G.R. No. L-78325 January 25, 1990 Sec. 22. Infringement, what constitutes.
Sec. 22. Infringement, what constitutes. — Any person who shall use, without the consent of the
DEL MONTE CORPORATION and PHILIPPINE PACKING CORPORATION, petitioners,
vs. COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING INDUSTRIES, respondents.
CRUZ, J.:
The petitioners are questioning the decision of the respondent court upholding the dismissal by the trial court of
their complaint against the private respondent for infringement of trademark and unfair competition.
Petitioner Del Monte Corporation is a foreign company organized under the laws of the United States and not
engaged in business in the Philippines. Both the Philippines and the United States are signatories to the Convention
of Paris of September 27, 1965, which grants to the nationals of the parties rights and advantages which their own
nationals enjoy for the repression of acts of infringement and unfair competition.
Petitioner Philippine Packing Corporation (Philpack) is a domestic corporation duly organized under the laws of
the Philippines. On April 11, 1969, Del Monte granted Philpack the right to manufacture, distribute and sell in the
Philippines various agricultural products, including catsup, under the Del Monte trademark and logo.
On October 27,1965, Del Monte authorized Philpack to register with the Philippine Patent Office the Del Monte
catsup bottle configuration, for which it was granted Certificate of Trademark Registration No. SR-913 by the
Philippine Patent Office under the Supplemental Register. 1 On November 20, 1972, Del Monte also obtained two
registration certificates for its trademark "DEL MONTE" and its logo. 2
Respondent Sunshine Sauce Manufacturing Industries was issued a Certificate of Registration by the Bureau of
Domestic Trade on April 17,1980, to engage in the manufacture, packing, distribution and sale of various kinds of
sauce, identified by the logo Sunshine Fruit Catsup.3
This logo was registered in the Supplemental Register on September 20, 1983. 4
The product itself was contained in various kinds of bottles, including the Del Monte bottle, which the private
respondent bought from the junk shops for recycling.
Having received reports that the private respondent was using its exclusively designed bottles and a logo
confusingly similar to Del Monte's, Philpack warned it to desist from doing so on pain of legal action. Thereafter,
claiming that the demand had been ignored, Philpack and Del Monte filed a complaint against the private
respondent for infringement of trademark and unfair competition, with a prayer for damages and the issuance of a
writ of preliminary injunction. 5
In its answer, Sunshine alleged that it had long ceased to use the Del Monte bottle and that its logo was
substantially different from the Del Monte logo and would not confuse the buying public to the detriment of the
petitioners. 6
After trial, the Regional Trial Court of Makati dismissed the complaint. It held that there were substantial
differences between the logos or trademarks of the parties; that the defendant had ceased using the petitioners'
bottles; and that in any case the defendant became the owner of the said bottles upon its purchase thereof from the
junk yards. Furthermore, the complainants had failed to establish the defendant's malice or bad faith, which was an
essential element of infringement of trademark or unfair competition. 7
This decision was affirmed in toto by the respondent court, which is now faulted in this petition
for certiorari under Rule 45 of the Rules of Court.
Section 22 of R.A. No. 166, otherwise known as the Trademark Law, provides in part as follows:
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-
name in connection with the sale, offering for sale, or advertising of any goods, business or services on
or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers
or others as to the source or origin of such goods or services or identity of such business; or reproduce,
counterfeit copy or colorably imitate any such mark or trade name and apply such reproduction,
counterfeit copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services, shall
be liable to a civil action by the registrant for any or all of the remedies herein provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and remedies. — A person who has identified in the mind of the
public the goods he manufactures or deals in, his business or services from those of others, whether or
not a mark or tradename is employed, has a property right in the goodwill of the said goods, business
or services so identified, which will be protected in the same manner as other property rights. Such a
person shall have the remedies provided in section twenty- three, Chapter V hereof.
Any person who shall employ deception or any other means contrary to good faith by which he shall
pass off the goods manufactured by him or in which he deals, or his business, or services for those of
the one having established such goodwill, or who shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair competition, the following shall be
deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of goods
of another manufacturer or dealer, either as to the goods themselves or in the wrapping of
the packages in which they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would likely influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance as shall deceive the
public and defraud another of his legitimate trade, or any subsequent vendor of such goods
or any agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs ally other means calculated
to induce the false belief that such person is offering the services of another who has
identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods,
business or services of another.
To arrive at a proper resolution of this case, it is important to bear in mind the following distinctions
between infringement of trademark and unfair competition.
(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair
competition is the passing off of one's goods as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary whereas in unfair
competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a prerequisite to
the action, whereas in unfair competition registration is not necessary. 8
In the challenged decision, the respondent court cited the following test laid down by this Court in a
number of cases:
 In determining whether two trademarks are confusingly similar, the two marks in their
entirety as they appear in the respective labels must be considered in relation to the goods
to which they are attached; the discerning eye of the observer must focus not only on the
predorninant words but also on the other features appearing on both labels. 9
and applying the same, held that there was no colorable imitation of the petitioners' trademark and logo
by the private respondent. The respondent court agreed with the findings of the trial court that:
In order to resolve the said issue, the Court now attempts to make a comparison of the two products, to wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular with a crown or tomato shape design on top of the rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed by Sysu International, Inc., Q.C., Philippines.
Sunshine: Sunshine fruit catsup is clearly indicated "made in the Philippines by Sunshine
Sauce Manufacturing Industries" No. 1 Del Monte Avenue, Malabon, Metro Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark red, with words "Del Monte Quality" in
white.
Sunshine: White, light green and light red, with words "Sunshine Brand" in yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the neck of the bottle, with picture of tomatoes
with words "made from real tomatoes."
Sunshine: There is a label below the cap which says "Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not agree with the conclusion that there was no
infringement or unfair competition. It seems to us that the lower courts have been so pre-occupied with the details
that they have not seen the total picture.
It has been correctly held that side-by-side comparison is not the final test of similarity. 10 Such comparison
requires a careful scrutiny to determine in what points the labels of the products differ, as was done by the trial
judge. The ordinary buyer does not usually make such scrutiny nor does he usually have the time to do so. The
average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a
library. Where the housewife has to return home as soon as possible to her baby or the working woman has to
make quick purchases during her off hours, she is apt to be confused by similar labels even if they do have minute
differences. The male shopper is worse as he usually does not bother about such distinctions.
The question is not whether the two articles are distinguishable by their label when set side by side but whether the
general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard,
is such as to likely result in his confounding it with the original. 11 As observed in several cases, the general
impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and giving the
attention such purchasers usually give in buying that class of goods is the touchstone. 12
It has been held that in making purchases, the consumer must depend upon his recollection of the appearance of
the product which he intends to purchase. 13 The buyer having in mind the mark/label of the respondent must rely
upon his memory of the petitioner's mark. 14 Unlike the judge who has ample time to minutely examine the labels
in question in the comfort of his sala, the ordinary shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether a trademark has been infringed, we must consider the
mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not
usually to any part of it. 15 The court therefore should be guided by its first impression, 16 for a buyer acts quickly
and is governed by a casual glance, the value of which may be dissipated as soon as the court assumes to analyze
carefully the respective features of the mark. 17
It has also been held that it is not the function of the court in cases of infringement and unfair competition to
educate purchasers but rather to take their carelessness for granted, and to be ever conscious of the fact that marks
need not be identical. A confusing similarity will justify the intervention of equity. 18 The judge must also be aware
of the fact that usually a defendant in cases of infringement does not normally copy but makes only colorable
changes. 19Well has it been said that the most successful form of copying is to employ enough points of similarity
to confuse the public with enough points of difference to confuse the courts. 20
We also note that the respondent court failed to take into consideration several factors which should have affected
its conclusion, to wit: age, training and education of the usual purchaser, the nature and cost of the article, whether
the article is bought for immediate consumption and also the conditions under which it is usually purchased
. 21Among these, what essentially determines the attitude of the purchaser, specifically his inclination to be
cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care as
one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in
buying an article for which he pays a few centavos as he does in purchasing a more valuable thing. 22 Expensive
and valuable items are normally bought only after deliberate, comparative and analytical investigation. But mass
products, low priced articles in wide use, and matters of everyday purchase requiring frequent replacement are
bought by the casual consumer without great care. 23 In this latter category is catsup.
At that, even if the labels were analyzed together it is not difficult to see that the Sunshine label is a colorable
imitation of the Del Monte trademark. The predominant colors used in the Del Monte label are green and red-
orange, the same with Sunshine. The word "catsup" in both bottles is printed in white and the style of the
print/letter is the same. Although the logo of Sunshine is not a tomato, the figure nevertheless approximates that of
a tomato.
As previously stated, the person who infringes a trade mark does not normally copy out but only makes colorable
changes, employing enough points of similarity to confuse the public with enough points of differences to confuse
the courts. What is undeniable is the fact that when a manufacturer prepares to package his product, he has before
him a boundless choice of words, phrases, colors and symbols sufficient to distinguish his product from the others.
When as in this case, Sunshine chose, without a reasonable explanation, to use the same colors and letters as those
used by Del Monte though the field of its selection was so broad, the inevitable conclusion is that it was done
deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of grave doubt is the rule that as between a newcomer
who by the confusion has nothing to lose and everything to gain and one who by honest dealing has already
achieved favor with the public, any doubt should be resolved against the newcomer inasmuch as the field from
which he can select a desirable trademark to indicate the origin of his product is obviously a large one. 25
Coming now to the second issue, we find that the private respondent is not guilty of infringement for having used
the Del Monte bottle. The reason is that the configuration of the said bottle was merely registered in the
Supplemental Register. In the case of Lorenzana v. Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a presumption of the validity of the registration,
the registrant's ownership of the mark and his right to the exclusive use thereof. There is no such
presumption in the registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to the actual owner of the trademark and
proceedings therein on the issue of ownership which may be contested through opposition or
interference proceedings or, after registration, in a petition for cancellation.
Registration in the Principal Register is constructive notice of the registrant's claim of ownership,
while registration in the Supplemental Register is merely proof of actual use of the trademark and
notice that the registrant has used or appropriated it. It is not subject to opposition although it may be
cancelled after the issuance. Corollarily, registration in the Principal Register is a basis for an action
for infringement while registration in the Supplemental Register is not.
(3) In applications for registration in the Principal Register, publication of the application is necessary.
This is not so in applications for registrations in the Supplemental Register.
It can be inferred from the foregoing that although Del Monte has actual use of the bottle's configuration, the
petitioners cannot claim exclusive use thereof because it has not been registered in the Principal Register.
However, we find that Sunshine, despite the many choices available to it and notwithstanding that the caution "Del
Monte Corporation, Not to be Refilled" was embossed on the bottle, still opted to use the petitioners' bottle to
market a product which Philpack also produces. This clearly shows the private respondent's bad faith and its
intention to capitalize on the latter's reputation and goodwill and pass off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent court in resolving the case in favor of Sunshine are
untenable. First, it declared that the registration of the Sunshine label belied the company's malicious intent to
imitate petitioner's product. Second, it held that the Sunshine label was not improper because the Bureau of Patent
presumably considered other trademarks before approving it. Third, it cited the case of Shell Co. v. Insular
Petroleum, 27 where this Court declared that selling oil in containers of another with markings erased, without
intent to deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the Sunshine label was registered not in the Principal
Register but only in the Supplemental Register where the presumption of the validity of the trademark, the
registrant's ownership of the mark and his right to its exclusive use are all absent.
Anent the assumption that the Bureau of Patent had considered other existing patents, it is reiterated that since
registration was only in the Supplemental Register, this did not vest the registrant with the exclusive right to use
the label nor did it give rise to the presumption of the validity of the registration.
On the argument that no unfair competition was committed, the Shell Case is not on all fours with the case at bar
because:
(1) In Shell, the absence of intent to deceive was supported by the fact that the respondent therein,
before marketing its product, totally obliterated and erased the brands/mark of the different companies
stenciled on the containers thereof, except for a single isolated transaction. The respondent in the
present case made no similar effort.
(2) In Shell, what was involved was a single isolated transaction. Of the many drums used, there was
only one container where the Shell label was not erased, while in the case at hand, the respondent
admitted that it made use of several Del Monte bottles and without obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to dealers, not to ultimate consumers. As a general
rule, dealers are well acquainted with the manufacturer from whom they make their purchases and
since they are more experienced, they cannot be so easily deceived like the inexperienced public.
There may well be similarities and imitations which deceive all, but generally the interests of the
dealers are not regarded with the same solicitude as are the interests of the ordinary consumer. For it is
the form in which the wares come to the final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's trademark, law and equity call for the cancellation of the
private respondent's registration and withdrawal of all its products bearing the questioned label from the market.
With regard to the use of Del Monte's bottle, the same constitutes unfair competition; hence, the respondent should
be permanently enjoined from the use of such bottles.
The court must rule, however, that the damage prayed for cannot be granted because the petitioner has not
presented evidence to prove the amount thereof. Section 23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for infringement. — Any person entitled to the exclusive
use of a registered mark or trade name may recover damages in a civil action from any person who
infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which
the complaining party would have made, had the defendant not infringed his said rights or the profit
which the defendant actually made out of the infringement, or in the event such measure of damages
cannot be readily ascertained with reasonable certainty the court may award as damages reasonable
percentage based upon the amount of gross sales of the defendant or the value of the services in
connection with which the mark or trade name was used in the infringement of the rights of the
complaining party. In cases where actual intent to mislead the public or to defraud the complaining
party shall be shown, in the discretion of the court, the damages may be doubled.
The complaining party, upon proper showing may also be granted injunction.1âwphi1
Fortunately for the petitioners, they may still find some small comfort in Art. 2222 of the Civil Code, which
provides:
Art. 2222. The court may award nominal damages in every obligation arising from any source
enumerated in Art. 1157, or in every case where any property right has been invaded.
Accordingly, the Court can only award to the petitioners, as it hereby does award, nominal damages in the amount
of Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated December 24, 1986 and the
Resolution dated April 27,1987, are REVERSED and SET ASIDE and a new judgment is hereby rendered:
(1) Canceling the private respondent's Certificate of Register No. SR-6310 and permanently enjoining
the private respondent from using a label similar to that of the petitioners.
(2) Prohibiting the private respondent from using the empty bottles of the petitioners as containers for
its own products.
(3) Ordering the private respondent to pay the petitioners nominal damages in the amount of Pl,000.00,
and the costs of the suit.
 [G.R. No. 132428. October 24, 2000]
GEORGE YAO, petitioner, vs. HON. COURT OF APPEALS, and THE PEOPLE OF THE
PHILIPPINES, respondents.
DECISION
DAVIDE, JR., C.J.:
In this petition for review on certiorari, George Yao (hereafter YAO) assails the 25 April 1995
Resolution of the Court of Appeals in CA-G.R. No. 16893 which dismissed his appeal and ordered the
remand of the records of the case to the Metropolitan Trial Court, Branch 52, Caloocan * City (hereafter
MeTC) for execution. YAO was convicted by said MeTC for unfair competition.
YAOs legal dilemma commenced in June 1990 when the Philippine Electrical Manufacturing
Company (hereafter PEMCO) noticed the proliferation locally of General Electric (GE) lamp starters. As
the only local subsidiary of GE-USA, PEMCO knew that it was a highly unlikely market situation
considering that no GE starter was locally manufactured or imported since 1983. PEMCO
commissioned Gardsmarks, Inc. to conduct a market survey. Gardsmarks, Inc., thru its trademark specialist,
Martin Remandaman, discovered that thirty (30) commercial establishments sold GE starters. All these
establishments pointed to Tradeway Commercial Corporation (hereafter TCC) as their source.Remandaman
was able to purchase from TCC fifty (50) pieces of fluorescent lamp starters with the GE logo and
design. Assessing that these products were counterfeit, PEMCO applied for the issuance of a search
warrant. This was issued by the MeTC, Branch 49, Caloocan City. Eight boxes, each containing 15,630
starters, were thereafter seized from the TCC warehouse in Caloocan City.
Indicted before the MeTC, Branch 52, Caloocan City for unfair competition under Article 189 of the
Revised Penal Code were YAO, who was TCCs President and General Manager, and Alfredo Roxas, a
member of TCCs Board of Directors. The indictment[1] charged YAO and Roxas of having mutually and in
conspiracy sold fluorescent lamp starters which have the General Electric (GE) logo, design and containers,
making them appear as genuine GE fluorescent lamp starters; and inducing the public to believe them as
such, when they were in fact counterfeit. The case was docketed as Criminal Case No. C-155713.
Both accused pleaded not guilty. At the trial, the prosecution presented evidence tending to establish
the foregoing narration of facts. Further, the State presented witnesses Atty. Hofilena of the Castillo Laman
Tan and Pantaleon Law Offices who underwent a familiarization seminar from PEMCO in 1990 on how to
distinguish a genuine GE starter from a counterfeit, and Allan de la Cruz, PEMCOs marketing
manager. Both described a genuine GE starter as having a stenciled silk-screen printing which includes the
GE logo... back to back around the starter, a drumlike glowbulb and a condenser/capacitor shaped like an
M&M candy with the numbers .006." They then compared and examined random samples of the seized
starters with the genuine GE products. They concluded that the seized starters did not possess the full
design complement of a GE original. They also observed that some of the seized starters did not have
capacitors or if they possessed capacitors, these were not shaped like M&M. Still others merely had sticker
jackets with prints of the GE logo. Mr. de la Cruz added that only Hankuk Stars of Korea manufactured GE
starters and if these were imported by PEMCO, they would cost P7.00 each locally. As TCCs starters
cost P1.60 each, the witnesses agreed that the glaring differences in the packaging, design and costs
indisputably proved that TCCs GE starters were counterfeit.
The defense presented YAO as its lone witness. YAO admitted that as general manager, he has
overall supervision of the daily operation of the company. As such, he has the final word on the particular
brands of products that TCC would purchase and in turn sold. He also admitted that TCC is not an
accredited distributor of GE starters. However, he disclaimed liability for the crime charged since (1) he
had no knowledge or information that the GE starters supplied to TCC were fake; (2) he had not attended
any seminar that helped him determine which TCC products were counterfeit; (3) he had no participation in
the manufacture, branding, stenciling of the GE names or logo in the starters; (4) TCCs suppliers of the
starters delivered the same already branded and boxed; and (5) he only discussed with the suppliers matters
regarding pricing and peak-volume items.
In its 13-page 20 October 1993 decision,[2] the MeTC acquitted Roxas but convicted YAO. In
acquitting Roxas, the trial court declared that the prosecution failed to prove that he was still one of the
Board of Directors at the time the goods were seized. It anchored its conviction of YAO on the
following: (1) YAOs admission that he knew that the starters were not part of GEs line products when he
applied with PEMCO for TCCs accreditation as distributor; (2) the prosecutions evidence (Exhibit G-7), a
delivery receipt dated 25 May 1989 issued by Country Supplier Center, on which a TCC personnel noted
that the 2000 starters delivered were GE starters despite the statement therein that they were China starters;
this fact gave rise to a presumption that the TCC personnel knew of the anomaly and that YAO as general
manager and overall supervisor knew and perpetrated the deception of the public; (3) the fact that no
genuine GE starter could be sold from 1986 whether locally manufactured or imported or at the very least
in such large commercial quantity as those seized from TCC; and (4) presence of the elements of unfair
competition.
The dispositive portion of the decision reads as follows:
For the failure of the prosecution to prove the guilt of the accused, Alfredo Roxas, of Unfair Competition
under Article 189 (1) of the Revised Penal Code ... i.e., to prove that he was Chairman of the Board of the
Tradeway Commercial Corporation on October 10, 1990, as well as to have him identified in open court
during the trial, he is acquitted of the same.
But because the prosecution proved the guilt of the other accused, George Yao, beyond reasonable doubt as
principal under the said Article 189 (1) for Unfair Competition, he is convicted of the same. In the absence
of any aggravating or mitigating circumstances alleged/proven, and considering the provisions of the
Indeterminate Sentence Law, he is sentenced to a minimum of four (4) months and twenty-one (21) days of
arresto mayor to a maximum of one (1) year and five (5) months of prision correccional.
This case was prosecuted by the law offices of Castillo Laman Tan and Pantaleon for ... PEMCO ...
Considering that no document was submitted by the private complainant to show how the claim
of P300,000 for consequential damages was reached and/or computed, the court is not in a position to make
a pronouncement on the whole amount. However, the offender, George Yao, is directed to pay PEMCO the
amount of P20,000 by way of consequential damages under Article 2202 of the New Civil Code, and to pay
the law offices of Castillo, Laman Tan and Pantaleon the amount of another P20,000.00 as PEMCOs
attorneys fees under Article 2208 (11) of the same.
This decision should have been promulgated in open court on July 28, 1993 but the promulgation was reset
for August 31, 1993 in view of the absence of parties; it was again re-set for today.
Promulgated this 20th day of October, 1993 in Kalookan City, Philippines. [3]
YAO filed a motion for reconsideration, which the MeTC denied in its order[4] of 7 March 1994.
YAO appealed to the Regional Trial Court of Caloocan City (RTC). The appeal was docketed as
Criminal Case No. C-47255(94) and was assigned to Branch 121 of the court.
On 24 May 1994, Presiding Judge Adoracion G. Angeles of Branch 121 issued an order [5] directing
the parties to file their respective memoranda.
On 4 July 1994 YAO filed his Appeal Memorandum.[6]
Without waiting for the Memorandum on Appeal of the prosecution, which was filed only on 20
August 1994,[7] Judge Adoracion Angeles rendered on 27 July 1994 a one-page Decision[8] which
affirmed in toto the MeTC decision. In so doing, she merely quoted the dispositive portion of the MeTC
and stated that [a]after going over the evidence on record, the Court finds no cogent reason to disturb the
findings of the Metropolitan Trial Court.
YAO filed a motion for reconsideration[9] and assailed the decision as violative of Section 2, Rule 20
of the Rules of Court.[10] In its order[11] of 28 September 1994, the RTC denied the motion for
reconsideration as devoid of merit and reiterated that the findings of the trial court are entitled to great
weight on appeal and should not be disturbed on appeal unless for strong and cogent reasons.
On 4 October 1994, YAO appealed to the Court of Appeals by filing a notice of appeal.[12]
 The appealed case was docketed as CA-G.R. CR No. 16893. In its Resolution[13] of 28 February
1995, the Court of Appeals granted YAO an extension of twenty (20) days from 10 February or until 12
March 1995 within which to file the Appellants Brief. However, on 25 April 1995 the Court of Appeals
promulgated a Resolution[14] declaring that [t]he decision rendered on July 27, 1994 by the Regional Trial
Court, Branch 121, has long become final and executory and ordering the records of the case remanded to
said court for the proper execution of judgment. The pertinent portion of the Resolution reads:
In Our resolution, dated February 28, 1995, accused-appellant was granted an extension of twenty (20) days
from February 10, 1995, or until March 12, 1995 within which to file appellants brief.
To date, no appellants brief has been filed.
From the Manifestation, filed on March 24, 1995, by City Prosecutor Gabriel N. dela Cruz, Kalookan City,
it would appear that:
xxx
2. George Yao received a copy of the RTCs decision on August 16, 1994, and filed a motion for
reconsideration on August 30, 1994. On October 3, 1994, George Yao received a copy of the RTCs order,
dated September 28, 1994, denying his motion for reconsideration.
3. On October 4, 1994, George Yao filed a notice of appeal by registered mail.
We will assume from the said Manifestation that the decision of the RTC and the order denying YAOs
motion for reconsideration were sent to and received by YAOs counsel.
Proceeding from said assumption, Yao had fifteen (15) days from August 16, 1994 to elevate his case to
this Court. On August 30, 1994, or fourteen (14) days thereafter, Yao filed a motion for
reconsideration. When he received the Order denying his aforesaid motion on October 3, 1994, he had one
more day left to elevate his case to this Court by the proper mode of appeal, which is by petition for
review. Yao, however, on October 4, 1994, filed a notice of appeal by registered mail informing the RTC
that he is appealing his conviction to the Court of Appeals. By then, the fifteen (15) day period had already
elapsed.
That notwithstanding, the Branch Clerk of Court, RTC, Branch 121, transmitted to this Court the entire
records of the case, thru a transmittal letter, dated October 13, 1994, and received by the Criminal Section
of this Court on October 28, 1994. YAOs counsel, on February 20, 1995, filed with this Court, a motion for
extension of period to file brief for accused-appellant which was granted in Our resolution mentioned in the
opening paragraph of this resolution.
Petitions for review shall be filed within the period to appeal. This period has already elapsed even when
Yao filed a notice of appeal by registered mail, with the RTC of Kalookan City. Worse, the notice of appeal
is procedurally infirm.
YAO filed an Urgent Motion to Set Aside Entry of Judgment contending that the 25 April 1995
resolution did not specifically dismiss the appeal, for which reason, there was no judgment on which an
entry of judgment could be issued.He also argued that the attendant procedural infirmities in the appeal, if
any, were cured with the issuance of the 28 February 1995 resolution granting him twenty (20) days from
10 February 1995 or until 12 March 1995 within which to file an appellants brief and in compliance thereto,
consequently filed his appellants brief on 2 March 1995.[15]
In its Resolution[16] of 26 January 1998, the Court of Appeals denied the Urgent Motion to Set Aside
the Entry of Judgment for lack of merit. It considered the 25 April 1995 resolution as having in effect
dismissed the appeal, [hence] the Entry of Judgment issued on May 26, 1995... was proper.
In this petition for review on certiorari, YAO reiterates the arguments he raised in his Urgent Motion
to Set Aside the Entry of Judgment of the Court of Appeals, thus: (1) that the entry of judgment was
improvidently issued in the absence of a final resolution specifically dismissing the appeal; (2) the
procedural infirmity in the appeal, if any, has been cured; and (3) the Court of Appeals committed grave
abuse of discretion amounting to lack of jurisdiction in denying him (YAO) due process of law.
In support of his first argument, YAO cites Section 1, Rule 11 of the Revised Internal Rules of the
Court of Appeals, thus:
SEC. 1. Entry of Judgment. -- Unless a motion for reconsideration is filed or an appeal is taken to the
Supreme Court, judgments and final resolutions of the Court of Appeals shall be entered upon the
expiration of fifteen (15) days after notice to parties.
YAO claims that the 25 April 1995 resolution of the Court of Appeals was not a judgment on his
appeal nor was it a final resolution contemplated in the Internal Rules since it did not specifically dismiss
his appeal. A fortiori, the entry of judgment was improvidently issued for lack of legal basis.
YAO also repeats his argument that any procedural infirmity in the appeal was cured when the RTC
gave due course to the appeal, elevated the records to the Court of Appeals which in turn issued on 13
December 1994 a notice to file his Appellants Brief and granted him until 12 March 1995 within which to
file the appellants brief.
Finally, YAO asserts that he was denied due process considering that (1) none of the elements of
unfair competition are present in this case; (2) he filed his appeal to the Court of Appeals within the
reglementary period; and (3)notwithstanding his filing of a notice of appeal (instead of a petition for
review), it was a mere procedural lapse, a technicality which should not bar the determination of the case
based on intrinsic merits. YAO then invokes the plethora of jurisprudence wherein the Supreme Court in
the exercise of equity jurisdiction decided to disregard technicalities; decided [the case] on merits and not
on technicalities; found manifest in the petition strong considerations of substantial justice necessitating the
relaxing of the stringent application of technical rules, or heeded petitioners cry for justice because the
basic merits of the case warrant so, as where the petition embodies justifying circumstances; discerned not
to sacrifice justice to technicality; discovered that the application of res judicata and estoppel by
judgment amount to a denial of justice and or a bar to a vindication of a legitimate grievance.[17]
In its Comment, the Office of the Solicitor General prays that the petition should be dismissed for
lack of merit. It maintains that although the 25 April 1995 resolution did not specifically state that the
appeal was being dismissed, the intent and import are clear and unequivocable. It asserts that the appeal
was obviously dismissed because the RTC decision has long become final and executory. YAO failed to
challenge the RTC decision, within the reglementary period, by filing a petition for review of the same with
the Court of appeals pursuant to Section 1 of Rule 42 of the Rules of Court. Instead, he filed an ordinary
appeal by way of a notice of appeal. Hence, the period to file the correct procedural remedy had lapsed.
There is no dispute that YAO availed of the wrong procedural remedy in assailing the RTC
decision. It is clear from the records that YAO received a copy of the adverse RTC judgment on 16 August
1994. He has fifteen (15) days or until 31 August 1994 within which to file either a motion for
reconsideration or a petition for review with the Court of Appeals. Fourteen (14) days thereafter or on 30
August 1994, YAO opted to file a motion for reconsideration the pendency of which tolled the running of
the period. He received a copy of the RTCs order denying the motion for reconsideration on 3 October
1994. He had therefore, only one day left, 4 October 1994 as the last day, within which to file with the
Court of Appeals a petition for review.[18] However, on said date, YAO filed a notice of appeal. He palpably
availed of the wrong mode of appeal. And since he never instituted the correct one, he lost it.
The right to appeal is not a constitutional, natural or inherent right. It is a statutory privilege of
statutory origin and, therefore, available only if granted or provided by statute. [19] Since the right to appeal
is not a natural right nor a part of due process, it may be exercised only in the manner and in accordance
with the provisions of law.[20] Corollarily, its requirements must be strictly complied with.
That an appeal must be perfected in the manner and within the period fixed by law is not only
mandatory but jurisdictional.[21] Non-compliance with such legal requirements is fatal, [22] for it renders the
decision sought to be appealed final and executory,[23] with the end result that no court can exercise
appellate jurisdiction to review the decision.[24]
 In the light of these procedural precepts, YAOs petition appears to be patently without merit and
does not deserve a second look. Hence, the reasons he enumerated to persuade this Court to grant his
petition and reinstate his appeal are obviously frivolous if not downright trivial. They need not even be
discussed here.
In the normal and natural course of events, we should dismiss the petition outright, if not for an
important detail which augurs well for YAO and would grant him a reprieve in his legal battle. The
decision of the RTC affirming the conviction of YAO palpably transgressed Section 14, Article VIII of the
Constitution, which states:
Sec. 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the
facts and the law on which it is based.
xxx
Let us quote in full the RTC judgment:
This is an appeal from the decision of the Metropolitan Trial Court, Branch 52, Kalookan City, in Crim.
Case No. C-155713, the dispositive portion of which reads as follows:
xxx
But because the prosecution proved the guilt of the other accused, George Yao; beyond reasonable doubt as
principal under the said Article 189 (1) for Unfair Competition, he is convicted of the same. In the absence
of any aggravating or mitigating circumstances alleged/proven, and considering the provisions of the
Indeterminate Sentence Law, he is sentenced to a minimum of four (4) months and twenty-one (21) days of
arresto mayor to a maximum of one (1) year and five (5) months of prision correccional.
xxx
After going over the evidence on record, the Court finds no cogent reason to disturb the findings of the
Metropolitan Trial Court.
WHEREFORE, this Court affirms in toto the decision of the Metropolitan Trial Court dated October 20,
1993.
SO ORDERED.
That is all there is to it.
We have sustained decisions of lower courts as having substantially or sufficiently complied with the
constitutional injunction notwithstanding the laconic and terse manner in which they were written and even
if there (was left) much to be desired in terms of (their) clarity, coherence and comprehensibility provided
that they eventually set out the facts and the law on which they were based, [25] as when they stated the legal
qualifications of the offense constituted by the facts proved, the modifying circumstances, the participation
of the accused, the penalty imposed and the civil liability;[26] or discussed the facts comprising the elements
of the offense that was charged in the information, and accordingly rendered a verdict and imposed the
corresponding penalty;[27] or quoted the facts narrated in the prosecutions memorandum but made their own
findings and assessment of evidence, before finally agreeing with the prosecutions evaluation of the case. [28]
We have also sanctioned the use of memorandum decisions,[29] a specie of succinctly written
decisions by appellate courts in accordance with the provisions of Section 40, B.P. Blg. 129[30] on the
grounds of expediency, practicality, convenience and docket status of our courts. We have also declared
that memorandum decisions comply with the constitutional mandate. [31]
In Francisco v. Permskul,[32] however, we laid down the conditions for the of validity of
memorandum decisions, thus:
The memorandum decision, to be valid, cannot incorporate the findings of fact and the conclusions of law
of the lower court only by remote reference, which is to say that the challenged decision is not easily and
immediately available to the person reading the memorandum decision. For the incorporation by reference
to be allowed, it must provide for direct access to the facts and the law being adopted, which must be
contained in a statement attached to the said decision. In other words, the memorandum decision authorized
under Section 40 of B.P. Blg. 129 should actually embody the findings of fact and conclusions of law of the
lower court in an annex attached to and made an indispensable part of the decision.
It is expected that this requirement will allay the suspicion that no study was made of the decision of the
lower court and that its decision was merely affirmed without a proper examination of the facts and the law
on which it is based. The proximity at least of the annexed statement should suggest that such an
examination has been undertaken. It is, of course, also understood that the decision being adopted should, to
begin with, comply with Article VIII, Section 14 as no amount of incorporation or adoption will rectify its
violation.
The Court finds necessary to emphasize that the memorandum decision should be sparingly used lest it
become an addictive excuse for judicial sloth. It is an additional condition for the validity that this kind of
decision may be resorted to only in cases where the facts are in the main accepted by both parties and easily
determinable by the judge and there are no doctrinal complications involved that will require an extended
discussion of the laws involved. The memorandum decision may be employed in simple litigations only,
such as ordinary collection cases, where the appeal is obviously groundless and deserves no more than the
time needed to dismiss it.
xxx
Henceforth, all memorandum decisions shall comply with the requirements herein set forth both as to the
form prescribed and the occasions when they may be rendered. Any deviation will summon the strict
enforcement of Article VIII, Section 14 of the Constitution and strike down the flawed judgment as a
lawless disobedience.
Tested against these standards, we find that the RTC decision at bar miserably failed to meet them
and, therefore, fell short of the constitutional injunction. The RTC decision is brief indeed, but it is starkly
hallow, otiosely written, vacuous in its content and trite in its form. It achieved nothing and attempted at
nothing, not even at a simple summation of facts which could easily be done. Its inadequacy speaks for
itself.
We cannot even consider or affirm said RTC decision as a memorandum decision because it failed to
comply with the measures of validity laid down in Francisco v. Permskul. It merely affirmed in toto the
MeTC decision without saying more. A decision or resolution, especially one resolving an appeal, should
directly meet the issues for resolution; otherwise, the appeal would be pointless. [33]
We therefore reiterate our admonition in Nicos Industrial Corporation v. Court of Appeals,[34] in that
while we conceded that brevity in the writing of decisions is an admirable trait, it should not and cannot be
substituted for substance; and again in Francisco v. Permskul,[35] where we cautioned that expediency
alone, no matter how compelling, cannot excuse non-compliance with the constitutional requirements.
This is not to discourage the lower courts to write abbreviated and concise decisions, but never at the
expense of scholarly analysis, and more significantly, of justice and fair play, lest the fears expressed by
Justice Feria as the ponente in Romero v. Court of Appeals[36] come true, i.e., if an appellate court failed to
provide the appeal the attention it rightfully deserved, said court deprived the appellant of due process since
he was not accorded a fair opportunity to be heard by a fair and responsible magistrate. This situation
becomes more ominous in criminal cases, as in this case, where not only property rights are at stake but
also the liberty if not the life of a human being.
Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably
a paramount component of due process and fair play.[37] It is likewise demanded by the due process clause
of the Constitution.[38]The parties to a litigation should be informed of how it was decided, with an
explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply
say that judgment is rendered in favor of X and against Y and just leave it at that without any justification
whatsoever for its action. The losing party is entitled to know why he lost, so he may appeal to the higher
court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly
and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was
reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the
court for review by a higher tribunal.[39] More than that, the requirement is an assurance to the parties that,
in reaching judgment, the judge did so through the processes of legal reasoning. It is, thus, a safeguard
against the impetuosity of the judge, preventing him from deciding ipse dixit. Vouchsafed neither the sword
nor the purse by the Constitution but nonetheless vested with the sovereign prerogative of passing judgment
on the life, liberty or property of his fellowmen, the judge must ultimately depend on the power of reason
for sustained public confidence in the justness of his decision.[40]

Thus the Court has struck down as void, decisions of lower courts and even of the Court of Appeals
whose careless disregard of the constitutional behest exposed their sometimes cavalier attitude not only to
their magisterial responsibilities but likewise to their avowed fealty to the Constitution.

Thus, we nullified or deemed to have failed to comply with Section 14, Article VIII of the
Constitution, a decision, resolution or order which: contained no analysis of the evidence of the parties nor
reference to any legal basis in reaching its conclusions; contained nothing more than a summary of the
testimonies of the witnesses of both parties;[41] convicted the accused of libel but failed to cite any legal
authority or principle to support conclusions that the letter in question was libelous; [42] consisted merely of
one (1) paragraph with mostly sweeping generalizations and failed to support its conclusion of
parricide;[43] consisted of five (5) pages, three (3) pages of which were quotations from the labor arbiters
decision including the dispositive portion and barely a page (two [2] short paragraphs of two [2] sentences
each) of its own discussion or reasonings[44]; was merely based on the findings of another
court sans transcript of stenographic notes;[45] or failed to explain the factual and legal bases for the award
of moral damages.[46]

In the same vein do we strike down as a nullity the RTC decision in question.

In sum, we agree with YAO that he was denied due process but not on the grounds he ardently
invoked but on the reasons already extensively discussed above. While he indeed resorted to the wrong
mode of appeal and his right to appeal is statutory, it is still an essential part of the judicial system that
courts should proceed with caution so as not to deprive a party of the prerogative, but instead afford every
party-litigant the amplest opportunity for the proper and just disposition of his cause, freed from the
constraints of technicalities.[47]

In the interest of substantial justice, procedural rules of the most mandatory character in terms of
compliance, may be relaxed.[48] In other words, if strict adherence to the letter of the law would result in
absurdity and manifest injustice[49] or where the merit of a partys cause is apparent and outweighs
consideration of non-compliance with certain formal requirements,[50] procedural rules should definitely be
liberally construed. A party-litigant is to be given the fullest opportunity to establish the merits of his
complaint or defense rather than for him to lose life, liberty, honor or property on mere technicalities. [51] We
therefore withhold legal approbation on the RTC decision at bar for its palpable failure to comply with the
constitutional and legal mandates thereby denying YAO of his day in court. We also remind all magistrates
to heed the demand of Section 14, Article VIII of the Constitution. It is their solemn and paramount duty to
uphold the Constitution and the principles enshrined therein, lest they be lost in the nitty-gritty of their
everyday judicial work.

WHEREFORE, in view of all the foregoing, the petition in this case is GRANTED. The questioned
25 April 1995 resolution of the Court of Appeals in CA-G.R. No. 16893 is hereby SET ASIDE and the 27
July 1994 decision of the Regional Trial Court, Branch 121 of Kalookan City rendered in its appellate
jurisdiction is NULLIFIED. The records are hereby remanded to said Regional Trial Court for further
proceedings and for the rendition of judgment in accordance with the mandate of Section 14, Article VIII of
the Constitution.

No costs.

