ANG TIBAY

Petitioner has appealed to this Court by certiorari to reverse the judgment of the Court of
Appeals reversing that of the Court of First Instance of Manila and directing the Director of
Commerce to cancel the registration of the trade-mark "Ang Tibay" in favor of said petitioner,
and perpetually enjoining the latter from using said trade-mark on goods manufactured and sold
by her.

Respondent Toribio Teodoro, at first in partnership with Juan Katindig and later as sole
proprietor, has continuously used "Ang Tibay," both as a trade-mark and as a trade-name, in the
manufacture and sale of slippers, shoes, and indoor baseballs since 1910. He formally registered
it as trade-mark on September 29, 1915, and as trade-name on January 3, 1933. The growth of
his business is a thrilling epic of Filipino industry and business capacity. Starting in an obscure
shop in 1910 with a modest capital of P210 but with tireless industry and unlimited perseverance,
Toribio Teodoro, then an unknown young man making slippers with his own hands but now a
prominent business magnate and manufacturer with a large factory operated with modern
machinery by a great number of employees, has steadily grown with his business to which he has
dedicated the best years of his life and which he has expanded to such proportions that his gross
sales from 1918 to 1938 aggregated P8,787,025.65. His sales in 1937 amounted to P1,299,343.10
and in 1938, P1,133,165.77. His expenses for advertisement from 1919 to 1938 aggregated
P210,641.56.

Petitioner (defendant below) registered the same trade-mark "Ang Tibay" for pants and shirts on
April 11, 1932, and established a factory for the manufacture of said articles in the year 1937. In
the following year (1938) her gross sales amounted to P422,682.09. Neither the decision of the
trial court nor that of the Court of Appeals shows how much petitioner has spent or
advertisement. But respondent in his brief says that petitioner "was unable to prove that she had
spent a single centavo advertising "Ang Tibay" shirts and pants prior to 1938. In that year she
advertised the factory which she had just built and it was when this was brought to the attention
of the appellee that he consulted his attorneys and eventually brought the present suit."
The trial court (Judge Quirico Abeto) presiding absolved the defendant from the complaint, with
costs against the plaintiff, on the grounds that the two trademarks are dissimilar and are used on
different and non-competing goods; that there had been no exclusive use of the trade-mark by the
plaintiff; and that there had been no fraud in the use of the said trade-mark by the defendant
because the goods on which it is used are essentially different from those of the plaintiff. The
second division of the Court of Appeals, composed of Justices Bengson, Padilla, Lopez Vito,
Tuason, and Alex Reyes, with Justice Padilla as ponente, reversed that judgment, holding that by
uninterrupted an exclusive use since 191 in the manufacture of slippers and shoes, respondent's
trade-mark has acquired a secondary meaning; that the goods or articles on which the two trade-
marks are used are similar or belong to the same class; and that the use by petitioner of said
trade-mark constitutes a violation of sections 3 and 7 of Act No. 666. The defendant Director of
Commerce did not appeal from the decision of the Court of Appeals.

From all of this we deduce that "Ang Tibay" is not a descriptive term within the meaning of the
Trade-Mark Law but rather a fanciful or coined phrase which may properly and legally be
appropriated as a trade-mark or trade-name. In this connection we do not fail to note that when
the petitioner herself took the trouble and expense of securing the registration of these same
words as a trademark of her products she or her attorney as well as the Director of Commerce
was undoubtedly convinced that said words (Ang Tibay) were not a descriptive term and hence
could be legally used and validly registered as a trade-mark. It seems stultifying and puerile for
her now to contend otherwise, suggestive of the story of sour grapes. Counsel for the petitioner
says that the function of a trade-mark is to point distinctively, either by its own meaning or by
association, to the origin or ownership of the wares to which it is applied. That is correct, and we
find that "Ang Tibay," as used by the respondent to designate his wares, had exactly performed
that function for twenty-two years before the petitioner adopted it as a trade-mark in her own
business. Ang Tibay shoes and slippers are, by association, known throughout the Philippines as
products of the Ang Tibay factory owned and operated by the respondent Toribio Teodoro.
We think reasonable men may not disagree that shoes and shirts are not as unrelated as fountain
pens and razor blades, for instance. The mere relation or association of the articles is not
controlling. As may readily be noted from what we have heretofore said, the proprietary
connotation that a trade-mark or trade-name has acquired is of more paramount consideration.
The Court of Appeals found in this case that by uninterrupted and exclusive use since 1910 of
respondent's registered trade-mark on slippers and shoes manufactured by him, it has come to
indicate the origin and ownership of said goods. It is certainly not farfetched to surmise that the
selection by petitioner of the same trade-mark for pants and shirts was motivated by a desire to
get a free ride on the reputation and selling power it has acquired at the hands of the respondent.
As observed in another case, 12 the field from which a person may select a trade-mark is
practically unlimited, and hence there is no excuse for impinging upon or even closely
approaching the mark of a business rival. In the unlimited field of choice, what could have been
petitioner's purpose in selecting "Ang Tibay" if not for its fame?
G.R. No. 91332 July 16, 1993

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., AND FABRIQUES OF
TABAC REUNIES, S.A., petitioners
vs.
THE COURT OF APPEALS AND FORTUNE TOBACCO CORPORATION,
respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco Law Office for petitioners.

Teresita Gandionco-Oledan for private respondent.

MELO, J.:

In the petition before us, petitioners Philip Morris, Inc., Benson and Hedges (Canada), Inc., and
Fabriques of Tabac Reunies, S.A., are ascribing whimsical exercise of the faculty conferred upon
magistrates by Section 6, Rule 58 of the Revised Rules of Court when respondent Court of
Appeals lifted the writ of preliminary injunction it earlier had issued against Fortune Tobacco
Corporation, herein private respondent, from manufacturing and selling "MARK" cigarettes in
the local market.

Banking on the thesis that petitioners' respective symbols "MARK VII", "MARK TEN", and
"LARK", also for cigarettes, must be protected against unauthorized appropriation, petitioners
twice solicited the ancillary writ in the course the main suit for infringement but the court of
origin was unpersuaded.

Before we proceed to the generative facts of the case at bar, it must be emphasized that
resolution of the issue on the propriety of lifting the writ of preliminary injunction should not be
construed as a prejudgment of the suit below. Aware of the fact that the discussion we are about
to enter into involves a mere interlocutory order, a discourse on the aspect infringement must
thus be avoided. With these caveat, we shall now shift our attention to the events which spawned
the controversy.

As averred in the initial pleading, Philip Morris, Incorporated is a corporation organized under
the laws of the State of Virginia, United States of America, and does business at 100 Park
Avenue, New York, New York, United States of America. The two other plaintiff foreign
corporations, which are wholly-owned subsidiaries of Philip Morris, Inc., are similarly not doing
business in the Philippines but are suing on an isolated transaction. As registered owners
"MARK VII", "MARK TEN", and "LARK" per certificates of registration issued by the
Philippine Patent Office on April 26, 1973, May 28, 1964, and March 25, 1964, plaintiffs-
petitioners asserted that defendant Fortune Tobacco Corporation has no right to manufacture and
sell cigarettes bearing the allegedly identical or confusingly similar trademark "MARK" in
contravention of Section 22 of the Trademark Law, and should, therefore, be precluded during
the pendency of the case from performing the acts complained of via a preliminary injunction (p.
75, Court of Appeals Rollo in AC-G.R. SP No. 13132).

For its part, Fortune Tobacco Corporation admitted petitioners' certificates of registration with
the Philippine Patent Office subject to the affirmative and special defense on misjoinder of party
plaintiffs. Private respondent alleged further that it has been authorized by the Bureau of Internal
Revenue to manufacture and sell cigarettes bearing the trademark "MARK", and that "MARK" is
a common word which cannot be exclusively appropriated (p.158, Court of Appeals Rollo in
A.C.-G.R. SP No. 13132). On March 28, 1983, petitioners' prayer for preliminary injunction was
denied by the Presiding Judge of Branch 166 of the Regional Trial Court of the National Capital
Judicial Region stationed at Pasig, premised upon the following propositions:
On the economic repercussion of this case, we are extremely bothered by the thought of having
to participate in throwing into the streets Filipino workers engaged in the manufacture and sale
of private respondent's "MARK" cigarettes who might be retrenched and forced to join the ranks
of the many unemployed and unproductive as a result of the issuance of a simple writ of
preliminary injunction and this, during the pendency of the case before the trial court, not to
mention the diminution of tax revenues represented to be close to a quarter million pesos
annually. On the other hand, if the status quo is maintained, there will be no damage that would
be suffered by petitioners inasmuch as they are not doing business in the Philippines.

With reference to the second and third issues raised by petitioners on the lifting of the writ of
preliminary injunction, it cannot be gainsaid that respondent court acted well within its
prerogatives under Section 6, Rule 58 of the Revised Rules of Court:

Sec. 6. Grounds for objection to, or for motion of dissolution of injunction. — The injunction
may be refused or, if granted ex parte, may be dissolved, upon the insufficiency of the complaint
as shown by the complaint itself, with or without notice to the adverse party. It may also be
refused or dissolved on other grounds upon affidavits on the part of the defendants which may be
opposed by the plaintiff also by affidavits. It may further be refused or, if granted, may be
dissolved, if it appears after hearing that although the plaintiff is entitled to the injunction, the
issuance or continuance thereof, as the case may be, would cause great damage to the defendant
while the plaintiff can be fully compensated for such damages as he may suffer, and the
defendant files a bond in an amount fixed by the judge conditioned that he will pay all damages
which the plaintiff may suffer by the refusal or the dissolution of the injunction. If it appears that
the extent of the preliminary injunction granted is too great, it must be modified.

Under the foregoing rule, injunction may be refused, or, if granted, may be dissolved, on the
following instances:
(1) If there is insufficiency of the complaint as shown by the allegations therein. Refusal or
dissolution may be granted in this case with or without notice to the adverse party.

(2) If it appears after hearing that although the plaintiff is entitled to the injunction, the
issuance or continuance thereof would cause great damage to the defendant, while the plaintiff
can be fully compensated for such damages as he may suffer. The defendant, in this case, must
file a bond in an amount fixed by the judge conditioned that he will pay all damages which
plaintiff may suffer by the refusal or the dissolution of the injunction.

(3) On the other grounds upon affidavits on the part of the defendant which may be opposed
by the plaintiff also affidavits.

Modification of the injunction may also be ordered by the court if it appears that the extent of the
preliminary injunction granted is too great. (3 Martin, Rules of Court, 1986 ed., p. 99; Francisco,
supra, at p. 268.)

In view of the explicit representation of petitioners in the complaint that they are not engaged in
business in the Philippines, it inevitably follows that no conceivable damage can be suffered by
them not to mention the foremost consideration heretofore discussed on the absence of their
"right" to be protected. At any rate, and assuming in gratia argumenti that respondent court
erroneously lifted the writ it previously issued, the same may be cured by appeal and not in the
form of a petition for certiorari (Clark vs. Philippine Ready Mix Concrete Co., 88 Phil. 460
[1951]). Verily, and mindful of the rule that a writ of preliminary injunction is an interlocutory
order which is always under the control of the court before final judgment, petitioners' criticism
must fall flat on the ground, so to speak, more so when extinction of the previously issued writ
can even be made without previous notice to the adverse party and without a hearing (Caluya vs.
Ramos, 79 Phil. 640 [1974]; 3 Moran, Rules of Court, 1970 ed., p. 81).

WHEREFORE, the petition is hereby DISMISSED and the Resolutions of the Court of Appeals
dated September 14, 1989 and November 29, 1989 are hereby AFFIRMED.
FELICIANO, J., dissenting:

I find myself unable to join in the opinion prepared by my distinguished brother, Melo, J.
It seems to me that the issues involved in this case are rather more complex than what has been
assumed to be the case by the majority opinion. For this and related reasons, there is set out
below a statement of the relevant facts (as I see them) that is more extensive than what is
ordinarily found in dissenting opinions.

Petitioner Philip Morris, Inc. is a corporation organized and existing under the law of Virginia,
U.S.A. Petitioners Benson & Hedges (Canada), Inc. and Fabriques de Tabac Reunies, S.A., both
wholly owned subsidiaries of Philip Morris, Inc., are organized and existing under the law of
Canada and Switzerland, respectively.

Philip Morris, Inc. is registered owner of the trademark "MARK VII" for cigarettes. Its
ownership thereof is evidenced by Philippine Patent Office Trademark Certificate of Registration
No. 18723, dated 26 April 1973. The statement attached to the Certificate of Registration states
that the trademark "MARK VII" had been registered in the United States Patent Office, on the
Principal Register, under Certificate of Registration No. 888,931 issued on 7 April 1970. The
statement also requested that the trademark be registered in the Philippine Patent Office on the
Principal Register in accordance with Section 37 of R.A. No. 166, as amended.

Benson & Hedges (Canada), Inc. is the registered owner of the trademark "MARK TEN" also for
cigarettes, as evidenced by Philippine Patent Office Trademark Certificate of Registration No.
11147, dated 28 May 1964, on the Principal Register. This Trademark Certificate of Registration
was originally issued in the name of Canadian Tabacofina Ltd. and later assigned to Benson &
Hedges (Canada), Inc. Petitioners alleged that the name Canadian Tabacofina Ltd. was later
changed to Benson & Hedges (Canada) Ltd. This trademark Certificate of Registration was
renewed on 28 May 1984. The statement attached thereto stated that the "date of first use of the
trademark 'MARK TEN' in trade in or with the Philippines is April 15, 1963," and that trademark
had "been in actual use in commerce over the Philippines continuously for two months."

