has
something of value. If another poaches upon the commercial magnetism of the symbol he
has created, the owner can obtain legal redress.

It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce
trademark rights in this country, specifically, the right to sue for trademark infringement in Philippine
courts and be accorded protection against unauthorized use of their Philippine-registered trademarks.

In support of their contention respecting their right of action, petitioners assert that, as corporate
nationals of member-countries of the Paris Union, they can sue before Philippine courts for infringement of
trademarks, or for unfair competition, without need of obtaining registration or a license to do
business in the Philippines, and without necessity of actually doing business in the Philippines.
To petitioners, these grievance right and mechanism are accorded not only by Section 21-A of Republic Act
(R.A.) No. 166, as amended, or the Trademark Law, but also by Article 2 of the Paris Convention for the
Protection of Industrial Property, otherwise known as the Paris Convention.

In any event, petitioners point out that there is actual use of their trademarks in the Philippines as
evidenced by the certificates of registration of their trademarks. The marks MARK TEN and LARK were
registered on the basis of actual use in accordance with Sections 2-A [13] and 5(a)[14] of R.A. No. 166, as
amended, providing for a 2-month pre-registration use in local commerce and trade while the registration
of MARK VII was on the basis of registration in the foreign country of origin pursuant to Section 37 of the
same law wherein it is explicitly provided that prior use in commerce need not be alleged. [15]

Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does
not mean that cigarettes bearing their trademarks are not available and sold locally. Citing Converse
Rubber Corporation v. Universal Rubber Products, Inc., [16] petitioners state that such availability and sale
may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of
trademarks in the country in view of the Philippines adherence to the Trade Related Aspects of Intellectual
Property Rights or the TRIPS Agreement and the enactment of R.A. No. 8293, or the Intellectual Property
Code (hereinafter the IP Code), both of which provide that the fame of a trademark may be acquired
through promotion or advertising with no explicit requirement of actual use in local trade or commerce.

Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it
must be emphasized that their standing to sue in Philippine courts had been recognized, and rightly so, by
the CA. It ought to be pointed out, however, that the appellate court qualified its holding with a statement,
following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune Tobacco
Corporation,[17] that such right to sue does not necessarily mean protection of their registered marks in the
absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength
of registration of their trademarks in thePhilippines.

As we ruled in G.R. No. 91332,[18] supra, so it must be here.

Admittedly,

the registration of a trademark

such as petitioners, advantages denied non-registrants or ordinary

gives the registrant,

users,

like

respondent.But

while

petitioners enjoy the statutory presumptions arising from such registration, [19] i.e., as to the validity of the
registration, ownership and the exclusive right to use the registered marks, they may not successfully sue
on the basis alone of their respective certificates of registration of trademarks. For, petitioners are still
foreign corporations. As such, they ought, as a condition to availment of the rights and privileges vis-vis their trademarks in this country, to show proof that, on top of Philippine registration, their
country grants substantially similar rights and privileges to Filipino citizens pursuant to
Section 21-A[20] of R.A. No. 166.
In Leviton Industries v. Salvador,[21] the Court further held that the aforementioned reciprocity
requirement is a condition sine qua non to filing a suit by a foreign corporation which, unless alleged in the
complaint, would justify dismissal thereof, a mere allegation that the suit is being pursued under Section
21-A of R.A. No. 166 not being sufficient. In a subsequent case, [22] however, the Court held that where the
complainant is a national of a Paris Convention- adhering country, its allegation that it is suing under said
Section 21-A would suffice, because the reciprocal agreement between the two countries is embodied and
supplied by the Paris Convention which, being considered part of Philippine municipal laws, can be taken
judicial notice of in infringement suits.[23]

As well, the fact that their respective home countries, namely, the United States, Switzerland and
Canada, are, together with the Philippines, members of the Paris Union does not automatically entitle
petitioners to the protection of their trademarks in this country absent actual use of the marks in local
commerce and trade.