SO ORDERED.
 [G.R. No. 154342. July 14, 2004]
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC. petitioners, vs. E. &
J. GALLO WINERY and THE ANDRESONS GROUP, INC. respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners Mighty Corporation and La
Campana Fabrica de Tabaco, Inc. (La Campana) seek to annul, reverse and set aside: (a) the November 15,
2001 decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming the November 26, 1998
decision,[2] as modified by the June 24, 1999 order,[3] of the Regional Trial Court of Makati City, Branch 57
(Makati RTC) in Civil Case No. 93-850, which held petitioners liable for, and permanently enjoined them
from, committing trademark infringement and unfair competition, and which ordered them to pay damages
to respondents E. & J. Gallo Winery (Gallo Winery) and The Andresons Group, Inc. (Andresons); (b) the
July 11, 2002 CA resolution denying their motion for reconsideration[4] and (c) the aforesaid Makati RTC
decision itself.
I.The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but
organized and existing under the laws of the State of California, United States of America (U.S.), where all
its wineries are located. Gallo Winery produces different kinds of wines and brandy products and sells them
in many countries under different registered trademarks, including the GALLO and ERNEST & JULIO
GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive wine importer and
distributor in the Philippines since 1991, selling these products in its own name and for its own account.[5]
Gallo Winerys GALLO wine trademark was registered in the principal register of the Philippine
Patent Office (now Intellectual Property Office) on November 16, 1971 under Certificate of Registration
No. 17021 which was renewed on November 16, 1991 for another 20 years. [6] Gallo Winery also applied for
registration of its ERNEST & JULIO GALLO wine trademark on October 11, 1990 under Application
Serial No. 901011-00073599-PN but the records do not disclose if it was ever approved by the Director of
Patents.[7]
On the other hand, petitioners Mighty Corporation and La Campana and their sister company,
Tobacco Industries of the Philippines (Tobacco Industries), are engaged in the cultivation, manufacture,
distribution and sale of tobacco products for which they have been using the GALLO cigarette trademark
since 1973. [8]
The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of GALLO 100s cigarette
mark on September 14, 1973 and GALLO filter cigarette mark on March 26, 1976, both for the
manufacture and sale of its cigarette products. In 1976, Tobacco Industries filed its manufacturers sworn
statement as basis for BIRs collection of specific tax on GALLO cigarettes. [9]
On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration
of the GALLO cigarette trademark in the principal register of the then Philippine Patent Office. [10]
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which,
on July 16, 1985, applied for trademark registration in the Philippine Patent Office.[11] On July 17, 1985, the
National Library issued Certificate of Copyright Registration No. 5834 for La Campanas lifetime copyright
claim over GALLO cigarette labels.[12]
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.[13] BIR approved Mighty Corporations use of GALLO 100s cigarette brand,
under licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL
100s cigarette brand on April 3, 1989.[14]
Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by
Tobacco Industries, then by La Campana and finally by Mighty Corporation. [15]
On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971,
respondents claim that they first introduced and sold the GALLO and ERNEST & JULIO GALLO wines in
the Philippines circa 1974 within the then U.S. military facilities only. By 1979, they had expanded their
Philippine market through authorized distributors and independent outlets. [16]
Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part
of 1992 when an Andresons employee saw such cigarettes on display with GALLO wines in a Davao
supermarket wine cellar section.[17] Forthwith, respondents sent a demand letter to petitioners asking them
to stop using the GALLO trademark, to no avail.
II.The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename
infringement and unfair competition, with a prayer for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6bis of the Paris Convention for the Protection
of Industrial Property (Paris Convention)[18] and RA 166 (Trademark Law),[19] specifically, Sections 22 and
23 (for trademark infringement),[20] 29 and 30[21] (for unfair competition and false designation of origin) and
37 (for tradename infringement).[22] They claimed that petitioners adopted the GALLO trademark to ride on
Gallo Winerys GALLO and ERNEST & JULIO GALLO trademarks established reputation and popularity,
thus causing confusion, deception and mistake on the part of the purchasing public who had always
associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Winerys wines. Respondents
prayed for the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2 million as
actual and compensatory damages, at least P500,000 as exemplary and moral damages, and at
least P500,000 as attorneys fees and litigation expenses.[23]
In their answer, petitioners alleged, among other affirmative defenses, that: petitioners GALLO
cigarettes and Gallo Winerys wines were totally unrelated products; Gallo Winerys GALLO trademark
registration certificate covered wines only, not cigarettes; GALLO cigarettes and GALLO wines were sold
through different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO
menthols, were low-cost items compared to Gallo Winerys high-priced luxury wines which cost
between P98 to P242.50; the target market of Gallo Winerys wines was the middle or high-income bracket
with at least P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen, laborers
and other low-income workers; the dominant feature of the GALLO cigarette mark was the rooster device
with the manufacturers name clearly indicated as MIGHTY CORPORATION while, in the case of Gallo
Winerys wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or just their
surname GALLO; by their inaction and conduct, respondents were guilty of laches and estoppel; and
petitioners acted with honesty, justice and good faith in the exercise of their right to manufacture and sell
GALLO cigarettes.
In an order dated April 21, 1993,[24] the Makati RTC denied, for lack of merit, respondents prayer for
the issuance of a writ of preliminary injunction,[25] holding that respondents GALLO trademark registration
certificate covered wines only, that respondents wines and petitioners cigarettes were not related goods and
respondents failed to prove material damage or great irreparable injury as required by Section 5, Rule 58 of
the Rules of Court.[26]
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents motion for
reconsideration. The court reiterated that respondents wines and petitioners cigarettes were not related
goods since the likelihood of deception and confusion on the part of the consuming public was very
remote. The trial court emphasized that it could not rely on foreign rulings cited by respondents because
the[se] cases were decided by foreign courts on the basis of unknown facts peculiar to each case or upon
factual surroundings which may exist only within their jurisdiction. Moreover, there [was] no showing that
[these cases had] been tested or found applicable in our jurisdiction.[27]
On February 20, 1995, the CA likewise dismissed respondents petition for review on certiorari,
docketed as CA-G.R. No. 32626, thereby affirming the Makati RTCs denial of the application for issuance
of a writ of preliminary injunction against petitioners.[28]
After trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable
for, and permanently enjoined them from, committing trademark infringement and unfair competition with
respect to the GALLO trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their distributors, trade outlets, and all persons acting
for them or under their instructions, from (i) using E & Js registered trademark GALLO or any other
reproduction, counterfeit, copy or colorable imitation of said trademark, either singly or in conjunction with
other words, designs or emblems and other acts of similar nature, and (ii) committing other acts of unfair
competition against plaintiffs by manufacturing and selling their cigarettes in the domestic or export
markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs
(i) actual and compensatory damages for the injury and prejudice and impairment of plaintiffs business and
goodwill as a result of the acts and conduct pleaded as basis for this suit, in an amount equal to 10% of
FOURTEEN MILLION TWO HUNDRED THIRTY FIVE THOUSAND PESOS (PHP14,235,000.00)
from the filing of the complaint until fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorneys fees and expenses of litigation in the amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED.[29]
On June 24, 1999, the Makati RTC granted respondents motion for partial reconsideration and
increased the award of actual and compensatory damages to 10% of P199,290,000 or P19,929,000.[30]
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioners motion for
reconsideration.
III.The Issues
Petitioners now seek relief from this Court contending that the CA did not follow prevailing laws
and jurisprudence when it held that: [a] RA 8293 (Intellectual Property Code of the Philippines [IP
Code]) was applicable in this case; [b] GALLO cigarettes and GALLO wines were identical, similar or
related goods for the reason alone that they were purportedly forms of vice; [c] both goods passed through
the same channels of trade and [d] petitioners were liable for trademark infringement, unfair competition
and damages.[31]
Respondents, on the other hand, assert that this petition which invokes Rule 45 does not involve pure
questions of law, and hence, must be dismissed outright.
IV.Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only questions of
law[32] (that is, the doubt pertains to the application and interpretation of law to a certain set of facts) and not
questions of fact (where the doubt concerns the truth or falsehood of alleged facts), [33] otherwise, the
petition will be denied. We are not a trier of facts and the Court of Appeals factual findings are generally
conclusive upon us.[34]
This case involves questions of fact which are directly related and intertwined with questions of
law. The resolution of the factual issues concerning the goods similarity, identity, relation, channels of
trade, and acts of trademark infringement and unfair competition is greatly dependent on the interpretation
of applicable laws. The controversy here is not simply the identity or similarity of both parties trademarks
but whether or not infringement or unfair competition was committed, a conclusion based on statutory
interpretation. Furthermore, one or more of the following exceptional circumstances oblige us to review the
evidence on record:[35]
(1) the conclusion is grounded entirely on speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals from its findings of fact is manifestly mistaken,
absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the case, and the
same are contrary to the admissions of both the appellant and the appellee;
(6) the findings are without citation of specific evidence on which they are based;
(7) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not
disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence of evidence and
are contradicted [by the evidence] on record.[36]
In this light, after thoroughly examining the evidence on record, weighing, analyzing and balancing
all factors to determine whether trademark infringement and/or unfair competition has been committed, we
conclude that both the Court of Appeals and the trial court veered away from the law and well-settled
jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair
competition committed during the effectivity of the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under
the aforesaid governing laws but also under the IP Code which took effect only on January 1, 1998,[37] or
about five years after the filing of the complaint:
Defendants unauthorized use of the GALLO trademark constitutes trademark infringement pursuant to
Section 22 of Republic Act No. 166, Section 155 of the IP Code, Article 6bis of the Paris Convention, and
Article 16 (1) of the TRIPS Agreement as it causes confusion, deception and mistake on the part of the
purchasing public.[38] (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati RTC decision:
In the light of its finding that appellants use of the GALLO trademark on its cigarettes is likely to create
confusion with the GALLO trademark on wines previously registered and used in the Philippines by
appellee E & J Gallo Winery, the trial court thus did not err in holding that appellants acts not
only violated the provisions of the our trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293) but also
Article 6bis of the Paris Convention.[39] (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that
it has first been promulgated. A law that is not yet effective cannot be considered as conclusively known by
the populace. To make a law binding even before it takes effect may lead to the arbitrary exercise of the
legislative power.[40] Nova constitutio futuris formam imponere debet non praeteritis. A new state of the law
ought to affect the future, not the past. Any doubt must generally be resolved against the retroactive
operation of laws, whether these are original enactments, amendments or repeals. [41] There are only a few
instances when laws may be given retroactive effect,[42] none of which is present in this case.
 The IP Code, repealing the Trademark Law,[43] was approved on June 6, 1997. Section 241 thereof
expressly decreed that it was to take effect only on January 1, 1998, without any provision for retroactive
application. Thus, the Makati RTC and the CA should have limited the consideration of the present case
within the parameters of the Trademark Law and the Paris Convention, the laws in force at the time of the
filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a common conception at
their root, that is, a person shall not be permitted to misrepresent his goods or his business as the goods or
business of another, the law on unfair competition is broader and more inclusive than the law on trademark
infringement. The latter is more limited but it recognizes a more exclusive right derived from the trademark
adoption and registration by the person whose goods or business is first associated with it. The law on
trademarks is thus a specialized subject distinct from the law on unfair competition, although the two
subjects are entwined with each other and are dealt with together in the Trademark Law (now, both are
covered by the IP Code). Hence, even if one fails to establish his exclusive property right to a trademark, he
may still obtain relief on the ground of his competitors unfairness or fraud. Conduct constitutes unfair
competition if the effect is to pass off on the public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end. [44]
In Del Monte Corporation vs. Court of Appeals,[45] we distinguished trademark infringement from
unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair
competition is the passing off of one's goods as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair
competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the
action, whereas in unfair competition registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,[46] an international agreement binding on the Philippines and the
United States (Gallo Winerys country of domicile and origin) prohibits the [registration] or use of a
trademark which constitutes a reproduction, imitation or translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to be well-known in that country
as being already the mark of a person entitled to the benefits of the [Paris] Convention and used for
identical or similar goods. [This rule also applies] when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to create confusiontherewith. There is no
time limit for seeking the prohibition of the use of marks used in bad faith. [47]
bis
Thus, under Article 6 of the Paris Convention, the following are the elements of trademark
infringement:
(a) registration or use by another person of a trademark which is a reproduction, imitation or
translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or use[48] to be well-
known in that country and is already the mark of a person entitled to the benefits of the Paris
Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for infringement when,
among others, he uses without the consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising
of any goods, business or services or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of
such business; or reproduce, counterfeit, copy or colorably imitate any such mark or tradename and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business or
services.[49] Trademark registration and actual use are material to the complaining partys cause of action.
Corollary to this, Section 20 of the Trademark Law[50] considers the trademark registration certificate
as prima facie evidence of the validity of the registration, the registrants ownership and exclusive right to
use the trademark in connection with the goods, business or services as classified by the Director of
Patents[51] and as specified in the certificate, subject to the conditions and limitations stated therein. Sections
2 and 2-A[52] of the Trademark Law emphasize the importance of the trademarks actual use in commerce in
the Philippines prior to its registration. In the adjudication of trademark rights between contending parties,
equitable principles of laches, estoppel, and acquiescence may be considered and applied.[53]
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the
elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register
of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or advertising of any
goods, business or services or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or such trademark is reproduced, counterfeited, copied or
colorably imitated by another person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by
domestic authorities), while the Trademark Law protects all trademarks, whether well-known or not,
provided that they have been registered and are in actual commercial use in the Philippines. Following
universal acquiescence and comity, in case of domestic legal disputes on any conflicting provisions between
the Paris Convention (which is an international agreement) and the Trademark law (which is a municipal
law) the latter will prevail.[54]
Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is
limited only to goods identical or similar to those in respect of which such trademark is registered and only
when there is likelihood of confusion. Under both laws, the time element in commencing infringement
cases is material in ascertaining the registrants express or implied consent to anothers use of its trademark
or a colorable imitation thereof. This is why acquiescence, estoppel or laches may defeat the registrants
otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of
liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents own judicial admission, the GALLO wine trademark was registered in the
Philippines in November 1971 but the wine itself was first marketed and sold in the country only in 1974
and only within the former U.S. military facilities, and outside thereof, only in 1979. To prove commercial
use of the GALLO wine trademark in the Philippines, respondents presented sales invoice no. 29991 dated
July 9, 1981 addressed to Conrad Company Inc., Makati, Philippines and sales invoice no. 85926 dated
March 22, 1996 addressed to Andresons Global, Inc., Quezon City, Philippines. Both invoices were for the
sale and shipment of GALLO wines to the Philippines during that period.[55] Nothing at all, however, was
presented to evidence the alleged sales of GALLO wines in the Philippines in 1974 or, for that matter, prior
to July 9, 1981.
 On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and
manufacturers sworn statement, it appears that petitioners and its predecessor-in-interest, Tobacco
Industries, have indeed been using and selling GALLO cigarettes in the Philippines since 1973 or before
July 9, 1981.[56]
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,[57] we reiterated our rulings
in Pagasa Industrial Corporation vs. Court of Appeals,[58] Converse Rubber Corporation vs. Universal
Rubber Products, Inc.,[59]Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,[60] Kabushi Kaisha Isetan vs. Intermediate Appellate Court,[61] and Philip Morris vs.
Court of Appeals,[62] giving utmost importance to the actual commercial use of a trademark in the
Philippines prior to its registration, notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's contention that private
respondent failed to prove prior actual commercial use of its LEE trademark in the Philippines
before filing its application for registration with the BPTTT and hence, has not acquired ownership
over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership
over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial Property relied upon by
private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) were sufficiently expounded upon
and qualified in the recent case of Philip Morris, Inc. v. Court of Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirement of actual use in the Philippines must subordinate an international agreement inasmuch
as the apparent clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain, High
Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has been made part of the law of the land does not
by any means imply the primacy of international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of international law are given a standing equal,
not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of
lack of business activity in the Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the Philippines in line with
Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign
corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need
not be actually using the trademark in commerce in the Philippines. Such a foreign corporation may have
the personality to file a suit for infringement but it may not necessarily be entitled to protection due to
absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several registration
certificates for its various trademarks LEE, LEE RIDERS, and LEESURES in both the supplemental and
principal registers, as early as 1969 to 1973. However, registration alone will not suffice. In Sterling
Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214 [1969];
Reiterated in Kabushi Isetan vs. Intermediate Appellate Court (203 SCRA 583 [1991]) we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down through the years is that actual
use in commerce or business is a prerequisite in the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of
validity, ownership and exclusive use, is qualified. A registration certificate serves merely as prima
facie evidence. It is not conclusive but can and may be rebutted by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of Patents and the Court of
Appeals. After a meticulous study of the records, we observe that the Director of Patents and the
Court of Appeals relied mainly on the registration certificates as proof of use by private respondent
of the trademark LEE which, as we have previously discussed are not sufficient. We cannot give
credence to private respondent's claim that its LEE mark first reached the Philippines in the 1960's
through local sales by the Post Exchanges of the U.S. Military Bases in the Philippines (Rollo, p. 177)
based as it was solely on the self-serving statements of Mr. Edward Poste, General Manager of Lee
(Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private respondent.
(Original Records, p. 52) Similarly, we give little weight to the numerous vouchers representing
various advertising expenses in the Philippines for LEE products. It is well to note that these
expenses were incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into a licensing
agreement with private respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans and
other garments adopting its STYLISTIC MR. LEE trademark since 1975 as evidenced by appropriate
sales invoices to various stores and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526 [1982]) and Converse Rubber
Corp. v. Universal Rubber Products, Inc., (147 SCRA 154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior to its
registration. There is no dispute that respondent corporation was the first registrant, yet it failed to
fully substantiate its claim that it used in trade or business in the Philippines the subject mark; it did
not present proof to invest it with exclusive, continuous adoption of the trademark which should
consist among others, of considerable sales since its first use. The invoices submitted by respondent
which were dated way back in 1957 show that the zippers sent to the Philippines were to be used as
samples and of no commercial value. The evidence for respondent must be clear, definite and free from
inconsistencies. Samples are not for sale and therefore, the fact of exporting them to the Philippines cannot
be considered to be equivalent to the use contemplated by law. Respondent did not expect income from
such samples. There were no receipts to establish sale, and no proof were presented to show that they were
subsequently sold in the Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of
its own mark and for failure to establish confusing similarity between said trademarks, private
respondent's action for infringement must necessarily fail. (Emphasis supplied.)
 In view of the foregoing jurisprudence and respondents judicial admission that the actual
commercial use of the GALLO wine trademark was subsequent to its registration in 1971 and to Tobacco
Industries commercial use of the GALLO cigarette trademark in 1973, we rule that, on this account,
respondents never enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of
Tobacco Industries and its successors-in-interest, herein petitioners, either under the Trademark Law or the
Paris Convention.
Respondents GALLO trademark
registration is limited to
wines only
We also note that the GALLO trademark registration certificates in the Philippines and in other
countries expressly state that they cover wines only, without any evidence or indication that registrant Gallo
Winery expanded or intended to expand its business to cigarettes. [63]
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right to use
the GALLO trademark should be limited to wines, the only product indicated in its registration
certificates. This strict statutory limitation on the exclusive right to use trademarks was amply clarified in
our ruling in Faberge, Inc. vs. Intermediate Appellate Court:[64]
Having thus reviewed the laws applicable to the case before Us, it is not difficult to discern from the
foregoing statutory enactments that private respondent may be permitted to register the trademark BRUTE
for briefs produced by it notwithstanding petitioner's vehement protestations of unfair dealings in marketing
its own set of items which are limited to: after-shave lotion, shaving cream, deodorant, talcum powder and
toilet soap. Inasmuch as petitioner has not ventured in the production of briefs, an item which is not
listed in its certificate of registration, petitioner cannot and should not be allowed to feign that
private respondent had invaded petitioner's exclusive domain. To be sure, it is significant that petitioner
failed to annex in its Brief the so-called eloquent proof that petitioner indeed intended to expand its mark
BRUT to other goods (Page 27, Brief for the Petitioner; page 202, Rollo). Even then, a mere application by
petitioner in this aspect does not suffice and may not vest an exclusive right in its favor that can ordinarily
be protected by the Trademark Law. In short, paraphrasing Section 20 of the Trademark Law as
applied to the documentary evidence adduced by petitioner, the certificate of registration issued by
the Director of Patents can confer upon petitioner the exclusive right to use its own symbol only to
those goods specified in the certificate, subject to any conditions and limitations stated therein. This basic
point is perhaps the unwritten rationale of Justice Escolin in Philippine Refining Co., Inc. vs. Ng
Sam (115 SCRA 472 [1982]), when he stressed the principle enunciated by the United States Supreme
Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70 L ed 317, 46 Sct. 160) that one who
has adopted and used a trademark on his goods does not prevent the adoption and use of the same
trademark by others for products which are of a different description. Verily, this Court had the
occasion to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that
no serious objection was posed by the petitioner therein since the applicant utilized the emblem Tango for
no other product than hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private respondent sought to belie as
regards petitioner's alleged expansion of its business. It may be recalled that petitioner claimed that it has a
pending application for registration of the emblem BRUT 33 for briefs (page 25, Brief for the Petitioner;
page 202, Rollo) to impress upon Us the Solomonic wisdom imparted by Justice JBL Reyes in Sta. Ana vs.
Maliwat (24 SCRA 1018 [1968]), to the effect that dissimilarity of goods will not preclude relief if the
junior user's goods are not remote from any other product which the first user would be likely to
make or sell (vide, at page 1025). Commenting on the former provision of the Trademark Law now
embodied substantially under Section 4(d) of Republic Act No. 166, as amended, the erudite jurist opined
that the law in point does not require that the articles of manufacture of the previous user and late user of
the mark should possess the same descriptive properties or should fall into the same categories as to bar the
latter from registering his mark in the principal register. (supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law extends only to
the goods used by the first user as specified in the certificate of registration following the clear
message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which was relied upon by
Justice JBL Reyes in the Sta. Ana case and Section 20? It would seem that Section 4(d) does not
require that the goods manufactured by the second user be related to the goods produced by the
senior user while Section 20 limits the exclusive right of the senior user only to those goods specified
in the certificate of registration. But the rule has been laid down that the clause which comes later shall be
given paramount significance over an anterior proviso upon the presumption that it expresses the latest and
dominant purpose. (Graham Paper Co. vs. National Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett
vs. Merchant's L. Ins. Co., 87 Okl. 42;State ex nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061; cited by Martin,
Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably follows that Section 20 is
controlling and, therefore, private respondent can appropriate its symbol for the briefs it
manufactures because as aptly remarked by Justice Sanchez in Sterling Products International Inc. vs.
Farbenfabriken Bayer (27 SCRA 1214 [1969]):
Really, if the certificate of registration were to be deemed as including goods not specified therein,
then a situation may arise whereby an applicant may be tempted to register a trademark on any and
all goods which his mind may conceive even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not contemplated by our Trademark Law. (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit
as to the identity, source or origin of the goods or identity of the business as a consequence of using a
certain mark. Likelihood of confusion is admittedly a relative term, to be determined rigidly according to
the particular (and sometimes peculiar) circumstances of each case. Thus, in trademark cases, more than in
other kinds of litigation, precedents must be studied in the light of each particular case. [65]
There are two types of confusion in trademark infringement. The first is confusion of goods when an
otherwise prudent purchaser is induced to purchase one product in the belief that he is purchasing another,
in which case defendants goods are then bought as the plaintiffs and its poor quality reflects badly on the
plaintiffs reputation. The other is confusion of business wherein the goods of the parties are different but
the defendants product can reasonably (though mistakenly) be assumed to originate from the plaintiff, thus
deceiving the public into believing that there is some connection between the plaintiff and defendant which,
in fact, does not exist.[66]
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the trademarks are attached; [c] the likely effect on the
purchaser and [d] the registrants express or implied consent and other fair and equitable considerations.
Petitioners and respondents both use GALLO in the labels of their respective cigarette and wine
products. But, as held in the following cases, the use of an identical mark does not, by itself, lead to a legal
conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent, [67] we ordered the approval of Acoje Minings
application for registration of the trademark LOTUS for its soy sauce even though
Philippine Refining Company had prior registration and use of such identical mark for its
edible oil which, like soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, [68] we upheld the Patent
Directors registration of the same trademark CAMIA for Ng Sams ham under Class 47,
despite Philippine Refining Companys prior trademark registration and actual use of such
mark on its lard, butter, cooking oil (all of which belonged to Class 47), abrasive
detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun Liong, [69] we
dismissed Hickoks petition to cancel private respondents HICKOK trademark registration
 for its Marikina shoes as against petitioners earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals,[70] in a minute resolution, we
dismissed the petition for review for lack of merit and affirmed the Patent Offices
registration of the trademark SHELL used in the cigarettes manufactured by respondent
Fortune Tobacco Corporation, notwithstanding Shell Companys opposition as the prior
registrant of the same trademark for its gasoline and other petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,[71] we dismissed ESSOs complaint for
trademark infringement against United Cigarette Corporation and allowed the latter to use
the trademark ESSO for its cigarettes, the same trademark used by ESSO for its petroleum
products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,[72] we affirmed
the rulings of the Patent Office and the CA that NSR Rubber Corporation could use the
trademark CANON for its sandals (Class 25) despite Canon Kabushiki Kaishas prior
registration and use of the same trademark for its paints, chemical products, toner and
dyestuff (Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges on colorable
imitation[73] which has been defined as such similarity in form, content, words, sound, meaning, special
arrangement or general appearance of the trademark or tradename in their overall presentation or in their
essential and substantive and distinctive parts as would likely mislead or confuse persons in the ordinary
course of purchasing the genuine article.[74]
Jurisprudence has developed two tests in determining similarity and likelihood of confusion in
trademark resemblance:[75]
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals [76] and other
cases,[77] and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of Appeals[78] and its
preceding cases.[79]
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks
which might cause confusion or deception, and thus infringement. If the competing trademark contains the
main, essential or dominant features of another, and confusion or deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should
suggest an effort to imitate. The question is whether the use of the marks involved is likely to cause
confusion or mistake in the mind of the public or deceive purchasers.[80]
On the other hand, the Holistic Test requires that the entirety of the marks in question be considered
in resolving confusing similarity. Comparison of words is not the only determining factor. The trademarks
in their entirety as they appear in their respective labels or hang tags must also be considered in relation to
the goods to which they are attached. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels in order that he may draw his
conclusion whether one is confusingly similar to the other.[81]
In comparing the resemblance or colorable imitation of marks, various factors have been considered,
such as the dominant color, style, size, form, meaning of letters, words, designs and emblems used, the
likelihood of deception of the mark or name's tendency to confuse[82] and the commercial impression likely
to be conveyed by the trademarks if used in conjunction with the respective goods of the parties. [83]
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO
cigarette trademark is the device of a large rooster facing left, outlined in black against a gold background.
The roosters color is either green or red green for GALLO menthols and red for GALLO filters. Directly
below the large rooster device is the word GALLO. The rooster device is given prominence in the GALLO
cigarette packs in terms of size and location on the labels.[84]
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation
at all to the product but was chosen merely as a trademark due to the fondness for fighting cocks of the son
of petitioners president.Furthermore, petitioners adopted GALLO, the Spanish word for rooster, as a
cigarette trademark to appeal to one of their target markets, the sabungeros (cockfight aficionados).[85]
Also, as admitted by respondents themselves,[86] on the side of the GALLO cigarette packs are the
words MADE BY MIGHTY CORPORATION, thus clearly informing the public as to the identity of the
manufacturer of the cigarettes.
On the other hand, GALLO Winerys wine and brandy labels are diverse. In many of them, the labels
are embellished with sketches of buildings and trees, vineyards or a bunch of grapes while in a few, one or
two small roosters facing right or facing each other (atop the EJG crest, surrounded by leaves or ribbons),
with additional designs in green, red and yellow colors, appear as minor features thereof. [87] Directly below
or above these sketches is the entire printed name of the founder-owners, ERNEST & JULIO GALLO or
just their surname GALLO,[88] which appears in different fonts, sizes, styles and labels, unlike
petitioners uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winerys wines are printed the words VINTED AND BOTTLED
BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA.[89]
The many different features like color schemes, art works and other markings of both products
drown out the similarity between them the use of the word GALLO ― a family surname for the Gallo
Winerys wines and a Spanish word for rooster for petitioners cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition; but confusion of
business may arise between non-competing interests as well.[90]
Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6 bis of the
Paris Convention which proscribe trademark infringement not only of goods specified in the certificate of
registration but also of identical or similar goods, we have also uniformly recognized and applied the
modern concept of related goods.[91] Simply stated, when goods are so related that the public may be, or is
actually, deceived and misled that they come from the same maker or manufacturer, trademark
infringement occurs.[92]
Non-competing goods may be those which, though they are not in actual competition, are so related
to each other that it can reasonably be assumed that they originate from one manufacturer, in which case,
confusion of business can arise out of the use of similar marks. [93] They may also be those which, being
entirely unrelated, cannot be assumed to have a common source; hence, there is no confusion of business,
even though similar marks are used.[94]Thus, there is no trademark infringement if the public does not
expect the plaintiff to make or sell the same class of goods as those made or sold by the defendant.[95]
In resolving whether goods are related,[96] several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or
container [97]
(d) the nature and cost of the articles[98]
(e) the descriptive properties, physical attributes or essential characteristics with reference to their
form, composition, texture or quality
(f) the purpose of the goods[99]
(g) whether the article is bought for immediate consumption, [100] that is, day-to-day household
items[101]
(h) the fields of manufacture[102]
(i) the conditions under which the article is usually purchased[103] and
(j) the channels of trade through which the goods flow,[104] how they are distributed, marketed,
displayed and sold.[105]
 The wisdom of this approach is its recognition that each trademark infringement case presents its
own unique set of facts. No single factor is preeminent, nor can the presence or absence of one determine,
without analysis of the others, the outcome of an infringement suit. Rather, the court is required to sift the
evidence relevant to each of the criteria. This requires that the entire panoply of elements constituting the
relevant factual landscape be comprehensively examined. [106] It is a weighing and balancing process. With
reference to this ultimate question, and from a balancing of the determinations reached on all of the factors,
a conclusion is reached whether the parties have a right to the relief sought.[107]
A very important circumstance though is whether there exists a likelihood that an appreciable
number of ordinarily prudent purchasers will be misled, or simply confused, as to the source of the goods in
question.[108] The purchaser is not the completely unwary consumer but is the ordinarily intelligent buyer
considering the type of product involved.[109] He is accustomed to buy, and therefore to some extent familiar
with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of the
deception of some persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who knows nothing about the design which has
been counterfeited, and who must be indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase.[110]
Hence, in the adjudication of trademark infringement, we give due regard to the goods usual
purchasers character, attitude, habits, age, training and education. [111]
Applying these legal precepts to the present case, petitioners use of the GALLO cigarette trademark
is not likely to cause confusion or mistake, or to deceive the ordinarily intelligent buyer of either wines or
cigarettes or both as to the identity of the goods, their source and origin, or identity of the business of
petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to
the same class of goods. Respondents GALLO wines belong to Class 33 under Rule 84[a] Chapter III, Part
II of the Rules of Practice in Trademark Cases while petitioners GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the decisive factor in the resolution
of whether or not wines and cigarettes are related goods. Emphasis should be on the similarity of the
products involved and not on the arbitrary classification or general description of their properties or
characteristics. But the mere fact that one person has adopted and used a particular trademark for his goods
does not prevent the adoption and use of the same trademark by others on articles of a different
description. [112]
Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1)
they are related forms of vice, harmful when taken in excess, and used for pleasure and relaxation and (2)
they are grouped or classified in the same section of supermarkets and groceries.
We find these premises patently insufficient and too arbitrary to support the legal conclusion that
wines and cigarettes are related products within the contemplation of the Trademark Law and the Paris
Convention.
First, anything - not only wines and cigarettes ― can be used for pleasure and relaxation and can be
harmful when taken in excess. Indeed, it would be a grave abuse of discretion to treat wines and cigarettes
as similar or related products likely to cause confusion just because they are pleasure-giving, relaxing or
potentially harmful. Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated
products and the goods here involved, wines and cigarettes, have nothing whatsoever in common with
respect to their essential characteristics, quality, quantity, size, including the nature of their packages,
wrappers or containers.[113]
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods
are sold in one store under the same roof does not automatically mean that buyers are likely to be confused
as to the goods respective sources, connections or sponsorships. The fact that different products are
available in the same store is an insufficient standard, in and of itself, to warrant a finding of likelihood of
confusion.[114]
In this regard, we adopted the Director of Patents finding in Philippine Refining Co., Inc. vs. Ng Sam
and the Director of Patents:[115]
In his decision, the Director of Patents enumerated the factors that set respondents products apart from the
goods of petitioner. He opined and we quote:
I have taken into account such factors as probable purchaser attitude and habits, marketing activities, retail
outlets, and commercial impression likely to be conveyed by the trademarks if used in conjunction with the
respective goods of the parties, I believe that ham on one hand, and lard, butter, oil, and soap on the
other are products that would not move in the same manner through the same channels of trade.
They pertain to unrelated fields of manufacture, might be distributed and marketed under dissimilar
conditions, and are displayed separately even though they frequently may be sold through the same
retail food establishments. Opposers products are ordinary day-to-day household items whereas ham is
not necessarily so. Thus, the goods of the parties are not of a character which purchasers would likely
attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The particular goods of the parties
are so unrelated that consumers, would not, in any probability mistake one as the source of origin of the
product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing and are totally
unrelated products not likely to cause confusion vis--vis the goods or the business of the petitioners and
respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and
smoked. There is a whale of a difference between their descriptive properties, physical attributes or
essential characteristics like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized
by middle-to-high-income earners while GALLO cigarettes appeal only to simple folks like farmers,
fishermen, laborers and other low-income workers.[116] Indeed, the big price difference of these two
products is an important factor in proving that they are in fact unrelated and that they travel in different
channels of trade. There is a distinct price segmentation based on vastly different social classes of
purchasers.[117]
GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO
cigarettes are Philippine-made and petitioners neither claim nor pass off their goods as imported or
emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through ambulant and
sidewalk vendors, small local sari-sari stores and grocery stores in Philippine rural areas, mainly in
Misamis Oriental, Pangasinan, Bohol, and Cebu.[118] On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through Gallo Winerys exclusive contracts with a domestic entity,
which is currently Andresons. By respondents own testimonial evidence, GALLO wines are sold in hotels,
expensive bars and restaurants, and high-end grocery stores and supermarkets, not through sari-sari stores
or ambulant vendors.[119]
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip
Morris, Inc.[120] to support its finding that GALLO wines and GALLO cigarettes are related goods. The
courts a quo should have taken into consideration the subsequent case of IDV North America, Inc. and R &
A Bailey Co. Limited vs. S & M Brands, Inc.:[121]
IDV correctly acknowledges, however, that there is no per se rule that the use of the same mark on alcohol
and tobacco products always will result in a likelihood of confusion. Nonetheless, IDV relies heavily on the
decision in John Walker & Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla.
1954), affd, 222 F. 2d 460 (5th Cir. 1955), wherein the court enjoined the use of the mark JOHNNIE
WALKER on cigars because the fame of the plaintiffs mark for scotch whiskey and because the plaintiff
advertised its scotch whiskey on, or in connection with tobacco products. The court, in John Walker &
Sons, placed great significance on the finding that the infringers use was a deliberate attempt to
capitalize on the senior marks fame. Id. At 256.IDV also relies on Carling Brewing Co. v. Philip
Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the defendants use
of the mark BLACK LABEL for cigarettes because it was likely to cause confusion with the plaintiffs
well-known mark BLACK LABEL for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the principle that tobacco products
and alcohol products should be considered related only in cases involving special
circumstances. Schenley Distillers, Inc. v. General Cigar Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785
(1970). The presence of special circumstances has been found to exist where there is a finding of
unfair competition or where a famous or well-known mark is involved and there is a demonstrated
intent to capitalize on that mark. For example, in John Walker & Sons, the court was persuaded to find a
relationship between products, and hence a likelihood of confusion, because of the plaintiffs long use and
extensive advertising of its mark and placed great emphasis on the fact that the defendant used the
trademark Johnnie Walker with full knowledge of its fame and reputation and with the intention of taking
advantage thereof. John Walker & Sons, 124 F. Supp. At 256; see Mckesson & Robbins, Inc. v. P. Lorillard
Co., 1959 WL 5894, 120 U.S.P.Q. 306, 307 (1959) (holding that the decision in John Walker & Sons was
merely the law on the particular case based upon its own peculiar facts); see also Alfred Dunhill, 350 F.
Supp. At 1363 (defendants adoption of Dunhill mark was not innocent). However, in Schenley, the court
noted that the relation between tobacco and whiskey products is significant where a widely known arbitrary
mark has long been used for diversified products emanating from a single source and a newcomer seeks to
use the same mark on unrelated goods. Schenley, 427 F.2d. at 785. Significantly, in Schenley, the court
looked at the industry practice and the facts of the case in order to determine the nature and extent of the
relationship between the mark on the tobacco product and the mark on the alcohol product.
The record here establishes conclusively that IDV has never advertised BAILEYS liqueurs in conjunction
with tobacco or tobacco accessory products and that IDV has no intent to do so. And, unlike the defendant
in Dunhill, S & M Brands does not market bar accessories, or liqueur related products, with its
cigarettes. The advertising and promotional materials presented a trial in this action demonstrate a complete
lack of affiliation between the tobacco and liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by adopting the family
name Baileys as the mark for its cigarettes, to capitalize upon the fame of the BAILEYS mark for
liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will be discussed below, and as found
in Mckesson & Robbins, the survey evidence refutes the contention that cigarettes and alcoholic
beverages are so intimately associated in the public mind that they cannot under any circumstances
be sold under the same mark without causing confusion. See Mckesson & Robbins, 120 U.S.P.Q. at
308.
Taken as a whole, the evidence here demonstrates the absence of the special circumstances in which courts
have found a relationship between tobacco and alcohol products sufficient to tip the similarity of goods
analysis in favor of the protected mark and against the allegedly infringing mark. It is true that BAILEYS
liqueur, the worlds best selling liqueur and the second best selling in the United States, is a well-
known product. That fact alone, however, is insufficient to invoke the special circumstances
connection here where so much other evidence and so many other factors disprove a likelihood of
confusion. The similarity of products analysis, therefore, augers against finding that there is a
likelihood of confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in cases involving special
circumstances which exist only if a famous mark is involved and there is a demonstrated intent to capitalize
on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in the late 1980s and
the 1990s, that is, after Tobacco Industries use of the GALLO cigarette trademark in 1973 and petitioners
use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods,
a requisite element under both the Trademark Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines.
Respondents do not dispute the documentary evidence that aside from Gallo Winerys GALLO trademark
registration, the Bureau of Patents, Trademarks and Technology Transfer also issued on September 4, 1992
Certificate of Registration No. 53356 under the Principal Register approving Productos Alimenticios Gallo,
S.As April 19, 1990 application for GALLO trademark registration and use for its noodles, prepared food or
canned noodles, ready or canned sauces for noodles, semolina, wheat flour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species and
ice.[122]
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals
and NSR Rubber Corporation,[123] GALLO cannot be considered a well-known mark within the
contemplation and protection of the Paris Convention in this case since wines and cigarettes are not
identical or similar goods:
We agree with public respondents that the controlling doctrine with respect to the applicability of Article 8
of the Paris Convention is that established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203
SCRA 59 [1991]). As pointed out by the BPTTT:
Regarding the applicability of Article 8 of the Paris Convention, this Office believes that there is no
automatic protection afforded an entity whose tradename is alleged to have been infringed through
the use of that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No. 75420, 15 November
1991, the Honorable Supreme Court held that:
The Paris Convention for the Protection of Industrial Property does not automatically exclude all
countries of the world which have signed it from using a tradename which happens to be used in one
country. To illustrate if a taxicab or bus company in a town in the United Kingdom or India happens
to use the tradename Rapid Transportation, it does not necessarily follow that Rapid can no longer
be registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection of Intellectual Property
regarding well-known marks and possible application thereof in this case. Petitioner, as this office sees it, is
trying to seek refuge under its protective mantle, claiming that the subject mark is well known in this
country at the time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin, issued a memorandum
dated 25 October 1983 to the Director of Patents, a set of guidelines in the implementation of Article
6bis of the Treaty of Paris. These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or copyright or
anything else;
c) the mark must be for use in the same or similar kinds of goods; and
d) the person claiming must be the owner of the mark (The Parties Convention
Commentary on the Paris Convention. Article by Dr. Bogsch,
Director General of the World Intellectual Property Organization,
Geneva, Switzerland, 1985)
From the set of facts found in the records, it is ruled that the Petitioner failed to comply with the third
requirement of the said memorandum that is the mark must be for use in the same or similar kinds
of goods. The Petitioner is using the mark CANON for products belonging to class 2 (paints, chemical
products) while the Respondent is using the same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time the Respondent filed its
application for the same mark should fail. (Emphasis supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
All told, after applying all the tests provided by the governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable for trademark infringement, unfair competition or
damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court of Appeals in CA-G.R. CV No. 65175 and the November
26, 1998 decision and the June 24, 1999 order of the Regional Trial Court of Makati, Branch 57 in Civil
Case No. 93-850 are hereby REVERSED and SET ASIDE and the complaint against petitioners
DISMISSED.
Costs against respondents.
SO ORDERED.