Fabriques de Tabac Reunies, S.A. is registered owner of the trademark "LARK" also for
cigarettes, as evidenced by Philippine Patent Office Trademark Certificate of Registration No.
10953, dated 25 March 1964. This Trademark Certificate of Registration was originally issued in
the name of Ligget and Myres Tobacco Company was later assigned to Fabriques de Tabac
Reunies, S.A. Petitioners alleged that the name of Liggett and Myres Tobacco Company was
changed later to Fabriques de Tabac Reunies, S.A. The statement attached to this Certificate of
Registration states that the trademark "LARK" was first used by Ligget and Myres Tobacco
Company on 31 May 1920, and first used by it "in commerce in or with the Philippines on
February 6, 1963" and has been continuously used by it "in trade in or with the Philippines since
February 6, 1963."
Sometime before 17 October 1981, private respondent Fortune Tobacco Corporation ("Fortune")
commenced manufacturing and selling in the Philippines cigarettes under the brandname
"MARK." Fortune also filed on 13 February 1981 with the Philippine Patent Office an
application for registration of "MARK" as a trademark for cigarettes.

By a letter dated 17 October 1981, petitioner through their lawyers wrote to Fortune stating that
the manufacturing, selling and advertising of "MARK" cigarettes by Fortune constituted an
"infringement or an act of unfair competition with" petitioners' "well-known international
trademarks used on cigarettes and tobacco products which were registered worldwide and with
the Philippine Patent Office." Petitioners listed their Philippine Certificates of Registration for
the trademarks "MARK VII," "MARK TEN," and "LARK." Petitioners then asked Fortune "to
cease and desist from further manufacturing; selling or advertising 'MARK' cigarettes,"
otherwise appropriate court actions would be filed without further notice.

On 18 August 1982, petitioners commenced action before the Court of First Instance of Pasig,
Metro Manila (Civil Case No. 47374). In their complaint, petitioners alleged that they were not
doing business in the Philippines but had nonetheless the right and the capacity to bring the
instant suit; that they were owners of Philippine Patent Office Trademark Certificates of
Registration which were in full force and effect, covering "MARK VII," "MARK TEN," and
"LARK," all for cigarettes (except the last which also covered chewing and smoking tobacco);
that they had registered those trademarks in their respective countries of origin and in other
countries the world and that by virtue of their "long and extensive use [had] gained international
fame and acceptance;" that they had their respective real and effective industrial or commercial
establishments in the United States, Canada and Switzerland, which countries were, like the
Philippines, members of the Convention of Paris for the Protection of Industrial Property; that
under that Convention each member-country undertakes to 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 Convention and use for identical or similar goods; that petitioner
Fabriques de Tabac Reunies, S.A. had long been using trademark "LARK" throughout the world,
including the Philippines where its products bearing the trademark "LARK" had been sold in the
duty-free market, and advertised and marketted in the Philippines at least since 1964 and have
continued to be so to present; that Fortune had without previous consent, authority or license
from petitioners, with knowledge of the popularity of petitioners' marks and their Philippine
registrations, manufactured, advertised and sold cigarettes bearing the identical or confusingly
similar trademark "MARK" which unauthorized use constituted an act of infringement under
Section 22 of R.A. No. 166, as amended; that thereby the public and the patronizers of
petitioners' products were being deceived into buying Fortune's cigarettes under the impression
and mistaken belief that Fortune's cigarettes were identical with, or came from the same source
as, petitioners' products or that Fortune was licensee of petitioners, which it was not; that the
infringement by Fortune of petitioners' trademarks have inflicted damages upon petitioners; that
the continued unauthorized and unlicensed manufacture and sale by Fortune of its infringing
products during the litigation would work injustice and cause irreparable injury to petitioners in
violation of their property rights and moreover tend to render the judgment which the court
might render ineffectual. Petitioners accordingly asked for a writ of preliminary injunction to
restrain Fortune from manufacturing or selling "MARK" cigarettes, and after trial, to make such
preliminary injunction permanent and to order Fortune's infringing materials to be destroyed, and
for damages.

Fortune filed an Opposition to petitioners' prayer for preliminary injunction. On 28 March 1983,
the trial court1 issued an Order denying petitioners' motion for preliminary injunction. In
rendering that order, the trial court, while noting that petitioners were holders of Philippine
Certificates of Trademark Registration, relied heavily on three (3) factors:

Firstly, that petitioners were foreign corporations not doing business in the Philippines;

Secondly, that Fortune's application for a registration as trademark of the word "MARK" for
cigarettes was then pending before the Philippine Patent Office; and

Thirdly, that Fortune was the "only party authorized" by the Bureau of Internal Revenue ("BIR")
to manufacture cigarettes bearing the mark "MARK" in the Philippines.

In respect of the first point, the trial court was obviously heavily influenced by Fortune's
argument that because petitioners were not doing business in the Philippines, which meant that
"they [were] not engaged in the sale, manufacture, importation, exportation and advertisement of
their cigarette products in the Philippines," Fortune's manufacture and sale of its "MARK"
cigarettes could not be said to be causing petitioners "irreparable damage" within the Philippines.
In respect to the second point, the trial judge felt that because the Director of Patents had not, at
that point, denied Fortune's pending application for registration of its trademark "MARK," the
grant of a preliminary injunction was premature. With regard to the third point, the judge noted a
letter dated 30 January 1979 2 of the then Acting Commissioner of Internal Revenue Mr.
Conrado P. Diaz, temporarily granting the request of Fortune for a permit to manufacture two (2)
new brands of cigarettes, one of which was "MARK." The trial judge also noted that the BIR
letter contained the following paragraph:
Please be informed further that this authority herein granted does not give you protection against
any person or entity whose rights may be prejudiced by infringement or unfair competition in
relation to your above named brands/trademarks. 3

The trial judge, however, apparently gave no weight at all to this caveat.

Petitioners sought, on 15 April 1983, reconsideration of Judge Reyes' Order denying preliminary
injunction. After Fortune had filed an Opposition to petitioners' Motion for Reconsideration, and
petitioners had filed their Reply and Fortune a Rejoinder, and after an offer of exhibits by the
parties respectively, Judge Reyes issued on 5 April 1984 another Order denying the Motion for
Reconsideration. In his second order, the trial judge laid great stress on the fact that Fortune's
application for registration of its trademark "MARK" for cigarettes remained subsisting. On the
basis, Judge Reyes denied petitioners' motion for reconsideration.

More than two (2) years later, petitioners filed a "Second Motion for Issuance of Preliminary
Injunction" dated 1 September 1986. In their Second Motion, petitioners invited attention to
Paper No. 3, dated 6 April 1983, relating to Fortune's application for registration of its
brandname "MARK." This Paper No. 3 reproduced a letter to Fortune's counsel by Bienvenido
A. Palisoc, Senior Trademark Examiner, and Wilfredo T. Jaramillo, Trademark Examiner,
stating that:

This application [for registration of "Mark"] has been examined.

Caption mark of the application must tally with the drawing on file.

Subject mark is confusingly similar with the following marks on file:

a. "Mark" with Reg. No. SR-2659 for cigarettes.

b. "Mark VII" with Reg. No. 18723 for cigarettes.

c. "Mark Ten" with Reg. No. 11147 for cigarettes.

d. "Lark" with Reg. No. 10953 for cigarettes.

Hence, registration is barred under Sec. 4 (d) of Rep. Act No. 166 as amended.

Subject mark has no trademark significance and can not serve its purpose as to indicate the
source and origin of goods.

Furthermore, the word "Mark" is generic and therefore incapable of exclusive appropriation.

Makati, Metro Manila, April 6, 1983. 4 (Emphasis supplied)

Petitioners also invited attention to a certification dated 8 August 1986 issued by Mr. Luis M.
Daca, Jr., Assistant Director, Philippine Patent Office, to the effect that Fortune's application for
the mark "MARK" for cigarettes was declared abandoned as of 16 February 1986 and was now
deemed forfeited. In addition, petitioners explained in some detail how Fortune's use of its mark
"MARK" was "destructive of [petitioners'] property right to [their] registered trademarks."5
Further, petitioners assailed Fortune's argument that issuance of preliminary injunction would
cause "loss of revenue and taxes to the Government" and that more damages would be sustained
by Fortune than by petitioners since the petitioners do not market their cigarettes in the
Philippines.

After Fortune had filed an Opposition to petitioners' Second Motion, the trial court, this time
presided over by Judge Nicolas Galing, issued an Order dated 22 April 1987 denying once more
the motion for issuance of a writ of preliminary injunction. In this order, Judge Galing relied on
two (2) points: firstly, according to the trial judge, petitioners had not shown that the products
they sought to protect from Fortune's "MARK" cigarettes were "in actual use and available for
commercial purposes anywhere in the Philippines;" and secondly, it appeared that while
Fortune's original application had been abandoned, it could be refiled and was in fact re-filed.
Thus, Judge Galing in effect reiterated Judge Reyes's position that until the Director of Patents
had definitely acted upon Fortune's application for registration of "MARK," petitioners' prayer
for preliminary injunction could not be granted.

Petitioners then filed a Petition for Review with the Supreme Court, which Petition was docketed
as G.R. No. 78141. The Court ordered respondents to file their Comments on the Petition and on
30 September 1987, the Court referred the Petition to the Court of Appeals.
In due course of time, the Court of Appeals, through Cacdac, Jr., J.,6 rendered a decision on 5
May 1989 setting aside the 22 April 1987 order of the trial court and ordering issuance of a writ
of preliminary injunction upon filing of a bond by petitioners in the sum of P200,000.00 to be
approved by the appellate court, "enjoining the private respondents, its agents, employees and
representatives from manufacturing, selling and/or advertising "MARK" cigarettes until further
orders." The Court of Appeals said in pertinent part:

There is no dispute that petitioners are the registered owners of the trademarks for cigarettes
"MARK VII," "MARK TEN," and "LARK". (Annexes B, C and D, Petition). As found and
reiterated by the Philippine Patent Office in two (2) official communications dated April 6, 1983
and January 24, 1984, the trademark "MARK" is "confusingly similar" to the trademarks of
petitioners, hence, registration was barred under Sec. 4(d) of Rep. Act No. 166, as amended (pp.
106, 139 SCA rollo). In a third official communication dated April 8, 1986, the trademark
application of private respondent for the mark "MARK" under Serial No. 44008 filed on
February 13, 1981 which was declared abandoned as of February 16, 1986, is now deemed
forfeited, there being no revival made pursuant to Rule 98 of the Revised Rules of Practitioners
in Trademark Cases.' (p. 107, CA rollo). The foregoing documents or communications
mentioned by petitioners as "the changes in material facts which occurred after March 28, 1983",
are not also questioned by respondents.7 (Emphasis supplied)

The Court of Appeals also noted the BIR letter of 30 January 1979 temporarily granting
Fortune's request for a permit to manufacture two (2) new brands of cigarettes, including one
branded "MARK," and the caveat (earlier noted)8 that the BIR's authorization would not give
Fortune any protection against any person or entity whose rights may be prejudiced by
infringement or unfair competition on the part of Fortune. The Court of Appeals also referred to
the certificate dated 26 September 1986 of Mr. Cesar G. Sandico, then Director of Patents, issued
upon request of Fortune's counsel stating that there was a pending application for registration of
the trademark "MARK" for cigarettes under Serial No. 59872, filed on 16 September 1986,
noting at the same time, that Director Sandico's certification contained the following caveat or
qualification:

This certification, however, does not give protection as against any person or entity whose right
may be prejudiced by infringement or unfair competition in relation to the aforesaid trademark
nor the right to register as contrary to the provisions of the Trademark Law, Republic Act No.
166 as amended and the Revised Rules of Practice in Trademark Cases. (Emphasis supplied)

The Court of Appeals then went on to say that:

[We] believe and hold that petitioners have shown a prima facie case for the issuance of the writ
of prohibitory injunction for the purposes stated in their complaint and subsequent motions for
the issuance of the prohibitory writ. (Buayan Cattle Co. v. Quintillan, 125 SCRA 276).

The requisites for the granting of preliminary injunction are the existence of the right protected
and the facts against which the injunction is to be directed as violative of said right. (Buayan
Cattle Co. v. Quintillan, supra; Ortigas & Co. vs. Ruiz, 148 SCRA 326). It is a writ framed
according to the circumstances of the case commanding an act which the Court regards as
essential to justice and restraining an act it deems contrary to equity and good conscience
(Rosauro vs. Cuneta, 151 SCRA 570). If it is not issued, the defendant may, before final
judgment, do or continue the doing of the act which the plaintiff asks the court to restrain, and
thus make ineffectual the final judgment rendered afterwards granting the relief sought by the
plaintiff (Calo vs. Roldan, 76 Phil. 445). Generally, its grant or denial rests upon the sound
discretion of the Court except on a clear case of abuse (Belish Investment & Finance Co. vs.
Statement House, 151 SCRA 636). Petitioners' right of exclusivity to their registered trademarks
being clear and beyond question, the respondent court's denial of the prohibitive writ constituted
excess of jurisdiction and grave abuse of discretion. If the lower court does not grant preliminary
injunction, the appellate court may grant the same (Service Specialists, Inc. v. Sheriff of Manila.
145 SCRA 139).9 (Emphasis supplied)

Fortune moved for reconsideration of the Decision of the Court of Appeals insisting that
petitioners must first prove their "clear, unmistakable and unquestioned right to the writ, coupled
with the possible damages it would suffer;" that petitioners had not suffered any "great and
irreparable injury to speak of" because "petitioners have never done business in this country in
the past nor in the future;" that, on the other hand, Fortune had been authorized by the BIR to
manufacture "MARK" cigarettes, "thereby generating much needed funds for the Government;"
that Fortune's application for registration of its brandname "MARK" with the Philippine Patent
Office "still pending" and not "finally rejected" by the Director of Patents. On 12 July 1989, the
Court of Appeals issued a Minute Resolution stating that the issues and arguments in Fortune's
motion for reconsideration had been "fully discussed" in the Decision sought to be reconsidered,
that no new arguments were raised, and accordingly denied the Motion for Reconsideration.