True, the Philippines adherence to the Paris Convention[24] effectively obligates the country to honor and
enforce its provisions[25] as regards the protection of industrial property of foreign nationals in this
country. However, any protection accorded has to be made subject to the limitations of Philippine laws.
[26]

Hence, despite Article 2 of the Paris Convention which substantially provides that (1) nationals of

member-countries shall have in this country rights specially provided by the Convention as are consistent
with Philippine laws, and enjoy the privileges that Philippine laws now grant or may hereafter grant to its
nationals, and (2) while no domicile requirement in the country where protection is claimed shall be
required of persons entitled to the benefits of the Union for the enjoyment of any industrial property rights,
[27]

foreign nationals must still observe and comply with the conditions imposed by Philippine law on its

nationals.

Considering that R.A. No. 166, as amended, specifically Sections 2 [28] and 2-A[29] thereof, mandates actual
use of the marks and/or emblems in local commerce and trade before they may be registered and
ownership thereof acquired, the petitioners cannot, therefore, dispense with the element of actual use.
Their being nationals of member-countries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,[30] the Court reiterated its rulings
in Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, [31] Kabushi Kaisha Isetan
v. Intermediate Appellate Court,[32] and Philip Morris v. Court of Appeals and Fortune Tobacco
Corporation[33] on

the

importance

of actual

commercial

use of

trademark

the Philippines notwithstanding the Paris Convention:

The provisions of the 1965 Paris Convention relied upon by private respondent and
Sec. 21-A of the Trademark Law were sufficiently expounded upon and qualified in the recent
case of Philip Morris, Inc., et. al. vs. Court of Appeals:

xxx xxx xxx

in

Following universal acquiescence and comity, our municipal law on trademarks

regarding the requirements of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a municipal
tribunal. Xxx. Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of
International Law are given a standing equal, not superior, to national legislative
enactments.

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement but the
question of whether they have an exclusive right over their symbol as to justify issuance of
the controversial writ will depend on actual use of their trademarks in the Philippines in line
with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that
when a foreign corporation not licensed to do business in the Philippines files a complaint for
infringement, the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit for
infringement but it may not necessarily be entitled to protection due to absence of actual
use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as
to the actual use of such trademark in local commerce. As it were, registration does not confer upon the
registrant an absolute right to the registered mark. The certificate of registration merely constitutes prima
facieevidence that the registrant is the owner of the registered mark. Evidence of non-usage of the mark
rebuts the presumption of trademark ownership, [34] as what happened here when petitioners no less
admitted not doing business in this country. [35]
Most importantly, we stress that registration in the Philippines of trademarks does not ipso
facto convey an absolute right or exclusive ownership thereof. To borrow from Shangri-La International
Hotel Management, Ltd. v. Development Group of Companies, Inc. [36] trademark is a creation of use and,
therefore, actual use is a pre-requisite to exclusive ownership; registration is only an administrative
confirmation of the existence of the right of ownership of the mark, but does not perfect such right; actual
use thereof is the perfecting ingredient.[37]

Petitioners reliance on Converse Rubber Corporation[38] is quite misplaced, that case being cast in a
different factual milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not licensed
to do, and not so engaged in, business in the Philippines, may actually earn reputation or goodwill for its
goods in the country. But unlike in the instant case, evidence of actual sales of Converse rubber shoes,
such as sales invoices, receipts and the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint
herein having been filed in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP
Code, however, took effect only on January 1, 1998 without a provision as to its retroactivity. [39] In the same
vein, the TRIPS Agreement was inexistent when the suit for infringement was filed, the Philippines having
adhered thereto only on December 16, 1994.

With the foregoing perspective, it may be stated right off that the registration of a trademark
unaccompanied by actual use thereof in the country accords the registrant only the standing to sue for
infringement in Philippine courts. Entitlement to protection of such trademark in the country is entirely a
different matter.

This brings us to the principal issue of infringement.

Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as
follows:

Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of
the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered
mark or tradename in connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy of color ably imitate

any such mark or tradename and apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business, or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein provided.

Petitioners would insist on their thesis of infringement since respondents mark MARK for cigarettes
is confusingly or deceptively similar with their dulyregistered MARK VII, MARK TEN and LARK marks
likewise for cigarettes. To them, the word MARK would likely cause confusion in the trade, or deceive
purchasers, particularly as to the source or origin of respondents cigarettes.