Each trademark infringement case presents a unique problem which must be answered by weighing
the conflicting interests of the litigants.[124]
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of
trade, that is, retail trade. If respondents assertion is true, then both goods co-existed peacefully for a
considerable period of time. It took respondents almost 20 years to know about the existence of GALLO
cigarettes and sue petitioners for trademark infringement. Given, on one hand, the long period of time that
petitioners were engaged in the manufacture, marketing, distribution and sale of GALLO cigarettes and, on
the other, respondents delay in enforcing their rights (not to mention implied consent, acquiescence or
negligence) we hold that equity, justice and fairness require us to rule in favor of petitioners. The scales of
conscience and reason tip far more readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they
intended to capitalize on respondents goodwill in adopting the GALLO mark for their cigarettes which are
totally unrelated to respondents GALLO wines. Thus, we rule out trademark infringement on the part of
petitioners.
PETITIONERS ARE ALSO NOT LIABLE
FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person who employs deception or any other means
contrary to good faith by which he passes off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such goodwill, or who commits any acts
calculated to produce said result, is guilty of unfair competition. It includes the following acts:

(a) Any person, who in selling his goods shall give them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they
are contained, or the devices or words thereon, or in any other feature of their appearance, which would be
likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall
deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or
any agent of any vendor engaged in selling such goods with a like purpose;

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

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

The universal test question is whether the public is likely to be deceived. Nothing less than conduct
tending to pass off one mans goods or business as that of another constitutes unfair competition. Actual or
probable deception and confusion on the part of customers by reason of defendants practices must always
appear.[125] On this score, we find that petitioners never attempted to pass off their cigarettes as those of
respondents. There is no evidence of bad faith or fraud imputable to petitioners in using their GALLO
cigarette mark.
 G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, INC., petitioners,
vs. L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B.
DY, JESUS AYCARDO, ARACELI AYCARDO, and GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999 of the Court of 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 McDonald's Corporation ("McDonald's") is a corporation organized under the laws of Delaware,
United States. McDonald's operates, by itself or through its franchisees, a global chain of fast-food
restaurants. McDonald's4 owns a family of marks5 including the "Big Mac" mark for its "double-decker
hamburger sandwich."6McDonald's registered this trademark with the United States Trademark Registry on
16 October 1979.7 Based on this Home Registration, McDonald's applied for the registration of the same
mark in the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology
("PBPTT"), now the Intellectual Property Office ("IPO"). Pending approval of its application, McDonald's
introduced its "Big Mac" hamburger sandwiches in the Philippine market in September 1981. On 18 July
1985, the PBPTT allowed registration of the "Big Mac" mark in the Principal Register based on its Home
Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in items 8 and paraphernalia9 in its
restaurants, and in its outdoor and indoor signages. From 1982 to 1990, McDonald's spent P10.5 million in
advertisement for "Big Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic corporation, is McDonald's
Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a domestic corporation which operates
fast-food outlets and snack vans in Metro Manila and nearby provinces.12 Respondent corporation's menu
includes hamburger sandwiches and other food items.13 Respondents Francis B. Dy, Edna A. Dy, Rene B.
Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto ("private respondents") are the
incorporators, stockholders and directors of respondent corporation.14
On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak"
mark for its hamburger sandwiches. McDonald's opposed respondent corporation's application on the
ground that "Big Mak" was a colorable imitation of its registered "Big Mac" mark for the same food
products. McDonald's also informed respondent Francis Dy ("respondent Dy"), the chairman of the Board
of Directors of respondent corporation, of its exclusive right to the "Big Mac" mark and requested him
to desist from using the "Big Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990 sued respondents in the Regional
Trial Court of Makati, Branch 137 ("RTC"), for trademark infringement and unfair competition. In its
Order of 11 July 1990, the RTC issued a temporary restraining order ("TRO") against respondents
enjoining them from using the "Big Mak" mark in the operation of their business in the National Capital
Region.15 On 16 August 1990, the RTC issued a writ of preliminary injunction replacing the TRO.16
In their Answer, respondents admitted that they have been using the name "Big Mak Burger" for their fast-
food business. Respondents claimed, however, that McDonald's does not have an exclusive right to the "Big
Mac" mark or to any other similar mark. Respondents point out that the Isaiyas Group of Corporations
("Isaiyas Group") registered the same mark for hamburger sandwiches with the PBPTT on 31 March 1979.
One Rodolfo Topacio ("Topacio") similarly registered the same mark on 24 June 1983, prior
to McDonald's registration on 18 July 1985. Alternatively, respondents claimed that they are not liable for
trademark infringement or for unfair competition, as the "Big Mak" mark they sought to register does not
constitute a colorable imitation of the "Big Mac" mark. Respondents asserted that they did not fraudulently
pass off their hamburger sandwiches as those of petitioners' Big Mac hamburgers. 17 Respondents sought
damages in their counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's is not the exclusive owner of the "Big
Mac" mark. Petitioners asserted that while the Isaiyas Group and Topacio did register the "Big Mac" mark
ahead of McDonald's, the Isaiyas Group did so only in the Supplemental Register of the PBPTT and such
registration does not provide any protection. McDonald's disclosed that it had acquired Topacio's rights to
his registration in a Deed of Assignment dated 18 May 1981. 18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision") finding respondent corporation liable
for trademark infringement and unfair competition. However, the RTC dismissed the complaint against
private respondents and the counterclaim against petitioners for lack of merit and insufficiency of evidence.
The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for plaintiff McDonald's, and as
such, it is entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names "B[ig] M[ac]" and "B[ig] M[ak]" as appearing
in the respective signages, wrappers and containers of the food products of the parties. But
infringement goes beyond the physical features of the questioned name and the original name.
There are still other factors to be considered.
xxxx
Significantly, the contending parties are both in the business of fast-food chains and restaurants.
An average person who is hungry and wants to eat a hamburger sandwich may not be
discriminating enough to look for a McDonald's restaurant and buy a "B[ig] M[ac]" hamburger.
Once he sees a stall selling hamburger sandwich, in all likelihood, he will dip into his pocket
and order a "B[ig] M[ak]" hamburger sandwich. Plaintiff McDonald's fast-food chain
has attained wide popularity and acceptance by the consuming public so much so that its air-
conditioned food outlets and restaurants will perhaps not be mistaken by many to be the same as
defendant corporation's mobile snack vans located along busy streets or highways. But the thing
is that what is being sold by both contending parties is a food item – a hamburger sandwich
which is for immediate consumption, so that a buyer may easily be confused or deceived into
thinking that the "B[ig] M[ak]" hamburger sandwich he bought is a food-product of plaintiff
McDonald's, or a subsidiary or allied outlet thereof. Surely, defendant corporation has its own
secret ingredients to make its hamburger sandwiches as palatable and as tasty as the other brands
in the market, considering the keen competition among mushrooming hamburger stands and
 multinational fast-food chains and restaurants. Hence, the trademark "B[ig] M[ac]" has been
infringed by defendant corporation when it used the name "B[ig] M[ak]" in its signages,
wrappers, and containers in connection with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a trademark or tradename in
their signages, or in causing the name "B[ig] M[ak]" to be printed on the wrappers and
containers of their food products also constitute an act of unfair competition under Section 29 of
the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader and more inclusive than
the law concerning the infringement of trademark, which is of more limited range, but within its
narrower range recognizes a more exclusive right derived by the adoption and registration of the
trademark by the person whose goods or services are first associated therewith.
xxx Notwithstanding the distinction between an action for trademark infringement and an action
for unfair competition, however, the law extends substantially the same relief to the injured
party for both cases. (See Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to pass off on the public
the goods of one man as the goods of another. The choice of "B[ig] M[ak]" as tradename by
defendant corporation is not merely for sentimental reasons but was clearly made to take
advantage of the reputation, popularity and the established goodwill of plaintiff McDonald's.
For, as stated in Section 29, a person is guilty of unfair competition who in selling his
goods shall give them the general appearance, of goods of another manufacturer or dealer,
either as to the goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their appearance, which
would likely influence purchasers to believe that the goods offered are those of a manufacturer
or dealer other than the actual manufacturer or dealer. Thus, plaintiffs have established their
valid cause of action against the defendants for trademark infringement and unfair competition
and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's Corporation and
McGeorge Food Industries, Inc. and against defendant L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990] is made
permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual damages in
the amount ofP400,000.00, exemplary damages in the amount of P100,000.00, and attorney's
fees and expenses of litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B. Dy, Wiliam B. Dy,
Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well as all counter-claims, are dismissed
for lack of merit as well as for insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment ("Court of Appeals' Decision") reversing
the RTC Decision and ordering McDonald's to pay respondents P1,600,000 as actual and compensatory
damages and P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court that the use
of defendants-appellants of its corporate name – the whole "L.C. B[ig] M[ak] B[urger], I[nc]."
which appears on their food packages, signages and advertisements is an infringement of their
trademark "B[ig] M[ac]" which they use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonald's logo of umbrella "M" stamped
thereon, together with the printed mark in red bl[o]ck capital letters, the words being separated
by a single space. Specifically, plaintiffs-appellees argue that defendants-appellants' use of their
corporate name is a colorable imitation of their trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no colorable imitation exists. As the
definition dictates, it is not sufficient that a similarity exists in both names, but that more
importantly, the over-all presentation, or in their essential, substantive and distinctive parts is
such as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way the trademark "B[ig] M[ac]" is being used by
plaintiffs-appellees and corporate name L.C. Big Mak Burger, Inc. by defendants-appellants,
would readily reveal that no confusion could take place, or that the ordinary purchasers would
be misled by it. As pointed out by defendants-appellants, the plaintiffs-appellees' trademark is
used to designate only one product, a double decker sandwich sold in a Styrofoam box with the
"McDonalds" logo. On the other hand, what the defendants-appellants corporation is using is
not a trademark for its food product but a business or corporate name. They use the business
name "L.C. Big Mak Burger, Inc." in their restaurant business which serves diversified food
items such as siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants' corporate or business name appearing in the food
packages and signages are written in silhouette red-orange letters with the "b" and "m" in upper
case letters. Above the words "Big Mak" are the upper case letter "L.C.". Below the words "Big
Mak" are the words "Burger, Inc." spelled out in upper case letters. Furthermore, said corporate
or business name appearing in such food packages and signages is always accompanied by the
company mascot, a young chubby boy named Maky who wears a red T-shirt with the upper case
"m" appearing thereinand a blue lower garment. Finally, the defendants-appellants' food
packages are made of plastic material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears a vast difference in the
appearance of the product and the manner that the tradename "Big Mak" is being used and
presented to the public. As earlier noted, there are glaring dissimilarities between plaintiffs-
appellees' trademark and defendants-appellants' corporate name. Plaintiffs-appellees' product
carrying the trademark "B[ig] M[ac]" is a double decker sandwich (depicted in the tray mat
containing photographs of the various food products xxx sold in a Styrofoam box with the
"McDonald's" logo and trademark in red, bl[o]ck capital letters printed thereon xxx at a price
which is more expensive than the defendants-appellants' comparable food products. In order
to buy a "Big Mac", a customer needs to visit an air-conditioned "McDonald's" restaurant
usually located in a nearby commercial center, advertised and identified by its logo - the
umbrella "M", and its mascot – "Ronald McDonald". A typical McDonald's restaurant boasts of
a playground for kids, a second floor to accommodate additional customers, a drive-thru to
allow customers with cars to make orders without alighting from their vehicles, the interiors of
the building are well-lighted, distinctly decorated and painted with pastel colors xxx. In buying a
"B[ig] M[ac]", it is necessary to specify it by its trademark. Thus, a customer needs to look for a
"McDonald's" and enter it first before he can find a hamburger sandwich which carry the mark
"Big Mac". On the other hand,defendants-appellants sell their goods through snack vans xxxx
 Anent the allegation that defendants-appellants are guilty of unfair competition,
We likewise find the same untenable.
Unfair competition is defined as "the employment of deception or any other means contrary to
good faith by which a person shall pass off the goods manufactured by him or in which he deals,
or his business, or service, for those of another who has already established good will for his
similar good, business or services, or any acts calculated to produce the same result" (Sec. 29,
Rep. Act No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow that there was malice and
that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffs-appellees that
defendants-appellants deliberately tried to pass off the goods manufactured by them for those of
plaintiffs-appellees. The mere suspected similarity in the sound of the defendants-appellants'
corporate name with the plaintiffs-appellees' trademark is not sufficient evidence to conclude
unfair competition. Defendants-appellants explained that the name "M[ak]" in their corporate
name was derived from both the first names of the mother and father of defendant Francis Dy,
whose names are Maxima and Kimsoy. With this explanation, it is up to the plaintiffs-appellees
to prove bad faith on the part of defendants-appellants. It is a settled rule that the law always
presumes good faith such that any person who seeks to be awarded damages due to acts of
another has the burden of proving that the latter acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals' Decision but the appellate court denied their
motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS' CORPORATE
NAME "L.C. BIG MAK BURGER, INC." IS NOT A COLORABLE IMITATION OF THE
MCDONALD'S TRADEMARK "BIG MAC", SUCH COLORABLE IMITATION BEING
AN ELEMENT OF TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for their products and not
merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably and unquestionably similar
to petitioners' "Big Mac" trademark based on the dominancy test and the idem sonans
test resulting inexorably in confusion on the part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE INHERENT
SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE WORD MARK "BIG MAC"
AS AN INDICATION OF RESPONDENTS' INTENT TO DECEIVE OR DEFRAUD
FOR PURPOSES OF ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety of this petition as it allegedly raises
only questions of fact. On the merits, respondents contend that the Court of Appeals committed no
reversible error in finding them not liable for trademark infringement and unfair competition and in
ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for a petition for review under Rule
45.
2. On the merits, (a) whether respondents used the words "Big Mak" not only as part of the corporate name
"L.C. Big Mak Burger, Inc." but also as a trademark for their hamburger products, and (b) whether
respondent corporation is liable for trademark infringement and unfair competition. 23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a Petition for Review
A party intending to appeal from a judgment of the Court of Appeals may file with this Court a petition for
review under Section 1 of Rule 45 ("Section 1")24 raising only questions of law. A question of law exists
when the doubt or difference arises on what the law is on a certain state of facts. There is a question of fact
when the doubt or difference arises on the truth or falsity of the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court of Appeals' findings on respondent
corporation's non-liability for trademark infringement and unfair competition. Ordinarily, the Court can
deny due course to such a petition. In view, however, of the contradictory findings of fact of the RTC and
Court of Appeals, the Court opts to accept the petition, this being one of the recognized exceptions to
Section 1.26 We took a similar course of action in Asia Brewery, Inc. v. Court of Appeals27 which also
involved a suit for trademark infringement and unfair competition in which the trial court and the Court of
Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate name "L.C. Big Mak Burger,
Inc." appears in the packaging for respondents' hamburger products and not the words "Big Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for the issuance of a writ of preliminary
injunction shows that the plastic wrappings and plastic bags used by respondents for their hamburger
sandwiches bore the words "Big Mak." The other descriptive words "burger" and "100% pure beef" were
set in smaller type, along with the locations of branches. 28 Respondents' cash invoices simply refer to their
hamburger sandwiches as "Big Mak."29It 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 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
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"), the law applicable to this
al.,49 the Court distinguished these two types of confusion, thus:
case,32 defines trademark infringement as follows:

[Rudolf] Callman notes two types of confusion. The first is the confusion of goods "in which
Infringement, what constitutes. — Any person who [1] shall use, without the consent of the
event the ordinarily prudent purchaser would be induced to purchase one product in the belief
registrant, anyreproduction, counterfeit, copy or colorable imitation of any registered mark or
that he was purchasing the other." xxx The other is the confusion of business: "Here though the
trade-name in connection withthe sale, offering for sale, or advertising of any goods, business or
goods of the parties are different, the defendant's product is such as might reasonably be
services on or in connection with which such use is likely to cause confusion or mistake or to
assumed to originate with the plaintiff, and the public would then be deceived either into that
deceive purchasers or others as to the source or origin of such goods or services, or identity of
belief or into the belief that there is some connection between the plaintiff and defendant
such business; or [2] reproduce, counterfeit, copy, or colorably imitate any such mark or trade-
which, in fact, does not exist."
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 Under Act No. 666,50 the first trademark law, infringement was limited to confusion of goods only, when
registrant for any or all of the remedies herein provided.33 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
Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly used,
RA 166 deleted the requirement in question and expanded its scope to include such use of the mark or its
without petitioners' consent, a colorable imitation of the "Big Mac" mark in advertising and selling
colorable imitation that is likely to result in confusion on "the source or origin of such goods or services, or
respondents' hamburger sandwiches. This likely caused confusion in the mind of the purchasing public on
identity of such business."52 Thus, while there is confusion of goods when the products are competing,
the source of the hamburgers or the identity of the business.
confusion of business exists when the products are non-competing but related enough to produce confusion
of affiliation.53
To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiff's
mark; (2) the plaintiff's ownership of the mark; and (3) the use of the mark or its colorable imitation by
On Whether Confusion of Goods and
the alleged infringer results in "likelihood of confusion."34 Of these, it is the element of likelihood of
Confusion of Business are Applicable
confusion that is the gravamen of trademark infringement.35

Petitioners claim that respondents' use of the "Big Mak" mark on respondents' hamburgers results in
On the Validity of the "Big Mac"Mark
confusion of goods, particularly with respect to petitioners' hamburgers labeled "Big Mac." Thus,
and McDonald's Ownership of such Mark
petitioners alleged in their complaint:

A mark is valid if it is "distinctive" and thus not barred from registration under Section 4 36 of RA 166
1.15. Defendants have unduly prejudiced and clearly infringed upon the property rights of
("Section 4"). However, once registered, not only the mark's validity but also the registrant's ownership of
plaintiffs in the McDonald's Marks, particularly the mark "B[ig] M[ac]". Defendants'
the mark is prima facie presumed.37
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
Respondents contend that of the two words in the "Big Mac" mark, it is only the word "Mac" that is valid it is engaged in, are approved and sponsored by, or affiliated with, plaintiffs.54 (Emphasis
because the word "Big" is generic and descriptive (proscribed under Section 4[e]), and thus "incapable of supplied)
exclusive appropriation."38
Since respondents used the "Big Mak" mark on the same goods, i.e. hamburger sandwiches, that petitioners'
The contention has no merit. The "Big Mac" mark, which should be treated in its entirety and not dissected "Big Mac" mark is used, trademark infringement through confusion of goods is a proper issue in this case.
word for word,39 is neither generic nor descriptive. Generic marks are commonly used as the name or
description of a kind ofgoods,40 such as "Lite" for beer41 or "Chocolate Fudge" for chocolate soda
Petitioners also claim that respondents' use of the "Big Mak" mark in the sale of hamburgers, the same
drink.42 Descriptive marks, on the other hand, convey the characteristics, functions, qualities or ingredients
business that petitioners are engaged in, results in confusion of business. Petitioners alleged in their
of a product to one who has never seen it or does not know it exists, 43 such as "Arthriticare" for arthritis
complaint:
medication.44 On the contrary, "Big Mac" falls under theclass 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 1.10. For some period of time, and without the consent of plaintiff McDonald's nor its
licensee/franchisee, plaintiff McGeorge, and in clear violation of plaintiffs' exclusive right to
use and/or appropriate the McDonald's marks, defendant Big Mak Burger acting through
The Court also finds that petitioners have duly established McDonald's exclusive ownership of the "Big
individual defendants, has been operating "Big Mak Burger", a fast food restaurant business
Mac" mark. Although Topacio and the Isaiyas Group registered the "Big Mac" mark ahead of McDonald's,
dealing in the sale of hamburger and cheeseburger sandwiches, french fries and other food
Topacio, as petitioners disclosed, had already assigned his rights to McDonald's. The Isaiyas Group, on the
products, and has caused to be printed on the wrapper of defendant's food products and
other hand, registered its trademark only in the Supplemental Register. A mark which is not registered in
incorporated in its signages the name "Big Mak Burger", which is confusingly similar
the Principal Register, and thus not distinctive, has no real protection. 47 Indeed, we have held that
to and/or is a colorable imitation of the plaintiff McDonald's mark "B[ig] M[ac]",
registration in the Supplemental Register is not even a prima facie evidence of the validity of the registrant's
xxx. Defendant Big Mak Burger has thus unjustly created the impression that its business
exclusive right to use the mark on the goods specified in the certificate. 48
is approved and sponsored by, or affiliated with, plaintiffs.xxxx

On Types of Confusion
 2.2 As a consequence of the acts committed by defendants, which unduly prejudice and entirety of the marks as applied to the products, including the labels and packaging,
infringe upon the property rights of plaintiffs McDonald's and McGeorge as the real owner and in determining confusing similarity.
rightful proprietor, and the licensee/franchisee, respectively, of the McDonald's marks, and
which are likely to have caused confusion or deceived the public as to the true source,
The Court of Appeals, in finding that there is no likelihood of confusion that could arise in the use
sponsorship or affiliation of defendants' food products and restaurant business, plaintiffs
of respondents' "Big Mak" mark on hamburgers, relied on the holistic test. Thus, the Court of Appeals ruled
have suffered and continue to suffer actual damages in the form of injury to their business
that "it is not sufficientthat a similarity exists in both name(s), but that more importantly,
reputation and goodwill, and of the dilution of the distinctive quality of the McDonald's
the overall presentation, or in their essential, substantive and distinctive parts is such as would likely
marks, in particular, the mark "B[ig] M[ac]".55 (Emphasis supplied)
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
Respondents admit that their business includes selling hamburger sandwiches, the same food product that is not enough to consider their words and compare the spelling and pronunciation of the words.58
petitioners sell using the "Big Mac" mark. Thus, trademark infringement through confusion of business is
also a proper issue in this case.
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.
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
This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy test
likelihood of confusion of business remains, since the low-income group might be led to believe that the
considers the dominant features in the competing marks in determining whether they are confusingly
"Big Mak" hamburgers are the low-end hamburgers marketed by petitioners. After all, petitioners have the
similar. Under the dominancy test, courts give greater weight to the similarity of the appearance of the
exclusive right to use the "Big Mac" mark. On the other hand, respondents would benefit by associating
product arising from the adoption of the dominant features of the registered mark,
their low-end hamburgers, through the use of the "Big Mak" mark, with petitioners' high-end "Big Mac"
disregarding minor differences.59 Courts will consider more the aural and visual impressions created by the
hamburgers, leading to likelihood of confusion in the identity of business.
marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market
segments.
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,
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court ruled:
noodles and pizza. Respondents also point out that petitioners sell their Big Mac double-deckers in a
styrofoam box with the "McDonald's" logo and trademark in red, block letters at a price more expensive
than the hamburgers of respondents. In contrast, respondents sell their Big Mak hamburgers in plastic xxx It has been consistently held that the question of infringement of a trademark is to
wrappers and plastic bags. Respondents further point out that petitioners' restaurants are air-conditioned be determined by the test of dominancy. Similarity in size, form and color, while relevant, is not
buildings with drive-thru service, compared to respondents' mobile vans. 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
These and other factors respondents cite cannot negate the undisputed fact that respondents use their "Big
suggest an effort to imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F.,
Mak" mark on hamburgers, the same food product that petitioners' sell with the use of their registered mark
489, 495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue
"Big Mac." Whether a hamburger is single, double or triple-decker, and whether wrapped in plastic or
in cases of infringement of trademarks is whether the use of the marks involved would be likely
styrofoam, it remains the same hamburger food product. Even respondents' use of the "Big Mak" mark on
to cause confusion or mistakes in the mind of the public or deceive purchasers. (Auburn Rubber
non-hamburger food products cannot excuse their infringement of petitioners' registered mark, otherwise
Corporation vs. Honover Rubber Co., 107 F. 2d 588; xxx) (Emphasis supplied.)
registered marks will lose their protection under the law.

The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,61 Phil. Nut Industry, Inc. v.
The registered trademark owner may use his mark on the same or similar products, in different segments of
Standard Brands Inc.,62 Converse Rubber Corporation v. Universal Rubber Products, Inc.,63 and Asia
the market, and at different price levels depending on variations of the products for specific segments of the
Brewery, Inc. v. Court of Appeals.64 In the 2001 case of Societe Des Produits Nestlé, S.A. v. Court of
market. The Court has recognized that the registered trademark owner enjoys protection in product and
Appeals,65 the Court explicitly rejected the holistic test in this wise:
market areas that are the normal potential expansion of his business. Thus, the Court has declared:

[T]he totality or holistic test is contrary to the elementary postulate of the law on
Modern law recognizes that the protection to which the owner of a trademark is entitled is not
trademarks and unfair competition that confusing similarity is to be determined on the basis
limited to guarding his goods or business from actual market competition with identical or
of visual, aural, connotative comparisons and overall impressions engendered by the marks in
similar products of the parties, but extends to all cases in which the use by a junior appropriator
controversy as they are encountered in the realities of the marketplace. (Emphasis supplied)
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 The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property
activities of the infringer; or when it forestalls the normal potential expansion of his business (v. Code which defines infringement as the "colorable imitation of a registered mark xxx or a dominant
148 ALR, 77, 84; 52 Am. Jur. 576, 577).56 (Emphasis supplied) feature thereof."

On Whether Respondents' Use of the "Big Mak" Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in
Mark Results in Likelihood of Confusion 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"
In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the
when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus
holistic test.57 The dominancy test focuses on the similarity of the prevalent features of the competing
"Caloocan" is spelled "Kalookan."
trademarks that might cause confusion. In contrast, the holistic test requires the court to consider the
In short, aurally the two marks are the same, with the first word of both marks phonetically the same, and
the second word of both marks also phonetically the same. Visually, the two marks have both two words
and six letters, with the first word of both marks having the same letters and the second word having the
same first two letters. In spelling, considering the Filipino language, even the last letters of both marks are
the same.
Clearly, respondents have adopted in "Big Mak" not only the dominant but also almost all the features
of "Big Mac." Applied to the same food product of hamburgers, the two marks will likely result in
confusion in the public mind.
The Court has taken into account the aural effects of the words and letters contained in the marks
in determining the issue of confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia &
Co., et al.,66 the Court held:
The following random list of confusingly similar sounds in the matter of trademarks, culled
from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce our view that
"SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust" and "Gold
Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and
"Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon Amdur,
in his book "Trade-Mark Law and Practice", pp. 419-421, cities, as coming within the purview
of the idem sonans rule, "Yusea" and "U-C-A", "Steinway Pianos" and "Steinberg Pianos", and
"Seven-Up" and "Lemon-Up". In Co Tiong vs. Director of Patents, this Court unequivocally
said that "Celdura" and "Cordura" are confusingly similar in sound; this Court held in Sapolin
Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an infringement of the trademark
"Sapolin", as the sound of the two names is almost the same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater confusion, not only aurally but
also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their sound. When one hears a "Big
Mac" or "Big Mak" hamburger advertisement over the radio, one would not know whether the "Mac" or
"Mak" ends with a "c" or a "k."
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their advertisement expenses, has
built goodwill and reputation for such mark making it one of the easily recognizable marks in the market
today. This increases the likelihood that consumers will mistakenly associate petitioners' hamburgers and
business with those of respondents'.
Respondents' inability to explain sufficiently how and why they came to choose "Big Mak" for their
hamburger sandwiches indicates their intent to imitate petitioners' "Big Mac" mark. Contrary to the Court
of Appeals' finding, respondents' claim that their "Big Mak" mark was inspired by the first names of
respondent Dy's mother (Maxima) and father (Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at a more creative
choice for a corporate name by using the names of his parents, especially since he was allegedly
driven by sentimental reasons. For one, he could have put his father's name ahead of his
mother's, as is usually done in this patriarchal society, and derived letters from said names in
that order. Or, he could have taken an equal number of letters (i.e., two) from each name, as is
the more usual thing done. Surely, the more plausible reason behind Respondents' choice of the
word "M[ak]", especially when taken in conjunction with the word "B[ig]", was their intent to
take advantage of Petitioners' xxx "B[ig] M[ac]" trademark, with their allegedsentiment-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 shalldeceive 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 exculpate them from their unfair business conduct. As earlier stated, we cannot consider respondents'
trademark infringement. Trademark infringement is a form of unfair competition. 77 Trademark infringement evidence since petitioners' complaint was based on facts existing before and during the injunctive hearings.
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
Thus, there is actually no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak
infringement without unfair competition as when the infringer discloses on the labels containing the mark
Burger, Inc." and not those of petitioners who have the exclusive right to the "Big Mac" mark. This clearly
that he manufactures the goods, thus preventing the public from being deceived that the goods originate
shows respondents' intent to deceive the public. Had respondents' placed a notice on their plastic wrappers
from the trademark owner.78
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
To support their claim of unfair competition, petitioners allege that respondents fraudulently passed off competition.82 Respondents, however, did not give such notice. We hold that as found by the RTC,
their hamburgers as "Big Mac" hamburgers. Petitioners add that respondents' fraudulent intent can be respondent corporation is liable for unfair competition.
inferred from the similarity of the marks in question.79
The Remedies Available to Petitioners
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
Under Section 2383 ("Section 23") in relation to Section 29 of RA 166, a plaintiff who successfully
that they are buying that of his competitors.80 Thus, the defendant gives his goods the general appearance of
maintains trademark infringement and unfair competition claims is entitled to injunctive and monetary
the goods of his competitor with the intention of deceiving the public that the goods are those of his
reliefs. Here, the RTC did not err in issuing the injunctive writ of 16 August 1990 (made permanent in its
competitor.
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
The RTC described the respective marks and the goods of petitioners and respondents in this wise: corporation. Also, the amount of actual damages is a reasonable percentage (11.9%) of respondent
corporation's gross sales for three (1988-1989 and 1991) of the six years (1984-1990) respondents have
used the "Big Mak" mark.84
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its double decker hamburger
sandwich. The packaging material is a styrofoam box with the McDonald's logo and trademark
in red with block capital letters printed on it. All letters of the "B[ig] M[ac]" mark are also in red The RTC also did not err in awarding exemplary damages by way of correction for the public good 85 in
and block capital letters. On the other hand,defendants' "B[ig] M[ak]" script print is in orange view of the finding of unfair competition where intent to deceive the public is essential. The award of
with only the letter "B" and "M" being capitalized and the packaging material is plastic wrapper. attorney's fees and expenses of litigation is also in order.86
xxxx Further, plaintiffs' logo and mascot are the umbrella "M" and "Ronald
McDonald's", respectively, compared to the mascot of defendant Corporation which is a chubby
WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision dated 26 November 1999
boy called "Macky" displayed or printed between the words "Big" and "Mak."81 (Emphasis
of the Court of Appeals and its Resolution dated 11 July 2000 and REINSTATE the Decision dated 5
supplied)
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.
Respondents point to these dissimilarities as proof that they did not give their hamburgers the general
appearance of petitioners' "Big Mac" hamburgers.
SO ORDERED.

The dissimilarities in the packaging are minor compared to the stark similarities in the words that give
respondents' "Big Mak" hamburgers the general appearance of petitioners' "Big Mac" hamburgers. Section
29(a) expressly provides that the similarity in the general appearance of the goods may be in the "devices or
words" used on the wrappings. Respondents have applied on their plastic wrappers and bags almost
the same words that petitioners use on their styrofoam box. What attracts the attention of the buying public
are the words "Big Mak" which are almost the same, aurally and visually, as the words "Big Mac." The
dissimilarities in the material and other devices are insignificant compared to the glaring similarity in the
words used in the wrappings.

Section 29(a) also provides that the defendant gives "his goods the general appearance of goods of another
manufacturer." Respondents' goods are hamburgers which are also the goods of petitioners. If respondents
sold egg sandwiches only instead of hamburger sandwiches, their use of the "Big Mak" mark would not
give their goods the general appearance of petitioners' "Big Mac" hamburgers. In such case, there is only
trademark infringement but no unfair competition. However, since respondents chose to apply the "Big
Mak" mark on hamburgers, just like petitioner's use of the "Big Mac" mark on hamburgers, respondents
have obviously clothed their goods with the general appearance of petitioners' goods.

Moreover, there is no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak
Burger, Inc." Respondents introduced during the trial plastic wrappers and bags with the words "L.C. Big
Mak Burger, Inc." to inform the public of the name of the seller of the hamburgers. However, petitioners
introduced during the injunctive hearings plastic wrappers and bags with the "Big Mak" mark without the
name "L.C. Big Mak Burger, Inc." Respondents' belated presentation of plastic wrappers and bags bearing
the name of "L.C. Big Mak Burger, Inc." as the seller of the hamburgers is an after-thought designed to
 G.R. No. 166115 February 2, 2007
McDONALD’S CORPORATION, Petitioner,
vs. MACJOY FASTFOOD CORPORATION, Respondent.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court, herein petitioner McDonald’s
Corporation seeks the reversal and setting aside of the following issuances of the Court of Appeals (CA) in
CA-G.R. SP No. 57247, to wit:
1. Decision dated 29 July 20041 reversing an earlier decision of the Intellectual Property Office
(IPO) which rejected herein respondent MacJoy FastFood Corporation’s application for
registration of the trademark "MACJOY & DEVICE"; and
2. Resolution dated 12 November 20042 denying the petitioner’s motion for reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic corporation engaged in the sale
of fast food products in Cebu City, filed with the then Bureau of Patents, Trademarks and Technology
Transfer (BPTT), now the Intellectual Property Office (IPO), an application, thereat identified as
Application Serial No. 75274, for the registration of the trademark "MACJOY & DEVICE" for fried
chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under
classes 29 and 30 of the International Classification of Goods.
Petitioner McDonald’s Corporation, a corporation duly organized and existing under the laws of the State
of Delaware, USA, filed a verified Notice of Opposition3 against the respondent’s application claiming that
the trademark "MACJOY & DEVICE" so resembles its corporate logo, otherwise known as the Golden
Arches or "M" design, and its marks "McDonalds," McChicken," "MacFries," "BigMac," "McDo,"
"McSpaghetti," "McSnack," and "Mc," (hereinafter collectively known as the MCDONALD’S marks) such
that when used on identical or related goods, the trademark applied for would confuse or deceive
purchasers into believing that the goods originate from the same source or origin. Likewise, the petitioner
alleged that the respondent’s use and adoption in bad faith of the "MACJOY & DEVICE" mark would
falsely tend to suggest a connection or affiliation with petitioner’s restaurant services and food products,
thus, constituting a fraud upon the general public and further cause the dilution of the distinctiveness of
petitioner’s registered and internationally recognized MCDONALD’S marks to its prejudice and irreparable
damage. The application and the opposition thereto was docketed as Inter Partes Case No. 3861.
Respondent denied the aforementioned allegations of the petitioner and averred that it has used the mark
"MACJOY" for the past many years in good faith and has spent considerable sums of money for said
mark’s extensive promotion in tri-media, especially in Cebu City where it has been doing business long
before the petitioner opened its outlet thereat sometime in 1992; and that its use of said mark would not
confuse affiliation with the petitioner’s restaurant services and food products because of the differences in
the design and detail of the two (2) marks.
In a decision4 dated December 28, 1998, the IPO, ratiocinating that the predominance of the letter "M," and
the prefixes "Mac/Mc" in both the "MACJOY" and the "MCDONALDS" marks lead to the conclusion that
there is confusing similarity between them especially since both are used on almost the same products
falling under classes 29 and 30 of the International Classification of Goods, i.e., food and ingredients of
food, sustained the petitioner’s opposition and rejected the respondent’s application, viz:
WHEREFORE, the Opposition to the registration of the mark MACJOY & DEVICE for use in fried
chicken and chicken barbecue, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks
is, as it is hereby, SUSTAINED. Accordingly, Application Serial No. 75274 of the herein Respondent-
Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be sent to the Administrative, Financial and
Human Resources Development Bureau for appropriate action in accordance with this Decision, with a
copy to be furnished the Bureau of Trademarks for information and to update its record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the IPO denied the motion in its Order 5 of January
14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review with prayer for Preliminary
Injunction6 under Rule 43 of the Rules of Court, whereat its appellate recourse was docketed as CA-G.R.
SP No. 57247.
Finding no confusing similarity between the marks "MACJOY" and "MCDONALD’S," the CA, in its
herein assailed Decision7 dated July 29, 2004, reversed and set aside the appealed IPO decision and order,
thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING
ASIDE the Decision of the IPO dated 28 December 1998 and its Order dated 14 January 2000 and
ORDERING the IPO to give due course to petitioner’s Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless the glaring and drastic differences and
variations in style of the two trademarks and even decreed that these pronounced differences are
"miniscule" and considered them to have been "overshadowed by the appearance of the predominant
features" such as "M," "Mc," and "Mac" appearing in both MCDONALD’S and MACJOY marks. Instead
of taking into account these differences, the IPO unreasonably shrugged off these differences in the device,
letters and marks in the trademark sought to be registered. The IPO brushed aside and ignored the following
irrefutable facts and circumstances showing differences between the marks of MACJOY and
MCDONALD’S. They are, as averred by the petitioner [now respondent]:
1. The word "MacJoy" is written in round script while the word "McDonald’s" is written in
single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie and wings
sprouting on both sides, while the word "McDonald’s" comes with an arches "M" in gold colors,
and absolutely without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while "McDonald’s" is
written in red, yellow and black color combination;
4. The façade of the respective stores of the parties are entirely different. Exhibits 1 and 1-A,
show that [respondent’s] restaurant is set also in the same bold, brilliant and noticeable color
scheme as that of its wrappers, containers, cups, etc., while [petitioner’s] restaurant is in yellow
and red colors, and with the mascot of "Ronald McDonald" being prominently displayed
therein." (Words in brackets supplied.)
Petitioner promptly filed a motion for reconsideration. However, in its similarly challenged Resolution 8 of
November 12, 2004, the CA denied the motion, as it further held:
Whether a mark or label of a competitor resembles another is to be determined by an inspection of the
points of difference and resemblance as a whole, and not merely the points of resemblance. The articles and
trademarks employed and used by the [respondent] Macjoy Fastfood Corporation are so different and
distinct as to preclude any probability or likelihood of confusion or deception on the part of the public to
the injury of the trade or business of the [petitioner] McDonald’s Corporation. The "Macjoy & Device"
mark is dissimilar in color, design, spelling, size, concept and appearance to the McDonald’s marks.
(Words in brackets supplied.)
Hence, the petitioner’s present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT’S "MACJOY & DEVICE"
MARK IS NOT CONFUSINGLY SIMILAR TO PETITIONER’S "McDONALD’S MARKS." IT FAILED
TO CORRECTLY APPLY THE DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY APPLIED
BY THIS HONORABLE COURT IN DETERMINING THE EXISTENCE OF CONFUSING
SIMILARITY BETWEEN COMPETING MARKS.
A. The McDonald’s Marks belong to a well-known and established "family of marks"
distinguished by the use of the prefix "Mc" and/or "Mac" and the corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner’s McDonald’s
Marks and the Respondent’s "Macjoy & Device" mark. As such, the marks are confusingly
similar under the Dominancy Test.
C. Petitioner’s McDonald’s Marks are well-known and world-famous marks which must be
protected under the Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO DATED 28
DECEMBER 1998 AND ITS ORDER DATED 14 JANUARY 2000 WERE NOT BASED ON
SUBSTANTIAL EVIDENCE.
In its Comment,9 the respondent asserts that the petition should be dismissed outright for being procedurally
defective: first, because the person who signed the certification against forum shopping in behalf of the
petitioner was not specifically authorized to do so, and second, because the petition does not present a
reviewable issue as what it challenges are the factual findings of the CA. In any event, the respondent
insists that the CA committed no reversible error in finding no confusing similarity between the trademarks
in question.
The petition is impressed with merit.
Contrary to respondent’s claim, the petitioner’s Managing Counsel, Sheila Lehr, was specifically
authorized to sign on behalf of the petitioner the Verification and Certification 10 attached to the petition. As
can be gleaned from the petitioner’s Board of Director’s Resolution dated December 5, 2002, as embodied
in the Certificate of the Assistant Secretary dated December 21, 2004, 11 Sheila Lehr was one of those
authorized and empowered "to execute and deliver for and on behalf of [the petitioner] all documents as
may be required in connection with x x x the protection and maintenance of any foreign patents,
trademarks, trade-names, and copyrights owned now or hereafter by [the petitioner], including, but not
limited to, x x x documents required to institute opposition or cancellation proceedings against conflicting
trademarks, and to do such other acts and things and to execute such other documents as may be necessary
and appropriate to effect and carry out the intent of this resolution." Indeed, the afore-stated authority given
to Lehr necessarily includes the authority to execute and sign the mandatorily required certification of non-
forum shopping to support the instant petition for review which stemmed from the "opposition
proceedings" lodged by the petitioner before the IPO. Considering that the person who executed and signed
the certification against forum shopping has the authority to do so, the petition, therefore, is not
procedurally defective.
As regards the respondent’s argument that the petition raises only questions of fact which are not proper in
a petition for review, suffice it to say that the contradictory findings of the IPO and the CA constrain us to
give due course to the petition, this being one of the recognized exceptions to Section 1, Rule 45 of the
Rules of Court. True, this Court is not the proper venue to consider factual issues as it is not a trier of
facts.12 Nevertheless, when the factual findings of the appellate court are mistaken, absurd, speculative,
conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the
court of origin,13 as here, this Court will review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a "trademark" as any
distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or
dealt in by others.14
Under the same law, the registration of a trademark is subject to the provisions of Section 4 thereof,
paragraph (d) of which is pertinent to this case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-marks on the principal register. – There is
hereby established a register of trademarks, tradenames and service-marks which shall be known as the
principal register. The owner of the trade-mark, trade-name or service-mark used to distinguish his goods,
business or services of others shall have the right to register the same on the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in
the Philippines or a mark or trade-name previously used in the Philippines by another and not abandoned,
as to be likely, when applied to or used in connection with the goods, business or services of the applicant,
to cause confusion or mistake or to deceive purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity between the MCDONALD’S marks of
the petitioner and the respondent’s "MACJOY & DEVICE" trademark when applied to Classes 29 and 30
of the International Classification of Goods, i.e., food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has developed two tests, the
dominancy test and the holistic test.15 The dominancy test focuses on the similarity of the prevalent features
of the competing trademarks that might cause confusion or deception.16 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.17 Under the latter test, a comparison of the words is not the
only determinant factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that there was confusing similarity between the two
(2) trademarks in question as it took note of the appearance of the predominant features "M", "Mc" and/or
"Mac" in both the marks. In reversing the conclusion reached by the IPO, the CA, while seemingly
applying the dominancy test, in fact actually applied the holistic test. The appellate court ruled in this wise:
Applying the Dominancy test to the present case, the IPO should have taken into consideration the entirety
of the two marks instead of simply fixing its gaze on the single letter "M" or on the combinations "Mc" or
"Mac". A mere cursory look of the subject marks will reveal that, save for the letters "M" and "c", no other
similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted for the IPO to consider the prefix "Mac" as
the predominant feature and the rest of the designs in [respondent’s] mark as details. Taking into account
such paramount factors as color, designs, spelling, sound, concept, sizes and audio and visual effects, the
prefix "Mc" will appear to be the only similarity in the two completely different marks; and it is the prefix
"Mc" that would thus appear as the miniscule detail. When pitted against each other, the two marks reflect a
distinct and disparate visual impression that negates any possible confusing similarity in the mind of the
buying public. (Words in brackets supplied.)
Petitioner now vigorously points out that the dominancy test should be the one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no
set rules can be deduced because each case must be decided on its merits. 19 In such cases, even more than in
any other litigation, precedent must be studied in the light of the facts of the particular case.20 That is the
reason why in trademark cases, jurisprudential precedents should be applied only to a case if they are
specifically in point.21
While we agree with the CA’s detailed enumeration of differences between the two (2) competing
trademarks herein involved, we believe that the holistic test is not the one applicable in this case, the
dominancy test being the one more suitable. In recent cases with a similar factual milieu as here, the Court
has consistently used and applied the dominancy test in determining confusing similarity or likelihood of
confusion between competing trademarks.22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where the trademark "Big Mak" was
found to be confusingly similar with the "Big Mac" mark of the herein the petitioner, the Court explicitly
held:
This Court, xxx, has relied on the dominancy test rather than the holistic test. The dominancy test considers
the dominant features in the competing marks in determining whether they are confusingly similar. Under
the dominancy test, courts give greater weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark, disregarding minor differences. Courts
will consider more the aural and visual impressions created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets and market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying the dominancy test, concluded
that the use by the respondent therein of the word "MASTER" for its coffee product "FLAVOR MASTER"
was likely to cause confusion with therein petitioner’s coffee products’ "MASTER ROAST" and
"MASTER BLEND" and further ruled:
xxx, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on the basis of visual, aural, connotative
comparisons and overall impressions engendered by the marks in controversy as they are encountered in the
marketplace. The totality or holistic test only relies on visual comparisons between two trademarks whereas
the dominancy test relies not only on the visual but also on the aural and connotative comparisons and
overall impressions between the two trademarks.
Applying the dominancy test to the instant case, the Court finds that herein petitioner’s "MCDONALD’S"
and respondent’s "MACJOY" marks are confusingly similar with each other such that an ordinary
purchaser can conclude an association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as
dominant features. The first letter "M" in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by
the similar way in which they are depicted i.e. in an arch-like, capitalized and stylized manner.25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally catches the attention of
the consuming public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds,"
"MacFries," "McSpaghetti," "McDo," "Big Mac" and the rest of the MCDONALD’S marks which all use
the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the
respondent’s trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes
29 and 30 of the International Classification of Goods, namely, fried chicken, chicken barbeque, burgers,
fries, spaghetti, etc. Likewise, the petitioner’s trademark registration for the MCDONALD’S marks in the
Philippines covers goods which are similar if not identical to those covered by the respondent’s application.
Thus, we concur with the IPO’s findings that:
In the case at bar, the predominant features such as the "M," "Mc," and "Mac" appearing in both
McDonald’s marks and the MACJOY & DEVICE" easily attract the attention of would-be customers. Even
non-regular customers of their fastfood restaurants would readily notice the predominance of the "M"
design, "Mc/Mac" prefixes shown in both marks. Such that the common awareness or perception of
customers that the trademarks McDonalds mark and MACJOY & DEVICE are one and the same, or an
affiliate, or under the sponsorship of the other is not far-fetched.
The differences and variations in styles as the device depicting a head of chicken with cap and bowtie and
wings sprouting on both sides of the chicken head, the heart-shaped "M," and the stylistic letters in
"MACJOY & DEVICE;" in contrast to the arch-like "M" and the one-styled gothic letters in McDonald’s
marks are of no moment. These minuscule variations are overshadowed by the appearance of the
predominant features mentioned hereinabove.
Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in both marks, the inevitable
conclusion is there is confusing similarity between the trademarks Mc Donald’s marks and "MACJOY
AND DEVICE" especially considering the fact that both marks are being used on almost the same products
falling under Classes 29 and 30 of the International Classification of Goods i.e. Food and ingredients of
food.
With the existence of confusing similarity between the subject trademarks, the resulting issue to be resolved
is who, as between the parties, has the rightful claim of ownership over the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from registration under the Trademark Law.
However, once registered, not only the mark’s validity but also the registrant’s ownership thereof is prima
facie presumed.26
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision regarding the protection of
industrial property of foreign nationals in this country as embodied in the Paris Convention28 under which
the Philippines and the petitioner’s domicile, the United States, are adherent-members, the petitioner was
able to register its MCDONALD’S marks successively, i.e., "McDonald’s" in 04 October, 1971 29 ; the
corporate logo which is the "M" or the golden arches design and the "McDonald’s" with the "M" or golden
arches design both in 30 June 197730 ; and so on and so forth.31
On the other hand, it is not disputed that the respondent’s application for registration of its trademark
"MACJOY & DEVICE" was filed only on March 14, 1991 albeit the date of first use in the Philippines was
December 7, 1987.32
Hence, from the evidence on record, it is clear that the petitioner has duly established its ownership of the
mark/s.

Respondent’s contention that it was the first user of the mark in the Philippines having used "MACJOY &
DEVICE" on its restaurant business and food products since December, 1987 at Cebu City while the first
McDonald’s outlet of the petitioner thereat was opened only in 1992, is downright unmeritorious. For the
requirement of "actual use in commerce x x x in the Philippines" before one may register a trademark,
trade-name and service mark under the Trademark Law33 pertains to the territorial jurisdiction of the
Philippines and is not only confined to a certain region, province, city or barangay.