Fortune then filed a "Motion to Dissolve Writ of Preliminary Injunction with Offer to File
Counterbond" date 25 July 1989, where it reiterated the basic arguments it previously made.

A "Supplemental Motion to Lift Writ of Preliminary Injunction with Offer of Counterbond"

dated 17 August 1989 was next filed by Fortune. In this "Supplemental Motion," Fortune averred
that it had paid to the BIR for 1988 the amount of P181,940,177.38 for specific taxes; while for
January to July 1989, it had paid the amount of P120,120,735.28. Fortune also referred to its
employees assigned to the manufacture of "MARK" cigarettes who were apparently
apprehensive that their services would eventually be terminated and that they would join the
ranks of the unemployed.

Petitioners filed an Opposition to the "Motion to Dissolve" and a Comment on the "Supplemental
Motion" of Fortune.

On 14 September 1989, the Court of Appeals once more through Cacdac, Jr., J. issued a
Resolution lifting the preliminary injunction it had earlier granted upon the filing of counterbond
by private respondent in the amount of P400,000.00 to answer for any damages petitioners may
suffer as a consequence of such lifting. In its Resolution, the Court of Appeals referred to the
"lots of workers employed [who] will be laid off as a consequence of the injunction" and that
Government "will stand to lose the amount of specific taxes being paid by" Fortune. It when
went on to say:

After a thorough re-examination of the issues involved and the arguments advanced by both
parties in the offer to file a counterbond and the opposition thereto, WE believe that there are
sound and cogent reasons for Us to grant the dissolution of the writ of preliminary injunction by
the offer of the private respondent to put up a counterbond to answer for whatever damages the
petitioner may suffer as a consequence of the dissolution of the preliminary injunction.

The petitioner will not be prejudiced nor stand to suffer irreparably as a consequence of the
lifting of the preliminary injunction considering that they are not actually engaged in the
manufacture of the cigarettes with the trademarks in question and the filing of the counterbond
will amply answer for such damages.

While the rule is that an offer of a counterbond does not operate to dissolve an injunction
previously granted, nevertheless, it is equally true that an injunction could be dissolved only
upon good and valid grounds subject to the sound discretion of the court. As WE have
maintained the view that there are sound and good reasons to lift the preliminary injunction the
motion to file a counterbond is granted. 10 (Emphasis supplied)

Petitioners filed a Motion for Reconsideration, without success.

In the instant Petition, petitioners make the following basic submissions:

1. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when it required, contrary to law and jurisprudence that in order that petitioners may
suffer irreparable injury due to the lifting of the injunction, petitioners should be using actually
their registered trademarks in commerce in the Philippines;

2. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when it lifted the injunction in violation of Section 6 of Rule 58 of the rules of Court;

3. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when, after having found that the trial court had committed grave abuse of discretion
and exceeded its jurisdiction for having refused to issue the writ of injunction to restrain
respondent's acts that are contrary to equity and good conscience, it made a complete about face
for legally insufficient grounds and authorized private respondent to continue performing the
very same acts that it had considered contrary to equity and good conscience, thereby ignoring
not only the mandates of the trademark law, the international commitments of the Philippines,
the judicial admission of private respondent that it will have no more right to use the trademark
"MARK" after the Director of Patents shall have rejected the application to register it, and the
admonitions of the Supreme Court. 11

The Court required private respondent to file a comment. The comment reiterated the basic
arguments made by private respondent before the Court of Appeals:

a. the petitioners are not suffering any irreparable damage by the lifting of the preliminary
injunction by the Court of appeals. Whatever damages they might suffer are "based purely on
speculation, since by judicial admission, petitioners are not doing business in the Philippines.
Private respondent stressed that petitioners "are not manufacturing, importing or selling "MARK
TEN," "MARK VII" or "LARK" in this country," notwithstanding "false allegation" that
petitioners have been "using" the said trademarks "in commerce and trade" in the Philippines
since 1963 up to the present.

b. that whatever damage petitioners may be suffering is negligible when compared to the
taxes that would have to be foregone by the Government considering that private respondent
"paid an annual specific tax of P240 Million only on the manufacture and sale of "MARK
cigarettes." Private respondent claims that, in contrast, petitioners which are foreign corporations
"based in three different countries" have not contributed anything to Government tax revenues.
c. that the Court of Appeals lifted the writ of preliminary injunction it had earlier issued
upon the submission of a counter bond in double the amount of the bond submitted by
petitioners, under Section 6, Rule 58 of the Rules of Court, which act was within the sound
discretion of the Court of Appeals. Private respondent also stresses that the right of petitioners to
the injunction was still being litigated before the trial court.

Reformulating the issues raised by the petitioners here, we think the principal issues may be
reduced to the following: firstly, is there a clear legal right to the relief asked by petitioners in the
form of a preliminary injunction to restrain private respondent from manufacturing, selling and
distributing cigarettes under the trademark "MARK"? The second question is: are private
respondent's acts complained of by petitioners causing irreparable injury to petitioners' rights in
the premises? These two (2) basic issues are obviously related and need to be addressed together.

The first point that needs to be stressed is that petitioners have Philippine Certificates of
Registration for their trademarks "MARK TEN", "MARK VII," and "LARK" in the Principal
Register.

Upon the other hand, private respondent's trademark "MARK" is not registered in the Principal
Register in the Office of the Director of Patents; private respondents is simply an applicant for
registration of a mark, the status of which application may be noted later.

It is important to stress the legal effects of registration of a trademark in the Principal Register in
the Office of the Director of Patents. Section 20 of R.A. No. 166, as amended, sets out the
principal legal effects of such registration:

Sec. 20. Certificate of registration prima facie evidence of validity. — A certificate of

registration, of a mark or a trade name shall be prima facie evidence of the validity of the
registration, the registrant's ownership of the mark or trade name, and of the registrant's
exclusive right to use the same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein. (Emphasis supplied)
In Lorenzana v. Macagba, 12 the Court distinguished between the effects of registration in the
Principal Register and registration in the Supplemental Register in the following manner:

(1) Registration in the Principal Register gives rise to a presumption of the validity of the
registration, the registrant's ownership of the mark, and his right to the exclusive use thereof.
There is no such presumption in registrations in the Supplemental Register.

(2) Registration in the Principal Register is limited to the actual owner of the trademark
(Unno Commercial Enterprises v. Gen. Milling Corp., 120 SCRA 804 [1983]) 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.

Registration in the Principal Register is constructive notice of the registrant's claims of

ownership, while registration in the Supplemental Register is merely proof of actual use of the
trademark and notice that the registrant has used or appropriated it. (Le Chemise Lacoste, S.A. v.
Fernandez, 129 SCRA 373 [1984]: "Registration in the Supplemental Register . . . serves as
notice that the registrant is using or has appropriated the trademark.") It is not subject to
opposition although it may be cancelled after its issuance. Corollarilly, registration in the
Principal Register is a basis for an action for infringement, while registration in the Supplemental
Register is not.

(3) In application for registration in the Principal Register, publication of the application is
necessary. This is not so in applications for registration in the Supplemental Register.
Certificates of registration under both Registers are also different from each other.

(4) Proof of registration in the Principal Register may be filed with the Bureau of Customs to
exclude foreign goods bearing infringing marks while it does not hold true for registrations in the
Supplemental Register. 13 (Emphasis supplied)

When taken with the companion presumption of regularity of performance of official duty, it will
be seen that issuance of a Certificate of Registration of a trademark in the Principal Register also
gives rise to the presumption that
all requirements of Philippine law necessary for a valid registration (including prior use in
commerce in the Philippines for at least two [2] months) were complied with and satisfied.
In contrast, private respondent filed an application for registration of its mark "MARK" for
cigarettes with the Director of Patents soon after it commenced manufacturing and selling
cigarettes trademark with "MARK." This application was abandoned or "forfeited", 14 for failure
of private respondent to file a necessary Paper with the Director of Patent. It also appears,
however, that private respondent later re-filed or reinstated its application for registration of
"MARK" 15 and that, so far as the record here before us is concerned, this application remains
merely an application and has not been granted and a Certificate of Registration in the Principal
Register issued. 16 While final action does not appear as yet to have been taken by the Director
of Patents on private respondent's application, there was at least a preliminary determination of
the trademark examiners that the trademark "MARK" was "confusingly similar" with petitioners'
marks "MARK VII," "MARK TEN" and "LARK" and that accordingly, registration was barred
under Section 4 (d) of R.A. No. 166, as amended. 17

In the trial court, both Judge Reyes and Judge Galing took the position that until the Director of
Patents shall have finally acted on private respondent's application for registration of "MARK,"
petitioners cannot be granted the relief of preliminary injunction. It is respectfully submitted that
this position is both erroneous and unfortunate. In reliance upon that position, private respondent
has kept its application for registration alive and pending. The Director of Patents in turn may
well have refrained from taking final action on that application, even in the absence of a
restraining order from the courts, out of deference to the courts. The pendency of the application
before the Director of Patents is not in itself a reason for denying preliminary injunction. Our
courts have jurisdiction and authority to determine whether or not "MARK" is an infringement
on petitioners' registered trademarks. Under our case law, the issuance of a Certificate of
Registration of a trademark in the Principal Register by the Director of Patents would not prevent
a court from ruling on whether or not the trademark so granted registration is confusingly similar
with a previously registered trademark, where such issue is essential for resolution of a case
properly before the court. A fortiori, a mere application for registration cannot be a sufficient
reason for denying injunctive relief, whether preliminary or definitive. In the case at bar,
petitioners' suit for injunction and for damages for infringement, and their application for a
preliminary injunction against private respondent, cannot be resolved without resolving the issue
of claimed confusing similarity.

In the case at bar, the evidence of record is scanty. Petitioners have not submitted actual copies
or photographs of their registered marks as used in cigarettes. Private respondent has not, for its
part, submitted the actual labels or packaging material used in selling its "MARK" cigarettes.
Petitioners have appended to their Petition a photocopy of an advertisement of "MARK"
cigarettes. Private respondent has not included in the record a copy of its application for
registration of "MARK" for cigarettes, which would include a facsimile of the trademark being
applied for. It should be noted that "MARK" and "LARK," when read or pronounced orally,
constitute idem sonans in striking degree. Further, "MARK" has taken over the dominant word in
"MARK VII" and "MARK TEN." These circumstances, coupled with private respondent's failure
to explain how or why it chose, out of all the words in the English language, the word "mark" to
refer to its cigarettes, lead me to the submission that there is a prima facie basis for holding, as
the Patent Office has held and as the Court of Appeals did hold originally, that private
respondent's "MARK" infringes upon petitioners' registered trademarks.

II

There is thus no question as to the legal rights of petitioners as holders of trademarks registered
in the Philippines. Private respondent, however, resists and assails petitioners' effort to enforce
their legal rights by heavily underscoring the fact that petitioners are not registered to do
business in the Philippines and are not in fact doing business in the Philippines. It is thus
necessary to determine what consequences, if any, flow from this circumstance so far as
enforcement of petitioners' rights as holders of registered Philippine trademarks is concerned.

It should be stressed at the outset that circumstance has no legal impact upon the right of
petitioners to own and register their trademarks in the Philippines. Section 2 of R.A. No. 166 as
amended expressly recognizes as registrable, under this statute, marks which are owned by
corporations domiciled in any foreign country:

Sec. 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 trade marks, 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. (Emphasis suppplied)

It is also entirely clear that foreign corporations and corporations domiciled in a foreign country
are not disabled from bringing suit in Philippine courts to protect their rights as holders of
trademarks registered in the Philippines. Under Section 21-A of R.A. No. 166, as amended, any
foreign corporation which is a holder of a trademark registered under Philippine law may bring
an action for infringement of such mark or for unfair competition or false designation of origin
and false description "whether or not it has been licensed to do business in the Philippines under
the [Corporation Law] at the time it brings complaint, subject to the proviso that:
. . . that the country of which the said foreign corporation or juristic person is a citizen or in
which it is domiciled by treaty, convention or law, grants similar privilege to corporate or juristic
persons of the Philippines. (Emphasis supplied)

The rule thus embodied in Section 21-A of R.A. No. 166 as amended is also set out in Article 2
of the Paris Convention for the Protection of Industrial Property ("Paris Convention"), to which
the Philippines, the United States, Canada and Switzerland are all parties. 18 Article 2 of the
Paris Convention provides in relevant part:

Article 2

(1) Nationals of any country of the Union shall, as regards the protection of industrial
property, enjoy in all the other countries of the Union the advantages that their respective laws
now grant, or may hereafter grant, to nationals; all without prejudice to the rights specially
provided for by this Convention. Consequently, they shall have the same protection as the latter,
and the same legal remedy against any infringement of their rights, provided that the conditions
and formalities imposed upon national are complied with.

(2) However, no requirement as to domicile or establishment in the country where protection

is claimed may be imposed upon nationals of countries of the Union for the enjoyment of any
industrial property rights.

xxx xxx xxx

(Emphasis supplied)

Article 2, paragraph 1 of the Paris Convention embodies the principle of "national treatment" or
"assimilation with nationals," one of the basic rules of the Convention. 19 Under Article 2,
paragraph 1 of the Paris Convention, nationals of Canada, Switzerland and the United States who
are all countries of the Paris Union are entitled to enjoy in the Philippines, also a country of the
Union, the advantages and protections which Philippine law grants to Philippine nationals.
Article 2 paragraph 2 of the Paris Convention restrains the Philippines from imposing a
requirement of local incorporation or establishment of a local domicile as a pre-requisite for
granting to foreign nationals the protection which nationals of the Philippines are entitled to
under Philippine law in respect of their industrial property rights. It should be noted that Article
2, paragraph 2 also constitutes proof of compliance with the requirement of reciprocity between,
on the one hand, the Philippines and, on the other hand, Canada, Switzerland and the United
States required under Section 21-A of R.A. No. 166 as amended.