The likelihood of confusion is the gravamen of trademark infringement. [40] But likelihood of
confusion is a relative concept, the particular, and sometimes peculiar, circumstances of each case being
determinative of its existence. Thus, in trademark infringement cases, more than in other kinds of
litigation, precedents must be evaluated in the light of each particular case. [41]

In

determining

similarity

and

jurisprudence has developed two tests: the dominancy test

likelihood
and

of

confusion,

the holistic test.[42] The

dominancytest[43] sets sight on the similarity of the prevalent features of the competing trademarks that
might cause confusion and deception, thus constitutes infringement. Under this norm, the question at
issue turns on whether the use of the marks involved would be likely to cause confusion or mistake in the
mind of the public or deceive purchasers.[44]
In contrast, the holistic test[45] entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.

Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the
likelihood of confusion resulting in infringement arising from the respondents use of the trademark MARK
for its particular cigarette product.

For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as
they appear on the products,[46] the striking dissimilarities are significant enough to warn any purchaser
that one is different from the other. Indeed, although the perceived offending word MARK is itself
prominent in petitioners trademarks MARK VII and MARK TEN, the entire marking system should be
considered as a whole and not dissected, because a discerning eye would focus not only on the
predominant word but also on the other features appearing in the labels. Only then would such discerning
observer draw his conclusion whether one mark would be confusingly similar to the other and whether or
not sufficient differences existed between the marks. [47]

This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three
cigarette brands of the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind
that a trademark serves as a tool to point out distinctly the origin or ownership of the goods to which it is
affixed,[48] the likelihood of confusion tantamount to infringement appears to be farfetched. The reason for
the origin and/or ownership angle is that unless the words or devices do so point out the origin or
ownership, the person who first adopted them cannot be injured by any appropriation or imitation of them
by others, nor can the public be deceived.[49]

Since the word MARK, be it alone or in combination with the word TEN and the Roman numeral VII,
does not point to the origin or ownership of the cigarettes to which they apply, the local buying public
could not possibly be confused or deceived that respondents MARK is the product of petitioners and/or
originated from the U.S.A., Canada or Switzerland. And lest it be overlooked, no actual commercial use of

petitioners marks in local commerce was proven. There can thus be no occasion for the public in this
country, unfamiliar in the first place with petitioners marks, to be confused.

For another, a comparison of the trademarks as they appear on the goods is just one of the
appreciable circumstances in determining likelihood of confusion. Del Monte Corp. v. CA[50] dealt with
another, where we instructed to give due regard to the ordinary purchaser, thus:

The question is not whether the two articles are distinguishable by their label when
set side by side but whether the general confusion made by the article upon the eye of the
casual purchaser who is unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. As observed in several cases, the general impression of the
ordinary purchaser, buying under the normally prevalent conditions in trade and giving the
attention such purchasers usually give in buying that class of goods is the touchstone.

When we spoke of an ordinary purchaser, the reference was not to the completely unwary customer
but to the ordinarily intelligent buyer considering the type of product involved. [51]
It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly
by those who are already predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be
all too familiar with his brand and discriminating as well. We, thus, concur with the CA when it held, citing a
definition found in Dy Buncio v. Tan Tiao Bok,[52] that the ordinary purchaser in this case means one
accustomed to buy, and therefore to some extent familiar with, the goods in question.

Pressing on with their contention respecting the commission of trademark infringement, petitioners finally
point to Section 22 of R.A. No. 166, as amended. As argued, actual use of trademarks in local commerce is,
under said section, not a requisite before an aggrieved trademark owner can restrain the use of his
trademark upon goods manufactured or dealt in by another, it being sufficient that he had registered the
trademark or trade-name with the IP Office. In fine, petitioners submit that respondent is liable for

infringement, having manufactured and sold cigarettes with the trademark MARK which, as it were, are
identical and/or confusingly similar with their duly registered trademarks MARK VII, MARK TEN and LARK.

This Court is not persuaded.

In Mighty Corporation v. E & J Gallo Winery,[53] the Court held that the following constitute the
elements of trademark infringement in accordance not only with Section 22 of R.A. No. 166, as amended,
but also Sections 2, 2-A, 9-A[54] and 20 thereof:

(a) a trademark actually used in commerce in the Philippines and registered in the principal
register of the Philippine Patent Office,

(b) is used by another person in connection with the sale, offering for sale, or advertising of
any goods, business or services or in connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with
such goods, business or services as to likely cause confusion or mistake or to deceive
purchasers,

(c) the trademark is used for identical or similar goods, and

(d) such act is done without the consent of the trademark registrant or assignee.
As already found herein, while petitioners have registered the trademarks MARK VII, MARK TEN and
LARK for cigarettes in the Philippines, prior actual commercial use thereof had not been proven. In fact,
petitioners judicial admission of not doing business in this country effectively belies any pretension to the
contrary.