Likewise wanting in merit is the respondent’s claim that the petitioner cannot acquire ownership of the
word "Mac" because it is a personal name which may not be monopolized as a trademark as against others
of the same name or surname. As stated earlier, once a trademark has been registered, the validity of the
mark is prima facie presumed. In this case, the respondent failed to overcome such presumption. We agree
with the observations of the petitioner regarding the respondent’s explanation that the word "MACJOY" is
based on the name of its president’s niece, Scarlett Yu Carcell. In the words of the petitioner:

First of all, Respondent failed to present evidence to support the foregoing claim which, at best, is a mere
self-serving assertion. Secondly, it cannot be denied that there is absolutely no connection between the
name "Scarlett Yu Carcel" and "MacJoy" to merit the coinage of the latter word. Even assuming that the
word "MacJoy" was chosen as a term of endearment, fondness and affection for a certain Scarlett Yu
Carcel, allegedly the niece of Respondent’s president, as well as to supposedly bring good luck to
Respondent’s business, one cannot help but wonder why out of all the possible letters or combinations of
letters available to Respondent, its president had to choose and adopt a mark with the prefix "Mac" as the
dominant feature thereof. A more plausible explanation perhaps is that the niece of Respondent’s president
was fond of the food products and services of the Respondent, but that is beside the point." 34

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

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

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

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

No pronouncement as to costs.

SO ORDERED.
 G.R. No. 158589 June 27, 2006
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC
REUNIES, S.A., (now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs. FORTUNE TOBACCO CORPORATION, Respondent.
DECISION
GARCIA, J.:
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson &
Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal
and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig
City, Branch 166, in its Civil Case No. 47374, which dismissed the complaint for trademark
infringement and damages thereat commenced by the petitioners against respondent Fortune Tobacco
Corporation; and
2. Resolution dated May 30, 20032 denying petitioners’ motion for reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of
America, is, per Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine Patents Office
(PPO), the registered owner of the trademark "MARK VII" for cigarettes. Similarly, petitioner Benson & Hedges
(Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark "MARK TEN" for
cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as can be seen in Trademark Certificate
of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de Tabac
Reunies, S.A., is the assignee of the trademark "LARK," which was originally registered in 1964 by Ligget and
Myers Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company organized in
the Philippines, manufactures and sells cigarettes using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their
respective trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of Trademark
and Damages against respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional
Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that they are
foreign corporations not doing business in the Philippines and are suing on an isolated transaction. xxx they
averred that the countries in which they are domiciled grant xxx to corporate or juristic persons of the Philippines
the privilege to bring action for infringement, xxx without need of a license to do business in those countries.
[Petitioners] likewise manifested [being registered owners of the trademark "MARK VII" and "MARK TEN" for
cigarettes as evidenced by the corresponding certificates of registration and an applicant for the registration of the
trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the aforementioned trademarks in
their respective countries of origin and that, by virtue of the long and extensive usage of the same, these
trademarks have already gained international fame and acceptance. Imputing bad faith on the part of the
[respondent], petitioners claimed that the [respondent], without any previous consent from any of the [petitioners],
manufactured and sold cigarettes bearing the identical and/or confusingly similar trademark "MARK" xxx
Accordingly, they argued that [respondent’s] use of the trademark "MARK" in its cigarette products have caused
and is likely to cause confusion or mistake, or would deceive purchasers and the public in general into buying
these products under the impression and mistaken belief that they are buying [petitioners’] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual Property (Paris
Convention, for brevity), to which the Philippines is a signatory xxx, [petitioners] pointed out that upon the request
of an interested party, a country of the Union may prohibit the use of a trademark which constitutes a reproduction,
imitation, or translation of a mark already belonging to a person entitled to the benefits of the said Convention.
They likewise argued that, in accordance with Section 21-A in relation to Section 23 of Republic Act 166, as
amended, they are entitled to relief in the form of damages xxx [and] the issuance of a writ of preliminary
injunction which should be made permanent to enjoin perpetually the [respondent] from violating [petitioners’]
right to the exclusive use of their aforementioned trademarks.
[Respondent] filed its Answer xxx denying [petitioners’] material allegations and xxx averred [among other things]
xxx that "MARK" is a common word, which cannot particularly identify a product to be the product of the
[petitioners] xxx
xxx xxx xxx.
lawphil.net
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the [petitioners’]
prayer for the issuance of a writ of preliminary injunction was negatively resolved by the court in an Order xxx
dated March 28, 1973. [The incidental issue of the propriety of an injunction would eventually be elevated to the
CA and would finally be resolved by the Supreme Court in its Decision dated July 16, 1993 in G.R. No. 91332].
xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated November 3, 1999
dismissing the complaint and counterclaim after making a finding that the [respondent] did not commit trademark
infringement against the [petitioners]. Resolving first the issue of whether or not [petitioners] have capacity to
institute the instant action, the trial court opined that [petitioners’] failure to present evidence to support their
allegation that their respective countries indeed grant Philippine corporations reciprocal or similar privileges by
law xxx justifies the dismissal of the complaint xxx. It added that the testimonies of [petitioners’] witnesses xxx
essentially declared that [petitioners] are in fact doing business in the Philippines, but [petitioners] failed to
establish that they are doing so in accordance with the legal requirement of first securing a license. Hence, the
court declared that [petitioners] are barred from maintaining any action in Philippine courts pursuant to Section
133 of the Corporation Code.
The issue of whether or not there was infringement of the [petitioners’] trademarks by the [respondent] was
likewise answered xxx in the negative. It expounded that "in order for a name, symbol or device to constitute a
trademark, it must, either by itself or by association, point distinctly to the origin or ownership of the article to
which it is applied and be of such nature as to permit an exclusive appropriation by one person". Applying such
principle to the instant case, the trial court was of the opinion that the words "MARK", "TEN", "LARK" and the
Roman Numerals "VII", either alone or in combination of each other do not by themselves or by association point
distinctly to the origin or ownership of the cigarettes to which they refer, such that the buying public could not be
deceived into believing that [respondent’s] "MARK" cigarettes originated either from the USA, Canada, or
Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial court stated
that the general rule is that an infringement exists if the resemblance is so close that it deceives or is likely to
deceive a customer exercising ordinary caution in his dealings and induces him to purchase the goods of one
manufacturer in the belief that they are those of another. xxx. The trial court ruled that the [petitioners] failed to
pass these tests as it neither presented witnesses or purchasers attesting that they have bought [respondent’s]
product believing that they bought [petitioners’] "MARK VII", "MARK TEN" or "LARK", and have also failed to
introduce in evidence a specific magazine or periodical circulated locally, which promotes and popularizes their
products in the Philippines. It, moreover, elucidated that the words consisting of the trademarks allegedly infringed
by [respondent] failed to show that they have acquired a secondary meaning as to identify them as [petitioners’]
products. Hence, the court ruled that the [petitioners] cannot avail themselves of the doctrine of secondary
meaning.
As to the issue of damages, the trial court deemed it just not to award any to either party stating that, since the
[petitioners] filed the action in the belief that they were aggrieved by what they perceived to be an infringement of
their trademark, no wrongful act or omission can be attributed to them. xxx.3 (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has committed trademark
infringement, petitioners went on appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV
No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter of their legal
capacity to sue in this country for trademark infringement, nevertheless affirmed the trial court’s decision on the
underlying issue of respondent’s liability for infringement as it found that:
xxx the appellants’ [petitioners’] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not qualify as
well-known marks entitled to protection even without the benefit of actual use in the local market and that the
similarities in the trademarks in question are insufficient as to cause deception or confusion tantamount to
infringement. Consequently, as regards the third issue, there is likewise no basis for the award of damages prayed
for by the appellants herein.4 (Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally challenged Resolution of May
30, 2003, petitioners are now with this Court via this petition for review essentially raising the following issues: (1)
whether or not petitioners, as Philippine registrants of trademarks, are entitled to enforce trademark rights in this
country; and (2) whether or not respondent has committed trademark infringement against petitioners by its use of
the mark "MARK" for its cigarettes, hence liable for damages.
In its Comment,5 respondent, aside from asserting the correctness of the CA’s finding on its liability for trademark
infringement and damages, also puts in issue the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises both questions of
fact and law contrary to the prescription against raising factual questions in a petition for review on certiorari filed
before the Court. A question of law exists when the doubt or difference arises as to what the law is on a certain
state of facts; there is a question of fact when the doubt or difference arises as to the truth or falsity of alleged
facts.6
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts.7 Unless the factual
findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion,
or contrary to the findings culled by the court of origin,8 we will not disturb them.
It is petitioners’ posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn therefrom by the
CA is correct is one of law.9 But, even if we consider and accept as pure questions of law the issues raised in this
petition, still, the Court is not inclined to disturb the conclusions reached by the appellate court, the established
rule being that all doubts shall be resolved in favor of the correctness of such conclusions. 10
Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in accordance with
law and established jurisprudence in arriving at its assailed decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted
and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured,
sold, or dealt in by others.11 Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter observed
in Mishawaka Mfg. Co. v. Kresge Co.:12
The protection of trademarks is the law’s recognition of the psychological function of symbols. If it is true that we
live by symbols, it is no less true that we purchase goods by them. A trade-mark is a merchandising short-cut
which induces a purchaser to select what he wants, or what he has been led to believe what he wants. The owner of
a mark exploits this human propensity by making every effort to impregnate the atmosphere of the market with the
drawing power of a congenial symbol. Whatever the means employed, the aim is the same - to convey through the
mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is
attained, the trade-mark owner has something of value. If another poaches upon the commercial magnetism of the
symbol he has created, the owner can obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce trademark rights in
this country, specifically, the right to sue for trademark infringement in Philippine courts and be accorded
protection against unauthorized use of their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate nationals of
member-countries of the Paris Union, they can sue before Philippine courts for infringement of trademarks, or for
unfair competition, without need of obtaining registration or a license to do business in the Philippines, and
without necessity of actually doing business in the Philippines. To petitioners, these grievance right and
mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No. 166, as amended, or the Trademark
Law, but also by Article 2 of the Paris Convention for the Protection of Industrial Property, otherwise known as
the Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines as evidenced by the
certificates of registration of their trademarks. The marks "MARK TEN" and "LARK" were registered on the basis
of actual use in accordance with Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing for a 2-month
pre-registration use in local commerce and trade while the registration of "MARK VII" was on the basis of
registration in the foreign country of origin pursuant to Section 37 of the same law wherein it is explicitly provided
that prior use in commerce need not be alleged.15
Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that
cigarettes bearing their trademarks are not available and sold locally. Citing Converse Rubber Corporation v.
Universal Rubber Products, Inc.,16 petitioners state that such availability and sale may be effected through the acts
of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks
in the country in view of the Philippines’ adherence to the Trade Related Aspects of Intellectual Property Rights or
the TRIPS Agreement and the enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the "IP
Code"), both of which provide that the fame of a trademark may be acquired through promotion or advertising
with no explicit requirement of actual use in local trade or commerce.
Before discussing petitioners’ claimed entitlement to enforce trademark rights in the Philippines, it must be
emphasized that their standing to sue in Philippine courts had been recognized, and rightly so, by the CA. It ought
to be pointed out, however, that the appellate court qualified its holding with a statement, following G.R. No.
91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune Tobacco Corporation, 17 that such
right to sue does not necessarily mean protection of their registered marks in the absence of actual use in the
Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of
their trademarks in the Philippines.
As we ruled in G.R. No. 91332,18 supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages denied non-
registrants or ordinary users, like respondent. But while petitioners enjoy the statutory presumptions arising from
such registration,19 i.e., as to the validity of the registration, ownership and the exclusive right to use the registered
marks, they may not successfully sue on the basis alone of their respective certificates of registration of
trademarks. For, petitioners are still foreign corporations. As such, they ought, as a condition to availment of the
rights and privileges vis-à-vis their trademarks in this country, to show proof that, on top of Philippine registration,
their country grants substantially similar rights and privileges to Filipino citizens pursuant to Section 21-A20 of
R.A. No. 166.
In Leviton Industries v. Salvador,21 the Court further held that the aforementioned reciprocity requirement is a
condition sine qua non to filing a suit by a foreign corporation which, unless alleged in the complaint, would
justify dismissal thereof, a mere allegation that the suit is being pursued under Section 21-A of R.A. No. 166 not
being sufficient. In a subsequent case,22 however, the Court held that where the complainant is a national of a Paris
Convention- adhering country, its allegation that it is suing under said Section 21-A would suffice, because the
reciprocal agreement between the two countries is embodied and supplied by the Paris Convention which, being
considered part of Philippine municipal laws, can be taken judicial notice of in infringement suits.23
As well, the fact that their respective home countries, namely, the United States, Switzerland and Canada, are,
together with the Philippines, members of the Paris Union does not automatically entitle petitioners to the
protection of their trademarks in this country absent actual use of the marks in local commerce and trade.
True, the Philippines’ adherence to the Paris Convention24 effectively obligates the country to honor and enforce
its provisions25 as regards the protection of industrial property of foreign nationals in this country. However, any
protection accorded has to be made subject to the limitations of Philippine laws. 26 Hence, despite Article 2 of the
Paris Convention which substantially provides that (1) nationals of member-countries shall have in this country
rights specially provided by the Convention as are consistent with Philippine laws, and enjoy the privileges that
Philippine laws now grant or may hereafter grant to its nationals, and (2) while no domicile requirement in the
country where protection is claimed shall be required of persons entitled to the benefits of the Union for the
enjoyment of any industrial property rights,27 foreign nationals must still observe and comply with the conditions
imposed by Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 2 28 and 2-A29 thereof, mandates actual use of the
marks and/or emblems in local commerce and trade before they may be registered and ownership thereof acquired,
the petitioners cannot, therefore, dispense with the element of actual use. Their being nationals of member-
countries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its rulings in Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate
Court,32 and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation 33 on the importance of actual
commercial use of a trademark in the Philippines notwithstanding the Paris Convention:
The provisions of the 1965 Paris Convention … relied upon by private respondent and Sec. 21-A of the Trademark
Law were sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc., et. al. vs. Court of
Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the requirements of
actual use in the Philippines must subordinate an international agreement inasmuch as the apparent clash is being
decided by a municipal tribunal. Xxx. Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in the municipal sphere.
Under the doctrine of incorporation as applied in most countries, rules of International Law are given a standing
equal, not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement … but the question of
whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend
on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines
files a complaint for infringement, the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not
necessarily be entitled to protection due to absence of actual use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual
use of such trademark in local commerce. As it were, registration does not confer upon the registrant an absolute
right to the registered mark. The certificate of registration merely constitutes prima facie evidence that the
registrant is the owner of the registered mark. Evidence of non-usage of the mark rebuts the presumption of
trademark ownership,34 as what happened here when petitioners no less admitted not doing business in this
country.35
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an
absolute right or exclusive ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd.
v. Development Group of Companies, Inc.36 trademark is a creation of use and, therefore, actual use is a pre-
requisite to exclusive ownership; registration is only an administrative confirmation of the existence of the right of
ownership of the mark, but does not perfect such right; actual use thereof is the perfecting ingredient. 37
Petitioners’ reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast in a different
factual milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so
engaged in, business in the Philippines, may actually earn reputation or goodwill for its goods in the country. But
unlike in the instant case, evidence of actual sales of Converse rubber shoes, such as sales invoices, receipts and
the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein
having been filed in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however,
took effect only on January 1, 1998 without a provision as to its retroactivity. 39 In the same vein, the TRIPS
Agreement was inexistent when the suit for infringement was filed, the Philippines having adhered thereto only on
December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by
actual use thereof in the country accords the registrant only the standing to sue for infringement in Philippine
courts. Entitlement to protection of such trademark in the country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the
sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is
likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy of color ably imitate any such mark or
tradename and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business, or
services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondent’s mark "MARK" for cigarettes is
confusingly or deceptively similar with their duly registered "MARK VII," "MARK TEN" and "LARK" marks
likewise for cigarettes. To them, the word "MARK" would likely cause confusion in the trade, or deceive
purchasers, particularly as to the source or origin of respondent’s cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement.40 But likelihood of confusion is a
relative concept, the particular, and sometimes peculiar, circumstances of each case being determinative of its
existence. Thus, in trademark infringement cases, more than in other kinds of litigation, precedents must be
evaluated in the light of each particular case.41
In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test
and the holistic test.42 The dominancy test43 sets sight on the similarity of the prevalent features of the competing
trademarks that might cause confusion and deception, thus constitutes infringement. Under this norm, the question
at issue turns on whether the use of the marks involved would be likely to cause confusion or mistake in the mind
of the public or deceive purchasers.44
In contrast, the holistic test45 entails a consideration of the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the likelihood of
confusion resulting in infringement arising from the respondent’s use of the trademark "MARK" for its particular
cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they appear
on the products,46 the striking dissimilarities are significant enough to warn any purchaser that one is different
from the other. Indeed, although the perceived offending word "MARK" is itself prominent in petitioners’
trademarks "MARK VII" and "MARK TEN," the entire marking system should be considered as a whole and not
dissected, because a discerning eye would focus not only on the predominant word but also on the other features
appearing in the labels. Only then would such discerning observer draw his conclusion whether one mark would be
confusingly similar to the other and whether or not sufficient differences existed between the marks. 47
This said, the CA then, in finding that respondent’s goods cannot be mistaken as any of the three cigarette brands
of the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a trademark
serves as a tool to point out distinctly the origin or ownership of the goods to which it is affixed, 48 the likelihood of
confusion tantamount to infringement appears to be farfetched. The reason for the origin and/or ownership angle is
that unless the words or devices do so point out the origin or ownership, the person who first adopted them cannot
be injured by any appropriation or imitation of them by others, nor can the public be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral "VII," does
not point to the origin or ownership of the cigarettes to which they apply, the local buying public could not
possibly be confused or deceived that respondent’s "MARK" is the product of petitioners and/or originated from
the U.S.A., Canada or Switzerland. And lest it be overlooked, no actual commercial use of petitioners’ marks in
local commerce was proven. There can thus be no occasion for the public in this country, unfamiliar in the first
place with petitioners’ marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable
circumstances in determining likelihood of confusion. Del Monte Corp. v. CA50 dealt with another, where we
instructed to give due regard to the "ordinary purchaser," thus:
The question is not whether the two articles are distinguishable by their label when set side by side but whether the
general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard,
is such as to likely result in his confounding it with the original. As observed in several cases, the general
impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and giving the
attention such purchasers usually give in buying that class of goods is the touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary customer" but to the
"ordinarily intelligent buyer" considering the type of product involved.51
It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by those who
are already predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be all too familiar with
his brand and discriminating as well. We, thus, concur with the CA when it held, citing a definition found in Dy
Buncio v. Tan Tiao Bok,52 that the "ordinary purchaser" in this case means "one accustomed to buy, and therefore
to some extent familiar with, the goods in question."
Pressing on with their contention respecting the commission of trademark infringement, petitioners finally point to
Section 22 of R.A. No. 166, as amended. As argued, actual use of trademarks in local commerce is, under said
section, not a requisite before an aggrieved trademark owner can restrain the use of his trademark upon goods
manufactured or dealt in by another, it being sufficient that he had registered the trademark or trade-name with the
IP Office. In fine, petitioners submit that respondent is liable for infringement, having manufactured and sold
cigarettes with the trademark "MARK" which, as it were, are identical and/or confusingly similar with their duly
registered trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following constitute the elements of
trademark infringement in accordance not only with Section 22 of R.A. No. 166, as amended, but also Sections 2,
2-A, 9-A54and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register of
the Philippine Patent Office,
(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of such
business; or such trademark is reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such
goods, business or services as to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.lawphil.net
As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN" and
"LARK" for cigarettes in the Philippines, prior actual commercial use thereof had not been proven. In fact,
petitioners’ judicial admission of not doing business in this country effectively belies any pretension to the
contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known
and/or have acquired goodwill in the Philippines so as to be entitled to protection even without actual use in this
country in accordance with Article 6bis55 of the Paris Convention. As correctly found by the CA, affirming that of
the trial court:
xxx the records are bereft of evidence to establish that the appellants’ [petitioners’] products are indeed well-
known in the Philippines, either through actual sale of the product or through different forms of advertising. This
finding is supported by the fact that appellants admit in their Complaint that they are not doing business in the
Philippines, hence, admitting that their products are not being sold in the local market. We likewise see no cogent
reason to disturb the trial court’s finding that the appellants failed to establish that their products are widely known
by local purchasers as "(n)o specific magazine or periodical published in the Philippines, or in other countries but
circulated locally" have been presented by the appellants during trial. The appellants also were not able to show the
length of time or the extent of the promotion or advertisement made to popularize their products in the
Philippines.56
Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and
appellate courts having peremptorily found allegations of infringement on the part of respondent to be without
basis. As we said time and time again, factual determinations of the trial court, concurred in by the CA, are final
and binding on this Court.57
For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to
respondent’s use of its mark and for petitioners’ failure to demonstrate confusing similarity between said
trademarks, the dismissal of their basic complaint for infringement and the concomitant plea for damages must be
affirmed. The law, the surrounding circumstances and the equities of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of
Appeals are AFFIRMED.
Costs against the petitioners.
SO ORDERED.
 G.R. No. 170891 November 24, 2009
MANUEL C. ESPIRITU, JR., AUDIE LLONA, FREIDA F. ESPIRITU, CARLO F. ESPIRITU, RAFAEL F.
ESPIRITU, ROLANDO M. MIRABUNA, HERMILYN A. MIRABUNA, KIM ROLAND A. MIRABUNA, KAYE
ANN A. MIRABUNA, KEN RYAN A. MIRABUNA, JUANITO P. DE CASTRO, GERONIMA A. ALMONITE and
MANUEL C. DEE, who are the officers and directors of BICOL GAS REFILLING PLANT
CORPORATION, Petitioners,
vs. PETRON CORPORATION and CARMEN J. DOLOIRAS, doing business under the name "KRISTINA
PATRICIA ENTERPRISES," Respondents.
DECISION
ABAD, J.:
This case is about the offense or offenses that arise from the reloading of the liquefied petroleum gas cylinder container of
one brand with the liquefied petroleum gas of another brand.
The Facts and the Case
Respondent Petron Corporation (Petron) sold and distributed liquefied petroleum gas (LPG) in cylinder tanks that carried
its trademark "Gasul."1 Respondent Carmen J. Doloiras owned and operated Kristina Patricia Enterprises (KPE), the
exclusive distributor of Gasul LPGs in the whole of Sorsogon. 2 Jose Nelson Doloiras (Jose) served as KPE’s manager.
Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and distributing LPGs in Sorsogon
but theirs carried the trademark "Bicol Savers Gas." Petitioner Audie Llona managed Bicol Gas.
In the course of trade and competition, any given distributor of LPGs at times acquired possession of LPG cylinder tanks
belonging to other distributors operating in the same area. They called these "captured cylinders." According to Jose,
KPE’s manager, in April 2001 Bicol Gas agreed with KPE for the swapping of "captured cylinders" since one distributor
could not refill captured cylinders with its own brand of LPG. At one time, in the course of implementing this arrangement,
KPE’s Jose visited the Bicol Gas refilling plant. While there, he noticed several Gasul tanks in Bicol Gas’ possession. He
requested a swap but Audie Llona of Bicol Gas replied that he first needed to ask the permission of the Bicol Gas owners.
That permission was given and they had a swap involving around 30 Gasul tanks held by Bicol Gas in exchange for
assorted tanks held by KPE.
KPE’s Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard. He offered to make a swap for
these but Llona declined, saying the Bicol Gas owners wanted to send those tanks to Batangas. Later Bicol Gas told Jose
that it had no more Gasul tanks left in its possession. Jose observed on almost a daily basis, however, that Bicol Gas’ trucks
which plied the streets of the province carried a load of Gasul tanks. He noted that KPE’s volume of sales dropped
significantly from June to July 2001.
On August 4, 2001 KPE’s Jose saw a particular Bicol Gas truck on the Maharlika Highway. While the truck carried mostly
Bicol Savers LPG tanks, it had on it one unsealed 50-kg Gasul tank and one 50-kg Shellane tank. Jose followed the truck
and when it stopped at a store, he asked the driver, Jun Leorena, and the Bicol Gas sales representative, Jerome Misal,
about the Gasul tank in their truck. They said it was empty but, when Jose turned open its valve, he noted that it was not.
Misal and Leorena then admitted that the Gasul and Shellane tanks on their truck belonged to a customer who had them
filled up by Bicol Gas. Misal then mentioned that his manager was a certain Rolly Mirabena.
Because of the above incident, KPE filed a complaint3 for violations of Republic Act (R.A.) 623 (illegally filling up
registered cylinder tanks), as amended, and Sections 155 (infringement of trade marks) and 169.1 (unfair competition) of
the Intellectual Property Code (R.A. 8293). The complaint charged the following: Jerome Misal, Jun Leorena, Rolly
Mirabena, Audie Llona, and several John and Jane Does, described as the directors, officers, and stockholders of Bicol
Gas. These directors, officers, and stockholders were eventually identified during the preliminary investigation.
Subsequently, the provincial prosecutor ruled that there was probable cause only for violation of R.A. 623 (unlawfully
filling up registered tanks) and that only the four Bicol Gas employees, Mirabena, Misal, Leorena, and petitioner Llona,
could be charged. The charge against the other petitioners who were the stockholders and directors of the company was
dismissed.
Dissatisfied, Petron and KPE filed a petition for review with the Office of the Regional State Prosecutor, Region V, which
initially denied the petition but partially granted it on motion for reconsideration. The Office of the Regional State
Prosecutor ordered the filing of additional informations against the four employees of Bicol Gas for unfair competition. It
ruled, however, that no case for trademark infringement was present. The Secretary of Justice denied the appeal of Petron
and KPE and their motion for reconsideration.
Undaunted, Petron and KPE filed a special civil action for certiorari with the Court of Appeals 4 but the Bicol Gas
employees and stockholders concerned opposed it, assailing the inadequacy in its certificate of non-forum shopping, given
that only Atty. Joel Angelo C. Cruz signed it on behalf of Petron. In its Decision5 dated October 17, 2005, the Court of
Appeals ruled, however, that Atty. Cruz’s certification constituted sufficient compliance. As to the substantive aspect of
the case, the Court of Appeals reversed the Secretary of Justice’s ruling. It held that unfair competition does not necessarily
absorb trademark infringement. Consequently, the court ordered the filing of additional charges of trademark infringement
against the concerned Bicol Gas employees as well.
Since the Bicol Gas employees presumably acted under the direct order and control of its owners, the Court of Appeals
also ordered the inclusion of the stockholders of Bicol Gas in the various charges, bringing to 16 the number of persons to
be charged, now including petitioners Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu,
Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna,
Juanito P. de Castro, Geronima A. Almonite, and Manuel C. Dee (together with Audie Llona), collectively, petitioners
Espiritu, et al. The court denied the motion for reconsideration of these employees and stockholders in its Resolution dated
January 6, 2006, hence, the present petition for review6 before this Court.
The Issues Presented
The petition presents the following issues:
1. Whether or not the certificate of non-forum shopping that accompanied the petition filed with the Court of
Appeals, signed only by Atty. Cruz on behalf of Petron, complied with what the rules require;
2. Whether or not the facts of the case warranted the filing of charges against the Bicol Gas people for:
a) Filling up the LPG tanks registered to another manufacturer without the latter’s consent in
violation of R.A. 623, as amended;
b) Trademark infringement consisting in Bicol Gas’ use of a trademark that is confusingly similar
to Petron’s registered "Gasul" trademark in violation of section 155 also of R.A. 8293; and
c) Unfair competition consisting in passing off Bicol Gas-produced LPGs for Petron-produced
Gasul LPG in violation of Section 168.3 of R.A. 8293.
The Court’s Rulings
First. Petitioners Espiritu, et al. point out that the certificate of non-forum shopping that respondents KPE and Petron
attached to the petition they filed with the Court of Appeals was inadequate, having been signed only by Petron, through
Atty. Cruz.
But, while procedural requirements such as that of submittal of a certificate of non-forum shopping cannot be totally
disregarded, they may be deemed substantially complied with under justifiable circumstances. 7 One of these circumstances
is where the petitioners filed a collective action in which they share a common interest in its subject matter or raise a
common cause of action. In such a case, the certification by one of the petitioners may be deemed sufficient.8
Here, KPE and Petron shared a common cause of action against petitioners Espiritu, et al., namely, the violation of their
proprietary rights with respect to the use of Gasul tanks and trademark. Furthermore, Atty. Cruz said in his certification
that he was executing it "for and on behalf of the Corporation, and co-petitioner Carmen J. Doloiras."9Thus, the object of
the requirement – to ensure that a party takes no recourse to multiple forums – was substantially achieved. Besides, the
failure of KPE to sign the certificate of non-forum shopping does not render the petition defective with respect to Petron
which signed it through Atty. Cruz.10 The Court of Appeals, therefore, acted correctly in giving due course to the petition
before it.
Second. The Court of Appeals held that under the facts of the case, there is probable cause that petitioners Espiritu, et al.
committed all three crimes: (a) illegally filling up an LPG tank registered to Petron without the latter’s consent in violation
of R.A. 623, as amended; (b) trademark infringement which consists in Bicol Gas’ use of a trademark that is confusingly
similar to Petron’s registered "Gasul" trademark in violation of Section 155 of R.A. 8293; and (c) unfair competition which
consists in petitioners Espiritu, et al. passing off Bicol Gas-produced LPGs for Petron-produced Gasul LPG in violation of
Section 168.3 of R.A. 8293.
Here, the complaint adduced at the preliminary investigation shows that the one 50-kg Petron Gasul LPG tank found on the
Bicol Gas’ truck "belonged to [a Bicol Gas] customer who had the same filled up by BICOL GAS." 11 In other words, the
customer had that one Gasul LPG tank brought to Bicol Gas for refilling and the latter obliged.
R.A. 623, as amended,12 punishes any person who, without the written consent of the manufacturer or seller of gases
contained in duly registered steel cylinders or tanks, fills the steel cylinder or tank, for the purpose of sale, disposal or
trafficking, other than the purpose for which the manufacturer or seller registered the same. This was what happened in this
case, assuming the allegations of KPE’s manager to be true. Bicol Gas employees filled up with their firm’s gas the tank
registered to Petron and bearing its mark without the latter’s written authority. Consequently, they may be prosecuted for
that offense.
But, as for the crime of trademark infringement, Section 155 of R.A. 8293 (in relation to Section 170 13 ) provides that it is
committed by any person who shall, without the consent of the owner of the registered mark:
1. Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark or the
same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or
to deceive; or
2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering
for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive.
KPE and Petron have to show that the alleged infringer, the responsible officers and staff of Bicol Gas, used Petron’s Gasul
trademark or a confusingly similar trademark on Bicol Gas tanks with intent to deceive the public and defraud its
competitor as to what it is selling.14 Examples of this would be the acts of an underground shoe manufacturer in Malabon
producing "Nike" branded rubber shoes or the acts of a local shirt company with no connection to La Coste, producing and
selling shirts that bear the stitched logos of an open-jawed alligator.
Here, however, the allegations in the complaint do not show that Bicol Gas painted on its own tanks Petron’s Gasul
trademark or a confusingly similar version of the same to deceive its customers and cheat Petron. Indeed, in this case, the
one tank bearing the mark of Petron Gasul found in a truck full of Bicol Gas tanks was a genuine Petron Gasul tank, more
of a captured cylinder belonging to competition. No proof has been shown that Bicol Gas has gone into the business of
distributing imitation Petron Gasul LPGs.
As to the charge of unfair competition, Section 168.3 (a) of R.A. 8293 (also in relation to Section 170) describes the acts
constituting the offense as follows:
168.3. In particular, and without in any way limiting the scope of protection against unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise clothes
the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;
Essentially, what the law punishes is the act of giving one’s goods the general appearance of the goods of another, which
would likely mislead the buyer into believing that such goods belong to the latter. Examples of this would be the act of
manufacturing or selling shirts bearing the logo of an alligator, similar in design to the open-jawed alligator in La Coste
shirts, except that the jaw of the alligator in the former is closed, or the act of a producer or seller of tea bags with red tags
showing the shadow of a black dog when his competitor is producing or selling popular tea bags with red tags showing the
shadow of a black cat.
Here, there is no showing that Bicol Gas has been giving its LPG tanks the general appearance of the tanks of Petron’s
Gasul. As already stated, the truckfull of Bicol Gas tanks that the KPE manager arrested on a road in Sorsogon just
happened to have mixed up with them one authentic Gasul tank that belonged to Petron.
The only point left is the question of the liability of the stockholders and members of the board of directors of Bicol Gas
with respect to the charge of unlawfully filling up a steel cylinder or tank that belonged to Petron. The Court of Appeals
ruled that they should be charged along with the Bicol Gas employees who were pointed to as directly involved in overt
acts constituting the offense.1avvphi1
Bicol Gas is a corporation. As such, it is an entity separate and distinct from the persons of its officers, directors, and
stockholders. It has been held, however, that corporate officers or employees, through whose act, default or omission the
corporation commits a crime, may themselves be individually held answerable for the crime. 15
Jose claimed in his affidavit that, when he negotiated the swapping of captured cylinders with Bicol Gas, its manager,
petitioner Audie Llona, claimed that he would be consulting with the owners of Bicol Gas about it. Subsequently, Bicol
Gas declined the offer to swap cylinders for the reason that the owners wanted to send their captured cylinders to Batangas.
The Court of Appeals seized on this as evidence that the employees of Bicol Gas acted under the direct orders of its owners
and that "the owners of Bicol Gas have full control of the operations of the business."16
The "owners" of a corporate organization are its stockholders and they are to be distinguished from its directors and
officers. The petitioners here, with the exception of Audie Llona, are being charged in their capacities as stockholders of
Bicol Gas. But the Court of Appeals forgets that in a corporation, the management of its business is generally vested in its
board of directors, not its stockholders.17 Stockholders are basically investors in a corporation. They do not have a hand in
running the day-to-day business operations of the corporation unless they are at the same time directors or officers of the
corporation. Before a stockholder may be held criminally liable for acts committed by the corporation, therefore, it must be
shown that he had knowledge of the criminal act committed in the name of the corporation and that he took part in the
same or gave his consent to its commission, whether by action or inaction.
The finding of the Court of Appeals that the employees "could not have committed the crimes without the consent,
[abetment], permission, or participation of the owners of Bicol Gas"18 is a sweeping speculation especially since, as
demonstrated above, what was involved was just one Petron Gasul tank found in a truck filled with Bicol Gas tanks.
Although the KPE manager heard petitioner Llona say that he was going to consult the owners of Bicol Gas regarding the
offer to swap additional captured cylinders, no indication was given as to which Bicol Gas stockholders Llona consulted. It
would be unfair to charge all the stockholders involved, some of whom were proved to be minors. 19 No evidence was
presented establishing the names of the stockholders who were charged with running the operations of Bicol Gas. The
complaint even failed to allege who among the stockholders sat in the board of directors of the company or served as its
officers.
The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C. Espiritu, Jr. as the registered
owner of the truck that the KPE manager brought to the police for investigation because that truck carried a tank of Petron
Gasul. But the act that R.A. 623 punishes is the unlawful filling up of registered tanks of another. It does not punish the act
of transporting such tanks. And the complaint did not allege that the truck owner connived with those responsible for
filling up that Gasul tank with Bicol Gas LPG.
WHEREFORE, the Court REVERSES and SETS ASIDE the Decision of the Court of Appeals in CA-G.R. SP 87711 dated
October 17, 2005 as well as its Resolution dated January 6, 2006, the Resolutions of the Secretary of Justice dated March
11, 2004 and August 31, 2004, and the Order of the Office of the Regional State Prosecutor, Region V, dated February 19,
2003. The Court REINSTATES the Resolution of the Office of the Provincial Prosecutor of Sorsogon in I.S. 2001-9231
(inadvertently referred in the Resolution itself as I.S. 2001-9234), dated February 26, 2002. The names of petitioners
Manuel C. Espiritu, Jr., Freida F. Espititu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A.
Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P. De Castro, Geronima A.
Almonite and Manuel C. Dee are ORDERED excluded from the charge.
SO ORDERED.
 G.R. No. 169882 September 12, 2007
MANOLO P. SAMSON, petitioners,
vs. CATERPILLAR, INC., respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Amended
Decision1dated 8 August 2005, rendered by the Court of Appeals in CA-G.R. SP No. 80532, (1) reversing
its Decision,2 dated 13 December 2004, in which it set aside the Order dated 31 January 2003 of Branch
211 of the Mandaluyong Regional Trial Court (RTC), dismissing Criminal Case No. MC02-5019 filed
against petitioner Manolo P. Samson (Samson) for violation of Republic Act No. 8293, otherwise known as
the Intellectual Property Code of the Philippines, specifically Section 168.3(a) on Unfair Competition,
Section 123.1 (e) and Section 131.3 on registration of trademarks, in relation to Section 170 thereof; and (2)
directing the Mandaluyong RTC to conduct an independent assessment of whether the Motion to Withdraw
Information filed by the state prosecutor is warranted.
Samson is the owner of retail outlets within the Philippines, which sell, among other things, footwear,
clothing, bags and other similar items, bearing the mark "Caterpillar" and "Cat." Samson registered the
aforementioned marks for shoes, slippers, sandals and boots with the Bureau of Patents, Trademarks &
Technology Transfer (whose functions are presently exercised by Intellectual Property Office) in 1997.3
Caterpillar is a foreign corporation, primarily in the business of manufacturing equipment used in
construction, mining, road building and agricultural industries. Since the 1960’s, however, it had expanded
its product line to clothing and, since 1988, to footwear. Caterpillar alleges that it is a widely known brand
name and that its products are being internationally distributed. 4
As early as 26 July 2000, Branch 56 of the Makati RTC, issued Search Warrants No. 00-022 to No. 00-032
against establishments owned by Samson. This led to the seizure of various retail items such as footwear,
clothing, accessories, and leatherware for Unfair Competition under the Intellectual Property Code.
Caterpillar filed criminal complaints before the Department of Justice (DOJ). In addition, Caterpillar filed a
civil action on 31 July 2000, heard before Branch 90 of the Quezon City RTC for Unfair Competition,
Damages and Cancellation of Trademark with an Application for a Temporary Restraining Order and/or
Writ of Preliminary Injunction docketed as Civil Case No. Q-00-41445.5
Since Samson allegedly continued to sell and distribute merchandise which bore the disputed "Caterpillar"
marks, Caterpillar sought the issuance of another set of search warrants against Samson. On 18 December
2000, Branch 172 of the Valenzuela RTC in Search Warrants No. 12-V-00 to No. 37-V-00 issued 26 writs
of search warrants under which various clothing items were seized by National Bureau of Investigation
(NBI) agents as evidence of violations of the law on unfair competition.
On 23 January 2001, Caterpillar, through its legal counsel, filed 26 criminal complaints against Samson
before the DOJ, for alleged violations of Section 168.3(a) on Unfair Competition, Section 123.1(e) and
Section 131.3 on registration of trademarks, in relation to Section 170 of the Intellectual Property Code. 6
The complaints were docketed as I.S. Nos. 2001-42 to 2001-67 and assigned to State Prosecutor Zenaida
Lim of the Task Force on Anti-Intellectual Property Piracy. But before the determination by the DOJ on
whether Samson should be criminally charged with Unfair Competition, the Valenzuela RTC already issued
an Order, dated 26 June 2001, quashing the search warrants issued in Search Warrants No. 12-V-00 to No.
37-V-00.7
The DOJ, through State Prosecutor Lim, subsequently issued a Joint Resolution, dated 28 September 2001,
recommending that Samson be criminally charged with unfair competition under Section 168.3(a), in
relation to Section 131.1, 123.1 and 170 of the Intellectual Property Code. Resulting from the said
Resolution, Criminal Case No. MC02-5019 was filed with the Mandaluyong RTC.8
Samson filed a Petition for Review of the foregoing Joint Resolution, with the Secretary of Justice. His
petition was granted. In a Resolution dated 13 January 2003, the Acting Secretary of Justice, Merceditas
Gutierrez, recommended the withdrawal of the criminal informations filed against Samson before various
courts on the ground that there was lack of probable cause. Caterpillar filed a Motion for Reconsideration,
which was denied by Acting Secretary of Justice Gutierrez on 25 September 2003. An appeal questioning
the DOJ Resolution dated 13 January 2003 of Acting Secretary of Justice Gutierrez was filed by Caterpillar
before the Court of Appeals docketed as CA-G.R. No. 79937.9
Meanwhile, pursuant to the Resolution dated 13 January 2003 of Acting Secretary of Justice Gutierrez,
State Prosecutor Lim filed an Ex Parte Motion to Withdraw Information in Criminal Case No. MC02-5019
before the Mandaluyong RTC. On 31 January 2003, the Mandaluyong RTC issued an Order granting the
withdrawal of the Information against Samson.10 The entire text of the said Decision reads:
This refers to the Ex-Parte Motion to Withdraw Information filed on January 31, 2003 by State
Prosecution Zenaida M. Lim of the Department of Justice in connection with Resolution No.
011, Series of 2003, dated January 13, 2003 of the Acting Secretary of Justice Ma. Merceditas
N. Gutierrez reversing and setting aside the resolution of said state prosecutor and directed the
Chief State Prosecutor Jovencito R. Zuño to withdraw the informations filed in this court against
Manolo Samson.
WHEREFORE, finding the said motion to be in order and it appearing that accused has not yet
been arraigned and therefore the court has not yet acquired jurisdiction over the subject accused,
the court hereby grants the withdrawal of the information in the above-entitled case as it is
hereby ordered withdrawn form the record files of the court. 11
Caterpillar filed a Motion for Reconsideration, which was denied by the Mandaluyong RTC in an Order
dated 27 August 2003:
For resolution is a Motion for Reconsideration of the order of the court dated January 31, 2003
granting the withdrawal of the information from the record files of the court, filed on February
21, 2003, by the plaintiff in the above-entitled case.
Hearing on the motion together with the opposition thereto was held after which, the same was
submitted for resolution.
After the court examined with great care the bases advanced by both parties in the aforesaid
motion, the court was unable to find any cogent justification to overturn or set aside its previous
order, there being no new issues raised and the same are rehash of its previous pleadings.
WHEREFORE, premises considered, plaintiff’s Motion for Reconsideration is hereby
DENIED.12
Caterpillar filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of Court,
assailing the Order dated 31 January 2003 of the Mandaluyong RTC, docketed as CA-G.R. SP No. 80532.
The Court of Appeals, in a Decision dated 13 December 2004, dismissed the Petition on the ground that
Caterpillar lacked the legal standing to question the proceedings involving the criminal aspect of the case,
and that its participation is limited only to the recovery of civil liability. The appellate court also took into
account the denial by the Acting Secretary of Justice Gutierrez of Caterpillar’s Motion for Reconsideration
of her order to withdraw the Informations against Samson and, thus, ruled that this rendered the case moot
and academic.13
Caterpillar filed a Motion for Reconsideration of the aforementioned Decision rendered by the Court of
Appeals. In its Amended Decision dated 8 August 2005, the Court of Appeals reversed its earlier ruling and
declared that the Mandaluyong RTC gravely abused its discretion when it merely relied on the Resolution,
dated 13 January 2003 of Acting Secretary of Justice Gutierrez in ordering the withdrawal of the
information filed before it without making an independent assessment of the case. 14 In the dispositive
portion of its Amended Decision, the Court of Appeals ruled that:
with those of Caterpillar’s footwear products would demonstrate that he is passing off his
product as those of genuine Caterpillar footwear products. Accordingly, "where the similarity in
the appearance of the goods as packed and offered for sale is so striking, this fact shows intent
on the part of defendant to deceive the public and defraud plaintiff out of his trade. The intent to
deceive may be inferred from the similarity of the goods as packed and offered for sale, and an
action will lie to restrain such unfair competition and for damages." x x x19.