The net effect of the statutory and treaty provisions above referred to is that a corporate national
of a member country of the Paris Union is entitled to bring in Philippine courts an action for
infringement of trademarks, or for unfair competition, without necessity for obtaining
registration or a license to do business in the Philippines. Article 2 as quoted above is in effect
with respect to all four (4) countries.

Such has been the rule in our jurisdiction even before the enactment of R.A. No. 166 and before
the Philippines became a party to the Paris Convention. In Western Equipment and Supplies
Company, et al. v. Reyes, etc., et al., 20 petitioner Western Electrical Company, a U.S.
manufacturer of electrical and telephone equipment and supplies not doing business in the
Philippines, commenced action in a Philippine court to protect its corporate name from
unauthorized use thereof by certain Philippine residents. The Philippine residents sought to
organize a Philippine corporation to be known as "Western Electrical Company" for the purpose
of manufacturing and selling electrical and telephone equipment in the Philippines. The local
residents resisted the suit by contending, inter alia, that the petitioner Western Electrical
Company had never transacted business in the Philippines and that registration of private
respondent's articles of incorporation could not in any way injure petitioner. The Supreme Court,
in rejecting this argument, stated that:

. . . a foreign corporation which has never done business in the Philippines — but is widely and
favorably known in the Philippines through the use therein of its products bearing its corporate
name and tradename has a legal right to maintain an action in the [Philippines]. The purpose of
such a suit is to protect its reputation, corporate name and goodwill which has been established
through the natural development of its trade for a long period of years in the doing of which it
does not seek to enforce any legal or contract rights arising from or closing out of any business
which it has transacted in the Philippines. . . .21 (Emphasis supplied)

Similarly, in Asari Yoko v. Kee Boc,22 a Japanese corporation, also not engaged in any business
in the Philippines, successfully opposed an application for registration of its trademark "Race
Brand" on shirts and undershirts by a local businessman, even though the Japanese company had
not previously registered its own mark "Race Brand" in the Philippines.
Again, in General Garments Corporation v. Director of Patents and Puritan Sportswear
Corporation,23 Puritan Sportswear Corporation, an entity organized in Pennsylvania U.S.A. and
not doing business in the Philippines, filed a petition for cancellation of the mark "Puritan"
which was registered in the name of petitioner General Garments Corporation for assorted men's
wear, undershirts, briefs, shirts, sweaters and jackets. Puritan Sportswear alleged ownership and
prior use of the trademark "Puritan" in the Philippines. Petitioner General Garments, on the other
hand, contended that Puritan Sportswear, being a foreign corporation not licensed to do, and not
doing, business in the Philippines, could not maintain an action for cancellation of a trademark.
The Court, in upholding the Director of Patents' cancellation of the registration of the mark
"Puritan" in the name of General Garments, said:

. . . .such mark should not have been registered in the first place (and consequently may be
cancelled if so required) if it consists of
or comprises a mark or tradename which so resembles a mark or tradename . . . . previously used
in the Philippines by another and not abandoned, as to be likely, when applied to or used in
connection with goods, business or services of the applicant, to cause confusion or mistake or to
deceive purchasers. 24 (Emphasis supplied)

In Converse Rubber Corporation v. Universal Rubber Products, Inc., 25 petitioner Converse

Rubber Corporation was an American manufacturer of rubber shoes, not doing business on its
own in the Philippines and not licensed to do business in the Philippines, opposed the application
for registration of the trademark "Universal Converse and Device" to be used also in rubber
shoes and rubber slippers by private respondent Universal Rubber Products, Inc. ("Universal").
In reversing the Director of Patents and holding that Universal's application must be rejected, the
Supreme Court said:

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-emption. 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 sales presented "was made by a single witness who had never dealt with nor had never
known opposer {petitioner} . . . without Opposer having a direct or indirect hand in the
transaction to be the basis of trademark pre-exemption. 26 (Emphasis supplied)

Three (3) other cases may be noted. The first is La Chemise Lacoste, S.A. v. Fernandez 27 La
Chemise Lacoste, S.A. although a foreign corporation not engaged in and not licensed to do
business in the Philippines, was accorded protection for its trademarks "Lacoste", "Chemise
Lacoste," and "Crocodile Device" for clothing and sporting apparel. The Court recognized that
those marks were "world famous trademarks which the Philippines, as a party to the Paris Union,
is bound to protect." Similarly, in Del Monte Corporation, et al. v. Court of Appeals, et al., 28
petitioner Del Monte Corporation was a company organized under the laws of the United States
and not engaged in business in the Philippines. Because both the Philippines and the United
States are signatories to the Convention of Paris, which grants to nationals of the parties the
rights and advantages which their own nationals enjoy for the repression of acts of infringement
and unfair competition, the Court, having found that private respondent's label was an
infringement of Del Monte's trademark, held Del Monte entitled to recover damages.

In Puma Sportschuhfabriken Rudolf Dassler, K.G. v. Intermediate appellate Court, et al, 29

petitioner Puma was a foreign corporation existing under the laws of the Federal Republic of
Germany not registered to do business and not doing business in the Philippines, filed a
complaint for infringement of trademark and for issuance of a writ of preliminary injunction
against a local manufacturing company. Reversing the Court of Appeals, this Court held that
Puma had legal capacity to bring the suit in the Philippines under Section 21-A of R.A. No. 166
as amended and under the provisions of the Paris Convention to which both the Philippines and
the Federal Republic of Germany are parties. The Court also noted that "Puma" is an
internationally known brandname.

The relevancy of the doctrines set out in the cases above cited are conceded by my distinguished
brother Melo, J. in the majority opinion. The majority opinion, however, goes on to say:

In other words, petitioners may have the capacity to sue for infringement irrespective of lack of
business activity in the Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbols 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.
With great respect, certain essential qualifications must be made respecting the above paragraph.
Firstly, of the petitioners' three (3) marks here involved, two (2) of them — i.e., "MARK TEN"
and "LARK" — were registered in the Philippines on the basis of actual use in the Philippines,
precisely in accordance with the requirements of Section 2-A and Section 5 (A) of R.A. No. 166
as amended. The pre-registration use in commerce and trade in the Philippines for at least two
(2) months as required by the statute, is explicitly stated in the Certificates of Registration. The
very fact that the appropriate Philippine Government office issued the Certificates of
Registration necessarily gave rise to the presumption that such pre-registration use had in fact
been shown to the satisfaction of the Philippine Patent Office (now the Bureau of Patents,
Trademark and Technology Transfer ["BPTTT"]). It is important to note that respondent Fortune
has not purported to attack the validity of the trademarks "Mark Ten" and "Lark" by pretending
that no pre-registration use in commerce in the Philippines had been shown. 30

The third mark of petitioners — "MARK VII" — was registered in the Philippines on the basis
of Section 37 of R.A. No. 166 as amended, i.e., on the basis of registration in the country of
origin and under the Paris Convention. In such registration, by the express provisions of Section
37 (b) of R.A. No. 166 as amended, prior (pre-registration) use in commerce in the Philippines
need not be alleged.

Whether the Philippine trademark was based on actual use in the Philippines (under Section 2-A)
or on registration in a foreign country of origin (under Section 37), the statute appears to require
that trademarks (at least trademarks not shown to be internationally "well-known") must
continue to be used in trade and commerce in the Philippines. It is, however, essential to point
out that such continued use, as a requirement for the continued right to the exclusive use of the
registered trademark, is presumed so long as the Certificate of Registration remains outstanding
and so long as the registered trademark owner complies with the requirements of Section 12 of
R.A. No. 166 as amended of filing affidavits with the BPTTT on the 5th, 10th and 15th
anniversaries of the date of issuance of the Certificate of Registration, showing that the
trademark is still in use or showing that its non-use is not due to any intention to abandon the
same. In the case at bar, again, respondent Fortune has not explicitly pretended that the
petitioners' trademarks have been abandoned by non-use in trade and commerce in the
Philippines although it appears to insinuate such non-use and abandonment by stressing that
petitioners are not doing business in the Philippines.

That petitioners are not doing business and are not licensed to do business in the Philippines,
does not by any means mean either that petitioners have not complied with the requirements of
Section 12 of R.A. No. 166 relating to affidavits of continued use, or that petitioners' trademarks
are not in fact used in trade and commerce in the Philippines. In the Converse case, as earlier
noted, the Court held that the circumstance that the foreign owner of a Philippine trademark is
not licensed to do business and is not doing business in the Philippines, does not mean that
petitioner's goods (that is, goods bearing petitioner's trademark) are not sold in the Philippines.
For cigarettes bearing petitioners' trademarks may in fact be imported into and be available for
sale in the Philippines through the acts of importers or distributors. Petitioners have stated that
their "Mark VII," "Mark Ten" and "Lark" cigarettes are in fact brought into the country and
available for sale here in, e.g., duty-free shops, though not imported into or sold in the
Philippines by petitioners themselves. There is no legal requirement that the foreign registrant
itself manufacture and sell its products here. All the statute requires is the use in trade and
commerce in the Philippines, and that can be carried out by third party manufacturers operating
under license granted by the foreign registrant or by the importation and distribution of finished
products by independent importers or traders. The "use" of the trademark in such instances by
the independent third parties constitutes use of the foreign registrant's trademarks to the benefit
of the foreign registrant. 31

III

We turn to petitioners' claim that they are suffering irreparable damage by reason of the
manufacture and sale of cigarettes under the trademark "MARK." Here again, a basic argument
of private respondent was that petitioners had not shown any damages because they are not doing
business in the Philippines. I respectfully maintain that this argument is specious and without
merit.

That petitioners are not doing business and are not licensed to do business in the Philippines,
does not necessarily mean that petitioners are not in a position to sustain, and do not in fact
sustain, damage through trademark infringement on the part of a local enterprise. 32 Such
trademark infringement by a local company may, for one thing, affect the volume of importation
into the Philippines of cigarettes bearing petitioners' trademarks by independent or third party
traders.

The damage which the petitioners claim they are sustaining by reason of the acts of private
respondents, are not limited to impact upon the volume of actual imports into the Philippines of
petitioners' cigarettes. Petitioners urge that private respondent's use of its confusingly similar
trademark "MARK" is invasive and destructive of petitioners property right in their registered
trademarks because.

a) Plaintiffs' undeniable right to the exclusive use of their registered trademarks is

effectively effaced by defendant's use of a confusingly similar trademark;
b) Plaintiffs would lose control of the reputation of their products as their reputation will
depend on defendant's commercial activities and the quality of defendant's products;

c) The market in the Philippines for plaintiffs' products will be pre-empted;

d) Purchasers will think that defendant's goods are approved or sponsored by plaintiff;

e) Defendant will be allowed to benefit from the reputation of the plaintiffs' goods and
trademarks;

f) Defendant will be effectively authorized to continually invade plaintiffs' property rights,

for which invasion no fair and reasonable redness can be had in a court of law; and

g) Plaintiffs will lose their goodwill and trade and the value of their registered trademarks
will irreparably diluted and the damages to be suffered by plaintiffs cannot be redressed fairly in
terms of money. 33

Modern authorities on trademark law view trademarks as symbols which perform three (3)
distinct functions: first, they indicate origin or ownership of the articles to which they are
attached; second, they guarantee that those articles come up to a certain standard of quality;
third, they advertise the articles they symbolize. 34

The first two (2) functions have long been recognized in trademark law which characterizes the
goodwill or business reputation symbolized by a trademark as a property right protected by law.
Thus, the owner of a trademark is held entitled to exclude others from the use of the same, or of a
confusingly similar, mark where confusion results in diversion of trade or financial injury. At the
same time, trademarks warn against the imitation or faking of products and prevent the
imposition of fraud upon the public. The first two (2) functions of trademarks were aptly stressed
in e.g., the La Chemise Lacoste case where the objectives of trademark protection were
described in the following terms:
. . . 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 . . . . We buy a
kitchen appliance, a household tool, perfume, a face powder, other toilet articles, watches,
brandy or whisky, and items of clothing like jeans, T-shirts, neckties, etc. — the list is quite
lengthy — and 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
. . . . 35

The third or advertisement function of trademark has become of especial importance given the
modern technology of communication and transportation and the growth of international trade.
36 Through advertisement in the broadcast and print media, the owner of the trademark is able to
establish a nexus between its trademark products and the public in regions where the owner does
not itself manufacture or sell its own products. 37 Through advertisement, a well-established and
well-earned reputation may be gained in countries where the trademark owner has itself no
established business connection. 38 Goodwill may thus be seen to be much less closely confined
territorially than, say, a hundred or fifty years ago. 39 It is no longer true that "a trademark of
itself cannot travel to markets where there is no article to wear the badge and no trader to offer
the article." 40 Advertisement of trademarks is geared towards the promotion of use of the
marked article and the attraction of potential buyers and users;41 by fixing the identity of the
marked article in the public mind, it prepares the way for growth in such commerce whether the
commerce be handled by the trademark owner itself or by its licensees or independent traders.