Likewise, we note that petitioners even failed to support their claim that their respective marks are
well-known and/or have acquired goodwill in thePhilippines so as to be entitled to protection even without
actual use in this country in accordance with Article 6bis [55] of the Paris Convention. As correctly found by
the CA, affirming that of the trial court:

xxx the records are bereft of evidence to establish that the appellants [petitioners]
products are indeed well-known in the Philippines, either through actual sale of the product
or through different forms of advertising. This finding is supported by the fact that appellants
admit in their Complaint that they are not doing business in the Philippines, hence,
admitting that their products are not being sold in the local market. We likewise see no
cogent reason to disturb the trial courts finding that the appellants failed to establish that
their products are widely known by local purchasers as (n)o specific magazine or periodical
published in the Philippines, or in other countries but circulated locally have been presented
by the appellants during trial. The appellants also were not able to show the length of time
or the extent of the promotion or advertisement made to popularize their products in
the Philippines.[56]

Last,

but

not

least,

we must

reiterate

that

the

issue of trademark infringement is factual,

with both the trial and appellate courts having peremptorily found allegations of infringement on the part
of respondent to be without basis. As we said time and time again, factual determinations of the trial court,
concurred in by the CA, are final and binding on this Court. [57]

For lack of convincing proof on the part of the petitioners of actual use of their registered
trademarks prior to respondents use of its mark and for petitioners failure to demonstrate confusing
similarity between said trademarks, the dismissal of their basic complaint for infringement and the
concomitant plea for damages must be affirmed. The law, the surrounding circumstances and the equities
of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of
the Court of Appeals are AFFIRMED.

Costs against the petitioners.

SO ORDERED.
CONVERSE
RUBBER
CORPORATION, petitioner,
vs.
UNIVERSAL RUBBER PRODUCTS, INC. and TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, respondents.
Parades, Poblador, Nazareno, Azada & Tomacruz for petitioner.
RESOLUTION

FERNAN, J.:
The undisputed facts of the case are as follows:
Respondent Universal Rubber Products, Inc. filed an application with the Philippine Patent office for registration of the
trademark "UNIVERSAL CONVERSE AND DEVICE" used on rubber shoes and rubber slippers.
Petitioner Converse Rubber Corporation filed its opposition to the application for registration on grounds that:
a] The trademark sought to be registered is confusingly similar to the word "CONVERSE" which is part of
petitioner's corporate name "CONVERSE RUBBER CORPORATION" as to likely deceive purchasers of
products on which it is to be used to an extent that said products may be mistaken by the unwary public to
be manufactured by the petitioner; and,
b] The registration of respondent's trademark will cause great and irreparable injury to the business
reputation and goodwill of petitioner in the Philippines and would cause damage to said petitioner within
the, meaning of Section 8, R.A. No. 166, as amended.
Thereafter, respondent filed its answer and at the pre-trial, the parties submitted the following partial stipulation of facts:
1] The petitioner's corporate name is "CONVERSE RUBBER CORPORATION" and has been in existence
since July 31, 1946; it is duly organized under the laws of Massachusetts, USA and doing business at 392
Pearl St., Malden, County of Middle sex, Massachusetts;
2] Petitioner is not licensed to do business in the Philippines and it is not doing business on its own in the
Philippines; and,
3] Petitioner manufacturers rubber shoes and uses thereon the trademarks "CHUCK TAYLOR "and "ALL
STAR AND DEVICE". 1