WHEREFORE, in view [of] the foregoing rationications, the petitioner’s Motion for
Reconsideration is hereby GRANTED. The decision of this Court dated 13 December 2004, as
well as the assailed orders of the respondent court dated 31 January 2003 and 27 August 2003
are hereby REVERSED and SET ASIDE.
The respondent court is hereby ordered to CONDUCT an independent assessment of whether
the motion to withdraw information filed by the state prosecutor is warranted under the
circumstances obtaining in the case. 15
Samson filed with the Court of Appeals a Motion for Reconsideration of the Amended Decision, dated 8
August 2005, which was denied on 27 September 2005. Hence, the present Petition, where he is raising the
following issues:
I
THE COURT OF APPEALS GROSSLY ERRED IN RULING THAT THE RESPONDENT
JUDGE IN CA-G.R. NO. SP 80532 FAILED IN HER BOUNDEN DUTY TO DETERMINE
THE MERITS OF THE PROSECUTION’S EX-PARTE MOTION TO WITHDRAW; and
II
THE COURT OF APPEALS LIKEWISE ERRED IN IGNORING ITS OWN DECISION
FINDING RESPONDENT CATERPILLAR, INC., AS PRIVATE COMPLAINANT, BEREFT
OF AUTHORITY TO ASSAIL THE STATE PROSECUTOR’S EX-PARTE MOTION TO
WITHDRAW THE INFORMATION BECAUSE THE CRIMINAL ASPECT OF A
CRIMINAL CASE IS UNDER THE DIRECTION AND CONTROL OF THE PROSECUTION
AND, CONSEQUENTLY, PRIVATE COMPLAINANT HAS NO BUSINESS
WHATSEOEVER IN THE PROCEEDINGS. 16
On appeal docketed as G.R. No. 169199, this Court ruled that the Court of Appeals did not commit any
reversible error.
By sustaining the Decision of the Court of Appeals in said case, this Court, in a Resolution dated 17
October 2005, had already ruled that probable cause exists for the re-filing of a criminal case against
Samson for unfair competition under the Intellectual Property Code. Samson filed a Motion for
Reconsideration of this Court’s Resolution, which was denied with finality on 20 March 2006. Entry of
judgment was already made in said case on 18 April 2006; hence, rendering said judgment final and
executory. The repeated confirmation of the finding of probable cause against Samson, which this Court
cannot now overturn, effectively and decisively determines the issues in this petition.
The findings of the Court of Appeals in CA-G.R. SP No. 79937, affirmed by this Court in G.R. No.
169199, have rendered the present petition moot and academic. It is a rule that is unanimously observed
that courts of justice will take cognizance only of justiciable controversies wherein actual and not merely
hypothetical issues are involved.20A case becomes moot and academic when there is no more actual
controversy between the parties and no useful purpose can be served in passing upon the merits. 21 Since this
Court, in affirming the said Decision of the Court of Appeals, already found it imperative for the Chief
State Prosecutor to re-file the Informations against Samson for unfair competition, Criminal Case No.
MC02-5019 should be re-opened and heard by the Mandaluyong RTC. The rendering of a decision on the
merits of this case would be of no practical value. Hence, this case is dismissible. 22
IN VIEW OF THE FOREGOING, the instant Petition is DENIED and the assailed Amended Decision of
the Court of Appeals in CA-G.R. SP No. 80532, promulgated on 8 August 2005, is AFFIRMED WITH
MODIFICATION. The Order of the Court of Appeals in C.A.-G.R. SP No. 80532 directing Branch 211 of
the Mandaluyong Regional Trial Court to conduct an independent assessment is REVERSED. This
Court ORDERS Branch 211 of the Mandaluyong Regional Trial Court to re-open and hear Criminal Case
No. MC02-5019. Costs against the petitioner.
SO ORDERED.

Before discussing the merits of the Petition at bar, this Court notes that on 15 February 2005, the Court of
Appeals rendered a Decision in CA-G.R. SP No. 79937 in favor of Caterpillar. To recall, this was the
petition filed by Caterpillar to assail the Resolution of Acting Secretary of Justice Gutierrez dated 13
January 2003, directing the Chief State Prosecutor to cause the withdrawal of Informations against Samson.
The appellate court reversed said Resolution and pronounced that sufficient probable cause existed to
justify the filing of Informations against Samson. Thus, it ordered the re-filing of the Informations before
the proper trial courts.17

In its Decision in CA-G.R. SP No. 79937, the Court of Appeals held that the withdrawal of the
Informations against Samson, predicated on the quashal of the search warrants, was a manifest error.
Consistent with the doctrine laid out in Solid Triangle Sales Corporation v. The Sheriff of RTC, Quezon
City, Branch 93,18 the appellate court ruled that the earlier finding of probable cause against Samson was
not affected by the quashal of the warrants since independent evidence gathered by the NBI from the 24
test-buy operations it conducted in 1999 is sufficient to support such finding. It reiterated the findings of
State Prosecutor Lim:

Respondent’s use of depictions of heavy machinery and equipment, such as tractors, to market
his products, would verily show that he is passing off his products as those of Caterpillar’s xxx.
Meanwhile, the similarity in the appearance of the goods manufactured or sold by respondent
 LEVI STRAUSS (PHILS.), INC., G.R. No. 162311
Petitioner,
- versus -
TONY LIM,
Respondent.
December 4, 2008
x--------------------------------------------------x
DECISION
REYES, R.T., J.:
THE remedy of a party desiring to elevate to the appellate court an adverse resolution of the Secretary
of Justice is a petition for certiorari under Rule 65. A Rule 43 petition for review is a wrong mode of appeal.[1]
During preliminary investigation, the prosecutor is vested with authority and discretion to determine if
there is sufficient evidence to justify the filing of an information. If he finds probable cause to indict the
respondent for a criminal offense, it is his duty to file the corresponding information in court. However, it is
equally his duty not to prosecute when after an investigation, the evidence adduced is not sufficient to establish
a prima facie case.[2]
Before the Court is a petition for review on certiorari[3] of the Decision[4] and Resolution[5] of the Court of Appeals
(CA), affirming the resolutions of the Department of Justice (DOJ) finding that there is no probable cause to indict
respondent Tony Lim, a.k.a. Antonio Guevarra, for unfair competition.
The Facts
Petitioner Levi Strauss (Phils.), Inc. is a duly-registered domestic corporation. It is a wholly-owned
subsidiary of Levi Strauss & Co. (LS & Co.) a Delaware, USA company.
In 1972, LS & Co. granted petitioner a non-exclusive license to use its registered trademarks and trade
names[6] for the manufacture and sale of various garment products, primarily pants, jackets, and shirts, in the
Philippines.[7] Presently, it is the only company that has authority to manufacture, distribute, and sell products
bearing the LEVIS trademarks or to use such trademarks in the Philippines. These trademarks are registered
in over 130 countries, including the Philippines,[8] and were first used in commerce in the Philippines in 1946.[9]
Sometime in 1995, petitioner lodged a complaint[10] before the Inter-Agency Committee on Intellectual
Property Rights, alleging that a certain establishment in Metro Manila was manufacturing garments using
colorable imitations of the LEVIS trademarks.[11] Thus, surveillance was conducted on the premises of respondent
Tony Lim, doing business under the name Vogue Traders Clothing Company.[12] The investigation revealed that
respondent was engaged in the manufacture, sale, and distribution of products similar to those of petitioner and
under the brand name LIVES.[13]
On December 13, 1995, operatives of the Philippine National Police (PNP) Criminal Investigation
Unit[14] served search warrants[15] on respondents premises at 1042 and 1082 Carmen Planas Street,
Tondo, Manila. As a result, several items[16] were seized from the premises.[17]
The PNP Criminal Investigation Command (PNP CIC) then filed a complaint[18] against respondent
before the DOJ for unfair competition[19] under the old Article 189 of the Revised Penal Code, prior to its repeal by
Section 239 of Republic Act (RA) No. 8293.[20] The PNP CIC claimed that a confusing similarity could be noted
between petitioners LEVIs jeans and respondents LIVES denim jeans and pants.
In his counter-affidavit,[21] respondent alleged, among others, that (1) his products bearing the LIVES
brand name are not fake LEVIS garments; (2) LIVES is a registered trademark,[22] while the patch pocket design
for LIVES pants has copyright registration,[23] thus conferring legal protection on his own intellectual property
rights, which stand on equal footing as LEVIS; (3) confusing similarity, the central issue in the trademark
cancellation proceedings[24] lodged by petitioner, is a prejudicial question that complainant, the police, and the
court that issued the search warrants cannot determine without denial of due process or encroachment on the
jurisdiction of the agencies concerned; and (4) his goods are not clothed with an appearance which is likely to
deceive the ordinary purchaser exercising ordinary care.[25]
In its reply-affidavit, petitioner maintained that there is likelihood of confusion between the competing
products because: (1) a slavish imitation of petitioners arcuate trademark has been stitched on the backpocket of
LIVES jeans; (2) the appearance of the mark 105 on respondents product is obviously a play on petitioners 501
trademark; (3) the appearance of the word/phrase LIVES and LIVES ORIGINAL JEANS is confusingly similar to
petitioners LEVIS trademark; (4) a red tab, made of fabric, attached at the left seam of the right backpocket of
petitioners standard five-pocket jeans, also appears at the same place on LIVES jeans; (5) the patch used on LIVES
jeans (depicting three men on each side attempting to pull apart a pair of jeans) obviously thrives on petitioners
own patch showing two horses being whipped by two men in an attempt to tear apart a pair of jeans; and (6)
LEVIS jeans are packaged and sold with carton tickets, which are slavishly copied by respondent in his own carton
ticket bearing the marks LIVES, 105, the horse mark, and basic features of petitioners ticket designs, such as two
red arrows curving and pointing outward, the arcuate stitching pattern, and a rectangular portion with intricate
border orientation.[26]
DOJ Rulings
On October 8, 1996, Prosecution Attorney Florencio D. Dela Cruz recommended the dismissal[27] of
the complaint. The prosecutor agreed with respondent that his products are not clothed with an appearance which
is likely to deceive the ordinary purchaser exercising ordinary care. The recommendation was approved by
Assistant Chief State Prosecutor Lualhati R. Buenafe.
On appeal, then DOJ Secretary Teofisto Guingona affirmed the prosecutors dismissal of the complaint
on January 9, 1998.[28] Prescinding from the basic rule that to be found guilty of unfair competition, a person shall,
by imitation or any unfair device, induce the public to believe that his goods are those of another, Secretary
Guingona stated:
In the case at bar, complainant has not shown that anyone was actually deceived by
respondent. Respondents product, which bears the trademark LIVEs, has an
entirely different spelling and meaning with the trademark owned by complainant which is
LEVIs. Complainants trademark comes from a Jewish name while that of respondent is
merely an adjective word. Both, when read and pronounced, would resonate different
sounds. While respondents LIVEs trademark may appear similar, such could not have been
intended by the respondent to deceive since he had the same registered with the
appropriate government agencies. Granting arguendo, that respondents trademark or
products possessed similar characteristics with the trademark and products of complainant,
on that score alone, without evidence or proof that such was a device of respondent to
deceive the public to the damage of complainant no unfair competition is committed.[29]
On February 13, 1998, petitioner filed a motion for reconsideration of Secretary Guingonas resolution, alleging,
among others, that only a likelihood of confusion is required to sustain a charge of unfair competition. It also
submitted the results of a consumer survey[30] involving a comparison of petitioners and respondents products.
On June 5, 1998, Justice Secretary Silvestre Bello III, Guingonas successor, granted petitioners motion
and directed the filing of an information against respondent.[31]
WHEREFORE, our resolution dated 9 January 1998 is hereby reversed and set
aside. You are directed to file an information for unfair competition under Article 189 of
the Revised Penal Code, as amended, against respondent Tony Lim. Report the action
taken thereon within ten (10) days from receipt hereof.[32]
Secretary Bello reasoned that under Article 189 of the Revised Penal Code, as amended, exact
similarity of the competing products is not required. However, Justice Guingonas resolution incorrectly
dwelt on the specific differences in the details of the products.[33] Secretary Bellos own factual findings revealed:
x x x [I]t is not difficult to discern that respondent gave his products the
general appearance as that of the product of the complainant. This was established by the
respondents use of the complainants arcuate backpocket design trademark; the 105 mark
which apparently is a spin-off of the 501 mark of the complainant; the patch which was
clearly patterned after that of the complainants two horse patch design trademark; the red
tab on the right backpocket; the wordings which were crafted to look similar with the Levis
 trademark of the complainant; and even the packaging. In appropriating himself the
general appearance of the product of the complainant, the respondent clearly intended to
deceive the buying public. Verily, any person who shall employ deception or any other
means contrary to good faith by which he shall pass of the goods manufactured by him or
in which he deals, or his business, or services for those of the one having established good
will shall guilty of unfair competition.
Respondents registration of his trademark can not afford him any remedy.
Unfair competition may still be prosecuted despite such registration.[34] (Citation omitted)
Respondent then filed his own motion for reconsideration of the Bello resolution. On May 7, 1999, new DOJ
Secretary Serafin Cuevas granted respondents motion and ordered the dismissal of the charges against him. [35]
CA Disposition
Dissatisfied with the DOJ rulings, petitioner sought recourse with the CA via a petition for review under Rule 43
of the 1997 Rules of Civil Procedure. On October 17, 2003, the appellate court affirmed the dismissal of the unfair
competition complaint.
WHEREFORE, premises considered, the petition for review is DENIED and is
accordingly DISMISSED for lack of merit.
SO ORDERED.[36]
The CA pointed out that to determine the likelihood of confusion, mistake or deception, all relevant
factors and circumstances should be taken into consideration, such as the circumstances under which the goods are
sold, the class of purchasers, and the actual occurrence or absence of confusion. [37]
Thus, the existence of some similarities between LIVES jeans and LEVIS garments would not ipso
facto equate to fraudulent intent on the part of respondent. The CA noted that respondent used affirmative and
precautionary distinguishing features in his products for differentiation. The appellate court considered the spelling
and pronunciation of the marks; the difference in the designs of the back pockets; the dissimilarity between the
carton tickets; and the pricing and sale of petitioners products in upscale exclusive specialty shops. The CA also
disregarded the theory of post-sale confusion propounded by petitioner, relying instead on the view that the
probability of deception must be determined at the point of sale.[38]
Issues
Petitioner submits that the CA committed the following errors:
I.
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT ACTUAL
CONFUSION IS NECESSARY TO SUSTAIN A CHARGE OF UNFAIR
COMPETITION, AND THAT THERE MUST BE DIRECT EVIDENCE OR PROOF OF
INTENT TO DECEIVE THE PUBLIC.
II.
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENTS
LIVES JEANS DO NOT UNFAIRLY COMPETE WITH LEVIS JEANS AND/OR THAT
THERE IS NO POSSIBILITY THAT THE FORMER WILL BE CONFUSED FOR THE
LATTER, CONSIDERING THAT RESPONDENTS LIVES JEANS
BLATANTLY COPY OR COLORABLY IMITATE NO LESS THAN SIX (6)
TRADEMARKS OF LEVIS JEANS.
III.
THE COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE
EVIDENCE ON RECORD, CONSISTING OF THE SCIENTIFICALLY CONDUCTED
MARKET SURVEY AND THE AFFIDAVIT OF THE EXPERT WITNESS ON THE
RESULTS THEREOF, WHICH SHOW THAT RESPONDENTS LIVES JEANS ARE,
IN FACT, BEING CONFUSED FOR LEVIS JEANS.
IV.
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE ISSUE OF
CONFUSION SHOULD ONLY BE DETERMINED AT THE POINT OF SALE.
V.
THE COURT OF APPEALS GRAVELY ERRED IN FAILING TO DIRECT THE
SECRETARY OF JUSTICE TO CAUSE THE FILING OF THE APPROPRIATE
INFORMATION IN COURT AGAINST THE RESPONDENT.[39](Underscoring
supplied)
Our Ruling
In essence, petitioner asks this Court to determine if probable cause exists to charge respondent with the crime of
unfair competition under Article 189(1) of the Revised Penal Code, prior to its repeal by Section 239 of RA No.
8293.
However, that is a factual issue[40] the resolution of which is improper in a Rule 45 petition.[41] The
only legal issue left for the Court to determine is whether the issue of confusion
should be determined only at the point of sale.
Nonetheless, there is sufficient reason for this Court to dismiss this petition merely by looking at the
procedural avenue petitioner used to have the DOJ resolutions reviewed by the CA.
Petitioner filed with the CA a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure.[42] Rule 43 governs all appeals from [the Court of Tax Appeals and] quasi-judicial bodies to the CA. Its
Section 1 provides:
Section 1. Scope. This Rule shall apply to appeals from [judgments or final
orders of the Court of Tax Appeals and from] awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-
judicial functions. Among these agencies are the Civil Service Commission, Central Board
of Assessment Appeals, Securities and Exchange Commission, Office of the President,
Land Registration Authority, Social Security Commission, Civil Aeronautics Board,
Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission,
Department of Agrarian Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission, Agricultural Inventions Board,
Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators authorized by
law.[43]
Clearly, the DOJ is not one of the agencies enumerated in Section 1 of Rule 43 whose awards, judgments, final
orders, or resolutions may be appealed to the CA.
The Court has consistently ruled that the filing with the CA of a petition for review under Rule
43 to question the Justice Secretarys resolution regarding the determination of probable cause is an improper
remedy.[44]
Under the 1993 Revised Rules on Appeals from Resolutions in Preliminary Investigations or
Reinvestigations,[45] the resolution of the investigating prosecutor is subject to appeal to the Justice
[46]
Secretary who, under the Revised Administrative Code, exercises the power of control and supervision over
said Investigating Prosecutor; and who may affirm, nullify, reverse, or modify the ruling of such prosecutor. [47] If
the appeal is dismissed, and after the subsequent motion for reconsideration is resolved, a party has no more appeal
or other remedy available in the ordinary course of law.[48] Thus, the Resolution of the Justice Secretary affirming,
modifying or reversing the resolution of the Investigating Prosecutor is final. [49]
There being no more appeal or other remedy available in the ordinary course of law, the remedy of the
aggrieved party is to file a petition for certiorari under Rule 65. Thus, while the CA may review the resolution of
the Justice Secretary, it may do so only in a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, solely on the ground that the Secretary of Justice committed grave abuse of discretion amounting to
excess or lack of jurisdiction.[50]
Verily, when respondent filed a petition for review under Rule 43 instead of a petition
for certiorari under Rule 65, the CA should have dismissed it outright. However, the appellate court chose to
determine if DOJ Secretaries Guingona and Cuevas correctly determined the absence of probable cause.
 Now, even if We brush aside technicalities and consider the petition for review filed with the CA as
one under Rule 65, the petition must fail just the same.
While the resolution of the Justice Secretary may be reviewed by the Court, it is not empowered
to substitute its judgment for that of the executive branch when there is no grave abuse of discretion.[51]
Courts are without power to directly decide matters over which full discretionary authority has been
delegated to the legislative or executive branch of the government.[52] The determination of probable cause is one
such matter because that authority has been given to the executive branch, through the DOJ.[53]
It bears stressing that the main function of a government prosecutor is to determine the existence of
probable cause and to file the corresponding information should he find it to be so. [54] Thus, the decision whether
or not to dismiss the criminal complaint against respondent is necessarily dependent on the sound discretion of the
investigating prosecutor and ultimately, that of the Secretary of Justice. [55]
A prosecutor, by the nature of his office, is under no compulsion to file a particular criminal
information where he is not convinced that he has evidence to prop up its averments, or that the evidence at hand
points to a different conclusion. This is not to discount the possibility of the commission of abuses on the part of
the prosecutor. But this Court must recognize that a prosecutor should not be unduly compelled to work against his
conviction. Although the power and prerogative of the prosecutor to determine whether or not the evidence at hand
is sufficient to form a reasonable belief that a person committed an offense is not absolute but subject to judicial
review, it would be embarrassing for him to be compelled to prosecute a case when he is in no position to do so,
because in his opinion he does not have the necessary evidence to secure a conviction, or he is not convinced of the
merits of the case.[56]
In finding that respondents goods were not clothed with an appearance which is likely to deceive the
ordinary purchaser exercising ordinary care, the investigating prosecutor exercised the discretion lodged in him by
law. He found that:
First, the LIVES mark of the respondents goods is spelled and pronounced
differently from the LEVIS mark of the complainant.
Second, the backpocket design allegedly copied by the respondent from the
registered arcuate design of the complainant, appears to be different in view of the longer
curved arms that stretch deep downward to a point of convergence where the stitches form
a rectangle. The arcuate design for complainant LEVIs jeans form a diamond instead. And
assuming arguendo that there is similarity in the design of backpockets between the
respondents goods and that of the complainant, this alone does not establish that
respondents jeans were intended to copy the complainants goods and pass them off as the
latters products as this design is simple and may not be said to be strikingly distinct absent
the other LEVIS trademark such as the prints on the button, rivets, tags and the like. x x x
Further, the presence of accessories bearing Levis trademark was not established as there
were no such accessories seized from the respondent and instead genuine LIVES hangtags,
button and patches were confiscated during the search of latters premises.
Second, the design of the patches attached to the backpockets of the
respondents goods depicts three men on either side of a pair of jeans attempting to pull
apart said jeans, while the goods manufactured by complainant with patches also attached
at the right backpockets depicts two horses being whipped by two men in an attempt to tear
apart a pair of jeans. It is very clear therefore that the design of the backpocket patches by
the respondent is different from that of the complainant, in the former the men were trying
to pull apart the pants while in the latter horses are the ones doing the job. Obviously, there
is a great difference between a man and a horse and this will naturally not escape the eyes
of an ordinary purchaser.
Third, the manner by which Levis jeans are packed and sold with carton tickets
attached to the products cannot be appropriated solely by complainant to the exclusion of
all other manufacturers of same class. It frequently happens that goods of a particular class
are labeled by all manufacturer[s] in a common manner. In cases of that sort, no
manufacturer may appropriate for himself the method of labeling or packaging [of] his
merchandise and then enjoin other merchants from using it. x x x.
Fourth, evidence shows that there is a copyright registration issued by the
National Library over the backpocket design of the respondent. And this copyright
registration gives the respondent the right to use the same in his goods x x x. [57]
The determination of probable cause is part of the discretion granted to the investigating prosecutor
and ultimately, the Secretary of Justice. Courts are not empowered to substitute their own judgment for that of the
executive branch.[58]
The courts duty in an appropriate case is confined to a determination of whether the assailed executive
or judicial determination of probable cause was done without or in excess of jurisdiction or with grave abuse of
discretion amounting to want of jurisdiction.[59] For grave abuse of discretion to prosper as a ground for certiorari,
it must be demonstrated that the lower court or tribunal has exercised its power in an arbitrary and despotic
manner, by reason of passion or personal hostility, and it must be patent and gross as would amount to an evasion
or to a unilateral refusal to perform the duty enjoined or to act in contemplation of law.[60]
In the case at bar, no grave abuse of discretion on the part of the DOJ was shown. Petitioner merely
harps on the error committed by the DOJ and the CA in arriving at their factual finding that there is no confusing
similarity between petitioners and respondents products. While it is possible that the investigating prosecutor and
Secretaries Guingona and Cuevas erroneously exercised their discretion when they found that unfair competition
was not committed, this by itself does not render their acts amenable to correction and annulment by the
extraordinary remedy of certiorari. There must be a showing of grave abuse of discretion amounting to lack or
excess of jurisdiction.[61]
We are disinclined to find that grave of abuse of discretion was committed when records show
that the finding of no probable cause is supported by the evidence, law, and jurisprudence.
Generally, unfair competition consists in employing deception or any other means contrary to good
faith by which any person 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 goodwill, or committing any acts calculated to produce such result. [62]
The elements of unfair competition under Article 189(1)[63] of the Revised Penal Code are:
(a) That the offender gives his goods the general appearance of the goods of another
manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the (2)
wrapping of their packages, or in the (3) device or words therein, or in (4) any other
feature of their appearance;
(c) That the offender offers to sell or sells those goods or gives other persons a chance
or opportunity to do the same with a like purpose; and
(d) That there is actual intent to deceive the public or defraud a competitor.[64]
All these elements must be proven.[65] In finding that probable cause for unfair competition does not
exist, the investigating prosecutor and Secretaries Guingona and Cuevas arrived at the same conclusion that there
is insufficient evidence to prove all the elements of the crime that would allow them to secure a conviction.
Secretary Guingona discounted the element of actual intent to deceive by taking into consideration the
differences in spelling, meaning, and phonetics between LIVES and LEVIS, as well as the fact that respondent had
registered his own mark.[66] While it is true that there may be unfair competition even if the competing mark is
registered in the Intellectual Property Office, it is equally true that the same may show prima facie good
faith.[67] Indeed, registration does not negate unfair competition where the goods are packed or offered for sale and
passed off as those of complainant.[68] However, the marks registration, coupled with the stark differences between
the competing marks, negate the existence of actual intent to deceive, in this particular case.
For his part, Justice Cuevas failed to find the possibility of confusion and of intent to deceive the
public, relying on Emerald Garment Manufacturing Corporation v. Court of Appeals.[69] In Emerald, the Court
explained that since maong pants or jeans are not inexpensive, the casual buyer is more cautious and discerning
and would prefer to mull over his purchase, making confusion and deception less likely.
We cannot subscribe to petitioners stance that Emerald Garment cannot apply because there was only
one point of comparison, i.e., LEE as it appears in Emerald Garments STYLISTIC MR. LEE. Emerald Garment is
instructive in explaining the attitude of the buyer when it comes to products that are not inexpensive, such as
jeans. In fact, the Emerald Garment rationale is supported by Del Monte Corporation v. Court of Appeals,[70]where
the Court explained that the attitude of the purchaser is determined by the cost of the goods. There is no reason not
to apply the rationale in those cases here even if only by analogy.
 The rule laid down in Emerald Garment and Del Monte is consistent with Asia Brewery, Inc. v. Court plaintiffs business. The universal test question is whether the public is likely to be
of Appeals,[71] where the Court held that in resolving cases of infringement and unfair competition, the courts deceived.
should take into consideration several factors which would affect its conclusion, to wit: the age, training and
education of the usual purchaser, the nature and cost of the article, whether the article is bought for immediate In the case before us, we are of the view that the probability of deception must
consumption and also the conditions under which it is usually purchased.[72] be tested at the point of sale since it is at this point that the ordinary purchaser mulls upon
the product and is likely to buy the same under the belief that he is buying another. The
Petitioner argues that the element of intent to deceive may be inferred from the similarity of the goods test of fraudulent simulation is to be found in the likelihood of deception, or the possibility
or their appearance.[73] The argument is specious on two fronts. First, where the similarity in the appearance of the of deception of some persons in some measure acquainted with an established design and
goods as packed and offered for sale is so striking, intent to deceive may be inferred.[74] However, as found by the desirous of purchasing the commodity with which that design has been associated. [81]
investigating prosecutor and the DOJ Secretaries, striking similarity between the competing goods is not present.
In sum, absent a grave abuse of discretion on the part of the executive branch tasked with the
Second, the confusing similarity of the goods was precisely in issue during the preliminary determination of probable cause during preliminary investigation, We cannot nullify acts done in the exercise of
investigation. As such, the element of intent to deceive could not arise without the investigating prosecutors or the the executive officers discretion. Otherwise, We shall violate the principle that the purpose of a preliminary
DOJ Secretarys finding that such confusing similarity exists. Since confusing similarity was not found, the element investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from
of fraud or deception could not be inferred. an open and public accusation of crime, from the trouble, expense and anxiety of a public trial, and also to protect
the State from useless and expensive trials.[82]
We cannot sustain Secretary Bellos opinion that to establish probable cause, it is enough that the
respondent gave to his product the general appearance of the product[75] of petitioner. It bears stressing that that is WHEREFORE, the petition is DENIED and the appealed Decision of the Court of
only one element of unfair competition. All others must be shown to exist. More importantly, the likelihood of Appeals AFFIRMED.
confusion exists not only if there is confusing similarity. It should also be likely to cause confusion or mistake or
deceive purchasers.[76] Thus, the CA correctly ruled that the mere fact that some resemblance can be pointed out SO ORDERED.
between the marks used does not in itself prove unfair competition.[77] To reiterate, the resemblance must be such
as is likely to deceive the ordinary purchaser exercising ordinary care.[78]
The consumer survey alone does not equate to actual confusion. We note that the survey was made by
showing the interviewees actual samples of petitioners and respondents respective products, approximately five
feet away from them. From that distance, they were asked to identify the jeans brand and state the reasons for
thinking so.[79] This method discounted the possibility that the ordinary intelligent buyer would be able to closely
scrutinize, and even fit, the jeans to determine if they were LEVIS or not. It also ignored that a consumer would
consider the price of the competing goods when choosing a brand of jeans. It is undisputed that LIVES jeans are
priced much lower than LEVIS.

The Courts observations in Emerald Garment are illuminating on this score:

First, the products involved in the case at bar are, in the main, various kinds of
jeans. x x x Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would prefer to mull over his
purchase. Confusion and deception, then, is less likely. In Del Monte Corporation v. Court
of Appeals, we noted that:

Among these, what essentially determines the attitudes

of the purchaser, specifically his inclination to be cautious, is the
cost of the goods. To be sure, a person who buys a box of candies
will not exercise as much care as one who buys an expensive
watch. As a general rule, an ordinary buyer does not exercise as
much prudence in buying an article for which he pays a few
centavos as he does in purchasing a more valuable
thing. Expensive and valuable items are normally bought only
after deliberate, comparative and analytical investigation. But
mass products, low priced articles in wide use, and matters of
everyday purchase requiring frequent replacement are bought by
the casual consumer without great care.[80] (Emphasis supplied)

We find no reason to go beyond the point of sale to determine if there is probable cause for unfair competition. The
CA observations along this line are worth restating:

We also find no basis to give weight to petitioners contention that the post sale
confusion that might be triggered by the perceived similarities between the two products
must be considered in the action for unfair competition against respondent.

No inflexible rule can be laid down as to what will constitute unfair

competition. Each case is, in the measure, a law unto itself. Unfair competition is always a
question of fact. The question to be determined in every case is whether or not, as a matter
of fact, the name or mark used by the defendant has previously come to indicate and
designate plaintiffs goods, or, to state it in another way, whether defendant, as a matter of
fact, is, by his conduct, passing off defendants goods as plaintiffs goods or his business as
 G.R. No. 164321 March 23, 2011 A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN CONSIDERING MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR
TRADEMARK INFRINGEMENT IN PASSING UPON THE VALIDITY OF THE SEARCH
SKECHERS, U.S.A., INC., Petitioner,
WARRANT WHEN IT SHOULD HAVE LIMITED ITSELF TO A DETERMINATION OF
vs. INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER PACIFIC TRADING CORP.
WHETHER THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN
and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or
QUASHING THE SEARCH WARRANTS.
STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T.
MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors,
officers, employees and/or occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
No. 153 Quirino Avenue, Parañaque City, Respondents. DISCRETION IN FINDING THAT RESPONDENTS ARE NOT GUILTY OF TRADEMARK
INFRINGEMENT IN THE CASE WHERE THE SOLE TRIABLE ISSUE IS THE
EXISTENCE OF PROBABLE CAUSE TO ISSUE A SEARCH WARRANT. 10
x - - - - - - - - - - - - - - - - - - - - - - -x

In the meantime, petitioner-intervenor filed a Petition-in-Intervention11 with this Court claiming to be the
TRENDWORKS INTERNATIONAL CORPORATION, Petitioner-Intervenor,
sole licensed distributor of Skechers products here in the Philippines.
vs. INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER PACIFIC TRADING CORP.
and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or
STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T. On November 30, 2006, this Court rendered a Decision 12 dismissing the petition.
MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors,
officers, employees and/or occupants of its premises located at S-7, Ed & Joe's Commercial Arcade,
Both petitioner and petitioner-intervenor filed separate motions for reconsideration.
No. 153 Quirino Avenue, Parañaque City, Respondents.

In petitioner’s motion for reconsideration, petitioner moved for a reconsideration of the earlier decision on
RESOLUTION
the following grounds:

PERALTA, J.:
(a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS CASE DUE
TO THE SIGNIFICANCE AND REPERCUSSIONS OF ITS DECISION.
1
For resolution are the twin Motions for Reconsideration filed by petitioner and petitioner-intervenor from
the Decision rendered in favor of respondents, dated November 30, 2006.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE UNAUTHORIZED
REPRODUCTIONS OF THE "S" TRADEMARK OWNED BY PETITIONER WERE
At the outset, a brief narration of the factual and procedural antecedents that transpired and led to the filing INTENDED FOR DISTRIBUTION IN THE PHILIPPINE MARKET TO THE DETRIMENT
of the motions is in order. OF PETITIONER – RETURNING THE GOODS TO RESPONDENTS WILL ADVERSELY
AFFECT THE GOODWILL AND REPUTATION OF PETITIONER.
The present controversy arose when petitioner filed with Branch 24 of the Regional Trial Court (RTC) of
Manila an application for the issuance of search warrants against an outlet and warehouse operated by (c) THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH ACTED
respondents for infringement of trademark under Section 155, in relation to Section 170 of Republic Act WITH GRAVE ABUSE OF DISCRETION.
No. 8293, otherwise known as the Intellectual Property Code of the Philippines. 2 In the course of its
business, petitioner has registered the trademark "SKECHERS"3 and the trademark "S" (within an oval
(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE THE
design)4 with the Intellectual Property Office (IPO).
EVIDENCE PRESENTED DURING THE SEARCH WARRANT APPLICATION
PROCEEDINGS.
Two search warrants5 were issued by the RTC and were served on the premises of respondents. As a result
of the raid, more than 6,000 pairs of shoes bearing the "S" logo were seized.
(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS CASE, AS IT IS BASED
ON A DIFFERENT FACTUAL MILIEU. PRELIMINARY FINDING OF GUILT (OR
Later, respondents moved to quash the search warrants, arguing that there was no confusing similarity ABSENCE THEREOF) MADE BY THE SEARCH WARRANT COURT AND THE COURT
between petitioner’s "Skechers" rubber shoes and its "Strong" rubber shoes. OF APPEALS WAS IMPROPER.

On November 7, 2002, the RTC issued an Order6 quashing the search warrants and directing the NBI to (f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION. THE LAW IS
return the seized goods. The RTC agreed with respondent’s view that Skechers rubber shoes and Strong CLEAR. THE DOMINANCY TEST SHOULD BE USED.
rubber shoes have glaring differences such that an ordinary prudent purchaser would not likely be misled or
confused in purchasing the wrong article.
(g) THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION.13

Aggrieved, petitioner filed a petition for certiorari 7 with the Court of Appeals (CA) assailing the RTC
On the other hand, petitioner-intervenor’s motion for reconsideration raises the following errors for this
Order. On November 17, 2003, the CA issued a Decision8 affirming the ruling of the RTC.
Court’s consideration, to wit:

Subsequently, petitioner filed the present petition 9 before this Court which puts forth the following
(a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED
assignment of errors:
CONTRARY TO LAW AND JURISPRUDENCE IN ADOPTING THE ALREADY-
 REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE OF CONFUSING
SIMILARITY;
(b) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED
CONTRARY TO LAW IN HOLDING THAT THERE IS NO PROBABLE CAUSE FOR
TRADEMARK INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED THE TRIAL COURT’S DEPARTURE
FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHEN IT
UPHELD THE QUASHAL OF THE SEARCH WARRANT ON THE BASIS SOLELY OF A
FINDING THAT THERE IS NO CONFUSING SIMILARITY. 14
A perusal of the motions submitted by petitioner and petitioner-intervenor would show that the primary
issue posed by them dwells on the issue of whether or not respondent is guilty of trademark infringement.
After a thorough review of the arguments raised herein, this Court reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 8293.
Specifically, Section 155 of R.A. No. 8293 states:
Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or
the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes
place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless
of whether there is actual sale of goods or services using the infringing material. 15
The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause
confusion. In determining similarity and likelihood of confusion, jurisprudence has developed tests the
Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the similarity of the
prevalent or dominant features of the competing trademarks that might cause confusion, mistake, and
deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither is it
required that the mark sought to be registered suggests an effort to imitate. Given more consideration are
the aural and visual impressions created by the marks on the buyers of goods, giving little weight to factors
like prices, quality, sales outlets, and market segments.16
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied
to the products, including the labels and packaging, in determining confusing similarity. The discerning eye
of the observer must focus not only on the predominant words, but also on the other features appearing on
both labels so that the observer may draw conclusion on whether one is confusingly similar to the other. 17
Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of
confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would
be induced to purchase one product in the belief that he was purchasing the other; and (2) confusion of
business (source or origin confusion), where, although the goods of the parties are different, the product, the
mark of which registration is applied for by one party, is such as might reasonably be assumed to originate
with the registrant of an earlier product, and the public would then be deceived either into that belief or into
the belief that there is some connection between the two parties, though inexistent. 18
Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by
respondent in its Strong rubber shoes infringes on the mark already registered by petitioner with the IPO.
While it is undisputed that petitioner’s stylized "S" is within an oval design, to this Court’s mind, the
dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S" which catches the
eye of the purchaser. Thus, even if respondent did not use an oval design, the mere fact that it used the same
stylized "S", the same being the dominant feature of petitioner’s trademark, already constitutes
infringement under the Dominancy Test.
This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be
considered as highly identifiable to the products of petitioner alone. The CA even supported its conclusion
by stating that the letter "S" has been used in so many existing trademarks, the most popular of which is the
trademark "S" enclosed by an inverted triangle, which the CA says is identifiable to Superman. Such
reasoning, however, misses the entire point, which is that respondent had used a stylized "S," which is the
same stylized "S" which petitioner has a registered trademark for. The letter "S" used in the Superman logo,
on the other hand, has a block-like tip on the upper portion and a round elongated tip on the lower portion.
Accordingly, the comparison made by the CA of the letter "S" used in the Superman trademark with
petitioner’s stylized "S" is not appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the font
and the size of the lettering, the stylized "S" utilized by respondent is the very same stylized "S" used by
petitioner; a stylized "S" which is unique and distinguishes petitioner’s trademark. Indubitably, the
likelihood of confusion is present as purchasers will associate the respondent’s use of the stylized "S" as
having been authorized by petitioner or that respondent’s product is connected with petitioner’s business.
Both the RTC and the CA applied the Holistic Test in ruling that respondent had not infringed petitioner’s
trademark. For its part, the RTC noted the following supposed dissimilarities between the shoes, to wit:
1. The mark "S" found in Strong Shoes is not enclosed in an "oval design."
2. The word "Strong" is conspicuously placed at the backside and insoles.
3. The hang tags and labels attached to the shoes bears the word "Strong" for respondent and
"Skechers U.S.A." for private complainant;
4. Strong shoes are modestly priced compared to the costs of Skechers Shoes. 19
While there may be dissimilarities between the appearances of the shoes, to this Court’s mind such
dissimilarities do not outweigh the stark and blatant similarities in their general features. As can be readily
observed by simply comparing petitioner’s Energy20 model and respondent’s Strong21 rubber shoes,
respondent also used the color scheme of blue, white and gray utilized by petitioner. Even the design and
"wavelike" pattern of the midsole and outer sole of respondent’s shoes are very similar to petitioner’s shoes,
if not exact patterns thereof. At the side of the midsole near the heel of both shoes are two elongated
designs in practically the same location. Even the outer soles of both shoes have the same number of ridges,
five at the back and six in front. On the side of respondent’s shoes, near the upper part, appears the stylized
"S," placed in the exact location as that of the stylized "S" on petitioner’s shoes. On top of the "tongue" of
both shoes appears the stylized "S" in practically the same location and size. Moreover, at the back of
petitioner’s shoes, near the heel counter, appears "Skechers Sport Trail" written in white lettering.
However, on respondent’s shoes appears "Strong Sport Trail" noticeably written in the same white lettering,
font size, direction and orientation as that of petitioner’s shoes. On top of the heel collar of petitioner’s
shoes are two grayish-white semi-transparent circles. Not surprisingly, respondent’s shoes also have two
grayish-white semi-transparent circles in the exact same location.lihpwa1
Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test,
ruled that there was no colorable imitation, when it cannot be any more clear and apparent to this Court that
there is colorable imitation. The dissimilarities between the shoes are too trifling and frivolous that it is
indubitable that respondent’s products will cause confusion and mistake in the eyes of the public.
Respondent’s shoes may not be an exact replica of petitioner’s shoes, but the features and overall design are
so similar and alike that confusion is highly likely.1avvphi1

In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc., 22 this Court, in a case for unfair
competition, had opined that even if not all the details are identical, as long as the general appearance of the
two products are such that any ordinary purchaser would be deceived, the imitator should be liable, to wit:

From said examination, We find the shoes manufactured by defendants to contain, as found by the trial
court, practically all the features of those of the plaintiff Converse Rubber Corporation and manufactured,
sold or marketed by plaintiff Edwardson Manufacturing Corporation, except for their respective brands, of
course. We fully agree with the trial court that "the respective designs, shapes, the colors of the ankle
patches, the bands, the toe patch and the soles of the two products are exactly the same ... (such that) at a
distance of a few meters, it is impossible to distinguish "Custombuilt" from "Chuck Taylor." These
elements are more than sufficient to serve as basis for a charge of unfair competition. Even if not all the
details just mentioned were identical, with the general appearances alone of the two products, any ordinary,
or even perhaps even a not too perceptive and discriminating customer could be deceived, and, therefore,
Custombuilt could easily be passed off for Chuck Taylor. Jurisprudence supports the view that under such
circumstances, the imitator must be held liable. x x x23

Neither can the difference in price be a complete defense in trademark infringement. In McDonald’s
Corporation v. L.C. Big Mak Burger. Inc.,24 this Court held:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is
likely to lead to a confusion of source, as where prospective purchasers would be misled into thinking that
the complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or
is in any way connected with the activities of the infringer; or when it forestalls the normal potential
expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). x x x25

Indeed, the registered trademark owner may use its mark on the same or similar products, in different
segments of the market, and at different price levels depending on variations of the products for specific
segments of the market.26 The purchasing public might be mistaken in thinking that petitioner had ventured
into a lower market segment such that it is not inconceivable for the public to think that Strong or Strong
Sport Trail might be associated or connected with petitioner’s brand, which scenario is plausible especially
since both petitioner and respondent manufacture rubber shoes.