That a registered trademark has value in itself apart from the trade physically accompanying its
use, has been recognized by our Court. In Ang v. Teodoro,42 the Court was called upon the
determine whether there was infringement in the use of the same trademark on articles which do
not belong to the same class of goods which the lawful trademark owner manufactures and sells.
In holding that there was infringing use in such case, the Court said:

. . . . such unfair trading can cause injury or damage to the first user of a given trade-mark, first,
by prevention of the natural expansion of his business and, second, by having his business
reputation confused with and put at the mercy of the second user. When noncompetitive products
are sold under the same mark, the gradual whittling away or dispersion of the identity and hold
upon the public mind of the mark created by its first user, inevitably result. The original owner is
entitled to the preservation of the valuable link between him and the public that has been created
by his ingenuity and the merit of his wares or services. Experience has demonstrated that when a
well-known trade-mark is adopted by another even for a totally different class of goods, it is
done to get the benefit of the reputation and advertisements of the originator of said mark, to
convey to the public a false impression of some supposed connection between the manufacturer
of the article sold under the original mark and the new articles being tendered to the public under
the same or similar mark . . . The owner of a trademark or tradename has a property right in
which he is entitled to protection, since there is damage to him in the form of confusion of
reputation or goodwill in the mind of the public as well as from confusion of goods. (Emphasis
supplied)

In Sta. Ana v. Maliwat,43 the Court, through J.B.L. Reyes, J., in holding that the use of the name
"Flormen" with respect to shoes was infringement of the mark "Flormann" used in the men's
wear such as shirts, polo shirts and pants, said:

Modern law recognizes that the protection to which the owner of a trade-mark is entitled is not
limited to guarding his goods or business from actual market competition with identical or
similar products of the parties, but extends to all cases in which the use by a junior appropriator
of a trade-mark or trade-name is likely to lead to a confusing of source, as where prospective
purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 52 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). . . . . 44 (Emphasis supplied)

Petitioners did not try to put a peso figure on their claimed damage arising from the erosion and
possible eventual destruction of the symbolic value of their trademark. Such damage, while not
easily quantifiable, is nonetheless real and effective. I submit, with respect, that such continuing
damage falls clearly within the concept of irreparable damage or injury described in Social
Security Commission v. Bayona 45 in the following terms:

Damages are irreparable within the meaning of the rule relative to the issuance of injunction
where there is no standard by which their amount can be measured with reasonable accuracy
(Crouc v. Central Labor Council, 83 ALR, 193). "An irreparable injury which a court of equity
will enjoin includes that degree of wrong of a repeated and continuing kind which produce hurt,
inconvenience, or damage that can be estimated only by conjecture, and not by any accurate
standard of measurement" (Phipps v. Rogue River Valley Canal Co., 7 ALR, 741). An
irreparable injury to authorize an injunction consists of a serious charge of, or is destructive to,
the property if affects, either physically or in the character in which it has been held and
enjoined, or when the property has some peculiar quality or use, so that its pecuniary value will
not fairly recompense the owner of the loss thereof' (Dunker v. Field and Tub Club, 92 P., 502).
Respondent corporations made a lengthy discourse on the matter of irreparable injury they may
suffer if the injunction were not issued, but the array of figures they have laid out merely
succeeded in proving that the damage, if any they may suffer, is susceptible of mathematical
computation. It is not then irreparable. As already stated, this term has a definite meaning in law.
It does not have reference to the amount of damages that may be caused but rather to the
difficulty of measuring the damages inflicted. If full compensation can be obtained by way of
damages, equity will not apply the remedy of injunction (28 Am. Jur., 244; 43 C.J.S., 427, 446).
46

I next turn to private respondent's claim that issuance of an injunction would impose heavy
damage upon itself and upon Government. As noted, private respondent stated that it had paid
many millions of pesos as ad valorem and VAT taxes to the Government in 1988 and 1989 in
connection with its "MARK" cigarettes. 47 Presumably, the total volume of its business
associated with the manufacture and sale of cigarettes trademarked "MARK" would be even
larger. In addition, private respondent suggests, albeit indirectly only, that hundreds if not
thousands of its employees would find themselves unemployed if it were restrained from the
manufacture and sale of "MARK" cigarettes.

Private respondent's claims concerning alleged damages both to itself and to the Government,
which obviously loomed very large in the mind of the majority here, and of the Court of Appeals
when it lifted the injunction it had issued, appear to me to be extravagant indeed. Petitioners
cannot claim to be entitled to an injunction which could restrain private respondent from
manufacturing and selling cigarettes completely; petitioner do not pretend to be so entitled to
such a comprehensive injunction. Petitioners seek only the reinstatement of the original
injunction issued by the Court of Appeals, i.e., one that restrains private respondent from using
the trademark "MARK" on its cigarettes. There is nothing to prevent private respondent from
continuing to manufacture and sell cigarettes under any of its already existing and registered
trademarks, of which it has several, or under some new and specially created trademark(s).
Realistically, private respondent, if enjoined, would lose only the value of the packaging material
imprinted with the same trademark (which cigarettes and material may well be amenable to re-
cycling) and the cost of past advertisements of "MARK" in media, if any. Thus, the apprehension
on the part of the majority which private respondent tried diligently to foment — that the
Government would lose many millions of pesos in tax revenues and that many employees would
lose their jobs, if an injunction is issued — is more apparent than real. The damages private
respondent would sustain from reinstatement of the preliminary injunction are clearly
quantifiable in pesos.

Besides, as pointed out by petitioners, to pay heed to private respondent's creative economic
argument would ultimately mean that the greater the volume of sales and the profits of the
infringer, the greater would be the infringer's claim to be entitled to continue infringement. I
respectfully submit that the law should not countenance such a cynical result.

My conclusion is that private respondent's claims concerning damage which it would sustain if
the petitioners were granted the injunction they seek, did not constitute a sufficient basis for
overturning the original decision of the Court of Appeals. The Resolution of the Court of
Appeals granting private respondent's Motion to Dissolve, in effect disregarded everything that
Court had set out in its original Decision. The mere offer and filing of a counterbond does not, by
itself, provide a sufficient basis for lifting the preliminary injunction earlier granted. For all the
elements which supported the original issuance of a preliminary injunction continued to exist.
Private respondent's hyperbolic claims concerning the damages that it and the Government
would sustain by reason of an injunction, had been made earlier both before the trial court and
the Court of Appeals. Finally, it is not enough to say as private respondent says, that the Court of
Appeals in granting its Motion to Dissolve the preliminary injunction was merely exercising its
discretion; for the Court of Appeals obviously was also exercising its discretion when it rendered
its original Decision granting the preliminary injunction.

I vote to grant due course to the petition for Certiorari, to set aside the Resolution of the
respondent Court of Appeals dated 14 September 1989 in C.A.-G.R. SP No. 13132 and to
reinstate the Decision of that same Court dated 5 May 1989.

VICTORIAS MILLING V. ONG SU

This is a petition to review the decision of the Director of Patents in Inter Partes Case No. 304
entitled "Victorias Milling Company, Inc., petitioner, verus, Ong Su" dated August 15, 1967
denying the petition to cancel the certificate of registration issued by the philippines Patent
Office on Jurie 20, 1961 in favor of Ong Su covering the tradenwk "VALENTINE" and design
and used on refined suga
. As correctly stated by the Director of Patents, common geometric shapes such as diamonds
ordinarily are not regarded as indicia of origin for goods to which the remarks are applied unless
they have acquired a secondary meaning.

The evidence is that Ong Su has been using his trademark since prior to the last World War and
he obtained the registration thereof on June 20, 1961. Vijandre declared that the petitioner started
to use its trademark only in 1947. Said trademark was registered on November 9, 1961. It cannot
be said, therefore, that the respondent Ong Su imitated the trademark of the petitioner.
Even an illiterate person can see the difference between the two diamond designs.

There is no evidence that the respondent Ong Su had obtained the registration of his trademark
"Valentine" and design by means of fraud. The said trademark was registered in the Philippines
Patent Office before the petitioner registered its trademark.

The record and evidence show that Ong Su had also used in his business the name Mariano Ang.
Hence the licenses and permits in the name of Ong Su and/or Mariano Ang were correctly
admitted as evidence.

WHEREFORE the decision of the Director of Patents sought to be reviewed is hereby affirmed,
without pronouncement as to costs.

MIRPURI V. CA

The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty which
the Philippines bound itself to honor and enforce in this country. As to whether or not the treaty
affords protection to a foreign corporation against a Philippine applicant for the registration of a
similar trademark is the principal issue in this case.

On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas J.
Mirpuri, filed an application with the Bureau of Patents for the registration of the trademark
"Barbizon" for use in brassieres and ladies undergarments. Escobar alleged that she had been
manufacturing and selling these products under the firm name "L & BM Commercial" since
March 3, 1970.

Private respondent Barbizon Corporation, a corporation organized and doing business under the
laws of New York, U.S.A., opposed the application.

On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition and
giving due course to Escobar's application, thus:

"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,

Application Serial No. 19010 for the registration of the trademark BARBIZON, of respondent
Lolita R. Escobar, is given due course.

Escobar later assigned all her rights and interest over the trademark to petitioner Pribhdas J.
Mirpuri who, under his firm name then, the "Bonito Enterprises," was the sole and exclusive
distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the
trademark required under Section 12 of Republic Act (R.A.) No. 166, the Philippine Trademark
Law. Due to this failure, the Bureau of Patents cancelled Escobar's certificate of registration.
 On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri filed
his own application for registration of Escobar's trademark.Escobar later assigned her application
to herein petitioner and this application was opposed by private respondent. The case was docketed
as Inter Partes Case No. 2049 (IPC No. 2049).

This decision became final and on September 11, 1974, Lolita Escobar was issued a certificate of
registration for the trademark "Barbizon." The trademark was "for use in "brassieres and lady's
underwear garments like panties.

Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for
cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of
registration, and declared private respondent the owner and prior user of the business name
"Barbizon International." Thus:

"WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner and prior
user of the business name "BARBIZON INTERNATIONAL" under Certificate of Registration
No. 87-09000 dated March 10, 1987 and issued in the name of respondent, is [sic] hereby
ordered revoked and cancelled. x x x."[6]

Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of
Patents. On June 18, 1992, the Director rendered a decision declaring private respondent's
opposition barred by res judicata and giving due course to petitioner's application for registration,
to wit:

Modern authorities on trademark law view trademarks as performing three distinct functions:
(1) they indicate origin or ownership of the articles to which they are attached; (2) they guarantee
that those articles come up to a certain standard of quality; and (3) they advertise the articles they
symbolize
This is the mise-en-scene of the present controversy. Petitioner brings this action claiming
that "Barbizon" products have been sold in the Philippines since 1970. Petitioner developed this
market by working long hours and spending considerable sums of money on advertisements and
promotion of the trademark and its products. Now, almost thirty years later, private respondent, a
foreign corporation, "swaggers into the country like a conquering hero," usurps the trademark and
invades petitioner's market.[32] Justice and fairness dictate that private respondent be prevented
from appropriating what is not its own. Legally, at the same time, private respondent is barred
from questioning petitioner's ownership of the trademark because of res judicata
t is also noted that the oppositions in the first and second cases are based on different laws. The
opposition in IPC No. 686 was based on specific provisions of the Trademark Law, i.e., Section 4
(d)[70] on confusing similarity of trademarks and Section 8[71] on the requisite damage to file an
opposition to a petition for registration. The opposition in IPC No. 2049 invoked the Paris
Convention, particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister
of Trade and Industry. This opposition also invoked Article 189 of the Revised Penal Code which
is a statute totally different from the Trademark Law.[72] Causes of action which are distinct and
independent from each other, although arising out of the same contract, transaction, or state of
facts, may be sued on separately, recovery on one being no bar to subsequent actions on
others.[73] The mere fact that the same relief is sought in the subsequent action will not render the
judgment in the prior action operative as res judicata, such as where the two actions are based on
different statutes.[74] Res judicata therefore does not apply to the instant case and respondent Court
of Appeals did not err in so ruling.
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 28415 are affirmed.
SO ORDERED.

UNNO COMMERCIAL V. GENERAL MILLING

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 - Party-Applicant 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.
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.

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.

SHANGRI LA V. DEVELOPERS GROUP OF COMPANIES

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, 20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its
Resolution2 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.

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 internationally-known 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 decision4 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.

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.

ASIA BREWERY

Infringement is determined by the "test of dominancy" rather than by differences or variations in

the details of one trademark and of another. The rule was formulated in Co Tiong Sa vs. Director
of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-
217 (1956), thus:

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 it is
necessary that the infringing label should suggest an effort to imitate. [C. Neilman
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;
. . . .) (Emphasis supplied.)

In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test was similarity or
"resemblance between the two (trademarks) such as would be likely to cause the one mark to be
mistaken for the other. . . . [But] this is not such similitude as amounts to identity."

G.R. No. L-19906 April 30, 1969

STERLING PRODUCTS INTERNATIONAL, INCORPORATED, plaintiff-appellant,

vs.
FARBENFABRIKEN BAYER AKTIENGESELLSCHAFT, and ALLIED
MANUFACTURING AND TRADING CO., INC.,

MEDICINES V. PESTICIDES. WORLD WAR I AND WORLD WAR II.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-54158 August 31, 1984

PAGASA INDUSTRIAL CORPORATION, petitioner,

vs.
COURT OF APPEALS, TIBURCIO S. EVALLE as Director of Patents, and YOSHIDA
KOGYO KABUSHIKI KAISHA, respondents.

Quasha, Asperilla, Ancheta, Valmonte, Peña & Marcos and Francisco Lava, Jr. for petitioner.

The Solicitor General for respondent Appellate Court.

Romulo, Mabanta, Buenaventura & delos Angeles for private respondent.

RESOLUTION

AQUINO, J.:

This case is about the conflicting claims of Pagasa Industrial Corporation and Yoshida Kogyo
Kabushiki Kaisha for the trademark YKK for zippers.

The Director of Patents issued to Yoshida on November 9, 1961 Certificate of Registration No.
9331 for the said trademark for slide fasteners and zippers in class 41. It claimed to have used the
trademark since September 1, 1950.

Notwithstanding that prior registration, the Director on April 4, 1968, or more than six years
later, issued to Pagasa Certificate of Registration No. 13756 for the same trademarkfor its
zippers, based on alleged use of the trademark since March 1, 1966.

On January 23, 1975, Yoshida asked the Director to cancel the registration in favor of Pagasa.
The trademark, used for the same product by two different entities, has caused confusion,
mistake and deception. The Director explained that the duplicitous registration was attributable
to the fact that his examiner "miserably overlooked" the anterior registration by Yoshida. Had it
not been for such costly oversight, Pagasa's application would have been rejected.