At the trial, petitioner's lone witness, Mrs. Carmen B. Pacquing, a duly licensed private merchant with stores at the Sta.
Mesa Market and in Davao City, testified that she had been selling CONVERSE rubber shoes in the local market since
1956 and that sales of petitioner's rubber shoes in her stores averaged twelve to twenty pairs a month purchased mostly
by basketball players of local private educational institutions like Ateneo, La Salle and San Beda.
Mrs. Pacquing, further stated that she knew petitioner's rubber shoes came from the United States "because it says there
in the trademark Converse Chuck Taylor with star red or blue and is a round figure and made in U.S.A. " 2 In the invoices
issued by her store, the rubber shoes were described as "Converse Chuck Taylor", 3 "Converse All Star,"4 "All Star
Converse Chuck Taylor," 5 or "Converse Shoes Chuck Taylor." 6 She also affirmed that she had no business connection
with the petitioner.
Respondent, on the other hand, presented as its lone witness the secretary of said corporation who testified that
respondent has been selling on wholesale basis "Universal Converse" sandals since 1962 and "Universal Converse"
rubber shoes since 1963. Invoices were submitted as evidence of such sales. The witness also testified that she had no
Idea why respondent chose "Universal Converse" as a trademark and that she was unaware of the name "Converse" prior
to her corporation's sale of "Universal Converse" rubber shoes and rubber sandals.
Eventually, the Director of Patents dismissed the opposition of the petitioner and gave due course to respondent's
application. His decision reads in part:
... the only question for determination is whether or not the applicant's partial appropriation of the
Opposer's [petitioner'] corporate name is of such character that in this particular case, it is calculated to
deceive or confuse the public to the injury of the corporation to which the name belongs ...
I cannot find anything that will prevent registration of the word 'UNIVERSAL CONVERSE' in favor of the
respondent. In arriving at this conclusion, I am guided by the fact that the opposer failed to present proof
that the single word "CONVERSE' in its corporate name has become so Identified with the corporation
that whenever used, it designates to the mind of the public that particular corporation.
The proofs herein are sales made by a single witness who had never dealt with the petitioner . . . the
entry of Opposer's [petitioner's] goods in the Philippines were not only effected in a very insignificant
quantity but without the opposer [petitioner] having a direct or indirect hand in the transaction so as to be
made the basis for trademark pre- exemption.
Opposer's proof of its corporate personality cannot establish the use of the word "CONVERSE" in any
sense, as it is already stipulated that it is not licensed to do business in the Philippines, and is not doing
business of its own in the Philippines. If so, it will be futile for it to establish that "CONVERSE" as part of
its corporate name Identifies its rubber shoes. Besides, it was also stipulated that opposer [petitioner], in
manufacturing rubber shoes uses thereon the trademark "CHUCK TAYLOR" and "ALL STAR and
DEVICE" and none other.
Furthermore, inasmuch as the Opposer never presented any label herein, or specimen of its shoes,
whereon the label may be seen, notwithstanding its witness' testimony touching upon her Identification of
the rubber shoes sold in her stores, no determination can be made as to whether the word 'CONVERSE'
appears thereon.
. . .the record is wanting in proof to establish likelihood of confusion so as to cause probable damage to
the Opposer. 7

Its motion for reconsideration having been denied by the respondent Director of Patents, petitioner instituted the instant
petition for review.
As correctly phrased by public respondent Director of Patents, the basic issue presented for our consideration is whether
or not the respondent's partial appropriation of petitioner's corporate name is of such character that it is calculated to
deceive or confuse the public to the injury of the petitioner to which the name belongs.
A trade name is any individual name or surname, firm name, device or word used by manufacturers,
industrialists, merchants and others to Identify their businesses, vocations or occupations. 8 As the trade
name refers to the business and its goodwill ... the trademark refers to the goods." 9 The ownership of a
trademark or tradename is a property right which the owner is entitled to protect "since there is damage to
him from confusion or reputation or goodwill in the mind of the public as well as from confusion of goods.
The modern trend is to give emphasis to the unfairness of the acts and to classify and treat the issue as
fraud. 10
From a cursory appreciation of the petitioner's corporate name "CONVERSE RUBBER CORPORATION,' it is evident that
the word "CONVERSE" is the dominant word which Identifies petitioner from other corporations engaged in similar
business. Respondent, in the stipulation of facts, admitted petitioner's existence since 1946 as a duly organized foreign
corporation engaged in the manufacture of rubber shoes. This admission necessarily betrays its knowledge of the
reputation and business of petitioner even before it applied for registration of the trademark in question. Knowing,
therefore, that the word "CONVERSE" belongs to and is being used by petitioner, and is in fact the dominant word in
petitioner's corporate name, respondent has no right to appropriate the same for use on its products which are similar to
those being produced by petitioner.
A corporation is entitled to the cancellation of a mark that is confusingly similar to its corporate
name."11 "Appropriation by another of the dominant part of a corporate name is an infringement."12
Respondent's witness had no Idea why respondent chose "UNIVERSAL CONVERSE" as trademark and the record
discloses no reasonable explanation for respondent's use of the word "CONVERSE" in its trademark. Such unexplained
use by respondent of the dominant word of petitioner's corporate name lends itself open to the suspicion of fraudulent
motive to trade upon petitioner's reputation, thus:
A boundless choice of words, phrases and symbols is available to one who wishes a trademark sufficient
unto itself to distinguish his product from those of others. When, however, there is no reasonable
explanation for the defendant's choice of such a mark though the field for his selection was so broad, the
inference is inevitable that it was chosen deliberately to deceive. 13
The testimony of petitioner's witness, who is a legitimate trader as well as the invoices evidencing sales of petitioner's
products in the Philippines, give credence to petitioner's claim that it has earned a business reputation and goodwill in this
country. The sales invoices submitted by petitioner's lone witness show that it is the word "CONVERSE" that mainly
Identifies petitioner's products, i.e. "CONVERSE CHUCK TAYLOR, 14 "CONVERSE ALL STAR,"15 ALL STAR
CONVERSE CHUCK TAYLOR," 16 or "CONVERSE SHOES CHUCK and TAYLOR." 17 Thus, contrary to the
determination of the respondent Director of Patents, the word "CONVERSE" has grown to be Identified with petitioner's
products, and in this sense, has acquired a second meaning within the context of trademark and tradename laws.
Furthermore, said sales invoices provide the best proof that there were actual sales of petitioner's products in the country
and that there was actual use for a protracted period of petitioner's trademark or part thereof through these sales. "The
most convincing proof of use of a mark in commerce is testimony of such witnesses as customers, or the orders of buyers

during a certain period. 18 Petitioner's witness, having affirmed her lack of business connections with petitioner, has
testified as such customer, supporting strongly petitioner's move for trademark pre-emption.
The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered insignificant, considering that they
appear to be of high expensive quality, which not too many basketball players can afford to buy. Any sale made by a
legitimate trader from his store is a commercial act establishing trademark rights since such sales are made in due course
of business to the general public, not only to limited individuals. It is a matter of public knowledge that all brands of goods
filter into the market, indiscriminately sold by jobbers dealers and merchants not necessarily with the knowledge or
consent of the manufacturer. Such actual sale of goods in the local market establishes trademark use which serves as the
basis for any action aimed at trademark pre- exemption. It is a corollary logical deduction that while Converse Rubber
Corporation is not licensed to do business in the country and is not actually doing business here, it does not mean that its
goods are not being sold here or that it has not earned a reputation or goodwill as regards its products. The Director of
Patents was, therefore, remiss in ruling that the proofs of sales presented "was made by a single witness who had never
dealt with nor had never known opposer [petitioner] x x x without Opposer having a direct or indirect hand in the
transaction to be the basis of trademark pre- exemption."
Another factor why respondent's applications should be denied is the confusing similarity between its trademark
"UNIVERSAL CONVERSE AND DEVICE" and petitioner's corporate name and/or its trademarks "CHUCK TAYLOR" and
"ALL STAR DEVICE" which could confuse the purchasing public to the prejudice of petitioner,
The trademark of respondent "UNIVERSAL CONVERSE and DEVICE" is imprinted in a circular manner on the side of its
rubber shoes. In the same manner, the trademark of petitioner which reads "CONVERSE CHUCK TAYLOR" is imprinted
on a circular base attached to the side of its rubber shoes. The deteminative factor in ascertaining whether or not marks
are confusingly similar to each other "is not whether the challenged mark would actually cause confusion or deception of
the purchasers but whether the use of such mark would likely cause confusion or mistake on the part of the buying public.
It would be sufficient, for purposes of the law, that the similarity between the two labels is such that there is a possibility or
likelihood of the purchaser of the older brand mistaking the new brand for it." 19 Even if not an the details just mentioned
were identical, with the general appearance alone of the two products, any ordinary, or even perhaps even [sic] a not too
perceptive and discriminating customer could be deceived ... " 20
When the law speaks co-purchaser," the reference is to ordinary average purchaser. 21 It is not necessary in either case
that the resemblance be sufficient to deceive experts, dealers, or other persons specially familiar with the trademark or
goods involve." 22
The similarity y in the general appearance of respondent's trademark and that of petitioner would evidently create a
likelihood of confusion among the purchasing public. But even assuming, arguendo, that the trademark sought to be
registered by respondent is distinctively dissimilar from those of the petitioner, the likelihood of confusion would still
subsists, not on the purchaser's perception of the goods but on the origins thereof. By appropriating the word
"CONVERSE," respondent's products are likely to be mistaken as having been produced by petitioner. "The risk of
damage is not limited to a possible confusion of goods but also includes confusion of reputation if the public could
reasonably assume that the goods of the parties originated from the same source. 23
It is unfortunate that respondent Director of Patents has concluded that since the petitioner is not licensed to do business
in the country and is actually not doing business on its own in the Philippines, it has no name to protect iN the forum and
thus, it is futile for it to establish that "CONVERSE" as part of its corporate name identifies its rubber shoes. That a foreign
corporation has a right to maintain an action in the forum even if it is not licensed to do business and is not actually doing
business on its own therein has been enunciated many times by this Court. In La Chemise Lacoste, S.A. vs.
Fernandez, 129 SCRA 373, this Court, reiterating Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115, stated that:

... a foreign corporation which has never done any business in the Philippines and which is unlicensed
and unregistered to do business here, but is widely and favorably known in the Philippines through the
use therein of its products bearing its corporate and tradename, has a legal right to maintain an action in
the Philippines to restrain the residents and inhabitants thereof from organizing a corporation therein
bearing the same name as the foreign corporation, when it appears that they have personal knowledge of
the existence of such a foreign corporation, and it is apparent that the purpose of the proposed domestic
corporation is to deal and trade in the same goods as those of the foreign corporation.
We further held:
xxx xxx xxx
That company is not here seeking to enforce any legal or control rights arising from or
growing out of, any business which it has transacted in the Philippine Islands. The sole
purpose of the action:
Is to protect its reputation, its corporate name, its goodwill whenever that reputation,
corporate name or goodwill have, through the natural development of its trade,
established themselves.' And it contends that its rights to the use of its corporate and
trade name:
Is a property right, a right in recess which it may assert and protect against all the world,
in any of the courts of the world even in jurisdictions where it does not transact businessjust the same as it may protect its tangible property, real or personal against trespass, or
conversion. Citing sec. 10, Nims on Unfair Competition and Trademarks and cases cited;
secs. 21-22, Hopkins on Trademarks, Trade Names and Unfair Competition and cases
cited That point is sustained by the authorities, and is well stated in Hanover Star Milling
Co. vs. Allen and Wheeler Co. [208 Fed., 5131, in which the syllabus says:
Since it is the trade and not the mark that is to be protected, a trademark acknowledges
no territorial boundaries of municipalities or states or nations, but extends to every market
where the trader's goods have become known and Identified by the use of the mark.
The ruling in the aforecited case is in consonance with the Convention of the Union of Paris for the Protection of Industrial
Property to which the Philippines became a party on September 27, 1965. Article 8 thereof provides that "a trade name
[corporate name] shall be protected in all the countries of the Union without the obligation of filing or registration, whether
or not it forms part of the trademark. " [emphasis supplied]
The object of the Convention is to accord a national of a member nation extensive protection "against infringement and
other types of unfair competition" [Vanitary Fair Mills, Inc. vs. T. Eaton Co., 234 F. 2d 6331.
The mandate of the aforementioned Convention finds implementation in Sec. 37 of RA No. 166, otherwise known as the
Trademark Law:
Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled or have a bona fide or
effective business or commercial establishment in any foreign country, which is a party to an international
convention or treaty relating to marks or tradenames on the repression of unfair competition to which the
Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act . . . ...

Tradenames of persons described in the first paragraph of this section shall be protected without the
obligation of filing or registration whether or not they form parts of marks. [emphasis supplied]
WHEREFORE, the decision of the Director of Patents is hereby set aside and a new one entered denying Respondent
Universal Rubber Products, Inc.'s application for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE"
on its rubber shoes and slippers.
SO ORDERED.