Withal, the protection of trademarks as intellectual property is intended not only to preserve the goodwill
and reputation of the business established on the goods bearing the mark through actual use over a period of
time, but also to safeguard the public as consumers against confusion on these goods. 27 While respondent’s
shoes contain some dissimilarities with petitioner’s shoes, this Court cannot close its eye to the fact that for
all intents and purpose, respondent had deliberately attempted to copy petitioner’s mark and overall design
and features of the shoes. Let it be remembered, that defendants in cases of infringement do not normally
copy but only make colorable changes.28The most successful form of copying is to employ enough points of
similarity to confuse the public, with enough points of difference to confuse the courts. 29

WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED. The Decision dated
November 30, 2006 is RECONSIDERED and SET ASIDE.

SO ORDERED.
 G.R. No. 169440 November 23, 2011
GEMMA ONG A.K.A. Maria Teresa Gemma Catacutan, Petitioner,
vs. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of Court, to set aside and
reverse the June 16, 2005 Decision1 of the Court of Appeals in CA-G.R. CR No. 28308, which affirmed the
September 23, 2003 Decision2 of the Regional Trial Court (RTC) of Manila, Branch 24 in Criminal Case
No. 00-184454.
On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma) was charged
before the RTC for Infringement under Section 155 in relation to Section 170 of Republic Act No. 8293 or
the Intellectual Property Code. The accusatory portion of the Information reads:
That sometime in September 25, 1998 and prior thereto at Sta. Cruz, Manila and within the jurisdiction of
this Honorable Court, the above-named accused did then and there, knowingly, maliciously, unlawfully and
feloniously engage in the distribution, sale, [and] offering for sale of counterfeit Marlboro cigarettes which
had caused confusion, deceiving the public that such cigarettes [were] Marlboro cigarettes and those of the
Telengtan Brothers and Sons, Inc., doing business under the style of La Suerte Cigar and Cigarettes
Factory, the exclusive manufacturer of Marlboro Cigarette in the Philippines and that of Philip Morris
Products, Inc. (PMP7) the registered owner and proprietor of the MARLBORO trademark together with the
devices, including the famous-Root Device, to their damage and prejudice, without the accused seeking
their permit or authority to manufacture and distribute the same.3
On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a warrant of arrest against
Gemma, but lifted4 and set aside5 the same after Gemma voluntarily surrendered on August 4, 2000, and
filed a cash bond for ₱ 12,000.00.
Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000. 6 After the pre-trial
conference on February 13, 2001,7 trial on the merits ensued.
The prosecution called to the witness stand the following: Roger Sherman Slagle, the Director of
Operations of Philip Morris Malaysia, and Philip Morris Philippines, Inc.’s (PMPI) product/brand security
expert, to testify that according to his examination, the products they seized at the subject premises were
counterfeit cigarettes;8 as well as Jesse Lara, who, as then Senior Investigator III at the Intellectual Property
Rights (IPR) Unit of the Economic Intelligence and Investigation Bureau (EIIB), Department of Finance,
led the investigating team, to testify on the events that led to the arrest of Gemma. 9 The prosecution also
presented the billing accountant of Quasha Ancheta Peña & Nolasco Law Office (Quasha Law Office),
Juliet Flores, to show that PMPI, being one of Quasha Law Office’s clients, paid the amount of $4,069.12
for legal services rendered.10 The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a senior
law partner at Quasha Law Office, who testified that as the duly appointed Attorney-in-Fact of PMPI, he
was in charge of the EIIB search operation in the subject premises. Atty. Ancheta said that while he was not
personally present during the implementation of the search warrant, he sent Atty. Leonardo Salvador, who
constantly reported the developments to him.11
The facts, as succinctly summarized by the Court of Appeals, are as follows:
On September 10, 1998, Jesse S. Lara, then Senior Investigator III at the Intellectual Property Rights (IPR)
Unit of the Economic Intelligence and Investigation Bureau (EIIB), Department of Finance, received
reliable information that counterfeit "Marlboro" cigarettes were being distributed and sold by two (2)
Chinese nationals, Johnny Sia and Jessie Concepcion, in the areas of Tondo, Binondo, Sta. Cruz and
Quiapo, Manila. A mission team formed by EIIB, including Lara, conducted surveillance operation to
verify the report. EIIB agents Leonardo Villanueva and Jigo Madrigal did a "test-buy" on the different sari-
sari stores of Manila located in Quiapo, Tondo, Sta. Cruz and Blumentritt areas and took samples of
"Marlboro" cigarettes sold therein. During the surveillance, the container van delivering the "Marlboro"
packed in black plastic bags was seen parked at 1677 Bulacan corner Hizon Streets, Sta. Cruz, Manila [(the
subject premises)]. Upon inquiry from the Barangay Chairman, they also learned that the place is owned by
a certain Mr. Jackson Ong.
The EIIB team coordinated with officers of Philip Morris, Inc., owner of the trademark Marlboro Label in
the Philippines duly registered with the Philippine Patents Office and subsequently with the Intellectual
Property Office (IPO) since 1956. Initial examination made by Philip Morris, Inc. on those random sample
purchases revealed that the cigarettes were indeed fake products unauthorized by the company. With
official indorsement by the EIIB, Senior Investigator Lara filed an application for search warrant before the
Regional Trial Court of Dasmariñas, Cavite, Branch 90.
On September 24, 1998, Executive Judge Dolores L. Español issued a search warrant after finding probable
cause to believe that Mr. Jackson Ong has in his possession/control in the premises located at 1675-1677
Bulacan St. cor. M. Hizon St., Sta. Cruz, Manila, the following properties:
"Substantial number of fake locally made and imported fake cigarettes bearing the Marlboro brand, together
with the corresponding labels, cartons, boxes and other packaging as well as receipts, invoices and other
documents relative to the purchase, sale, and distribution of the aforesaid fake Marlboro cigarettes."
On September 25, 1998, the EIIB team led by Senior Investigator Lara implemented the search warrant,
together with SPO2 Rommel P. Sese of the Western Police District (WPD) as representative of the
Philippine National Police (PNP), Barangay Chairman Ernesto Traje, Sr., Barangay Kagawad Vivian V.
Rallonza and Atty. Leonardo P. Salvador who was sent by [Quasha Peña & Nolasco Law Office,] the law
firm engaged by Philip Morris, Inc. They proceeded to the subject premises but Jackson Ong, the alleged
owner, was not there. It was accused, who is supposedly either the spouse or common-law wife of Jackson
Ong, who entertained them. At first, accused refused to allow them entry into the premises but eventually
the team was able to search the premises and found Marlboro cigarettes stocked in several boxes containing
fifty (50) reams inside each box which were packed in black plastic sacks like in "balikbayan boxes." The
"Inventory" and "Certification In the Conduct of Search" were duly accomplished and signed by the
members of the EIIB and the other representatives present during the actual search (SPO2 Sese, Jess Lara,
Traje, Sr., Henry Mariano, Isidro Burgos and Atty. Salvador). Accused signed her name in the said
documents as "Gemma Ong," as the Owner/Representative, while a certain employee, Girlie Cantillo, also
signed as witness.
On September 28, 1998, a Return of Search Warrant was submitted by the EIIB to the issuing court stating
that the articles seized pursuant to the warrant were stored in the premises of the EIIB and requesting that
EIIB be granted temporary custody of the goods. Acting on the Urgent Motion To Transfer Custody of
Confiscated Articles filed by Philip Morris Products, Inc. (PMPI) of Virginia, U.S.A., Executive Judge
Dolores L. Español ordered the custody of the seized goods transferred from EIIB to PMPI c/o Quasha
Ancheta Peña and Nolasco Law Office, the Attorney-in-Fact of PMPI. Judge Español subsequently also
issued an order dated October 15, 1998 authorizing PMPI to secure and take out samples of the
unauthorized products from the confiscated cartons/boxes of Marlboro cigarettes which are stored at Four
Winds Phils. Inc. warehouse located at No. 2241 Pasong Tamo Extension, Makati City under the direct and
personal control and supervision of Sheriff IV Tomas C. Azurin. PMPI had earlier sought such order from
the court for the purpose of laboratory analysis and scientific testing of the samples from the confiscated
cigarettes.
On the basis of the results of the examination conducted by PMPI on the samples obtained from the
confiscated boxes of cigarettes bearing the Marlboro brand, which confirmed the same to be unauthorized
products and not genuine Marlboro cigarettes, the EIIB filed a case for Violation of Sections 155 and 168 in
relation to Section 170 of Republic Act No. 8293 against Jackson Ong who is not an authorized distributor
of Marlboro products in the Philippines.12
After the prosecution rested its case, the defense filed a Demurrer to Evidence, 13 which the RTC denied on
March 26, 2003.14 The defense moved for a reconsideration of this order but the same was denied on April
22, 2003.15
Gemma, as the lone witness for the defense, then took the witness stand. She said that she is married to Co
Yok Piao, a Chinese national, but she still uses her maiden name Catacutan.16 She denied that she is the
Gemma Ong accused in this case. She testified that she was arrested on August 4, 2000, without the
arresting officers asking for her name. She said that when she pleaded to be released, she was instructed to
post a cash bond, which she did in the amount of ₱ 12,000.00. Gemma averred that when she posted her
bond and signed her certificate of arraignment, she did so under her real name Maria Teresa Gemma
Catacutan, as opposed to the signatures in the Inventory and Certification in the Conduct of Search (search
documents), which she denied signing. She claimed that she was not able to bring up her defense of
mistaken identity early on as she did not know when the proper time to raise it was. She avowed that she
was not interrogated by the police prior to her arrest, despite the two-year gap between it and the search of
the subject premises. She alleged that she did not know Jackson Ong and that the prosecution witnesses,
whom she first saw during her trial, couldn’t even point to her as the person present during the raid when
they testified in court. Gemma further asseverated that while she could not remember where she was on
September 25, 1998, she was sure that she was not at the subject premises on that date. Gemma presented
her Identification Card issued by the Professional Regulation Commission (PRC) to show that she is a
dentist by profession, although she claimed that she is a businessperson in practice. She said that she used
to buy and sell gear fabrics, t-shirts, truck materials, and real estate17 under the business name "Fascinate
Trading" based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased operations in February
1998.18 Gemma denied ever having engaged in the manufacture and sale of any kind of cigarettes and
claimed that she could not even distinguish between a fake and a genuine Marlboro cigarette. 19
On September 30, 2003, the RTC convicted Gemma of the crime as charged. The dispositive portion of its
Decision reads:
Accordingly, this Court finds accused Gemma Catacutan guilty beyond reasonable doubt of violation of
Section 155 in relation to Section 170 of Republic Act No. 8293 and hereby sentences her to suffer the
penalty of imprisonment of two (2) years and to pay a fine of Fifty Thousand (₱ 50,000.00) Pesos.
Accused is further directed to indemnify private complainant the sum of US$4,069.12 or its peso
equivalent, as actual damages.
The records of the case as against Jackson Ong is hereby ordered archived pending his arrest.
20
With costs against accused Gemma Catacutan.
In resolving the case, the RTC narrowed down the issue to whether Gemma Catacutan was the same
accused identified as Gemma Ong. The RTC answered this in the affirmative as it found Gemma’s defense
of mistaken identity as untenable, especially since she claimed to be a professional. The RTC explained:
Ranged against the positive and forthright declaration of the prosecution witnesses, the mere
uncorroborated and self-serving denials of the accused cannot stand. (People vs. Hortaleza, 258 SCRA 201)
We note in disbelief that it was only in the hearing of November 26, 2001, that accused’[s] former lawyer
manifested that accused is known as Gemma Catacutan never as Gemma Ong (tsn, November 26, 2001, p.
3) and as admitted by her, she never revealed her true identity when arrested, when she posted her bail bond
and even during her arraignment.
She could have protested at the time of her arrest that they were arresting the wrong person but this she did
not do. She proceeded to post a bond for her provisional liberty, hired a lawyer to defend her but failed to
divulge the very information that could have led to an early dismissal of the case, if true.
Her pretensions of ignorance as to the proper stage of when to explain (tsn, May 26, 2003), p. 13 can hardly
be given credit. A dentist by profession, it is utterly incredible that she remained meek all through-out her
arrest and the posting of her bail bond.21
The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale and
manufacture of Marlboro cigarettes, the address of her business "Fascinate Trading" is registered as 1677
Bulacan Street, Sta. Cruz, Manila, the same property raided by the EIIB that contained the counterfeit
cigarettes.22
Aggrieved, Gemma appealed the RTC’s decision to the Court of Appeals based on the following grounds:
I
THE LOWER COURT GRIEVOUSLY ERRED IN CONVICTING DR. MARIA TERESA
GEMMA CATACUTAN GUILTY OF THE CRIME OF VIOLATION OF THE
INTELLECTUAL PROPERTY RIGHTS LAW DESPITE UTTER LACK OF EVIDENCE.
II
THE LOWER COURT IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN
ON THE BASIS OF SURMISE (sic), CONJECTURES AND GUESSWORK COMMITTED
GRAVE VIOLENCE AGAINST THE CONSTITUTIONAL PRESUMPTION OF
INNOCENCE.
III
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN CONVICTING
THE ACCUSED-APPELLANT WHO HAD NOT BEEN POSITIVELY IDENTIFIED AND
PINPOINTED AS MANUFACTURER NOR (sic) DISTRIBUTOR OF FAKE MARLBORO
PRODUCT.
IV
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN NOT GIVING
THE SLIGHTEST CREDENCE TO THE UNCONTRADICTED, UNREFUTED AND
CANDID TESTIMONY OF THE ACCUSED-APPELLANT, BUT INSTEAD, CONVICTED
HER ON [T]HE BASIS OF EXTRAPOLATED EVIDENCE NOT BORNE BY THE
RECORDS.
V
THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN CONVICTING
ACCUSED-APPELLANT DESPITE THE UTTER AND PATHETIC LACK OF EVIDENCE
TO SUSTAIN THE PROSECUTION’S LAME, SHALLOW AND UNCONFOUNDED
THEORY OF GUILT.23
The Court of Appeals found Gemma’s appeal to be unmeritorious. It said that Gemma was positively
identified by the prosecution witnesses as the woman who entertained them during the search of the subject
premises on September 25, 1998, and the woman who signed the Certification in the Conduct of Search and
Inventory. The Court of Appeals agreed with the RTC’s rejection of Gemma’s defense of mistaken identity,
as she should have raised it at the earliest opportunity, which was at the time of her arrest, the posting of her
bail bond, or during her arraignment. The Court of Appeals held that the amendment of the prosecution
witnesses’ affidavits was explained during the hearing, and although the original affidavits were the ones
marked during the pre-trial, the amended ones provided the basis for the filing of the Information against
Gemma and her co-accused Jackson Ong. The Court of Appeals also noted that the March 20, 2000
Resolution of the State Prosecutor specifically mentioned that the search warrant was served on Gemma
Ong. The Court of Appeals then proclaimed that in the hierarchy of evidence, the testimony of the witness
in court commands greater weight than his written affidavit.24
The Court of Appeals affirmed the conviction of Gemma for trademark infringement under Section 155 of
Republic Act No. 8293, as the counterfeit goods seized by the EIIB were not only found in her possession
and control, but also in the building registered under her business, Fascinate Trading. The Court of Appeals
said that the prosecution had satisfactorily proven Gemma’s commission of the offense since the
unauthorized use of the trademark Marlboro, owned by PMPI, was clearly intended to deceive the public as
to the origin of the cigarettes being distributed and sold, or intended to be distributed and sold. The Court of
Appeals further sustained the penalty and damages imposed by the RTC for being in accord with the law
and facts.25
Gemma is now before this Court with the following assignment of errors:
A.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF
PROSECUTION WITNESSES IDENTIFYING PETITIONER AS PRESENT AT THE TIME AND
PLACE WHEN THE SEARCH AND SEIZURE TOOK PLACE.
B.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF
PROSECUTION WITNESSES THAT THEY SAW PETITIONER SIGN HER NAME AS "GEMMA
ONG" AS OWNER/CLAIMANT/REPRESENTATIVE (OF THE ARTICLES SEIZED) ON THE
SEARCH WARRANT (EXH. "A"), CERTIFICATION IN THE CONDUCT OF SEARCH (EXH. "B")
AND INVENTORY OF THE S[E]IZED ARTICLES AT THE TIME OF THE SEARCH (EXH. "D").
C.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER’S SIGNATURE IN
EXHIBITS "A", "B" AND "C" ARE NOT HERS BUT WERE FORGED, BEING COMPLETELY AND
PATENTLY DISSIMILAR TO HER TRUE AND REAL SIGNATURE AS SHOWN IN HER OFFICIAL
I.D AS PROFESSIONAL DENTIST.
D.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF THE
PROSECUTION WITNESSES WHICH DID NOT MENTION PETITIONER’S PRESENCE AT THE
TIME AND PLACE OF THE SEARCH CANNOT TAKE PRECEDENCE OVER THEIR CONTRARY
TESTIMONIES IN COURT THAT SHE WAS PRESENT AND IN FACT THE OCCUPANT AND
OWNER OF THE PREMISES FROM WHICH SHE INITIALLY BLOCKED THEIR ENTRY INTO.
E.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS THE VERY
SAME PERSON WHO WAS CAUGHT IN POSSESSION AND CONTROL OF THE PREMISES
WHERE THE COUNTERFEIT ARTICLES WERE SEIZED BECAUSE SHE ALLEGEDLY NEVER
PROTESTED BEING WRONGFULLY ACCUSED AT THE TIME OF HER ARREST ON 4 AUGUST
2000, WHEN SHE POSTED HER CASH BOND AND WHEN SHE EVEN SIGNED HER NAME AS
MA. TERESA GEMMA CATACUTAN IN THE WAIVER, UNDERTAKING AND CERTIFICATE OR
ARRAIGNMENT, ALL IN THE NAME OF THE ACCUSED AS "GEMMA ONG, a.k.a. MA. THERESA
CATACUTAN."
F.
THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR FAILURE OF THE
PROSECUTION TO PROVE THE GUILT OF THE ACCUSED-APPELLANT BEYOND
REASONABLE DOUBT.26
Gemma argues that if it were true that she was in the subject premises when it was raided on September 25,
1998, then her name and presence would have been mentioned in the respective affidavits of Slagle and
Atty. Ancheta; and the EIIB agents who conducted the search would have confronted, investigated, or
arrested her. Gemma insists that the fact that her name was only mentioned for the first time in the amended
affidavits yields to the conclusion that she was not in the subject premises when it was searched and that the
testimonies of the prosecution witnesses were perjured.27
Gemma further claims that the courts below were wrong in finding that she never protested that she was
mistakenly identified. She claims that she was arrested without the benefit of a preliminary investigation
and all she wanted to do at that point was to "get out [of] the clutches of overzealous and eager beaver
policemen who were exuberant in arresting an innocent party like"28 her. Gemma also explains that her non-
protest during her arraignment was upon the advice of her former lawyer, who said that he would correct it
in the proper time during the trial.
Respondent People of the Philippines, in its comment,29 avers that there are only two issues to be resolved
in this case, to wit:
1. THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES QUESTIONS OF
FACT WHICH ARE NOT PROPER FOR REVIEW UNDER RULE 45 OF THE REVISED
RULES OF COURT.
2. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONER’S
CONVICTION FOR VIOLATION OF SECTION 155 IN RELATION TO SECTION 170 OF
R.A. 8293 (INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES). 30
Respondent claims that a perusal of the issues in Gemma’s petition readily discloses that only questions of
fact have been raised, which are not reviewable in an appeal by certiorari. 31 Respondent asseverates that
Gemma’s conviction was warranted as the prosecution had sufficiently established her presence during the
search of the subject premises where she signed the search documents as "Gemma Ong." Moreover, the
respondent avers, Gemma failed to timely protest her arrest and raise her claim that she is not Gemma
Ong.32
Issues
A study of the pleadings filed before this Court shows that the only issues to be resolved are the following:
1. Whether or not accused-appellant’s petition for review on certiorari under Rule 45 of the
Rules of Court is fatally defective as it raises questions of fact; and
2. Whether or not Gemma’s guilt was proven beyond reasonable doubt in light of her alleged
mistaken identity.
This Court’s Ruling
Procedural Issue A mark is valid if it is distinctive and not barred from registration. Once registered, not only the mark’s
validity, but also the registrant’s ownership of the mark is prima facie presumed. 39
As this case reached this Court via Rule 45 of the Rules of Court, the basic rule is that factual questions are
beyond the province of this Court, because only questions of law may be raised in a petition for The prosecution was able to establish that the trademark "Marlboro" was not only valid for being neither
review.33 However, in exceptional cases, this Court has taken cognizance of questions of fact in order to generic nor descriptive, it was also exclusively owned by PMPI, as evidenced by the certificates of
resolve legal issues, such as when there was palpable error or a grave misapprehension of facts by the lower registration issued by the Intellectual Property Office of the Department of Trade and Industry. 40
court.34 In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, 35 we said
that although submission of issues of fact in an appeal by certiorari taken to this Court is ordinarily
Anent the element of confusion, both the RTC and the Court of Appeals have correctly held that the
proscribed, this Court nonetheless retains the option in the exercise of its sound discretion, taking into
counterfeit cigarettes seized from Gemma’s possession were intended to confuse and deceive the public as
account the attendant circumstances, either to decide the case or refer it to the proper court for
to the origin of the cigarettes intended to be sold, as they not only bore PMPI’s mark, but they were also
determination.36 Since the determination of the identity of Gemma is the very issue affecting her guilt or
packaged almost exactly as PMPI’s products.41
innocence, this Court chooses to take cognizance of this case in the interest of proper administration of
justice.
Regarding the Claim of Mistaken Identity
Gemma is guilty of violating Section 155 in relation to Section 170 of Republic Act No. 8293
Despite all these findings, Gemma has posited only a single defense, from the RTC all the way up to this
Court: that she is not the Gemma Ong named and accused in this case. She bases this claim on the alleged
Gemma was charged and convicted of violating Section 155 in relation to Section 170 of Republic Act No.
discrepancies in the prosecution witnesses’ original affidavits vis-à-vis the amended ones, which
8293, or the Intellectual Property Code of the Philippines.
discrepancies, according to her, strongly suggest her innocence.

Section 155. Remedies; Infringement. - Any person who shall, without the consent of the owner of the
This Court has time and again held that between an affidavit executed outside the court, and a testimony
registered mark:
given in open court, the latter almost always prevails.

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or
Discrepancies between a sworn statement and testimony in court do not outrightly justify the acquittal of an
the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
accused. Such discrepancies do not necessarily discredit the witness since ex parte affidavits are often
advertising of any goods or services including other preparatory steps necessary to carry out the sale of any
incomplete. They do not purport to contain a complete compendium of the details of the event narrated by
goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
the affiant. Thus, our rulings generally consider sworn statements taken out of court to be inferior to in
or to deceive; or
court testimony. x x x.42

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof
A reading of the original affidavits43 executed by Slagle and Atty. Ancheta, readily reveals that they
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
concentrated on the facts and events leading up to the search and seizure of the contraband materials from
wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the
the subject premises. They not only failed to mention Gemma Ong’s presence there, but they also failed to
sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such
mention the other witnesses’ names and presence there as well. Although this might appear to be a mistake
use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for
on the part of a known and established law firm like the Quasha Law Office, the firm immediately sought to
infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes
rectify this by having the affidavits of Slagle, Atty. Ancheta, and Lara amended.
place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless
of whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A. No 166a)
If it were true that Gemma was not at the subject premises at all on September 25, 1998, then she should
have grabbed every chance to correct this notion and expose this mistake before she was arrested. She could
Section 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal
have brought up her defense of mistaken identity or absence at the raid in the preliminary investigation
penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos
conducted prior to the issuance of her warrant of arrest; but instead, she chose to ignore her subpoena and
(₱ 50,000) to Two hundred thousand pesos (₱ 200,000), shall be imposed on any person who is found
disregard the preliminary investigation. Even then, Gemma had the opportunity to raise the fact that she
guilty of committing any of the acts mentioned in Section 155, Section 168 and Subsection 169.1. (Arts.
was not Gemma Ong; not only during her arrest, but also during the posting of the cash bond for her bail,
188 and 189, Revised Penal Code.) (Emphases supplied.)
and more importantly, during her arraignment, when she was asked if she understood the charges against
her. Gemma also knew that the Information was filed against her on the basis of the amended affidavits,
A "mark" is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of thus, she could have filed a motion to quash the information before she entered her plea, or asked that a
an enterprise and shall include a stamped or marked container of goods. 37 reinvestigation be conducted. However, all these Gemma failed to do. We agree with the RTC that it is
highly unlikely that a person of her stature and educational attainment would be so meek and timid that she
failed to protest against her being wrongly identified, accused, arrested, and potentially imprisoned. If what
In McDonald’s Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., 38 this Court
she says were true, she would not have agreed to post bail or to be arraigned without at the very least,
held:
bringing up the fact that she was not the Gemma Ong the police officers were looking for. In addition, her
own lawyer, Atty. Maglinao, brought up the fact that she was not Gemma Ong, only for the purpose of
To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiff’s correcting the Information, and not to contest it, to wit:
mark; (2) the plaintiff’s ownership of the mark; and (3) the use of the mark or its colorable imitation by the
alleged infringer results in "likelihood of confusion." Of these, it is the element of likelihood of confusion
WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR CONTINUATION OF
that is the gravamen of trademark infringement.
DIRECT EXAMINATION BY:
ATTY. ERESE: Lara on the other hand, even pointed to her and thus positively identified her to be the one who had signed
the search documents,48 as the owner of the subject premises, to wit:
With the kind permission of the hon. court.
Testimony of Jesse Lara
COURT: Proceed.
ATTY. FREZ
ATTY. MAGLINAO:
Q : Mr. Witness, do you know this person who wrote the name Gemma Ong?
I would just want to be on record that my client, Gemma Catacutan has never been known as Gemma Ong
because her real name is Gemma Catacutan. A : Yes, sir, Gemma Ong is the owner of the premises when we served the search warrant and also, she was
the one who refused us to gain entry during the service of the search warrant.
COURT: Do you have any objection to the amendment of the information?
Q : Were you able to gain entry at the premises?
ATTY. MAGLINAO:
A : Yes, sir.
44
No, your Honor. May we request to correct the information from Gemma Ong to Gemma Catacutan.
Q : So, as regard to the person whom you identify as the one who refused you to gain entry, would you be
able to identify this person?
Gemma further accuses the prosecution witnesses of falsely testifying and of perjuring themselves just so
they can satisfy a big client like PMPI by showing that somebody had been arrested for counterfeiting its
cigarettes. The crimes Gemma is imputing on these witnesses are serious crimes, and in the absence of A : Yes, sir, that lady in pink is Mrs. Gemma Ong.
concrete and convincing evidence, this Court could not believe her mere allegations that imply that these
people would destroy someone’s life just so they can please a client, more so over mere cigarettes. In
(As witness is pointing to the accused Gemma Ong).
Principio v. Hon. Barrientos,45 we said:

Q : Mr. Witness, why do you say that the person whom you pointed to us is the one who wrote the name
Bad faith is never presumed while good faith is always presumed and the chapter on Human Relations of
Mrs. Gemma Ong?
the Civil Code directs every person, inter alia, to observe good faith, which springs from the fountain of
good conscience. Therefore, he who claims bad faith must prove it. For one to be in bad faith, the same
must be "evident." x x x.46 WITNESS

The prosecution witnesses, contrary to Gemma’s claim, had positively identified her as the person who Because when we served the search warrant she signed it in our presence and that is her own signature.
initially refused the search team entrance, then later acquiesced to the search operations. Slagle explained
that even though he mentioned Gemma only in his amended affidavit, he was sure that she was at the
subject premises on the day that they searched it: xxxx

ATTY. FREZ
Testimony of Roger Sherman Slagle

ATTY. MAGLINAO: Q : So, Mr. Witness, in this Inventory, we made some markings during the pre-trial conference and I see
here above the signature (Owner/Representative), there exist a handwritten name which reads GEMMA
ONG and above it, there exist a signature, are you familiar with this person which appears to be Gemma
Q In this amended affidavit you mentioned the name, Gemma Catacutan as one of the accused? Ong?

A Yes sir. A : Yes, sir, Gemma Ong signed that in my presence.

Q Can you tell the court how you were able to include the name of Gemma Catacutan in your amended
affidavit, when in fact it did not appear in the first affidavit?
A When we arrived she was there and she was very nervous and upset.
Q : Your Honor, during the pre-trial conference, it was previously marked as Exhibit "D-1". Mr. Witness, I
also see here a Verification but there also exist an entry below the name and I quote
"Owner/Claimant/Representative", there appears a handwritten name Gemma Ong and a signature above it,
are you familiar with this person which appears to be Gemma Ong?

A : Yes, sir, Gemma Ong signed that in my presence.

xxxx

xxxx
A It is very clear to me when I arrived there that she was somehow involved.47 (Emphases ours.)
Q : Mr. Witness, in this document which is the certification in the Conduct of Search and I have here above handwriting expert to testify on her behalf that there is no way that the signatures in the search documents
the entry (Owner/Representative), a handwritten name which reads Gemma Ong and there exist a signature and the signature on her PRC identification card could have been written by one and the same person;
above the handwritten name, can you identify the signature? instead, she relied on the flimsy contention that the two signatures were, on their face, different.1awp++i1

A : Yes, sir, this was signed by Gemma Ong in my presence.49 (Emphases ours.)
Lara further attested to the fact that the search warrant was served on Gemma, who later on entertained the
search team:
Gemma’s defense consists of her claim of mistaken identity, her denial of her involvement in the crime, and
her accusation against the prosecution witnesses of allegedly giving false testimonies and committing
perjury. These are all weak, unproven, and unfounded claims, and will not stand against the strong evidence
against her.

WHEREFORE, this Court DENIES the Petition. The June 16, 2005 Decision of the Court of Appeals in
ATTY. FREZ
CA-G.R. CR No. 28308 is AFFIRMED.

Mr. Witness, the person to whom you served the search warrant is identified as Mrs. Gemma Ong, do you
SO ORDERED.
know her relationship with the accused Jackson Ong?

ATTY. FERNANDEZ

Objection, your honor, the witness would be incompetent . . .

COURT

May answer.

(The stenographer read back the question).

WITNESS

I am not familiar with the relationship of Mrs. Gemma Ong with Jackson Ong because during the service of
the search warrant, Mrs. Gemma Ong was there together with two employees and when I asked where was
Jackson Ong, she was the one who entertained us.

ATTY. FREZ

So, the search warrant was served against Gemma Ong?

WITNESS

Yes, Sir.50

Positive identification of a culprit is of great weight in determining whether an accused is guilty or

not.51 Gemma, in claiming the defense of mistaken identity, is in reality denying her involvement in the
crime. This Court has held that the defense of denial is insipid and weak as it is easy to fabricate and
difficult to prove; thus, it cannot take precedence over the positive testimony of the offended party. 52 The
defense of denial is unavailing when placed astride the undisputed fact that there was positive identification
of the accused.53

While Gemma claims she does not know Jackson Ong, the subject premises where the counterfeit cigarettes
were seized was registered under her admitted business "Fascinate Trading." 54 Aside from the bare
allegation that she had stopped operations in the subject premises as early as February 1998, she has neither
proven nor shown any evidence that she had relinquished control of the building after that date. Gemma’s
allegation that she did not sign the search documents, and that the signatures therein did not match the
signature on her PRC identification card, must also be struck down as she has not shown proof that her PRC
signature is the only way she has ever signed her name. She could have, at the very least, gotten a
 G.R. No. 180677 February 18, 2013
VICTORIO P. DIAZ, Petitioner,
vs. PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.
DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the
gravamen of the offense of infringement of a registered trademark. The acquittal of the accused should
follow if the allegedly infringing mark is not likely to cause confusion. Thereby, the evidence of the State
does not satisfy the quantum of proof beyond reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 2007 1 and November 22,
2007,2whereby the Court of Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133
for the belated filing of the appellant's brief, and denied his motion for reconsideration. Thereby, the
decision rendered on February 13, 2006 in Criminal Case No. 00-0318 and Criminal Case No. 00-0319 by
the Regional Trial Court, Branch 255, in Las Pifias City (RTC) convicting him for two counts of
infringement of trademark were affirmed.3
Antecedents
On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Piñas City,
charging Diaz with violation of Section 155, in relation to Section 170, of Republic Act No. 8293, also
known as the Intellectual Property Code of the Philippines (Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction
of this Honorable Court, the abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc.
(hereinafter referred to as LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and
intentionally engaged in commerce by reproducing, counterfeiting, copying and colorably imitating Levi’s
registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE
BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN,
TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold,
offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or
deceived the general consuming public, without the consent, permit or authority of the registered owner,
LEVI’S, thus depriving and defrauding the latter of its right to the exclusive use of its trademarks and
legitimate trade, to the damage and prejudice of LEVI’S.
CONTRARY TO LAW.4
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction
of this Honorable Court, the abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc.
(hereinafter referred to as LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and
intentionally engaged in commerce by reproducing, counterfeiting, copying and colorably imitating Levi’s
registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE
BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN,
TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold,
offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or
deceived the general consuming public, without the consent, permit or authority of the registered owner,
LEVI’S, thus depriving and defrauding the latter of its right to the exclusive use of its trademarks and
legitimate trade, to the damage and prejudice of LEVI’S.
CONTRARY TO LAW.5
The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to each information on
June 21, 2000.6
1.
Evidence of the Prosecution
Levi Strauss and Company (Levi’s), a foreign corporation based in the State of Delaware, United States of
America, had been engaged in the apparel business. It is the owner of trademarks and designs of Levi’s
jeans like LEVI’S 501, the arcuate design, the two-horse brand, the two-horse patch, the two-horse patch
with pattern arcuate, and the composite tab arcuate. LEVI’S 501 has the following registered trademarks, to
wit: (1) the leather patch showing two horses pulling a pair of pants; (2) the arcuate pattern with the
inscription "LEVI STRAUSS & CO;" (3) the arcuate design that refers to "the two parallel stitching curving
downward that are being sewn on both back pockets of a Levi’s Jeans;" and (4) the tab or piece of cloth
located on the structural seam of the right back pocket, upper left side. All these trademarks were registered
in the Philippine Patent Office in the 1970’s, 1980’s and early part of 1990’s.7
Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After receiving information that
Diaz was selling counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza and Talon, Las Piñas City,
Levi’s Philippines hired a private investigation group to verify the information. Surveillance and the
purchase of jeans from the tailoring shops of Diaz established that the jeans bought from the tailoring shops
of Diaz were counterfeit or imitations of LEVI’S 501. Levi’s Philippines then sought the assistance of the
National Bureau of Investigation (NBI) for purposes of applying for a search warrant against Diaz to be
served at his tailoring shops. The search warrants were issued in due course. Armed with the search
warrants, NBI agents searched the tailoring shops of Diaz and seized several fake LEVI’S 501 jeans from
them. Levi’s Philippines claimed that it did not authorize the making and selling of the seized jeans; that
each of the jeans were mere imitations of genuine LEVI’S 501 jeans by each of them bearing the registered
trademarks, like the arcuate design, the tab, and the leather patch; and that the seized jeans could be
mistaken for original LEVI’S 501 jeans due to the placement of the arcuate, tab, and two-horse leather
patch.8
2.
Evidence of the Defense
On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.
Diaz stated that he did not manufacture Levi’s jeans, and that he used the label "LS Jeans Tailoring" in the
jeans that he made and sold; that the label "LS Jeans Tailoring" was registered with the Intellectual Property
Office; that his shops received clothes for sewing or repair; that his shops offered made-to-order jeans,
whose styles or designs were done in accordance with instructions of the customers; that since the time his
shops began operating in 1992, he had received no notice or warning regarding his operations; that the jeans
he produced were easily recognizable because the label "LS Jeans Tailoring," and the names of the
customers were placed inside the pockets, and each of the jeans had an "LSJT" red tab; that "LS" stood for
"Latest Style;" and that the leather patch on his jeans had two buffaloes, not two horses. 9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:
WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY
beyond reasonable doubt of twice violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in
the Informations in Criminal Case Nos. 00-0318 & 00-0319, respectively, and hereby sentences him to
suffer in each of the cases the penalty of imprisonment of TWO (2) YEARS of prision correcional, as
minimum, up to FIVE (5) YEARS of prision correcional, as maximum, as well as pay a fine of ₱50,000.00
for each of the herein cases, with subsidiary imprisonment in case of insolvency, and to suffer the accessory
penalties provided for by law.
Also, accused Diaz is hereby ordered to pay to the private complainant Levi’s Strauss (Phils.), Inc. the
following, thus:
1. ₱50,000.00 in exemplary damages; and
2. ₱222,000.00 as and by way of attorney’s fees.
Costs de officio.
SO ORDERED.10
Ruling of the CA
Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his
appellant’s brief on time despite being granted his requested several extension periods.
Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.
Issue
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT
APPLIED RIGIDLY THE RULE ON TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE
BY DISMISSING THE APPEAL OF THE PETITIONER FOR LATE FILING OF APPELLANT’S
BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his
appellant’s brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellant’s brief in the
CA "within forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and
documentary, are attached to the record, seven (7) copies of his legibly typewritten, mimeographed or
printed brief, with proof of service of two (2) copies thereof upon the appellee." Section 1(e) of Rule 50 of
the Rules of Court grants to the CA the discretion to dismiss an appeal either motu proprio or on motion of
the appellee should the appellant fail to serve and file the required number of copies of the appellant’s brief
within the time provided by the Rules of Court.12
The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure
to file the appellant’s brief is not mandatory, but discretionary. Verily, the failure to serve and file the
required number of copies of the appellant’s brief within the time provided by the Rules of Court does not
have the immediate effect of causing the outright dismissal of the appeal. This means that the discretion to
dismiss the appeal on that basis is lodged in the CA, by virtue of which the CA may still allow the appeal to
proceed despite the late filing of the appellant’s brief, when the circumstances so warrant its liberality. In
deciding to dismiss the appeal, then, the CA is bound to exercise its sound discretion upon taking all the
pertinent circumstances into due consideration.
The records reveal that Diaz’s counsel thrice sought an extension of the period to file the appellant’s brief.
The first time was on March 12, 2007, the request being for an extension of 30 days to commence on March
11, 2007. The CA granted his motion under its resolution of March 21, 2007. On April 10, 2007, the last
day of the 30-day extension, the counsel filed another motion, seeking an additional 15 days. The CA
allowed the counsel until April 25, 2007 to serve and file the appellant’s brief. On April 25, 2007, the
counsel went a third time to the CA with another request for 15 days. The CA still granted such third
motion for extension, giving the counsel until May 10, 2007. Notwithstanding the liberality of the CA, the
counsel did not literally comply, filing the appellant’s brief only on May 28, 2007, which was the 18th day
beyond the third extension period granted.
Under the circumstances, the failure to file the appellant’s brief on time rightly deserved the outright
rejection of the appeal. The acts of his counsel bound Diaz like any other client. It was, of course, only the
counsel who was well aware that the Rules of Court fixed the periods to file pleadings and equally
significant papers like the appellant’s brief with the lofty objective of avoiding delays in the administration
of justice.
Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by
the CA on appeal because of the failure of his counsel to serve and file the appellant’s brief on time despite
the grant of several extensions the counsel requested. Diaz was convicted and sentenced to suffer two
indeterminate sentences that would require him to spend time in detention for each conviction lasting two
years, as minimum, to five years, as maximum, and to pay fines totaling ₱100,000.00 (with subsidiary
imprisonment in case of his insolvency). His personal liberty is now no less at stake. This reality impels us
to look beyond the technicality and delve into the merits of the case to see for ourselves if the appeal, had it
not been dismissed, would have been worth the time of the CA to pass upon. After all, his appellant’s brief
had been meanwhile submitted to the CA. While delving into the merits of the case, we have uncovered a
weakness in the evidence of guilt that cannot be simply ignored and glossed over if we were to be true to
our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable
negligence tendered by Diaz’s counsel to justify the belated filing of the appellant’s brief as unworthy of
serious consideration, Diaz should not be made to suffer the dire consequence. Any accused in his shoes,
with his personal liberty as well as his personal fortune at stake, expectedly but innocently put his fullest
trust in his counsel’s abilities and professionalism in the handling of his appeal. He thereby delivered his
fate to the hands of his counsel. Whether or not those hands were efficient or trained enough for the job of
handling the appeal was a learning that he would get only in the end. Likelier than not, he was probably
even unaware of the three times that his counsel had requested the CA for extensions. If he were now to be
left to his unwanted fate, he would surely suffer despite his innocence. How costly a learning it would be
for him! That is where the Court comes in. It is most important for us as dispensers of justice not to allow
the inadvertence or incompetence of any counsel to result in the outright deprivation of an appellant’s right
to life, liberty or property.13
We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on
the line, the people whose futures hang in a balance should not be left to suffer from the incompetence,
mindlessness or lack of professionalism of any member of the Law Profession. They reasonably expect a
just result in every litigation. The courts must give them that just result. That assurance is the people’s
birthright. Thus, we have to undo Diaz’s dire fate.
Even as we now set aside the CA’s rejection of the appeal of Diaz, we will not remand the records to the
CA for its review. In an appeal of criminal convictions, the records are laid open for review. To avoid
further delays, therefore, we take it upon ourselves to review the records and resolve the issue of guilt,
considering that the records are already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:
Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or
the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes
place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless
of whether there is actual sale of goods or services using the infringing material.
The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore,
the following:
1. The trademark being infringed is registered in the Intellectual Property Office;
2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;
3. The infringing mark is used in connection with the sale, offering for sale, or advertising of
any goods, business or services; or the infringing mark is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in connection
with such goods, business or services;
4. The use or application of the infringing mark is likely to cause confusion or mistake or to
deceive purchasers or others as to the goods or services themselves or as to the source or origin
of such goods or services or the identity of such business; and
5. The use or application of the infringing mark is without the consent of the trademark owner or
the assignee thereof.14
As can be seen, the likelihood of confusion is the gravamen of the offense of trademark
infringement.15 There are two tests to determine likelihood of confusion, namely: the dominancy test, and
the holistic test. The contrasting concept of these tests was explained in Societes Des Produits Nestle, S.A.
v. Dy, Jr., thus:
x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement takes place when the competing trademark
contains the essential features of another. Imitation or an effort to imitate is unnecessary. The question is
whether the use of the marks is likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in determining
confusing similarity. The focus is not only on the predominant words but also on the other features
appearing on the labels.16
As to what test should be applied in a trademark infringement case, we said in McDonald’s Corporation v.
Macjoy Fastfood Corporation17 that:
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no
set rules can be deduced because each case must be decided on its merits. In such cases, even more than in
any other litigation, precedent must be studied in the light of the facts of the particular case. That is the
reason why in trademark cases, jurisprudential precedents should be applied only to a case if they are
specifically in point.
The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an alleged
trademark infringement of jeans products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a
corporation based in the United States of America, claimed that Emerald Garment’s trademark of
"STYLISTIC MR. LEE" that it used on its jeans products was confusingly similar to the "LEE" trademark
that H.D. Lee used on its own jeans products. Applying the holistic test, the Court ruled that there was no
infringement.
The holistic test is applicable here considering that the herein criminal cases also involved trademark
infringement in relation to jeans products. Accordingly, the jeans trademarks of Levi’s Philippines and Diaz
must be considered as a whole in determining the likelihood of confusion between them. The maong pants
or jeans made and sold by Levi’s Philippines, which included LEVI’S 501, were very popular in the
Philippines. The consuming public knew that the original LEVI’S 501 jeans were under a foreign brand and
quite expensive. Such jeans could be purchased only in malls or boutiques as ready-to-wear items, and were
not available in tailoring shops like those of Diaz’s as well as not acquired on a "made-to-order" basis.
Under the circumstances, the consuming public could easily discern if the jeans were original or fake
LEVI’S 501, or were manufactured by other brands of jeans. Confusion and deception were remote, for, as
the Court has observed in Emerald Garments:
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your
ordinary household items like catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans
are not inexpensive. Accordingly, the casual buyer is predisposed to be more cautious and discriminating in
and would prefer to mull over his purchase. Confusion and deception, then, is less likely. In Del Monte
Corporation v. Court of Appeals, we noted that:
.... Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be
cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much
care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he does in purchasing a more valuable
thing. Expensive and valuable items are normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and matters of everyday purchase
requiring frequent replacement are bought by the casual consumer without great care....
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the
sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore,
more or less knowledgeable and familiar with his preference and will not easily be distracted.
Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser."
Cast in this particular controversy, the ordinary purchaser is not the "completely unwary consumer" but is
the "ordinarily intelligent buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the
"ordinary purchaser" was defined as one "accustomed to buy, and therefore to some extent familiar with,
the goods in question. The test of fraudulent simulation is to be found in the likelihood of the deception
of some persons in some measure acquainted with an established design and desirous of purchasing the
commodity with which that design has been associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing about the design which has been counterfeited,
and who must be indifferent between that and the other. The simulation, in order to be objectionable, must
be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is familiar
with the article that he seeks to purchase.19
Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring
shops. His trademark was visually and aurally different from the trademark "LEVI STRAUSS & CO"
appearing on the patch of original jeans under the trademark LEVI’S 501. The word "LS" could not be
confused as a derivative from "LEVI STRAUSS" by virtue of the "LS" being connected to the word
"TAILORING", thereby openly suggesting that the jeans bearing the trademark "LS JEANS TAILORING"
came or were bought from the tailoring shops of Diaz, not from the malls or boutiques selling original
LEVI’S 501 jeans to the consuming public.