In his decision of May 5, 1977, the Director cancelled Pagasa's certificate of registration in
accordance with section 4 (d) and chapter IV of Republic Act No. 166.
Pagasa appealed to the Court of Appeals which in its decision dated February 6, 1980 affirmed
the cancellation. It found that prior to 1968 Pagasa knew that Yoshida was the registered owner
and user of the YKK trademark which is an acronym of its corporate name.

Tadao Yoshida, the president of Yoshida, and Tsutomu Isaka the export manager, visited in 1960
(1965) Pagasa's factory which was manufacturing zippers under the Royal brand Anacleto Chi,
Pagasa's president visited in turn Yoshida's factory in Toyoma,Japan.

The Appellate Court concluded that Pagasa's knowledge that Yoshida was using the YKK
trademark precludes the application of the equitable principle of laches, estoppel and
acquiescence. It noted that Pagasa acted in bad faith. As observed by Yoshida's counsel, Pagasa's
registration of YKK as its own trademark was an act of ingratitude.

Pagasa appealed to this Court. The Second Division in a decision dated November 19, 1982,
reversed the decision of the Appellate Court (118 SCRA 526). Yoshida filed a motion for
reconsideration which was denied in the resolution of January 12, 1983. It was granted leave to
file a second motion for reconsideration over Pagasa's opposition. The case was transferred to
the Banc.

We hold that the second motion for reconsideration should be granted. Pagasa contended
originally that the Appellate Court erred in holding that Pagasa cannot invoke the equitable
principles of laches, estoppel and acquiescence because Yoshida had not abandoned the YKK
trademark and Pagasa was aware of its prior existence and registration. It allegedly erred further
in ruling that registration gives the registrant a vested right in the trademark.

These contentions are devoid of merit. The appeal should not have been given due course. The
Director of Patents sensibly and correctly cancelled the registration in favor of Pagasa which has
not shown any semblance of justification for usurping the trademark YKK. The registration in
favor of Pagasa was admitted by the Director to be a mistake. He said that Pagasa's application
should have been denied outright.

Pagasa cannot rely on equity because he who comes into equity must come with clean hands.
Equity refuses to lend its aid in any manner to one seeking its active interposition who has been
guilty of unlawful or inequitable conduct in the matter with relation to which he seeks relief (30
C.J.S. 1009).

"Registration is sufficient prima-facie proof that all acts necessary to entitle the mark to
registration were duly performed" (87 C.J.S. 421). Obviously, Yoshida's prior registration is
superior and must prevail.

WHEREFORE, the decisions of the Director of Patents and the Court of Appeals are affirmed.
Costs against the petitioner.

SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Abad Santos, Melencio-Herrera, Plana, Escolin and
Gutierrez, JJ., concur.

Concepcion, Jr., Guerrero, Relova, Cuevas, and De la Fuente, JJ., took no part.

FIRST DIVISION

MCDONALDS CORPORATION and G.R. No. 143993

MCGEORGE FOOD INDUSTRIES, INC.,
Petitioners,
Present:
Davide, Jr., C.J.,
Chairman,
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.

L.C. BIG MAK BURGER, INC.,

FRANCIS B. DY, EDNA A. DY,
RENE B. DY, WILLIAM B. DY,
JESUS AYCARDO, ARACELI Promulgated:
AYCARDO, and GRACE HUERTO,
Respondents. August 18, 2004

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

DECISION

CARPIO, J.:

The Case

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

Appeals[2] finding respondent L.C. Big Mak Burger, Inc. not liable for trademark infringement and

unfair competition and ordering petitioners to pay respondents P1,900,000 in damages, and of
its Resolution dated 11 July 2000 denying reconsideration. The Court of Appeals Decision

reversed the 5 September 1994 Decision[3] of the Regional Trial Court of Makati, Branch 137,

finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair

competition.

The Facts

Petitioner McDonalds Corporation (McDonalds) is a corporation organized under the laws

of Delaware, United States. McDonalds operates, by itself or through its franchisees, a global chain

of fast-food restaurants. McDonalds[4] owns a family of marks[5] including the Big Mac mark for

its double-decker hamburger sandwich.[6] McDonalds registered this trademark with the United

States Trademark Registry on 16 October 1979. [7] Based on this Home Registration, McDonalds

applied for the registration of the same mark in the Principal Register of the then Philippine

Bureau of Patents, Trademarks and Technology (PBPTT), now the Intellectual Property Office

(IPO). Pending approval of its application, McDonalds introduced its Big Mac hamburger

sandwiches in the Philippine market in September 1981. On 18 July 1985, the PBPTT allowed

registration of the Big Mac mark in the Principal Register based on its Home Registration in the

United States.

Like its other marks, McDonalds displays the Big Mac mark in items[8] and

paraphernalia[9] in its restaurants, and in its outdoor and indoor signages. From 1982 to 1990,

McDonalds spent P10.5 million in advertisement for Big Mac hamburger sandwiches alone. [10]
 Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic corporation, is

McDonalds Philippine franchisee.[11]

Respondent L.C. Big Mak Burger, Inc. (respondent corporation) is a domestic corporation

which operates fast-food outlets and snack vans in Metro Manila and nearby

provinces.[12] Respondent corporations menu includes hamburger sandwiches and other food

items.[13] Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo,

Araceli Aycardo, and Grace Huerto (private respondents) are the incorporators, stockholders and

directors of respondent corporation. [14]

On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the

Big Mak mark for its hamburger sandwiches. McDonalds opposed respondent corporations

application on the ground that Big Mak was a colorable imitation of its registered Big Mac mark

for the same food products. McDonalds also informed respondent Francis Dy (respondent Dy), the

chairman of the Board of Directors of respondent corporation, of its exclusive right to the Big Mac

mark and requested him to desist from using the Big Mac mark or any similar mark.

Having received no reply from respondent Dy, petitioners on 6 June 1990 sued respondents

in the Regional Trial Court of Makati, Branch 137 (RTC), for trademark infringement and unfair

competition. In its Order of 11 July 1990, the RTC issued a temporary restraining order (TRO)

against respondents enjoining them from using the Big Mak mark in the operation oftheir business

in the National Capital Region. [15] On 16 August 1990, the RTC issued a writ of preliminary

injunction replacing the TRO.[16]

In their Answer, respondents admitted that they have been using the name Big Mak Burger for

their fast-food business. Respondents claimed, however, that McDonalds does not have an
exclusive right to the Big Mac mark or to any other similar mark. Respondents point out that the

Isaiyas Group of Corporations (Isaiyas Group) registered the same mark for hamburger

sandwiches with the PBPTT on 31 March 1979. One Rodolfo Topacio (Topacio) similarly

registered the same mark on 24 June 1983, prior to McDonalds registration on 18 July

1985. Alternatively, respondents claimed that they are not liable for trademark infringement or for

unfair competition, as the Big Mak mark they sought to register does not constitute a colorable

imitation of the Big Mac mark. Respondents asserted that they did not fraudulently pass off their

hamburger sandwiches as those of petitioners Big Mac hamburgers. [17] Respondents sought

damages in their counterclaim.

In their Reply, petitioners denied respondents claim that McDonalds is not the exclusive owner of

the Big Mac mark. Petitioners asserted that while the Isaiyas Group and Topacio did register the

Big Mac mark ahead of McDonalds, the Isaiyas Group did so only in the Supplemental Register

of the PBPTT and such registration does not provide any protection. McDonalds disclosed that it

had acquired Topacios rights to his registration in a Deed of Assignment dated 18 May 1981. [18]

The Trial Courts Ruling

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

corporation liable for trademark infringement and unfair competition. However, the RTC

dismissed the complaint against private respondents and the counterclaim against petitioners for

lack of merit and insufficiency of evidence. The RTC held:

 Undeniably, the mark B[ig] M[ac] is a registered trademark for plaintiff
McDonalds, and as such, it is entitled [to] protection against infringement.

xxxx
There exist some distinctions between the names B[ig] M[ac] and B[ig] M[ak] as
appearing in the respective signages, wrappers and containers of the food products
of the parties. But infringement goes beyond the physical features of the
questioned name and the original name. There are still other factors to be
considered.

xxxx

Significantly, the contending parties are both in the business of fast-food chains and
restaurants. An average person who is hungry and wants to eat a hamburger
sandwich may not be discriminating enough to look for a McDonalds restaurant
and buy a B[ig] M[ac] hamburger. Once he sees a stall selling hamburger sandwich,
in all likelihood, he will dip into his pocket and order a B[ig] M[ak] hamburger
sandwich. Plaintiff McDonalds fast-food chain has attained wide popularity and
acceptance by the consuming public so much so that its air-conditioned food outlets
and restaurants will perhaps not be mistaken by many to be the same as defendant
corporations mobile snack vans located along busy streets or highways. But the
thing is that what is being sold by both contending parties is a food item a
hamburger sandwich which is for immediate consumption, so that a buyer may
easily be confused or deceived into thinking that the B[ig] M[ak] hamburger
sandwich he bought is a food-product of plaintiff McDonalds, or a subsidiary or
allied outlet thereof. Surely, defendant corporation has its own secret ingredients to
make its hamburger sandwiches as palatable and as tasty as the other brands in the
market, considering the keen competition among mushrooming hamburger stands
and multinational fast-food chains and restaurants. Hence, the trademark B[ig]
M[ac] has been infringed by defendant corporation when it used the name B[ig]
M[ak] in its signages, wrappers, and containers in connection with its food
business. xxxx

Did the same acts of defendants in using the name B[ig] M[ak] as a trademark or
tradename in their signages, or in causing the name B[ig] M[ak] to be printed on
the wrappers and containers of their food products also constitute an act of unfair
competition under Section 29 of the Trademark Law?

The answer is in the affirmative. xxxx

The xxx provision of the law concerning unfair competition is broader and more
inclusive than the law concerning the infringement of trademark, which is
of more limited range, but within its narrower range recognizes a more exclusive
right derived by the adoption and registration of the trademark by the person whose
goods or services are first associated therewith. xxx Notwithstanding the
distinction between an action for trademark infringement and an action for unfair
competition, however, the law extends substantially the same relief to the injured
party for both cases. (See Sections 23 and 29 of Republic Act No. 166)

Any conduct may be said to constitute unfair competition if the effect is to pass off
on the public the goods of one man as the goods of another. The choice of B[ig]
M[ak] as tradename by defendant corporation is not merely for sentimental reasons
but was clearly made to take advantage of the reputation, popularity and the
established goodwill of plaintiff McDonalds. For, as stated in Section 29, a person
is guilty of unfair competition who in selling his goods shall give them the general
appearance, of goods of another manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in which they are contained, or the
devices or words thereon, or in any other feature of their appearance, which would
likely influence purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actualmanufacturer or dealer. Thus,
plaintiffs have established their valid cause of action against the defendants for
trademark infringement and unfair competition and for damages. [19]

The dispositive portion of the RTC Decision provides:

WHEREFORE, judgment is rendered in favor of plaintiffs McDonalds

Corporation and McGeorge Food Industries, Inc. and against defendant L.C. Big
Mak Burger, Inc., as follows:

1. The writ of preliminary injunction issued in this case on [16 August

1990] is made permanent;

2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay

plaintiffs actual damages in the amount of P400,000.00, exemplary damages in
the amount of P100,000.00, and attorneys fees and expenses of litigation in
the amount of P100,000.00;

3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B.

Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well
as all counter-claims, are dismissed for lack of merit as well as for insufficiency
of evidence.[20]

Respondents appealed to the Court of Appeals.

 The Ruling of the Court of Appeals

On 26 November 1999, the Court of Appeals rendered judgment (Court of Appeals Decision)

reversing the RTC Decision and ordering McDonalds to pay respondents P1,600,000 as actual and

compensatory damages and P300,000 as moral damages. The Court of Appeals held:

Plaintiffs-appellees in the instant case would like to impress on this Court

that the use of defendants-appellants of its corporate name the whole L.C. B[ig]
M[ak] B[urger], I[nc]. which appears on their food packages, signages and
advertisements is an infringement of their trademark B[ig] M[ac] which they use to
identify [their] double decker sandwich, sold in a Styrofoam box packaging
material with the McDonalds logo of umbrella M stamped thereon, together
with the printed mark in red bl[o]ck capital letters, the words being separated by a
single space. Specifically, plaintiffs-appellees argue that defendants-appellants use
of their corporate name is a colorable imitation of their trademark Big Mac.

xxxx

To Our mind, however, this Court is fully convinced that no colorable imitation
exists. As the definition dictates, it is not sufficient that a similarity exists
in both names, but that more importantly, the over-all presentation, or in their
essential, substantive and distinctive parts is such as would likely MISLEAD or
CONFUSE persons in the ordinary course of purchasing the genuine
article. A careful comparison of the way the trademark B[ig] M[ac] is being used
by plaintiffs-appellees and corporate name L.C. Big Mak Burger, Inc. by
defendants-appellants, would readily reveal that no confusion could take place, or
that the ordinary purchasers would be misled by it. As pointed out by defendants-
appellants, the plaintiffs-appellees trademark is used to designate only one product,
a double decker sandwich sold in a Styrofoam box with the McDonalds logo. On
the other hand, what the defendants-appellants corporation is using is not a
trademark for its food product but a business or corporate name. They use the
business name L.C. Big Mak Burger, Inc. in their restaurant business which serves
diversified food items such as siopao, noodles, pizza, and sandwiches such as
hotdog, ham, fish burger and hamburger. Secondly, defendants-appellants
corporate or business name appearing in the food packages and signages are written
in silhouette red-orange letters with the b and m in upper case letters. Above the
words Big Mak are the upper case letter L.C.. Below the words Big Mak are the
words Burger, Inc. spelled out in upper case letters. Furthermore, said corporate or
business name appearing in such food packages and signages is always
accompanied by the company mascot, a young chubby boy named Maky who wears
a red T-shirt with the upper case m appearing therein and a blue lower
garment. Finally, the defendants-appellants food packages are made of plastic
material.

xxxx

xxx [I]t is readily apparent to the naked eye that there appears a vast difference in
the appearance of the product and the manner that the tradename Big Mak is being
used and presented to the public. As earlier noted, there are glaring dissimilarities
between plaintiffs-appellees trademark and defendants-appellants corporate
name. Plaintiffs-appellees product carrying the trademark B[ig] M[ac] is a double
decker sandwich (depicted in the tray mat containing photographs of the various
food products xxx sold in a Styrofoam box with the McDonalds logo and trademark
in red, bl[o]ck capital letters printed thereon xxx at a price which is more expensive
than the defendants-appellants comparable food products. In order to buy a Big
Mac, a customer needs to visit an air-conditioned McDonalds restaurant
usually located in a nearby commercial center, advertised and identified by its logo
- the umbrella M, and its mascot Ronald McDonald. A typical
McDonalds restaurant boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow customers with cars to
make orders without alighting from their vehicles, the interiors of the building are
well-lighted, distinctly decorated and painted with pastel colors xxx. In buying a
B[ig] M[ac], it is necessary to specify it by its trademark. Thus, a customer needs
to look for a McDonalds and enter it first before he can find a hamburger sandwich
which carry the mark Big Mac. On the other hand, defendants-appellants sell their
goods through snack vans xxxx

Anent the allegation that defendants-appellants are guilty of unfair competition,

We likewise find the same untenable.