There were other remarkable differences between the two trademarks that the consuming public would
easily perceive. Diaz aptly noted such differences, as follows:

The prosecution also alleged that the accused copied the "two horse design" of the petitioner-private
complainant but the evidence will show that there was no such design in the seized jeans. Instead, what is
shown is "buffalo design." Again, a horse and a buffalo are two different animals which an ordinary
customer can easily distinguish. x x x.

The prosecution further alleged that the red tab was copied by the accused. However, evidence will show
that the red tab used by the private complainant indicates the word "LEVI’S" while that of the accused
indicates the letters "LSJT" which means LS JEANS TAILORING. Again, even an ordinary customer can
distinguish the word LEVI’S from the letters LSJT.

xxxx

In terms of classes of customers and channels of trade, the jeans products of the private complainant and the
accused cater to different classes of customers and flow through the different channels of trade. The
customers of the private complainant are mall goers belonging to class A and B market group – while that
of the accused are those who belong to class D and E market who can only afford Php 300 for a pair of
made-toorder pants.20 x x x.

Moreover, based on the certificate issued by the Intellectual Property Office, "LS JEANS TAILORING"
was a registered trademark of Diaz. He had registered his trademark prior to the filing of the present
cases.21 The Intellectual Property Office would certainly not have allowed the registration had Diaz’s
trademark been confusingly similar with the registered trademark for LEVI’S 501 jeans.

Given the foregoing, it should be plain that there was no likelihood of confusion between the trademarks
involved. Thereby, the evidence of guilt did not satisfy the quantum of proof required for a criminal
conviction, which is proof beyond reasonable doubt. According to Section 2, Rule 133 of the Rules of
Court, proof beyond a reasonable doubt does not mean such a degree of proof as, excluding possibility of
error, produces absolute certainty. Moral certainty only is required, or that degree of proof which produces
conviction in an unprejudiced mind. Consequently, Diaz should be acquitted of the charges.

WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of
trademark charged in Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for failure of the State to
establish his guilt by proof beyond reasonable doubt.

No pronouncement on costs of suit.

SO ORDERED.
Diamond v. Chakrabarty, 447 U.S. 303 (1980) Chakrabarty's patent claims were of three types: first, process claims for the method of producing the
bacteria; second, claims for an inoculum comprised of a carrier material floating on water, such as straw,
and the new bacteria; and third, claims to the bacteria themselves. The patent examiner allowed the claims
Syllabus
falling into the first two categories, but rejected claims for the bacteria. His decision rested on two grounds:
(1) that micro-organisms are "products of nature," and (2) that, as living things, they are not patentable
Title 35 U.S.C. § 101 provides for the issuance of a patent to a person who invents or discovers "any" new subject matter under 35 U.S.C. § 101.
and useful "manufacture" or "composition of matter." Respondent filed a patent application relating to his
invention of a human-made, genetically engineered bacterium capable of breaking down crude oil, a
Chakrabarty appealed the rejection of these claims to the Patent Office Board of Appeals, and the Board
property which is possessed by no naturally occurring bacteria. A patent examiner's rejection of the patent
affirmed the examiner on the second ground. [Footnote 3] Relying on the legislative history of the 1930
application's claims for the new bacteria was affirmed by the Patent Office Board of Appeals on the ground
Plant Patent Act, in which Congress extended patent protection to certain asexually reproduced plants, the
that living things are not patentable subject matter under § 101. The Court of Customs and Patent Appeals
Board concluded that § 101 was not intended to cover living things such as these laboratory created micro-
reversed, concluding that the fact that micro-organisms are alive is without legal significance for purposes
organisms.
of the patent law.

Held: A live, human-made micro-organism is patentable subject matter under § 101. Respondent's micro-
organism constitutes a "manufacture" or "composition of matter" within that statute. Pp. 447 U. S. 308-318.
(a) In choosing such expansive terms as "manufacture" and "composition of matter," modified by the
comprehensive "any," Congress contemplated that the patent laws should be given wide scope, and the
relevant legislative history also supports a broad construction. While laws of nature, physical phenomena,
and abstract ideas are not patentable, respondent's claim is not to a hitherto unknown natural phenomenon,
but to a nonnaturally occurring manufacture or composition of matter -- a product of human ingenuity
"having a distinctive name, character [and] use." Hartranft v. Wiegmann, 121 U. S. 609, 121 U. S.
615. Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U. S. 127, distinguished. Pp. 447 U. S. 308-310.
(b) The passage of the 1930 Plant Patent Act, which afforded patent protection to certain asexually
reproduced plants, and the 1970 Plant Variety Protection Act, which authorized protection for certain
sexually reproduced plants but excluded bacteria from its protection, does not evidence congressional
understanding that the terms "manufacture" or "composition of matter" in § 101 do not include living
things. Pp. 447 U. S. 310-314.
(c) Nor does the fact that genetic technology was unforeseen when Congress enacted § 101 require the
conclusion that micro-organisms cannot qualify as patentable subject matter until Congress expressly
authorizes such protection. The unambiguous language of § 101 fairly embraces respondent's invention.
Arguments against patentability under § 101, based on potential hazards that may be generated by genetic
research, should be addressed to the Congress and the Executive, not to the Judiciary. Pp. 447 U. S. 314-
318.
596 F.2d 952, affirmed.
The Court of Customs and Patent Appeals, by a divided vote, reversed on the authority of its prior decision
in In re Bergy, 563 F.2d 1031, 1038 (1977), which held that "the fact that micro-organisms . . . are alive . . .
[is] without legal significance" for purposes of the patent law. [Footnote 4] Subsequently, we granted the
Acting Commissioner of Patents and Trademarks' petition for certiorari in Bergy, vacated the judgment, and
remanded the case "for further consideration in light of Parker v. Flook, 437 U. S. 584 (1978)." 438 U.S.
902 (1978). The Court of Customs and Patent Appeals then vacated its judgment in Chakrabarty and
consolidated the case with Bergy for reconsideration. After reexamining both cases in the light of our
holding in Flook, that court, with one dissent, reaffirmed its earlier judgments.
The Commissioner of Patents and Trademarks again sought certiorari, and we granted the writ as to both
Bergy and Chakrabarty. 444 U.S. 924 (1979). Since then, Bergy has been dismissed as moot, 444 U.S. 1028
(1980), leaving only Chakrabarty for decision.
II
The Constitution grants Congress broad power to legislate to "promote the Progress of Science and useful
Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective
Writings and Discoveries."
The patent laws promote this progress by offering inventors exclusive rights for a limited period as an
incentive for their inventiveness and research efforts. Kewanee Oil Co. v. Bicron Corp., 416 U. S. 470, 416
U. S. 480-481 (1974); Universal Oil Co. v. Globe Co., 322 U. S. 471, 322 U. S. 484 (1944). The authority
of Congress is exercised in the hope that "[t]he productive effort thereby fostered will have a positive effect
on society through the introduction of new products and processes of manufacture into the economy, and
the emanations by way of increased employment and better lives for our citizens."

Kewanee, supra, at 416 U. S. 480.

We granted certiorari to determine whether a live, human-made micro-organism is patentable subject matter
under 35 U.S.C. § 101.
The question before us in this case is a narrow one of statutory interpretation requiring us to construe 35
U.S.C. § 101, which provides:
I

"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of
In 1972, respondent Chakrabarty, a microbiologist, filed a patent application, assigned to the General
matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions
Electric Co. The application asserted 36 claims related to Chakrabarty's invention of "a bacterium from the
and requirements of this title."
genus Pseudomons containing therein at least two stable energy-generating plasmids, each of said plasmids
providing a separate hydrocarbon degradative pathway. [Footnote 1]"
Specifically, we must determine whether respondent's micro-organism constitutes a "manufacture" or
"composition of matter" within the meaning of the statute. [Footnote 5]
This human-made, genetically engineered bacterium is capable of breaking down multiple components of
crude oil. Because of this property, which is possessed by no naturally occurring bacteria, Chakrabarty's
invention is believed to have significant value for the treatment of oil spills. [Footnote 2] III
In cases of statutory construction we begin, of course, with the language of the statute. Southeastern
Community College v. Davis, 442 U. S. 397, 442 U. S. 405 (1979). And "unless otherwise defined, words
will be interpreted as taking their ordinary, contemporary, common meaning." Perrin v. United States, 444
U. S. 37,444 U. S. 42 (1979). We have also cautioned that courts "should not read into the patent laws
limitations and conditions which the legislature has not expressed." United States v. Dubilier Condenser
Corp., 289 U. S. 178,289 U. S. 199 (1933) .
Guided by these canons of construction, this Court has read the term "manufacture" in § 101 in accordance
with its dictionary definition to mean "the production of articles for use from raw or prepared materials by
giving to these materials new forms, qualities, properties, or combinations, whether by hand labor or by
machinery."
American Fruit Growers, Inc. v. Brogdex Co., 283 U. S. 1, 283 U. S. 11 (1931). Similarly, "composition of
matter" has been construed consistent with its common usage to include "all compositions of two or more
substances and . . . all composite articles, whether they be the results of chemical union, or of mechanical
mixture, or whether they be gases, fluids, powders or solids."
Shell Development Co. v. Watson, 149 F.Supp. 279, 280 (DC 1957) (citing 1 A. Deller, Walker on Patents §
14, p. 55 (1st ed.1937)). In choosing such expansive terms as "manufacture" and "composition of matter,"
modified by the comprehensive "any," Congress plainly contemplated that the patent laws would be given
wide scope.
The relevant legislative history also supports a broad construction. The Patent Act of 1793, authored by
Thomas Jefferson, defined statutory subject matter as "any new and useful art, machine, manufacture, or
composition of matter, or any new or useful improvement [thereof]." Act of Feb. 21, 1793, § 1, 1 Stat. 319.
The Act embodied Jefferson's philosophy that "ingenuity should receive a liberal encouragement."
Subsequent patent statutes in 1836, 1870, and 1874 employed this same broad language. In 1052, when the
patent laws were recodified, Congress replaced the word "art" with "process," but otherwise left Jefferson's
language intact. The Committee Reports accompanying the 1952 Act inform us that Congress intended
statutory subject matter to "include anything under the sun that is made by man." S Rep. No 1979, 82d
Cong., 2d Sess., 5 (1952); H.R.Rep. No. 1979, 82d Cong., 2d Sess., 6 (1952). [Footnote 6]
This is not to suggest that § 101 has no limits, or that it embraces every discovery. The laws of nature,
physical phenomena, and abstract ideas have been held not patentable. See Parker v. Flook, 437 U. S.
584(1978); Gottschalk v. Benson, 409 U. S. 63, 409 U. S. 67 (1972); Funk Brothers Seed Co. v. Kalo
Inoculant Co., 333 U. S. 127, 333 U. S. 130 (1948); O'Reilly v. Morse, 15 How. 62, 56 U. S. 112-121
(1854); Le Roy v. Tatham, 14 How. 156, 55 U. S. 175 (1853). Thus, a new mineral discovered in the earth
or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his
celebrated law that E=mc2; nor could Newton have patented the law of gravity. Such discoveries are
"manifestations of . . . nature, free to all men and reserved exclusively to none." Funk, supra at 333 U. S.
130.
Judged in this light, respondent's micro-organism plainly qualifies as patentable subject matter. His claim is
not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition
of matter -- a product of human ingenuity "having a distinctive name, character [and] use." Hartranft v.
Wiegmann, 121 U. S. 609, 121 U. S. 615 (1887). The point is underscored dramatically by comparison of
the invention here with that in Funk. There, the patentee had discovered that there existed in nature certain
species of root nodule bacteria which did not exert a mutually inhibitive effect on each other. He used that
discovery to produce a mixed culture capable of inoculating the seeds of leguminous plants. Concluding
that the patentee had discovered "only some of the handiwork of nature," the Court ruled the product
nonpatentable:
"Each of the species of root-nodule bacteria contained in the package infects the same group of leguminous
plants which it always infected. No species acquires a different use. The combination of species produces
no new bacteria, no change in the six species of bacteria, and no enlargement of the range of their utility.
Each species has the same effect it always had. The bacteria perform in their natural way. Their use in
combination does not improve in any way their natural functioning. They serve the ends nature originally
provided, and act quite independently of any effort of the patentee."
Here, by contrast, the patentee has produced a new bacterium with markedly different characteristics from
any found in nature, and one having the potential for significant utility. His discovery is not nature's
handiwork, but his own; accordingly it is patentable subject matter under § 101.
IV
Two contrary arguments are advanced, neither of which we find persuasive.
(A)
The petitioner's first argument rests on the enactment of the 1930 Plant Patent Act, which afforded patent
protection to certain asexually reproduced plants, and the 1970 Plant Variety Protection Act, which
authorized protection for certain sexually reproduced plants but excluded bacteria from its protection.
[Footnote 7] In the petitioner's view, the passage of these Acts evidences congressional understanding that
the terms "manufacture" or "composition of matter" do not include living things; if they did, the petitioner
argues, neither Act would have been necessary.
We reject this argument. Prior to 1930, two factors were thought to remove plants from patent protection.
The first was the belief that plants, even those artificially bred, were products of nature for purposes of the
patent law. This position appears to have derived from the decision of the Patent Office in Ex parte
Latimer,1889 Dec.Com.Pat 123, in which a patent claim for fiber found in the needle of the Pinus australis
was rejected. The Commissioner reasoned that a contrary result would permit "patents [to] be obtained
upon the trees of the forest and the plants of the earth, which of course would be unreasonable and
impossible."Id. at 126. The Latimer case, it seems, came to "se[t] forth the general stand taken in these
matters" that plants were natural products not subject to patent protection. Thorne, Relation of Patent Law
to Natural Products, 6 J.Pat.Off.Soc. 23, 24
The second obstacle to patent protection for plants was the fact that plants were thought not amenable to the
"written description" requirement of the patent law. See 35 U.S.C. § 112. Because new plants may differ
from old only in color or perfume, differentiation by written description was often impossible. See Hearings
on H.R. 11372 before the House Committee on Patents, 71st Cong., 2d Sess., 7 (1930) (memorandum of
Patent Commissioner Robertson).
In enacting the Plant Patent Act, Congress addressed both of these concerns. It explained at length its belief
that the work of the plant breeder "in aid of nature" was patentable invention. S.Rep. No. 315, 71st Cong.,
2d Sess., 8 (1930); H.R.Rep. No. 1129, 71st Cong., 2d Sess., 7-9 (1930). And it relaxed the written
description requirement in favor of "a description . . . as complete as is reasonably possible." 35 U.S.C. §
162. No Committee or Member of Congress, however, expressed the broader view, now urged by the
petitioner, that the terms "manufacture" or "composition of matter" exclude living things. The sole support
for that position in the legislative history of the 1930 Act is found in the conclusory statement of Secretary
of Agriculture Hyde, in a letter to the Chairmen of the House and Senate Committees considering the 1930
Act, that "the patent laws . . . at the present time are understood to cover only inventions or discoveries in
the field of inanimate nature." See S.Rep. No. 315, supra at Appendix A; H.R.Rep. No. 1129, supra at
Appendix A. Secretary Hyde's opinion, however, is not entitled to controlling weight. His views were
solicited on the administration of the new law. and not on the scope of patentable subject matter -- an area
beyond his competence. Moreover, there is language in the House and Senate Committee Reports
suggesting that, to the extent Congress considered the matter, it found the Secretary's dichotomy
unpersuasive. The Reports observe:
"There is a clear and logical distinction between the discovery of a new variety of plant and of certain
inanimate things, such, for example, as a new and useful natural mineral. The mineral is created wholly by
nature unassisted by man. . . . On the other hand, a plant discovery resulting from cultivation is unique,
isolated, and is not repeated by nature, nor can it be reproduced by nature unaided by man. . . ."
S.Rep. No. 315, supra at 6; H.R.Rep. No. 1129, supra at 7 (emphasis added). Congress thus recognized that
the relevant distinction was not between living and inanimate things, but between products of nature,
whether living or not, and human-made inventions. Here, respondent's micro-organism is the result of
human ingenuity and research. Hence, the passage of the Plant Patent Act affords the Government no
support.
Nor does the passage of the 1970 Plant Variety Protection Act support the Government's position. As the
Government acknowledges, sexually reproduced plants were not included under the 1930 Act because new
varieties could not be reproduced true-to-type through seedlings. Brief for Petitioner 27, n. 31. By 1970,
however, it was generally recognized that true-to-type reproduction was possible, and that plant patent
protection was therefore appropriate. The 1970 Act extended that protection. There is nothing in its
language or history to suggest that it was enacted because § 101 did not include living things.
In particular, we find nothing in the exclusion of bacteria from plant variety protection to support the
petitioner's position. See n 7, supra. The legislative history gives no reason for this exclusion. As the Court
of Customs and Patent Appeals suggested, it may simply reflect congressional agreement with the result
reached by that court in deciding In re Arzberger, 27 C.C.P.A.(Pat.) 1315, 112 F.2d 834 (1940), which held
that bacteria were not plants for the purposes of the 1930 Act. Or it may reflect the fact that, prior to 1970,
the Patent Office had issued patents for bacteria under § 101. [Footnote 9] In any event, absent some clear
indication that Congress "focused on [the] issues . . . directly related to the one presently before the
Court," SEC v. Sloan,436 U. S. 103, 436 U. S. 120-121 (1978), there is no basis for reading into its actions
an intent to modify the plain meaning of the words found in § 101. See TVA v. Hill, 437 U. S. 153, 437 U.
S. 189-193 (1978); United States v. Price, 361 U. S. 304, 361 U. S. 313 (1960).
(B)
The petitioner's second argument is that micro-organisms cannot qualify as patentable subject matter until
Congress expressly authorizes such protection. His position rests on the fact that genetic technology was
unforeseen when Congress enacted § 101. From this it is argued that resolution of the patentability of
inventions such as respondent's should be left to Congress. The legislative process, the petitioner argues, is
best equipped to weigh the competing economic, social, and scientific considerations involved, and to
determine whether living organisms produced by genetic engineering should receive patent protection. In
support of this position, the petitioner relies on our recent holding in Parker v. Flook, 437 U. S. 584 (1978),
and the statement that the judiciary "must proceed cautiously when . . . asked to extend patent rights into
areas wholly unforeseen by Congress." Id. at 437 U. S. 596.
It is, of course, correct that Congress, not the courts, must define the limits of patentability; but it is equally
true that, once Congress has spoken, it is "the province and duty of the judicial department to say what the
law is." Marbury v. Madison, 1 Cranch 137, 5 U. S. 177 (1803). Congress has performed its constitutional
role in defining patentable subject matter in § 101; we perform ours in construing the language Congress
has employed. In so doing, our obligation is to take statutes as we find them, guided, if ambiguity appears,
by the legislative history and statutory purpose. Here, we perceive no ambiguity. The subject matter
provisions of the patent law have been cast in broad terms to fulfill the constitutional and statutory goal of
promoting "the Progress of Science and the useful Arts" with all that means for the social and economic
benefits envisioned by Jefferson. Broad general language is not necessarily ambiguous when congressional
objectives require broad terms.
Nothing in Flook is to the contrary. That case applied our prior precedents to determine that a "claim for an
improved method of calculation, even when tied to a specific end use, is unpatentable subject matter under
§ 101." 437 U.S. at 437 U. S. 595, n. 18. The Court carefully scrutinized the claim at issue to determine
whether it was precluded from patent protection under "the principles underlying the prohibition against
patents for ideas' or phenomena of nature." Id. at 437 U. S. 593. We have done that here. Flook did not
announce a new principle that inventions in areas not contemplated by Congress when the patent laws were
enacted are unpatentable per se.
To read that concept into Flook would frustrate the purposes of the patent law. This Court frequently has
observed that a statute is not to be confined to the "particular application[s] . . . contemplated by the
legislators."
This is especially true in the field of patent law. A rule that unanticipated inventions are without protection
would conflict with the core concept of the patent law that anticipation undermines patentability. See
Graham v. John Deere Co., 383 U.S. at 383 U. S. 12-17. Mr. Justice Douglas reminded that the inventions
most benefiting mankind are those that "push back the frontiers of chemistry. physics, and the like." Great
A. & P. Tea Co. v. Supermarket Corp., 340 U. S. 147, 340 U. S. 154 (1950) (concurring opinion). Congress
employed broad general language in drafting § 101 precisely because such inventions are often
unforeseeable. [Footnote 10]
To buttress his argument, the petitioner, with the support of amicus, points to grave risks that may be
generated by research endeavors such as respondent's. The briefs present a gruesome parade of horribles.
Scientists, among them Nobel laureates, are quoted suggesting that genetic research may pose a serious
threat to the human race, or, at the very least, that the dangers are far too substantial to permit such research
to proceed apace at this time. We are told that genetic research and related technological developments may
spread pollution and disease, that it may result in a loss of genetic diversity, and that its practice may tend
to depreciate the value of human life. These arguments are forcefully, even passionately, presented; they
remind us that, at times, human ingenuity seems unable to control fully the forces it creates -- that, with
Hamlet, it is sometimes better "to bear those ills we have than fly to others that we know not of."
It is argued that this Court should weigh these potential hazards in considering whether respondent's
invention is patentable subject matter under § 101. We disagree. The grant or denial of patents on micro-
organisms is not likely to put an end to genetic research or to its attendant risks. The large amount of
research that has already occurred when no researcher had sure knowledge that patent protection would be
available suggests that legislative or judicial fiat as to patentability will not deter the scientific mind from
probing into the unknown any more than Canute could command the tides. Whether respondent's claims are
patentable may determine whether research efforts are accelerated by the hope of reward or slowed by want
of incentives, but that is all.
What is more important is that we are without competence to entertain these arguments -- either to brush
them aside as fantasies generated by fear of the unknown or to act on them. The choice we are urged to
make is a matter of high policy for resolution within the legislative process after the kind of investigation,
examination, and study that legislative bodies can provide and courts cannot. That process involves the
balancing of competing values and interests, which, in our democratic system, is the business of elected
representatives. Whatever their validity, the contentions now pressed on us should be addressed to the
political branches of the Government, the Congress and the Executive, and not to the courts. [Footnote 11]
We have emphasized in the recent past that "[o]ur individual appraisal of the wisdom or unwisdom of a
particular [legislative] course . . . is to be put aside in the process of interpreting a statute."
TVA v. Hill, 437 U.S. at 437 U. S. 194. Our task, rather, is the narrow one of determining what Congress
meant by the words it used in the statute; once that is done, our powers are exhausted. Congress is free to
amend § 101 so as to exclude from patent protection organisms produced by genetic engineering. Cf. 42
U.S.C. § 2181(a), exempting from patent protection inventions "useful solely in the utilization of special
nuclear material or atomic energy in an atomic weapon." Or it may choose to craft a statute specifically
designed for such living things. But, until Congress takes such action, this Court must construe the
language of § 101 as it is. The language of that section fairly embraces respondent's invention.
Accordingly, the judgment of the Court of Customs and Patent Appeals is Affirmed.
 Rosaire v. Baroid Sales Div., National Lead Co.
TUTTLE, Circuit Judge.
In this suit for patent infringement there is presented to us for determination the correctness of the judgment
of the trial court, based on findings of fact and conclusions of law, holding that the two patents involved in
the litigation were invalid and void and that furthermore there had been no infringement by defendant. 120
F. Supp. 20.
The Rosaire and Horvitz patents relate to methods of prospecting for oil or other hydrocarbons. The
inventions are based upon the assumption that gases have emanated from deposits of hydrocarbons which
have been trapped in the earth and that these emanations have modified the surrounding rock. The methods
claimed involve the steps of taking a number of samples of soil from formations which are not themselves
productive of hydrocarbons, either over a horizontal area or vertically down a well bore, treating each
sample, as by grinding and heating in a closed vessel, to cause entrained or absorbed hydrocarbons therein
to evolve as a gas, quantitatively measuring the amount of hydrocarbon gas so evolved from each sample,
and correlating the measurements with the locations from which the samples were taken.
Plaintiff claims that in 1936 he and Horvitz invented this new method of prospecting for oil. In due course
the two patents in suit, Nos. 2,192,525 and 2,324,085, were issued thereon. Horvitz assigned his interest to
Rosaire.
Appellant alleged that appellee Baroid began infringing in 1947; that he learned of this in 1949 and asked
Baroid to take a license, but no license agreement was worked out, and this suit followed, seeking an
injunction and an accounting.
In view of the fact that the trial court's judgment that the patents were invalid, would of course dispose of
the matter if correct, we turn our attention to this issue. Appellee's contention is that the judgment of the
trial court in this respect should be supported on two principal grounds. The first is that the prior art, some
of which was not before the patent office, anticipated the two patents; the second is that work carried on by
one Teplitz for the Gulf Oil Corporation invalidated both patents by reason of the relevant provisions of the
patent laws which state that an invention is not patentable if it "was known or used by others in this
country" before the patentee's invention thereof, 35 U.S.C.A. § 102(a). Appellee contends that Teplitz and
his coworkers knew and extensively used in the field the same alleged inventions before any date asserted
by Rosaire and Horvitz.
On this point appellant himself in his brief admits that "Teplitz conceived of the idea of extracting and
quantitatively measuring entrained or absorbed gas from the samples of rock, rather than relying upon the
free gas in the samples. We do not deny that Teplitz conceived of the methods of the patents in suit." And
further appellant makes the following admission: "We admit that the Teplitz-Gulf work was done before
Rosaire and Horvitz conceived of the inventions. We will show, however, that Gulf did not apply for patent
until 1939, did not publish Teplitz's ideas, and did not otherwise give the public the benefit of the
experimental work."
Appellant poses what it claims to be the main issue as follows: "The main question before the court on this
appeal is: Does the earlier experiment by Gulf invalidate the patents in suit? The District Court has held that
it does. We contend that it does not."
We shall discuss these points in the order of importance that the parties themselves seem to place on them.
In support of their respective positions, both appellant and appellee stress the language in our opinion in the
case of Pennington v. National Supply Co., 5 Cir., 95 F.2d 291, 294, where, speaking through Judge
Holmes, we said:
"Appellant insists that the court erred in considering the prior use of the Texas machine, because that
machine was abandoned by the Texas Company and was not successful until modified and rebuilt. As to
this, it does not appear that the Texas machine was a failure, since it drilled three wells for the Texas
Company, which was more than was usually accomplished by the rotary drilling machines then in use.
"An unsuccessful experiment which is later abandoned does not negative novelty in a new and successful
device, T.H. Symington Co. v. National Malleable Castings Co., 250 U.S. 383, 386, 39 S.Ct. 542, 63 L.Ed.
1045; Clark Thread Co. v. Willimantic Linen Co., 140 U.S. 481, 489, 11 S.Ct. 846, 35 L.Ed. 521.
Nevertheless, the existence and operation of a machine, abandoned after its completion and sufficient use to
demonstrate its practicability, is evidence that the same ideas incorporated in a later development along the
same line do not amount to invention. Corona Cord Tire Co. v. Dovan Chemical Corporation, 276 U.S.
358, 48 S.Ct. 380, 72 L.Ed. 610; Jones v. Sykes Metal Lath Roofing Co., 6 Cir., 254 F. 91. If the prior
machine does not anticipate, it would not have done so if it had been neither unsuccessful nor abandoned.
Novelty is ascribed to new things, without regard to the successful and continued use of old things.
Correlatively, it is denied to old things, without regard to the circumstances which caused their earlier
applications to be unsatisfactory or their use to be abandoned. Cf. Pickering v. McCullough, 104 U.S.
310, 26 L.Ed. 749; Merrimac Mattress Mfg. Co. v. Feldman, C.C., 133 F. 64; Van Epps v. United Box
Board Paper Co., 2 Cir., 143 F. 869."
The question as to whether the work of Teplitz was "an unsuccessful experiment," as claimed by appellant,
or was a successful trial of the method in question and a reduction of that method to actual practice, as
contended by appellee, is, of course, a question of fact. On this point the trial court made the following
finding of fact:
"4.
"I find as a fact, by clear and substantial proof beyond a reasonable doubt, that Abraham J. Teplitz and his
coworkers with Gulf Oil Corporation and its Research Department during 1935 and early 1936, before any
date claimed by Rosaire, spent more than a year in the oil fields and adjacent territory around Palestine,
Texas, taking and analyzing samples both over an area and down drill holes, exactly as called for in the
claims of the patents which Rosaire and Horvitz subsequently applied for and which are here in suit.
"This Teplitz work was a successful and adequate field trial of the prospecting method involved and a
reduction to practice of that method. The work was performed in the field under ordinary conditions
without any deliberate attempt at concealment or effort to exclude the public and without any instructions
of secrecy to the employees performing the work."
As we view it, if the court's findings of fact are correct then under the statute as construed by the courts, we
must affirm the finding of the trial court that appellee's patents were invalid. Buser v. Novelty Tufting
Machine Co., 6 Cir., 151 F. 478, 493; Electrol, Inc., v. Merrell Co., Inc., 8 Cir., 39 F.2d 873; Corona Cord
Tire Co. v. Dovan Chemical Corporation, 276 U.S. 358, 48 S.Ct. 380, 72 L.Ed. 610. As to the finding of
fact we are to affirm unless we conclude that it is "clearly erroneous." Rule 52, Fed. Rules Civ.Proc., 28
U.S.C.A.
A close analysis of the evidence on which the parties rely to resolve this question clearly demonstrates that
there was sufficient evidence to sustain the finding of the trial court that there was more here than an
unsuccessful or incomplete experiment. It is clear that the work was not carried forward, but that appears to
be a result of two things: (1) that the geographical area did not lend itself properly to the test, and (2) that
the "entire gas prospecting program was therefore suspended in September of 1936, in order that the
accumulated information might be thoroughly reviewed." It will be noted that the program was not
suspended to test the worth of the method but to examine the data that was produced by use of the method
involved. The above quotation came from one of the recommendations at the end of Teplitz's report, and
was introduced on behalf of the appellant himself.
Expert testimony presented by witnesses Rogers, Eckhardt and Weaver supported appellee's contention.
With respect to the argument advanced by appellant that the lack of publication of Teplitz's work deprived
an alleged infringer of the defense of prior use, we find no case which constrains us to hold that where such
work was done openly and in the ordinary course of the activities of the employer, a large producing
company in the oil industry, the statute is to be so modified by construction as to require some affirmative
act to bring the work to the attention of the public at large.

While there is authority for the proposition that one of the basic principles underlying the patent laws is the
enrichment of the art, and that a patent is given to encourage disclosure of inventions, no case we have
found requires a holding that, under the circumstances that attended the work of Teplitz, the fact of public
knowledge must be shown before it can be urged to invalidate a subsequent patent. The case of Corona
Cord Tire Co. v. Dovan Chemical Corporation, supra, is authority for the opposing view, that taken by the
court below. In that case the Supreme Court said:

"In 1916, while with the Norwalk Company, Kratz prepared D.P.G. and demonstrated its utility as a rubber
accelerator by making test slabs of vulcanized or cured rubber with its use. Every time that he produced
such a slab he recorded his test in cards which he left with the Norwalk Company and kept a duplicate of
his own. * * * This work was known to, and was participated in, by his associate in the Norwalk Company,
his immediate superior and the chief chemist of the company, Dr. Russell, who fully confirms Kratz's
records and statement." Corona Cord Tire Co. v. Dovan Chemical Corporation, 276 U.S. 358, 378, 379, 48
S.Ct. 380, 386, 72 L.Ed. 610.

The court further states in the Corona case at page 382 of 276 U.S., at page 387 of 48 S.Ct.:

"But, even if we ignore this evidence of Kratz's actual use of D.P.G. in these rubber inner tubes which were
sold, what he did at Norwalk, supported by the evidence of Dr. Russell, his chief, and by the indubitable
records that are not challenged, leaves no doubt in our minds that he did discover in 1916 the strength of
D.P.G. as an accelerator as compared with the then known accelerators, and that he then demonstrated it by
a reduction of it to practice in production of cured or vulcanized rubber.

"This constitutes priority in this case."

This same principle underlies the decision of the Court of Appeals for the Second Circuit in the case of
United Chromium v. General Motors Corporation, 85 F.2d 577, and in the Seventh Circuit in United
Chromium v. Kohler Co., 159 F.2d 979.

The other basis of appellee's attack on appellant's patents was the disclosures in the Graf article, which was
published in Germany in September, 1935. This article was not considered by the Patent Office and the
patents were therefore greatly weakened and they lack the presumption of validity that would otherwise
exist. While there was disputed expert testimony on the point, there was ample support both from the oral
evidence and from a reading of the Graf article itself to warrant the court's finding of fact No. 3 that the
patents in suit had been anticipated by this publication.

In connection with the presumption of validity in such a case see R. Hoe Co. v. Goss Printing Press Co., 2
Cir., 30 F.2d 271; National Electric Products Corp. v. Grossman, 2 Cir., 70 F.2d 257; Boynton v. Chicago
Hardware Foundry Co., 7 Cir., 77 F.2d 799.

Concluding, as we do, that the trial court correctly held the patents invalid, it is not necessary to consider
the question of infringement. The judgment of the trial court is affirmed.
 G.R. No. L-32160 January 30, 1982 and registration of patent by plaintiff Conrado G. de Leon; that the registration of the alleged invention did
not confer any right on the plaintiff because the registration was unlawfully secured and was a result of the
gross misrepresentation on the part of the plaintiff that his alleged invention is a new and inventive process;
DOMICIANO A. AGUAS, petitioner,
that the allegation of the plaintiff that Patent No. 658 is of great value to plaintiff and of great benefit to the
vs. CONRADO G. DE LEON and COURT OF APPEALS, respondents.
public is a mere conclusion of the plaintiff, the truth being that a) the invention of plaintiff is neither
inventive nor new, hence, it is not patentable, b) defendant has been granted valid patents (Patents No. 108,
109, 110 issued on December 21, 1961) on designs for concrete decorative wall tiles; and c) that he can not
be guilty of infringement because his products are different from those of the plaintiff. 4
FERNANDEZ, J.:
The trial court rendered a decision dated December 29, 1965, the dispositive portion of which reads:
This is a petition for certiorari to review the decision of the Court of Appeals in CA G.R. NO. 37824-R
entitled "Conrado G. de Leon, plaintiff-appelle vs. Dominciano Aguas and F.H. Aquino and Sons, WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the
defendants-appellants," the dispositive portion of which reads: defendants:

WHEREFORE, with the modification that plintiff-applee's award of moral damages 1. Declaring plaintiff's patent valid and infringed:
is hereby redured to P3,000.00, the appealed judgment is hereby affirmed, in all othe
respects, with costs against appellants. 1
2. Granting a perpetual injunction restraining defendants, their officers, agents,
employees, associates, confederates, and any and all persons acting under their
On April 14, 1962, Conrado G. de Leon filed in the Court of First Instance of Rizal at Quezon City a authority from making and/or using and/or vending tiles embodying said patented
complaint for infringement of patent against Domiciano A. Aguas and F. H. Aquino and Sons alleging that invention or adapted to be used in combination embodying the same, and from
being the original first and sole inventor of certain new and useful improvements in the process of making making, manufacturing, using or selling, engravings, castings and devises designed
mosaic pre-cast tiles, he lawfully filed and prosecuted an application for Philippine patent, and having and intended for use in apparatus for the making of tiles embodying plaintiff's
complied in all respects with the statute and the rules of the Philippine Patent Office, Patent No. 658 was patented invention, and from offering or advertising so to do, and from aiding and
lawfully granted and issued to him; that said invention was new, useful, not known or used by others in this abetting or in any way contributing to the infringement of said patent;
country before his invention thereof, not patented or described in any printed publication anywhere before
his invention thereof, or more than one year prior to his application for patent thereof, not patented in any
3. Ordering that each and all of the infringing tiles, engravings, castings and devices,
foreign country by him or his legal representatives on application filed more than one year prior to his
which are in the possession or under the control of defendants be delivered to
application in this country; that plaintiff has the exclusive license to make, use and sell throughout the
plaintiff;
Philippines the improvements set forth in said Patent No. 658; that the invention patented by said Patent
No. 658 is of great utility and of great value to plaintiff and of great benefit to the public who has demanded
and purchased tiles embodying the said invention in very large quantities and in very rapidly increasing 4. Ordering the defendants to jointly and severally pay to the plaintiff the following
quant ies; that he has complied with the Philippine statues relating to marking patented tiles sold by him; sums of money, to wit:
that the public has in general acknowledged the validity of said Patent No. 658, and has respected plaintiff's
right therein and thereunder; that the defendant Domiciano A. Aguas infringed Letters of Patent No. 658 by
(a) P10,020.99 by way of actual damages;
making, using and selling tiles embodying said patent invention and that defendant F. H. Aquino & Sons is
guilty of infringement by making and furnishing to the defendant Domiciano A. Aguas the engravings,
castings and devices designed and intended of tiles embodying plaintiff;s patented invention; that he has (b) P50,000.00 by way of moral damages;
given direct and personal notice to the defendants of their said acts of infringement and requested them to
desist, but nevertheless, defendants have refused and neglected to desist and have disregarded such request,
and continue to so infringe causing great and irreparable damage to plaintiff; that if the aforesaid (c) P5,000.00 by way of exemplary damages;
infringement is permitted to continue, further losses and damages and irreparable injury will be sustained
by the plaintiff; that there is an urgent need for the immediate issuance of a preliminary injunction; that as a (d) P5,000.00 by way of attorney's fees and
result of the defendants' wrongful conduct, plaintiff has suffered and the defendants are liable to pay him, in
addition to actual damages and loss of profits which would be determined upon proper accounting, moral
and exemplary or corrective damages in the sum of P90,000.00; that plaintiff has been compelled to go to (e) costs of suit. 5
court for the protection and enforcement of his and to engage the service of counsel, thereby incurring
attorney's fees and expenses of litigation in the sum of P5,000.00. 2 The defendant Domiciano Aguas appealed to the Court of Appeals, assigning the following errors. 6

On April 14, 1962, an order granting the plaintiff's petition for a Writ of Preliminary Injunction was I
issued. 3
THE TRIAL COURT ERRED IN NOT HOLDING THAT PLAINTIFF'S PATENT
On May 23, 1962, the defendant Domiciano A. Aguas filed his answer denying the allegations of the FOR THE 'PROCESS OF MAKING MOSAIC PRE-CAST TILE' IS INVALID
plaintiff and alleging that: the plaintiff is neither the original first nor sole inventor of the improvements in BECAUSE SAID ALLEGED PROCESS IS NOT AN INVENTION OR
the process of making mosaic pre-cast tiles, the same having been used by several tile-making factories in DISCOVERY AS THE SAME HAS ALREADY LONG BEEN USED BY TILE
the Philippines and abroad years before the alleged invention by de Leon; that Letters Patent No. 658 was MANUFACTURERS BOTH ABROAD AND IN THIS COUNTRY.
unlawfully acquired by making it appear in the application in relation thereto that the process is new and
that the plaintiff is the owner of the process when in truth and in fact the process incorporated in the patent
application has been known and used in the Philippines by almost all tile makers long before the alleged use II
 THE TRIAL COURT ERRED IN HOLDING THAT THE PATENT OF
PLAINTIFF IS VALID BECAUSE IT IS AN IMPROVEMENT OR THE AGE-
OLD TILE MAKING SYSTEM.
III
THE TRIAL COURT ERRED IN NOT ORDERING THE CANCELLATION OF
PLAINTIFF-APPELLEE'S LETTERS PATENT NO. 658, EXHIBIT L, IN
ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE PATENT
LAW, REPUBLIC ACT 165.
IV
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT DOMICIANO
A. AGUAS IS GUILTY OF INFRINGEMENT DESPITE THE FACT THAT
PLAINTIFF'S PATENT IS NOT A VALID ONE.
V
THE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEFENDANT
COULD NEVER BE GUILTY OF INFRINGEMENT OF PLAINTIFF'S PATENT
BECAUSE EVEN IN MATTERS NOT PATENTED BY THE PLAINTIFF - LIKE
THE COMPOSITION AND PROPORTION OF INGREDIENTS USED AND THE
STRUCTURAL DESIGNS OF THE MOULD AND THE TILE PRODUCED -
THAT OF THE DEFENDANT ARE DIFFERENT.
VI
THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT AND IN
HOLDING THE DEFENDANT, INSTEAD OF THE PLAINTIFF, LIABLE FOR
DAMAGES, AND ATTORNEY'S FEES.
On August 5, 1969, the Court of Appeals affirmed the decision of the trial court, with the modification that
plaintiff-appellee's award of moral damages was reduced to P3,000.00. 7
The petitioner assigns the following errors supposedly committed by the Court of Appeals:
It is now respectfully submitted that the Court of Appeals committed the following
errors involving questions of law, to wit:
First error. — When it did not conclude that the letters patent of the respondent
although entitled on the cover page as a patent for improvements, was in truth and in
fact, on the basis of the body of the same, a patent for the old and non-patentable
process of making mosaic pre-cast tiles;
Second error. — When it did not conclude from the admitted facts of the case,
particularly the contents of the letters patent, Exh. L and the pieces of physical
evidence introduced consisting of samples of the tiles and catalouges, that the alleged
improvements introduced by the respondent in the manufacture of mosaic pre-cast
tiles are not patentable, the same being not new, useful and inventive.
Third error. — As a corollary, when it sentenced the herein petitioner to pay the
damages enumerated in the decision of the lower court (Record on Appeal, pp. 74-
75), as confirmed by it (the Court of Appeals), but with the modification that the
amount of P50,000.00 moral damages was reduced to P3,000.00. 8
The facts, as found by the Court of Appeals, are:
The basic facts borne out by the record are to the effect that on December 1, 1959
plaintiff-appellee filed a patent application with the Philippine Patent Office, and on
May 5, 1960, said office issued in his favor Letters Patent No. 658 for a "new and
useful improvement in the process of making mosaic pre-cast tiles" (Exh, "L"); that
defendant F.H. Aquino & Sons engraved the moulds embodying plaintiff's patented
improvement for the manufacture of pre-cast tiles, plaintiff furnishing said defendant
the actual model of the tiles in escayola and explained to said engraver the plans,
specifications and the details of the engravings as he wanted them to be made,
including an explanation of the lip width, artistic slope of easement and critical depth
of the engraving that plaintiff wanted for his moulds; that engraver Enrique Aquino
knew that the moulds he was engraving for plaintiff were the latter's very own, which
possession the new features and characteristics covered by plaintiff's parent; that
defendant Aguas personally, as a building contractor, purchased from plaintiff, tiles
shaped out of these moulds at the back of which was imprinted plaintiff's patent
number (Exhs., "A" to "E"); that subsequently, through a representative, Mr.
Leonardo, defendant Aguas requested Aquino to make engravings of the same type
and bearing the characteristics of plaintiff's moulds; that Mr. Aquino knew that the
moulds he was asked to engrave for defendant Aguas would be used to produce
cement tiles similar to plaintiff's; that the moulds which F.H. Aquino & Sons
eventually engraved for Aguas and for which it charged Aguas double the rate it
charged plaintiff De Leon, contain the very same characteristic features of plaintiff's
mould and that Aguas used these moulds in the manufacture of his tiles which he
actually put out for sale to the public (Exhs. "1" to "3" and Exhs. "A" to "E"); that
both plaintiff's and defendant Aguas' tiles are sculptured pre-cast wall tiles intended
as a new feature of construction and wag ornamentation substantially Identical to
each other in size, easement, lip width and critical depth of the deepest depression;
and that the only significant difference between plaintiff's mould and that engraved
by Aquino for Aguas is that, whereas plaintiff's mould turns out tiles 4 x 4 inches in
size, defendant Aguas' mould is made to fit a 4-1/4 x 4-1/4 inch tile. 9
The patent right of the private respondent expired on May 5, 1977. 10 The errors will be discuss only to
determine the right of said private respondent to damages.
The petitioner questioned the validity of the patent of the private respondent, Conrado G. de Leon, on the
ground that the process, subject of said patent, is not an invention or discovery, or an improvement of the
old system of making tiles. It should be noted that the private respondent does not claim to be the
discoverer or inventor of the old process of tile-making. He only claims to have introduced an improvement
of said process. In fact, Letters Patent No. 658 was issued by the Philippine Patent Office to the private
respondent, Conrado G. de Leon, to protect his rights as the inventor of "an alleged new and useful
improvement in the process of making mosaic pre-cast tiles." 11Indeed, Section 7, Republic Act No. 165, as
amended provides: "Any invention of a new and useful machine, manufactured product or substance,
process, or an improvement of the foregoing, shall be patentable.
The Court of Appeals found that the private respondent has introduced an improvement in the process of
tile-making because:
... we find that plaintiff-appellee has introduced an improvement in the process of
tile-making, which proceeds not merely from mechanical skill, said improvement
consisting among other things, in the new critical depth, lip width, easement and field
of designs of the new tiles. The improved lip width of appellee's tiles ensures the
durability of the finished product preventing the flaking off of the edges. The
easement caused by the inclination of the protrusions of the patented moulds is for
the purpose of facilitating the removal of the newly processed tile from the female
 die. Evidently, appellee's improvement consists in the solution to the old critical The petitioner also contends that the improvement of respondent is not patentable because it is not new,
problem by making the protrusions on his moulds attain an optimum height, so that useful and inventive. This contention is without merit.
the engraving thereon would be deep enough to produce tiles for sculptured and
decorative purposes, strong optimum thickness of appellee's new tiles of only 1/8 of
The records disclose that de Leon's process is an improvement of the old process of tile making. The tiles
an inch at the deepest easement (Exhs. "D" and "D-1") is a most critical feature,
produced from de Leon's process are suitable for construction and ornamentation, which previously had not
suggestive of discovery and inventiveness, especially considering that, despite said
been achieved by tiles made out of the old process of tile making. De Leon's invention has therefore
thinness, the freshly formed tile remains strong enough for its intended purpose.
brought about a new and useful kind of tile. The old type of tiles were usually intended for floors although
there is nothing to prevent one from using them for walling purposes. These tiles are neither artistic nor
While it is true that the matter of easement, lip width, depth, protrusions and ornamental. They are heavy and massive.
depressions are known to some sculptors, still, to be able to produce a new and useful
wall tile, by using them all together, amounts to an invention. More so, if the totality
The respondent's improvement is indeed inventive and goes beyond the exercise of mechanical skill. He has
of all these features are viewed in combination with the Ideal composition of cement,
introduced a new kind of tile for a new purpose. He has improved the old method of making tiles and pre-
sodium silicate and screened fine sand.
cast articles which were not satisfactory because of an intolerable number of breakages, especially if deep
engravings are made on the tile. He has overcome the problem of producing decorative tiles with deep
By using his improved process, plaintiff has succeeded in producing a new product - engraving, but with sufficient durability. 15 Durability inspite of the thinness and lightness of the tile, is
a concrete sculptured tile which could be utilized for walling and decorative assured, provided that a certain critical depth is maintained in relation to the dimensions of the tile. 16
purposes. No proof was adduced to show that any tile of the same kind had been
produced by others before appellee. Moreover, it appears that appellee has been
The petitioner also claims that changing the design from embossed to engraved tiles is neither new nor
deriving considerable profit from his manufacture and sale of such tiles. This
inventive because the Machuca Tile Factory and the Pomona Tile Manufacturing Company have been
commercial success is evidence of patentability (Walker on Patents, Dellers Edition,
manufacturing decorative wall tiles that are embossed as well as engraved; 17 that these tiles have also
Vol. I, p. 237). 12
depth, lip width, easement and field of designs; 18 and that the private respondent had copied some designs
of Pomona. 19
The validily of the patent issued by the Philippines Patent Office in favor of the private respondent and the
question over the inventiveness, novelty and usefulness of the improved process therein specified and
The Machuca tiles are different from that of the private respondent. The designs are embossed and not
described are matters which are better determined by the Philippines Patent Office. The technical staff of
engraved as claimed by the petitioner. There may be depressions but these depressions are too shallow to be
the Philippines Patent Office, composed of experts in their field, have, by the issuance of the patent in
considered engraved. Besides, the Machuca tiles are heavy and massive.
question, accepted the thinness of the private respondent's new tiles as a discovery. There is a presumption
that the Philippines Patent Office has correctly determined the patentability of the improvement by the
private respondent of the process in question. There is no similarity between the Pomona Tiles and de Leon's tiles. The Pomona tiles are made of
ceramics. 20The process involved in making cement tiles is different from ceramic tiles. Cement tiles are
made with the use of water, while in ceramics fire is used. As regards the allegation of the petitioner that
Anent this matter, the Court of Appeals said:
the private respondent copied some designs of Pomona, suffice it to say that what is in issue here is the
process involved in tile making and not the design.
Appellant has not adduced evidence sufficient to overcome the above established
legal presumption of validity or to warrant reversal of the findings of the lower court
In view of the foregoing, this Court finds that Patent No. 658 was legally issued, the process and/or
relative to the validity of the patent in question. In fact, as we have already pointed
improvement being patentable.
out, the clear preponderance of evidence bolsters said presumption of validity of
appellee's patent. There is no indication in the records of this case and this Court is
unaware of any fact, which would tend to show that concrete wall tiles similar to Both the trial court and the Court of Appeals found as a fact that the petitioner Domiciano A. Aguas did
those produced by appellee had ever been made by others before he started infringe de Leon's patent. There is no showing that this case falls under one of the exceptions when this
manufacturing the same. In fact, during the trial, appellant was challenged by Court may overrule the findings of fact of the Court of Appeals. The only issue then to be resolved is the
appellee to present a tile of the same kind as those produced by the latter, from any amount of damages that should be paid by Aguas.
earlier source but, despite the fact that appellant had every chance to do so, he could
not present any. There is, therefore, no concrete proof that the improved process of
tile-making described in appellee's patent was used by, or known to, others previous In its decision the Court of Appeals affirmed the amount of damages awarded by the lower court with the
to his discovery thereof. 13 modification that the respondent is only entitled to P3,000.00 moral damages. 21

The contention of the petitioner Aguas that the letters patent of de Leon was actually a patent for the old The lower court awarded the following damages: 22
and non-patentable process of making mosaic pre-cast tiles is devoid of merit. De Leon never claimed to
have invented the process of tile-making. The Claims and Specifications of Patent No. 658 show that a) P10,020.99 by way of actual damages;
although some of the steps or parts of the old process of tile making were described therein, there were
novel and inventive features mentioned in the process. Some of the novel features of the private
respondent's improvements are the following: critical depth, with corresponding easement and lip width to b) P50,000.00 by way of moral damages;
such degree as leaves the tile as thin as 1/8 of an inch at its thinnest portion, Ideal composition of cement
and fine river sand, among other ingredients that makes possible the production of tough and durable wall c) P5,000.00 by way of exemplary damages;
tiles, though thin and light; the engraving of deep designs in such a way as to make the tiles decorative,
artistic and suitable for wall ornamentation, and the fact that the tiles can be mass produced in commercial
quantities and can be conveniently stock-piled, handled and packed without any intolerable incidence of d) P5,000.00 by way of attomey's fees and
breakages. 14
 e) Costs of suit

because:

An examination of the books of defendant Aguas made before a Commissioner

reveals that during the period that Aguas was manufacturing and selling tiles similar
to plaintiff's, he made a gross income of P3,340.33, which can be safely be
considered the amount by which he enriched himself when he infringed plaintiff's
patent. Under Sec. 42 of the Patent Law any patentee whose rights have been
infringed is entitled to damages which, according to the circumstances of the case
may be in a sum above the amount found as actual damages sustained provided the
award does not exceed three times the amount of such actual damages. Considering
the wantonness of the infringement committed by the defendants who knew all the
time about the existence of plaintiff's patent, the Court feels there is reason to grant
plaintiff maximum damages in the sum of P10,020.99. And in order to discourage
patent infringements and to give more teeth to the provisions of the patent law thus
promoting a stronger public policy committed to afford greater incentives and
protection to inventors, the Court hereby awards plaintiff exemplary damages in the
sum of P5,000.00 to be paid jointly and severally by defendants. Considering the
status of plaintiff as a reputable businessman, and owner of the likewise reputed
House of Pre-Cast, he is entitled to an award of moral damages in the sum of
P50,000.00. 23

In reducing the amount of moral damages the Court of Appeals said:

As regards the question of moral damages it has been shown that as a result of the
unlawful acts of infringment committed by defendants, plaintiff was unstandably
very sad; he worried and became nervous and lost concentration on his work in
connection with his tile business (pp. 28, 30, t.s.n., Feb. 28, 1964). In addition,
plaintiff's character and reputation have been unnecessarily put in question because
defendants, by their acts of infringement have created a doubt or suspicion in the
public mind concerning the truth and honesty of plaintiff's advertisements and public
announcements of his valid patent. Necessarily, said acts of defendants have caused
plaintiff considerable mental suffering, considering especially, the fact that he staked
everything on his pre-cast tile business (p. 36, t.s.n., Id.) The wantonness and evident
bad faith characterizing defendants' prejudicial acts against plaintiff justify the
assessment of moral damages in plaintiff's favor, though we do not believe the
amount of P50,000.00 awarded by the lower court is warranted by the circumstances.
We feel that said amount should be reduced to P3,000.00 by way of compensating
appellee for his moral suffering. "Willful injury to property may be a legal ground for
awarding moral damages if the court should find that, under the circumstances such
damages are justly due" (Art. 2219 NCC).

There is no reason to reduce the amount of damages and attorneys fees awarded by the trial court as
modified by the Court of Appeals.

WHEREFORE, the decision of the Court of Appeals in CA G.R. No. 37824-R appealed from is hereby
affirmed, without pronouncement as to costs.

SO ORDERED.
 Brenner v. Manson, 383 U.S. 519 (1966)
Syllabus
In December 1957 Ringold and Rosenkranz applied for a patent on an allegedly novel process for making
certain steroids, claiming priority as of December, 1956. A patent issued thereon in 1959. In January, 1960,
respondent filed an application to patent the same process, asserting that he had discovered it prior to
December, 1956, and requesting that an "interference" be declared to test the issue of priority. Respondent's
application was denied by a Patent Office examiner, the Board of Appeals affirming, for failure "to disclose
any utility for" the compound produced by the process. The Court of Customs and Patent Appeals (CCPA)
reversed, holding that, "where a claimed process produces a known product, it is not necessary to show
utility for the product" as long as it is not detrimental to the public interest.
Held:
1. This Court has jurisdiction under 28 U.S.C. § 1256 to review upon petition of the Commissioner of
Patents patent decisions of the CCPA. Pp. 383 U. S. 523-528.
2. The Patent Office properly may refuse to declare an "interference" on the ground that the application
therefor fails to disclose a prima facie case of patentability. P. 383 U. S. 528, n 12.
3. The practical utility of the compound produced by a chemical process is an essential element in
establishing a prima facie case for the patentability of the process. Pp. 383 U. S. 528-536.
(a) One may patent only that which is useful. Pp. 383 U. S. 528-529, 383 U. S. 535.
(b) Respondent has not provided any basis for overturning the determination of the Patent Office that the
utility requirement was not satisfied in this case by reference to the alleged utility of an adjacent
homologue. Pp. 383 U. S. 531-532.
(c) The requirement that a chemical process be useful is not satisfied by a showing that the compound
yielded belongs to a class of compounds which scientists are screening for possible uses. Pp. 383 U. S. 532-
536.
(d) Nor is the utility requirement for chemical processes satisfied by a showing that the process
works, i.e.,yields the intended product. Pp. 383 U. S. 532-536.
52 C.C.P.A.(Pat.) 739, 333 F. 2d 234, reversed.
This case presents two questions of importance to the administration of the patent laws: first, whether this
Court has certiorari jurisdiction, upon petition of the Commissioner of Patents, to review decisions of the
Court of Customs and Patent Appeals; and second, whether the practical utility of the compound produced
by a chemical process is an essential element in establishing a prima facie case for the patentability of the
process. The facts are as follows:
In December, 1957, Howard Ringold and George Rosenkranz applied for a patent on an allegedly novel
process for making certain known steroids. [Footnote 1] They claimed priority as of December 17, 1956,
the date on which they had filed for a Mexican patent. United States Patent No. 2,908,693 issued late in
1959.
In January, 1960, respondent Manson, a chemist engaged in steroid research, filed an application to patent
precisely the same process described by Ringold and Rosenkranz. He asserted that it was he who had
discovered the process, and that he had done so before December 17, 1956. Accordingly, he requested that
an "interference" be declared in order to try out the issue of priority between his claim and that of Ringold
and Rosenkranz. [Footnote 2]
A Patent Office examiner denied Manson's application, and the denial was affirmed by the Board of
Appeals within the Patent Office. The ground for rejection was the failure "to disclose any utility for" the
chemical compound produced by the process. Letter of Examiner, dated May 24, 1960. This omission was
not cured, in the opinion of the Patent Office, by Manson's reference to an article in the November, 1956,
issue of the Journal of Organic Chemistry, 21 J.Org.Chem. 1333-1335, which revealed that steroids of a
class which included the compound in question were undergoing screening for possible tumor-inhibiting
effects in mice, and that a homologue [Footnote 3] adjacent to Manson's steroid had proven effective in that
role. Said the Board of Appeals,
"It is our view that the statutory requirement of usefulness of a product cannot be presumed merely because
it happens to be closely related to another compound which is known to be useful."
The Court of Customs and Patent Appeals (hereinafter CCPA) reversed, Chief Judge Worley dissenting. 52
C.C.P.A.(Pat.) 739, 745, 333 F.2d 234, 237-238. The court held that Manson was entitled to a declaration
of interference, since, "where a claimed process produces a known product, it is not necessary to show
utility for the product" so long as the product "is not alleged to be detrimental to the public interest."
Certiorari was granted, 380 U.S. 971, to resolve this running dispute over what constitutes "utility" in
chemical process claims, [Footnote 4] as well as to answer the question concerning our certiorari
jurisdiction.
I
Section 1256 of Title 28 U.S.C. (1964 ed.), enacted in 1948, provides that "Cases in the Court of Customs
and Patent Appeals may be reviewed by the Supreme Court by writ of certiorari." This unqualified
language would seem to foreclose any challenge to our jurisdiction in the present case. Both the
Government [Footnote 5] and the respondent urge that we have certiorari jurisdiction over patent decisions
of the CCPA, although the latter would confine our jurisdiction to those petitions filed by dissatisfied
applicants, and would deny the Commissioner of Patents the right to seek certiorari. [Footnote 6] This
concert of opinion does not settle the basic question, because jurisdiction cannot be conferred by consent of
the parties. The doubt that does exist stems from a decision of this Court, rendered in January, 1927,
in Postum Cereal Co. v. California Fig Nut Co., 272 U. S. 693, which has been widely interpreted as
precluding certiorari jurisdiction over patent and trademark decisions of the CCPA.
Postum, however, was based upon a statutory scheme materially different from the present
one. Postuminvolved a proceeding in the Patent Office to cancel a trademark. The Commissioner of Patents
rejected the application. An appeal was taken to the then Court of Appeals for the District of Columbia,
which, in 1927, exercised the jurisdiction later transferred to the CCPA. Under the statutory arrangement in
effect at the time, the judgment of the Court of Appeals was not definitive, because it was not an order to
the Patent Office determinative of the controversy. A subsequent bill in equity could be brought in the
District Court, and it was possible that a conflicting adjudication could thus be obtained. On this basis, the
Court held that it could not review the decision of the Court of Appeals. It held that the conclusion of the
Court of Appeals was an "administrative decision," rather than a "judicial judgment" "merely an instruction
to the Commissioner of Patents by a court which is made part of the machinery of the Patent Office for
administrative purposes."
Therefore, this Court concluded, the proceeding in the Court of Appeals -- essentially administrative in
nature -- was neither case nor controversy within the meaning of Article III of the Constitution. Congress
might confer such "administrative" tasks upon the courts of the District of Columbia, wrote Chief Justice
Taft, but it could not empower this Court to participate therein.
Congress soon amended the statutory scheme. In March of 1927, it provided that an action in the District
Court was to be alternative, and not cumulative, to appellate review, that it could not be maintained to
overcome an adjudication in the Court of Appeals. [Footnote 7] In 1929, Congress transferred appellate
jurisdiction over the Commissioner's decisions from the Court of Appeals to what had been the Court of
Customs Appeals and was now styled the Court of Customs and Patent Appeals. [Footnote 8] Whereas the
Court of Appeals had been empowered to take additional evidence and to substitute its judgment for that of
the Commissioner, the CCPA was confined to the record made in the Patent Office. [Footnote 9] Compare
Federal Communications Comm'n v. Pottsville Broadcasting Co., 309 U. S. 134, 309 U. S. 144-145.
Despite these changes, however, Postum had acquired a life of its own. It continued to stand in the way of
attempts to secure review here of CCPA decisions respecting the Commissioner of Patents. See, e.g.,
McBride v. Teeple,311 U.S. 649, denying certiorari for "want of jurisdiction" on the authority of Postum.
[Footnote 10]
This was the background against which Congress, in its 1948 codification of statutes pertaining to the
judiciary, enacted § 1256, blandly providing in unqualified language for review on certiorari of "[c]ases in
the Court of Customs and Patent Appeals." Nothing in the legislative materials relating to the statute,
except its language, is of assistance to us in the resolution of the present problem: did the statutory changes
which followed Postum mean that a patent decision by the CCPA was a "judicial" determination reviewable
by this Court under Article III? And, if so, was § 1256 intended to create such jurisdiction?
Assistance came with the 1958 revision of the Judicial Code. Congress there declared the CCPA "a court
established under article III . . . ," that is, a constitutional court exercising judicial, rather than
administrative, power. 28 U.S.C. § 211 (1964 ed.). In 1962, this Court addressed itself to the nature and
status of the CCPA.Glidden Co. v. Zdanok, 370 U. S. 530, raised the question whether a judge of the CCPA
was an Article III judge, capable of exercising federal judicial power. In answering that question in the
affirmative, MR. JUSTICE HARLAN's opinion, for three of the seven Justices participating, expressly left
open the question whether § 1256 conferred certiorari jurisdiction over patent and trademark cases decided
in the CCPA, 370 U.S. at 370 U. S. 578 n. 49. It suggested, however, that Postum might be nothing more
than a museum piece. The opinion noted that Postum "must be taken to be limited to the statutory scheme
in existence before" 1929. 370 U.S. at 370 U. S. 579. The concurring opinion of MR. JUSTICE CLARK, in
which THE CHIEF JUSTICE joined, did not reflect any difference on this point.
Thus, the decision sought to be reviewed is that of an Article III court. It is "judicial" in character. It is not
merely an instruction to the Commissioner or part of the "administrative machinery" of the Patent Office. It
is final and binding in the usual sense. [Footnote 11] In sum, Postum has no vitality in the present setting,
and there remains no constitutional bar to our jurisdiction.
Having arrived at this conclusion, we have no difficulty in giving full force and effect to the generality of
the language in § 1256. It would be entirely arbitrary for us to assume, despite the statutory language, that
Congress, in 1948, intended to enshrine Postum -- dependent as it was upon a statutory scheme
fundamentally altered in 1927 and 1929 -- as a hidden exception to the sweep of § 1256. The contrary is
more plausible: that, by using broad and unqualified language, Congress intended our certiorari jurisdiction
over CCPA cases to be as broad as the Constitution permits.
This conclusion is reinforced by reference to the anomalous consequences which would result were we to
adopt a contrary view of § 1256. Determinations of the Patent Office may be challenged either by appeal to
the CCPA or by suit instituted in the United States District Court for the District of Columbia. 35 U.S.C. §
145, 28 U.S.C. § 1542 (1964 ed.). Where the latter route is elected, the decision obtained may be reviewed
in the Court of Appeals for the District of Columbia Circuit, and ultimately in this Court upon writ of
certiorari.Hoover Co. v. Coe, 325 U. S. 79. It would be strange indeed if corresponding certiorari
jurisdiction did not exist where the alternative route was elected. Were that so, in the event of conflict
between the CCPA and the courts of the District of Columbia, resolution by this Court would be achievable
only if the litigants chose to proceed through the latter. Obviously, the orderly administration both of our
certiorari jurisdiction and of the patent laws requires that ultimate review be available in this Court,
regardless of the route chosen by the litigants.
We therefore conclude that § 1256 authorizes the grant of certiorari in the present case. We now turn to the
merits. [Footnote 12]
II
Our starting point is the proposition, neither disputed nor disputable, that one may patent only that which is
"useful." In Graham v. John Deere Co., ante, p. 383 U. S. 1 at 383 U. S. 5-10, we have reviewed the history
of the requisites of patentability, and it need not be repeated here. Suffice it to say that the concept of utility
has maintained a central place in all of our patent legislation, beginning with the first patent law in 1790
[Footnote 13] and culminating in the present law's provision that
"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of
matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions
and requirements of this title. [Footnote 14]"
As is so often the case, however, a simple, everyday word can be pregnant with ambiguity when applied to
the facts of life. That this is so is demonstrated by the present conflict between the Patent Office and the
CCPA over how the test is to be applied to a chemical process which yields an already known product
whose utility -- other than as a possible object of scientific inquiry -- has not yet been evidenced. It was not
long ago that agency and court seemed of one mind on the question. In Application of Bremner, 37
C.C.P.A.(Pat.) 1032, 1034, 182 F.2d 216, 217, the court affirmed rejection by the Patent Office of both
process and product claims. It noted that "no use for the products claimed to be developed by the processes
had been shown in the specification." It held that "It was never intended that a patent be granted upon a
product, or a process producing a product, unless such product be useful." Nor was this new doctrine in the
court. See Thomas v. Michael, 35 C.C.P.A.(Pat.) 1036, 1038-1039, 166 F.2d 944, 946-947.
The Patent Office has remained steadfast in this view. The CCPA, however, has moved sharply away
from Bremner. The trend began in Application of Nelson, 47 C.C.P.A.(Pat.) 1031, 280 F.2d 172. There, the
court reversed the Patent Office's rejection of a claim on a process yielding chemical intermediates "useful
to chemists doing research on steroids," despite the absence of evidence that any of the steroids thus
ultimately produced were themselves "useful." The trend has accelerated, [Footnote 15] culminating in the
present case, where the court held it sufficient that a process produces the result intended and is not
"detrimental to the public interest." 52 C.C.P.A.(Pat.) at 745, 333 F.2d at 238.
It is not remarkable that differences arise as to how the test of usefulness is to be applied to chemical
processes. Even if we knew precisely what Congress meant in 1790 when it devised the "new and useful"
phraseology and in subsequent reenactments of the test, we should have difficulty in applying it in the
context of contemporary chemistry, where research is as comprehensive as man's grasp and where little or
nothing is wholly beyond the pale of "utility" -- if that word is given its broadest reach.
Respondent does not -- at least in the first instance -- rest upon the extreme proposition, advanced by the
court below, that a novel chemical process is patentable so long as it yields the intended product [Footnote
16] and so long as the product is not itself "detrimental." Nor does he commit the outcome of his claim to
the slightly more conventional proposition that any process is "useful" within the meaning of § 101 if it
produces a compound whose potential usefulness is under investigation by serious scientific researchers,
although he urges this position, too, as an alternative basis for affirming the decision of the CCPA. Rather,
he begins with the much more orthodox argument that his process has a specific utility which would entitle
him to a declaration of interference even under the Patent Office's reading of § 101. The claim is that the
supporting affidavits filed pursuant to Rule 204(b), by reference to Ringold's 1956 article, reveal that an
adjacent homologue of the steroid yielded by his process has been demonstrated to have tumor-inhibiting
effects in mice, and that this discloses the requisite utility. We do not accept any of these theories as an
adequate basis for overriding the determination of the Patent Office that the "utility" requirement has not
been met.
Even on the assumption that the process would be patentable were respondent to show that the steroid
produced had a tumor-inhibiting effect in mice, [Footnote 17] we would not overrule the Patent Office
finding that respondent has not made such a showing. The Patent Office held that, despite the reference to
the adjacent homologue, respondent's papers did not disclose a sufficient likelihood that the steroid yielded
by his process would have similar tumor-inhibiting characteristics. Indeed, respondent himself recognized
that the presumption that adjacent homologues have the same utility [Footnote 18] has been challenged in
the steroid field because of "a greater known unpredictability of compounds in that field." [Footnote 19] In
these circumstances and in this technical area, we would not overturn the finding of the Primary Examiner,
affirmed by the Board of Appeals and not challenged by the CCPA.
The second and third points of respondent's argument present issues of much importance. Is a chemical rules was meant to apply to the process which yielded the unpatentable product. [Footnote 24] That
process "useful" within the meaning of § 101 either (1) because it works -- i.e., produces the intended proposition seems to us little more than an attempt to evade the impact of the rules which concededly
product? or (2) because the compound yielded belongs to a class of compounds now the subject of serious govern patentability of the product itself.
scientific investigation? These contentions present the basic problem for our adjudication. Since we find no
specific assistance in the legislative materials underlying § 101, we are remitted to an analysis of the
This is not to say that we mean to disparage the importance of contributions to the fund of scientific
problem in light of the general intent of Congress, the purposes of the patent system, and the implications of
information short of the invention of something "useful," or that we are blind to the prospect that what now
a decision one way or the other.
seems without "use" may tomorrow command the grateful attention of the public. But a patent is not a
hunting license. It is not a reward for the search, but compensation for its successful conclusion. "[A] patent
In support of his plea that we attenuate the requirement of "utility," respondent relies upon Justice Story's system must be related to the world of commerce, rather than to the realm of philosophy. . . ." [Footnote 25]
well known statement that a "useful" invention is one "which may be applied to a beneficial use in society,
in contradistinction to an invention injurious to the morals, health, or good order of society, or frivolous and
The judgment of the CCPA is Reversed.
insignificant -- and upon the assertion that to do so would encourage inventors of new processes to
publicize the event for the benefit of the entire scientific community, thus widening the search for uses and
increasing the fund of scientific knowledge. Justice Story's language sheds little light on our subject.
Narrowly read, it does no more than compel us to decide whether the invention in question is "frivolous and
insignificant" -- a query no easier of application than the one built into the statute. Read more broadly, so as
to allow the patenting of any invention not positively harmful to society, it places such a special meaning
on the word "useful" that we cannot accept it in the absence of evidence that Congress so intended. There
are, after all, many things in this world which may not be considered "useful" but which, nevertheless are
totally without a capacity for harm.

It is true, of course, that one of the purposes of the patent system is to encourage dissemination of
information concerning discoveries and inventions. [Footnote 21] And it may be that inability to patent a
process to some extent discourages disclosure and leads to greater secrecy than would otherwise be the
case. The inventor of the process, or the corporate organization by which he is employed, has some
incentive to keep the invention secret while uses for the product are searched out. However, in light of the
highly developed art of drafting patent claims so that they disclose as little useful information as possible --
while broadening the scope of the claim as widely as possible -- the argument based upon the virtue of
disclosure must be warily evaluated. Moreover, the pressure for secrecy is easily exaggerated, for if the
inventor of a process cannot himself ascertain a "use" for that which his process yields, he has every
incentive to make his invention known to those able to do so. Finally, how likely is disclosure of a patented
process to spur research by others into the uses to which the product may be put? To the extent that the
patentee has power to enforce his patent, there is little incentive for others to undertake a search for uses.

Whatever weight is attached to the value of encouraging disclosure and of inhibiting secrecy, we believe a
more compelling consideration is that a process patent in the chemical field, which has not been developed
and pointed to the degree of specific utility, creates a monopoly of knowledge which should be granted only
if clearly commanded by the statute. Until the process claim has been reduced to production of a product
shown to be useful, the metes and bounds of that monopoly are not capable of precise delineation. It may
engross a vast, unknown, and perhaps unknowable area. Such a patent may confer power to block off whole
areas of scientific development, [Footnote 22] without compensating benefit to the public. The basic quid
pro quo contemplated by the Constitution and the Congress for granting a patent monopoly is the benefit
derived by the public from an invention with substantial utility. Unless and until a process is refined and
developed to this point -- where specific benefit

Page 383 U. S. 535

exists in currently available form -- there is insufficient justification for permitting an applicant to engross
what may prove to be a broad field.

These arguments for and against the patentability of a process which either has no known use or is useful
only in the sense that it may be an object of scientific research would apply equally to the patenting of the
product produced by the process. Respondent appears to concede that, with respect to a product, as opposed
to a process, Congress has struck the balance on the side of nonpatentability unless "utility" is shown.
Indeed, the decisions of the CCPA are in accord with the view that a product may not be patented absent a
showing of utility greater than any adduced in the present case. [Footnote 23] We find absolutely no
warrant for the proposition that, although Congress intended that no patent be granted on a chemical
compound whose sole "utility" consists of its potential role as an object of use-testing, a different set of
 Juicy Whip, Inc., Plaintiff-appellant, v. Orange Bang, Inc. and Unique Beverage Dispensers,
Inc.,defendants-appellees, 185 F.3d 1364 (Fed. Cir. 1999)
The district court in this case held a patent invalid for lack of utility on the ground that the patented
invention was designed to deceive customers by imitating another product and thereby increasing
sales of a particular good. We reverse and remand.
* Juicy Whip, Inc., is the assignee of United States Patent No. 5,575,405, which is entitled "Post-Mix
Beverage Dispenser With an Associated Simulated Display of Beverage." A "post-mix" beverage
dispenser stores beverage syrup concentrate and water in separate locations until the beverage is
ready to be dispensed. The syrup and water are mixed together immediately before the beverage is
dispensed, which is usually after the consumer requests the beverage. In contrast, in a "pre-mix"
beverage dispenser, the syrup concentrate and water are pre-mixed and the beverage is stored in a
display reservoir bowl until it is ready to be dispensed. The display bowl is said to stimulate impulse
buying by providing the consumer with a visual beverage display. A pre-mix display bowl, however,
has a limited capacity and is subject to contamination by bacteria. It therefore must be refilled and
cleaned frequently.
The invention claimed in the '405 patent is a post-mix beverage dispenser that is designed to look like
a pre-mix beverage dispenser. The claims require the post-mix dispenser to have a transparent bowl
that is filled with a fluid that simulates the appearance of the dispensed beverage and is resistant to
bacterial growth. The claims also require that the dispenser create the visual impression that the bowl
is the principal source of the dispensed beverage, although in fact the beverage is mixed immediately
before it is dispensed, as in conventional post-mix dispensers.
Claim 1 is representative of the claims at issue. It reads as follows:
In a post-mix beverage dispenser of the type having an outlet for discharging beverage components in
predetermined proportions to provide a serving of dispensed beverage, the improvement which
comprises:
a transparent bowl having no fluid connection with the outlet and visibly containing a quantity of
fluid;
said fluid being resistant to organic growth and simulating the appearance of the dispensed beverage;
said bowl being positioned relative to the outlet to create the visual impression that said bowl is the
reservoir and principal source of the dispensed beverage from the outlet; and
said bowl and said quantity of fluid visible within said bowl cooperating to create the visual
impression that multiple servings of the dispensed beverage are stored within said bowl.
Juicy Whip sued defendants Orange Bang, Inc., and Unique Beverage Dispensers, Inc., (collectively,
"Orange Bang") in the United States District Court for the Central District of California, alleging that
they were infringing the claims of the '405 patent. Orange Bang moved for summary judgment of
invalidity, and the district court granted Orange Bang's motion on the ground that the invention
lacked utility and thus was unpatentable under 35 U.S.C. § 101.
The court concluded that the invention lacked utility because its purpose was to increase sales by
deception, i.e., through imitation of another product. The court explained that the purpose of the
invention "is to create an illusion, whereby customers believe that the fluid contained in the bowl is
the actual beverage that they are receiving, when of course it is not." Although the court
acknowledged Juicy Whip's argument that the invention provides an accurate representation of the
dispensed beverage for the consumer's benefit while eliminating the need for retailers to clean their
display bowls, the court concluded that those claimed reasons for the patent's utility "are not
independent of its deceptive purpose, and are thus insufficient to raise a disputed factual issue to
present to a jury." The court further held that the invention lacked utility because it "improves the
prior art only to the extent that it increases the salability of beverages dispensed from post-mix
dispensers"; an invention lacks utility, the court stated, if it confers no benefit to the public other than
the opportunity for making a product more salable. Finally, the court ruled that the invention lacked
utility because it "is merely an imitation of the pre-mix dispenser," and thus does not constitute a new
and useful machine.
II
Section 101 of the Patent Act of 1952, 35 U.S.C. § 101, provides that " [w]hoever invents or
discovers any new and useful process, machine, manufacture, or composition of matter, or any new
and useful improvement thereof," may obtain a patent on the invention or discovery. The threshold of
utility is not high: An invention is "useful" under section 101 if it is capable of providing some
identifiable benefit. See Brenner v. Manson, 383 U.S. 519, 534 (1966); Brooktree Corp. v. Advanced
Micro Devices, Inc., 977 F.2d 1555, 1571 (Fed. Cir. 1992) ("To violate § 101 the claimed device
must be totally incapable of achieving a useful result"); Fuller v. Berger, 120 F. 274, 275 (7th Cir.
1903) (test for utility is whether invention "is incapable of serving any beneficial end").
To be sure, since Justice Story's opinion in Lowell v. Lewis, 15 F. Cas. 1018 (C.C.D. Mass. 1817), it
has been stated that inventions that are "injurious to the well-being, good policy, or sound morals of
society" are unpatentable. As examples of such inventions, Justice Story listed "a new invention to
poison people, or to promote debauchery, or to facilitate private assassination." Id. at 1019. Courts
have continued to recite Justice Story's formulation, see Tol-o-matic, Inc. v. Proma Produkt-Und
Marketing Gesellschaft m.b.H., 945 F.2d 1546, 1552-53, 20 USPQ 1332, 1338 (Fed. Cir. 1991); In re
Nelson, 280 F.2d 172, 178-79, 126 USPQ 242, 249 (CCPA 1960), but the principle that inventions
are invalid if they are principally designed to serve immoral or illegal purposes has not been applied
broadly in recent years. For example, years ago courts invalidated patents on gambling devices on the
ground that they were immoral, see e.g., Brewer v. Lichtenstein, 278 F. 512 (7th Cir. 1922); Schultze
v. Holtz, 82 F. 448 (N.D. Cal. 1897); National Automatic Device Co. v. Lloyd, 40 F. 89 (N.D. Ill.
1889), but that is no longer the law, see In re Murphy, 200 USPQ 801 (PTO Bd. App. 1977).
In holding the patent in this case invalid for lack of utility, the district court relied on two Second
Circuit cases dating from the early years of this century, Rickard v. Du Bon, 103 F. 868 (2d Cir.
1900), and Scott & Williams, Inc. v. Aristo Hosiery Co., 7 F.2d 1003 (2d Cir. 1925). In the Rickard
case, the court held invalid a patent on a process for treating tobacco plants to make their leaves
appear spotted. At the time of the invention, according to the court, cigar smokers considered cigars
with spotted wrappers to be of superior quality, and the invention was designed to make unspotted
tobacco leaves appear to be of the spotted -- and thus more desirable -- type. The court noted that the
invention did not promote the burning quality of the leaf or improve its quality in any way; "the only
effect, if not the only object, of such treatment, is to spot the tobacco, and counterfeit the leaf spotted
by natural causes." Id. at 869.
The Aristo Hosiery case concerned a patent claiming a seamless stocking with a structure on the back
of the stocking that imitated a seamed stocking. The imitation was commercially useful because at
the time of the invention many consumers regarded seams in stockings as an indication of higher
quality. The court noted that the imitation seam did not "change or improve the structure or the utility
of the article," and that the record in the case justified the conclusion that true seamed stockings were
superior to the seamless stockings that were the subject of the patent. See Aristo Hosiery, 7 F.2d at
1004. "At best," the court stated, "the seamless stocking has imitation marks for the purposes of
deception, and the idea prevails that with such imitation the article is more salable." Id. That was not
enough, the court concluded, to render the invention patentable.
We decline to follow Rickard and Aristo Hosiery, as we do not regard them as representing the
correct view of the doctrine of utility under the Patent Act of 1952. The fact that one product can be
altered to make it look like another is in itself a specific benefit sufficient to satisfy the statutory
requirement of utility.
It is not at all unusual for a product to be designed to appear to viewers to be something it is not. For
example, cubic zirconium is designed to simulate a diamond, imitation gold leaf is designed to
imitate real gold leaf, synthetic fabrics are designed to simulate expensive natural fabrics, and
imitation leather is designed to look like real leather. In each case, the invention of the product or
process that makes such imitation possible has "utility" within the meaning of the patent statute, and
indeed there are numerous patents directed toward making one product imitate another. See, e.g.,
U.S. Pat. No. 5,762,968 (method for producing imitation grill marks on food without using heat);
U.S. Pat. No. 5,899,038 (laminated flooring imitating wood); U.S. Pat. No. 5,571,545 (imitation
hamburger). Much of the value of such products resides in the fact that they appear to be something
they are not. Thus, in this case the claimed post-mix dispenser meets the statutory requirement of
utility by embodying the features of a post-mix dispenser while imitating the visual appearance of a
pre-mix dispenser.
The fact that customers may believe they are receiving fluid directly from the display tank does not
deprive the invention of utility. Orange Bang has not argued that it is unlawful to display a
representation of the beverage in the manner that fluid is displayed in the reservoir of the invention,
even though the fluid is not what the customer will actually receive. Moreover, even if the use of a
reservoir containing fluid that is not dispensed is considered deceptive, that is not by itself sufficient
to render the invention unpatentable. The requirement of "utility" in patent law is not a directive to
the Patent and Trademark Office or the courts to serve as arbiters of deceptive trade practices. Other
agencies, such as the Federal Trade Commission and the Food and Drug Administration, are assigned
the task of protecting consumers from fraud and deception in the sale of food products. Cf. In re
Watson, 517 F.2d 465, 474-76, 186 USPQ 11, 19 (CCPA 1975) (stating that it is not the province of
the Patent Office to determine, under section 101, whether drugs are safe). As the Supreme Court put
the point more generally, "Congress never intended that the patent laws should displace the police
powers of the States, meaning by that term those powers by which the health, good order, peace and
general welfare of the community are promoted." Webber v. Virginia, 103 U.S. 344, 347-48 (1880).
Of course, Congress is free to declare particular types of inventions unpatentable for a variety of
reasons, including deceptiveness. Cf. 42 U.S.C. § 2181(a) (exempting from patent protection
inventions useful solely in connection with special nuclear material or atomic weapons). Until such
time as Congress does so, however, we find no basis in section 101 to hold that inventions can be
ruled unpatentable for lack of utility simply because they have the capacity to fool some members of
the public. The district court therefore erred in holding that the invention of the '405 patent lacks
utility because it deceives the public through imitation in a manner that is designed to increase
product sales.
REVERSED and REMANDED.