Unfair competition is defined as the employment of deception or any other means

contrary to good faith by which a person shall pass off the goods manufactured by
him or in which he deals, or his business, or service, for those of another who has
already established good will for his similar good, business or services, or any acts
calculated to produce the same result (Sec. 29, Rep. Act No. 166, as amended).

To constitute unfair competition therefore it must necessarily follow that there was
malice and that the entity concerned was in bad faith.

In the case at bar, We find no sufficient evidence adduced by plaintiffs-

appellees that defendants-appellants deliberately tried to pass off the goods
manufactured by them for those of plaintiffs-appellees. The mere suspected
similarity in the sound of the defendants-appellants corporate name with the
plaintiffs-appellees trademark is not sufficient evidence to conclude unfair
 competition. Defendants-appellants explained that the name M[ak] in their
corporate name was derived from both the first names of the mother and father of
defendant Francis Dy, whose names are Maxima and Kimsoy. With this
explanation, it is up to the plaintiffs-appellees to prove bad faith on the part
of defendants-appellants. It is a settled rule that the law always presumes good faith
such that any person who seeks to be awarded damages due to acts of another has
the burden of proving that the latter acted in bad faith or with ill motive. [21]

Petitioners sought reconsideration of the Court of Appeals Decision but the appellate court denied

their motion in its Resolution of 11 July 2000.

Hence, this petition for review.

Petitioners raise the following grounds for their petition:

I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS

CORPORATE NAME L.C. BIG MAK BURGER, INC. IS NOT A
COLORABLE IMITATION OF THE MCDONALDS TRADEMARK BIG
MAC, SUCH COLORABLE IMITATION BEING AN ELEMENT
OF TRADEMARK INFRINGEMENT.

A. Respondents use the words Big Mak as trademark for their products
and not merely as their business or corporate name.

B. As a trademark, respondents Big Mak is undeniably and

unquestionably similar to petitioners Big Mac trademark based on the
dominancy test and the idem sonans test resulting inexorably in
confusion on the part of the consuming public.

II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE

INHERENT SIMILARITY BETWEEN THE MARK BIG MAK AND THE
WORD MARK BIG MAC AS AN INDICATION OF RESPONDENTS
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES
OF ESTABLISHING UNFAIR COMPETITION.[22]

Petitioners pray that we set aside the Court of Appeals Decision and reinstate the RTC Decision.
 In their Comment to the petition, respondents question the propriety of this petition as it

allegedly raises only questions of fact. On the merits, respondents contend that the Court of

Appeals committed no reversible error in finding them not liable for trademark infringement and

unfair competition and in ordering petitioners to pay damages.

The Issues

The issues are:

1. Procedurally, whether the questions raised in this petition are proper for a petition for

review under Rule 45.

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

corporate name L.C. Big Mak Burger, Inc. but also as a trademark for their hamburger products,

and (b) whether respondent corporation is liable for trademark infringement and unfair

competition.[23]

The Courts Ruling

The petition has merit.

On Whether the Questions Raised in the Petition are

Proper for a Petition for Review
A party intending to appeal from a judgment of the Court of Appeals may file with this Court a

petition for review under Section 1 of Rule 45 (Section 1) [24] raising only questions of law. A

question of law exists when the doubt or difference arises on what the law is on a certain state of

facts. There is a question of fact when the doubt or difference arises on the truth or falsity of

the alleged facts. [25]

Here, petitioners raise questions of fact and law in assailing the Court of Appeals findings on

respondent corporations non-liability for trademark infringement and unfair competition.

Ordinarily, the Court can deny due course to such a petition. In view, however, of the contradictory

findings of fact of the RTC and Court of Appeals, the Court opts to accept the petition, this being

one of the recognized exceptions to Section 1. [26] We took a similar course of action in Asia

Brewery, Inc. v. Court of Appeals[27] which also involved a suit for trademark infringement and

unfair competition in which the trial court and the Court of Appeals arrived at conflicting findings.

On the Manner Respondents Used

Big Mak in their Business

Petitioners contend that the Court of Appeals erred in ruling that the corporate name L.C. Big Mak

Burger, Inc. appears in the packaging for respondents hamburger products and not the words Big

Mak only.

The contention has merit.

The evidence presented during the hearings on petitioners motion for the issuance of a writ of

preliminary injunction shows that the plastic wrappings and plastic bags used by respondents for

their hamburger sandwiches bore the words Big Mak. The other descriptive words burger and
100% pure beef were set in smaller type, along with the locations of branches. [28]Respondents cash
invoices simply refer to their hamburger sandwiches as Big Mak. [29] It is respondents snack vans

that carry the words L.C. Big Mak Burger, Inc. [30]

It was only during the trial that respondents presented in evidence the plastic wrappers and bags

for their hamburger sandwiches relied on by the Court of Appeals.[31] Respondents plastic

wrappers and bags were identical with those petitioners presented during the hearings for the

injunctive writ except that the letters L.C. and the words Burger, Inc. in respondents evidence were

added above and below the words Big Mak, respectively. Since petitioners complaint was based

on facts existing before and during the hearings on the injunctive writ, the facts established during

those hearings are the proper factual bases for the disposition of the issues raised in this petition.

On the Issue of Trademark Infringement

Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law applicable to this

case,[32] defines trademark infringement as follows:

Infringement, what constitutes. Any person who [1] shall use, without the consent
of the registrant, any reproduction, counterfeit, copy or colorable imitation
of any registered mark or trade-name in connection with the sale, offering for sale,
or advertising of any goods, business or services on or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or [2]
reproduce, counterfeit, copy, or colorably imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein provided.[33]

Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly

used, without petitioners consent, a colorable imitation of the Big Mac mark in advertising and

selling respondents hamburger sandwiches. This likely caused confusion in the mind of the
purchasing public on the source of the hamburgers or the identity of the business.
 To establish trademark infringement, the following elements must be shown: (1) the

validity of 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. [34] Of these, it is

the element of likelihood of confusion that is the gravamen of trademark infringement. [35]

On the Validity of the Big MacMark

and McDonalds Ownership of such Mark

A mark is valid if it is distinctive and thus not barred from

registration under Section 4[36] of RA 166 (Section 4). However, once registered, not only the

marks validity but also the registrants ownership of the mark is prima facie presumed.[37]

Respondents contend that of the two words in the Big Mac mark, it is only the word Mac

that is valid because the word Big is generic and descriptive (proscribed under Section 4[e]), and

thus incapable of exclusive appropriation. [38]

The contention has no merit. The Big Mac mark, which should be treated in its entirety and not

dissected word for word,[39] is neither generic nor descriptive. Generic marks are commonly used

as the name or description of a kind of goods,[40] such as Lite for beer[41] or Chocolate Fudge for

chocolate soda drink.[42] Descriptive marks, on the other hand, convey the

characteristics, functions, qualities or ingredients of a product to one who has never seen it or does

not know it exists,[43] such as Arthriticare for arthritis medication. [44] On the contrary, Big Mac

falls under the class of fanciful or arbitrary marks as it bears no logical relation to

the actual characteristics of the product it represents. [45] As such, it is highly distinctive and thus

valid. Significantly, the trademark Little Debbie for snack cakes was found arbitrary or fanciful. [46]

The Court also finds that petitioners have duly established McDonalds exclusive ownership
of the Big Mac mark. Although Topacio and the Isaiyas Group registered the Big Mac mark ahead
of McDonalds, Topacio, as petitioners disclosed, had already assigned his rights to McDonalds.

The Isaiyas Group, on the other hand, registered its trademark only in the Supplemental Register.

A mark which is not registered in the Principal Register, and thus not distinctive, has no real

protection.[47] Indeed, we have held that registration in the Supplemental Register is not even

a prima facie evidence of the validity of the registrants exclusive right to use the mark on the goods

specified in the certificate.[48]

On Types of Confusion

Section 22 covers two types of confusion arising from the use of similar or colorable imitation

marks, namely, confusion of goods (product confusion) and confusion of business (source or origin

confusion). In Sterling Products International, Incorporated v. Farbenfabriken Bayer

Aktiengesellschaft, et al.,[49] the Court distinguished these two types of confusion, thus:

[Rudolf] Callman notes two types of confusion. The first is the confusion of goods
in which event the ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other. xxx The other is
the confusion of business: Here though the goods of the parties are different, the
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.

Under Act No. 666,[50] the first trademark law, infringement was limited to confusion of goods

only, when the infringing mark is used on goods of a similar kind. [51] Thus, no relief was afforded

to the party whose registered mark or its colorable imitation is used on different although related

goods. To remedy this situation, Congress enacted RA 166 on 20 June 1947. In defining trademark

infringement, Section 22 of RA 166 deleted the requirement in question and expanded its scope to

include such use of the mark or its colorable imitation that is likely to result in confusion on the
source or origin of such goods or services, or identity of such business. [52] Thus, while there is

confusion of goods when the products are competing, confusion of business exists when the

products are non-competing but related enough to produce confusion of affiliation.[53]

On Whether Confusion of Goods and

Confusion of Business are Applicable

Petitioners claim that respondents use of the Big Mak mark on respondents hamburgers results in

confusion of goods, particularly with respect to petitioners hamburgers labeled Big Mac. Thus,

petitioners alleged in their complaint:

1.15. Defendants have unduly prejudiced and clearly

infringed upon the property rights of plaintiffs in the McDonalds Marks,
particularly the mark B[ig] M[ac]. Defendants unauthorized acts are likely, and
calculated, to confuse, mislead or deceive the public into believing that
the products and services offered by defendant Big Mak Burger, and the
business it is engaged in, are approved and sponsored by, or affiliated with,
plaintiffs.[54] (Emphasis supplied)

Since respondents used the Big Mak mark on the same goods, i.e. hamburger sandwiches, that

petitioners Big Mac mark is used, trademark infringement through confusion of goods is a proper

issue in this case.

Petitioners also claim that respondents use of the Big Mak mark in the sale of hamburgers, the

same business that petitioners are engaged in, results in confusion of

business. Petitioners alleged in their complaint:

1.10. For some period of time, and without the consent of plaintiff
McDonalds nor its licensee/franchisee, plaintiff McGeorge, and in clear violation
of plaintiffs exclusive right to use and/or appropriate the McDonalds marks,
 defendant Big Mak Burger acting through individual defendants, has been
operating Big Mak Burger, a fast food restaurant business dealing in the sale of
hamburger and cheeseburger sandwiches, french fries and other food products, and
has caused to be printed on the wrapper of defendants food products and
incorporated in its signages the name Big Mak Burger, which is confusingly similar
to and/or is a colorable imitation of the plaintiff McDonalds mark B[ig] M[ac],
xxx. Defendant Big Mak Burger has thus unjustly created the impression that
its business is approved and sponsored by, or affiliated with, plaintiffs. xxxx

2.2 As a consequence of the acts committed by defendants, which unduly

prejudice and infringe upon the property rights of plaintiffs McDonalds and
McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonalds marks, and which are likely to
have caused confusion or deceived the public as to the true source, sponsorship
or affiliation of defendants food products and restaurant business, plaintiffs
have suffered and continue to suffer actual damages in the form of injury to their
business reputation and goodwill, and of the dilution of the distinctive quality of
the McDonalds marks, in particular, the mark B[ig] M[ac].[55] (Emphasis supplied)

Respondents admit that their business includes selling hamburger sandwiches, the same food

product that petitioners sell using the Big Mac mark. Thus, trademark infringement through

confusion of business is also a proper issue in this case.

Respondents assert that their Big Mak hamburgers cater mainly to the low-income group

while petitioners Big Mac hamburgers cater to the middle and upper income groups. Even if this

is true, the likelihood of confusion of business remains, since the low-income group might be led

to believe that the Big Mak hamburgers are the low-end hamburgers marketed by petitioners. After

all, petitioners have the exclusive right to use the Big Mac mark. On the other hand, respondents

would benefit by associating their low-end hamburgers, through the use of the Big Mak mark, with

petitioners high-end Big Mac hamburgers, leading to likelihood of confusion in the identity of

business.
 Respondents further claim that petitioners use the Big Mac mark only on petitioners

double-decker hamburgers, while respondents use the Big Mak mark on hamburgers and other

products like siopao, noodles and pizza. Respondents also point out that petitioners sell their Big

Mac double-deckers in a styrofoam box with the McDonalds logo and trademark in red, block

letters at a price more expensive than the hamburgers of respondents. In contrast, respondents sell

their Big Mak hamburgers in plastic wrappers and plastic bags. Respondents further point out that

petitioners restaurants are air-conditioned buildings with drive-thru service, compared to

respondents mobile vans.

These and other factors respondents cite cannot negate the undisputed fact that respondents

use their Big Mak mark on hamburgers, the same food product that petitioners sell with the use

of their registered mark Big Mac. Whether a hamburger is single, double or triple-decker, and

whether wrapped in plastic or styrofoam, it remains the same hamburger food product.Even

respondents use of the Big Mak mark on non-hamburger food products cannot excuse their

infringement of petitioners registered mark, otherwise registered marks will lose their protection

under the law.

The registered trademark owner may use his mark on the same or similar products, in

different segments of the market, and at different price levels depending on variations of the

products for specific segments of the market. The Court has recognized that the registered

trademark owner enjoys protection in product and market areas that are the normal potential

expansion of his business. Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a

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

On Whether Respondents Use of the Big Mak

Mark Results in Likelihood of Confusion

In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test

and the holistic test.[57] The dominancy test focuses on the similarity of the prevalent features of

the competing trademarks that might cause confusion. In contrast, the holistic test requires the

court to consider the entirety of the marks as applied to the products, including the labels and

packaging, in determining confusing similarity.

The Court of Appeals, in finding that there is no likelihood of confusion that could arise

in the use of respondents Big Mak mark on hamburgers, relied on the holistic test. Thus, the Court

of Appeals ruled that it is not sufficient that a similarity exists in both name(s), but that more

importantly, the overall presentation, or in their essential, substantive and distinctive parts is such

as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the genuine

article. The holistic test considers the two marks in their entirety, as they appear on the goods with

their labels and packaging. It is not enough to consider their words and compare the spelling and

pronunciation of the words.[58]

Respondents now vigorously argue that the Court of Appeals application of the holistic test

to this case is correct and in accord with prevailing jurisprudence.

This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy

test considers the dominant features in the competing marks in determining whether they are

confusingly similar. Under the dominancy test, courts give greater weight to the similarity of the

appearance of the product arising from the adoption of the dominant features of the registered

mark, disregarding minor differences.[59] Courts will consider more the aural and visual

impressions created by the marks in the public mind, giving little weight to factors like prices,

quality, sales outlets and market segments.

Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,[60] the Court ruled:

xxx It has been consistently held that the question of infringement of a

trademark is to be determined by the test of dominancy. Similarity in size, form and
color, while relevant, is not conclusive. If the competing trademark contains the
main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation
is not necessary; nor is it necessary that the infringing label should suggest an effort
to imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489,
495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at
issue in cases of infringement of trademarks is whether the use of the marks
involved would be likely to cause confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107
F. 2d 588; xxx) (Emphasis supplied.)

The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,[61] Phil. Nut

Industry, Inc. v. Standard Brands Inc.,[62] Converse Rubber Corporation v. Universal Rubber

Products, Inc.,[63] and Asia Brewery, Inc. v. Court of Appeals.[64] In the 2001 case of Societe Des

Produits Nestl, S.A. v. Court of Appeals,[65] the Court explicitly rejected the holistic test in this

wise:

[T]he totality or holistic test is contrary to the elementary postulate of the law
on trademarks and unfair competition that confusing similarity is to
 be determined on the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace. (Emphasis supplied)

The test of dominancy is now explicitly incorporated into law in Section 155.1 of the

Intellectual Property Code which defines infringement as the colorable imitation of a registered

mark xxx or a dominant feature thereof.

Applying the dominancy test, the Court finds that respondents use of the Big Mak mark

results in likelihood of confusion. First, Big Mak sounds exactly the same as Big Mac. Second, the

first word in Big Mak is exactly the same as the first word in Big Mac. Third, the first two letters

in Mak are the same as the first two letters in Mac. Fourth, the last letter in Mak while a k sounds

the same as c when the word Mak is pronounced. Fifth, in Filipino, the letter k replaces c in

spelling, thus Caloocan is spelled Kalookan.

In short, aurally the two marks are the same, with the first word of both marks phonetically

the same, and the second word of both marks also phonetically the same. Visually, the two marks

have both two words and six letters, with the first word of both marks having the same letters and

the second word having the same first two letters. In spelling, considering the Filipino language,

even the last letters of both marks are the same.

Clearly, respondents have adopted in Big Mak not only the dominant but also almost all
the features of Big Mac. Applied to the same food product of hamburgers, the two marks will

likely result in confusion in the public mind.

The Court has taken into account the aural effects of the words and letters contained in the marks

in determining the issue of confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra

Hawpia & Co., et al.,[66] the Court held:

The following random list of confusingly similar sounds in the matter of

trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1,
 will reinforce our view that SALONPAS and LIONPAS are confusingly similar in
sound: Gold Dust and Gold Drop; Jantzen and Jass-Sea; Silver Flash and Supper
Flash; Cascarete and Celborite; Celluloid and Cellonite; Chartreuse and Charseurs;
Cutex and Cuticlean; Hebe and Meje; Kotex and Femetex; Zuso and Hoo Hoo.
Leon Amdur, in his book Trade-Mark Law and Practice, pp. 419-421, cities, as
coming within the purview of the idem sonans rule, Yusea and U-C-A, Steinway
Pianos and Steinberg Pianos, and Seven-Up and Lemon-Up. In Co Tiong vs.
Director of Patents, this Court unequivocally said that Celdura and Cordura are
confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil.
795 that the name Lusolin is an infringement of the trademark Sapolin, as the sound
of the two names is almost the same. (Emphasis supplied)

Certainly, Big Mac and Big Mak for hamburgers create even greater confusion, not only aurally

but also visually.

Indeed, a person cannot distinguish Big Mac from Big Mak by their sound. When one hears

a Big Mac or Big Mak hamburger advertisement over the radio, one would not know whether the

Mac or Mak ends with a c or a k.

Petitioners aggressive promotion of the Big Mac mark, as borne by their advertisement expenses,

has built goodwill and reputation for such mark making it one of the easily recognizable marks in

the market today. This increases the likelihood that consumers will mistakenly associate

petitioners hamburgers and business with those of respondents.

Respondents inability to explain sufficiently how and why they came to choose Big Mak for their
hamburger sandwiches indicates their intent to imitate petitioners Big Mac mark. Contrary to the

Court of Appeals finding, respondents claim that their Big Mak mark was inspired by the first

names of respondent Dys mother (Maxima) and father (Kimsoy) is not credible. As petitioners

well noted:

[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at a

more creative choice for a corporate name by using the names of his parents,
especially since he was allegedly driven by sentimental reasons. For one, he could
have put his fathers name ahead of his mothers, as is usually done in this patriarchal
society, and derived letters from said names in that order. Or, he could have taken
an equal number ofletters (i.e., two) from each name, as is the more usual thing
 done. Surely, the more plausible reason behind Respondents choice of the word
M[ak], especially when taken in conjunction with the word B[ig], was their intent
to take advantage of Petitioners xxx B[ig] M[ac] trademark, with
their alleged sentiment-focused explanation merely thought of as a
convenient, albeit unavailing, excuse or defense for such an unfair choice of
name.[67]

Absent proof that respondents adoption of the Big Mak mark was due to honest mistake or

was fortuitous,[68] the inescapable conclusion is that respondents adopted the Big Mak mark to ride

on the coattails of the more established Big Mac mark.[69] This saves respondents much of the

expense in advertising to create market recognition of their mark and hamburgers. [70]

Thus, we hold that confusion is likely to result in the public mind. We sustain petitioners

claim of trademark infringement.

On the Lack of Proof of

Actual Confusion

Petitioners failure to present proof of actual confusion does not negate their claim of trademark

infringement. As noted in American Wire & Cable Co. v. Director of Patents,[71] Section

22 requires the less stringent standard of likelihood of confusion only. While proof

of actual confusion is the best evidence of infringement, its absence is inconsequential. [72]

On the Issue of Unfair Competition

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

xxxx

Any person who will employ deception or any other means contrary to good faith
by which he shall pass off the goods manufactured by him or in which he deals, or
 his business, or services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said result, shall be guilty of
unfair competition, and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance
of goods of another manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in which they are contained, or the
devices or words thereon, or in any feature of their appearance, which would be
likely to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor of such goods
or any agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another. (Emphasis supplied)

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

the general appearance of the goods, and (2) intent to deceive the public and defraud a

competitor.[74] The confusing similarity may or may not result from similarity in the marks, but

may result from other external factors in the packaging or presentation of the goods. The intent to

deceive and defraud may be inferred from the similarity of the appearance of the goods as offered

for sale to the public.[75] Actual fraudulent intent need not be shown.[76]

Unfair competition is broader than trademark infringement and includes passing off goods

with or without trademark infringement. Trademark infringement is a form of unfair

competition.[77] Trademark infringement constitutes unfair competition when there is not merely

likelihood of confusion, but also actual or probable deception on the public because of the general

appearance of the goods. There can be trademark infringement without unfair competition as when

the infringer discloses on the labels containing the mark that he manufactures the goods, thus
preventing the public from being deceived that the goods originate from the trademark owner. [78]
 To support their claim of unfair competition, petitioners allege that respondents

fraudulently passed off their hamburgers as Big Mac hamburgers. Petitioners add that respondents

fraudulent intent can be inferred from the similarity of the marks in question.[79]

Passing off (or palming off) takes place where the defendant, by imitative devices on the

general appearance of the goods, misleads prospective purchasers into buying his merchandise

under the impression that they are buying that of his competitors. [80] Thus, the defendant gives his

goods the general appearance of the goods of his competitor with the intention of deceiving the

public that the goods are those of his competitor.

The RTC described the respective marks and the goods of petitioners and respondents in

this wise:

The mark B[ig] M[ac] is used by plaintiff McDonalds to identify its double
decker hamburger sandwich. The packaging material is a styrofoam box with the
McDonalds logo and trademark in red with block capital letters printed on it. All
letters of the B[ig] M[ac] mark are also in red and block capital letters. On the other
hand, defendants B[ig] M[ak] script print is in orange with only the letter B and M
being capitalized and the packaging material is plastic wrapper. xxxx Further,
plaintiffs logo and mascot are the umbrella M and Ronald McDonalds, respectively,
compared to the mascot of defendant Corporation which is a chubby boy called
Macky displayed or printed between the words Big and Mak. [81] (Emphasis
supplied)

Respondents point to these dissimilarities as proof that they did not give their hamburgers the

general appearance of petitioners Big Mac hamburgers.

The dissimilarities in the packaging are minor compared to the stark similarities in the

words that give respondents Big Mak hamburgers the general appearance of petitioners Big Mac

hamburgers. Section 29(a) expressly provides that the similarity in the general appearance of the

goods may be in the devices or words used on the wrappings. Respondents have applied on their
plastic wrappers and bags almost the same words that petitioners use on their styrofoam box.
What attracts the attention of the buying public are the words Big Mak which are almost the same,

aurally and visually, as the words Big Mac. The dissimilarities in the material and other devices

are insignificant compared to the glaring similarity in the words used in the wrappings.

Section 29(a) also provides that the defendant gives his goods the general appearance of

goods of another manufacturer. Respondents goods are hamburgers which are also the goods of

petitioners. If respondents sold egg sandwiches only instead of hamburger sandwiches, their use

of the Big Mak mark would not give their goods the general appearance of petitioners Big Mac

hamburgers. In such case, there is only trademark infringement but no unfair

competition. However, since respondents chose to apply the Big Mak mark on hamburgers, just

like petitioners use of the Big Mac mark on hamburgers, respondents have obviously clothed their

goods with the general appearance of petitioners goods.

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

L.C. Big Mak Burger, Inc. Respondents introduced during the trial plastic wrappers and bags with

the words L.C. Big Mak Burger, Inc. to inform the public of the name of the seller of the

hamburgers. However, petitioners introduced during the injunctive hearings plastic wrappers and

bags with the Big Mak mark without the name L.C. Big Mak Burger, Inc. Respondents belated

presentation of plastic wrappers and bags bearing the name of L.C. Big Mak Burger, Inc. as the

seller of the hamburgers is an after-thought designed to exculpate them from their unfair business

conduct. As earlier stated, we cannot consider respondents evidence since petitioners complaint

was based on facts existing before and during the injunctive hearings.

Thus, there is actually no notice to the public that the Big Mak hamburgers are products of

L.C. Big Mak Burger, Inc. and not those of petitioners who have the exclusive right to the Big

Mac mark. This clearly shows respondents intent to deceive the public. Had respondents placed a

notice on their plastic wrappers and bags that the hamburgers are sold by L.C. Big Mak Burger,
Inc., then they could validly claim that they did not intend to deceive the public. In such case, there
is only trademark infringement but no unfair competition.[82] Respondents, however, did not give

such notice. We hold that as found by the RTC, respondent corporation is liable for unfair

competition.

The Remedies Available to Petitioners

Under Section 23[83] (Section 23) in relation to Section 29 of RA 166, a plaintiff who successfully

maintains trademark infringement and unfair competition claims is entitled to injunctive and

monetary reliefs. Here, the RTC did not err in issuing the injunctive writ of 16 August 1990 (made

permanent in its Decision of 5 September 1994) and in ordering the payment

of P400,000 actual damages in favor of petitioners. The injunctive writ is indispensable to prevent

further acts of infringement by respondent corporation. Also, the amount of actual damages is a

reasonable percentage (11.9%) of respondent corporations gross sales for three (1988-1989 and

1991) of the six years (1984-1990) respondents have used the Big Mak mark. [84]

The RTC also did not err in awarding exemplary damages by way of correction for the

public good[85] in view of the finding of unfair competition where intent to deceive the public is

essential. The award of attorneys fees and expenses of litigation is also in order. [86]

WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision dated 26

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

unfair competition.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice
WE CONCUR: