LIP Cases

LIP
(Law on Intellectual Property)

Atty. Alcantara | 3D | A.Y. 2018-2019
TRADEMARKS
No. Case Title Pages Page
Acquisition of Ownership of Mark
Birkenstock Orthopaedie GmbH & Co. KG v. Phil. Shoe Expo Marketing Corp., G.R. No.
1 9 3
194307, November 20, 2013
Superior Commercial Enterprises, Inc. v. Kunnan Enterprises Ltd., G.R. No. 169974,
2 16 12
April 20, 2010
Acquisition of Ownership of Trade Name
Ecole de Cuisine Manille (Cordon Bleu of the Phils.), Inc. v. Renaud Cointreau & Cie,
3 7 28
G.R. No. 185830, June 5, 2013
Tests to Determine Confusing Similarity Between Marks
Dominancy Test
4 Asia Brewery, Inc. v. CA, G.R. No. 103543, July 5, 1993 17 35
5 McDonald’s Corp. v. L.C. Big Mak Burgers, Inc., G.R. No. 143993, August 18, 2004 21 52
6 Societes Des Produits Nestle, S.A. v. CA, G.R. No. 112012, April 4, 2001 10 73
7 McDonald’s Corp. v. MacJoy Fastfood Corp., G.R. No. 166115, February 2, 2007 11 83
Skechers, U.S.A., Inc. v. Inter Pacific Industrial Trading Corp., G.R. No. 164321,
8 94
November 30, 2006
8
Skechers, U.S.A., Inc. v. Inter Pacific Industrial Trading Corp., G.R. No. 164321, March
8 102
28, 2011 (Resolution)
9 Societe Des Produits Nestle, S.A. v. Dy, Jr., G.R. No. 172276, August 9, 2010 13 110
Holistic Test
10 Emerald Garment Mfg. Corp. v. CA, G.R. No. 100098, December 29, 1995 17 123
11 Bristol Myers Co. v. Dir. of Patents, G.R. No. L-21587, May 19, 1966 4 140
12 Diaz v. People, G.R. No. 180677, February 18, 2013 10 144
13 Philip Morris, Inc. v. Fortune Tobacco Corp., G.R. No. 158589, June 27, 2006 15 154
14 Del Monte Corp. v. CA, G.R. No. 78325, January 25, 1990 9 169
Well-Known Marks
15 In-N-Out Burger, Inc. v. Sehwani, Inc., G.R. No. 179127, December 24, 2008 19 178
Fredco Mfg. Corp. v. Pres. and Fellows of Harvard College, G.R. No. 185917, June 1,
16 15 197
2011
Rights Conferred by Registration
Taiwan Kolin Corp., Ltd. v. Kolin Electronics Co., Inc., G.R. No. 209843, March 25,
17 12 212
2015
18 Mighty Corp. v. E. & J. Gallo Winery, G.R. No. 154342, July 14, 2004 33 224
Infringement and Remedies
Trademark Infringement
Shangri-La Int’l Hotel Management, Ltd. v. Developers Group of Companies, Inc., G.R.
14 257
No. 159938, March 31, 2006
19
Shangri-La Int’l Hotel Management, Ltd. v. Developers Group of Companies, Inc., G.R.
3 271
No. 159938, January 22, 2007 (Resolution)
Prosource Int’l, Inc. v. Horphag Research Management SA, G.R. No. 180073,
20 7 274
November 25, 2009
Coffee Partners, Inc. v. San Francisco Coffee & Roastery, Inc., G.R. No. 169504, March
21 7 281
3, 2010
22 Ong v. People of the Philippines, G.R. No. 169440, November 23, 2011 15 288
23 REGASCO v. Petron Corp., G.R. No. 194062, June 17, 2013 8 303
Jurisdiction
A.M. No. 02-1-11-SC (Re: Designation of an Intellectual Property Judge for Manila),
24 2 311
February 19, 2002
A.M. No. 03-03-03-SC (Re: Consolidation of Intellectual Property Courts with
25 4 313
Commercial Courts), July 1, 2003
Unfair Competition
Pilipinas Shell Petroleum Corp. v. Romars Int’l Gases Corp., G.R. No. 189669,
26 7 317
February 16, 2015
27 Willaware Products Corp. v. Jesichris Mfg. Corp., G.R. No. 195549, September 3, 2014 9 324
28 Espiritu, Jr. v. Petron Corp., G.R. No. 170891, November 24, 2009 8 333
29 Levi Strauss (Phils.), Inc. v. Lim, G.R. No. 162311, December 4, 2008 14 341
30 Coca-Cola Bottlers, Phils., Inc. v. Gomez, G.R. No. 154491, November 14, 2008 10 355
False Designations of Origins, False Description or Representation
31 Uyco v. Lo, G.R. No. 202423, January 28, 2013 4 365
Penalties
32 Century Chinese Medicine Co. v. People, G.R. No. 188526, November 11, 2013 14 369
SECOND DIVISION
[G.R. No. 194307. November 20, 2013.]
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly

BIRKENSTOCK ORTHOPAEDIE GMBH) , petitioner, vs . PHILIPPINE
SHOE EXPO MARKETING CORPORATION , respondent.
DECISION
PERLAS-BERNABE , J : p
Assailed in this Petition for Review on Certiorari 1 are the Court of Appeals' (CA) Decision 2
dated June 25, 2010 and Resolution 3 dated October 27, 2010 in CA-G.R. SP No. 112278
which reversed and set aside the Intellectual Property Of ce (IPO) Director General's
Decision 4 dated December 22, 2009 that allowed the registration of various trademarks in
favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany, applied
for various trademark registrations before the IPO, namely: (a) "BIRKENSTOCK" under
Trademark Application Serial No. (TASN) 4-1994-091508 for goods falling under Class 25
of the International Classi cation of Goods and Services (Nice Classi cation) with ling
date of March 11, 1994; (b)"BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING
OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM"
under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classi cation
with ling date of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE
COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS
AND SUNBEAM" under TASN 4-1994-095043 for goods falling under Class 10 of the Nice
Classification with filing date of September 5, 1994 (subject applications). 5 AcDHCS
However, registration proceedings of the subject applications were suspended in view of

an existing registration of the mark "BIRKENSTOCK AND DEVICE" under Registration No.
56334 dated October 21, 1993 (Registration No. 56334) in the name of Shoe Town
International and Industrial Corporation, the predecessor-in-interest of respondent
Philippine Shoe Expo Marketing Corporation. 6 In this regard, on May 27, 1997 petitioner
led a petition for cancellation of Registration No. 56334 on the ground that it is the lawful
and rightful owner of the Birkenstock marks (Cancellation Case). 7 During its pendency,
however, respondent and/or its predecessor-in-interest failed to le the required 10th Year
Declaration of Actual Use (10th Year DAU) for Registration No. 56334 on or before
October 21, 2004, 8 thereby resulting in the cancellation of such mark. 9 Accordingly, the
cancellation case was dismissed for being moot and academic. 1 0
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of
the subject applications in the IPO e-Gazette on February 2, 2007. 1 1 In response,
respondent led three (3) separate veri ed notices of oppositions to the subject
applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and 14-
2007-00116, 1 2 claiming, inter alia, that: (a) it, together with its predecessor-in-interest, has
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been using Birkenstock marks in the Philippines for more than 16 years through the mark
"BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject applications are
identical to the one covered by Registration No. 56334 and thus, petitioner has no right to
the registration of such marks; (c) on November 15, 1991, respondent's predecessor-in-
interest likewise obtained a Certi cate of Copyright Registration No. 0-11193 for the word
"BIRKENSTOCK"; (d) while respondent and its predecessor-in-interest failed to le the 10th
Year DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce; and
(e) to record its continued ownership and exclusive right to use the "BIRKENSTOCK"
marks, it has led TASN 4-2006-010273 as a "re-application" of its old registration,
Registration No. 56334. 1 3 On November 13, 2007, the Bureau of Legal Affairs (BLA) of the
IPO issued Order No. 2007-2051 consolidating the aforesaid inter partes cases
(Consolidated Opposition Cases). 1 4 CHEIcS
The Ruling of the BLA

In its Decision 1 5 dated May 28, 2008, the BLA of the IPO sustained respondent's
opposition, thus, ordering the rejection of the subject applications. It ruled that the
competing marks of the parties are confusingly similar since they contained the word
"BIRKENSTOCK" and are used on the same and related goods. It found respondent and its
predecessor-in-interest as the prior user and adopter of "BIRKENSTOCK" in the Philippines,
while on the other hand, petitioner failed to present evidence of actual use in the trade and
business in this country. It opined that while Registration No. 56334 was cancelled, it does
not follow that prior right over the mark was lost, as proof of continuous and uninterrupted
use in trade and business in the Philippines was presented. The BLA likewise opined that
petitioner's marks are not well-known in the Philippines and internationally and that the
various certi cates of registration submitted by petitioners were all photocopies and,
therefore, not admissible as evidence. 1 6
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision 1 7 dated December 22, 2009, the IPO Director General reversed and set
aside the ruling of the BLA, thus allowing the registration of the subject applications. He
held that with the cancellation of Registration No. 56334 for respondent's failure to le the
10th Year DAU, there is no more reason to reject the subject applications on the ground of
prior registration by another proprietor. 1 8 More importantly, he found that the evidence
presented proved that petitioner is the true and lawful owner and prior user of
"BIRKENSTOCK" marks and thus, entitled to the registration of the marks covered by the
subject applications. 1 9 The IPO Director General further held that respondent's copyright
for the word "BIRKENSTOCK" is of no moment since copyright and trademark are different
forms of intellectual property that cannot be interchanged. 2 0 HETDAC
Finding the IPO Director General's reversal of the BLA unacceptable, respondent led a
petition for review with the CA.
Ruling of the CA
In its Decision 2 1 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO
Director General and reinstated that of the BLA. It disallowed the registration of the
subject applications on the ground that the marks covered by such applications "are
confusingly similar, if not outright identical" with respondent's mark. 2 2 It equally held that
respondent's failure to le the 10th Year DAU for Registration No. 56334 "did not deprive
petitioner of its ownership of the "BIRKENSTOCK' mark since it has submitted substantial
evidence showing its continued use, promotion and advertisement thereof up to the
present." 2 3 It opined that when respondent's predecessor-in-interest adopted and started
its actual use of "BIRKENSTOCK," there is neither an existing registration nor a pending
application for the same and thus, it cannot be said that it acted in bad faith in adopting
and starting the use of such mark. 2 4 Finally, the CA agreed with respondent that
petitioner's documentary evidence, being mere photocopies, were submitted in violation of
Section 8.1 of Office Order No. 79, Series of 2005 (Rules on Inter Partes Proceedings).
Dissatis ed, petitioner led a Motion for Reconsideration 2 5 dated July 20, 2010, which
was, however, denied in a Resolution 2 6 dated October 27, 2010. Hence, this petition. 2 7
Issues Before the Court
The primordial issue raised for the Court's resolution is whether or not the subject marks
should be allowed registration in the name of petitioner.
The Court's Ruling
The petition is meritorious.
A. Admissibility of Petitioner's
Documentary Evidence.
In its Comment 2 8 dated April 29, 2011, respondent asserts that the documentary
evidence submitted by petitioner in the Consolidated Opposition Cases, which are mere
photocopies, are violative of Section 8.1 of the Rules on Inter Partes Proceedings, which
requires certi ed true copies of documents and evidence presented by parties in lieu of
originals. 2 9 As such, they should be deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the
attainment of justice, rather than its frustration. A strict and rigid application of the rules
must always be eschewed when it would subvert the primary objective of the rules, that is,
to enhance fair trials and expedite justice. Technicalities should never be used to defeat
the substantive rights of the other party. Every party-litigant must be afforded the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities." 3 0 "Indeed, the primordial policy is a faithful observance of [procedural
rules], and their relaxation or suspension should only be for persuasive reasons and only in
meritorious cases, to relieve a litigant of an injustice not commensurate with the degree of
his thoughtlessness in not complying with the procedure prescribed." 3 1 This is especially
true with quasi-judicial and administrative bodies, such as the IPO, which are not bound by
technical rules of procedure. 3 2 On this score, Section 5 of the Rules on Inter Partes
Proceedings provides: CSTcEI
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter

Partes cases. — The rules of procedure herein contained primarily apply in the
conduct of hearing of Inter Partes cases. The Rules of Court may be applied
suppletorily. The Bureau shall not be bound by strict technical rules of
procedure and evidence but may adopt, in the absence of any
applicable rule herein, such mode of proceedings which is consistent
with the requirements of fair play and conducive to the just, speedy and
inexpensive disposition of cases , and which will give the Bureau the greatest
possibility to focus on the contentious issues before it. (Emphasis and
underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary evidence
in the Consolidated Opposition Cases, it should be noted that the IPO had already obtained
the originals of such documentary evidence in the related Cancellation Case earlier led
before it. Under this circumstance and the merits of the instant case as will be
subsequently discussed, the Court holds that the IPO Director General's relaxation of
procedure was a valid exercise of his discretion in the interest of substantial justice. 3 3
Having settled the foregoing procedural matter, the Court now proceeds to resolve the
substantive issues.
B. Registration and ownership of
"BIRKENSTOCK."
Republic Act No. (RA) 166, 3 4 the governing law for Registration No. 56334, requires the
filing of a DAU on specified periods, 3 5 to wit:
Section 12. Duration. — Each certi cate of registration shall remain in force
for twenty years: Provided, That registrations under the provisions of this
Act shall be cancelled by the Director, unless within one year following
the fth, tenth and fteenth anniversaries of the date of issue of the
certi cate of registration, the registrant shall le in the Patent Of ce
an af davit showing that the mark or trade-name is still in use or
showing that its non-use is due to special circumstance which excuse such non-
use and is not due to any intention to abandon the same, and pay the required
fee. acCTSE
The Director shall notify the registrant who les the above-prescribed af davits of
his acceptance or refusal thereof and, if a refusal, the reasons therefor. (Emphasis
and underscoring supplied)
The aforementioned provision clearly reveals that failure to le the DAU within the requisite
period results in the automatic cancellation of registration of a trademark. In turn, such
failure is tantamount to the abandonment or withdrawal of any right or interest the
registrant has over his trademark. 3 6
In this case, respondent admitted that it failed to le the 10th Year DAU for Registration
No. 56334 within the requisite period, or on or before October 21, 2004. As a
consequence, it was deemed to have abandoned or withdrawn any right or interest over
the mark "BIRKENSTOCK." Neither can it invoke Section 236 3 7 of the IP Code which
pertains to intellectual property rights obtained under previous intellectual property laws,
e.g., RA 166, precisely because it already lost any right or interest over the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark
"BIRKENSTOCK."
Under Section 2 3 8 of RA 166, which is also the law governing the subject applications, in
order to register a trademark, one must be the owner thereof and must have actually used
the mark in commerce in the Philippines for two (2) months prior to the application for
registration. Section 2-A 3 9 of the same law sets out to de ne how one goes about
acquiring ownership thereof. Under the same section, it is clear that actual use in
commerce is also the test of ownership but the provision went further by saying that the
mark must not have been so appropriated by another. Significantly, to be an owner, Section
2-A does not require that the actual use of a trademark must be within the Philippines.
Thus, under RA 166, one may be an owner of a mark due to its actual use but may not yet
have the right to register such ownership here due to the owner's failure to use the same in
the Philippines for two (2) months prior to registration. 4 0 EaSCAH
It must be emphasized that registration of a trademark, by itself, is not a mode of

acquiring ownership. If the applicant is not the owner of the trademark, he has no right to
apply for its registration. Registration merely creates a prima facie presumption of the
validity of the registration, of the registrant's ownership of the trademark, and of the
exclusive right to the use thereof. Such presumption, just like the presumptive regularity in
the performance of of cial functions, is rebuttable and must give way to evidence to the
contrary. 4 1
Clearly, it is not the application or registration of a trademark that vests ownership thereof,
but it is the ownership of a trademark that confers the right to register the same. A
trademark is an industrial property over which its owner is entitled to property rights which
cannot be appropriated by unscrupulous entities that, in one way or another, happen to
register such trademark ahead of its true and lawful owner. The presumption of ownership
accorded to a registrant must then necessarily yield to superior evidence of actual and real
ownership of a trademark. The Court's pronouncement in Berris Agricultural Co., Inc. v.
Abyadang 4 2 is instructive on this point:
The ownership of a trademark is acquired by its registration and its actual use by
the manufacturer or distributor of the goods made available to the purchasing
public. . . . A certi cate of registration of a mark, once issued, constitutes prima
facie evidence of the validity of the registration, of the registrant's ownership of
the mark, and of the registrant's exclusive right to use the same in connection
with the goods or services and those that are related thereto speci ed in the
certi cate. . . . In other words, the prima facie presumption brought about by the
registration of a mark may be challenged and overcome in an appropriate action, .
. . by evidence of prior use by another person, i.e. , it will controvert a
claim of legal appropriation or of ownership based on registration by a
subsequent user. This is because a trademark is a creation of use and
belongs to one who rst used it in trade or commerce. 4 3 (Emphasis and
underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark
"BIRKENSTOCK." It submitted evidence relating to the origin and history of
"BIRKENSTOCK" and its use in commerce long before respondent was able to register the
same here in the Philippines. It has suf ciently proven that "BIRKENSTOCK" was rst
adopted in Europe in 1774 by its inventor, Johann Birkenstock, a shoemaker, on his line of
quality footwear and thereafter, numerous generations of his kin continuously engaged in
the manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it
became the entity now known as the petitioner. Petitioner also submitted various
certi cates of registration of the mark "BIRKENSTOCK" in various countries and that it has
used such mark in different countries worldwide, including the Philippines. 4 4
On the other hand, aside from Registration No. 56334 which had been cancelled,
respondent only presented copies of sales invoices and advertisements, which are not
conclusive evidence of its claim of ownership of the mark "BIRKENSTOCK" as these merely
show the transactions made by respondent involving the same. 4 5 ETDHaC
In view of the foregoing circumstances, the Court nds the petitioner to be the true and
lawful owner of the mark "BIRKENSTOCK" and entitled to its registration, and that
respondent was in bad faith in having it registered in its name. In this regard, the Court
quotes with approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good faith in using
and in registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German
origin, is a highly distinct and arbitrary mark. It is very remote that two persons did
coin the same or identical marks. To come up with a highly distinct and
uncommon mark previously appropriated by another, for use in the same line of
business, and without any plausible explanation, is incredible. The eld from
which a person may select a trademark is practically unlimited. As in all other
cases of colorable imitations, the unanswered riddle is why, of the millions of
terms and combinations of letters and designs available, [respondent] had to
come up with a mark identical or so closely similar to the [petitioner's] if there was
no intent to take advantage of the goodwill generated by the [petitioner's] mark.
Being on the same line of business, it is highly probable that the [respondent]
knew of the existence of BIRKENSTOCK and its use by the [petitioner], before
[respondent] appropriated the same mark and had it registered in its name. 4 6
WHEREFORE , the petition is GRANTED . The Decision dated June 25, 2010 and Resolution
dated October 27, 2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED
and SET ASIDE . Accordingly, the Decision dated December 22, 2009 of the IPO Director
General is hereby REINSTATED .
SO ORDERED.
Brion, Del Castillo, Perez and Reyes, * JJ., concur.
Footnotes
* Designated Additional Member per Raffle dated October 17, 2012.
1. Rollo, pp. 11-74.

2. Id. at 98-126. Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate
Justices Ramon M. Bato, Jr. and Florito S. Macalino, concurring.
3. Id. at 128-129.
4. Id. at 132-146. Penned by Director General Adrian S. Cristobal, Jr.
5. Id. at 99.
6. On February 24, 2004, Shoe Town International and Industrial Corporation formally
assigned the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334 in favor
of respondent; id. at 102.
7. Id. at 20.
8. Id. at 102.
9. Id. at 142.
10. Id. at 21.
11. Id. at 99.
12. Id. at 99-100.
13. Id. at 101-105.
14. Id. at 111 and 133.
15. Id. at 111. Decision No. 2008-102.
16. Id. at 113 and 139.
17. Id. at 132-146.
18. Id. at 142.
19. Id. at 144-145.
20. Id. at 146.
21. Id. at 98-126.
22. Id. at 119.
23. Id. at 121.
24. Id. at 125.
25. Id. at 147-182.
26. Id. at 128-129.
27. Id. at 11-74.
28. Id. at 190-221.
29. Section 8.1 of the Rules on Inter Partes Proceedings states:
8.1. Within three (3) working days from receipt of the petition or opposition,
the Bureau shall issue an order for the respondent to le an answer together with the
af davits of witnesses and originals of documents, and at the same time shall notify all
parties required to be noti ed in the IP Code and these Regulations, provided that in case
of public documents, certi ed true copies may be substituted in lieu of the originals. The
af davits and documents shall be marked consecutively as "exhibits" beginning with the
number "1."
30. Alcantara v. Philippine Commercial and International Bank , G.R. No. 151349,
October 20, 2010, 634 SCRA 48, 61.
31. Asia United Bank v. Goodland Company, Inc. , G.R. No. 188051, November 22,
2010, 635 SCRA 637, 645.
32. See E.Y. Industrial Sales, Inc. v. Shen Dar Electricity and Machinery Co., Ltd. , G.R.
No. 184850, October 20, 2010, 634 SCRA 363, 378.
33. See id. at 378-381.

34. Entitled, "AN ACT TO PROVIDE FOR THE REGISTRATION AND PROTECTION OF
TRADE-MARKS, TRADE-NAMES AND SERVICE-MARKS, DEFINING UNFAIR
COMPETITION AND FALSE MARKING AND PROVIDING REMEDIES AGAINST THE SAME,
AND FOR OTHER PURPOSES."
35. Such rule was carried over in Sections 124.2 and 145 of RA 8293, otherwise
known as the Intellectual Property Code of the Philippines (IP Code), viz.:
Sec. 124. Requirements of Application. — . . .
xxx xxx xxx
124.2. The applicant or the registrant shall le a declaration of actual use of the
mark with evidence to that effect, as prescribed by the Regulations within three (3) years
from the ling date of the application. Otherwise, the application shall be refused or the
mark shall be removed from the Register by the Director.
Sec. 145. Duration. — A certi cate of registration shall remain in force for ten
(10) years: Provided, That the registrant shall le a declaration of actual use and
evidence to that effect, or shall show valid reasons based on the existence of obstacles
to such use, as prescribed by the Regulations, within one (1) year from the fth
anniversary of the date of the registration of the mark. Otherwise, the mark shall be
removed from the Register by the Office.
In the same manner, Rules 204 and 801 of the Rules and Regulations on Trademarks
provide:
Rule 204. Declaration of Actual Use. — The Of ce will not require any proof of
use in commerce in the processing of trademark applications. However, without need of
any notice from the Of ce, all applicants or registrants shall le a declaration of actual
use of the mark with evidence to that effect within three years, without possibility of
extension, from the ling date of the application. Otherwise, the application shall be
refused or the mark shall be removed from the register by the Director motu proprio.
Rule 801. Duration. — A certi cate of registration shall remain in force for ten
(10) years, Provided, That without need of any notice from the Of ce, the registrant shall
le a declaration of actual use and evidence to that effect, or shall show valid reasons
based on the existence of obstacles to such use, as prescribed by these Regulations,
within one (1) year from the fth anniversary of the date of the registration of the mark.
Otherwise, the Of ce shall remove the mark from the Register. Within one (1) month
from receipt of the declaration of actual use or reason for nonuse, the Examiner shall
notify the registrant of the action taken thereon such as acceptance or refusal.
36. See Mattel, Inc. v. Francisco , G.R. No. 166886, July 30, 2008, 560 SCRA 504, 513-
514.
37. Section 236 of the IP Code provides:
Sec. 236. Preservation of Existing Rights. — Nothing herein shall adversely affect
the rights on the enforcement of rights in patents, utility models, industrial designs,
marks and works, acquired in good faith prior to the effective date of this Act.
38. Section 2 of RA 166 provides:
Sec. 2. What are registrable. — Trademarks, trade names and service marks
owned by persons, corporations, partnerships or associations domiciled in the
Philippines and by persons, corporations, partnerships or associations domiciled in any
foreign country may be registered in accordance with the provisions of this Act:
Provided, That said trademarks, trade names, or service marks are actually in use in
commerce and services not less than two months in the Philippines before the time the
applications for registration are filed; And provided, further, That the country of which the
applicant for registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is of cially certi ed, with a certi ed true copy
of the foreign law translated into the English language, by the government of the foreign
country to the Government of the Republic of the Philippines.
39. Section 2-A, which was added by RA 638 to RA 166, provides:
Sec. 2-A. Ownership of trademarks, trade names and service marks; how
acquired. — Anyone who lawfully produces or deals in merchandise of any kind or who
engages in any lawful business, or who renders any lawful service in commerce, by
actual use thereof in manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trademark, a trade name, or a service mark not so
appropriated by another, to distinguish his merchandise, business or service from the
merchandise, business or services of others. The ownership or possession of a
trademark, trade name, service mark, heretofore or hereafter appropriated, as in this
section provided, shall be recognized and protected in the same manner and to the same
extent as are other property rights known to this law.
40. Ecole de Cuisine Manille (The Cordon Bleu of the Philippines), Inc. v. Renaud
Cointreau & Cie and Le Cordon Bleu Int'l., B.V. , G.R. No. 185830, June 5, 2013, citing
Shangri-La International Hotel Management, Ltd. v. Developers Group of Companies,
Inc., G.R. No. 159938, March 31, 2006, 486 SCRA 405, 426.
41. Shangri-La International Hotel Management, Ltd. v. Developers Group of
Companies, Inc., G.R. No. 159938, March 31, 2006, 486 SCRA 405, 420-421.
42. G.R. No. 183404, October 13, 2010, 633 SCRA 196.
43. Id. at 204-205.
44. Rollo, p. 143.
45. Id.
46. Id. at 144-145.

SECOND DIVISION
[G.R. No. 169974. April 20, 2010.]
SUPERIOR COMMERCIAL ENTERPRISES, INC. , petitioner, vs . KUNNAN

ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR, INC. ,
respondents.
DECISION
BRION , J : p
We review in this petition for review on certiorari 1 the (1) decision 2 of the Court
of Appeals (CA) in CA-G.R. CV No. 60777 that reversed the ruling of the Regional Trial
Court of Quezon City, Branch 85 (RTC), 3 and dismissed the petitioner Superior
Commercial Enterprises, Inc.'s (SUPERIOR) complaint for trademark infringement and
unfair competition (with prayer for preliminary injunction) against the respondents
Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor, Inc. (SPORTS
CONCEPT); and (2) the CA resolution 4 that denied SUPERIOR's subsequent motion for
reconsideration. The RTC decision that the CA reversed found the respondents liable
for trademark infringement and unfair competition, and ordered them to pay SUPERIOR
P2,000,000.00 in damages, P500,000.00 as attorney's fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR 5 led a complaint for trademark infringement
and unfair competition with preliminary injunction against KUNNAN 6 and SPORTS
CONCEPT 7 with the RTC, docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR rst claimed to be the owner of the
trademarks, trading styles, company names and business names 8 "KENNEX", 9
"KENNEX & DEVICE", 1 0 "PRO KENNEX" 1 1 and "PRO-KENNEX" (disputed trademarks).
1 2 Second, it also asserted its prior use of these trademarks, presenting as evidence of
ownership the Principal and Supplemental Registrations of these trademarks in its
name. Third, SUPERIOR also alleged that it extensively sold and advertised sporting
goods and products covered by its trademark registrations. Finally, SUPERIOR
presented as evidence of its ownership of the disputed trademarks the preambular
clause of the Distributorship Agreement dated October 1, 1982 (Distributorship
Agreement) it executed with KUNNAN, which states: HCIaDT
Wh erea s, KUNNAN intends to acquire the ownership of KENNEX

trademark registered by the [ sic ] Superior in the Philippines . Whereas, the
[sic] Superior is desirous of having been appointed [sic] as the sole distributor by
KUNNAN in the territory of the Philippines." [Emphasis supplied.] 1 3
In its defense, KUNNAN disputed SUPERIOR's claim of ownership and maintained

that SUPERIOR — as mere distributor from October 6, 1982 until December 31, 1991
— fraudulently registered the trademarks in its name . KUNNAN alleged that it
was incorporated in 1972, under the name KENNEX Sports Corporation for the purpose
of manufacturing and selling sportswear and sports equipment; it commercially
marketed its products in different countries, including the Philippines since 1972. 1 4 It
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created and rst used "PRO KENNEX," derived from its original corporate name, as a
distinctive trademark for its products in 1976. KUNNAN also alleged that it registered
the "PRO KENNEX" trademark not only in the Philippines but also in 31 other countries,
and widely promoted the "KENNEX" and "PRO KENNEX" trademarks through worldwide
advertisements in print media and sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial distributorship agreement
with another company, 1 5 KUNNAN appointed SUPERIOR as its exclusive distributor in
the Philippines under a Distributorship Agreement whose pertinent provisions state: 1 6
Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered
by the Superior in the Philippines. Whereas, the Superior is desirous of
having been appointed [ sic ] as the sole distributor by KUNNAN in the
territory of the Philippines .
Now, therefore, the parties hereto agree as follows:

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

ownership of KENNEX trademark, under the registration of Patent
Certi cate No. 4730 dated 23 May 1980 to KUNNAN on the
effects [ sic ] of its ten (10) years contract of distributorship, and it
is required that the ownership of the said trademark shall be genuine,
complete as a whole and without any defects.
3. KUNNAN will guarantee to the Superior that no other third parties will be
permitted to supply the KENNEX PRODUCTS in the Philippines except only
to the Superior. If KUNNAN violates this stipulation, the transfer of the
KENNEX trademark shall be null and void.
4. If there is a necessity, the Superior will be appointed, for the protection of

interest of both parties, as the agent in the Philippines with full power to
exercise and granted the power of attorney, to pursue any case of Pirating,
Infringement and Counterfeiting the [sic] KENNEX trade mark in the
Philippine territory.
5. The Superior will be granted from [sic] KUNNAN's approval before making
and selling any KENNEX products made in the Philippines and the other
countries, and if this is the situation, KUNNAN is entitled to have a royalty
of 5%-8% of FOB as the right. SIcEHC
6. Without KUNNAN's permission, the Superior cannot procure other goods

supply under KENNEX brand of which are not available to supply [sic] by
KUNNAN. However, in connection with the sporting goods, it is permitted
that the Superior can procure them under KENNEX brand of which are not
available to be supplied by KUNNAN. [Emphasis supplied.]
Even though this Agreement clearly stated that SUPERIOR was obligated to
assign the ownership of the KENNEX trademark to KUNNAN, the latter claimed that the
Certi cate of Registration for the KENNEX trademark remained with SUPERIOR
because Mariano Tan Bon Diong ( Mr. Tan Bon Diong ), SUPERIOR's President and
General Manager, misled KUNNAN's o cers into believing that KUNNAN was not
quali ed to hold the same due to the "many requirements set by the Philippine Patent
O ce" that KUNNAN could not meet. 1 7 KUNNAN further asserted that SUPERIOR
deceived it into assigning its applications for registration of the "PRO KENNEX"
trademark in favor of SUPERIOR, through an Assignment Agreement dated June 14,
1983 whose pertinent provisions state: 1 8
1. In consideration of the distributorship relationship between KUNNAN and
Superior, KUNNAN, who is the seller in the distributorship relationship, agrees to
assign the following trademark applications owned by itself in the
Philippines to Superior who is the buyer in the distributorship
relationship .
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2. Superior shall acknowledge that KUNNAN is still the real and

truthful owner of the abovementioned trademarks, and shall agree that
it will not use the right of the abovementioned trademarks to do
anything which is unfavourable or harmful to KUNNAN .
3. Superior agrees that it will return back the abovementioned

trademarks to KUNNAN without hesitation at the request of KUNNAN at
any time . KUNNAN agrees that the cost for the concerned assignment of the
abovementioned trademarks shall be compensated by KUNNAN. TAHIED
4. Superior agrees that the abovementioned trademarks when requested by

KUNNAN shall be clean and without any incumbency.
5. Superior agrees that after the assignment of the abovementioned

trademarks, it shall have no right to reassign or license the said trademarks to any
other parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement and unfair

competition case before the RTC, KUNNAN led with the now defunct Bureau
of Patents, Trademarks and Technology Transfer 1 9 separate Petitions for
the Cancellation of Registration Trademark Nos. 41032, SR 6663, 40326,
39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709, 3710, 3811,
3812, 3813 and 3814, as well as Opposition to Application Serial Nos. 84565
and 84566, docketed as Inter Partes Cases Nos. 4101 and 4102 (Consolidated
Petitions for Cancellation) involving the KENNEX and PRO KENNEX trademarks. 2 0 In
essence, KUNNAN led the Petition for Cancellation and Opposition on the ground that
SUPERIOR fraudulently registered and appropriated the disputed trademarks; as mere
distributor and not as lawful owner, it obtained the registrations and assignments of
the disputed trademarks in violation of the terms of the Distributorship Agreement and
Sections 2-A and 17 of Republic Act No. 166, as amended. 2 1
On December 3, 1991, upon the termination of its distributorship agreement with
SUPERIOR, KUNNAN appointed SPORTS CONCEPT as its new distributor.
Subsequently, KUNNAN also caused the publication of a Notice and Warning in the
Manila Bulletin's January 29, 1993 issue, stating that (1) it is the owner of the disputed
trademarks; (2) it terminated its Distributorship Agreement with SUPERIOR; and (3) it
appointed SPORTS CONCEPT as its exclusive distributor. This notice prompted
SUPERIOR to le its Complaint for Infringement of Trademark and Unfair Competition
with Preliminary Injunction against KUNNAN. 2 2
The RTC Ruling
On March 31, 1998, the RTC issued its decision 2 3 holding KUNNAN liable for
trademark infringement and unfair competition. The RTC also issued a writ of
preliminary injunction enjoining KUNNAN and SPORTS CONCEPT from using the
disputed trademarks. DaCTcA
The RTC found that SUPERIOR su ciently proved that it was the rst user and
owner of the disputed trademarks in the Philippines, based on the ndings of the
Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR was
"rightfully entitled to register the mark 'KENNEX' as user and owner thereof." It also
considered the "Whereas clause" of the Distributorship Agreement, which categorically
stated that "KUNNAN intends to acquire ownership of [the] KENNEX trademark
registered by SUPERIOR in the Philippines." According to the RTC, this clause amounts
to KUNNAN's express recognition of SUPERIOR's ownership of the KENNEX
trademarks. 2 4
KUNNAN and SPORTS CONCEPT appealed the RTC's decision to the CA where
the appeal was docketed as CA-G.R. CV No. 60777. KUNNAN maintained that
SUPERIOR was merely its distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based on its prior use and
numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN led on December 19, 2003 a
Manifestation and Motion praying that the decision of the Bureau of Legal Affairs
( BLA ) of the Intellectual Property O ce (IPO), dated October 30, 2003, in the
Consolidated Petitions for Cancellation be made of record and be considered
by the CA in resolving the case . 2 5 The BLA ruled in this decision —
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and
convincingly established its rights to the mark "PRO KENNEX". It was proven that
actual use by Respondent-Registrant is not in the concept of an owner but as a
mere distributor (Exhibits "I", "S" to "S-1", "P" and "P-1" and "Q" and "Q-2") and as
enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406,
"a mere distributor of a product bearing a trademark, even if permitted to use said
trademark has no right to and cannot register the said trademark." EAcCHI
WHEREFORE , there being sufficient evidence to prove that the Petitioner-Opposer

(KUNNAN) is the prior user and owner of the trademark "PRO-KENNEX" , the
consolidated Petitions for Cancellation and the Notices of Opposition are hereby
GRANTED . Consequently, the trademark "PRO-KENNEX" bearing Registration
Nos. 41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in
favor of Superior Commercial Enterprises, Inc., herein Respondent-Registrant
under the Principal Register and SR No. 6663 are hereby CANCELLED .
Accordingly, trademark application Nos. 84565 and 84566, likewise for the
registration of the mark PRO-KENNEX are hereby REJECTED .
Let the le wrappers of PRO-KENNEX subject matter of these cases be forwarded
to the Administrative Finance and Human Resources Development Services
Bureau (AFHRDSB) for appropriate action in accordance with this Decision and a
copy thereof be furnished the Bureau of Trademarks (BOT) for information and
update of its record. 2 6
On February 4, 2005, KUNNAN again led another Manifestation requesting that

t h e IPO Director General's decision on appeal dated December 8, 2004,
denying SUPERIOR's appeal , be given weight in the disposition of the case. 2 7 The
dispositive portion of the decision reads: 2 8
WHEREFORE, premises considered, there is no cogent reason to disturb Decision
No. 2003-35 dated 30 October 2003 rendered by the Director of the Bureau of
Legal Affairs. Accordingly, the instant appeal is DENIED and the appealed
decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director General's
ruling before the Court of Appeals on a petition for review under Rule 43 of the Rules of
Court, docketed as CA-G.R. SP No. 87928 (Registration Cancellation Case). On August
30, 2007, the CA rendered its decision dismissing SUPERIOR's petition. 2 9 On
December 3, 2007, the CA decision was declared nal and executory and entry of
judgment was accordingly made. Hence, SUPERIOR's registration of the disputed
trademarks now stands effectively cancelled .
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing
and setting aside the RTC's decision of March 31, 1998. 3 0 It dismissed SUPERIOR's
Complaint for Infringement of Trademark and Unfair Competition with Preliminary
Injunction on the ground that SUPERIOR failed to establish by preponderance of
evidence its claim of ownership over the KENNEX and PRO KENNEX trademarks. The
CA found the Certi cates of Principal and Supplemental Registrations and the "whereas
clause" of the Distributorship Agreement insu cient to support SUPERIOR's claim of
ownership over the disputed trademarks. cEaDTA
The CA stressed that SUPERIOR's possession of the aforementioned Certi cates

of Principal Registration does not conclusively establish its ownership of the disputed
trademarks as dominion over trademarks is not acquired by the fact of registration
alone; 3 1 at best, registration merely raises a presumption of ownership that can be
rebutted by contrary evidence. 3 2 The CA further emphasized that the Certi cates of
Supplemental Registration issued in SUPERIOR's name do not even enjoy the
presumption of ownership accorded to registration in the principal register; it does not
amount to a prima facie evidence of the validity of registration or of the registrant's
exclusive right to use the trademarks in connection with the goods, business, or
services specified in the certificate. 3 3
In contrast with the failure of SUPERIOR's evidence, the CA found that KUNNAN
presented su cient evidence to rebut SUPERIOR's presumption of ownership over the
trademarks. KUNNAN established that SUPERIOR, far from being the rightful owner of
the disputed trademarks, was merely KUNNAN's exclusive distributor. This conclusion
was based on three pieces of evidence that, to the CA, clearly established that
SUPERIOR had no proprietary interest over the disputed trademarks.
First, the CA found that the Distributorship Agreement, considered in its entirety,
positively con rmed that SUPERIOR sought to be the KUNNAN's exclusive distributor.
The CA based this conclusion on the following provisions of the Distributorship
Agreement:

(1) that SUPERIOR was "desirous of [being] appointed as the sole distributor
by KUNNAN in the territory of the Philippines;"
IHAcCS
(2) that "KUNNAN will appoint the sole distributorship right to Superior in the
Philippines;" and
(3) that "no third parties will be permitted to supply KENNEX PRODUCTS in
the Philippines except only to Superior."
The CA thus emphasized that the RTC erred in unduly relying on the rst whereas
clause, which states that "KUNNAN intends to acquire ownership of [the] KENNEX
trademark registered by SUPERIOR in the Philippines" without considering the entirety
of the Distributorship Agreement indicating that SUPERIOR had been merely appointed
by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express undertaking in the
Assignment Agreement to "acknowledge that KUNNAN is still the real and truthful
owner of the [PRO KENNEX] trademarks," and that it "shall agree that it will not use the
right of the abovementioned trademarks to do anything which is unfavourable or
harmful to KUNNAN." To the CA, these provisions are clearly inconsistent with
SUPERIOR's claim of ownership of the disputed trademarks. The CA also observed that
although the Assignment Agreement was a private document, its authenticity and due
execution was proven by the similarity of Mr. Tan Bon Diong's signature in the
Distributorship Agreement and the Assignment Agreement.
Third, the CA also took note of SUPERIOR's Letter dated November 12, 1986
addressed to Brig. Gen. Jose Almonte, identifying itself as the "sole and exclusive
licensee and distributor in the Philippines of all its KENNEX and PRO-KENNEX
products." Attached to the letter was an agreement with KUNNAN, identifying the latter
as the "foreign manufacturer of all KENNEX products." The CA concluded that in this
letter, SUPERIOR acknowledged its status as a distributor in its dealings with KUNNAN,
and even in its transactions with third persons.
Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and
had no right to the registration of the disputed trademarks since the right to register a
trademark is based on ownership. Citing Section 4 of Republic Act No. 166 3 4 and
established jurisprudence, 3 5 the CA held that SUPERIOR — as an exclusive distributor —
did not acquire any proprietary interest in the principal's (KUNNAN's) trademark. SaIEcA
The CA denied SUPERIOR's motion for reconsideration for lack of merit in its
Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT

PETITIONER SUPERIOR IS NOT THE TRUE AND RIGHTFUL OWNER OF THE
TRADEMARKS "KENNEX" AND "PRO-KENNEX" IN THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

THAT PETITIONER SUPERIOR IS A MERE DISTRIBUTOR OF RESPONDENT
KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN REVERSING

AND SETTING ASIDE THE DECISION OF THE REGIONAL TRIAL COURT OF
QUEZON CITY IN CIVIL CASE NO. Q-93-14888, LIFTING THE PRELIMINARY
INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN AND SPORTS
CONCEPT AND DISMISSING THE COMPLAINT FOR INFRINGEMENT OF
TRADEMARK AND UNFAIR COMPETITION WITH PRELIMINARY INJUNCTION
THE COURT'S RULING

We do not find the petition meritorious.
On the Issue of Trademark Infringement
We rst consider the effect of the nal and executory decision in the Registration
Cancellation Case on the present case. This decision — rendered after the CA decision
for trademark infringement and unfair competition in CA-G.R. CV No. 60777 (root of the
present case) — states:
As to whether respondent Kunnan was able to overcome the presumption of
ownership in favor of Superior, the former su ciently established the fraudulent
registration of the questioned trademarks by Superior. The Certi cates of
Registration No. SR-4730 (Supplemental Register) and 33487 (Principal Register)
for the KENNEX trademark were fraudulently obtained by petitioner Superior. Even
before PROKENNEX products were imported by Superior into the Philippines, the
same already enjoyed popularity in various countries and had been distributed
worldwide, particularly among the sports and tennis enthusiasts since 1976.
Riding on the said popularity, Superior caused the registration thereof in the
Philippines under its name when it knew fully well that it did not own nor did it
manufacture the PROKENNEX products. Superior claimed ownership of the
subject marks and failed to disclose in its application with the IPO that it was
merely a distributor of KENNEX and PROKENNEX products in the Philippines. CacHES
While Superior accepted the obligation to assign Certi cates of Registration Nos.
SR-4730 and 33487 to Kunnan in exchange for the appointment by the latter as
its exclusive distributor, Superior however breached its obligation and failed to
assign the same to Kunnan. In a letter dated 13 February 1987, Superior, through
Mr. Tan Bon Diong, misrepresented to Kunnan that the latter cannot own
trademarks in the Philippines. Thus, Kunnan was misled into assigning to
Superior its (Kunnan's) own application for the disputed trademarks. In the same
assignment document, however. Superior was bound to ensure that the
PROKENNEX trademarks under Registration Nos. 40326, 39254, and 49998 shall
be returned to Kunnan clean and without any incumbency when requested by the
latter.
In ne, We see no error in the decision of the Director General of the IPO which
a rmed the decision of the Director of the Bureau of Legal Affairs canceling the
registration of the questioned marks in the name of petitioner Superior and
denying its new application for registration, upon a nding that Superior is not the
rightful owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO

KENNEX" trademarks should be cancelled because SUPERIOR was not the
owner of, and could not in the rst place have validly registered these
trademarks . Thus, as of the nality of the CA decision on December 3, 2007, these
trademark registrations were effectively cancelled and SUPERIOR was no longer the
registrant of the disputed trademarks. HICSTa
Section 22 of Republic Act No. 166, as amended ("RA 166"), 3 6 the law applicable
to this case, defines trademark infringement as follows:
Section 22. Infringement, what constitutes. — Any person who [1] shall
use, without the consent of the registrant , any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in connection
with the sale, offering for sale, or advertising of any goods, business or services
on or in connection with which such use is likely to cause confusion or mistake or
to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or [2] reproduce, counterfeit, copy, or
colorably imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon 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. [Emphasis
supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can le a case
for infringement. Corollary to this, Section 19 of RA 166 provides that any right
conferred upon the registrant under the provisions of RA 166 3 7 terminates when the
judgment or order of cancellation has become final, viz.:
Section 19. Cancellation of registration. — If the Director nds that a case for
cancellation has been made out he shall order the cancellation of the registration.
The order shall not become effective until the period for appeal has elapsed, or if
appeal is taken, until the judgment on appeal becomes nal. When the order or
judgment becomes nal, any right conferred by such registration upon
the registrant or any person in interest of record shall terminate . Notice
of cancellation shall be published in the Official Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration of a trademark

has the effect of depriving the registrant of protection from infringement from the
moment judgment or order of cancellation has become final. 3 8
In the present case, by operation of law, speci cally Section 19 of RA 166, the
trademark infringement aspect of SUPERIOR's case has been rendered moot and
academic in view of the nality of the decision in the Registration Cancellation Case. In
short, SUPERIOR is left without any cause of action for trademark infringement since
the cancellation of registration of a trademark deprived it of protection from
infringement from the moment judgment or order of cancellation became nal. To be
sure, in a trademark infringement, title to the trademark is indispensable to a valid
cause of action and such title is shown by its certi cate of registration. 3 9 With its
certi cates of registration over the disputed trademarks effectively cancelled with
nality, SUPERIOR's case for trademark infringement lost its legal basis and no longer
presented a valid cause of action. HEASaC
Even assuming that SUPERIOR's case for trademark infringement had not been
rendered moot and academic, there can be no infringement committed by KUNNAN
who was adjudged with nality to be the rightful owner of the disputed trademarks in
the Registration Cancellation Case. Even prior to the cancellation of the registration of
the disputed trademarks, SUPERIOR — as a mere distributor and not the owner —
cannot assert any protection from trademark infringement as it had no right in the rst
place to the registration of the disputed trademarks. In fact, jurisprudence holds that in
the absence of any inequitable conduct on the part of the manufacturer, an exclusive
distributor who employs the trademark of the manufacturer does not acquire
proprietary rights of the manufacturer, and a registration of the trademark by the
distributor as such belongs to the manufacturer , provided the duciary
relationship does not terminate before application for registration is led. 4 0 Thus, the
CA in the Registration Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the
questioned mark in its name. Well-entrenched in our jurisdiction is the rule that the
right to register a trademark should be based on ownership. When the applicant is
not the owner of the trademark being applied for, he has no right to apply for the
registration of the same. Under the Trademark Law, only the owner of the
trademark, trade name or service mark used to distinguish his goods, business or
service from the goods, business or service of others is entitled to register the
same. An exclusive distributor does not acquire any proprietary interest in the
principal's trademark and cannot register it in his own name unless it is has been
validly assigned to him.
In addition, we also note that the doctrine of res judicata bars SUPERIOR's
present case for trademark infringement. The doctrine of res judicata embraces two
(2) concepts: the rst is "bar by prior judgment" under paragraph (b) of Rule 39, Section
47, and the second is "conclusiveness of judgment" under paragraph (c) thereof.
In the present case, the second concept — conclusiveness of judgment —
applies. Under the concept of res judicata by conclusiveness of judgment , a nal
judgment or decree on the merits by a court of competent jurisdiction is conclusive of
the rights of the parties or their privies in all later suits on points and matters
determined in the former suit . 4 1 Stated differently, facts and issues actually and
directly resolved in a former suit cannot again be raised in any future case between the
same parties, even if the latter suit may involve a different cause of action. 4 2 This
second branch of the principle of res judicata bars the re-litigation of particular facts or
issues in another litigation between the same parties on a different claim or cause of
action. 4 3 acCTIS
Because the Registration Cancellation Case and the present case involve the
same parties, litigating with respect to and disputing the same trademarks, we are
bound to examine how one case would affect the other. In the present case, even if the
causes of action of the Registration Cancellation Case (the cancellation of trademark
registration) differs from that of the present case (the improper or unauthorized use of
trademarks), the nal judgment in the Registration Cancellation Case is nevertheless
conclusive on the particular facts and issues that are determinative of the present case.
To establish trademark infringement, the following elements must be proven: (1)
the validity of plaintiff's 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." 4 4
Based on these elements, we nd it immediately obvious that the second
element — the plaintiff's ownership of the mark — was what the Registration
Cancellation Case decided with nality. On this element depended the validity of the
registrations that, on their own, only gave rise to the presumption of, but was not
conclusive on, the issue of ownership. 4 5
In no uncertain terms, the appellate court in the Registration Cancellation
Case ruled that SUPERIOR was a mere distributor and could not have been
the owner, and was thus an invalid registrant of the disputed trademarks.
Signi cantly, these are the exact terms of the ruling the CA arrived at in the present
petition now under our review. Thus, whether with one or the other, the ruling on the
issue of ownership of the trademarks is the same. Given, however, the nal and
executory ruling in the Registration Cancellation Case on the issue of ownership that
binds us and the parties, any further discussion and review of the issue of ownership —
although the current CA ruling is legally correct and can stand on its own merits —
becomes a pointless academic discussion. DaScHC
On the Issue of Unfair Competition

Our review of the records shows that the neither the RTC nor the CA made any
factual ndings with respect to the issue of unfair competition. In its Complaint,
SUPERIOR alleged that: 4 6
17. In January 1993, the plaintiff learned that the defendant Kunnan
Enterprises, Ltd., is intending to appoint the defendant Sports Concept and
Distributors, Inc. as its alleged distributor for sportswear and sporting goods
bearing the trademark "PRO-KENNEX." For this reason, on January 20, 1993, the
plaintiff, through counsel, wrote the defendant Sports Concept and Distributor's,
Inc. advising said defendant that the trademark "PRO-KENNEX" was registered
and owned by the plaintiff herein.
18. The above information was a rmed by an announcement made by the
defendants in The Manila Bulletin issue of January 29, 1993, informing the public
that defendant Kunnan Enterprises, Ltd. has appointed the defendant Sports
Concept and Distributors, Inc. as its alleged distributor of sportswear and sporting
goods and equipment bearing the trademarks "KENNEX and "PRO-KENNEX" which
trademarks are owned by and registered in the name of plaintiff herein as alleged
hereinabove.
xxx xxx xxx

27. The acts of defendants, as previously complained herein, were designed
to and are of the nature so as to create confusion with the commercial activities
of plaintiff in the Philippines and is liable to mislead the public as to the nature
and suitability for their purposes of plaintiff's business and the defendant's acts
are likely to discredit the commercial activities and future growth of plaintiff's
business.
From jurisprudence, unfair competition has been de ned as the passing off (or
palming off) or attempting to pass off upon the public of the goods or business of one
person as the goods or business of another with the end and probable effect of
deceiving the public. The essential elements of unfair competition 4 7 are (1) confusing
similarity in the general appearance of the goods; and (2) intent to deceive the public
and defraud a competitor. 4 8
Jurisprudence also formulated the following "true test" of unfair competition:
whether the acts of the defendant have the intent of deceiving or are calculated to
deceive the ordinary buyer making his purchases under the ordinary conditions of the
particular trade to which the controversy relates. One of the essential requisites in an
action to restrain unfair competition is proof of fraud; the intent to deceive, actual or
probable must be shown before the right to recover can exist. 4 9 DTSIEc

In the present case, no evidence exists showing that KUNNAN ever attempted to
pass off the goods it sold (i.e., sportswear, sporting goods and equipment) as those of
SUPERIOR. In addition, there is no evidence of bad faith or fraud imputable to KUNNAN
in using the disputed trademarks. Speci cally, SUPERIOR failed to adduce any evidence
to show that KUNNAN by the above-cited acts intended to deceive the public as to the
identity of the goods sold or of the manufacturer of the goods sold. In McDonald's
Corporation v. L.C. Big Mak Burger, Inc., 5 0 we held that there can be trademark
infringement without unfair competition such as when the infringer discloses on
the labels containing the mark that he manufactures the goods, thus
preventing the public from being deceived that the goods originate from the
trademark owner. In this case, no issue of confusion arises because the same
manufactured products are sold; only the ownership of the trademarks is at issue.
Furthermore, KUNNAN's January 29, 1993 notice by its terms prevents the public from
being deceived that the goods originated from SUPERIOR since the notice clearly
indicated that KUNNAN is the manufacturer of the goods bearing the trademarks
"KENNEX" and "PRO KENNEX." This notice states in full: 5 1
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and rst user of the internationally-
renowned trademarks KENNEX and PRO KENNEX for sportswear and sporting
goods and equipment. Kunnan Enterprises Ltd. has registered the trademarks
KENNEX and PRO KENNEX in the industrial property o ces of at least 31
countries worldwide where KUNNAN Enterprises Ltd. has been selling its
sportswear and sporting goods and equipment bearing the KENNEX and PRO
KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had terminated its
Distributorship Agreement with Superior Commercial Enterprises, Inc. on
December 31, 1991. As a result, Superior Commercial Enterprises, Inc. is no
longer authorized to sell sportswear and sporting goods and equipment
manufactured by Kunnan Enterprises Ltd. and bearing the trademarks
KENNEX and PRO KENNEX .
xxx xxx xxx

In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS,
INC. as its exclusive Philippine distributor of sportswear and sporting goods and
equipment bearing the trademarks KENNEX and PRO KENNEX. The public is
advised to buy sporting goods and equipment bearing these trademarks
only from SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that
the products they are buying are manufactured by Kunnan Enterprises
Ltd . [Emphasis supplied.] CcAESI
Finally, with the established ruling that KUNNAN is the rightful owner of the
trademarks of the goods that SUPERIOR asserts are being unfairly sold by KUNNAN
under trademarks registered in SUPERIOR's name, the latter is left with no effective
right to make a claim. In other words, with the CA's nal ruling in the Registration
Cancellation Case, SUPERIOR's case no longer presents a valid cause of action. For this
reason, the unfair competition aspect of the SUPERIOR's case likewise falls.
WHEREFORE , premises considered, we DENY Superior Commercial Enterprises,
Inc.'s petition for review on certiorari for lack of merit. Cost against petitioner Superior
Commercial Enterprises, Inc. TacESD

SO ORDERED.
Carpio, Del Castillo, Abad and Perez, JJ., concur.
Footnotes
1.Under Rule 45 of the RULES OF COURT.
2.Dated June 22, 2005; penned by Associate Justice Japar B. Dimaampao and concurred in by
Associate Justice Renato C. Dacudao and Associate Justice Edgardo F. Sundiam (both
retired); rollo, pp. 33-50.
3.CA rollo, pp. 11-22.

4.Dated October 4, 2005; rollo, pp. 51-52.
5.SUPERIOR is a domestic corporation duly organized under Philippine laws; id at 34.
6.KUNNAN is foreign corporation organized under the laws of Taiwan, Republic of China, doing
business in the Philippines; id.
7.SPORTS CONCEPT is a domestic corporation organized under Philippine laws; id.
8.SUPERIOR claimed that it registered the business name "PRO-KENNEX SPORTS PRODUCTS"
with the Bureau of Domestic Trade on February 10, 1983 under Certificate of
Registration No. 03767. It also claimed that it registered the business name "PRO-
KENNEX (PHIL.) SPORTS PRODUCTS" with the Bureau of Domestic Trade on February
10, 1983 under Certificate of Registration No. 03767, which it renewed on April 4, 1988
with Certificate of Registration No. 14693 dated April 4, 1988; id at 35.
9.SUPERIOR alleged that it first used the mark "KENNEX" in the Philippines on March 15, 1978
and registered the mark in its name under Supplemental Registration No. 34478 dated
May 31, 1985 to be used for the following goods, namely: "tennis racket, pelota racket,
pingpong racket, goal net, volleyball net and tennis shoulder bags;" id. at 12.
10.SUPERIOR also claimed that it first used the mark "KENNEX & DEVICE OF LETTER 'K' INSIDE
A CIRCLE OF THORNS" in the Philippines on March 15, 1978; the mark was registered in
its name under Supplemental Registration No. 4730 dated May 23, 1980 to be used for
the following goods: "tennis racket, pelota racket, pingpong, squash racket, badminton
racket, basketball, tennis ball, soccer ball, foot ball, badminton shuttlecock, sports
clothing, head ban, wrist band, basketball goal net, tennis net, volleyball net, tennis
shoulder bag, handbag and sport rubber shoes, tennis string;" id.
11.SUPERIOR also alleged that the trademark "PROKENNEX" was first used in the Philippines
by KUNNAN on August 1, 1982 and was registered under the former's name as assignee
under Principal Certificate of Registration No. 39254 dated July 13, 1988 for the
following goods: "handbags, travelling bags and trunks;" id. at 13.
12.SUPERIOR also claimed that the trademark "PRO-KENNEX" was first used by KUNNAN on
January 2, 1980 and is registered under the former's name as assignee under Principal
Certificate of Registration No. 40326 dated August 12, 1988 for the following goods:
"tennis rackets, squash rackets, racketball rackets, badminton rackets and fishing rods."
However, SUPERIOR claims that it first used the trademark "PRO-KENNEX" with the word
"ball design" and "tennis racket" on January 2, 1980 and is registered in its name under
Certificate of Registration No. 41032 dated September 2, 1988 for the following sporting
goods: "tennis racket and accessories." The trademark "PRO-KENNEX" with the design
ball and racket is claimed to be first used by SUPERIOR on January 2, 1980 and is
registered under Supplemental Certificate of Registration No. 6663 dated November 2,
1984 for the following goods: "sporting goods such as tennis racket and accessories;" id.
13.Id. at 102.
14.KUNNAN alleged that it has manufactured products bearing the KENNEX and PRO KENNEX
trademarks and sold them in the Philippines, initially through the importation by
independent outlets and the subsequently through agreements with local distributors; id.
at 90-91.
15.KUNNAN also alleged that its initial distributorship agreement was with Bonmark
Sportsmasters, Inc. from August 21, 1982 to January 3, 1983; id. at 91.
16.Id. at 102-103.
17.Id. at 92.
18.Id. at 94.
19.On January 1, 1998, Republic Act No. 8293, otherwise known as the Intellectual Property
Code of the Philippines, took effect which abolished among other offices, the Bureau of
Patents, Trademarks and Technology Transfer and transferred its functions to the newly
created Intellectual Property Office.
20.Id. at 36.
21.Id. at 82.
22.Id. at 36-37.
23.The dispositive portion of the decision reads:
WHEREFORE, it is hereby ordered that it appearing from the established facts that great and
irreparable damage and injury has resulted and will continue to result to the Plaintiff, let
a writ of preliminary injunction be issued enjoining the defendants KUNNAN
ENTERPRISES LIMITED, and SPORTS CONCEPT AND DISTRIBUTOR, INC., their officers,
employees, agents, representatives, or assigns and other persons acting for and in their
behalf, from using, in connection with its business the trademarks KENNEX, PRO-
KENNEX AND KENNEX and DEVICE OF LETTER "K" INSIDE A CIRCLE OF THORNS and
the like and any other marks and trade names which are identical or confusingly similar
to plaintiff's marks and trade names.
a.) All infringing matter in the possession of defendants, its officers, employees, agents,
representatives, or assigns should be delivered to this Court or the plaintiff and be
accordingly destroyed;
b.) Defendants are hereby ordered to render an accounting of the sales from the time it
commenced using the marks and trade names of the plaintiff up to the time of
judgment, including the profits derived from said sales;
c.) Defendants are hereby ordered to pay plaintiff the amount of P2,000,000.00 which is the
reasonable profit which plaintiff could have made, had not defendant infringed the
plaintiff's trademarks;
d.) Defendants are likewise ordered to pay plaintiff's attorney's fees and expenses of
litigation in the amount of P500,000.00;
e.) Defendants should pay the cost of the suit.

SO ORDERED. Id. at 37.
24.CA rollo, pp. 11-22.
25.Rollo, p. 39.
26.Id. at 93. While the dispositive portion of the BLA Decision dated October 30, 2003 referred
only to the PRO-KENNEX trademark, Certificate of Registration No. 4730 which covers
the KENNEX trademarks was cancelled in the same Decision. This oversight was
remedied in the Director General's Decision dated December 8, 2004 which noted that the
"registrations and the applications cover the mark PRO-KENNEX except Registration No.
4730 which refers to the mark KENNEX;" id. at 53-54.
27.Supra note 23.
28.Id. at 67.
29.Decision penned by Guevara-Salonga, J., with Roxas and Garcia, JJ., concurring.
30.The dispositive portion of which states:
WHEREFORE, the Appeal is GRANTED. The Decision dated 31 March 1998 of the Regional
Trial Court of Quezon City, Branch 85 is hereby REVERSED and SET ASIDE. The
Complaint for Infringement of Trademark and Unfair Competition with Preliminary
Injunction, docketed as Civil Case No. Q-93-14888, is DISMISSED.
SO ORDERED. Rollo, p. 49.

31.Citing Philip Morris v. Court of Appeals, n G.R. No. 91332, July 16, 1993, 224 SCRA 576, 596.
32.Citing Emerald Garment Manufacturing Corp. v. Court of Appeals, G.R. No. 100098,
December 29, 1995, 251 SCRA 600, 622-623.
33.Citing La Chemise Lacoste, S.A. v. Fernandez, G.R. Nos. L-63796-97 and L-65659, May 21,
1984, 129 SCRA 373, 392.
34.The provision states:

. . . The owner of a trademark, a trade-name or service mark used to distinguish his goods,
business or services from the goods, business or services of other shall have the right to
register the same. . . .
35.See Marvex Commercial Co. Inc. v. Petra Hawpia & Milling Co., G.R. No. L-19297, December
22, 1966, 18 SCRA 1178, 1180; Unno Commercial Enterprises, Inc. v. General Milling
Corporation, G.R. No. L-28554, February 28, 1983, 120 SCRA 804, 808-809; Gabriel v.
Perez, G.R. No. L-24075, January 31, 1974, 55 SCRA 406.
36.An Act To Provide For the Registration and Protection of Trademarks, Trade-Names, and
Service-Marks, Defining Unfair Competition and False Marking And Providing Remedies
Against The Same, And For Other Purposes.
37.Section 20 of RA 166 considers the trademark registration certificate as prima facie
evidence of the validity of the registration, the registrant's ownership and
exclusive right to use the trademark in connection with the goods, business or
services as classified by the Director of Patents and as specified in the certificate,
subject to the conditions and limitations stated therein. See Mighty Corporation v. E. & J.
Gallo Winery, G.R. No. 154342, July 14, 2004, 434 SCRA 473, 495.
38.See Heirs of Crisanta Y. Gabriel-Almoradie v. Court of Appeals, G.R. No. 91385, January 4,
1994, 229 SCRA 15, 32-33.

39.Western Equipment & Supply Co. v. Reyes, 51 Phil. 115 (1927).
40.Gabriel v. Perez, G.R. No. L-24075, January 31, 1974, 55 SCRA 406.
41.RULES OF COURT, Section 47(c), Rule 39 — Effect of judgments or final orders. — The effect
of a judgment or final order rendered by a court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as follows:
xxx xxx xxx
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon
its face to have been so adjudged, or which was actually and necessarily included
therein or necessary thereto.
See also Gutierrez v. Court of Appeals, 193 SCRA 437 (1991).

42.Tan v. Court of Appeals, G.R. No. 142401, August 20, 2001.
43.Mata v. Court of Appeals, 376 Phil. 525 (1999).
44.McDonald's Corporation v. L.C. Big Mak Burger, Inc., G.R. No. 143993, August 18, 2004, 437
SCRA 10.
45.Supra note 31.
46.Original Records, pp. 5-8.

47.Under Section 29 of RA 166, 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. Unfair competition include 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 feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a manufacturer or dealer, other
than the actual manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate trade, or
any subsequent vendor of such goods or any agent of any vendor engaged in selling
such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to
induce the false belief that such person is offering the services of another who has
identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods,
business or services of another. [Emphasis supplied.]
48.Supra note 42.
49.Coca-Cola Bottlers, Inc. v. Quintin J. Gomez, G.R. No. 154491, November 14, 2008.
50.G.R. No. 143993, August 18, 2004, 437 SCRA 10.

51.Original Records, p. 14.
n Note from the Publisher: Written as "Phillip Morris v. Court of Appeals" in the original
document.

SECOND DIVISION
[G.R. No. 185830. June 5, 2013.]
ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE

PHILIPPINES), INC., petitioner, vs. RENAUD COINTREAU & CIE
and LE CORDON BLEU INT'L., B.V., respondents.
DECISION
PERLAS-BERNABE, J : p
Assailed in this petition for review on certiorari 1 is the December 23, 2008
Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 104672 which affirmed
in toto the Intellectual Property Office (IPO) Director General's April 21, 2008
Decision 3 that declared respondent Renaud Cointreau & Cie (Cointreau) as the
true and lawful owner of the mark "LE CORDON BLEU & DEVICE" and thus, is
entitled to register the same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws of France,
filed before the (now defunct) Bureau of Patents, Trademarks, and Technology
Transfer (BPTTT) of the Department of Trade and Industry a trademark
application for the mark "LE CORDON BLEU & DEVICE" for goods falling under
classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International Classification of
Goods and Services for the Purposes of Registrations of Marks ("Nice
Classification") (subject mark). The application was filed pursuant to Section 37
of Republic Act No. 166, as amended (R.A. No. 166), on the basis of Home
Registration No. 1,390,912, issued on November 25, 1986 in France. Bearing
Serial No. 72264, such application was published for opposition in the March-April
1993 issue of the BPTTT Gazette and released for circulation on May 31, 1993. 4
STaCIA
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an
opposition to the subject application, averring that: ( a) it is the owner of the
mark "LE CORDON BLEU, ECOLE DE CUISINE MANILLE," which it has been using
since 1948 in cooking and other culinary activities, including in its restaurant
business; and (b) it has earned immense and invaluable goodwill such that
Cointreau's use of the subject mark will actually create confusion, mistake, and
deception to the buying public as to the origin and sponsorship of the goods, and
cause great and irreparable injury and damage to Ecole's business reputation and
goodwill as a senior user of the same. 5
On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful
owner of the subject mark. It averred that: (a) it has filed applications for the
subject mark's registration in various jurisdictions, including the Philippines; (b)
Le Cordon Bleu is a culinary school of worldwide acclaim which was established
in Paris, France in 1895; (c) Le Cordon Bleu was the first cooking school to have
set the standard for the teaching of classical French cuisine and pastry making;
a n d (d) it has trained students from more than eighty (80) nationalities,
including Ecole's directress, Ms. Lourdes L. Dayrit. Thus, Cointreau concluded that
Ecole's claim of being the exclusive owner of the subject mark is a fraudulent
misrepresentation. 6
During the pendency of the proceedings, Cointreau was issued Certificates of
Registration Nos. 60631 and 54352 for the marks "CORDON BLEU & DEVICE"
and "LE CORDON BLEU PARIS 1895 & DEVICE" for goods and services under
classes 21 and 41 of the Nice Classification, respectively. 7
The Ruling of the Bureau of Legal Affairs
In its Decision 8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO
sustained Ecole's opposition to the subject mark, necessarily resulting in the
rejection of Cointreau's application. 9 While noting the certificates of registration
obtained from other countries and other pertinent materials showing the use of
the subject mark outside the Philippines, the BLA did not find such evidence
sufficient to establish Cointreau's claim of prior use of the same in the
Philippines. It emphasized that the adoption and use of trademark must be in
commerce in the Philippines and not abroad. It then concluded that Cointreau
has not established any proprietary right entitled to protection in the Philippine
jurisdiction because the law on trademarks rests upon the doctrine of nationality
or territoriality. 10 AaHTIE
On the other hand, the BLA found that the subject mark, which was the
predecessor of the mark "LE CORDON BLEU MANILLE" has been known and used
in the Philippines since 1948 and registered under the name "ECOLE DE CUISINE
MANILLE (THE CORDON BLEU OF THE PHILIPPINES), INC." on May 9, 1980. 11
Aggrieved, Cointreau filed an appeal with the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General reversed and set
aside the BLA's decision, thus, granting Cointreau's appeal and allowing the
registration of the subject mark. 12 He held that while Section 2 of R.A. No. 166
requires actual use of the subject mark in commerce in the Philippines for at
least two (2) months before the filing date of the application, only the owner
thereof has the right to register the same, explaining that the user of a mark in
the Philippines is not ipso facto its owner. Moreover, Section 2-A of the same law
does not require actual use in the Philippines to be able to acquire ownership of a
mark. 13
In resolving the issue of ownership and right to register the subject mark in favor
of Cointreau, he considered Cointreau's undisputed use of such mark since 1895
for its culinary school in Paris, France (in which petitioner's own directress, Ms.
Lourdes L. Dayrit, had trained in 1977). Contrarily, he found that while Ecole
may have prior use of the subject mark in the Philippines since 1948, it failed to
explain how it came up with such name and mark. The IPO Director General
therefore concluded that Ecole has unjustly appropriated the subject mark,
rendering it beyond the mantle of protection of Section 4 (d) 14 of R.A. No. 166.
15 HCacDE

Finding the IPO Director General's reversal of the BLA's Decision unacceptable,
Ecole filed a Petition for Review 16 dated June 7, 2008 with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO Director
General's Decision in toto. 17 It declared Cointreau as the true and actual owner
of the subject mark with a right to register the same in the Philippines under
Section 37 of R.A. No. 166, having registered such mark in its country of origin
on November 25, 1986. 18
The CA likewise held that Cointreau's right to register the subject mark cannot be
barred by Ecole's prior use thereof as early as 1948 for its culinary school "LE
CORDON BLEU MANILLE" in the Philippines because its appropriation of the mark
was done in bad faith. Further, Ecole had no certificate of registration that would
put Cointreau on notice that the former had appropriated or has been using the
subject mark. In fact, its application for trademark registration for the same
which was just filed on February 24, 1992 is still pending with the IPO. 19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Court's resolution is whether the CA was correct in
upholding the IPO Director General's ruling that Cointreau is the true and lawful
owner of the subject mark and thus, entitled to have the same registered under
its name.
At this point, it should be noted that the instant case shall be resolved under the
provisions of the old Trademark Law, R.A. No. 166, which was the law in force at
the time of Cointreau's application for registration of the subject mark.
The Court's Ruling
The petition is without merit. ADSTCI
In the petition, Ecole argues that it is the rightful owner of the subject mark,
considering that it was the first entity that used the same in the Philippines.
Hence, it is the one entitled to its registration and not Cointreau.
Petitioner's argument is untenable.
Under Section 2 20 of R.A. No. 166, in order to register a trademark, one must be
the owner thereof and must have actually used the mark in commerce in the
Philippines for two (2) months prior to the application for registration. Section 2-
A 21 of the same law sets out to define how one goes about acquiring ownership
thereof. Under Section 2-A, it is clear that actual use in commerce is also the test
of ownership but the provision went further by saying that the mark must not
have been so appropriated by another. Additionally, it is significant to note that
Section 2-A does not require that the actual use of a trademark must be within
the Philippines. Thus, as correctly mentioned by the CA, under R.A. No. 166, one
may be an owner of a mark due to its actual use but may not yet have the right
to register such ownership here due to the owner's failure to use the same in the
Philippines for two (2) months prior to registration. 22

Nevertheless, foreign marks which are not registered are still accorded protection
against infringement and/or unfair competition. At this point, it is worthy to
emphasize that the Philippines and France, Cointreau's country of origin, are
both signatories to the Paris Convention for the Protection of Industrial Property
(Paris Convention). 23 Articles 6bis and 8 of the Paris Convention state: DHEACI
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation
so permits, or at the request of an interested party, to refuse or to
cancel the registration, and to prohibit the use, of a trademark which
constitutes a reproduction, an imitation, or a translation, liable to create
confusion, of a mark considered by the competent authority of the
country of registration or use to be well known in that country as being
already the mark of a person entitled to the benefits of this
Convention and used for identical or similar goods. These
provisions shall also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union

without the obligation of filing or registration, whether or not it
forms part of a trademark. (Emphasis and underscoring supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris
Convention, to wit:
Section 37. Rights of foreign registrants. — Persons who are
nationals of, domiciled in, or have a bona fide or effective business or
commercial establishment in any foreign country, which is a party to
any international convention or treaty relating to marks or trade-names,
or the repression of unfair competition to which the Philippines may be
a party, shall be entitled to the benefits and subject to the provisions of
this Act to the extent and under the conditions essential to give effect to
any such convention and treaties so long as the Philippines shall
continue to be a party thereto, except as provided in the following
paragraphs of this section.
xxx xxx xxx
Trade-names of persons described in the first paragraph of this section

shall be protected without the obligation of filing or registration whether
or not they form parts of marks. HCacDE
xxx xxx xxx
In view of the foregoing obligations under the Paris Convention, the Philippines
is obligated to assure nationals of the signatory-countries that they are afforded
an effective protection against violation of their intellectual property rights in the
Philippines in the same way that their own countries are obligated to accord
similar protection to Philippine nationals. 24 "Thus, under Philippine law, a trade
name of a national of a State that is a party to the Paris Convention, whether or
not the trade name forms part of a trademark, is protected 'without the
obligation of filing or registration.'" 25
In the instant case, it is undisputed that Cointreau has been using the subject
mark in France since 1895, prior to Ecole's averred first use of the same in the
Philippines in 1948, of which the latter was fully aware thereof. In fact, Ecole's
present directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco
Dayrit), had trained in Cointreau's Le Cordon Bleu culinary school in Paris,
France. Cointreau was likewise the first registrant of the said mark under various
classes, both abroad and in the Philippines, having secured Home Registration No.
1,390,912 dated November 25, 1986 from its country of origin, as well as
several trademark registrations in the Philippines. 26
On the other hand, Ecole has no certificate of registration over the subject mark
but only a pending application covering services limited to Class 41 of the Nice
Classification, referring to the operation of a culinary school. Its application was
filed only on February 24, 1992, or after Cointreau filed its trademark application
for goods and services falling under different classes in 1990. Under the
foregoing circumstances, even if Ecole was the first to use the mark in the
Philippines, it cannot be said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the same
was already being used by Cointreau, albeit abroad, of which Ecole's directress
was fully aware, being an alumna of the latter's culinary school in Paris, France.
Hence, Ecole cannot claim any tinge of ownership whatsoever over the subject
mark as Cointreau is the true and lawful owner thereof. As such, the IPO Director
General and the CA were correct in declaring Cointreau as the true and lawful
owner of the subject mark and as such, is entitled to have the same registered
under its name. SDTaHc
In any case, the present law on trademarks, Republic Act No. 8293, otherwise
known as the Intellectual Property Code of the Philippines, as amended, has
already dispensed with the requirement of prior actual use at the time of
registration. 27 Thus, there is more reason to allow the registration of the subject
mark under the name of Cointreau as its true and lawful owner.
As a final note, "the function of a trademark is to point out distinctly the origin or
ownership of the goods (or services) to which it is affixed; to secure to him, who
has been instrumental in bringing into the market a superior article of
merchandise, the fruit of his industry and skill; to assure the public that they are
procuring the genuine article; to prevent fraud and imposition; and to protect the
manufacturer against substitution and sale of an inferior and different article as
his product." 28 As such, courts will protect trade names or marks, although not
registered or properly selected as trademarks, on the broad ground of enforcing
justice and protecting one in the fruits of his toil. 29
WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008
Decision of the Court of Appeals in CA-G.R. SP No. 104672 is hereby AFFIRMED
in toto.
SO ORDERED.
Sereno, * C.J., Brion, ** Perez and Leonen, *** JJ., concur.
Footnotes
*Designated Additional Member in lieu of Justice Mariano C. Del Castillo per Raffle dated
February 18, 2013.
**Designated Acting Chairperson in lieu of Justice Antonio T. Carpio per Special Order
No. 1460 dated May 29, 2013.
***Designated Acting Member per Special Order No. 1461 dated May 29, 2013.
1.Rollo, pp. 10-33.
2.Id. at 127-137. Penned by Associate Justice Myrna Dimaranan Vidal, with Associate
Justices Jose L. Sabio, Jr. ( ) and Jose C. Reyes Jr., concurring.
3.Id. at 48-55. Penned by Director General Adrian S. Cristobal, Jr.
4.Id. at 128.
5.Id. at 37-38, 42.
6.Id. at 38-39.
7.Id. at 133.
8.Id. at 36-46. Penned by Director Estrellita Beltran-Abelardo.
9.Id. at 46.
10.Id. at 43-46.
11.Id. at 42.
12.Id. at 55.
13.Id. at 52.
14.Section 4 (d) of R.A. 166 provides:

Section 4. Registration of trademarks, trade names and service marks on the
principal register. — There is hereby established a register of trademarks, trade
names and service marks, which shall be known as the principal register. The
owner of a trademark, a trade name or service mark used to distinguish his
goods, business or services from the goods, business or services of others
shall have the right to register the same on the principal register, unless it:
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
registered in 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.
15.Rollo, pp. 52-55.
16.Id. at 56-76.
17.Id. at 136.
18.Id. at 134-135.
19.Id. at 133-136.
20.Section 2 of R.A. No. 166 provides:
Section 2. What are registrable. — Trademarks, trade names and service
marks owned by persons, corporations, partnerships or associations domiciled
in the Philippines and by persons, corporations, partnerships or associations
domiciled in any foreign country may be registered in accordance with the
provisions of this Act: Provided, That said trademarks, trade names, or service
marks are actually in use in commerce and services not less than two months
in the Philippines before the time the applications for registration are filed; And
provided, further, That the country of which the applicant for registration is a
citizen grants by law substantially similar privileges to citizens of the Philippines,
and such fact is officially certified, with a certified true copy of the foreign law
translated into the English language, by the government of the foreign country
to the Government of the Republic of the Philippines.
21.Section 2-A, which was added by R.A. No. 638 to R.A. No. 166, provides:
Section 2-A. Ownership of trademarks, trade names and service marks; how
acquired. — Anyone who lawfully produces or deals in merchandise of any kind
or who engages in any lawful business, or who renders any lawful service in
commerce, by actual use thereof in manufacture or trade, in business, and in
the service rendered, may appropriate to his exclusive use a trademark, a trade
name, or a service mark from the merchandise, business, or service of others.
The ownership or possession of a trademark, trade name or service mark not
so appropriated by another, to distinguish his merchandise, business or service
from the merchandise, business or services of others. The ownership or
possession of a trademark, trade name, service mark, heretofore or hereafter
appropriated, as in this section provided, shall be recognized and protected in
the same manner and to the same extent as are other property rights known
to this law.
22.Shangri-La International Hotel Management, Ltd. v. Developers Group of
Companies, Inc., 520 Phil. 935, 936 (2006).
23.See <http://www.wipo.int/treaties/en/ShowResults.jsp?treaty_id=2> (last visited
May 9, 2013).
24.Fredco Manufacturing Corporation v. President and Fellows of Harvard College
(Harvard University), G.R. No. 185917, June 1, 2011, 650 SCRA 232, 247,
citingLa Chemise Lacoste, S.A. v. Hon. Fernandez, G.R. Nos. L-63796-97, May
21, 1984, 129 SCRA 373, 389.
25.Id. at 248.
26.Rollo, p. 176.
27.See Shangri-la Int'l. Hotel Management, Ltd. v. Developers Group of Companies,
supra note 22, at 954.
28.Mirpuri v. CA, G.R. No. 114508, November 19, 1999, 318 SCRA 516, 532.
29.Harry D. Nims, The Law of Unfair Competition and Trademarks 28 (1917), citing
Sartor v. Schaden, 125 Iowa 696 at p. 700, 1904; 101 N.W. 511.
EN BANC
[G.R. No. 103543. July 5, 1993.]
ASIA BREWERY, INC . petitioner, vs. THE HON. COURT OF APPEALS

and SAN MIGUEL CORPORATION , respondents.
Abad Santos & Associates and Sycip, Salazar, Hernandez and Gatmaitan for petitioner.
Roco, Bunag, Kapunan Law Office for private respondent.
SYLLABUS
1. REMEDIAL LAW; APPEAL; FACTUAL FINDINGS OF COURT OF APPEALS

CONCLUSIVE AND BINDING ON SUPREME COURT; EXCEPTIONS; CASE AT BAR. — As a
general rule, the findings of the Court of Appeals upon factual questions are conclusive
and ought not to be disturbed by us. However, there are exceptions to this general rule, and
they are: (1) When the conclusion is grounded entirely on speculation, surmises and
conjectures; (2) When the inference of the Court of Appeals from its findings of fact is
manifestly mistaken, absurd and impossible; (3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts; (5) When 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) When the findings of
said court are contrary to those of the trial court; (7) When the findings are without citation
of specific evidence on which they are based; (8) When 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
(9) When the findings of facts of the Court of Appeals are premised on the absence of
evidence and are contradicted on record. (Reynolds Philippine Corporation vs. Court of
Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of Appeals, 156 SCRA 597;
Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593,
609; Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA 333, 336;
also Apex Investment and Financing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs. De
Jesus, 56 SCRA 167; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734;
Manero vs. CA, 102 SCRA 817; and Moran, Jr. vs. Ca, 133 SCRA 88].) Under any of these
exceptions, the Court has to review the evidence in order to arrive at the correct findings
based on the record (Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.)
Where findings of the Court of Appeals and trial court are contrary to each other, the
Supreme Court may scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no concurrence between the
trial court and the Court of Appeals on the lone factual issue of whether ABI, by
manufacturing and selling its BEER PALE PILSEN in amber colored steinie bottles of 320
ml. capacity with a white painted rectangular label has committed trademark infringement
and unfair competition against SMC.
2. COMMERCIAL LAW; TRADEMARK LAW (REPUBLIC ACT NO. 166); INFRINGEMENT;
DEFINED; NATURE THEREOF. — Infringement of trademark is a form of unfair competition
(Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise
known as the Trademark Law, defines what constitutes infringement: 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 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. This
definition implies that only registered trade marks, trade names and service marks are
protected against infringement or unauthorized use by another or others. The use of
someone else's registered trademark, trade name or service mark is unauthorized, hence,
actionable, if it is done "without the consent of the registrant."
3. ID.; ID.; HOW QUESTION OF INFRINGEMENT OF TRADEMARK DETERMINED;
QUESTION AT ISSUE IN CASES OF INFRINGEMENT. — Infringement is determined by the
"test of dominancy" rather than by differences or variations in the details of one trademark
and of another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4
(1954); reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus:
"It has been consistently held that the question of infringement of a trademark is to be
determined by the test of dominancy. Similarity in size, form and color, while relevant, is
not conclusive. If the competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result, infringement takes
place. Duplication or imitation is not necessary; not it is necessary that the infringing label
should suggest an effort to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co.,
191 F., 489, 495, citing Eagle While Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at
issue in cases of infringement of trademarks is whether the use of the marks involved
would be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . .)" In
Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275), the test was similarity or
"resemblance between the two (trademarks) such as would be likely to cause the one
mark to be mistaken for the other. . . . [But] this is not such similitude as amounts to
identity." In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court was
more specific: the test is "similarity in the dominant features of the trademarks."
4. ID.; ID.; ID.; ID.; CASE AT BAR. — The dominant feature of SMC's trademark is the
name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with
elaborate serifs at the beginning and end of the letters "S" and "M" on an amber
background across the upper portion of the rectangular design. On the other hand, the
dominant feature of ABI's trademark is the name: BEER PALE PILSEN, with the word "Beer"
written in large amber letters, larger than any of the letters found in the SMC label. The trial
court perceptively observed that the word "BEER" does not appear in SMC's trademark,
just as the words "SAM MIGUEL" do not appear in ABI's trademark. Hence, there is
absolutely no similarity in the dominant features of both trademarks. Neither in sound,
spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN
MIGUEL PALE PILSEN. No one who purchases BEER PALE PILSEN can possibly be
deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was presented by
SMC proving otherwise.
5. ID.; ID.; GENERIC OR DESCRIPTIVE AND PRIMARILY GEOGRAPHICALLY
DESCRIPTIVE WORDS NON-REGISTRABLE AND NOT APPROPRIABLE; REASON
THEREFOR; CASE AT BAR. — The fact that the words pale pilsen are part of ABI's
trademark does not constitute an infringement of SMC's trademark: SAN MIGUEL PALE
PILSEN, for "pale pilsen" are generic words descriptive of the color ("pale"), of a type of
beer ("pilsen"), which is a light bohemian beer with a strong hops flavor that originated in
the City of Pilsen in Czechoslovakia and became famous in the Middle Ages. (Webster's
Third New International Dictionary of the English Language, Unabridged. Edited by Philip
Babcock Gove. Springfield, Mass.: G & C Merriam Co.,) 1976, page 1716.) "Pilsen" is a
"primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as
inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and not appropriable by any
beer manufacturer. The Trademark Law provides: "Sec. 4 . . . The owner of trade-mark,
trade-name or service-mark used to distinguished his goods, business or services from
the goods, business or services of others shall have the right to register the same [on the
principal register], unless it: . . . "(e) Consists of a mark or trade-name which, when applied
to or used in connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or used in
connection with the goods, business or services of the applicant is primarily
geographically descriptive or deceptively misdescriptive of them, or is primarily merely a
surname." The words "pale pilsen" may not be appropriated by SMC for its exclusive use
even if they are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than
such descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese," "corn
flakes" and "cooking oil" may be appropriated by any single manufacturer of these food
products, for no other reason than that he was the first to use them in his registered
trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it
was held that a dealer in shoes cannot register "Leather Shoes" as his trademark because
that would be merely descriptive and it would be unjust to deprive other dealers in leather
shoes of the right to use the same words with reference to their merchandise. No one may
appropriate generic or descriptive words. They belong to the public domain (Ong Ai Gui vs.
Director of Patents, 96 Phil. 673, 676 [1955]).
6. ID.; ID.; UNFAIR COMPETITION; DEFINED. — Unfair competition is 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 services, for those
of another who has already established goodwill for his similar goods, business or
services, or any acts calculated to produce the same result. (Sec. 29, Republic Act No. 166,
as amended.)
7. ID.; ID.; ID.; TEST TO DETERMINE EXISTENCE THEREOF. — The universal test
question is whether the public is likely to be deceived. Nothing less than conduct tending
to pass off one man's goods or business as that of another will constitute unfair
competition. Actual or probable deception and confusion on the part of the customers by
reason of defendant's practices must always appear." (Shell Co. of the Philippines, Ltd. vs.
Insular Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.) . . . In Dy Buncio vs. Tan Tiao
Bok, 42 Phil. 190, 196-197, where two competing tea products were both labelled as
Formosan tea, both sold in 5-ounce packages made of ordinary wrapping paper of
conventional color, both with labels containing designs drawn in green ink and Chinese
characters written in red ink, one label showing a double-decked jar in the center, the other,
a flower pot, this court found that the resemblances between the designs were not
sufficient to mislead the ordinary intelligent buyer, hence, there was no unfair competition.
The Court held: ". . . In order that there may be deception of the buying public in the sense
necessary to constitute unfair competition, it is necessary to suppose a public
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 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 possibility of the deception, of the person who knows nothing about the
design which has been counterfeited, and who must be indifferent as between that and the
other. The simulation, in order to be objectionable, must be such as appears likely to
mislead the ordinarily intelligent buyer who has a need to supply and is familiar with the
article that he seeks to purchase."
8. ID.; ID.; PROTECTION AGAINST IMITATION PROPERLY LIMITED TO
NONFUNCTIONAL FEATURES; CASE AT BAR. — The petitioner's contention that bottle size,
shape and color may not be the exclusive property of any one beer manufacturer is well
taken. SMC's being the first to use the steinie bottle does not give SMC a vested right to
use it to the exclusion of everyone else. Being of functional or common use, and not the
exclusive invention of any one, it is available to all who might need to use it within the
industry. Nobody can acquire any exclusive right to market articles supplying simple
human needs in containers or wrappers of the general form, size and character commonly
and immediately used in marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190,
194-195.) . . . ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its
own steinie bottle which has a fat bulging neck to differentiate it from SMC's bottle. The
amber color is a functional feature of the beer bottle. As pointed out by ABI, all bottled
beer produced in the Philippines is contained and sold in amber-colored bottles because
amber is the most effective color in preventing transmission of light and provides the
maximum protection to beer. As was ruled in California Crushed Fruit Corporation vs.
Taylor B. and Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or
color of bottle where the same has the useful purpose of protecting the contents from the
deleterious effects of light rays. Moreover, no one may have a monopoly of any color. Not
only beer, but most medicines, whether in liquid or tablet form, are sold in amber-colored
bottles. That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate SMC's
bottle but because that bottle capacity is the standard prescribed under Metrication
Circular No. 778, dated 4 December 1979, of the Department of Trade, Metric System
Board. With regard to the white label of both beer bottles, ABI explained that it used the
color white for its label because white presents the strongest contrast to the amber color
of ABI's bottle; it is also the most economical to use on labels, and the easiest to "bake" in
the furnace. No one can have a monopoly of the color amber for bottles, nor of white for
labels, nor of the rectangular shape which is the usual configuration of labels. Needless to
say, the shape of the bottle and of the label is unimportant. What is all important is the
name of the product written on the label of the bottle for that is how one beer may be
distinguished from the others.
9. ID.; ID.; TRADEMARK ALLEGEDLY INFRINGED CONSIDERED AS A WHOLE AND NOT
AS DISSECTED; DOCTRINE ENUNCIATED IN DEL MONTE CORPORATION vs. COURT OF
APPEALS AND SUNSHINE SAUCE MANUFACTURING INDUSTRIES, 181 SCRA 410, 419,
NOT APPLICABLE TO CASE AT BAR. — Our decision in this case will not diminish our ruling
in "Del Monte Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing
Industries," 181 SCRA 410, 419, 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." That
ruling may not apply to all kinds of products. The Court itself cautioned that in resolving
cases of infringement and unfair competition, the courts should "take into consideration
several factors which would affect is 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 consumption and also the conditions under which it is usually purchased." (181
SCRA 410, 418-419). The Del Monte case involved catsup , a common household item
which is bought off the store shelves by housewives and house help who, if they are
illiterate and cannot identify the product by name or brand, would very likely identify it by
mere recollection of its appearance. Since the competitor, Sunshine Sauce Mfg. Industries,
not only used recycled Del Monte bottles for its catsup (despite the warning embossed on
the bottles: "Del Monte Corporation. Not to be refilled.") but also used labels which were "a
colorable imitation" of Del Monte's label, we held that there was infringement of Del
Monte's trademark and unfair competition by Sunshine. Our ruling in Del Monte would not
apply to beer which is not usually picked up from a store shelf but ordered by brand by the
beer drinker himself from the storekeeper or waiter in a pub or restaurant.
CRUZ, J., dissenting:
1. COMMERCIAL LAW; TRADEMARK LAW (REPUBLIC ACT NO. 166); INFRINGEMENT;
TOUCHSTONE IN DETERMINATION OF EXISTENCE THEREOF; TO DETERMINE WHETHER
TRADEMARK HAS BEEN INFRINGED, THE MARK IS CONSIDERED AS A WHOLE AND NOT
AS DISSECTED. — The question is not whether the two articles are distinguishable by their
labels 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. 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. The
buyer having in mind the mark/label of the respondent must rely upon his memory of the
petitioner's mark. 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. The court
therefore should be guided by its first impression, 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.
DECISION
GRIÑO-AQUINO , J : p
On September 15, 1988, San Miguel Corporation (SMC) filed a complaint against Asia
Brewery Inc. (ABI) for infringement of trademark and unfair competition on account of the
latter's BEER PALE PILSEN or BEER NA BEER product which has been competing with
SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market. (San Miguel
Corporation vs. Asia Brewery Inc., Civ. Case No. 56390, RTC Branch 166, Pasig, Metro
Manila.)
On August 27, 1990, a decision was rendered by the trial Court, presided over by Judge
Jesus O. Bersamira, dismissing SMC's complaint because ABI "has not committed
trademark infringement or unfair competition against" SMC (p. 189, Rollo). prcd

SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On September 30, 1991,
the Court of Appeals (Sixth Division composed of Justice Jose C. Campos, Jr., chairman
and ponente, and Justices Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as members)
reversed the trial court. The dispositive part of the decision reads as follows:
"In the light of the foregoing analysis and under the plain language of the
applicable rule and principle on the matter, We find the defendant Asia Brewery
Incorporated GUILTY of infringement of trademark and unfair competition. The
decision of the trial court is hereby REVERSED, and a new judgment entered in
favor of the plaintiff and against the defendant as follows:
"(1) The defendant Asia Brewery Inc. its officers, agents, servants and
employees are hereby permanently enjoined and restrained from manufacturing,
putting up, selling, advertising, offering or announcing for sale, or supplying Beer
Pale Pilsen, or any similar preparation, manufacture or beer in bottles and under
labels substantially identical with or like the said bottles and labels of plaintiff
San Miguel Corporation employed for that purpose, or substantially identical with
or like the bottles and labels now employed by the defendant for that purpose, or
in bottles or under labels which are calculated to deceive purchasers and
consumers into the belief that the beer is the product of the plaintiff or which will
enable others to substitute, sell or palm off the said beer of the defendant as and
for the beer of the plaintiff-complainant.
"(2) The defendant Asia Brewery Inc. is hereby ordered to render an

accounting and pay the San Miguel Corporation double any and all the payments
derived by defendant from operations of its business and sale of goods bearing
the mark 'Beer Pale Pilsen' estimated at approximately Five Million Pesos
(P5,000,000.00); to recall all its products bearing the mark 'Beer Pale Pilsen' from
its retailers and deliver these as well as all labels, signs, prints, packages,
wrappers, receptacles and advertisements bearing the infringing mark and all
plates, molds, materials and other means of making the same to the Court
authorized to execute this judgment for destruction.
"(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million
Pesos (P2,000,000.00) as moral damages and Half a Million Pesos
(P5,000,000.00) by way of exemplary damages.
"(4) The defendant is further ordered to pay the plaintiff attorney's fees in the
amount of P250,000.00 plus costs of this suit." (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive part of the decision,
was modified by the separate opinions of the Special Sixth Division 1 so that it should read
thus:
In the light of the foregoing analysis and under the plain language of the
applicable rule and principle on the matter, We find the defendant Asia Brewery
Incorporated GUILTY of infringement of trademark and unfair competition. The
decision of the trial court is hereby REVERSED, and a new judgment entered in
favor of the plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants and
employees are hereby permanently enjoined and restrained from manufacturing,
putting up, selling, advertising, offering or announcing for sale, or supplying Beer
Pale Pilsen, or any similar preparation, manufacture or beer in bottles and under
labels substantially identical with or like the said bottles and labels of plaintiff
San Miguel Corporation employed for that purpose, or substantially identical with
or like the bottles and labels now employed by the defendant for that purpose, or
in bottles or under labels which are calculated to deceive purchasers and
consumers into the belief that the beer is the product of the plaintiff or which will
enable others to substitute, sell or palm off the said beer of the defendant as and
for the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all its
products bearing the mark Beer Pale Pilsen from its retailers and deliver these as
well as all labels, signs, prints, packages, wrappers, receptacles and
advertisements bearing the infringing mark and all plates, molds, materials and
other means of making the same to the Court authorized to execute this judgment
for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million
Pesos (P2,000,000.00) as moral damages and Half a Million Pesos (P500,000.00)
by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees in the
amount of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition for certiorari under Rule 45 of the
Rules of Court. The lone issue in this appeal is whether ABI infringes SMC's trademark: San
Miguel Pale Pilsen with Rectangular Hops and Malt Design, and thereby commits unfair
competition against the latter. It is a factual issue (Phil. Nut Industry Inc. v. Standard
Brands Inc., 65 SCRA 575) and as a general rule, the findings of the Court of Appeals upon
factual questions are conclusive and ought not to be disturbed by us. However, there are
exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation, surmises and
conjectures;
(2) When the inference of the Court of Appeals from its findings of fact is
manifestly mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When 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) When the findings of said court are contrary to those of the trial court;
(7) When the findings are without citation of specific evidence on which they
are based;
(8) When 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
(9) When the findings of facts of the Court of Appeals are premised on the
absence of evidence and are contradicted on record. (Reynolds Philippine
Corporation vs. Court of Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of
Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs.
Sandiganbayan, 142 SCRA 593, 609; Guita vs. CA, 139 SCRA 576; Casanayan vs.
Court of Appeals, 198 SCRA 333, 336; also Apex Investment and Financing Corp.
vs. IAC, 166 SCRA 458 [citing Tolentino vs. De Jesus, 56 SCRA 167; Carolina
Industries, Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102
SCRA 817; and Moran, Jr. vs. CA, 133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in order to arrive at the
correct findings based on the record (Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191
SCRA 411, 420.) Where findings of the Court of Appeals and trial court are contrary to each
other, the Supreme Court may scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA
222, 227.)
The present case is one of the exceptions because there is no concurrence between the
trial court and the Court of Appeals on the lone factual issue of whether ABI, by
manufacturing and selling its BEER PALE PILSEN in amber colored steinie bottles of 320
ml. capacity with a white painted rectangular label has committed trademark infringement
and unfair competition against SMC.
Infringement of trademark is a form of unfair competition (Clarke vs. Manila Candy Co., 36
Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise known as the Trademark Law,
defines what constitutes infringement:
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 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. (Emphasis supplied.)
This definition implies that only registered trade marks, trade names and service marks
are protected against infringement or unauthorized use by another or others. The use of
someone else's registered trademark, trade name or service mark is unauthorized, hence,
actionable, if it is done "without the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
"San Miguel Pale Pilsen With Rectangular Hops and Malt Design. (Philippine
Bureau of Patents, Trademarks and Technology Transfer Trademark Certificate
of Registration No. 36103, dated 23 Oct. 1986." (p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):

". . . a rectangular design [is] bordered by what appears to be minute grains
arranged in rows of three in which there appear in each corner hop designs. At the
top is a phrase written in small print 'Reg. Phil. Pat. Off.' and at the bottom 'Net
Contents: 320 Ml.' The dominant feature is the phrase 'San Miguel' written
horizontally at the upper portion. Below are the words 'Pale Pilsen' written
diagonally across the middle of the rectangular design. In between is a coat of
arms and the phrase 'Expertly Brewed.' The 'S' in 'San' and the 'M' of 'Miguel,' 'P'
of 'Pale' and 'Pilsen' are written in Gothic letters with fine strokes of serifs, the
kind that first appeared in the 1780s in England and used for printing German as
distinguished from Roman and Italic. Below 'Pale Pilsen' is the statement 'And
Bottled by' (first line, 'San Miguel Brewery' (second line), and 'Philippines' (third
line)." (p. 177, Rollo; Italics supplied.)
On the other hand, ABI's trademark, as described by the trial court, consists of:
". . . a rectangular design bordered by what appear to be buds of flowers with
leaves. The dominant feature is 'Beer' written across the upper portion of the
rectangular design. The phrase 'Pale Pilsen' appears immediately below in
smaller block letters. To the left is a hop design and to the right, written in small
prints, is the phrase 'Net Contents 320 ml.' immediately below 'Pale Pilsen' is the
statement written in three lines 'Especially brewed and bottled by' (first line), 'Asia
Brewery Incorporated' (second line), and 'Philippines' (third line)." (p. 177, Rollo;
Italics supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN MIGUEL PALE
PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN? The answer is "No."
Infringement is determined by the "test of dominancy" rather than by differences or
variations in the details of one trademark and of another. The rule was formulated in Co
Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of
Patents, 100 Phil. 214, 216-217 (1956), thus:
"It has been consistently held that the question of infringement of a trademark is
to be determined by the test of dominancy . Similarity in size, form and color, while
relevant, is not conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and deception is likely
to result, infringement takes place. Duplication or imitation is not necessary; nor it
is necessary that the infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . .
.)" (Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275), the test was similarity or
"resemblance between the two (trademarks) such as would be likely to cause the one
mark to be mistaken for the other . . . [But] this is not such similitude as amounts to
identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court was more
specific: the test is "similarity in the dominant features of the trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is the name of
the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with elaborate
serifs at the beginning and end of the letters "S" and "M" on an amber background across
the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE
PILSEN, with the word "Beer" written in large amber letters, larger than any of the letters
found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear in SMC's
trademark, just as the words "SAN MIGUEL" do not appear in ABI's trademark. Hence, there
is absolutely no similarity in the dominant features of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly
similar to SAN MIGUEL PALE PILSEN. No one who purchases BEER PALE PILSEN can
possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was
presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in the trade
dress or appearance of the competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced letters along a
diagonal band, whereas the words "pale pilsen" on ABI's bottle are half the size and printed
in slender block letters on a straight horizontal band. (See Exhibit "8-a".)
(3) The names of the manufacturers are prominently printed on their respective
bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery, Philippines," whereas
BEER PALE PILSEN is "Especially brewed and bottled by Asia Brewery Incorporated,
Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a row of flower buds
and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.

(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo, whereas
the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of arms and the
words "San Miguel Brewery Philippines" encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the center,
surrounded by the words "Asia Brewery Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE PILSEN
(currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN (currently at P7.00 per
bottle). One who pays only P4.25 for a bottle of beer cannot expect to receive San Miguel
Pale Pilsen from the storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark does not constitute an
infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for "pale pilsen" are generic
words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a light bohemian
beer with a strong hops flavor that originated in the City of Pilsen in Czechoslovakia and
became famous in the Middle Ages. (Webster's Third New International Dictionary of the
English Language, Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C
Merriam Co., c) 1976, page 1716.) "Pilsen" is a "primarily geographically descriptive word,"
(Sec. 4, subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-
registerable and not appropriable by any beer manufacturer. The Trademark Law provides:
"Sec. 4. . . . The owner of trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or services
of others shall have the right to register the same [on the principal register], unless
it:
xxx xxx xxx
"(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
geographically descriptive or deceptively misdescriptive of them, or is primarily
merely a surname." (Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they
are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than such
descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese," "corn flakes"
and "cooking oil" may be appropriated by any single manufacturer of these food products,
for no other reason than that he was the first to use them in his registered trademark. In
Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it was held that a
dealer in shoes cannot register "Leather Shoes" as his trademark because that would be
merely descriptive and it would be unjust to deprive other dealers in leather shoes of the
right to use the same words with reference to their merchandise. No one may appropriate
generic or descriptive words. They belong to the public domain (Ong Ai Gui vs. Director of
Patents, 96 Phil. 673, 676 [1955]):
"A word or a combination of words which is merely descriptive of an article of
trade, or of its composition, characteristics, or qualities, cannot be appropriated
and protected as a trademark to the exclusion of its use by others . . . inasmuch
as all persons have an equal right to produce and vend similar articles, they also
have the right to describe them properly and to use any appropriate language or
words for that purpose, and no person can appropriate to himself exclusively any
word or expression, properly descriptive of the article, its qualities, ingredients or
characteristics, and thus limit other persons in the use of language appropriate to
the description of their manufactures, the right to the use of such language being
common to all. This rule excluding descriptive terms has also been held to apply
to trade-names. As to whether words employed fall within this prohibition, it is
said that the true test is not whether they are exhaustively descriptive of the article
designated, but whether in themselves, and as they are commonly used by those
who understand their meaning, they are reasonably indicative and descriptive of
the thing intended. If they are thus descriptive, and not arbitrary, they cannot be
appropriated from general use and become the exclusive property of anyone. (52
Am. Jur. 542-543.)
". . . Others may use the same or similar descriptive word in connection with their
own wares, provided they take proper steps to prevent the public being deceived.
(Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d] 598.)
". . . A descriptive word may be admittedly distinctive, especially if the user is the
first creator of the article. It will, however, be denied protection, not because it
lacks distinctiveness, but rather because others are equally entitled to its use. (2
Callman, Unfair Competition and Trademarks, pp. 869-870.)" (Emphasis
supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery
Incorporated, has printed its name all over the bottle of its beer product: on the label, on
the back of the bottle, as well as on the bottle cap, disproves SMC's charge that ABI
dishonestly and fraudulently intends to palm off its BEER PALE PILSEN as SMC's product.
In view of the visible differences between the two products, the Court believes it is quite
unlikely that a customer of average intelligence would mistake a bottle of BEER PALE
PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-
colored steinie bottles of 320 ml. capacity and is also advertised in print, broadcast, and
television media, does not necessarily constitute unfair competition.
Unfair competition is 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 services, for those of another who has already established goodwill for
his similar goods, business or services, or any acts calculated to produce the same result.
(Sec. 29, Republic Act No. 166, as amended.) The law further enumerates the more
common ways of committing unfair competition, thus:
"Sec. 29. ...
"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
be likely to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor of such goods
or any agent of any vendor engaged in selling such goods with a like purpose.
"(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the public; or
"(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another."
In this case, the question to be determined is whether ABI is using a name or mark for its
beer that has previously come to designate SMC's beer, or whether ABI is passing off its
BEER PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN.
". . . The universal test question is whether the public is likely to be deceived.
Nothing less than conduct tending to pass off one man's goods or business as
that of another will constitute unfair competition. Actual or probable deception
and confusion on the part of the customers by reason of defendant's practices
must always appear." (Shell Co. of the Philippines, Ltd. vs. Insular Petroleum
Refining Co. Ltd. et al., 120 Phil. 434, 439.)
The use by ABI of the steinie bottle, similar but not identical to the SAN MIGUEL PALE
PILSEN bottle, is not unlawful. As pointed out by ABI's counsel, SMC did not invent but
merely borrowed the steinie bottle from abroad and it claims neither patent nor trademark
protection for that bottle shape and design. (See rollo, page 55.) The Cerveza Especial and
the Efes Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-E.) The trial court found
no infringement of SMC's bottle —
"The court agrees with defendant that there is no infringement of plaintiff's bottle,
firstly, because according to plaintiff's witness Deogracias Villadolid, it is a
standard type of bottle called steinie, and to witness Jose Antonio Garcia, it is not
a San Miguel Corporation design but a design originally developed in the United
States by the Glass Container Manufacturer's Institute and therefore lacks
exclusivity. Secondly, the shape was never registered as a trademark. Exhibit 'C' is
not a registration of a beer bottle design required under Rep. Act 165 but the
registration of the name and other marks of ownership stamped on containers as
required by Rep. Act 623. Thirdly, the neck of defendant's bottle is much larger
and has a distinct bulge in its uppermost part." (p. 186, Rollo.)
The petitioner's contention that bottle size, shape and color may not be the exclusive
property of any one beer manufacturer is well taken. SMC's being the first to use the
steinie bottle does not give SMC a vested right to use it to the exclusion of everyone else.
Being of functional or common use, and not the exclusive invention of any one, it is
available to all who might need to use it within the industry. Nobody can acquire any
exclusive right to market articles supplying simple human needs in containers or wrappers
of the general form, size and character commonly and immediately used in marketing such
articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
". . . protection against imitation should be properly confined to nonfunctional
features. Even if purely functional elements are slavishly copied, the resemblance
will not support an action for unfair competition, and the first user cannot claim
secondary meaning protection. Nor can the first user predicate his claim to
protection on the argument that his business was established in reliance on any
such unpatented nonfunctional feature, even 'at large expenditure of money.'
(Callman Unfair Competition, Trademarks and Monopolies, Sec. 19.33 [4th Ed.].)"
(Petition for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its own steinie
bottle which has a fat bulging neck to differentiate it from SMC's bottle. The amber color is
a functional feature of the beer bottle. As pointed out by ABI, all bottled beer produced in
the Philippines is contained and sold in amber-colored bottles because amber is the most
effective color in preventing transmission of light and provides the maximum protection to
beer. As was ruled in California Crushed Fruit Corporation vs. Taylor B. and Candy Co., 38
F2d 885, a merchant cannot be enjoined from using a type or color of bottle where the
same has the useful purpose of protecting the contents from the deleterious effects of
light rays. Moreover, no one may have a monopoly of any color. Not only beer, but most
medicines, whether in liquid or tablet form, are sold in amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate SMC's bottle but
because that bottle capacity is the standard prescribed under Metrication Circular No.
778, dated 4 December 1979, of the Department of Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained that it used the color
white for its label because white presents the strongest contrast to the amber color of
ABI's bottle; it is also the most economical to use on labels, and the easiest to "bake" in the
furnace (p. 16, TSN of September 20, 1988). No one can have a monopoly of the color
amber for bottles, nor of white for labels, nor of the rectangular shape which is the usual
configuration of labels. Needless to say, the shape of the bottle and of the label is
unimportant. What is all important is the name of the product written on the label of the
bottle for that is how one beer may be distinguished from the others. prLL
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing tea products
were both labelled as Formosan tea, both sold in 5-ounce packages made of ordinary
wrapping paper of conventional color, both with labels containing designs drawn in green
ink and Chinese characters written in red ink, one label showing a double-decked jar in the
center, the other, a flower pot, this court found that the resemblances between the designs
were not sufficient to mislead the ordinary intelligent buyer, hence, there was no unfair
competition. The Court held:
". . . In order that there may be deception of the buying public in the sense
necessary to constitute unfair competition, it is necessary to suppose a public
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 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 possibility of the deception,
of the person who knows nothing about the design which has been counterfeited,
and who must be indifferent as between that and the other. The simulation, in
order to be objectionable, must be such as appears likely to mislead the ordinarily
intelligent buyer who has a need to supply and is familiar with the article that he
seeks to purchase."
The main thrust of SMC's complaint is not infringement of its trademark, but unfair
competition arising from the allegedly "confusing similarity" in the general appearance or
trade dress of ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE PILSEN (p. 209,
Rollo).
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly similar" to its SAN
MIGUEL PALE PILSEN because both are bottled in 320 ml. steinie type, amber-colored
bottles with white rectangular labels.
However, when as in this case, the names of the competing products are clearly different
and their respective sources are prominently printed on the label and on other parts of the
bottle, mere similarity in the shape and size of the container and label, does not constitute
unfair competition. The steinie bottle is a standard bottle for beer and is universally used.
SMC did not invent it nor patent it. The fact that SMC's bottle is registered under R.A. No.
623 (as amended by RA 5700, An Act to Regulate the Use of Duly Stamped or Marked
Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers) simply prohibits
manufacturers of other foodstuffs from the unauthorized use of SMC's bottles by refilling
these with their products. It was not uncommon then for products such as patis (fish
sauce) and toyo (soy sauce) to be sold in recycled SAN MIGUEL PALE PILSEN bottles.
Registration of SMC's beer bottles did not give SMC a patent on the steinie or on bottles of
similar size, shape or color.
Most containers are standardized because they are usually made by the same
manufacturer. Milk, whether in powdered or liquid form, is sold in uniform tin cans. The
same can be said of the standard ketchup or vinegar bottle with its familiar elongated
neck. Many other grocery items such as coffee, mayonnaise, pickles and peanut butter are
sold in standard glass jars. The manufacturers of these foodstuffs have equal right to use
these standard tins, bottles and jars for their products. Only their respective labels
distinguish them from each other. Just as no milk producer may sue the others for unfair
competition because they sell their milk in the same size and shape of milk can which he
uses, neither may SMC claim unfair competition arising from the fact that ABI's BEER PALE
PILSEN is sold, like SMC's SAN MIGUEL PALE PILSEN in amber steinie bottles. prcd
The record does not bear out SMC's apprehension that BEER PALE PILSEN is being
passed off as SAN MIGUEL PALE PILSEN. This is unlikely to happen for consumers or
buyers of beer generally order their beer by brand. As pointed out by ABI's counsel, in
supermarkets and tiendas, beer is ordered by brand, and the customer surrenders his
empty replacement bottles or pays a deposit to guarantee the return of the empties. If his
empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE PILSEN as
replacement. In sari-sari stores, beer is also ordered from the tindera by brand. The same
is true in restaurants, pubs and beer gardens — beer is ordered from the waiters by brand.
(Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually monopolized the
domestic beer market for the past hundred years, those who have been drinking no other
beer but SAN MIGUEL PALE PILSEN these many years certainly know their beer too well to
be deceived by a newcomer in the market. If they gravitate to ABI's cheaper beer, it will not
be because they are confused or deceived, but because they find the competing product
to their taste.
Our decision in this case will not diminish our ruling in "Del Monte Corporation vs. Court of
Appeals and Sunshine Sauce Manufacturing Industries," 181 SCRA 410, 419, 3 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."
That ruling may not apply to all kinds of products. The Court itself cautioned that in
resolving cases of infringement and unfair competition, the courts 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 consumption and also the conditions under which it is usually
purchased" (181 SCRA 410, 418-419).
The Del Monte case involved catsup , a common household item which is bought off the
store shelves by housewives and house help who, if they are illiterate and cannot identify
the product by name or brand, would very likely identify it by mere recollection of its
appearance. Since the competitor, Sunshine Sauce Mfg. Industries, not only used recycled
Del Monte bottles for its catsup (despite the warning embossed on the bottles: "Del Monte
Corporation. Not to be refilled.") but also used labels which were "a colorable imitation" of
Del Monte's label, we held that there was infringement of Del Monte's trademark and unfair
competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually picked up from a store
shelf but ordered by brand by the beer drinker himself from the storekeeper or waiter in a
pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not infringed by ABI's
mark: "BEER NA BEER" or "BEER PALE PILSEN." ABI makes its own bottle with a bulging
neck to differentiate it from SMC's bottle, and prints ABI's name in three (3) places on said
bottle (front, back and bottle cap) to prove that it has no intention to pass off its "BEER" as
"SAN MIGUEL."
There is no confusing similarity between the competing beers for the name of one is "SAN
MIGUEL" while the competitor is plain "BEER" and the points of dissimilarity between the
two outnumber their points of similarity.
Petition ABI has neither infringed SMC's trademark nor committed unfair competition with
the latter's SAN MIGUEL PALE PILSEN product. While its BEER PALE PILSEN admittedly
competes with the latter in the open market, the competition is neither unfair nor
fraudulent. Hence, we must deny SMC's prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the same is hereby granted. The
decision and resolution of the Court of Appeals in CA-G.R. CV No. 28104 are hereby set
aside and that of the trial court is REINSTATED and AFFIRMED. Costs against the private
respondent.
SO ORDERED.
Narvasa, C . J ., Bidin, Regalado, Romero, Nocon, Bellosillo and Melo, JJ., concur.
Feliciano, J., no part. One party represented by my former firm.
Padilla, J., no part, in view of substantial interest in SMC.
Separate Opinions
CRUZ, J ., dissenting :
The present ponenciastresses the specific similarities and differences of the two products
to support the conclusion that there is no infringement of trade marks or unfair
competition. That test was rejected in my own ponencia in Del Monte Corporation vs.
Court of Appeals, 181 SCRA 410, concurred in by Justices Narvasa, Gancayco, Griño-
Aquino and Medialdea, where we declared:
While the Court does recognize these distinctions, it does not agree with the
conclusion that there was no infringement unfair competition. It seems to us that
the lower courts have been so preoccupied 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. 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 labels
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.
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. The
buyer having in mind the mark/label of the respondent must rely upon his
memory of the petitioner's mark. 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. The court therefore should be guided by its first impression, 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.
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. 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. Well 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.
For the above reasons, and the other arguments stated in Del Monte, I dissent.
Davide, Jr., dissents.
Footnotes
1. Composed of Justice Jose C. Campos, Jr. as chairman, and Justices Ricardo Francisco,
fully concurring, Ricardo Pronove, partly concurring, Filemon H. Mendoza and Oscar
Herrera, both dissenting. Justice Aldecoa, who had written a separate dissenting opinion,
retired before a resolution on the motion for reconsideration was promulgated. He was
substituted by Justice Oscar M. Herrera.
2. This portion of Justice Campos' original decision ordering ABI to render an accounting to
SMC and pay estimated damages of P5,000,000.00 did not carry enough votes to
become a decision as only Justice Ricardo Francisco concurred fully with him. Justice
Ricardo Pronove, although concurring partially with Justice Campos' decision, excepted
from the portion ordering an accounting and payment of P5 million damages.
3. Cited in Justice R. Francisco's concurring opinion, p. 107, Rollo.

FIRST DIVISION
[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 : p
The Case
This is a petition for review 1 of the Decision dated 26 November 1999 of the Court
of Appeals 2 nding 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, nding 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’s 4 owns a family of marks 5
including the “Big Mac” mark for its “double-decker hamburger sandwich.” 6 McDonald’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 O ce (“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
paraphernalia 9 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. 1 0
Petitioner McGeorge Food Industries (“petitioner McGeorge”), a domestic
corporation, is McDonald’s Philippine franchisee. 1 1
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. 1 2 Respondent corporation’s menu includes hamburger sandwiches and other
food items. 1 3 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. 1 4
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. ADaSET
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. 1 5 On 16
August 1990, the RTC issued a writ of preliminary injunction replacing the TRO. 1 6
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. 1 7 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. 1 8
The Trial Court’s Ruling
On 5 September 1994, the RTC rendered judgment (“RTC Decision”) nding
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 insu ciency 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.
xxx xxx xxx
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.
xxx xxx xxx

Signi cantly, 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 . . .
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 . . .

The . . . 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 rst associated therewith. . . . 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 in uence 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 of P400,000.00, 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, William 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 insu ciency of
evidence. 2 0
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. Speci cally, plaintiffs-appellees argue that defendants-appellants’
use of their corporate name is a colorable imitation of their trademark “Big Mac”.
DHACES
xxx xxx xxx

To Our mind, however, this Court is fully convinced that no colorable
imitation exists. As the de nition dictates, it is not su cient 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 diversi ed food items such as siopao, noodles, pizza, and sandwiches
such as hotdog, ham, sh burger and hamburger. Secondly, defendants-
appellants’ corporate or business name appearing in the food packages and
signages are written in silhouette red-orange letters with the “b” and “m” in upper
case letters. Above the words “Big Mak” are the upper case letter “L.C.”. Below the
words “Big Mak” are the words “Burger, Inc.” spelled out in upper case letters.
Furthermore, said corporate or business name appearing in such food packages
and signages is always accompanied by the company mascot, a young chubby
boy named Maky who wears a red T-shirt with the upper case “m” appearing
therein and a blue lower garment. Finally, the defendants-appellants’ food
packages are made of plastic material.
xxx xxx 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 . . . sold in a Styrofoam box with the
“McDonald’s” logo and trademark in red, bl[o]ck capital letters printed thereon . . .
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 identi ed by its logo — the umbrella “M”, and its mascot —
“Ronald McDonald”. A typical McDonald’s restaurant boasts of a playground for
kids, a second oor 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 . . . . 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 rst
before he can nd a hamburger sandwich which carry the mark “Big Mac”. On the
other hand, defendants-appellants sell their goods through snack vans . . .
Anent the allegation that defendants-appellants are guilty of unfair

competition, We likewise find the same untenable.
Unfair competition is de ned 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 nd no su cient 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 su cient evidence to conclude unfair
competition. Defendants-appellants explained that the name “M[ak]” in their
corporate name was derived from both the rst 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. 2 1
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. 2 2
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 nding 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. ADEaHT
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. 2 3
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 le with
this Court a petition for review under Section 1 of Rule 45 (“Section 1”) 2 4 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. 2 5
Here, petitioners raise questions of fact and law in assailing the Court of Appeals’
ndings 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 ndings 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. 2 6 We took a
similar course of action in Asia Brewery, Inc. v. Court of Appeals 2 7 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. 2 8 Respondents’ cash invoices simply refer to their hamburger
sandwiches as “Big Mak.” 2 9 It is respondents’ snack vans that carry the words “L.C. Big
Mak Burger, Inc.” 3 0
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. 3 1
Respondents’ plastic wrappers and bags were identical with those petitioners presented
during the hearings for the injunctive writ except that the letters “L.C.” and the words
“Burger, Inc.” in respondents’ evidence were added above and below the words “Big Mak,”
respectively. Since petitioners’ complaint was based on facts existing before and during
the hearings on the injunctive writ, the facts established during those hearings are the
proper factual bases for the disposition of the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 (“Section 22) of Republic Act No. 166, as amended (“RA 166”), the law
applicable to this case, 3 2 defines trademark infringement as follows:
Infringement, what constitutes. — Any person who [1] shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation
of any registered mark or trade-name in connection with the sale, offering for sale,
or advertising of any goods, business or services on or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of such
business; or [2] reproduce, counterfeit, copy, or colorably imitate any such mark or
trade-name and apply such reproduction, counterfeit, copy, or colorable imitation
to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services,
shall be liable to a civil action by the registrant for any or all of the remedies
herein provided. 3 3
Petitioners base their cause of action under the first part of Section 22, i.e. respondents
allegedly used, without petitioners’ consent, a colorable imitation of the “Big Mac” mark
in advertising and selling respondents’ hamburger sandwiches. This likely caused
confusion in the mind of the purchasing public on the source of the hamburgers or the
identity of the business.
To establish trademark infringement, the following elements must be shown: (1) the
validity of plaintiff’s 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.”
3 4 Of these, it is the element of likelihood of confusion that is the gravamen of trademark
infringement. 3 5
On the Validity of the “Big Mac ”Mark
and McDonald’s Ownership of such Mark
A mark is valid if it is “distinctive” and thus not barred from registration under
Section 4 3 6 of RA 166 (“Section 4”). However, once registered, not only the mark’s validity
but also the registrant’s ownership of the mark is prima facie presumed. 3 7
Respondents contend that of the two words in the “Big Mac” mark, it is only the
word “Mac” that is valid because the word “Big” is generic and descriptive (proscribed
under Section 4[e]), and thus “incapable of exclusive appropriation.” 3 8
The contention has no merit. The “Big Mac” mark, which should be treated in its
entirety and not dissected word for word, 3 9 is neither generic nor descriptive. Generic
marks are commonly used as the name or description of a kind of goods, 4 0 such as “Lite”
for beer 4 1 or “Chocolate Fudge” for chocolate soda drink. 4 2 Descriptive marks, on the
other hand, convey the characteristics, functions, qualities or ingredients of a product to
one who has never seen it or does not know it exists, 4 3 such as “Arthriticare” for arthritis
medication. 4 4 On the contrary, “Big Mac” falls under the class of fanciful or arbitrary marks
as it bears no logical relation to the actual characteristics of the product it represents. 4 5
As such, it is highly distinctive and thus valid. Signi cantly, the trademark “Little Debbie” for
snack cakes was found arbitrary or fanciful. 4 6
The Court also nds that petitioners have duly established McDonald’s exclusive
ownership of the “Big Mac” mark. Although Topacio and the Isaiyas Group registered the
“Big Mac” mark ahead of McDonald’s, Topacio, as petitioners disclosed, Topacio had
already assigned his rights to McDonald’s. The Isaiyas Group, on the other hand, registered
its trademark only in the Supplemental Register. A mark which is not registered in the
Principal Register, and thus not distinctive, has no real protection. 4 7 Indeed, we have held
that registration in the Supplemental Register is not even a prima facie evidence of the
validity of the registrant’s exclusive right to use the mark on the goods speci ed in the
certificate. 4 8
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or
colorable imitation marks, namely, confusion of goods (product confusion) and confusion
of business (source or origin confusion). In Sterling Products International, Incorporated v.
Farbenfabriken Bayer Aktiengesellschaft, et al., 4 9 the Court distinguished these two types
of confusion, thus:
[Rudolf] Callman notes two types of confusion. The rst is the confusion
of goods “in which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other.” . . . The
other is the confusion of business: “Here though the goods of the parties are
different, the defendant’s product is such as might reasonably be assumed to
originate with the plaintiff, and the public would then be deceived either into that
belief or into the belief that there is some connection between the plaintiff and
defendant which, in fact, does not exist.”
Under Act No. 666, 5 0 the rst trademark law, infringement was limited to confusion of
goods only, when the infringing mark is used on “goods of a similar kind.” 5 1 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 de ning trademark infringement, Section 22 of RA 166 deleted
the requirement in question and expanded its scope to include such use of the mark or
its colorable imitation that is likely to result in confusion on “the source or origin of
such goods or services, or identity of such business.” 5 2 Thus, while there is confusion
of goods when the products are competing, confusion of business exists when the
products are non-competing but related enough to produce confusion of affiliation. 5 3
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents’ use of the “Big Mak” mark on respondents’
hamburgers results in confusion of goods, particularly with respect to petitioners’
hamburgers labeled “Big Mac.” Thus, petitioners alleged in their complaint: IDTcHa
1.15. Defendants have unduly prejudiced and clearly infringed upon

the property rights of plaintiffs in the McDonald’s Marks, particularly the mark
“B[ig] M[ac]”. Defendants’ unauthorized acts are likely, and calculated, to confuse,
mislead or deceive the public into believing that the products and services offered
by defendant Big Mak Burger, and the business it is engaged in, are approved and
sponsored by, or affiliated with, plaintiffs. 5 4 (Emphasis supplied)
Since respondents used the “Big Mak” mark on the same goods, i.e. hamburger
sandwiches, that petitioners’ “Big Mac” mark is used, trademark infringement through
confusion of goods is a proper issue in this case.
Petitioners also claim that respondents’ use of the “Big Mak” mark in the sale of
hamburgers, the same business that petitioners are engaged in, results in confusion of
business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of plaintiff
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 individual defendants, has been
operating “Big Mak Burger”, a fast food restaurant business dealing in the sale of
hamburger and cheeseburger sandwiches, french fries and other food products,
and has caused to be printed on the wrapper of defendant’s food products and
incorporated in its signages the name “Big Mak Burger”, which is confusingly
similar to and/or is a colorable imitation of the plaintiff McDonald’s mark “B[ig]
M[ac]”, . . . Defendant Big Mak Burger has thus unjustly created the impression
that its business is approved and sponsored by, or affiliated with, plaintiffs . . .
2.2 As a consequence of the acts committed by defendants, which
unduly prejudice and infringe upon the property rights of plaintiffs McDonald’s
and McGeorge as the real owner and 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, sponsorship
or a liation of defendants’ food products and restaurant business , plaintiffs
have suffered and continue to suffer actual damages in the form of injury to their
business reputation and goodwill, and of the dilution of the distinctive quality of
the McDonald’s marks, in particular, the mark “B[ig] M[ac]”. 5 5 (Emphasis
supplied)
Respondents admit that their business includes selling hamburger sandwiches, the
same food product that petitioners sell using the “Big Mac” mark. Thus, trademark
infringement through confusion of business is also a proper issue in this case.
Respondents assert that their “Big Mak” hamburgers cater mainly to the low-income
group while petitioners’ “Big Mac” hamburgers cater to the middle and upper income
groups. Even if this is true, the likelihood of confusion of business remains, since the low-
income group might be led to believe that the “Big Mak” hamburgers are the low-end
hamburgers marketed by petitioners. After all, petitioners have the exclusive right to use
the “Big Mac” mark. On the other hand, respondents would bene t by associating their
low-end hamburgers, through the use of the “Big Mak” mark, with petitioners’ high-end “Big
Mac” hamburgers, leading to likelihood of confusion in the identity of business.
Respondents further claim that petitioners use the “Big Mac” mark only on
petitioners’ double-decker hamburgers, while respondents use the “Big Mak” mark on
hamburgers and other products like siopao, noodles and pizza. Respondents also point
out that petitioners sell their Big Mac double-deckers in a styrofoam box with the
“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 wrappers and plastic bags. Respondents further point out that petitioners’
restaurants are air-conditioned buildings with drive-thru service, compared to respondents’
mobile vans.
These and other factors respondents cite cannot negate the undisputed fact that
respondents use their “Big Mak” mark on hamburgers, the same food product that
petitioners’ sell with the use of their registered mark “Big Mac.” Whether a hamburger is
single, double or triple-decker, and whether wrapped in plastic or styrofoam, it remains the
same hamburger food product. Even respondents’ use of the “Big Mak” mark on non-
hamburger food products cannot excuse their infringement of petitioners’ registered mark,
otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or similar products,
in different segments of the market, and at different price levels depending on variations
of the products for speci c segments of the market. The Court has recognized that the
registered trademark owner enjoys protection in product and market areas that are the
normal potential expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business from actual
market competition with identical or similar products of the parties, but extends to
all cases in which the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective purchasers would
be misled into thinking that the complaining party has extended his business into
the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with
the activities of the infringer; or when it forestalls the normal potential expansion
of his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577). 5 6 (Emphasis supplied)
On Whether Respondents’ Use of the “Big Mak”
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two tests, the
dominancy test and the holistic test. 5 7 The dominancy test focuses on the similarity of the
prevalent features of the competing trademarks that might cause confusion. In contrast,
the holistic test requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.
The Court of Appeals, in nding that there is no likelihood of confusion that could
arise in the use of respondents’ “Big Mak” mark on hamburgers, relied on the holistic test.
Thus, the Court of Appeals ruled that “it is not su cient that a similarity exists in both
name(s), but that more importantly, the overall presentation, or in their essential,
substantive and distinctive parts is such as would likely MISLEAD or CONFUSE persons in
the ordinary course of purchasing the genuine article.” The holistic test considers the two
marks in their entirety, as they appear on the goods with their labels and packaging. It is
not enough to consider their words and compare the spelling and pronunciation of the
words. 5 8
Respondents now vigorously argue that the Court of Appeals’ application of the
holistic test to this case is correct and in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather than the holistic test.
The dominancy test considers the dominant features in the competing marks in
determining whether they are confusingly similar. Under the dominancy test, courts give
greater weight to the similarity of the appearance of the product arising from the adoption
of the dominant features of the registered mark, disregarding minor differences. 5 9 Courts
will consider more the aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, 6 0 the Court ruled:
. . . It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size, form
and color, while relevant, is not conclusive. If the competing trademark contains
the main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation is
not necessary; nor is it necessary that the infringing label should suggest an
effort to imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F.,
489, 495, citing Eagle White Lead Co. vs. P ugh (CC) 180 Fed. 579). The question
at issue in cases of infringement of trademarks is whether the use of the marks
involved would be likely to cause confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107
F. 2d 588; . . .) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of Patents , 6 1 Phil.
Nut Industry, Inc. v. Standard Brands Inc . , 6 2 Converse Rubber Corporation v. Universal
Rubber Products, Inc., 6 3 and Asia Brewery, Inc. v. Court of Appeals . 6 4 In the 2001 case of
Societe Des Produits Nestlé, S.A. v. Court of Appeals , 6 5 the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the
Intellectual Property Code which de nes infringement as the “colorable imitation of a
registered mark . . . or a dominant feature thereof.”
Applying the dominancy test, the Court nds that respondents’ use of the “Big Mak”
mark results in likelihood of confusion. First, “Big Mak” sounds exactly the same as “Big
Mac.” Second, the rst word in “Big Mak” is exactly the same as the rst word in “Big Mac.”
Third, the first two letters in “Mak” are the same as the first two letters in “Mac.” Fourth, the
last letter in “Mak” while a “k” sounds the same as “c” when the word “Mak” is pronounced.
Fifth, in Filipino, the letter “k” replaces “c” in spelling, thus “Caloocan” is spelled “Kalookan.”
In short, aurally the two marks are the same, with the rst 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 rst word of both
marks having the same letters and the second word having the same rst 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., 6 6 the Court held: aAHTDS
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 su ciently 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’ nding, 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’ . . . “B[ig] M[ac]” trademark, with
their alleged sentiment-focused “explanation” merely thought of as a convenient,
albeit unavailing, excuse or defense for such an unfair choice of name. 6 7
Absent proof that respondents’ adoption of the “Big Mak” mark was due to honest
mistake or was fortuitous, 6 8 the inescapable conclusion is that respondents adopted the
“Big Mak” mark to “ride on the coattails” of the more established “Big Mac” mark. 6 9 This
saves respondents much of the expense in advertising to create market recognition of
their mark and hamburgers. 7 0
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, 7 1
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. 7 2
On the Issue of Unfair Competition
Section 29 (“Section 29”) 7 3 of RA 166 defines unfair competition, thus:
xxx xxx xxx

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
devices or words thereon, or in any feature of their appearance, which would be
likely to in uence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
or any agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any arti ce, or device, or who employs any
other means calculated to induce the false belief that such person is offering the
(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. 7 4 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. 7 5 Actual fraudulent intent need
not be shown. 7 6
Unfair competition is broader than trademark infringement and includes passing off
goods with or without trademark infringement. Trademark infringement is a form of unfair
competition. 7 7 Trademark infringement constitutes unfair competition when there is not
merely likelihood of confusion, but also actual or probable deception on the public
because of the general appearance of the goods. There can be trademark infringement
without unfair competition as when the infringer discloses on the labels containing the
mark that he manufactures the goods, thus preventing the public from being deceived that
the goods originate from the trademark owner. 7 8
To support their claim of unfair competition, petitioners allege that respondents
fraudulently passed off their hamburgers as “Big Mac” hamburgers. Petitioners add that
respondents’ fraudulent intent can be inferred from the similarity of the marks in question.
79
Passing off (or palming off) takes place where the defendant, by imitative devices
on the general appearance of the goods, misleads prospective purchasers into buying his
merchandise under the impression that they are buying that of his competitors. 8 0 Thus,
the defendant gives his goods the general appearance of the goods of his competitor with
the intention of deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and
respondents in this wise:
The mark “B[ig] M[ac]” is used by plaintiff 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 and block capital letters. On the
other hand, defendants’ “B[ig] M[ak]” script print is in orange with only the letter
“B” and “M” being capitalized and the packaging material is plastic wrapper. . .
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 boy called “Macky” displayed or printed between the words
“Big” and “Mak.” 8 1 (Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not give their
hamburgers the general appearance of petitioners’ “Big Mac” hamburgers.
The dissimilarities in the packaging are minor compared to the stark similarities in
the words that give respondents’ “Big Mak” hamburgers the general appearance of
petitioners’ “Big Mac” hamburgers. Section 29(a) expressly provides that the similarity in
the general appearance of the goods may be in the “devices or words” used on the
wrappings. Respondents have applied on their plastic wrappers and bags almost the same
words that petitioners use on their styrofoam box. What attracts the attention of the
buying public are the words “Big Mak” which are almost the same, aurally and visually, as
the words “Big Mac.” The dissimilarities in the material and other devices are insigni cant
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. ASTcEa
Moreover, there is no notice to the public that the “Big Mak” hamburgers are
products of “L.C. Big Mak Burger, Inc.” Respondents introduced during the trial plastic
wrappers and bags with the words “L.C. Big Mak Burger, Inc.” to inform the public of the
name of the seller of the hamburgers. However, petitioners introduced during the injunctive
hearings plastic wrappers and bags with the “Big Mak” mark without the name “L.C. Big
Mak Burger, Inc.” Respondents’ belated presentation of plastic wrappers and bags bearing
the name of “L.C. Big Mak Burger, Inc.” as the seller of the hamburgers is an after-thought
designed to exculpate them from their unfair business conduct. As earlier stated, we
cannot consider respondents’ evidence since petitioners’ complaint was based on facts
existing before and during the injunctive hearings.
Thus, there is actually no notice to the public that the “Big Mak” hamburgers are
products of “L.C. Big Mak Burger, Inc.” and not those of petitioners who have the exclusive
right to the “Big Mac” mark. This clearly shows respondents’ intent to deceive the public.
Had respondents’ placed a notice on their plastic wrappers and bags that the hamburgers
are sold by “L.C. Big Mak Burger, Inc.”, then they could validly claim that they did not intend
to deceive the public. In such case, there is only trademark infringement but no unfair
competition. 8 2 Respondents, however, did not give such notice. We hold that as found by
the RTC, respondent corporation is liable for unfair competition.
The Remedies Available to Petitioners
Under Section 23 8 3 (“Section 23”) in relation to Section 29 of RA 166, a plaintiff who
successfully maintains trademark infringement and unfair competition claims is entitled to
injunctive and monetary reliefs. Here, the RTC did not err in issuing the injunctive writ of 16
August 1990 (made permanent in its Decision of 5 September 1994) and in ordering the
payment of P400,000 actual damages in favor of petitioners. The injunctive writ is
indispensable to prevent further acts of infringement by respondent corporation. Also, the
amount of actual damages is a reasonable percentage (11.9%) of respondent
corporation’s gross sales for three (1988–1989 and 1991) of the six years (1984–1990)
respondents have used the “Big Mak” mark. 8 4
The RTC also did not err in awarding exemplary damages by way of correction for
the public good 8 5 in view of the nding of unfair competition where intent to deceive the
public is essential. The award of attorney’s fees and expenses of litigation is also in order.
86
WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision dated 26
November 1999 of the Court of Appeals and its Resolution dated 11 July 2000 and
REINSTATE the Decision dated 5 September 1994 of the Regional Trial Court of Makati,
Branch 137, nding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement
and unfair competition.
SO ORDERED.
Davide, Jr., C .J ., Quisumbing, Ynares-Santiago and Azcuna, JJ ., concur.
Footnotes
1. Under Rule 45 of the 1997 Rules of Civil Procedure.

2. Penned by Associate Justice Eloy R. Bello, Jr. with Presiding Justice Jainal D. Rasul and
Associate Justice Ruben T. Reyes concurring.
3. Penned by Judge Santiago Ranada, Jr.

4. Itself a registered service mark.
5. Some of McDonald’s registered marks representing food items (f) and services (s) are:
McDONALD’S HAMBURGERS (s); McDONALD’S (f); RONALD McDONALD (s);
McDONALDLAND (s); McCHEESE & DESIGN (f); EGG McMUFFIN (s); EGG McMUFFIN (f);
McDONALDLAND (f); McDONALD’S & ARCHES (s); McFEAST (f); McCHICKEN (f);
McDONALD’S & ARCHES (f); McDONUTS (f); McPIZZA (f); McPIZZA (s); McHAPPY DAY
(s); MINI MAC (s); McDOUBLE (f); TOGETHER-McDONALD’S & YOU (s); CHICKEN
McNUGGETS (f); McDONALD’S & YOU (s); SUPER MAC (f); McSNACK (s); MAC FRIES (f);
McRIB (f); MAPLE McCRISP (f); LITE MAC (f); BIG MAC (s); CHICKEN McSWISS (f);
McMUFFIN (f); McD.L.T. (f). (McDonald’s Corporation v. McBagel’s, Inc., 649 F.Supp.
1268 [1986]).
6. Aside from Big Mac sandwiches, McDonald’s menu includes cheeseburgers, special
sandwiches, fried french potatoes, chicken nuggets, fried fish sandwiches, shakes, hot
pies, sundaes, softdrinks, and other beverages.
7. Certificate of Registration No. 1,126,102.

8. Table napkins, tray liners, cups and food wrappers.
9. Labels, promotional items and packages.
10. TSN (Arlene Manalo), 26 July 1990, pp. 34–35.

11. McDonald’s and petitioner McGeorge are referred to as petitioners.
12. Rizal, Laguna, Bulacan and Quezon.

13. E.g. pizzas, noodles, siopaos, hotdog sandwiches, ham sandwiches, fish burgers, fruit
juices, softdrinks and other beverages.
14. Respondent corporation and private respondents are referred to as respondents.
15. Records, p. 37.

16. Ibid., pp. 457–458.
17. Ibid., pp. 414–426.
18. Ibid., pp. 460–463.
19. Rollo, pp. 149–154.
20. Records, pp. 1431–1432.
21. Rollo, pp. 233–237 (Capitalization in the original).
22. Ibid., p. 24.
23. While petitioners seek to hold liable respondent corporation only, the Court’s opinion
will refer not only to the latter but also to all the respondents as all of them filed the
pleadings in this petition.
24. This provision states: “Filing of petition with Supreme Court. — A party desiring to
appeal by certiorari from a judgment or final order or resolution of the Court of Appeals,
the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set forth.”
25. Ramos, et al. v. Pepsi-Cola Bottling Co. of the Phils., et al., 125 Phil. 701 (1967).
26. Ducusin, et al. v. CA, et al., 207 Phil. 248 (1983).
27. G.R. No. 103543, 5 July 1993, 224 SCRA 437.
28. Exhibits E-1 to 2, F-1 to 2 and G-1 to 2.

29. Exhibits E, F and G.
30. Exhibits L-10, L-16 to 27.

31. Exhibits 34, 36–37.
32. RA 166 has been superseded by Republic Act No. 8293 (“RA 8293”), the Intellectual
Property Code of the Philippines, which took effect on 1 January 1998. Section 22 is
substantially identical with Section 16 of the United States’ 1946 Trademark Act
(“Lanham Act”).
33. Superseded by Section 155 of RA 8293 (“Section 155”).
34. See A & H Sportswear Co. v. Victoria’s Secret Stores, Inc., 167 F.Supp.2d 770 (2001).
35. Shaley’s Inc. v. Covalt, 704 F.2d 426 (1983). Also referred to as the “lynchpin”
(Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683 [1999]) or “touchstone”
(VMG Enterprises, Inc. v. F. Quesada and Franco, Inc., 788 F. Supp. 648 [1992]) of
trademark infringement.
36. This provision states: “Registration of trade-marks, trade-names and service-marks on

the principal register. — There is hereby established a register of trade-marks, trade-
names and service-marks which shall be known as the principal register. The owner of a
trade-mark, trade-name or service-mark used to distinguish his goods, business or
services from the goods, business or services of others shall have the right to register the
same on the principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous matter; or matter
which may disparage or falsely suggest a connection with persons, living or dead,
institutions, beliefs, or national symbols, or bring them into contempt or disrepute;
(b) Consists of or comprises the flag or coat of arms or other insignia of the
Philippines or any of its political subdivisions, or of any foreign nation, or any simulation
thereof;
(c) Consists of or comprises a name, portrait, or signature identifying a particular
living individual except by his written consent, or the name, signature, or portrait of a
deceased President of the Philippines, during the life of his widow, if any, except by the
written consent of the widow;
(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 a 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; or
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely descriptive or
deceptively misdescriptive of them, or when applied to or used in connection with the
goods, business or services of the applicant is primarily geographically descriptive or
deceptively misdescriptive of them, or is primarily merely a surname;
(f) Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this section
nothing herein shall prevent the registration of a mark or trade-name used by the
applicant which has become distinctive of the applicant’s goods, business or services.
The Director may accept as prima facie evidence that the mark or trade-name has
become distinctive, as applied to or used in connection with the applicant’s goods,
business or services, proof of substantially exclusive and continuous use thereof as a
mark or trade-name by the applicant in connection with the sale of goods, business or
services for five years next preceding the date of the filing of the application for its
registration.” This has been superseded by Section 123 of RA 8293.
37. Section 20, RA 166. This provision states: “Certificate of registration prima facie
evidence of validity. — A certificate of registration of a mark or trade-name shall be
prima facie evidence of the validity of the registration, the registrant’s ownership of the
mark or trade-name, and of the registrant’s exclusive right to use the same in connection
with the goods, business or services specified in the certificate, subject to any conditions
and limitations stated therein.” This has been superseded by Section 138 of RA 8293.
Neither RA 166 nor RA 8293 provides when the presumption of validity and ownership
becomes indubitable. In contrast, under the Lanham Act, as amended, (15 United States
Code § 1065), such takes place once the trademark has become “incontestable” i.e. after
the mark owner files affidavits stating that the mark is registered and has been in
continuous use for five consecutive years; that there is no pending proceeding; and that
there has been no adverse decision concerning the registrant’s ownership or right to
registration (See Luis Vuitton Malletier and Oakley, Inc. v. Veit, 211 F.Supp.2d 556
[2002]). However, both RA 166 (Section 12) and RA 8293 (Section 145) require the filing
of the affidavit attesting to the continuous use of the mark for five years and, under
Section 145, failure to file such affidavit will result in the removal of the mark from the
Register.
38. Rollo, pp. 525–527.

39. Societe Des Produits Nestlé, S.A. v. Court of Appeals, G.R. No. 112012, 4 April 2001, 356
SCRA 207; McKee Baking Co. v. Interstate Brands Corporation, 738 F. Supp. 1272 (1990).
40. Societe Des Produits Nestlé, S.A. v. Court of Appeals, supra note 39; Miller Brewing Co.
v. Heileman Brewing Co., 561 F.2d 75 (1977).
41. Miller Brewing Co. v. Heileman Brewing Co., supra note 40.
42. A. J. Canfield Co. v. Honickman, 808 F.2d 291 (1986).
43. Societe Des Produits Nestlé, S.A. v. Court of Appeals, supra note 39 citing § 43(A) of the
Lanham Act, as amended.
44. Bernard v. Commerce Drug Co., 964 F.2d 1338 (1992).
45. Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366 (1980).
46. McKee Baking Co. v. Interstate Brands Corporation, supra note 39.
47. See A. Miller and M. Davis, Intellectual Property, Patents, Trademarks and Copyright in
a Nutshell 177–178 (1983).
48. See Lorenzana v. Macagba, No. L-33773, 22 October 1987, 154 SCRA 723; La Chemise
Lacoste, S.A. v. Hon. Fernandez, etc., et al. 214 Phil. 332 (1984). RA 8293 no longer
provides for a Supplemental Register and instead mandates a single registry system
(Section 137). Under Section 239, marks registered in the Supplemental Register under
RA 166 will remain in force but are no longer subject to renewal.
49. 137 Phil. 838 (1969).
50. Enacted on 6 March 1903.

51. Section 3 of Act No. 666 provides: “The ownership or possession of a trade-mark,
heretofore or hereafter appropriated, as in the foregoing section provided, shall be
recognized and protected in the same manner and to the same extent, as are other
property rights known to the law. To this end any person entitled to the exclusive use of
a trade-mark to designate the origin or ownership of goods he has made or deals in may
recover damages in a civil action from any person who has sold goods of a similar kind,
bearing such trade-mark, and the measure of the damages suffered, at the option of the
complaining party, shall be either the reasonable profit which the complaining party
would have made had the defendant not sold the goods with the trade-mark aforesaid,
or the profit which the defendant actually made out of the sale of the goods with the
trade-mark, and in cases where actual intent to mislead the public or to defraud the
owner of the trade-mark shall be shown, in the discretion of the court, the damages may
be doubled. The complaining party, upon proper showing, may have a preliminary
injunction, restraining the defendant temporarily from use of the trade-mark pending the
hearing, to be granted or dissolved in the manner provided in the Code of Civil Procedure,
and such injunction upon final hearing, if the complainant’s property in the trade-mark
and the defendant’s violation thereof shall be fully established, shall be made perpetual,
and this injunction shall be part of the judgment for damages to be rendered in the same
cause as above provided.” (Emphasis supplied)
52. The United States Congress had introduced the same amendment to the Lanham Act in
1946. In 1962, the US Congress again amended Section 16 of the Lanham Act (“Sec.
43(A)”) by deleting the phrase “the source or origin of such goods or services, or identity
of such business” in the definition of trademark infringement. This led courts in that
jurisdiction to hold that post-sale confusion by the public at large (Esercizio v. Roberts,
944 F.2d 1235 [1991]. See also Koppers Company, Inc. v. Krup-Koppers, 517 F.Supp. 836
[1981]) or “subliminal confusion,” defined as confusion on a subliminal or subconscious
level, causing the consumer to identify the properties and reputation of one product with
those of another, although he can identify the particular manufacturer of each, (Ortho
Pharmaceutical Corporation v. American Cyanamid Company, 361 F.Supp. 1032 [1973].
See also Farberware, Inc. v. Mr. Coffee, Inc., 740 F.Supp. 291 (1990); Dreyfus Fund
Incorporated v. Royal Bank of Canada, 525 F. Supp. 1108 [1981]) are sufficient to
sustain a trademark infringement claim. Section 155 substantially reproduces Sec.
43(A).
53. Agpalo, The Law on Trademark, Infringement and Unfair Competition 45–46 (2000).
54. Records, p. 5.
55. Ibid., pp. 4, 6–7.

56. Sta. Ana v. Maliwat, et al., 133 Phil. 1006 (1968).
57. Societe Des Produits Nestlé, S.A. v. Court of Appeals, supra note 39; Emerald Garment
Manufacturing Corporation v. Court of Appeals, G.R. No. 100098, 29 December 1995,
251 SCRA 600.
58. V. Amador, Trademarks Under The Intellectual Property Code 260 (1999).
59. Ibid., p. 263.

60. 95 Phil. 1 (1954).
61. 100 Phil. 214 (1956).
62. No. L-23035, 31 July 1975, 65 SCRA 575.

63. No. L-27906, 8 January 1987, 147 SCRA 154.
64. Supra note 27.

65. Supra note 39.
66. 125 Phil. 295 (1966).
67. Rollo, pp. 588–589.

68. Time v. Life Television Co. of St. Paul, 123 F. Supp. 470 (1954);
69. Conde Nast Publications v. Vogue School of Fashion Modelling, 105 F. Supp. 325
(1952); Hanson v. Triangle Publications, 163 F.2d 74 (1947).
70. See Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466 (1994).
71. No. L-26557, 18 February 1970, 31 SCRA 544.
72. PACCAR Inc. v. Tele Scan Technologies, L.L.C., 319 F.3d 243 (2003).
73. Reiterated in Section 168 of RA 8293.
74. V. Amador, supra note 58 at 278.
75. Shell Co. of the Philippines, Ltd. v. Ins. Petroleum Refining Co., Ltd., 120 Phil. 434
(1964); “La Insular” v. Jao Oge, 42 Phil. 366 (1921).
76. Alhambra Cigar, etc., Co. v. Mojica, 27 Phil. 266 (1914).
77. Co Tiong Sa v. Director of Patents, supra note 60; Clarke v. Manila Candy Co., 36 Phil.
100 (1917).
78. See Q-Tips, Inc. v. Johnson & Johnson, 108 F.Supp 845 (1952).
79. Rollo, pp. 40–45.

80. Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683 (1999).
81. Rollo, pp. 148–149.
82. See Q-Tips, Inc. v. Johnson & Johnson, supra note 78.
83. This provision reads: “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, then the court may
award as damages a reasonable percentage based upon the amount of gross sales of
the defendant of 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.”
84. TSN, (Francis Dy), 15 March 1993, p. 32; TSN (Francis Dy), 22 March 1993, pp. 1–2.
85. Article 2229, Civil Code.

86. Article 2208(1), Civil Code.

FIRST DIVISION
[G.R. No. 112012. April 4, 2001.]
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES,

INC. , petitioners, vs . COURT OF APPEALS and CFC CORPORATION ,
respondents.
DECISION
YNARES-SANTIAGO , J : p
This is a petition for review assailing the Decision of the Court of Appeals in CA-G.R.
SP No. 24101, 1 reversing and setting aside the decision of the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT), 2 which denied private respondent's
application for registration of the trademark, FLAVOR MASTER.
On January 18, 1984, private respondent CFC Corporation led with the BPTTT an
application for the registration of the trademark "FLAVOR MASTER" for instant coffee,
under Serial No. 52994. The application, as a matter of due course, was published in the
July 18, 1988 issue of the BPTTT's Official Gazette.
Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under
Swiss laws and domiciled in Switzerland, led an unveri ed Notice of Opposition, 3
claiming that the trademark of private respondent's product is "confusingly similar to its
trademarks for coffee and coffee extracts, to wit: MASTER ROAST and MASTER BLEND."
Likewise, a veri ed Notice of Opposition was led by Nestle Philippines, Inc., a
Philippine corporation and a licensee of Societe Des Produits Nestle S.A., against CFC's
application for registration of the trademark FLAVOR MASTER. 4 Nestle claimed that the
use, if any, by CFC of the trademark FLAVOR MASTER and its registration would likely
cause confusion in the trade; or deceive purchasers and would falsely suggest to the
purchasing public a connection in the business of Nestle, as the dominant word present in
the three (3) trademarks is "MASTER"; or that the goods of CFC might be mistaken as
having originated from the latter.
In answer to the two oppositions, CFC argued that its trademark, FLAVOR MASTER,
is not confusingly similar with the former's trademarks, MASTER ROAST and MASTER
BLEND, alleging that, "except for the word MASTER (which cannot be exclusively
appropriated by any person for being a descriptive or generic name), the other words that
are used respectively with said word in the three trademarks are very different from each
other — in meaning, spelling, pronunciation, and sound". CFC further argued that its
trademark, FLAVOR MASTER, "is clearly very different from any of Nestle's alleged
trademarks MASTER ROAST and MASTER-BLEND, especially when the marks are viewed in
their entirety, by considering their pictorial representations, color schemes and the letters
of their respective labels."
In its Decision No. 90-47 dated December 27, 1990, the BPTTT denied CFC's
application for registration. 5 CFC elevated the matter to the Court of Appeals, where it was
docketed as CA-G.R. SP No. 24101.
The Court of Appeals de ned the issue thus: "Does appellant CFC's trade dress bear
a striking resemblance with appellee's trademarks as to create in the purchasing public's
mind the mistaken impression that both coffee products come from one and the same
source?" aEHADT
As stated above, the Court of Appeals, in the assailed decision dated September 23,
1993, reversed Decision No. 90-47 of the BPTTT and ordered the Director of Patents to
approve CFC's application. The Court of Appeals ruled:
Were We to take even a lackadaisical glance at the overall appearance of
the contending marks, the physical discrepancies between appellant CFC's and
appellee's respective logos are so ostensible that the casual purchaser cannot
likely mistake one for the other. Appellant CFC's label (Exhibit "4") is
predominantly a blend of dark and lighter shade of orange where the words
"FLAVOR MASTER", "FLAVOR" appearing on top of "MASTER", shaded in mocha
with thin white inner and outer sidings per letter and identically lettered except for
the slightly protruding bottom curve of the letter "S" adjoining the bottom tip of
the letter "A" in the word "MASTER", are printed across the top of a simmering red
coffee cup. Underneath "FLAVOR MASTER" appears "Premium Instant Coffee"
printed in white, slim and slanted letters. Appellees' "MASTER ROAST" label
(Exhibit "7"), however, is almost double the width of appellant CFC's. At the top is
printed in brown color the word "NESCAFE" against a white backdrop. Occupying
the center is a square-shaped con guration shaded with dark brown and picturing
a heap of coffee beans, where the word "MASTER" is inscribed in the middle.
"MASTER" in appellees' label is printed in taller capital letters, with the letter "M"
further capitalized. The letters are shaded with red and bounded with thin gold-
colored inner and outer sidings. Just above the word "MASTER" is a red window
like portrait of what appears to be a coffee shrub clad in gold. Below the
"MASTER" appears the word "ROAST" impressed in smaller, white print. And
further below are the inscriptions in white: "A selection of prime Arabica and
Robusta coffee." With regard to appellees' "MASTER BLEND" label (Exhibit "6") of
which only a xeroxed copy is submitted, the letters are bolder and taller as
compared to appellant CFC's and the word "MASTER" appears on top of the word
"BLEND" and below it are the words "100% pure instant coffee" printed in small
letters.
From the foregoing description, while the contending marks depict the
same product, the glaring dissimilarities in their presentation far outweigh and
dispel any aspect of similitude. To borrow the words of the Supreme Court in
American Cyanamid Co. v. Director of Patents (76 SCRA 568), appellant CFC's
and appellees' labels are entirely different in size, background, colors, contents
and pictorial arrangement; in short, the general appearances of the labels bearing
the respective trademarks are so distinct from each other that appellees cannot
assert that the dominant features, if any, of its trademarks were used or
appropriated in appellant CFC's own. The distinctions are so well-de ned so as to
foreclose any probability or likelihood of confusion or deception on the part of the
normally intelligent buyer when he or she encounters both coffee products at the
grocery shelf. The answer therefore to the query is a clear-cut No. 6
Petitioners are now before this Court on the following assignment of errors:
1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND
SETTING ASIDE THE DECISION (NO. 90-47) OF THE DIRECTOR OF THE BUREAU
OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER (BPTTT) DATED
DECEMBER 27, 1990.
2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT CFC'S

TRADE DRESS IS BEYOND THE SCOPE OF THE PROSCRIPTION LAID DOWN BY
JURISPRUDENCE AND THE TRADEMARK LAW.
3. RESPONDENT COURT ERRED IN HOLDING THAT THE TOTALITY

RULE, RATHER THAN THE TEST OF DOMINANCY, APPLIES TO THE CASE.
4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE

APPLIED IN THE CASES OF BRISTOL MYERS V. DIRECTOR OF PATENTS, ET AL.
(17 SCRA 128), MEAD JOHNSON & CO. V. NVJ VAN DORF LTD., (7 SCRA 768)
AND AMERICAN CYANAMID CO. V. DIRECTOR OF PATENTS (76 SCRA 568).
The petition is impressed with merit.

A trademark has been generally de ned as "any word, name, symbol or device
adopted and used by a manufacturer or merchant to identify his goods and distinguish
them from those manufactured and sold by others." 7
A manufacturer's trademark is entitled to protection. As Mr. Justice Frankfurter
observed in the case of Mishawaka Mfg. Co. v. Kresge Co.: 8
The protection of trade-marks 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
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, due 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.
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as amended, which was
in force at the time, provides thus:
Registration of trade-marks, trade-names and service-marks on the
principal register. — There is hereby established a register of trade-marks, trade-
names and service marks which shall be known as the principal register. The
owner of a trade-mark, trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the
right to register the same on the principal register, unless it:
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
(Emphasis supplied)

The law prescribes a more stringent standard in that there should not only be
confusing similarity but that it should not likely cause confusion or mistake or deceive
purchasers.
Hence, the question in this case is whether there is a likelihood that the trademark
FLAVOR MASTER may cause confusion or mistake or may deceive purchasers that said
product is the same or is manufactured by the same company. In other words, the issue is
whether the trademark FLAVOR MASTER is a colorable imitation of the trademarks
MASTER ROAST and MASTER BLEND.
Colorable imitation denotes such a close or ingenious imitation as to be calculated
to deceive ordinary persons, or such a resemblance to the original as to deceive an
ordinary purchaser giving such attention as a purchaser usually gives, as to cause him to
purchase the one supposing it to be the other. 9 In determining if colorable imitation exists,
jurisprudence has developed two kinds of tests — the Dominancy Test and the Holistic
Test. 1 0 The test of dominancy focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception and thus constitute
infringement. On the other side of the spectrum, the holistic test mandates that the
entirety of the marks in question must be considered in determining confusing similarity.
11
In the case at bar, the Court of Appeals held that:

The determination of whether two trademarks are indeed confusingly
similar must be taken from the viewpoint of the ordinary purchasers who are, in
general, undiscerningly rash in buying the more common and less expensive
household products like coffee, and are therefore less inclined to closely examine
speci c details of similarities and dissimilarities between competing products.
The Supreme Court in Del Monte Corporation v. CA, 181 SCRA 410, held that:
"The question is not whether the two articles are distinguishable by

their labels 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."
From this perspective, the test of similarity is to consider the two marks in
their entirety, as they appear in the respective labels, in relation to the goods to
which they are attached (Bristol Myers Company v. Director of Patents, et al., 17
SCRA 128, citing Mead Johnson & Co. v. NVJ Van Dorp, Ltd., et al., 7 SCRA 768 ).
The mark must be considered 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
(Del Monte Corp. v. CA, supra ), as what appellees would want it to be when they
essentially argue that much of the confusion springs from appellant CFC's use of
the word "MASTER" which appellees claim to be the dominant feature of their
own trademarks that captivates the prospective consumers. Be it further
emphasized that 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 (Mead Johnson & Co. v. NVJ Van Dorp, Ltd., supra). 1 2
The Court of Appeals applied some judicial precedents which are not on all fours
with this case. It must be emphasized that in infringement or trademark cases in the
Philippines, particularly in ascertaining whether one trademark is confusingly similar to or
is a colorable imitation of another, no set rules can be deduced. Each case must be
decided on its own merits. 1 3 In Esso Standard, Inc. v. Court of Appeals, 1 4 we ruled that the
likelihood of confusion is a relative concept; to be determined only according to the
particular, and sometimes peculiar, circumstances of each case. In trademark cases, even
more than in any other litigation, precedent must be studied in light of the facts of the
particular case. The wisdom of the likelihood of confusion test lies in its recognition that
each trademark infringement case presents its own unique set of facts. Indeed, the
complexities attendant to an accurate assessment of likelihood of confusion require that
the entire panoply of elements constituting the relevant factual landscape be
comprehensively examined. 1 5
The Court of Appeals' application of the case of Del Monte Corporation v. Court of
Appeals 1 6 is, therefore, misplaced. In Del Monte, the issue was about the alleged similarity
of Del Monte's logo with that of Sunshine Sauce Manufacturing Industries. Both
corporations market the catsup product which is an inexpensive and common household
item. DTIaHE
Since Del Monte alleged that Sunshine's logo was confusingly similar to or was a
colorable imitation of the former's logo, there was a need to go into the details of the two
logos as well as the shapes of the labels or marks, the brands printed on the labels, the
words or lettering on the labels or marks and the shapes and colors of the labels or marks.
The same criteria, however, cannot be applied in the instant petition as the facts and
circumstances herein are peculiarly different from those in the Del Monte case.
In the same manner, the Court of Appeals erred in applying the totality rule as
de ned in the cases of Bristol Myers v. Director of Patents ; 1 7 Mead Johnson & Co. v. NVJ
Van Dorf Ltd.; 1 8 and American Cyanamid Co. v. Director of Patents. 1 9 The totality rule
states that "the test is not simply to take their words and compare the spelling and
pronunciation of said words. 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 predominant words but also on the other features
appearing on both labels." 2 0
As this Court has often declared, each case must be studied according to the
peculiar circumstances of each case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point.
In the above cases cited by the Court of Appeals to justify the application of the
totality or holistic test to this instant case, the factual circumstances are substantially
different. In the Bristol Myers case, this Court held that although both BIOFERIN and
BUFFERIN are primarily used for the relief of pains such as headaches and colds, and their
names are practically the same in spelling and pronunciation, both labels have strikingly
different backgrounds and surroundings. In addition, one is dispensable only upon
doctor's prescription, while the other may be purchased over-the-counter.
In the Mead Johnson case, the differences between ALACTA and ALASKA are
glaring and striking to the eye. Also, ALACTA refers to "Pharmaceutical Preparations which
Supply Nutritional Needs," falling under Class 6 of the o cial classi cation of Medicines
and Pharmaceutical Preparations to be used as prescribed by physicians. On the other
hand, ALASKA refers to "Foods and Ingredients of Foods" falling under Class 47, and does
not require medical prescription.
In the American Cyanamid case, the word SULMET is distinguishable from the word
SULMETINE, as the former is derived from a combination of the syllables "SUL" which is
derived from sulfa and "MET" from methyl, both of which are chemical compounds present
in the article manufactured by the contending parties. This Court held that the addition of
the syllable "INE" in respondent's label is su cient to distinguish respondent's product or
trademark from that of petitioner. Also, both products are for medicinal veterinary use and
the buyer will be more wary of the nature of the product he is buying. In any case, both
products are not identical as SULMET's label indicates that it is used in a drinking water
solution while that of SULMETINE indicates that they are tablets.
It cannot also be said that the products in the above cases can be bought off the
shelf except, perhaps, for ALASKA. The said products are not the usual "common and
inexpensive" household items which an "undiscerningly rash" buyer would unthinkingly buy.
In the case at bar, other than the fact that both Nestle's and CFC's products are
inexpensive and common household items, the similarity ends there. What is being
questioned here is the use by CFC of the trademark MASTER. In view of the di culty of
applying jurisprudential precedents to trademark cases due to the peculiarity of each case,
judicial fora should not readily apply a certain test or standard just because of seeming
similarities. As this Court has pointed above, there could be more telling differences than
similarities as to make a jurisprudential precedent inapplicable.
Nestle points out that the dominancy test should have been applied to determine
whether there is a confusing similarity between CFC's FLAVOR MASTER and Nestle's
MASTER ROAST and MASTER BLEND.
We agree.
As the Court of Appeals itself has stated, "[t]he determination of whether two
trademarks are indeed confusingly similar must be taken from the viewpoint of the
ordinary purchasers who are, in general, undiscerningly rash in buying the more common
and less expensive household products like coffee, and are therefore less inclined to
closely examine speci c details of similarities and dissimilarities between competing
products." 2 1
The basis for the Court of Appeals' application of the totality or holistic test is the
"ordinary purchaser" buying the product under "normally prevalent conditions in trade" and
the attention such products normally elicit from said ordinary purchaser. An ordinary
purchaser or 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. 2 2
The Court of Appeals held that the test to be applied should be the totality or
holistic test reasoning, since what is of paramount consideration is the ordinary purchaser
who is, in general, undiscerningly rash in buying the more common and less expensive
household products like coffee, and is therefore less inclined to closely examine speci c
details of similarities and dissimilarities between competing products.
This Court cannot agree with the above reasoning. If the ordinary purchaser is
"undiscerningly rash" in buying such common and inexpensive household products as
instant coffee, and would therefore be "less inclined to closely examine speci c details of
similarities and dissimilarities" between the two competing products, then it would be less
likely for the ordinary purchaser to notice that CFC's trademark FLAVOR MASTER carries
the colors orange and mocha while that of Nestle's uses red and brown. The application of
the totality or holistic test is improper since the ordinary purchaser would not be inclined
to notice the speci c features, similarities or dissimilarities, considering that the product
is an inexpensive and common household item.
It must be emphasized that the products bearing the trademarks in question are
"inexpensive and common" household items bought off the shelf by "undiscerningly rash"
purchasers. As such, if the ordinary purchaser is "undiscerningly rash", then he would not
have the time nor the inclination to make a keen and perceptive examination of the physical
discrepancies in the trademarks of the products in order to exercise his choice.
While this Court agrees with the Court of Appeals' detailed enumeration of
differences between the respective trademarks of the two coffee products, this Court
cannot agree that totality test is the one applicable in this case. Rather, this Court believes
that the dominancy test is more suitable to this case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and overall impressions engendered by
the marks in controversy as they are encountered in the realities of the marketplace. 2 3 The
totality or holistic test only relies on visual comparison between two trademarks whereas
the dominancy test relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of
dominancy and held that:
From the evidence at hand, it is su ciently established that the word
MASTER is the dominant feature of opposer's mark. The word MASTER is printed
across the middle portion of the label in bold letters almost twice the size of the
printed word ROAST. Further, the word MASTER has always been given emphasis
in the TV and radio commercials and other advertisements made in promoting the
product. This can be gleaned from the fact that Robert Jaworski and Atty. Ric
Puno Jr., the personalities engaged to promote the product, are given the titles
Master of the Game and Master of the Talk Show, respectively. In due time,
because of these advertising schemes the mind of the buying public had come to
learn to associate the word MASTER with the opposer's goods.
. . . It is the observation of this O ce that much of the dominance which
the word MASTER has acquired through Opposer's advertising schemes is carried
over when the same is incorporated into respondent-applicant's trademark
FLAVOR MASTER. Thus, when one looks at the label bearing the trademark
FLAVOR MASTER (Exh. 4) one's attention is easily attracted to the word MASTER,
rather than to the dissimilarities that exist. Therefore, the possibility of confusion
as to the goods which bear the competing marks or as to the origins thereof is not
farfetched. . . . 2 4
In addition, the word "MASTER" is neither a generic nor a descriptive term. As such,
said term can not be invalidated as a trademark and, therefore, may be legally protected.
Generic terms 2 5 are those which constitute "the common descriptive name of an article or
substance," or comprise the "genus of which the particular product is a species," or are
"commonly used as the name or description of a kind of goods," or "imply reference to
every member of a genus and the exclusion of individuating characters," or "refer to the
basic nature of the wares or services provided rather than to the more idiosyncratic
characteristics of a particular product," and are not legally protectable. On the other hand,
a term is descriptive 2 6 and therefore invalid as a trademark if, as understood in its normal
and natural sense, it "forthwith conveys the characteristics, functions, qualities or
ingredients of a product to one who has never seen it and does not know what it is," or "if it
forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the
goods," or if it clearly denotes what goods or services are provided in such a way that the
consumer does not have to exercise powers of perception or imagination.
Rather, the term "MASTER" is a suggestive term brought about by the advertising
scheme of Nestle. Suggestive terms 2 7 are those which, in the phraseology of one court,
require "imagination, thought and perception to reach a conclusion as to the nature of the
goods." Such terms, "which subtly connote something about the product," are eligible for
protection in the absence of secondary meaning. While suggestive marks are capable of
shedding "some light" upon certain characteristics of the goods or services in dispute, they
nevertheless involve "an element of incongruity," " gurativeness," or " imaginative effort on
the part of the observer." DHCcST
This is evident from the advertising scheme adopted by Nestle in promoting its
coffee products. In this case, Nestle has, over time, promoted its products as "coffee
perfection worthy of masters like Robert Jaworski and Ric Puno Jr."
In associating its coffee products with the term "MASTER" and thereby impressing
them with the attributes of said term, Nestle advertised its products thus:
Robert Jaworski. Living Legend. A true hard court hero. Fast on his feet.
Sure in every shot he makes. A master strategist. In one word, unmatched.
MASTER ROAST. Equally unmatched. Rich and deeply satisfying. Made
from a unique combination of the best coffee beans — Arabica for superior taste
and aroma, Robusta for strength and body. A masterpiece only NESCAFE, the
world's coffee masters, can create.
MASTER ROAST. Coffee perfection worthy of masters like Robert
Jaworski. 2 8
In the art of conversation, Ric Puno Jr. is master. Witty. Well-informed.
Confident.
In the art of coffee-making, nothing equals Master Roast, the coffee
masterpiece from Nescafe, the world's coffee masters. A unique combination of
the best coffee beans — Arabica for superior taste and aroma, Robusta for
strength and body. Truly distinctive and rich in flavor.
Master Roast. Coffee perfection worthy of masters like Ric Puno Jr. 2 9
The term "MASTER", therefore, has acquired a certain connotation to mean the
coffee products MASTER ROAST and MASTER BLEND produced by Nestle. As such, the
use by CFC of the term "MASTER" in the trademark for its coffee product FLAVOR MASTER
is likely to cause confusion or mistake or even to deceive the ordinary purchasers.
In closing, it may not be amiss to quote the case of American Chicle Co. v. Topps
Chewing Gum, Inc., 3 0 to wit:
Why it should have chosen a mark that had long been employed by
[plaintiff] and had become known to the trade instead of adopting some other
means of identifying its goods is hard to see unless there was a deliberate
purpose to obtain some advantage from the trade that [plaintiff] had built up.
Indeed, it is generally true that, as soon as we see that a second comer in a
market has, for no reason that he can assign, plagiarized the "make-up" of an
earlier comer, we need no more; [W]e feel bound to compel him to exercise his
ingenuity in quarters further afield.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-
G.R. SP NO. 24101 is REVERSED and SET ASIDE and the decision of the Bureau of Patents,
Trademarks and Technology Transfer in Inter Partes Cases Nos. 3200 and 3202 is
REINSTATED.
SO ORDERED.
Davide, Jr., C.J., Kapunan and Pardo, JJ., concur.
Puno, J., is on official leave.
Footnotes
1. Penned by Associate Justice Ricardo J. Francisco and concurred in by Associate
Justices Lourdes K. Tayao-Jaguros and Eubulo G. Verzola.
2. Penned by Director Ignacio S. Sapalo.
3. Inter Partes Case No. 3202.
4. Inter Partes Case No. 3200.

5. Rollo, pp. 35-48.
6. Ibid., pp. 33-34.
7. Bass Buster, Inc. v. Gapen Mfg. Co., 420 F. Supp. 144, 156, 191 USPQ 315, 325 (W.D. Mo.
1976)
8. 316 U.S. 203, 53 USPQ 323 [1942].
9. Etepha v. Director of Patents, et al., 16 SCRA 495, 497-498 [1966].
10. Ibid.
11. Id.
12. Rollo, p. 32.
13. Emerald Garment Manufacturing Corporation v. Court of Appeals, 251 SCRA 600
[1995].
14. 116 SCRA 336 [1982] as cited In Emerald Garment Manufacturing Corporation v. Court
of Appeals, supra.
15. Thompson Medical Co. v. Pfizer, Inc., 753 F. 2d 208, 225 USPQ 124 (2d Cir. 1985).
16. 181 SCRA 410 [1990].
17. 17 SCRA 128 [1966].

18. 7 SCRA 768 [1963].
19. 76 SCRA 568 [1977].
20. Mead Johnson & Co. v. NVJ Van Dorf Ltd., supra.
21. Rollo, p. 32.
22. Del Monte Corporation v. Court of Appeals, 181 SCRA 410 [1990].
23. Federal Unfair Competition: Lanham Act §43(a), p. 3-76.
24. Rollo, pp. 38-39.
25. Federal Unfair Competition: Lanham Act §43(a), p. 3-22.1.
26. Id., p. 3-36.
27. Id., p. 3-54.
28. Exhibit ''N".
29. Exhibit "O".
30. 208 F. 2d 560, 562-63, 99 USPQ 362, 364-65 (2d Cir. 1953).

FIRST DIVISION
[G.R. No. 166115. February 2, 2007.]
McDONALD'S CORPORATION , petitioner, vs . MACJOY FASTFOOD

CORPORATION , respondent.
DECISION
GARCIA , J : p
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 2004 1 reversing an earlier decision of the
Intellectual Property O ce (IPO) which rejected herein respondent MacJoy
FastFood Corporation's application for registration of the trademark
"MACJOY & DEVICE"; and
2. Resolution dated 12 November 2004 2 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, led with the then
Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the Intellectual
Property O ce (IPO), an application, thereat identi ed 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. SCDaET
Petitioner McDonald's Corporation, a corporation duly organized and existing under

the laws of the State of Delaware, USA, led a veri ed Notice of Opposition 3 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 a liation 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 a liation 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 decision 4 dated December 28, 1998, the IPO, ratiocinating that the
predominance of the letter "M," and the pre xes "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 Classi cation 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 . DHIaTS
Let the lewrapper 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 Injunction 6 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 Decision 7 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:

. . . , 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.)AICDSa
Petitioner promptly led 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 pre x "Mc" and/or
"Mac" and the corporate "M" logo design.
B. The pre x "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. DacASC
In its Comment, 9 the respondent asserts that the petition should be dismissed
outright for being procedurally defective: rst, because the person who signed the
certi cation against forum shopping in behalf of the petitioner was not speci cally
authorized to do so, and second, because the petition does not present a reviewable issue
as what it challenges are the factual ndings of the CA. In any event, the respondent insists
that the CA committed no reversible error in nding no confusing similarity between the
trademarks in question.
Contrary to respondent's claim, the petitioner's Managing Counsel, Sheila Lehr, was
speci cally authorized to sign on behalf of the petitioner the Veri cation and Certi cation
1 0 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 Certi cate of the Assistant
Secretary dated December 21, 2004, 1 1 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 . . . 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, . . . documents required to institute opposition or
cancellation proceedings against con icting 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
certi cation 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 certi cation 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, su ce it to say that the contradictory ndings
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. 1 2 Nevertheless,
when the factual ndings of the appellate court are mistaken, absurd, speculative,
conjectural, con icting, tainted with grave abuse of discretion, or contrary to the ndings
culled by the court of origin, 1 3 as here, this Court will review them. HICEca
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, de nes 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. 1 4
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 Classi cation 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. 1 5 The dominancy test focuses on the
similarity of the prevalent features of the competing trademarks that might cause
confusion or deception. 1 6 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. 1 7 Under the latter test, a comparison of the words is not
the only determinant factor. 1 8
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 xing 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. HCITAS
We agree with the [respondent] that it is entirely unwarranted for the IPO to
consider the pre x "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
pre x "Mc" will appear to be the only similarity in the two completely different
marks; and it is the pre x "Mc" that would thus appear as the miniscule detail.
When pitted against each other, the two marks re ect 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. 1 9 In such cases, even more than in any other litigation, precedent
must be studied in the light of the facts of the particular case. 2 0 That is the reason why in
trademark cases, jurisprudential precedents should be applied only to a case if they are
specifically in point. 2 1
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. 2 2
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc. , 2 3 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, . . . , 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. CA 2 4 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:
. . . , the totality or holistic test is contrary to the elementary postulate of the
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 nds 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. ECaAHS
To begin with, both marks use the corporate "M" design logo and the pre xes "Mc"
and/or "Mac" as dominant features. The rst letter "M" in both marks puts emphasis on the
pre xes "Mc" and/or "Mac" by the similar way in which they are depicted i.e. in an arch-like,
capitalized and stylized manner. 2 5
For sure, it is the pre x "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
Classi cation 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" pre xes 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 a liate, 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. EDSHcT
Thus, with the predominance of the letter "M," and pre xes "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 Classi cation
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. 2 6
Pursuant to Section 37 2 7 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 Convention 2 8 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; 2 9 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 1977; 3 0 and so on and so forth. 3 1
On the other hand, it is not disputed that the respondent's application for
registration of its trademark "MACJOY & DEVICE" was led only on March 14, 1991 albeit
the date of first use in the Philippines was December 7, 1987. 3 2
Hence, from the evidence on record, it is clear that the petitioner has duly
established its ownership of the mark/s. HaTDAE
Respondent's contention that it was the rst 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 rst McDonald's outlet of the petitioner thereat
was opened only in 1992, is downright unmeritorious. For the requirement of "actual use in
commerce . . . in the Philippines" before one may register a trademark, trade-name and
service mark under the Trademark Law 3 3 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 pre x
"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." 3 4
By reason of the respondent's implausible and insu cient 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, 3 5 citing Chuanchow Soy & Canning Co. v. Dir. of Patents and Villapanta: 3 6
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. HTSaEC

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 O ce in Inter Partes Case No. 3861 is
REINSTATED.
No pronouncement as to costs.
SO ORDERED.
Puno, C.J., Sandoval-Gutierrez, Corona and Azcuna, JJ., concur.
Footnotes
1. Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices
Elvi John S. Asuncion and Ramon Bato, Jr.; Rollo, pp. 209-219.
2. Id. at 256-257.
3. Id. at 77-81.
4. Id. at 114-122.
5. Id. at 139-142.
6. Id. at 144-159.
7. Supra note 1.
8. Supra note 2.
9. Rollo, pp. 291-306.
10. Id. at 72.
11. Id. at 74 & 76
12. Moomba Mining Exploration Co. v. CA, G.R. No. 108846, October 26, 99, 317 SCRA 38,
397.
13. Smith Kline Beckman Corporation v. CA, G.R. No. 126627, August 14, 2003, 409 SCRA
33, 39.
14. Section 38, R.A. 166, as amended
15. Mighty Corporation v. E & J Gallo Winery, G.R. No. 154342, July 14, 2004, 434 SCRA
473, 506.
16. McDonald's Corporation v. L.C. Big Mak Burger, Inc., supra.

17. Id.
18. Emerald Garment Manufacturing Corporation v. Court of Appeals, G.R. No. 100098,
December 29, 1995, 251 SCRA 600, 615-616.
19. Societe Des Produits Nestle, S.A. v. CA, G.R. No. 112012, April 4, 2001, 356 SCRA 207,
217.
20. Id.

21. Id. at p. 218.
22. Applied in McDonald's Corp. v. L.C. Big Mak Burger, Inc., supra; Societe Des Produits
Nestle, S.A. v. CA, supra; Asia Brewery, Inc. v. CA, G.R. No. 103543, July 5, 1993, 224
SCRA 437; Converse Rubber Corp. v. Universal Rubber Products, Inc., G.R. No. L-27906,
January 8, 1987, 147 SCRA 154; Phil. Nut Industry Inc. v. Standard Brands, Inc., G.R. No.
L-23035, July 31, 1975, 65 SCRA 575.
23. Supra note 14, at 32.
24. Supra note 23.
25. "MacJoy" mark, Rollo p. 297 and "MCDONALDS" marks, Rollo, pp. 86, 89 & 91.
26. McDonald's Corporation v. L.C. Big Mak Burger Inc., supra note 14; SEC. 20. Certificate
of registration prima facie evidence of validity. — A certificate of registration of a mark or
trade name shall be prima facie evidence of the validity of the registration, the
registrant's ownership of the mark or trade name, and of the registrant's exclusive right
to use the same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein.
27. Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled in, or
have a bona fide or effective business or commercial establishment in any foreign
country, which is a party to an international convention or treaty relating to marks or
tradenames on the repression of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the provisions of this Act . . . . . .
"Tradenames of persons described in the first paragraph of this section shall be protected
without the obligation of filing or registration whether or not they form parts of marks."
28. The Paris Convention is essentially a compact among the various member countries to
accord in their own countries to citizens of the other contracting parties' trademarks and
other rights comparable to those accorded their own citizens by their domestic laws. The
underlying principle is that foreign nationals should be given the same treatment in each
of the member countries as that country makes available to its own citizens. In addition,
the Convention sought to create uniformity in certain respects by obligating each nation
to assure to nationals of countries of the Union an effective protection against unfair
competition. Article 2 of the Paris Convention provides that: ART. 2. Nationals of each of
the countries of the Union shall, as regards the protection of industrial property, enjoy in
all the other countries of the Union the advantages that their respective laws now grant,
or may hereafter grant, to nationals, without prejudice to the rights specially provided by
the present Convention. Consequently, they shall have the same protection as the latter,
and the same legal remedy against any infringement of their rights, provided they
observe the conditions and formalities imposed upon nationals.
29. Rollo, p. 86
30. Id. at 89 & 91
31. Registration No. 31966, dated June 24, 1983 for the mark "McChicken", Id. at 93;
Registration No. 34065, dated March 06, 1985, for the mark "McDonald's with "corporate
logo" arches design, Id. at 94; Registration No. 34065, dated July 18, 1985 for the mark
"Big Mac", Id. at 97; Registration No. 39988, dated July 14, 1988 for the mark "MacFries",
Id. at 99; Registration No. 45583, dated July 14, 1988, for the mark "McSpaghetti", Id. at
101; Registration No. 50987, dated July 24, 1991, for the servicemark "McDo", Id. at 100;
Registration No. 32009, dated June 24, 1983 for the trademark "Big Mac" and Circle
Design Rollo, p. 106; Registration No. 48491, dated June 25, 1990 for the service mark
"McSnack" Id. at 105; Registration No. 51789, dated December 02, 1991, for the
trademark "Mc" (Id. at 107).
32. IPO Decision; Rollo, pp. 120-121.
33. Section 2 of R.A. 166, as amended, provides: Sec. 2. What are registrable. —
Trademarks, tradenames and service marks owned by persons, corporations,
partnerships or associations domiciled in the Philippines and by persons, corporations,
partnerships or associations domiciled in any foreign country may be registered in
accordance with the provisions of this Act; Provided, That said trademarks, tradenames,
or service marks are actually in use in commerce and services not less than two months
in the Philippines before the time the applications for registration are filed; And provided,
further, That the country of which the applicant for registration is a citizen grants by law
substantially similar privileges to citizens of the Philippines, and such fact is officially
certified, with a certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the Government of the Republic of
the Philippines. (As amended by R.A. No. 865). SHTECI
34. Rollo, pp. 55-56.

35. G.R. No. 71189, November 4, 1992.
36. G.R. No. L-13947, 108 Phil. 833, 836.

FIRST DIVISION
[G.R. No. 164321. November 30, 2006.]
SKECHERS, U.S.A., INC. , petitioner, 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. 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, No. 153 Quirino Avenue,
Parañaque City , respondents.
TRENDWORKS INTERNATIONAL CORPORATION , petitioner-intervenor,

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.
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, No. 153
Quirino Avenue, Parañaque City , respondents.
DECISION
CHICO-NAZARIO , J : p
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil
Procedure, assailing the Decision 1 of the Court of Appeals in CA-G.R. SP No. 77269,
dated 17 November 2003, which denied petitioner's Petition for Certiorari seeking to
annul the Order 2 of the Regional Trial Court (RTC) of Manila, Branch 24 dated 7
November 2002, quashing Search Warrant No. 02-2827 and directing National Bureau
of Investigation (NBI) Special Investigator Carlos N. Borromeo III to return the seized
items to respondents and the Order dated 6 March 2003 denying petitioner's Motion
for Reconsideration.
Petitioner is a foreign corporation existing under the laws of the State of
California, United States of America and engaged in the manufacture of footwear.
Petitioner is not doing business in the Philippines and is suing before the trial court only
to protect its intellectual property rights. In the course of business, petitioner
registered the trademark "SKECHERS" with the Intellectual Property O ce (IPO) under
Registration No. 63364, Class 25 on 30 August 1996, and the trademark "S" (within an
oval design) under Registration No. 4-1996-110182, Class 25 on 12 July 2000, both to
be used in men's, women's, and children's footwear, namely, shoes, boots and slippers
of all kinds, and men's, women's and children's clothing, namely, t-shirts, sweat shirts,
sweat pants, socks, shorts, and hats. Petitioner also has a pending application for the
trademark "S" and design to be used for the same kinds of goods.
Sometime in March 2002, petitioner engaged the services of Zetetic Far East,
Inc. (Zetetic), a private investigative rm, to conduct an investigation on Inter Paci c
Industrial Trading Corporation (Inter Paci c) in coordination with the NBI to con rm if
Inter Paci c is indeed engaged in the importation, distribution and sale of unauthorized
products bearing counterfeit or unauthorized trademarks owned by petitioner. cTCaEA
On 11 April 2002, Mr. Alvin Ambion, a Market Researcher for Zetetic, visited the
business address of Inter Paci c/Strongshoes Warehouse and/or Strong Fashion
Shoes Trading at S-7 No. 153 Quirino Avenue, Parañaque City. Located at said business
address was Warehouse No. 7 of Ed & Joe's Commercial Arcade. Upon entering said
warehouse, Mr. Ambion saw different kinds and models of rubber shoes including
shoes bearing the "S" logo. During the visit, Mr. Ambion allegedly talked with the
caretakers of said warehouse who informed him that Inter Paci c directly imports the
goods from China and that their company distributes them to wholesalers and retailers
in the Baclaran area. One of the caretakers allegedly claimed that the shoes bearing the
"Strong" name with the "S" logo have the same style as Skechers shoes. Another
caretaker purportedly informed Mr. Ambion that they have an outlet located at Stall C-
11, Baclaran Terminal, Plaza 2 Shopping Center, Taft Avenue Ext., Pasay City, managed
by Violeta T. Magayaga, which sells the same footwear products.
Together with his colleague, Ms. Amelita Angeles, Mr. Ambion again visited
respondent's warehouse on 12 April 2002 and purchased four pairs of rubber shoes
bearing the "Strong" mark containing the "S" logo for P730.00, for which he was issued
Sales Invoice No. 0715. On the same day, Mr. Ambion and Ms. Angeles visited
respondent's outlet store in Baclaran.
On 17 May 2002, counsel for petitioner led a letter complaint with the O ce of
the NBI Director requesting their assistance in stopping the illegal importation,
manufacture and sale of counterfeit products bearing the trademarks owned by
petitioner, and in prosecuting the owners of the establishments engaged therein. Thus,
on 21 May 2002 Mr. Ambion and Ms. Angeles, together with NBI Special Investigator
Carlos N. Borromeo III of the Intellectual Property Rights Division of the NBI, visited
respondent's warehouse located at Ed & Joe's Commercial Arcade and purchased 24
pairs of rubber shoes bearing the "Strong" name and the "S" logo. Afterwards, they went
to respondent's outlet store in Baclaran and therein purchased a pair of rubber shoes
also bearing the "Strong" name and the "S" logo.
On 11 June 2002, Special Investigator Borromeo of the NBI, with Mr. Ambion as
witness, proceeded to Branch 24, RTC, Manila, to apply for search warrants against the
warehouse and outlet store being operated and managed by respondent for
infringement of trademark under Section 155 3 in relation to Section 170 4 of Republic
Act No. 8293, otherwise known as The Intellectual Property Code of the Philippines.
After personally examining the search warrant applicant and his witness, the
court a quo found probable cause to issue the search warrants applied for and thus
issued on the same day Search Warrant Nos. 02-2827 and 02-2828 to be served on the
warehouse and retail outlet of respondent. That same afternoon, the search warrants
were simultaneously served by the operatives of the Intellectual Property Rights
Division of the NBI and seized from the warehouse 71 boxes containing 36 pairs of
rubber shoes each or 2,556 pairs of rubber shoes bearing the "S" logo, 147 boxes
containing 24 pairs per box or 3,528 pairs of rubber shoes bearing the "S" logo and six
pages of various documents evidencing the sale and distribution of similar
merchandise; and from the outlet store, 295 pairs of rubber shoes bearing the "S" logo
and five pieces of rubber shoes bearing the "S" logo.
In compliance with the Order dated 9 July 2002 of the RTC directing respondents
to le their Comment on the issuance of the search warrant, respondents led their
Compliance and Comment with Prayer to Quash the search warrants. On 28 August
2002, respondents led their Amended Comment with Motion to Quash Search
Warrants on the ground that there is no confusing similarity between the petitioner's
Skechers' rubber shoes and respondent's Strong rubber shoes.
On 7 November 2002, the lower court issued the assailed Order quashing Search
Warrant No. 02-2827 and directing the NBI to return to respondents the items seized
by virtue of said search warrant. According to the court a quo:
The question to be posed in this case is this: Will the purchaser be
deceived or likely to be deceived into purchasing respondent's Strong Rubber
Shoes because of the belief that they are Skechers shoes in the ordinary course of
purchase? We answer in the negative. ICaDHT
A careful perusal of the Strong Rubber Shoes and Skechers shoes

presented by both respondents and private complainants reveals glaring
differences that an ordinary prudent purchaser would not likely be mislead or
confused in purchasing the wrong article. Some of these are;
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 "Sketchers U.S.A." for private
complainant;
4. Strong Shoes are modestly priced compared to the costs of

Sketchers Shoes.
xxx xxx xxx

Similarly as in this case, although the mark "S" is prominent on both
products, the same should be considered as a whole and not piecemeal.
Factoring the variables already cited make the dissimilarities between the two
marks conspicuous, noticeable and substantial.
Further, the products involved in the case at bar are not your ordinary
household items. These are shoes which vary in price. The casual buyer is
predisposed to be more cautious and discriminating and would prefer to mull over
his purchase. Confusion and deception is less likely.
Finally, like beer and maong pants and jeans, the average consumer
generally buys his rubber shoes by brand. He does not ask the sales clerk for
rubber shoes but for, say Adidas, Reebok, or Nike. He is, more or less,
knowledgeable and familiar with his preference and will not easily be distracted.
(Emerald Garment Manufacturing Corp., v. Court of Appeals , 251 SCRA 600,
supra)
ACCORDINGLY, respondent's Inter Paci c Industrial Trading Corporation,
Motion to Quash Search [Warrant] is hereby granted. Search Warrant No. 02-2827
is quashed. The applicant, Carlos N. Borromeo of the National Bureau of
Investigation is hereby directed to return to respondents the seized items. 5
Petitioner's Motion for Reconsideration was subsequently denied in an Order
dated 6 March 2003. Aggrieved, petitioner filed a Petition for Certiorari under Rule 65 of
the Rules of Court before the Court of Appeals assailing the Orders of the court a quo
on the ground that public respondent court committed grave abuse of discretion
amounting to lack and/or excess of jurisdiction in ruling that the act of private
respondents in selling and distributing rubber shoes which contain the trademarks and
designs owned by petitioner does not constitute trademark infringement.
On 17 November 2003, the appellate court denied the petition in this wise:
In the instant case, after examining and evaluating the foregoing factual
milieu and the respective arguments of the parties, We are inclined to agree with
the ruling of the public respondent that the holistic test is better suited to the
present case and consequently, hold that the private respondents' appropriation
and use of the letter "S" on their rubber shoes did not constitute an infringement
of the trademark of the petitioner. Hence, the instant petition must necessarily
fail. cSTDIC
A careful appreciation of the products in question readily reveals that these

products are not the ordinary household items like catsup, coffee or candy which
are commonly inexpensive. As such, the ordinary purchaser would be naturally
inclined to closely examine speci c details and would prefer to mull over his
purchase. The case of Del Monte Corp. vs. Court of Appeals (181 SCRA 410), is
clear on this point:
Among these, what essentially determines the attitudes of the
purchaser, speci cally 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 care . . . .
In his context, although one of the essential features of the private

respondents' shoes is the letter "S", su ce it to state that this alone would not
likely cause confusion, deception or mistake on the part of the ordinary buying
public. For it must be stressed that an ordinary purchaser of a product like a pair
of rubber shoes is an intelligent buyer, who "is accustomed to buy, and therefore
to some extent familiar with the goods" (Dy Buncio vs. Tan Tiao Bok, 42 Phil.
190). . . . .
xxx xxx xxx
Going further, contrary to the contention of the petitioner, the case of
Converse Rubber Corp. vs. Universal Rubber Products, Inc. (147 SCRA 154) is in
no way controlling in the instant case considering that it involved a different
factual milieu in contrast with that of the instant case. In said case, the
respondent sought for the registration of the trademark "UNIVERSAL CONVERSE
AND DEVICE" used on rubber shoes. Petitioner opposed on the ground that
respondent's trademark is confusingly similar to petitioner's corporate name
which is CONVERSE RUBBER CORPORATION and that it would likely deceive
purchasers of products on which it is to be used to an extent that said products
may be mistaken by the unwary public to be manufactured by the petitioner, i.e.
"CONVERSE CHUCK TAYLOR," "CONVERSE ALL STAR," "ALL STAR CONVERSE
CHUCK TAYLOR," OR "ALL STAR DEVICE." The High Court denied the application
for registration of respondent's trademark ratiocinating as follows:
The similarity in the general appearance of respondent's trademark
and that of petitioner would evidently create a likelihood of confusion
among the purchasing public. But even assuming arguendo, that the
trademark sought to be registered by respondent is distinctively dissimilar
from those of the petitioner, the likelihood of confusion would still
subsists, not on the purchaser's perception of the goods but on the origins
thereof. By appropriating the world "CONVERSE," respondent's products are
likely to be mistaken as having been produced by petitioner. The risk of
damage is not limited to a possible confusion of goods but also includes
confusion of reputation if the public could reasonably assume that the
goods of the parties originated from the same source.
Verily, the foregoing ruling does not apply on all fours in the instant case.
The word "CONVERSE" is highly identi ed not only to the products of Converse
Rubber Corporation but to the corporate entity most importantly such that the
mere appropriation of the word "CONVERSE" on products like rubber shoes,
regardless of whether or not it was compounded with other letters, symbols or
words; would not only likely but actually cause one to be mistaken that such
rubber shoes had been produced by Converse Rubber Corporation.
On the other hand, the letter "S" used on private respondents' rubber shoes
in the instant case could hardly be considered as highly identi able to the
products of petitioner alone. For it is not amiss to state that the letter "S" has been
used in many existing trademarks, the most popular of which is the trademark "S"
enclosed by an inverted triangle, which is extremely and profoundly identi able to
the well-known comics action hero, Superman. And perhaps it is due to the
existence of these trademarks containing letter "S" that the petitioner was
prompted to accessorize that letter "S" in its trademark with an outer oval design
and accompany it with the word "SKECHERS" in order to make it distinct from the
rest and identi able only to its products. As such, the dominancy test as applied
in the Converse case could not be applied in the instant case inasmuch as the
letter "S," although a dominant feature in petitioner's trademark; is neither
extremely and profoundly identi able to the products of petitioner alone nor has it
acquired a certain connotation to mean the rubber shoes produced by the
petitioner. What is extremely and profoundly identi able to the products of the
petitioner is the whole trademark consisting of the letter "S" enclosed by a
uniquely designed oval. Further, confusion and deception are less likely in the
instant case considering that the private respondents' rubber shoes were distinctly
and conspicuously marked "STRONG" at their front side, back side and insoles.
Furthermore their hang tags and labels attached to the shoes bear the word
"STRONG." In view of these, the dissimilarities between the private respondents'
and petitioner's shoes became more striking and noticeable to the ordinary
purchaser who could not in any way be deceived or misled that the shoes he buys
is produced by the petitioner. With this, the holistic test is squarely applicable.
HTSAEa
xxx xxx xxx

As set out in the decision, the foregoing case involves a peculiar factual
milieu in stark contrast with the instant case. As such, it nds no application in
the controversy in the instant case.
Taking off from the foregoing premises, the public respondent judge did
not commit grave abuse of discretion amounting to lack or excess of jurisdiction
in ruling that the act of the private respondent in selling and distributing rubber
shoes which contain the trademarks and designs owned by the petitioners does
not constitute trademark infringement. After all, the public respondent judge was
merely exercising his judgmental call conformably with the factual and legal
issues proferred and presented before him. Su ce it to state, it is a hornbook
doctrine in our jurisdiction that certiorari will not be issued to cure errors in
proceedings or to correct erroneous conclusions of law and fact. The special civil
action for certiorari is not a remedy for errors of judgment, which are correctible
by appeal (Montecillo vs. Civil Service Commission, 360 SCRA 99) .
WHEREFORE, in consideration of the foregoing premises, the instant
petition is perforce denied . 6
Petitioner's Motion for Reconsideration having been denied in an Order dated 18

June 2004, petitioner led the instant case contending that 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 warrant and in
concluding 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.
For its part, respondent maintains that it is logical for the Court of Appeals to
touch on the issue of whether or not there was trademark infringement since it was the
very issue raised in the Petition for Certiorari. According to respondent, petitioner failed
to qualify whether or not the determination of the Court of Appeals should be limited to
whether or not there was probable cause to issue the search warrants. Furthermore,
respondent claims that the trial court may not be faulted for quashing the search
warrants it had issued after nding that there was no basis for its issuance in the rst
place. According to respondent, after full appreciation of the trademarks and logos
depicted in the rubber shoes presented before the court a quo for close comparison, it
was only prudent for the lower court to correct itself and quash the search warrant
following a nding that probable cause does not exist for the offense of trademark
infringement.
At this juncture, it is paramount to stress that the power to issue search warrants
is exclusively vested with the trial judges in the exercise of their judicial function. 7 And
inherent in the courts' power to issue search warrants is the power to quash warrants
already issued. 8 After the judge has issued a warrant, he is not precluded to
subsequently quash the same, if he nds upon re-evaluation of the evidence that no
probable cause exists. 9 Though there is no xed rule for the determination of the
existence of probable cause since the existence depends to a large degree upon the
nding or opinion of the judge conducting the examination, 1 0 however, the ndings of
the judge should not disregard the facts before him nor run counter to the clear
dictates of reason. 1 1
In the determination of probable cause, the court must necessarily resolve
whether or not an offense exists to justify the issuance or quashal of the search
warrant. 1 2 In the case at bar, the subject search warrant was issued allegedly in
connection with trademark infringement, particularly the unauthorized use of the "S"
logo by respondent in their Strong rubber shoes. After conducting the hearing on the
application for a search warrant, the court a quo was initially convinced that there was
su cient reason to justify the issuance of the search warrant. However, upon motion of
respondent to quash the search warrant, the lower court changed its position and
declared that there was no probable cause to issue the search warrant as there was no
colorable imitation between respondent's trademark and that of petitioner. DIETHS
Based on its appreciation of the respective parties' arguments and the pieces of
evidence, particularly the samples of the original Skechers rubber shoes vis-à-vis
respondent's Strong rubber shoes, the trial court concluded that respondent's
appropriation of the symbol "S" on their rubber shoes does not constitute an
infringement on the trademark of petitioner. This exercise of judgment was further
strengthened by the a rmation of the Court of Appeals that public respondent judge
did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in
ruling that the acts of respondent do not constitute trademark infringement in light of
the factual and legal issues presented before it for consideration.
In ruling that there was no colorable imitation of petitioner's trademark in light of
the factual milieu prevalent in the instant case, the trial court may not be faulted for
reversing its initial nding that there was probable cause. Based on the courts' inherent
power to issue search warrants and to quash the same, the courts must be provided
with the opportunity to correct itself of an error inadvertently committed. After
reevaluating the evidence presented before it, the trial court may reverse its initial
nding of probable cause in order that its conclusion may be made to conform to the
facts prevailing in the instant case.
Furthermore, the court was acting reasonably when it went into a discussion of
whether or not there was trademark infringement, this is so because in the
determination of the existence of probable cause for the issuance or quashal of a
warrant, it is inevitable that the court may touch on issues properly threshed out in a
regular proceeding. 1 3 This nding that there was no colorable imitation of petitioner's
trademark is merely preliminary and did not nally determine the merits of the possible
criminal proceedings that may be instituted by petitioner. As held in the case of Solid
Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93: 1 4
When the court, in determining probable cause for issuing or quashing a
search warrant, nds that no offense has been committed, it does not interfere
with or encroach upon the proceedings in the preliminary investigation. The court
does not oblige the investigating o cer not to le an information for the court's
ruling that no crime exists is only for the purposes of issuing or quashing the
warrant.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The

Decision of the Court of Appeals in CA-G.R. SP No. 77269, dated 17 November 2003 is
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Footnotes
1. Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Conrado M.

Vasquez, Jr. and Arsenio J. Maopale concurring. Rollo, pp. 72-83.
2. Penned by Judge Antonio M. Eugenio, Jr., in search warrant case entitled "People of the
Philippines v. Inter Pacific Industrial, Inc. Rollo, pp. 173-176.
3. Sec. 155. 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.
4. Sec. 170. Penalties. — Independent of the civil and administrative sanctions by law, a
criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging
from Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall
be imposed on any person who is found guilty of committing any of the acts mentioned
in Section 155, Section 168 and Subsection 169.1. (Arts. 188 and 189, Revised Penal
Code).
5. RTC Order, pp. 2-4; rollo, pp. 174-176.

6. CA Decision, pp. 6-9 and 11; rollo, pp. 77-80 and 82.
7. Manly Sportswear Manufacturing, Inc. v. Dadodette Enterprises, G.R. No. 165306, 20
September 2005, 470 SCRA 384, 389, citing Section 2, Article III, 1987 Constitution.
8. Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C. Br. 93, 422 Phil. 72, 83 (2001).
9. Supra note 7.
10. Luna v. Hon. Plaza, 135 Phil. 329, 341 (1968).
11. La Chemise Lacoste, S.A. v. Fernandez, 214 Phil. 332, 349 (1984).
12. Supra note 8.
13. Supra note 7.
14. Supra note 8.

SECOND DIVISION
[G.R. No. 164321. March 28, 2011.]
SKECHERS, U.S.A., INC. , petitioner, 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. MAGAYAGA and/or JEFFREY
R. MORALES and/or any of its other proprietor/s, directors,
o cers, employees and/or occupants of its premises located at S-
7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue,
Parañaque City , respondents.
TRENDWORKS INTERNATIONAL CORPORATION , petitioner-intervenor,

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.
MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other
proprietor/s, directors, o cers, employees and/or occupants of its
premises located at S-7, Ed & Joe's Commercial Arcade, No. 153
Quirino Avenue, Parañaque City , respondents.
RESOLUTION
PERALTA , J : p
For resolution are the twin Motions for Reconsideration 1 led by petitioner and
petitioner-intervenor from the Decision rendered in favor of respondents, dated
November 30, 2006. aCHDAE
At the outset, a brief narration of the factual and procedural antecedents that
transpired and led to the filing of the motions is in order.
The present controversy arose when petitioner led 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 respondents for infringement of
trademark under Section 155, in relation to Section 170 of Republic Act 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 design) 4 with the Intellectual Property Office (IPO).
Two search warrants 5 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.
Later, respondents moved to quash the search warrants, arguing that there was
no confusing similarity between petitioner's "Skechers" rubber shoes and its "Strong"
rubber shoes.
On November 7, 2002, the RTC issued an Order 6 quashing the search warrants
and directing the NBI to return the seized goods. The RTC agreed with respondent's
view that Skechers rubber shoes and Strong rubber shoes have glaring differences
such that an ordinary prudent purchaser would not likely be misled or confused in
purchasing the wrong article.
Aggrieved, petitioner led a petition for certiorari 7 with the Court of Appeals
(CA) assailing the RTC Order. On November 17, 2003, the CA issued a Decision 8
affirming the ruling of the RTC.
Subsequently, petitioner led the present petition 9 before this Court which puts
forth the following assignment of errors:
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 WARRANT WHEN IT SHOULD HAVE LIMITED
ITSELF TO A DETERMINATION OF WHETHER THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN QUASHING THE SEARCH
WARRANTS. TCaEIc
B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

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. 1 0
In the meantime, petitioner-intervenor led a Petition-in-Intervention 1 1 with this

Court claiming to be the sole licensed distributor of Skechers products here in the
Philippines.
On November 30, 2006, this Court rendered a Decision 1 2 dismissing the petition.
Both petitioner and petitioner-intervenor led separate motions for
reconsideration.
In petitioner's motion for reconsideration, petitioner moved for a reconsideration
of the earlier decision on the following grounds:
(a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS
CASE DUE TO THE SIGNIFICANCE AND REPERCUSSIONS OF ITS
DECISION.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE
UNAUTHORIZED REPRODUCTIONS OF THE "S" TRADEMARK OWNED BY
PETITIONER WERE INTENDED FOR DISTRIBUTION IN THE PHILIPPINE
MARKET TO THE DETRIMENT OF PETITIONER — RETURNING THE GOODS
TO RESPONDENTS WILL ADVERSELY AFFECT THE GOODWILL AND
REPUTATION OF PETITIONER.
(c) THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH
ACTED WITH GRAVE ABUSE OF DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE THE
EVIDENCE PRESENTED DURING THE SEARCH WARRANT APPLICATION
PROCEEDINGS.
(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 ABSENCE THEREOF) MADE BY THE SEARCH WARRANT
COURT AND THE COURT OF APPEALS WAS IMPROPER.
(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION. THE

LAW IS CLEAR. THE DOMINANCY TEST SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION. 1 3
On the other hand, petitioner-intervenor's motion for reconsideration raises the

following errors for this Court's consideration, to wit:
(a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED
CONTRARY TO LAW AND JURISPRUDENCE IN ADOPTING THE ALREADY-
REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE OF CONFUSING
SIMILARITY; dctai
(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. 1 4
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. 1 5
HDaACI
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. 1 6
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. 1 7
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. 1 8
Applying the Dominancy Test to the case at bar, this Court nds 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 identi able 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 identi able 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. CTHDcE
4. Strong shoes are modestly priced compared to the costs of Skechers

Shoes. 1 9
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
Energy 2 0 model and respondent's Strong 2 1 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, ve 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.
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 tri ing 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.
I n Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc. , 2 2 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 nd 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 su cient 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.
. . . 23
Neither can the difference in price be a complete defense in trademark

infringement. In McDonald's Corporation v. L.C. Big Mak Burger, Inc., 2 4 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
eld (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). . . . 2 5
SIAEHC
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 speci c segments of the market. 2 6 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. 2 7 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. 2 8 The most successful form of copying is to employ enough points of
similarity to confuse the public, with enough points of difference to confuse the courts.
29
WHEREFORE , premises considered, the Motion for Reconsideration is GRANTED . The

Decision dated November 30, 2006 is RECONSIDERED and SET ASIDE .
SO ORDERED.
Carpio, Nachura, Abad and Mendoza, JJ., concur.

Footnotes
1.Rollo, pp. 1046-1071 & 1078-1118.

2.An Act Prescribing the Intellectual Property Code and Establishing the Intellectual Property
Office, Providing for Its Powers and Functions, and for Other Purposes. Took effect on
January 1, 1998.
3.Under Registration No. 63364; see rollo, p. 107.
4.Under Registration No. 4-1996-110182; see rollo, p. 109.

5.Search Warrant Nos. 02-2827 and 02-2828; see rollo, pp. 144-146, 147-148.
6.Rollo, pp. 173-176.
7.Id. at 195-220.
8.Id. at 72-83.
9.Id. at 11-59.
10.Id. at 26-27.
11.Id. at 557-603.
12.Penned by Associate Justice Minita V. Chico-Nazario, with Chief Justice Artemio V.
Panganiban and Associate Justices Consuelo Ynares-Santiago, Ma. Alicia Austria-
Martinez and Romeo J. Callejo, Sr. concurring; id. at 1032-1045.
13.Rollo, p. 1079.
14.Id. at 1047-1048.
15.Emphasis supplied.
16.Prosource International, Inc. v. Horphag Research Management SA, G.R. No. 180073,
November 25, 2009, 605 SCRA 523, 531; McDonald's Corporation v. MacJoy Fastfood
Corporation, G.R. No. 166115, February 2, 2007, 514 SCRA 95, 106; McDonald s
Corporation v. L.C. Big Mak Burger, Inc., 480 Phil. 402, 434 (2004).
17.Philip Morris, Inc. v. Fortune Tobacco Corporation, G.R. No. 158589, June 27, 2006, 493
SCRA 333, 357.
18.McDonald's Corporation v. L.C. Big Mak Burger, Inc., supra note 16, at 428, citing Sterling
Products International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,
137 Phil. 838, 852 (1969).
19.Rollo, p. 174.
20.See rollo, pp. 498-500, 572-574.
21.Id.
22.186 Phil. 85 (1980).
23.Id. at 94-95.

24.Supra note 16.
25.Id. at 432.
26.Dermaline, Inc. v. Myra Pharmaceuticals, Inc., G.R. No. 190065, August 16, 2010.
27.Berris Agricultural Co., Inc. v. Norvy Abyadang, G.R. No. 183404, October 13, 2010.
28.Del Monte Corporation v. Court of Appeals, 260 Phil. 435, 443 (1990).
29.Id.

SECOND DIVISION
[G.R. No. 172276. August 9, 2010.]
SOCIETE DES PRODUITS NESTLE, S.A. , petitioner, vs . MARTIN T. DY,

JR. , respondent.
DECISION
CARPIO , J : p
The Case
This is a petition 1 for review on certiorari under Rule 45 of the Rules of Court.
The petition challenges the 1 September 2005 Decision 2 and 4 April 2006 Resolution 3
of the Court of Appeals in CA-G.R. CV No. 62730, nding respondent Martin T. Dy, Jr.
(Dy, Jr.) not liable for trademark infringement. The Court of Appeals reversed the 18
September 1998 Decision 4 of the Regional Trial Court (RTC), Judicial Region 7, Branch
9, Cebu City, in Civil Case No. CEB-19345. TDcHCa
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation
organized under the laws of Switzerland. It manufactures food products and
beverages. As evidenced by Certi cate of Registration No. R-14621 5 issued on 7 April
1969 by the then Bureau of Patents, Trademarks and Technology Transfer, Nestle owns
the "NAN" trademark for its line of infant powdered milk products, consisting of PRE-
NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classi ed under Class 6 — "diatetic
preparations for infant feeding."
Nestle distributes and sells its NAN milk products all over the Philippines. It has
been investing tremendous amounts of resources to train its sales force and to
promote the NAN milk products through advertisements and press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from
Australia and repacks the powdered milk into three sizes of plastic packs bearing the
name "NANNY." The packs weigh 80, 180 and 450 grams and are sold for P8.90,
P17.50 and P39.90, respectively. NANNY is is also classi ed under Class 6 — "full
cream milk for adults in [ sic] all ages." Dy, Jr. distributes and sells the powdered milk in
Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using
"NANNY" and to undertake that he would stop infringing the "NAN" trademark. Dy, Jr. did
not act on Nestle's request. On 1 March 1990, Nestle led before the RTC, Judicial
Region 7, Branch 31, Dumaguete City, a complaint 6 against Dy, Jr. for infringement. Dy,
Jr. led a motion 7 to dismiss alleging that the complaint did not state a cause of
action. In its 4 June 1990 order, 8 the trial court dismissed the complaint. Nestle
appealed the 4 June 1990 order to the Court of Appeals. In its 16 February 1993
Resolution, the Court of Appeals set aside the 4 June 1990 order and remanded the
case to the trial court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle led with
the trial court a motion 9 to transfer the case to the RTC, Judicial Region 7, Branch 9,
Cebu City, which was designated as a special court for intellectual property rights.
The RTC's Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for
infringement. The trial court held:
If determination of infringement shall only be limited on whether or not the mark
used would likely cause confusion or mistake in the minds of the buying public or
deceive customers, such in [sic] the most considered view of this forum would be
highly unlikely to happen in the instant case. This is because upon comparison of
the plaintiff's NAN and defendant's NANNY, the following features would reveal
t h e absence of any deceptive tendency in defendant's NANNY: (1) all NAN
products are contained tin cans [sic], while NANNY are contained in plastic packs;
(2) the predominant colors used in the labels of NAN products are blue and white,
while the predominant colors in the plastic packings of NANNY are blue and
green; (3) the labels of NAN products have at the bottom portion an elliptical
shaped gure containing inside it a drawing of nestling birds, which is overlapped
by the trade-name "Nestle", while the plastic packs of NANNY have a drawing of
milking cows lazing on a vast green eld, back-dropped with snow covered
mountains; (4) the word NAN are [sic] all in large, formal and conservative-like
block letters, while the word NANNY are [sic] all in small and irregular style of
letters with curved ends; and (5) all NAN products are milk formulas intended for
use of [sic] infants, while NANNY is an instant full cream powdered milk intended
for use of [sic] adults.
DTaSIc
The foregoing has clearly shown that infringement in the instant case cannot be
proven with the use of the "test of dominancy" because the deceptive tendency of
the unregistered trademark NANNY is not apparent from the essential features of
the registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al., L-29971, Aug.
31, 1982, the Supreme Court took the occasion of discussing what is implied in
the de nition of "infringement" when it stated: "Implicit in this de nition is the
concept that the goods must be so related that there is likelihood either of
confusion of goods or business. . . . But as to whether trademark infringement
exists depends for the most part upon whether or not the goods are so related
that the public may be, or is actually, deceived and misled that they came from
the same maker or manufacturer. For non-competing goods may be those which,
though they are not in actual competition, are so related to each other that it
might reasonably be assumed that they originate from one manufacturer. Non-
competing goods may also be those which, being entirely unrelated, could not
reasonably be assumed to have a common source. In the former case of related
goods, confusion of business could arise out of the use of similar marks; in the
latter case of non-related goods, it could not."
Furthermore, in said case the Supreme Court as well discussed on when goods
may become so related for purposes of infringement when it stated: "Goods are
related when they belong to the same class or have same descriptive properties;
when they possess the same physical attributes or essential characteristics with
reference to their form, composition, texture or quality. They may also be related
because they serve the same purpose or are sold in grocery stores. . . .
Considering that defendant's NANNY belongs to the same class as that of

plaintiff's NAN because both are food products, the defendant's unregistered
trade mark NANNY should be held an infringement to plaintiff's registered
trademark NAN because defendant's use of NANNY would imply that it came
from the manufacturer of NAN. Furthermore, since the word "nanny" means a
"child's nurse," there might result the not so remote probability that defendant's
NANNY may be confused with infant formula NAN despite the aparent [sic]
disparity between the features of the two products. 1 0
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
The Court of Appeals' Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the trial court's
18 September 1998 Decision and found Dy, Jr. not liable for infringement. The Court of
Appeals held:
[T]he trial court appeared to have made a nding that there is no colorable
imitation of the registered mark "NAN" in Dy's use of "NANNY" for his own milk
packs. Yet it did not stop there. It continued on applying the "concept of related
goods."
The Supreme Court utlilized the "concept of related goods" in the said case of
Esso Standard Easter, Inc. versus Court of Appeals, et al., wherein two contending
parties used the same trademark "ESSO" for two different goods, i.e., petroleum
products and cigarettes. It rules that there is infringement of trademark involving
two goods bearing the same mark or label, even if the said goods are non-
competing, if and only if they are so related that the public may be, or is actually,
deceived that they originate from the one maker or manufacturer. Since petroleum
products and cigarettes, in kind and nature, ow through different trade channels,
and since the possibility of confusion is unlikely in the general appearances of
each mark as a whole, the Court held in this case that they cannot be so related in
the context of infringement.
In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellee's NAN and defendant-
appellant's NANNY belong to the same class being food products, the
unregistered NANNY should be held an infringement of Nestle's NAN because "the
use of NANNY would imply that it came from the manufacturer of NAN." Said
court went on to elaborate further: "since the word "NANNY" means a "child's
nurse," there might result the not so remote probability that defendant's NANNY
may be confused with infant formula NAN despite the aparent (sic) disparity
between the features of the two products as discussed above." ASHECD
The trial court's application of the doctrine laid down by the Supreme Court in the
Esso Standard case aforementioned and the cases cited therein is quite
misplaced. The goods of the two contending parties in those cases bear similar
marks or labels: "Esso" for petroleum products and cigarettes, "Selecta" for
biscuits and milk, "X-7" for soap and perfume, lipstick and nail polish. In the
instant case, two dissimilar marks are involved — plaintiff-appellee's "NAN" and
defendant-appellant's "NANNY." Obviously, the concept of related goods cannot
be utilized in the instant case in the same way that it was used in the Esso
Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that in
resolving infringement or trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, precedent must be studied in the light of the facts of the
particular case. Each case must be decided on its own merits. In the more recent
case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the High Court
further stressed that due to the peculiarity of the facts of each infringement case,
a judicial forum should not readily apply a certain test or standard just because of
seeming similarities. The entire panoply of elements constituting the relevant
factual landscape should be comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the word
"NAN" is contained in the word "NANNY," there are more glaring dissimilarities in
the entirety of their trademarks as they appear in their respective labels and also
in relation to the goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other. Even the trial court found these
glaring dissimilarities as above-quoted. We need not add more of these factual
dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all
infant preparations, while NANNY is a full cream milk for adults in [sic] all ages.
NAN milk products are sold in tin cans and hence, far expensive than the full
cream milk NANNY sold in three (3) plastic packs containing 80, 180 and 450
grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of NAN
products are of the colors blue and white and have at the bottom portion an
elliptical shaped gure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle." On the other hand, the plastic packs
NANNY have a drawing of milking cows lazing on a vast green eld, back-
dropped with snow-capped mountains and using the predominant colors of blue
and green. The word NAN are [sic] all in large, formal and conservative-like block
letters, while the word NANNY are [sic] all in small and irregular style of letters
with curved ends. With these material differences apparent in the packaging of
both milk products, NANNY full cream milk cannot possibly be an infringement of
NAN infant milk.
Moreover, NAN infant milk preparation is more expensive than NANNY instant full
cream milk. The cheaper price of NANNY would give, at the very rst instance, a
considerable warning to the ordinary purchaser on whether he is buying an infant
milk or a full cream milk for adults. A cursory examination of the packaging
would confirm the striking differences between the products in question.
In view of the foregoing, we nd that the mark NANNY is not confusingly similar
to NAN. Dy therefore cannot be held liable for infringement. 1 1
Nestle led a motion 1 2 for reconsideration. In its 4 April 2006 Resolution, the
Court of Appeals denied the motion for lack of merit. Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Court's Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
Infringement, what constitutes. — Any person who shall use, without the consent
of the registrant, any reproduction, counterfeit, copy or colorable imitation of any
registered mark or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which
business; or reproduce, counterfeit, copy or colorably imitate any such mark or
herein provided.
Section 155 of R.A. No. 8293 states:

Remedies; Infringement. — Any person who shall, without the consent of the
owner of the registered mark: ESHcTD
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
advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the infringement takes place at
the moment any of the acts stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of goods or services using
the infringing material.
In Prosource International, Inc. v. Horphag Research Management SA , 13 the

Court laid down the elements of infringement under R.A. Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and
20 thereof, the following constitute the elements of trademark infringement:
"(a) A trademark actually used in commerce in the Philippines and

registered in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering
for sale, or advertising of any goods, business or services or in connection
with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services, or
identity of such business; or such trademark is reproduced, counterfeited,
copied or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant
or assignee."
On the other hand, the elements of infringement under R.A. No. 8293 are as
follows:
(1) The trademark being infringed is registered in the Intellectual

Property O ce; however, in infringement of trade name, the same need not
be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied,
or colorably imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the
sale, offering for sale, or advertising of any goods, business or services; or
the infringing mark or trade name is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services;
(4) The use or application of the infringing mark or trade name is likely
to cause confusion or mistake or to deceive purchasers or others as to the
goods or services themselves or as to the source or origin of such goods or
services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or

the assignee thereof. 1 4
Among the elements, the element of likelihood of confusion is the gravamen of

trademark infringement. 1 5 There are two types of confusion in trademark infringement:
confusion of goods and confusion of business. 1 6 In Sterling Products International,
Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 1 7 the Court distinguished the two
types of confusion:
Callman notes two types of confusion. The rst is the confusion of goods "in
which event the ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other." In which case,
"defendant's goods are then bought as the plaintiff's, and the poorer quality of the
former re ects adversely on the plaintiff's reputation." The other is the confusion
of business: "Here though the goods of the parties are different, the defendant's
product is such as might reasonably be assumed to originate with the plaintiff,
and the public would then be deceived either into that belief or into the belief that
there is some connection between the plaintiff and defendant which, in fact, does
not exist." 1 8 TAEcSC
There are two tests to determine likelihood of confusion: the dominancy test and
holistic test. The dominancy test focuses on the similarity of the main, prevalent or
essential features of the competing trademarks that might cause confusion.
Infringement takes place when the competing trademark contains the essential
features of another. Imitation or an effort to imitate is unnecessary. The question is
whether the use of the marks is likely to cause confusion or deceive purchasers. 1 9
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. 2 0
In cases involving trademark infringement, no set of rules can be deduced. Each
case must be decided on its own merits. Jurisprudential precedents must be studied in
the light of the facts of each particular case. In McDonald's Corporation v. MacJoy
Fastfood Corporation, 2 1 the Court held:
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. 2 2
In the light of the facts of the present case, the Court holds that the dominancy
test is applicable. In recent cases with similar factual milieus, the Court has
consistently applied the dominancy test. In Prosource International, Inc., the Court
applied the dominancy test in holding that "PCO-GENOLS" is confusingly similar to
"PYCNOGENOL." The Court held:
The trial and appellate courts applied the Dominancy Test in determining whether
there was a confusing similarity between the marks PYCNOGENOL and PCO-
GENOL. Applying the test, the trial court found, and the CA affirmed, that:
"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same su x
"GENOL" which on evidence, appears to be merely descriptive and furnish
no indication of the origin of the article and hence, open for trademark
registration by the plaintiff through combination with another word or
phrase such as PYCNOGENOL, Exhibits "A" to "A-3." Furthermore, although
the letters "Y" between P and C, "N" between O and C and "S" after L are
missing in the [petitioner's] mark PCO-GENOLS, nevertheless, when the two
words are pronounced, the sound effects are confusingly similar not to
mention that they are both described by their manufacturers as a food
supplement and thus, identi ed as such by their public consumers. And
although there were dissimilarities in the trademark due to the type of
letters used as well as the size, color and design employed on their
individual packages/bottles, still the close relationship of the competing
product's name is sounds as they were pronounced, clearly indicates that
purchasers could be misled into believing that they are the same and/or
originates from a common source and manufacturer."
We find no cogent reason to depart from such conclusion.
This is not the rst time the Court takes into account the aural effects of the
words and letters contained in the marks in determining the issue of confusing
similarity. In Marvex Commercial Co., Inc. v Petra Hawpia & Co., et al., cited in
McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court held:
"The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo
Hoo." Leon Amdur, in his book "Trade-Mark Law and Practice," pp. 419-421,
cities [sic], as coming within the purview of the idem sonans rule, "Yusea"
and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and "Seven-Up" and
"Lemon-Up." In Co Tiong vs. Director of Patents, this Court unequivocally
said that "Celdura" and "Condura" are confusingly similar in sound; this
Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name
"Lusolin" is an infringement of the trademark "Sapolin," as the sound of the
two names is almost the same." 2 3 DEICaA
In McDonald's Corporation v. MacJoy Fastfood Corporation , the Court applied

the dominancy test in holding that "MACJOY" is confusingly similar to "MCDONALD'S."
The Court held:
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.
xxx xxx xxx
Applying the dominancy test to the instant case, the Court nds that herein
petitioner's "MCDONALD'S" and respondent's "MACJOY" marks are confusingly
similar with each other that an ordinary purchaser can conclude an association or
relation between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes "Mc"
and/or "Mac" as dominant features. . . .
For sure, it is the pre x "Mc," and abbreviation of "Mac," which visually and aurally
catches the attention of the consuming public. Verily, the word "MACJOY" attracts
attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo,"
"Big Mac" and the rest of the MCDONALD'S marks which all use the pre xes 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
Classi cation 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. 2 4
In McDonald's Corporation v. L.C. Big Mak Burger, Inc. , the Court applied the
dominancy test in holding that "BIG MAK" is confusingly similar to "BIG MAC." The Court
held:
This Court . . . has relied on the dominancy test rather than the holistic test. The
dominancy test considers the dominant features in the competing marks in
determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product
arising from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors
like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:

. . . It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of another,
and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman Brewing
Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead
Co. vs. P ugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co.,
107 F. 2d 558; . . .)
xxx xxx xxx
The test of dominancy is now explicitly incorporated into law in Section 155.1 of
the Intellectual Property Code which de nes infringement as the "colorable
imitation of a registered mark . . . or a dominant feature thereof."
Applying the dominancy test, the Court nds that respondents' use of the "Big
Mak" mark results in likelihood of confusion. First, "Big Mak" sounds exactly the
same as "Big Mac." Second, the rst word in "Big Mak" is exactly the same as the
rst word in "Big Mac." Third, the rst two letters in "Mak" are the same as the rst
two letters in "Mac." Fourth, the last letter "Mak" while a "k" sounds the same as "c"
when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in
spelling, thus "Caloocan" is spelled "Kalookan." 2 5
In Societe Des Produits Nestle, S.A. v. Court of Appeals , 2 6 the Court applied the
dominancy test in holding that "FLAVOR MASTER" is confusingly similar to "MASTER
ROAST" and "MASTER BLEND." The Court held:
While this Court agrees with the Court of Appeals' detailed enumeration of
differences between the respective trademarks of the two coffee products, this
Court cannot agree that totality test is the one applicable in this case. Rather, this
Court believes that the dominancy test is more suitable to this case in light of its
peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the
the realities of the marketplace. The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test relies not only
on the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of
dominancy and held that:
From the evidence at hand, it is su ciently established that the word
MASTER is the dominant feature of opposer's mark. The word MASTER is
printed across the middle portion of the label in bold letters almost twice
the size of the printed word ROAST. Further, the word MASTER has always
been given emphasis in the TV and radio commercials and other
advertisements made in promoting the product. . . . In due time, because of
these advertising schemes the mind of the buying public had come to learn
to associate the word MASTER with the opposer's goods. TcSCEa
. . . . It is the observation of this O ce that much of the dominance which

the word MASTER has acquired through Opposer's advertising schemes is
carried over when the same is incorporated into respondent-applicant's
trademark FLAVOR MASTER. Thus, when one looks at the label bearing the
trademark FLAVOR MASTER (exh. 4) one's attention is easily attracted to
the word MASTER, rather than to the dissimilarities that exist. Therefore,
the possibility of confusion as to the goods which bear the competing
marks or as to the origins thereof is not farfetched. 2 7
Applying the dominancy test in the present case, the Court nds that "NANNY" is
confusingly similar to "NAN." "NAN" is the prevalent feature of Nestle's line of infant
powdered milk products. It is written in bold letters and used in all products. The line
consists of PRE-NAN , NAN -H.A., NAN -1, and NAN -2. Clearly, "NANNY" contains the
prevalent feature "NAN." The rst three letters of "NANNY" are exactly the same as the
letters of "NAN." When "NAN" and "NANNY" are pronounced, the aural effect is
confusingly similar.
In determining the issue of confusing similarity, the Court takes into account the
aural effect of the letters contained in the marks. 2 8 In Marvex Commercial Company,
Inc. v. Petra Hawpia & Company, 2 9 the Court held:
It is our considered view that the trademarks "SALONPAS" and "LIONPAS" are
confusingly similar in sound.
Both these words have the same su x, "PAS", which is used to denote a plaster
that adheres to the body with curative powers. "PAS," being merely descriptive,
furnishes no indication of the origin of the article and therefore is open for
appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31,
1966) and may properly become the subject of a trademark by combination with
another word or phrase.
xxx xxx xxx
will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly similar in
sound: "Gold Dust" and ""Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and
"Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse"
and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and
"Femetex"; "Zuso" and "Hoo Hoo." Leon Amdur, in his book "Trade-Mark Law and
Practice," pp. 419-421, cities [ sic], as coming within the purview of the idem
sonans rule, "Yusea" and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and
"Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of Patents, this Court
unequivocally said that "Celdura" and "Condura" are confusingly similar in sound;
this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin"
is an infringement of the trademark "Sapolin," as the sound of the two names is
almost the same. 3 0
The scope of protection afforded to registered trademark owners is not limited

to protection from infringers with identical goods. The scope of protection extends to
protection from infringers with related goods, and to market areas that are the normal
expansion of business of the registered trademark owners. Section 138 of R.A. No.
8293 states:
Certificates of Registration. — A certificate of registration of a mark shall be prima
facie evidence of validity of the registration, the registrant's ownership of the
mark, and of the registrant's exclusive right to use the same in connection with
the goods or services and those that are related thereto speci ed in the
certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery , 3 1 the Court held that, "Non-
competing goods may be those which, though they are not in actual competition, are so
related to each other that it can reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise out of the use of similar
marks." 3 2 In that case, the Court enumerated factors in determining whether goods are
related: (1) classi cation of the goods; (2) nature of the goods; (3) descriptive
properties, physical attributes or essential characteristics of the goods, with reference
to their form, composition, texture or quality; and (4) style of distribution and marketing
of the goods, including how the goods are displayed and sold. 3 3
NANNY and NAN have the same classi cation, descriptive properties and
physical attributes. Both are classi ed under Class 6, both are milk products, and both
are in powder form. Also, NANNY and NAN are displayed in the same section of stores
— the milk section.
The Court agrees with the lower courts that there are differences between NAN
and NANNY: (1) NAN is intended for infants while NANNY is intended for children past
their infancy and for adults; and (2) NAN is more expensive than NANNY. However, as
the registered owner of the "NAN" mark, Nestle should be free to use its mark on similar
products, in different segments of the market, and at different price levels. In
McDonald's Corporation v. L.C. Big Mak Burger, Inc. , the Court held that the scope of
protection afforded to registered trademark owners extends to market areas that are
the normal expansion of business:
xxx xxx xxx
Even respondent's use of the "Big Mak" mark on non-hamburger food products
cannot excuse their infringement of petitioners' registered mark, otherwise
registered marks will lose their protection under the law. DASEac
The registered trademark owner may use his mark on the same or
similar products, in different segments of the market, and at different
price levels depending on variations of the products for speci c
segments of the market. The Court has recognized that the registered
trademark owner enjoys protection in product and market areas that are
the normal potential expansion of his business. Thus, the Court has
declared:
Modern law recognizes that the protection to which the owner of a

trademark is entitled is not limited to guarding his goods or business from
actual market competition with identical or similar products of the parties,
but extends to all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion of source, as
where prospective purchasers would be misled into thinking that the
complaining party has extended his business into the eld (see 148 ALR
56 et sq; 53 Am. Jur. 576) or is in any way connected with the activities of
the infringer; or when it forestalls the normal potential expansion of his
business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577). 34 (Emphasis
supplied)
WHEREFORE , we GRANT the petition. We SET ASIDE the 1 September 2005

Decision and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730
and REINSTATE the 18 September 1998 Decision of the Regional Trial Court, Judicial
Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
SO ORDERED .
Nachura, Peralta, Abad and Mendoza, JJ., concur.
Footnotes
1.Rollo, pp. 9-40.
2.Id. at 44-51. Penned by Associate Justice Ramon M. Bato, Jr., with Associate Justices Arsenio
J. Magpale and Pampio A. Abarintos concurring.
3.Id. at 53-54.
4.Id. at 55-62. Penned by Judge Benigno G. Gaviola.
5.Id. at 96-99.
6.Id. at 63-65.
7.Id. at 66-73.
8.Id. at 74-78.
9.Id. at 130-133.
10.Id. at 60-61.
11.Id. at 48-50.
12.Id. at 277-291.
13.G.R. No. 180073, 25 November 2009, 605 SCRA 523.
14.Id. at 529-530.
15.Id. at 531.
16.McDonald's Corporation v. L.C. Big Mak Burger, Inc., 480 Phil. 402, 428 (2004).
17.137 Phil. 838 (1969).

18.Id. at 852.
19.Prosource International, Inc. v. Horphag Research Management SA, supra note 13 at 531.
20.Id. at 531-532.
21.G.R. No. 166115, 2 February 2007, 514 SCRA 95.
22.Id. at 107.
23.Supra note 13 at 532-533.
24.Supra note 21 at 107-109.
25.Supra note 16 at 433-435.

26.408 Phil. 307 (2001).
27.Id. at 324-325.
28.Prosource International, Inc. v. Horphag Research Management SA, supra note 13 at 532;
McDonald's Corporation v. L.C. Big Mak Burger, Inc., supra note 16 at 435.
29.125 Phil. 295 (1966).
30.Id. at 301-303.
31.478 Phil. 615 (2204).
32.Id. at 661.
33.Id. at 662-663.
34.Supra note 16 at 432.

FIRST DIVISION
[G.R. No. 100098. December 29, 1995.]
EMERALD GARMENT MANUFACTURING CORPORATION , petitioner,

vs. HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS
AND TECHNOLOGY TRANSFER and H.D. LEE COMPANY, INC. ,
respondents.
Julio C. Contreras for petitioner.

Sycip, Salazar, Hernandez & Gatmaitan for private respondent.
SYLLABUS
1. COMMERCIAL LAW; TRADEMARK LAW; INFRINGEMENT; DECISION ON EACH CASE

MUST BE BASED ON ITS OWN MERIT. — In the history of trademark cases in the
Philippines, particularly in ascertaining whether one trademark is confusingly similar to or
is a colorable imitation of another, no set rules can be deduced. Each case must be
decided on its own merits. In Esso Standard Eastern, Inc. v. Court of Appeals , 116 SCRA
336 (1982), we held: ". . . But likelihood of confusion is a relative concept; to be determined
only according to the particular, and sometimes peculiar, circumstances of each case."
Likewise, it has been observed that: "In determining whether a particular name or mark is a
"colorable imitation" of another, no all-embracing rule seems possible in view of the great
number of factors which must necessarily be considered in resolving this question of fact,
such as the class of product or business to which the article belongs; the product's quality,
quantity, or size, including its wrapper or container; the dominant color, style, size, form,
meaning of letters, words, designs and emblems used; the nature of the package, wrapper
or container; the character of the product's purchasers; location of the business; the
likelihood of deception or the mark or name's tendency to confuse; etc." TCIHSa
2. ID.; ID.; ID.; COLORABLE IMITATION, CONSTRUED. — The essential element of

infringement is colorable imitation. This term has been de ned as "such a close or
ingenious imitation as to be calculated to deceive ordinary purchasers, or such
resemblance of the infringing mark to the original as to deceive an ordinary purchaser
giving such attention as a purchaser usually gives, and to cause him to purchase the one
supposing it to be the other." "Colorable imitation does not mean such similitude as
amounts to identity. Nor does it require that all the details be literally copied. Colorable
imitation refers to such similarity in form, content, words, sound, meaning, special
arrangement, or general appearance of the trademark or tradename with that of the other
mark or tradename in their over-all presentation or in their essential, substantive and
distinctive parts as would likely mislead or confuse persons in the ordinary course of
purchasing the genuine article."
3. ID.; ID.; ID.; ID.; TEST IN THE DETERMINATION. — In determining whether colorable
imitation exists, jurisprudence has developed two kinds of tests — the Dominancy Test
applied in Asia Brewery, Inc. v. Court of Appeals , 224 SCRA 437 (1993), and other cases
and the Holistic Test developed in Del Monte Corporation v. Court of Appeals , 181 SCRA
410 (1990), and its proponent cases. As its title implies, the test of dominancy focuses on
the similarity of the prevalent features of the competing trademarks which might cause
confusion or deception and thus constitutes infringement. On the other side of the
spectrum, the holistic test mandates that the entirety of the marks in question must be
considered in determining confusing similarity.
4. ID.; ID.; REQUISITES FOR THE ACQUISITION OF OWNERSHIP OVER TRADEMARK. —
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). In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 27 SCRA 1214 (1969), we declared: . . . "It would seem quite clear that
adoption alone of a trademark would not give exclusive right thereto. Such right "grows out
of their actual use." Adoption is not use. One may make advertisements, issue circulars,
give out price lists on certain goods; but these alone would not give exclusive right of use.
For trademark is a creation of use. The underlying reason for all these is that purchasers
have come to understand the mark as indicating the origin of the wares. Flowing from this
is the trader's right to protection in the trade he has built up and the goodwill he has
accumulated from use of the trademark. Registration of a trademark, of course, has value:
it is an administrative act declaratory of a preexisting right. Registration does not, however,
perfect a trademark right." The credibility placed on a certi cate of registration of one's
trademark, or its weight as evidence of validity, ownership and exclusive use, is quali ed. A
registration certi cate serves merely as prima facie evidence. It is not conclusive but can
and may be rebutted by controverting evidence. cCTIaS
5. ID.; ID.; DETERMINATION OF PRIOR USER OF TRADEMARK; FINDINGS OF FACTS BY THE

DIRECTOR OF PATENTS, CONCLUSIVE UPON THE SUPREME COURT. — The determination
as to who is the prior user of the trademark is a question of fact and it is this Court's
working principle not to disturb the ndings of the Director of Patents on this issue in the
absence of any showing of grave abuse of discretion. The ndings of facts of the Director
of Patents are conclusive upon the Supreme Court provided they are supported by
substantial evidence.
6. ID.; ID.; NATURE OF SUPPLEMENTAL REGISTER. — Registrations in the supplemental
register do not enjoy a similar privilege. A supplemental register was created precisely for
the registration of marks which are not registrable on the principal register due to some
defects. ScaCEH
DECISION
KAPUNAN , J : p
In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald
Garment Manufacturing Corporation seeks to annul the decision of the Court of Appeals
dated 29 November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be
confusingly similar to that of private respondent and the resolution dated 17 May 1991
denying petitioner's motion for reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation
organized under the laws of Delaware, U.S.A., led with the Bureau of Patents, Trademarks
& Technology Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054
(Supplemental Register) for the trademark "STYLISTIC MR. LEE" used on skirts, jeans,
blouses, socks, briefs, jackets, jogging suits, dresses, shorts, shirts and lingerie under
Class 25, issued on 27 October 1980 in the name of petitioner Emerald Garment
Manufacturing Corporation, a domestic corporation organized and existing under
Philippine laws. The petition was docketed as Inter Partes Case No. 1558. 1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the
Paris Convention for the Protection of Industrial Property, averred that petitioner's
trademark "so closely resembled its own trademark, 'LEE' as previously registered and
used in the Philippines, and not abandoned, as to be likely, when applied to or used in
connection with petitioner's goods, to cause confusion, mistake and deception on the part
of the purchasing public as to the origin of the goods." 2
In its answer dated 23 March 1982, petitioner contended that its trademark was entirely
and unmistakably different from that of private respondent and that its certi cate of
registration was legally and validly granted. 3
On 20 February 1984, petitioner caused the publication of its application for registration of
the trademark "STYLISTIC MR. LEE" in the Principal Register." 4
On 27 July 1984, private respondent led a notice of opposition to petitioner's application
for registration also on grounds that petitioner's trademark was confusingly similar to its
"LEE" trademark. 5 The case was docketed as Inter Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion led by private respondent dated 15
May 1985, issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on
grounds that a common question of law was involved. 6
On 19 July 1988, the Director of Patents rendered a decision granting private respondent's
petition for cancellation and opposition to registration.
The Director of Patents found private respondent to be the prior registrant of the
trademark "LEE" in the Philippines and that it had been using said mark in the Philippines. 7
Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's
trademark was confusingly similar to private respondent's mark because "it is the word
'Lee' which draws the attention of the buyer and leads him to conclude that the goods
originated from the same manufacturer. It is undeniably the dominant feature of the mark."
8
On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it
led with the BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the
Director of Patents on grounds that the same would cause it great and irreparable damage
and injury. Private respondent submitted its opposition on 22 August 1988. 9
On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's
motion to stay execution subject to the following terms and conditions:
1. That under this resolution, Respondent-Registrant is authorized only to dispose
of its current stock using the mark "STYLISTIC MR. LEE";
2. That Respondent-Registrant is strictly prohibited from further production,

regardless of mode and source, of the mark in question (STYLISTIC MR. LEE) in
addition to its current stock;
3. That this relief Order shall automatically cease upon resolution of the Appeal
by the Court of Appeals and, if the Respondent's appeal loses, all goods bearing
the mark "STYLISTIC MR. LEE" shall be removed from the market, otherwise such
goods shall be seized in accordance with the law.
SO ORDERED. 10
On 29 November 1990, the Court of Appeals promulgated its decision af rming the
decision of the Director of Patents dated 19 July 1988 in all respects. 11
In said decision the Court of Appeals expounded, thus:
xxx xxx xxx.
Whether or not a trademark causes confusion and is likely to deceive the public is
a question of fact which is to be resolved by applying the "test of dominancy",
meaning, if the competing trademark contains the main or essential or dominant
features of another by reason of which confusion and deception are likely to
result, then infringement takes place; that duplication or imitation is not
necessary, a similarity in the dominant features of the trademark would be
sufficient.
The word "LEE" is the most prominent and distinctive feature of the appellant's
trademark and all of the appellee's "LEE" trademarks. It is the mark which draws
the attention of the buyer and leads him to conclude that the goods originated
from the same manufacturer. While it is true that there are other words such as
"STYLISTIC", printed in the appellant's label, such word is printed in such small
letters over the word "LEE" that it is not conspicuous enough to draw the attention
of ordinary buyers whereas the word "LEE" is printed across the label in big, bold
letters and of the same color, style, type and size of lettering as that of the
trademark of the appellee. The alleged difference is too insubstantial to be
noticeable. Even granting arguendo that the word "STYLISTIC" is conspicuous
enough to draw attention, the goods may easily be mistaken for just another
variation or line of garments under the appellee's "LEE" trademarks in view of the
fact that the appellee has registered trademarks which use other words in
addition to the principal mark "LEE" such as "LEE RIDERS", "LEESURES" and "LEE
LEENS". The likelihood of confusion is further made more probable by the fact
that both parties are engaged in the same line of business. It is well to reiterate
that the determinative factor in ascertaining whether or not the marks are
confusingly similar to each other is not whether the challenged mark would
actually cause confusion or deception of the purchasers but whether the use of
such mark would likely cause confusion or mistake on the part of the buying
public.
xxx xxx xxx.
The appellee has suf ciently established its right to prior use and registration of
the trademark "LEE" in the Philippines and is thus entitled to protection from any
infringement upon the same. It is thus axiomatic that one who has identi ed a
peculiar symbol or mark with his goods thereby acquires a property right in such
symbol or mark, and if another infringes the trademark, he thereby invokes this
property right.
The merchandise or goods being sold by the parties are not that expensive as
alleged to be by the appellant and are quite ordinary commodities purchased by
the average person and at times, by the ignorant and the unlettered. Ordinary
purchasers will not as a rule examine the small letterings printed on the label but
will simply be guided by the presence of the striking mark "LEE". Whatever
difference there may be will pale in insigni cance in the face of an evident
similarity in the dominant features and overall appearance of the labels of the
parties. 12
xxx xxx xxx.
On 19 December 1990, petitioner led a motion for reconsideration of the above-

mentioned decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and
unrelated arguments and defenses not previously raised in the proceedings below such as
laches and a claim that private respondent appropriated the style and appearance of
petitioner's trademark when it registered its "LEE" mark under Registration No. 44220. 13
On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for
reconsideration and ruled thus:
xxx xxx xxx.
A defense not raised in the trial court cannot be raised on appeal for the rst time.
An issue raised for the rst time on appeal and not raised timely in the
proceedings in the lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the lower
court before they can be presented to this Court is to have the lower court rule
upon them, so that this Court on appeal may determine whether or not such ruling
was erroneous. The purpose is also in furtherance of justice to require the party to
rst present the question he contends for in the lower court so that the other party
may not be taken by surprise and may present evidence to properly meet the
issues raised.
Moreover, for a question to be raised on appeal, the same must also be within the
issues raised by the parties in their pleadings. Consequently, when a party
deliberately adopts a certain theory, and the case is tried and decided based upon
such theory presented in the court below, he will not be permitted to change his
theory on appeal. To permit him to do so would be unfair to the adverse party. A
question raised for the rst time on appeal, there having opportunity to raise them
in the court of origin constitutes a change of theory which is not permissible on
appeal.
In the instant case, appellant's main defense pleaded in its answer dated March
23, 1982 was that there was "no confusing similarity between the competing
trademark involved. On appeal, the appellant raised a single issue, to wit:
The only issue involved in this case is whether or not respondent-
registrant's trademark "STYLISTIC MR. LEE" is confusingly similar
with the petitioner's trademarks "LEE or LEE RIDERS, LEE-LEENS
and LEE-SURES."
Appellant's main argument in this motion for reconsideration on the other hand is
that the appellee is estopped by laches from asserting its right to its trademark.
Appellant claims although belatedly that appellee went to court with "unclean
hands" by changing the appearance of its trademark to make it identical to the
appellant's trademark.
Neither defenses were raised by the appellant in the proceedings before the
Bureau of Patents. Appellant cannot raise them now for the rst time on appeal,
let alone on a mere motion for reconsideration of the decision of this Court
dismissing the appellant's appeal.
While there may be instances and situations justifying relaxation of this rule, the
circumstance of the instant case, equity would be better served by applying the
settled rule it appearing that appellant has not given any reason at all as to why
the defenses raised in its motion for reconsideration was not invoked earlier. 14
xxx xxx xxx.
Twice rebuffed, petitioner presents its case before this Court on the following assignment
of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT
CAUSED THE ISSUANCE OF A FOURTH "LEE" TRADEMARK IMITATING THAT OF THE
PETITIONER'S ON MAY 5, 1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF
PATENT'S DECISION DATED JULY 19, 1988 .
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF ESTOPPEL BY
LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE THE BUREAU OF PATENTS,
TRADEMARKS AND TECHNOLOGY TRANSFER.
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE RESPONDENT'S
PRIOR REGISTRATION OF ITS TRADEMARK AND DISREGARDED THE FACT THAT PRIVATE
RESPONDENT HAD FAILED TO PROVE COMMERCIAL USE THEREOF BEFORE FILING OF
APPLICATION FOR REGISTRATION. 15
In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONER'S TRADEMARK
STYLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE RESPONDENT'S
TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT IS THE
PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM THAT OF THE PRIVATE
RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE
RESPONDENT'S AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA FACIE EVIDENCE
OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE CONFUSED WITH
PRIVATE RESPONDENT'S LEE TRADEMARK. 16
Petitioner contends that private respondent is estopped from instituting an action for
infringement before the BPTTT under the equitable principle of laches pursuant to Sec. 9-A
of R.A. No. 166, otherwise known as the Law on Trade-marks, Trade-names and Unfair
Competition:
SEC. 9-A. Equitable principles to govern proceedings. — In opposition proceedings
and in all other inter partes proceedings in the patent of ce under this act,
equitable principles of laches, estoppel, and acquiescence, where applicable, may
be considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May
1975, yet, it was only on 18 September 1981 that private respondent led a petition for
cancellation of petitioner's certi cate of registration for the said trademark. Similarly,
private respondent's notice of opposition to petitioner's application for registration in the
principal register was belatedly filed on 27 July 1984. 17
Private respondent counters by maintaining that petitioner was barred from raising new
issues on appeal, the only contention in the proceedings below being the presence or
absence of confusing similarity between the two trademarks in question. 18
We reject petitioner's contention.
Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A.
No. 166) provides that "marks and tradenames for the supplemental register shall not be
published for or be subject to opposition, but shall be published on registration in the
Of cial Gazette." 19 The reckoning point, therefore, should not be 1 May 1975, the date of
alleged use by petitioner of its assailed trademark but 27 October 1980, 20 the date the
certi cate of registration SR No. 5054 was published in the Of cial Gazette and issued to
petitioner.
It was only on the date of publication and issuance of the registration certi cate that
private respondent may be considered "of cially" put on notice that petitioner has
appropriated or is using said mark, which, after all, is the function and purpose of
registration in the supplemental register. 2 1 The record is bereft of evidence that private
respondent was aware of petitioner's trademark before the date of said publication and
issuance. Hence, when private respondent instituted cancellation proceedings on 18
September 1981, less than a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable delay in ling its
notice of opposition to petitioner's application for registration in the principal register
since said application was published only on 20 February 1984. 2 2 From the time of
publication to the time of ling the opposition on 27 July 1984 barely ve (5) months had
elapsed. To be barred from bringing suit on grounds of estoppel and laches, the delay
must be lengthy. 23
More crucial is the issue of confusing similarity between the two trademarks. Petitioner
vehemently contends that its trademark "STYLISTIC MR. LEE" is entirely different from and
not confusingly similar to private respondent's "LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's trademark tends to
mislead and confuse the public and thus constitutes an infringement of its own mark,
since the dominant feature therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
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 trade-name in connection with the sale, offering for sale,
or advertising of any goods, business or services on or in connection with which
business; or reproduce, counterfeit, copy or colorably imitate any such mark or
herein provided.
Practical application, however, of the aforesaid provision is easier said than done. In the
history of trademark cases in the Philippines, particularly in ascertaining whether one
trademark is confusingly similar to or is a colorable imitation of another, no set rules can
be deduced. Each case must be decided on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals, 2 4 we held:
. . . But likelihood of confusion is a relative concept; to be determined only
according to the particular, and sometimes peculiar, circumstances of each case.
It is unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.: "In
trademark cases, even more than in other litigation, precedent must be studied in
the light of the facts of the particular case."
xxx xxx xxx.
Likewise, it has been observed that:

In determining whether a particular name or mark is a "colorable imitation" of
another, no all-embracing rule seems possible in view of the great number of
factors which must necessarily be considered in resolving this question of fact,
such as the class of product or business to which the article belongs; the
product's quality, quantity, or size, including its wrapper or container; the
dominant color, style, size, form, meaning of letters, words, designs and emblems
used; the nature of the package, wrapper or container; the character of the
product's purchasers; location of the business; the likelihood of deception or the
mark or name's tendency to confuse; etc. 25
Proceeding to the task at hand, the essential element of infringement is colorable

imitation. This term has been de ned as "such a close or ingenious imitation as to be
calculated to deceive ordinary purchasers, or such resemblance of the infringing mark to
the original as to deceive an ordinary purchaser giving such attention as a purchaser
usually gives, and to cause him to purchase the one supposing it to be the other." 26
Colorable imitation does not mean such similitude as amounts to identity. Nor
does it require that all the details be literally copied. Colorable imitation refers to
such similarity in form, content, words, sound, meaning, special arrangement, or
general appearance of the trademark or tradename with that of the other mark or
tradename in their over-all presentation or in their essential, substantive and
distinctive parts as would likely mislead or confuse persons in the ordinary course
of purchasing the genuine article. 27
In determining whether colorable imitation exists, jurisprudence has developed two kinds
of tests — the Dominancy Test applied in Asia Brewery, Inc. v. Court of Appeals 2 8 and
other cases 2 9 and the Holistic Test developed in Del Monte Corporation v. Court of
Appeals 3 0 and its proponent cases. 31
As its title implies, the test of dominancy focuses on the similarity of the prevalent
features of the competing trademarks which might cause confusion or deception and thus
constitutes infringement.
xxx xxx xxx.
. . . If the competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor it is necessary that the
infringing label should suggest an effort to imitate. [C. Neilman Brewing Co. v.
Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. P ugh
(CC), 180 Fed. 579]. The question at issue in cases of infringement of trademarks
is whether the use of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .) 32
xxx xxx xxx.
On the other side of the spectrum, the holistic test mandates that the entirety of the marks
in question must be considered in determining confusing similarity.
xxx xxx xxx.
In determining whether the trademarks are confusingly similar, a comparison of
the words is not the only determinant 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. 33
xxx xxx xxx.
Applying the foregoing tenets to the present controversy and taking into account the
factual circumstances of this case, we considered the trademarks involved as a whole and
rule that petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's
"LEE" trademark.
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word
"LEE" is prominent, the trademark should be considered as a whole and not piecemeal. The
dissimilarities between the two marks become conspicuous, noticeable and substantial
enough to matter especially in the light of the following variables that must be factored in.
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, 3 4 we noted that:
. . . Among these, what essentially determines the attitudes of the purchaser,
speci cally 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 de nition laid down in Dy Buncio v. Tan Tiao Bok 3 5 is better suited to the present
case. There, the "ordinary purchaser" was de ned 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."
There is no cause for the Court of Appeal's apprehension that petitioner's products might
be mistaken as "another variation or line of garments under private respondent's 'LEE'
trademark". 3 6 As one would readily observe, private respondent's variation follows a
standard format "LEERIDERS," " LEESURES" and "LEELEENS." It is, therefore, improbable
that the public would immediately and naturally conclude that petitioner's "STYLISTIC MR.
LEE" is but another variation under private respondent's "LEE" mark.
As we have previously intimated the issue of confusing similarity between trademarks is
resolved by considering the distinct characteristics of each case. In the present
controversy, taking into account these unique factors, we conclude that the similarities in
the trademarks in question are not suf cient as to likely cause deception and confusion
tantamount to infringement
Another way of resolving the con ict is to consider the marks involved from the point of
view of what marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly
paragraph 4(e):
CHAPTER II-A. — The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)

SEC. 4. Registration of trade-marks, trade-names and service-marks on the
principal register. — There is hereby established a register of trade-marks, trade-
names and service-marks which shall be known as the principal register. The
owner of a trade-mark, trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the
right to register the same on the principal register, unless it:
xxx xxx xxx.
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
geographically descriptive or deceptively misdescriptive of them, or is primarily
merely a surname; (Italics ours.)
xxx xxx xxx.
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive

ownership over and singular use of said term.
. . . It has been held that a personal name or surname may not be monopolized as
a trademark or tradename as against others of the same name or surname. For in
the absence of contract, fraud, or estoppel, any man may use his name or
surname in all legitimate ways. Thus, "Wellington" is a surname, and its rst user
has no cause of action against the junior user of "Wellington" as it is incapable of
exclusive appropriation. 37
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 ling 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) which explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
SEC. 2. What are registrable. — Trade-marks, trade-names, and service marks
owned by persons, corporations, partnerships or associations domiciled in the
Philippines and by persons, corporations, partnerships, or associations domiciled
in any foreign country may be registered in accordance with the provisions of this
act: Provided, That said trade-marks, trade-names, or service marks are actually in
use in commerce and services not less than two months in the Philippines before
the time the applications for registration are led : And Provided, further, That the
country of which the applicant for registration is a citizen grants by law
substantially similar privileges to citizens of the Philippines, and such fact is
of cially certi ed, with a certi ed true copy of the foreign law translated into the
English language, by the government of the foreign country to the Government of
the Republic of the Philippines. (As amended.) (Italics ours.)
SEC. 2-A. Ownership of trade-marks, trade-names and service-marks; how
acquired. — Anyone who lawfully produces or deals in merchandise of any kind or
who engages in lawful business, or who renders any lawful service in commerce,
by actual use hereof in manufacture or trade, in business and in the service
rendered; may appropriate to his exclusive use a trade-mark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his merchandise,
business or services from others. The ownership or possession of trade-mark,
trade-name, service-mark, heretofore or hereafter appropriated, as in this section
provided, shall be recognized and protected in the same manner and to the same
extent as are other property rights to the law. (As amended.) (Italics ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38
relied upon by private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) 39
were suf ciently expounded upon and quali ed in the recent case of Philip Morris, Inc. v.
Court of Appeals: 40
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
les 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 le 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 certi cates for its various trademarks "LEE," "LEE RIDERS," and "LEESURES" in
both the supplemental and principal registers, as early as 1969 to 1973. 41 However,
registration alone will not suf ce. In S terling Products International, Inc. v. Farbenfabriken
Bayer Aktiengesellschaft, 4 2 we declared:
xxx xxx xxx.
A rule widely accepted and rmly 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.

It would seem quite clear that adoption alone of a trademark would not give
exclusive right thereto. Such right "grows out of their actual use." Adoption is not
use. One may make advertisements, issue circulars, give out price lists on certain
goods; but these alone would not give exclusive right of use. For trademark is a
creation of use. The underlying reason for all these is that purchasers have come
to understand the mark as indicating the origin of the wares. Flowing from this is
the trader's right to protection in the trade he has built up and the goodwill he has
accumulated from use of the trademark. Registration of a trademark, of course,
has value: it is an administrative act declaratory of a pre-existing right.
Registration does not, however, perfect a trademark right. (Italics ours.)
xxx xxx xxx.
To augment its arguments that it was, not only the prior registrant, but also the prior user,
private respondent invokes Sec. 20 of the Trademark Law, thus:
SEC. 20. Certi cate of registration prima facie evidence of validity . — A
certi cate of registration of a mark or tradename shall be a prima facie evidence
of the validity of the registration, the registrant's ownership of the mark or trade-
name, and of the registrant's exclusive right to use the same in connection with
the goods, business or services speci ed in the certi cate, subject to any
conditions and limitations stated therein.
The credibility placed on a certi cate of registration of one's trademark, or its weight as
evidence of validity, ownership and exclusive use, is quali ed. A registration certi cate
serves merely as prima facie evidence. It is not conclusive but can and may be rebutted by
controverting evidence.
Moreover, the aforequoted provision applies only to registrations in the principal register.
43 Registrations in the supplemental register do not enjoy a similar privilege. A
supplemental register was created precisely for the registration of marks which are not
registrable on the principal register due to some defects. 44
The determination as to who is the prior user of the trademark is a question of fact and it
is this Court's working principle not to disturb the ndings of the Director of Patents on
this issue in the absence of any showing of grave abuse of discretion. The ndings of facts
of the Director of Patents are conclusive upon the Supreme Court provided they are
supported by substantial evidence. 45
In the case at bench, however, we reverse the ndings 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 certi cates as proof of
use by private respondent of the trademark "LEE" which, as we have previously discussed
are not suf cient. We cannot give credence to private respondent's claim that its "LEE"
mark rst reached the Philippines in the 1960's through local sales by the Post Exchanges
of the U.S. Military Bases in the Philippines 46 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. 47 Similarly, we give
little weight to the numerous vouchers representing various advertising expenses in the
Philippines for "LEE" products. 48 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. 49
On the other hand, petitioner has suf ciently 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. 50
Our rulings in Pagasa Industrial Corp. v. Court of Appeals 5 1 and Converse Rubber Corp. v.
Universal Rubber Products, Inc., 5 2 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
rst 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 rst 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, de nite 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.

The sales invoices provide the best proof that there were actual sales of
petitioner's product in the country and that there was actual use for a protracted
period of petitioner's trademark or part thereof through these sales.
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.
WHEREFORE, premises considered, the questioned decision and resolution are hereby
REVERSED and SET ASIDE.
SO ORDERED.
Bellosillo and Hermosisima, Jr., JJ., concur.
Davide, Jr., J., I vote to deny the petition there being no showing of an exception to
inclusiveness of findings of BPTTT and of CA.
Padilla, J., I dissent. I vote to deny the petition; I agree with BPTTT and the CA that
petitioner's trademark "STYLISTIC MR. LEE" is confusingly similar to private respondent's
earlier registered trademarks "LEE" or "LEE RIDER, LEE-LEENS and LEE-SURES" such that
the trademark "STYLISTIC MR. LEE" is an infringement of the earlier registered trademarks.
Footnotes
1. Rollo, pp. 3, 27, 53.
2. Id., at 27, 55.

3. Id., at 27, 54.
4. Id., at 3, 27.
5.. Id., at 54.

6. Ibid.
7. Id., at 39.
8. Id., at 38.
9. Id., at 4.
10. Id., at 42.

11. Id., at 33.
12. Id., at 31-33.

13. Id., at 175.
14. Id., at 23-25.
15. Id., at 7, 14-15.

16. Ibid.
17. Id., at 12, 158.

18. Id., at 193.
19. The whole paragraph reads as follows:
Chapter IV-A. — The supplemental register. SEC. 19-A.

xxx xxx xxx.
Marks and trade-names for the supplemental register shall not be published for or be subject
to opposition, but shall be published on registration in the Of cial Gazette . Whenever
any person believes that he is or will be damaged by the registration of a mark or trade-
name on this register, he may at any time apply to the director to cancel such
registration. Upon receiving the application, the director shall give notice thereof to the
registrant. If it is found after a hearing that the registrant was not entitled to register the
mark at the time of his application for registration thereof, or that the mark was not used
by the registrant or has been abandoned, the registration shall be cancelled by the
director.
20. Supra, see Note 1.
21. Sec. 19-A, R.A. No. 166; La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373 (1984).
22. Supra, see Note 4.

23. Ruben Agpalo, Trademark Law & Practice in the Philippines, 1990, p. 32, citing La Insular v.
Jao Oge, 47 Phil. 75, (1924); La Insular v. Yu So, 45 Phil. 398 (1923).
24. 116 SCRA 336 (1982).
25. Jaime N. Salazar, Trademarks and Tradenames, 55 SCRA 422 (1974); See also Colorable
Imitation of Trademarks, Tradenames, Labels, Packages, Wrappers, etc., 16 SCRA 502
(1966).
26. Etepha v. Director of Patents, 16 SCRA 495 (1966).

27. Ruben Agpalo, Trademark Law & Practice in the Philippines, 1990, p. 41.
28. 224 SCRA 437 (1993).

29. Co Tiong v. Director of Patents, 95 Phil. 1 (1954); Lim Hoa v. Director of Patents; 100 Phil.
214 (1956); American Wire & Cable Co. v. Director of Patents, 31 SCRA 544 (1970); Phil.
Nut Industry, Inc. v. Standard Brands, Inc., 65 SCRA 575 (1975); Converse Rubber Corp. v.
Universal Rubber Products, Inc., 147 SCRA 154 (1987).
30. 181 SCRA 410 (1990).
31. Mead Johnson & Co. v. N.V.J. Van Dorp, Ltd., 7 SCRA 771 (1963); Bristol Myers Co. v.
Director of Patents, 17 SCRA 128 (1966); Fruit of the Loom, Inc. v. CA, 133 SCRA 405
(1984).
32. Supra, see note 28.
33. Fruit of the Loom, Inc. v. CA, supra, see note 31.
35. 42 Phil. 190 (1921).

37. Ruben Agpalo, Trademark Law and Practice in the Philippines, 1990, p. 18, citing Ang Si
Heng v. Wellington Dept. Store, Inc., 92 Phil. 448 (1953).
38. The Philippines became a signatory thereto on 27 September 1965.
The Paris Convention is essentially a compact among the various member countries to accord
in their own countries to citizens of the other contracting parties trademark and other
rights comparable to those accorded their own citizens by their domestic laws. The
of the member countries as that country makes available to its own citizens. In addition,
the Convention sought to create uniformity in certain respects by obligating each nation
to assure to nationals of countries of the Union an effective protection against unfair
competition. (Ruben Agpalo, Trademark Law And Practice in the Philippines, 1990, pp.
200-201.)
39. SEC. 21-A. Any foreign corporation or juristic person to which a mark or trade-name has
been registered or assigned under this Act may bring an action hereinunder for
infringement, for unfair competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the Philippines under Act Numbered
Fourteen hundred and fty-nine, as amended, otherwise known as the Corporation Law,
at the time it brings complaint: Provided, That the country of which the said foreign or
juristic person is a citizen, or in which it is domiciled, by treaty, convention or law, grants
a similar privilege to corporate or juristic persons of the Philippines. (As amended.)
40. 224 SCRA 576 (1993).
41. Rollo, p. 170; Exhibits A, B, C, & C-1.
42. 27 SCRA 1214 (1969); Reiterated in Kabushi Kaisha Isetan v. Intermediate Appellate Court,
203 SCRA 583 (1991).
43. La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373 (1984).
44. Ibid.
45. Unno Commercial Enterprises, Inc. v. General Milling Corp., 120 SCRA 804 (1983); Kabushi
Kaisha Isetan v. Intermediate Appellate Court, 203 SCRA 583 (1991).
46. Rollo, p. 177.

47. Original Records, p. 52.
48. Exhibits F-1 to F-59.

49. Exhibit E.
50. Exhibits 1-e to 1-o.
51. 118 SCRA 526 (1982).

52. 147 SCRA 154 (1987).

EN BANC
[G.R. No. L-21587. May 19, 1966.]
BRISTOL MYERS COMPANY, petitioner, vs. THE DIRECTOR OF

PATENTS and UNITED AMERICAN PHARMACEUTICALS, INC.,
respondents.
Picazo & Agcaoili for petitioner.

Sycip, Salazar, Luna & Associates for respondent United American
Pharmaceuticals, Inc.
Solicitor General Arturo A. Alafriz, Assistant Solicitor General A. A. Torres and
Solicitor A.V. Sempio-Diy, for Director of Patents.
SYLLABUS
1. TRADEMARK; TEST TO DETERMINE CONFUSING SIMILARITY. — In determining

whether two trademarks are confusingly similar, the test is not simply to take
their words and compare the spelling and pronunciation of said words. Rather, it
is to consider the two marks in their entirety, as they appear in the respective
labels, in relation to the goods to which they are attached. (Mead Johnson & Co.
vs. N.V.J. Van Dorp, Ltd., G.R. No. L-17501, April 27, 1963.)
2. ID.; ID.; TRADEMARK HAVING THE SAME SUFFIX AND SIMILAR SOUNDING
PREFIXES BUT WITH STRIKINGLY DIFFERENT BACKGROUNDS; CASE AT BAR. —
The trademarks in question are not apt to confuse prospective customers. For
though the words "BIOFERIN" and "BUFFERIN" have the same suffix and similar-
sounding prefixes, they appear in their respective labels with strikingly different
backgrounds and surroundings, as to color, size and design. Furthermore, the
product covered by "BIOFERIN" is expressly stated as dispensable only upon
doctor's prescription, while that of "BUFFERIN" does not require the same. The
chances of being confused into purchasing one for the other are therefore all the
more rendered negligible.
DECISION
BENGZON, J.P., J : p
A petition for registration in the Principal Register of the Patent Office of the
trademark "BIOFERIN" was filed on October 21, 1957 by United American
Pharmaceuticals, Inc. Said domestic corporation first used the afore-stated
trademark in the Philippines on August 13, 1957. It covers "a medicinal
preparation of antihistaminic, analgesic, antipyretic with vitamin C and
Bioflavenoid used in the treatment of common colds, influenza and other febrile
diseases with capillary hemorrhagic tendencies." The product falls under Class 6
of the official classification, that is, "Medicines and Pharmaceutical Preparations".
Bristol Myers Co., a corporation of the State of Delaware, U.S.A., filed on January
6, 1959 an opposition to the application. Said oppositor is the owner in the
Philippines of the trademark "BUFFERIN" under Certificate of Registration No.
4578 issued by the Philippine Patent Office on March 3, 1954. Its trademark is
also registered in the United States under Certificate of Registration No. 566190
issued on November 4, 1952. It was first used in the Philippines on May 13,
1953. The product covered by "BUFFERIN" also belongs to Class 6, Medicines and
Pharmaceutical Preparations. Designated as "Antacid analgesic", it is intended for
relief in cases of "simple headaches, neuralgia, colds, menstrual pain and minor
muscular aches."
The thrust of oppositor's contention was that the registration of the applicant's
trademark "BIOFERIN" would violate its rights and interest in its registered
trademark "BUFFERIN" as well as mislead and confuse the public as to the
source and origin of the goods covered by the respective marks, in view of the
allegedly practically the same spelling, pronunciation and letter type design of
the two trademarks covering goods of the same class.
The parties thereafter filed on January 18, 1961 a joint petition stipulating as to
the facts and submitting the case upon the issue of whether or not, considering
all the factors involved, in both trademarks — as the parties would discuss in
their memoranda — there will be such confusing similarity between the two
trademarks as will be likely to deceive the purchasing public.
After submission of memoranda, on June 21, 1963 the Director of Patents
rendered a decision granting the petition and dismissing the opposition, on the
ground that, all factors considered, the trademarks in question are not
confusingly similar, so that the damage feared by the oppositor will not result.
From said decision the oppositor appealed to this Court by petition for review
filed on July 24, 1963. The sole issue raised thereby is: Are the trademarks
"BIOFERIN" and "BUFFERIN", as presented to the public in their respective labels,
confusingly similar?
Appellant contends that confusing similarity will obtain because both products
are primarily used for the relief of pains such as headaches and colds; and
because the words "BIOFERIN and "BUFFERIN" are practically the same in
spelling and pronunciation.
In determining whether two trademarks are confusingly similar, the test is not
simply to take their words and compare the spelling and pronunciation of said
words. Rather, it is consider the two marks in their entirety, as they appear in the
respective labels, in relation to the goods to which they are attached. Said rule
was enunciated by this Court through Justice Felix Bautista Angelo in Mead
Johnson & Co., vs. N.V.J. Van Dorp, Ltd., L-17501, April 27, 1963, thus:
"It is true that between petitioner's trademark 'ALACTA' and respondent's
'ALASKA' there are similarities in spelling, appears and sound for both are
composed of six letters of three syllables each and each syllable has the
same vowel, but in determining if they are confusingly similar a
comparison of said words is not the only determining factor. The two
marks in their marks in their entirety as they appear in the respective
labels 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. . . ."
Applying this test to the trademarks involved in this case, it is at once evident
that the Director of Patents did not err in finding no confusing similarity. For
though the words "BIOFERING" and "BUFFERIN" and "Bufferin" have the same
suffix and similar-sounding prefixes, they appear in their respective labels with
strikingly different backgrounds and surroundings, as to color, size and design.
For convenience we sum up these differences, as follows:
Relevant Factors "BIOFERIN" "BUFFERIN"
1. Shape & Size of Rectangular about Rectangular,

Label 3-3/4" 2-1/4" 3-3/4" 1-1/4"
2. Color of Label Predominantly Predominantly

Yellow White
3. Color background Olive-green Blue

of word-mark
4. Over-all Layout At the top center At left side of label —
word-mark "BIOFE- "BUFFERIN"; with
RIN"; below it are "Bristol Myers Co.,
contents of medicine, New York, N.Y."
arranged horizontally; below it; at right side,
at bottom, center, contents, indications,
"United Pharma dosage are grouped
ceuticals, Inc." together, printed
in olive-green perpendicularly.
background. At left
side — dosage,
printed perpendicularly;
at right side, indications,
also perpendicularly
printed.
5. Forms of Product Capsules — Tablets —

label says: label says:
"50 capsules" "36 Tablets"
6. Prescription Label states: No such
"To be dispensed statement
only by or on the
prescription of a
physicians"
Accordingly, taken as they will appear to a prospective customer, the trademarks

in question are not apt to confuse. Furthermore, the product of the applicant is
expressly stated as dispensable only upon doctor's prescription, while that of
oppositor does not require the same. The chances of being confused into
purchasing one for the other are therefore all the more rendered negligible.
Although oppositor avers that some drugstores sell "BIOFERIN: without asking
for a doctor's prescription, the same if true would be an irregularity not
attributable to the applicant, who has already clearly stated the requirement of a
doctor's prescription upon the face of the label of its product.
Wherefore, the decision of the Director of Patents appealed from is hereby
affirmed without costs. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, J.B.L. Reyes, Barrera, Dizon, Regala,
Makalintal, Zaldivar and Sanchez, JJ., concur.

FIRST DIVISION
[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 : p
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,
2 0 0 7 1 and November 22, 2007, 2 whereby 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 Piñas
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: CAIHTE
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las
Piñas City, and within the jurisdiction of this Honorable Court, the above-
named 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.
CTcSAE
CONTRARY TO LAW. 4
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las
Piñas City, and within the jurisdiction of this Honorable Court, the above-
named 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 aIcHSC
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 HTaSEA
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: aAcDSC
WHEREFORE, premises considered, the Court finds accused Victorio P.

Diaz, a.k.a. Vic Diaz, GUILTY beyond reasonable doubt of twice violating
Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the
Informations in Criminal Case Nos. 00-0318 & 00-0319, respectively, and
hereby sentences him to suffer in each of the cases the penalty of
imprisonment of TWO (2) YEARS of prision correcional, as minimum, up
to FIVE (5) YEARS of prision correcional, as maximum, as well as pay a
fine of P50,000.00 for each of the herein cases, with subsidiary
imprisonment in case of insolvency, and to suffer the accessory penalties
provided for by law.
Also, accused Diaz is hereby ordered to pay to the private complainant

Levi's Strauss (Phils.), Inc. the following, thus:
1. P50,000.00 in exemplary damages; and
2. P222,000.00 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. ACTISD
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. TEAICc
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 P100,000.00 (with subsidiary imprisonment in case of
his insolvency). His personal liberty is now no less at stake. This reality impels us
to look beyond the technicality and delve into the merits of the case to see for
ourselves if the appeal, had it not been dismissed, would have been worth the
time of the CA to pass upon. After all, his 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 SECIcT
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. aEcTDI
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:
. . . . 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 TSaEcH
As to what test should be applied in a trademark infringement case, we said in

McDonald's Corporation v. Macjoy Fastfood Corporation 17 that:
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: EAcHCI
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. cEAaIS
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. . . . .
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.
xxx xxx xxx
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 Php300 for a pair of
made-to-order pants. 20 . . . .
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. LibLex
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.
Sereno, C.J., Leonardo-de Castro, Villarama, Jr. and Reyes, JJ., concur.
Footnotes
1.Rollo, pp. 29-32; penned by Associate Justice Ramon M. Bato, Jr., with Associate
Justice Andres B. Reyes, Jr. (now Presiding Justice) and Associate Justice Jose C.
Mendoza (now a Member of the Court) concurring.
2.Id. at 34-36.
3.Id. at 37-56.
4.Records, p. 3.
5.Id. at 9.
6.Id. at 192.
7.Id. at 26-101.
8.Id. at 98-148.
9.TSN, November 11, 2004, pp. 1-30.
10.Rollo, p. 56.
11.Id. at 10-11.
12.Section 1 (e), Rule 50, Rules of Court , states:
Section 1. Grounds for dismissal of appeal. — An appeal may be dismissed by
the Court of Appeals, on its own motion or on that of the appellee, on the
following grounds:
xxx xxx xxx
(e) Failure of the appellant to serve and file the required number of copies of
his brief or memorandum within the time provided by these Rules.
xxx xxx xxx
13.See, e.g., The Government of the Kingdom of Belgium v. Court of Appeals , G.R.
No. 164150, April 14, 2008, 551 SCRA 223, 242.
14.Societe Des Produits Nestle, S.A. v. Dy, Jr., G.R. No. 172276, August 9, 2010, 627
SCRA 223, 233-234; citing Prosource International, Inc. v. Horphag Research
Management SA, G.R. No. 180073, November 25, 2009, 605 SCRA 523, 530.
15.Societe Des Produits Nestle, S.A. v. Dy, Jr., id.
16.Id. at 235.
17.G.R. No. 166115, February 2, 2007, 514 SCRA 95, 107.
18.G.R. No. 100098, December 29, 1995, 251 SCRA 600.

19.Id. at 616-617.
20.Rollo, pp. 19-20.
21.Records, p. 696.

SECOND DIVISION
[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
DECISION
GARCIA , J : p
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners
Philip Morris, Inc., Benson & Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A.
(now Philip Morris Products S.A.) seek the reversal and setting aside of the following
issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619 , to wit:
1. Decision dated January 21, 2003 1 a rming an earlier decision of the
Regional Trial Court of Pasig City, Branch 166, in its Civil Case No. 47374,
which dismissed the complaint for trademark infringement and damages
thereat commenced by the petitioners against respondent Fortune
Tobacco Corporation; and
2. Resolution dated May 30, 2003 2 denying petitioners' motion for

reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of
Virginia, United States of America, is, per Certi cate of Registration No. 18723 issued on
April 26, 1973 by the Philippine Patents O ce (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 Certi cate of Registration No. 11147. And as can be
seen in Trademark Certi cate 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, led, 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. DCHIAS
The decision under review summarized what happened next, as follows:

In the Complaint . . . 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. . . . they
averred that the countries in which they are domiciled grant . . . to corporate or
juristic persons of the Philippines the privilege to bring action for infringement, . . .
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 certi cates of registration
and an applicant for the registration of the trademark "LARK MILDS"]. . . . .
[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" . . . 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 . . ., [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 . . . [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. ITAaCc
[Respondent] led its Answer . . . denying [petitioners'] material allegations

and . . . averred [among other things] . . . that "MARK" is a common word, which
cannot particularly identify a product to be the product of the [petitioners] . . .
xxx xxx xxx
Meanwhile, after the [respondent] led 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 . . . dated March 28,
1973. [The incidental issue of the propriety of an injunction would eventually be
elevated to the CA and would nally be resolved by the Supreme Court in its
Decision dated July 16, 1993 in G.R. No. 91332]. . . . .
xxx xxx xxx
After the termination of the trial on the merits . . . trial court rendered its
Decision . . . dated November 3, 1999 dismissing the complaint and counterclaim
after making a nding that the [respondent] did not commit trademark
infringement against the [petitioners]. Resolving rst 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 . . . justi es the dismissal of the complaint . . . . It added that the
testimonies of [petitioners'] witnesses . . . 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 rst 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 . . . 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. . . . . 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 speci c 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] led 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. . . . . 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 a rmed the trial court's decision on the underlying issue of
respondent's liability for infringement as it found that:
. . . 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 bene t of actual use in the local market and that the similarities in the
trademarks in question are insu cient 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
nding 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 rst with the procedural matter interposed by respondent, we nd 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 led 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 ndings of the appellate court are mistaken, absurd,
speculative, con icting, tainted with grave abuse of discretion, or contrary to the ndings
culled by the court of origin, 8 we will not disturb them. SCETHa
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. 1 0
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. 1 1
Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter observed in
Mishawaka Mfg. Co. v. Kresge Co.: 1 2
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, speci cally, 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 certi cates of registration of their trademarks. The marks
"MARK TEN" and "LARK" were registered on the basis of actual use in accordance with
Sections 2-A 1 3 and 5(a) 1 4 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. 1 5
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 . , 1 6
petitioners state that such availability and sale may be effected through the acts of
importers and distributors. ITCHSa
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 quali ed 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 , 1 7 that
such right to sue does not necessarily mean protection of their registered marks in the
absence of actual use in the Philippines.
Thus clari ed, 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 , 1 8 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, 1 9 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 certi cates 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-A 2 0 of R.A. No. 166 .
In Leviton Industries v. Salvador , 2 1 the Court further held that the aforementioned
reciprocity requirement is a condition sine qua non to ling 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 su cient. In a
subsequent case, 2 2 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 su ce, 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. 2 3
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 . CaDSHE
True, the Philippines' adherence to the Paris Convention 2 4 effectively obligates the
country to honor and enforce its provisions 2 5 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. 2 6 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 bene ts of the Union for the enjoyment of any
industrial property rights, 2 7 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, speci cally Sections 2 2 8 and 2-A 2 9
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 , 3 0 the Court reiterated its
rulings in Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft ,
3 1 Kabushi Kaisha Isetan v. Intermediate Appellate Court , 3 2 and Philip Morris v. Court of
Appeals and Fortune Tobacco Corporation 3 3 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 su ciently expounded
upon and quali ed 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. . . . . 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 les 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 le 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, 3 4 as what happened here when petitioners no less
admitted not doing business in this country. 3 5
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 .
3 6 trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive
ownership; registration is only an administrative con rmation of the existence of the right
of ownership of the mark, but does not perfect such right; actual use thereof is the
perfecting ingredient. 3 7
Petitioners' reliance on Converse Rubber Corporation 3 8 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 nds the IP Code and the TRIPS Agreement to be inapplicable, the
infringement complaint herein having been led 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. 3 9 In the same vein, the TRIPS Agreement was
inexistent when the suit for infringement was led, 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, de nes 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
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
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. 4 0 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. 4 1
In determining similarity and likelihood of confusion, jurisprudence has developed
two tests: the dominancy test and the holistic test. 4 2 The dominancy test 4 3 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. 4 4
In contrast, the holistic test 4 5 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, 4 6 the striking dissimilarities are signi cant
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. 4 7
This said, the CA then, in nding 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 a xed, 4 8 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
rst adopted them cannot be injured by any appropriation or imitation of them by others,
nor can the public be deceived. 4 9
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. CA 5 0 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. 5 1
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 de nition found in Dy Buncio v. Tan
Tiao Bok, 5 2 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 nally 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 su cient that he had registered the
trademark or trade-name with the IP O ce. In ne, 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.
I n Mighty Corporation v. E & J Gallo Winery , 5 3 the Court held that the following
constitute the elements of trademark infringement in accordance not only with Section 22
of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A 5 4 and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office, aASEcH
(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
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
business or services as to likely cause confusion or mistake or to deceive
purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or
assignee.
As already found herein, while petitioners have registered the trademarks "MARK
VII," "MARK TEN" and "LARK" for cigarettes in the Philippines, prior actual commercial use
thereof had not been proven. In fact, petitioners' judicial admission of not doing business
in this country effectively belies any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their
respective marks are well-known and/or have acquired goodwill in the Philippines so as to
be entitled to protection even without actual use in this country in accordance with Article
6bis 5 5 of the Paris Convention. As correctly found by the CA, a rming that of the trial
court:
. . . 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 nding
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 nding that the appellants failed to establish that their products are
widely known by local purchasers as "(n)o speci c 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. 5 6
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 nal and binding
on this Court. 5 7
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 a rmed. 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.
Puno, Sandoval-Gutierrez, Corona and Azcuna, JJ., concur.
Footnotes
1. Penned by Associate Justice Mercedes Gozo-Dadole (ret.) and concurred in by Associate
Justices Bennie Adefuin-Dela Cruz (ret.) and Mariano C. del Castillo; Rollo, pp. 9-34.
2. Id. at 36.
3. CA Decision; Id. at 10-19.
4. CA Decision; Id. at 33.
5. Id. at 228-296.
6. Ramos v. Pepsi-Cola Bottling Co. of the Phils., L-22533, February 9, 1967, 19 SCRA 289,
292.
7. Moomba Mining Exploration Co. v. CA, G.R. No. 108846, October 26, 99, 317 SCRA 388,
397.
8. Smith Kline Beckman Corporation v. CA, G.R. No. 126627, August 14, 2003, 409 SCRA 33,
39.
9. F. D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. 1, 1999 ed., p. 541.

10. Ibid., citing Pilar Dev. Corp. v. IAC, et al., G.R. No. 72283, December 12, 1986, 146 SCRA
215.
11. Sec. 38 of R.A. No. 166.

12. 316 U.S. 203, 53 USPQ 323 [1942] cited in Societe Des Produits Nestle, S.A. v. Court of
Appeals, G.R. No. 112012, April 4, 2001, 356 SCRA 207, 215.

13. Sec. 2-A. Ownership of trademarks, trade names and servicemarks; how acquired. —
Anyone who lawfully produces or deals in merchandise of any kind or who engages in
any lawful business, . . ., by actual use thereof in manufacture or trade, in business, . . .,
may appropriate to his exclusive use a trademark, a trade name, or a servicemark not so
appropriated by another, to distinguish his merchandise, [or] business . . . from the
merchandise, business or service of others. The ownership or possession of a trademark,
trade name, servicemark, heretofore or hereafter appropriated, as in this section provided,
shall be recognized and protected in the same manner and to the same extent as are
other property rights known to the law.
14. SEC. 5. Requirements of the application. — . . .

(a) Sworn statement of the applicant's domicile and citizenship, the date of the
applicant's first use of the mark or trade-name, the date of the applicant's first use of the
mark or trade-name in commerce or business, the goods, business or services in
connection with which the mark or trade-name is used and the mode or manner in which
the mark is used in connection with such goods, business or services, and that the
person making the application believes himself, or the firm, corporation or association
on whose behalf he makes the verification, to be the owner of the mark or trade-name
sought to be registered, that the mark or trade-name is in use in commerce or business,
and that to be best of his knowledge no person, firm, corporation or association has the
right to use such mark or trade-name in commerce or business either in the identical
form thereof or in such near resemblance thereto as might be calculated to deceive; . . . .
15. Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled in, or
have a bona fide or effective business or commercial establishment in any foreign
country, which is a party to an international convention or treaty relating to marks or
tradenames on the repression of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the provisions of this Act . . . . . .
"Tradenames of persons described in the first paragraph of this section shall be protected
without the obligation of filing or registration (sic) whether or not they form parts of
marks."
16. G.R. No. L-27906, January 8, 1987, 147 SCRA 154.
17. Philip Morris, Inc., et al. vs. CA, et al., July 16, 1993, 224 SCRA 576, 595.
18. Superseded by R.A. No. 8293 which took effect on January 1, 1998.
19. SEC. 20. Certificate of registration prima facie evidence of validity . — A certificate of
registration of a mark or trade name shall be prima facie evidence of the validity of the
registration, the registrant's ownership of the mark . . ., and of the registrant's exclusive
right to use the same . . ., subject to any conditions and limitations stated therein.
(Superseded by Sec. 138 of R.A. No. 8293).
20. SECTION 21-A. Any foreign corporation or juristic person to which a mark or trade-name
has been registered or assigned under this Act may bring an action hereunder for
infringement, . . ., whether or not it has been licensed to do business in the Philippines
under Act [No. 1495] or the Corporation Law, at the time it brings complaint: Provided,
That the country of which the said foreign corporation or juristic person is a citizen or in
which it is domiciled, by treaty, convention or law, grants a similar privilege to corporate
or juristic persons of the Philippines. (Superseded by Section 160 of R.A. No. 8293)
21. G.R. No. L-40163, June 19, 1982, 114 SCRA 420.
22. Puma Sportschufabriken Rudolf Dassler, K.G. v. IAC., G.R. No. 75067, February 26,
1988, 158 SCRA 233.
23. Agpalo, The Law on Trademark, Infringement and Unfair Competition, 2000 ed., pp.
209-210.
24. The Paris Convention is essentially a compact among the various member countries to
accord in their own countries to citizens of the other contracting parties' trademarks and
other rights comparable to those accorded their own citizens by their domestic laws. The
of the member countries as that country makes available to its own citizens. (La
Chemise Lacoste, S.A. v. Fernandez, G.R. No. L-63796-97, May 21, 1984, 129 SCRA 373.)
25. See La Chemise Lacoste S.A. v. Fernandez, supra at pp. 386-387.
26. Agpalo, The Law on Trademark, Infringement and Unfair Competition, supra at p. 199.
27. ART. 2. Nationals of each of the countries of the Union shall, as regards the protection
of industrial property, enjoy in all the other countries of the Union the advantages that
their respective laws now grant, or may hereafter grant, to nationals, without prejudice to
the rights specially provided by the present Convention. Consequently, they shall have
the same protection as the latter, and the same legal remedy against any infringement of
their rights, provided they observe the conditions and formalities imposed upon
nationals.
28. Sec. 2. What are registrable. — Trademarks, tradenames and service marks owned by
persons, corporations, partnerships or associations domiciled in the Philippines and by
persons, corporations, partnerships or associations domiciled in any foreign country
may be registered in accordance with the provisions of this Act; Provided, That said
trademarks, tradenames, or service marks are actually in use in commerce and services
not less than two months in the Philippines before the time the applications for
registration are filed; And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to citizens of the
Philippines, and such fact is officially certified, . . . (As amended by R.A. No. 865).
29. Sec. 2-A. Ownership of trademarks, trade names and servicemarks; how acquired. —
Anyone who lawfully produces or deals in merchandise of any kind or who engages in
any lawful business, or who renders any lawful service in commerce, by actual use
thereof in manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trademark, a trade name, or a servicemark not so
appropriated by another, to distinguish his merchandise, business or service from the
merchandise, business or service of others. The ownership or possession of a trademark,
trade name, servicemark, heretofore or hereafter appropriated, as in this section provided,
shall be recognized and protected in the same manner and to the same extent as are
other property rights known to the law. (Now Sec. 122 of R.A. No. 8293.)
30. G.R. No. 100098, December 29, 1995, 251 SCRA 600, 619-621.
31. L-19906, April 30, 1969, 27 SCRA 1214.

32. G.R. No. 75420, November 15, 1991, 203 SCRA 583.
33. Supra.
34. Emerald Garment Mfg. Corp. supra at p. 623.
35. Petitioners' Complaint in the RTC; Rollo, p. 207.
36. G.R. No. 159938, March 31, 2006.
37. Supra note 32.

38. Supra note 16.
39. Sec. 241 of IP Code.
40. McDonald's Corp. v. L.C. Big Mak Burger, Inc., G.R. No. 143993, August 18, 2004, 437
SCRA 10.
41. Emerald Garment Mfg. Corporation v. CA, supra, citing Esso Standard Eastern Inc. v. CA,
L-29971, August 31, 1982, 116 SCRA 336; also in Mighty Corporation v. E & J Gallo
Winery, G.R. No. 154342, July 14, 2004, 434 SCRA 473, 504.
42. Id. at p. 506.
43. Applied in McDonald's Corp. v. L.C. Big Mak Burger, Inc., supra; Asia Brewery, Inc. v. CA,
G.R. No. 103543, July 5, 1993, 224 SCRA 437; Converse Rubber Corp. v. Universal Rubber
Products, Inc., supra; Phil. Nut Industry Inc. v. Standard Brands, Inc., et al., L-23035, July
31, 1975, 65 SCRA 575.
44. Emerald Garment Mfg. Corporation v. Court of Appeals, supra at p. 615.

45. Applied in Emerald Garment Mfg. Corporation v. Court of Appeals, supra; Del Monte
Corp. v. CA, G.R. No. 78325, January 25, 1990, 181 SCRA 410; Fruit of the Loom, Inc. v.
CA, et al., L-32747, September 29, 1984, 133 SCRA 405; Bristol Myers Co. v. Dir. of
Patents, et al., L-21587, May 19, 1966, 17 SCRA 128.
46. See CA Decision; Rollo, pp. 28-30.
47. Mead Johnson & Co. v. N.V.J. Van Dorp. Ltd., et al., L-17501, April 27, 1963, 7 SCRA
768, 771.
48. Gabriel v. Perez, et al., L-24075, January 31, 1974, 55 SCRA 406.
49. 74 Am. Jur. 2d, Trademarks and Tradenames, Sec. 5.
50. Supra at p. 417.

51. Emerald Garment Mfg. Corp. v. CA, supra at p. 618.
52. 42 Phil. 190 (1921).
53. G.R. No. 154342, July 14, 2004, 434 SCRA 473, 496-497.
54. Sec. 9-A. Equitable principles to govern proceedings. — In opposition proceedings and
in all other inter partes proceedings . . . under this Act, equitable principles of laches,
estoppel, and acquiescence where applicable, may be considered and applied. (As added
by R.A. No. 638.)
55. Art. 6bis provides: . . . the countries of the Union undertakes, either administratively if
their legislation so permits, or at the request of an interested party, to refuse or to cancel
the registration and to prohibit the use of a trademark which constitutes a reproduction,
imitation or translation, liable to create confusion, 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 present Convention
and used for identical or similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any of such well-known mark or
an imitation liable to create confusion therewith.
56. Rollo, p. 179.

57. Sambar v. Levi Strauss & Co., G.R. No. 132604, March 6, 2002, 378 SCRA 364, 370.

FIRST DIVISION
[G.R. No. 78325. January 25, 1990.]
DEL MONTE CORPORATION and PHILIPPINE PACKING CORPORATION ,

petitioners, vs. COURT OF APPEALS and SUNSHINE SAUCE
MANUFACTURING INDUSTRIES , respondents.
Bito, Misa & Lozada for petitioners.

Reynaldo F. Singson for private respondent.
DECISION
CRUZ , J : p
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. cCESTA
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. cdll
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:
imitation of any registered mark or trade-name in connection with the sale,
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
business or services, shall be liable to a civil action by the registrant for any or all
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 trade-name 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
likely influence purchasers to believe that the goods offered are those of a
(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
(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 predominant 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 preoccupied 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. 1 0
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. 1 1 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. 1 3 The buyer
having in mind the mark/label of the respondent must rely upon his memory of the
petitioner's mark. 1 4 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. LexLib
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. 1 5 The court therefore
should be guided by its first impression, 1 6 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. 1 7
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. 1 8 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. 1 9 Well 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. 2 0
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. 2 1 Among 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. 2 2 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. 2 3 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. EaIDAT
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. 2 4
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. 2 5
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, 2 6 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, 2 7 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. 2 8
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. Cdpr
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.
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 P1,000.00.
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 Registration 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 P1,000.00, and the costs of the suit. LLpr
SO ORDERED.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Footnotes
1. Original Records, pp. 29-30.

2. Ibid., Annex 2 pp. 8-9; Annex 3, pp. 16-17.
3. Id., Annex A, p. 41.
4. Id., Annex B, pp. 42-43.
5. Id., pp. 1-6.
6. Id., pp. 38-40.
7. Id., pp. 166-168. Decision penned by Judge Roque A. Tamayo, affirmed in the Court of
Appeals by Coquia, J., ponente, with Luciano and Cui, JJ., concurring.
8. Jose C. Vitug, Pendect of Commercial Law & Jurisprudence, 1st ed., p. 291 citing
Compania General de Tabacos v. de Aljambra Cigar and Cigarette Manufacturing Co., 33
Phil 485; Ogura v. Chua, 59 Phil. 471; Parke Davies & Co. v. Kiu Foo & Co.., 60 Phil. 928.
9. Mead Johnson Co. v. N.V.J. Von Dorp. Ltd., 7 SCRA 768; Bristol Myers Co. v. Director of
Patents, 17 SCRA 128.
10. Stuart v. F.G. Stewart Co., 91 F 243.
11. Notaseme Hosiery v. Straus, 201 F 99.
12. McLean v. Fleming, 96 US 245; Fischer v. Blank, 138 N.Y. 244; Tillman Bendel v.
California Packing Corporation, 63 F 2d 498.
13. Martini & Rossi v. Consumer's People's Products, 57 F 2d 599.
14. Stuart v F.G. Stewart Co., 91 F 243.

15. Helmet Co. v. Wm Wrigley Jr. Co., 245 E 842; Pennzoil Co. v. Pennsylvania Petroleum
Co., 159 M.D. 187.
16. William Waltke & Co. v. Geo. H. Schafer, 49 App D.C. 294; Ward Baking Co. v. Potter-
Wringtington, 298 F 398.
17. Vortex Mfg. Co. v. Ply-Rite Contracting Co., 33 F 2d 302.
18. Hilton v. Hilton, 90 N.J. Eq. 564.
19. Bickmore Gall Cure Co. v. Karns, 134 F 833; J.C. Penny Co. v. H.D. Lee Merchantile Co.,
120 F 2d 949.
20. Baker and Master Printers Union of New Jersey, 34 F Supp. 808.
21. 11 H.D. Nims, The Law of Unfair Competition and Trademark, 1947, p. 1027.
22. Ibid., p. 1030.
23. 11 Rudolf Callman, The Law of Unfair Competition and Trademark, 1945, pp. 1137,
1136.
24. Ibid., Vol. III, 2nd ed. pp. 1527-1528 cited in Converse Rubber Corporation v. Universal
Rubber Product Inc., 147 SCRA 155.
25. William Waltke & Co. v. Geo. H. Schafer & Co., 49 App. D.C. 294; Standard Oil v. Michie,
34 F 2d 802.
26. 154 SCRA 723.
27. 11 SCRA 436.
28. Supra., p. 1141.

THIRD DIVISION
[G.R. No. 179127. December 24, 2008.]
IN-N-OUT BURGER, INC. , petitioner, vs . SEHWANI, INCORPORATED

AND/OR BENITA'S FRITES, INC. , respondents.
DECISION
CHICO-NAZARIO , J : p
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to reverse the Decision 1 dated 18 July 2006 rendered by the Court of Appeals
in CA-G.R. SP No. 92785, which reversed the Decision 2 dated 23 December 2005 of the
Director General of the Intellectual Property Of ce (IPO) in Appeal No. 10-05-01. The
Court of Appeals, in its assailed Decision, decreed that the IPO Director of Legal Affairs
and the IPO Director General do not have jurisdiction over cases involving unfair
competition. CIaASH
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws
of California, United States (US) of America, which is a signatory to the Convention of
Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects
of Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant
business, but it has never engaged in business in the Philippines. 3
Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations
organized in the Philippines. 4
On 2 June 1997, petitioner led trademark and service mark applications with
the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-N-OUT Burger &
Arrow Design". Petitioner later found out, through the Of cial Action Papers issued by
the IPO on 31 May 2000, that respondent Sehwani, Incorporated had already obtained
Trademark Registration for the mark "IN N OUT (the inside of the letter "O" formed like a
star)." 5 By virtue of a licensing agreement, Benita Frites, Inc. was able to use the
registered mark of respondent Sehwani, Incorporated.
Petitioner eventually led on 4 June 2001 before the Bureau of Legal Affairs
(BLA) of the IPO an administrative complaint against respondents for unfair
competition and cancellation of trademark registration. Petitioner averred in its
complaint that it is the owner of the trade name IN-N-OUT and the following
trademarks: (1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-OUT
Burger Logo". These trademarks are registered with the Trademark Of ce of the US
and in various parts of the world, are internationally well-known, and have become
distinctive of its business and goods through its long and exclusive commercial use. 6
Petitioner pointed out that its internationally well-known trademarks and the mark of
the respondents are all registered for the restaurant business and are clearly identical
and confusingly similar. Petitioner claimed that respondents are making it appear that
their goods and services are those of the petitioner, thus, misleading ordinary and
unsuspecting consumers that they are purchasing petitioner's products. 7 DITEAc
Following the ling of its complaint, petitioner sent on 18 October 2000 a

demand letter directing respondent Sehwani, Incorporated to cease and desist from
claiming ownership of the mark "IN-N-OUT" and to voluntarily cancel its trademark
registration. In a letter-reply dated 23 October 2000, respondents refused to accede to
petitioner' demand, but expressed willingness to surrender the registration of
respondent Sehwani, Incorporated of the "IN N OUT" trademark for a fair and
reasonable consideration. 8
Petitioner was able to register the mark "Double Double" on 4 July 2002, based
on their application led on 2 June 1997. 9 It alleged that respondents also used this
mark, as well as the menu color scheme. Petitioners also averred that respondent
Benita's receipts bore the phrase, "representing IN-N-OUT Burger". 1 0 It should be noted
that that although respondent Sehwahi, Incorporated registered a mark which appeared
as "IN N OUT (the inside of the letter "O" formed like a star)", respondents used the
mark "IN-N-OUT". 1 1
To counter petitioner's complaint, respondents led before the BLA-IPO an
Answer with Counterclaim. Respondents asserted therein that they had been using the
mark "IN N OUT" in the Philippines since 15 October 1982. On 15 November 1991,
respondent Sehwani, Incorporated led with the then Bureau of Patents, Trademarks
and Technology Transfer (BPTTT) an application for the registration of the mark "IN N
OUT (the inside of the letter "O" formed like a star)." Upon approval of its application, a
certi cate of registration of the said mark was issued in the name of respondent
Sehwani, Incorporated on 17 December 1993. On 30 August 2000, respondents
Sehwani, Incorporated and Benita Frites, Inc. entered into a Licensing Agreement,
wherein the former entitled the latter to use its registered mark, "IN N OUT".
Respondents asserted that respondent Sehwani, Incorporated, being the registered
owner of the mark "IN N OUT", should be accorded the presumption of a valid
registration of its mark with the exclusive right to use the same. Respondents argued
that none of the grounds provided under the Intellectual Property Code for the
cancellation of a certi cate of registration are present in this case. Additionally,
respondents maintained that petitioner had no legal capacity to sue as it had never
operated in the Philippines. 1 2
Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo,
rendered a Decision dated 22 December 2003, 1 3 in favor of petitioner. According to
said Decision, petitioner had the legal capacity to sue in the Philippines, since its
country of origin or domicile was a member of and a signatory to the Convention of
Paris on Protection of Industrial Property. And although petitioner had never done
business in the Philippines, it was widely known in this country through the use herein of
products bearing its corporate and trade name. Petitioner's marks are internationally
well-known, given the world-wide registration of the mark "IN-N-OUT", and its numerous
advertisements in various publications and in the Internet. Moreover, the IPO had
already declared in a previous inter partes case that "In-N-Out Burger and Arrow Design"
was an internationally well-known mark. Given these circumstances, the IPO Director
for Legal Affairs pronounced in her Decision that petitioner had the right to use its
tradename and mark "IN-N-OUT" in the Philippines to the exclusion of others, including
the respondents. However, respondents used the mark "IN N OUT" in good faith and
were not guilty of unfair competition, since respondent Sehwani, Incorporated did not
evince any intent to ride upon petitioner's goodwill by copying the mark "IN-N-OUT
Burger" exactly. The inside of the letter "O" in the mark used by respondents formed a
star. In addition, the simple act of respondent Sehwani, Incorporated of inquiring into
the existence of a pending application for registration of the "IN-N-OUT" mark was not
deemed fraudulent. The dispositive part of the Decision of the IPO Director for Legal
Affairs reads: EIcSDC
With the foregoing disquisition, Certi cate of Registration No. 56666 dated 17
December 1993 for the mark "IN-N-OUT" (the inside of the letter "O" formed like a
star) issued in favor of Sehwani, Incorporated is hereby CANCELLED.
Consequently, respondents Sehwani, Inc. and Benita's Frites are hereby ordered to
permanently cease and desist from using the mark "IN-N-OUT" and "IN-N-OUT
BURGER LOGO" on its goods and in its business. With regards the mark "Double-
Double", considering that as earlier discussed, the mark has been approved by
this Of ce for publication and that as shown by evidence, Complainant is the
owner of the said mark, Respondents are so hereby ordered to permanently cease
and desist from using the mark Double-Double. NO COSTS. 1 4
Both parties led their respective Motions for Reconsideration of the

aforementioned Decision. Respondents' Motion for Reconsideration 1 5 and petitioner's
Motion for Partial Reconsideration 1 6 were denied by the IPO Director for Legal Affairs
in Resolution No. 2004-18 1 7 dated 28 October 2004 and Resolution No. 2005-05
dated 25 April 2005, 1 8 respectively.
Subsequent events would give rise to two cases before this Court, G.R. No.
171053 and G.R. No. 179127, the case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of Resolution No. 2004-18
dated 28 October 2004 denying their Motion for Reconsideration. Thus, on 18
November 2004, respondents led an Appeal Memorandum with IPO Director General
Emma Francisco (Director General Francisco). However, in an Order dated 7 December
2004, the appeal was dismissed by the IPO Director General for being led beyond the
15 -day reglementary period to appeal.
Respondents appealed to the Court of Appeals via a Petition for Review under
Rule 43 of the Rules of Court, led on 20 December 2004 and docketed as CA-G.R. SP
No. 88004 , challenging the dismissal of their appeal by the IPO Director General, which
effectively af rmed the Decision dated 22 December 2003 of the IPO Director for Legal
Affairs ordering the cancellation of the registration of the disputed trademark in the
name of respondent Sehwani, Incorporated and enjoining respondents from using the
same. In particular, respondents based their Petition on the following grounds: DHATcE
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING

APPEAL NO. 14-2004-00004 ON A MERE TECHNICALITY
THE BUREAU OF LEGAL AFFAIR'S (SIC) DECISION AND RESOLUTION (1)
CANCELLING RESPONDENT'S CERTIFICATE OF REGISTRATION FOR THE MARK
"IN-N-OUT", AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND
DESIST FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS ARE
CONTRARY TO LAW AND/OR IS NOT SUPPORTED BY EVIDENCE.
Respondents thus prayed:

WHEREFORE, petitioners respectfully pray that this Honorable Court give due
course to this petition, and thereafter order the Of ce of the Director General of
the Intellectual Property Of ce to reinstate and give due course to [respondent]'s
Appeal No. 14-2004-00004.
Other reliefs, just and equitable under the premises, are likewise prayed for.
On 21 October 2005, the Court of Appeals rendered a Decision denying
respondents' Petition in CA-G.R. SP No. 88004 and af rming the Order dated 7
December 2004 of the IPO Director General. The appellate court con rmed that
respondents' appeal before the IPO Director General was led out of time and that it
was only proper to cancel the registration of the disputed trademark in the name of
respondent Sehwani, Incorporated and to permanently enjoin respondents from using
the same. Effectively, the 22 December 2003 Decision of IPO Director of Legal Affairs
was likewise af rmed. On 10 November 2005, respondents moved for the
reconsideration of the said Decision. On 16 January 2006, the Court of Appeals denied
their motion for reconsideration.
Dismayed with the outcome of their petition before the Court of Appeals,
respondents raised the matter to the Supreme Court in a Petition for Review under Rule
45 of the Rules of Court, led on 30 January 2006, bearing the title Sehwani,
Incorporated v. In-N-Out Burger and docketed as G.R. No. 171053 . 1 9
This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007, 2 0
nding that herein respondents failed to le their Appeal Memorandum before the IPO
Director General within the period prescribed by law and, consequently, they lost their
right to appeal. The Court further af rmed the Decision dated 22 December 2003 of the
IPO Director of Legal Affairs holding that herein petitioner had the legal capacity to sue
for the protection of its trademarks, even though it was not doing business in the
Philippines, and ordering the cancellation of the registration obtained by herein
respondent Sehwani, Incorporated of the internationally well-known marks of petitioner,
and directing respondents to stop using the said marks. Respondents led a Motion
for Reconsideration of the Decision of this Court in G.R. No. 171053, but it was denied
with finality in a Resolution dated 21 January 2008.
G.R. No. 179127
Upon the denial of its Partial Motion for Reconsideration of the Decision dated
22 December 2003 of the IPO Director for Legal Affairs, petitioner was able to le a
timely appeal before the IPO Director General on 27 May 2005. SaITHC
During the pendency of petitioner's appeal before the IPO Director General, the
Court of Appeals already rendered on 21 October 2005 its Decision dismissing
respondents' Petition in CA-G.R. SP No. 88004.
In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr.
found petitioner's appeal meritorious and modi ed the Decision dated 22 December
2003 of the IPO Director of Legal Affairs. The IPO Director General declared that
respondents were guilty of unfair competition. Despite respondents' claims that they
had been using the mark since 1982, they only started constructing their restaurant
sometime in 2000, after petitioner had already demanded that they desist from
claiming ownership of the mark "IN-N-OUT". Moreover, the sole distinction of the mark
registered in the name of respondent Sehwani, Incorporated, from those of the
petitioner was the star inside the letter "O", a minor difference which still deceived
purchasers. Respondents were not even actually using the star in their mark because it
was allegedly dif cult to print. The IPO Director General expressed his disbelief over
the respondents' reasoning for the non-use of the star symbol. The IPO Director
General also considered respondents' use of petitioner's registered mark "Double-
Double" as a sign of bad faith and an intent to mislead the public. Thus, the IPO Director
General ruled that petitioner was entitled to an award for the actual damages it
suffered by reason of respondents' acts of unfair competition, exemplary damages, and
attorney's fees. 2 1 The fallo of the Decision reads:
WHEREFORE , premises considered, the [herein respondents] are held guilty of
unfair competition. Accordingly, Decision No. 2003-02 dated 22 December 2003 is
hereby MODIFIED as follows:
[Herein Respondents] are hereby ordered to jointly and severally pay [herein
petitioner]:
1. Damages in the amount of TWO HUNDRED TWELVE
THOUSAND FIVE HUNDRED SEVENTY FOUR AND
28/100(P212,574.28) ;
2. Exemplary damages in the amount of FIVE HUNDRED

THOUSAND PESOS (P500,000.00) ;
3. Attorney's fees and expenses of litigation in the amount of FIVE
HUNDRED THOUSAND PESOS (P500,000.00) .
All products of [herein respondents] including the labels, signs, prints, packages,
wrappers, receptacles and materials used by them in committing unfair
competition should be without compensation of any sort be seized and disposed
of outside the channels of commerce.
Let a copy of this Decision be furnished the Director of Bureau of Legal Affairs for
appropriate action, and the records be returned to her for proper disposition.
Further, let a copy of this Decision be furnished the Documentation, Information
and Technology Transfer Bureau for their information and records purposes. 2 2
Aggrieved, respondents were thus constrained to le on 11 January 2006 before

the Court of Appeals another Petition for Review under Rule 43 of the Rules of Court,
docketed as CA-G.R. SP No. 92785 . Respondents based their second Petition before
the appellate court on the following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING
PETITIONERS LIABLE FOR UNFAIR COMPETITION AND IN ORDERING THEM TO
PAY DAMAGES AND ATTORNEY'S FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE
BUREAU OF LEGAL AFFAIR'S DECISION (1) CANCELLING PETITIONER'S
CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT", AND (2) ORDERING
PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM USING THE
SUBJECT MARK ON ITS GOODS AND BUSINESS cCSHET
Respondents assailed before the appellate court the foregoing 23 December

2005 Decision of the IPO Director General, alleging that their use of the disputed mark
was not tainted with fraudulent intent; hence, they should not be held liable for
damages. They argued that petitioner had never entered into any transaction involving
its goods and services in the Philippines and, therefore, could not claim that its goods
and services had already been identi ed in the mind of the public. Respondents added
that the disputed mark was not well-known. Finally, they maintained that petitioner's
complaint was already barred by laches. 2 3
At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the
following prayer:
WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:
(a) upon the ling of this petition, issue a temporary restraining order
enjoining the IPO and [petitioner], their agents, successors and assigns,
from executing, enforcing and implementing the IPO Director General's
Decision dated 23 December 2005, which modi ed the Decision No. 2003-
02 dated 22 December 2003 of the BLA, until further orders from this
Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner], their agents,
successors and assigns, from executing, enforcing and implementing the
Decision dated 23 December 2005 of the Director General of the IPO in IPV
No. 10-2001-00004 and to maintain the status quo ante pending the
resolution of the merits of this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision dated 23 December 2005 of the
Director General of the IPO in IPV No. 10-2001-00004 nding the
[respondents] guilty of unfair competition and awarding damages
and attorney's fees to the respondent
(ii) in lieu thereof, af rm Decision No. 2003-02 of the BLA dated 22
December 2003 and Resolution No. 2005-05 of the BLA dated 25
April 2005, insofar as it nds [respondents] not guilty of unfair
competition and hence not liable to the [petitioner] for damages and
attorney's fees;DTEIaC
(iii) reverse Decision No. 2003-02 of the BLA dated 22 December 2003,
and Resolution No. 2005-05 of the BLA dated 25 April 2005, insofar
as it upheld [petitioner]'s legal capacity to sue; that [petitioner]'s
trademarks are well-known; and that respondent has the exclusive
right to use the same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may deemed just or equitable. 2 4
On 18 July 2006, the Court of Appeals promulgated a Decision 2 5 in CA-G.R. SP

No. 92785 reversing the Decision dated 23 December 2005 of the IPO Director General.
The Court of Appeals, in its Decision, initially addressed petitioner's assertion
that respondents had committed forum shopping by the institution of CA-G.R. SP No.
88004 and CA-G.R. SP No. 92785. It ruled that respondents were not guilty of forum
shopping, distinguishing between the respondents' two Petitions. The subject of
Respondents' Petition in CA-G.R. SP No. 88004 was the 7 December 2004 Decision of
the IPO Director General dismissing respondents' appeal of the 22 December 2003
Decision of the IPO Director of Legal Affairs. Respondents questioned therein the
cancellation of the trademark registration of respondent Sehwani, Incorporated and the
order permanently enjoining respondents from using the disputed trademark.
Respondents' Petition in CA-G.R. SP No. 92785 sought the review of the 23 December
2005 Decision of the IPO Director General partially modifying the 22 December 2003
Decision of the IPO Director of Legal Affairs. Respondents raised different issues in
their second petition before the appellate court, mainly concerning the nding of the
IPO Director General that respondents were guilty of unfair competition and the
awarding of actual and exemplary damages, as well as attorney's fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on
jurisdictional grounds not raised by the parties. The appellate court declared that
Section 163 of the Intellectual Property Code speci cally confers upon the regular
courts, and not the BLA-IPO, sole jurisdiction to hear and decide cases involving
provisions of the Intellectual Property Code, particularly trademarks. Consequently, the
IPO Director General had no jurisdiction to rule in its Decision dated 23 December 2005
on supposed violations of these provisions of the Intellectual Property Code.
In the end, the Court of Appeals decreed:
WHEREFORE , the Petition is GRANTED . The Decision dated 23 December 2005
rendered by the Director General of the Intellectual Property Of ce of the
Philippines in Appeal No. 10-05-01 is REVERSED and SET ASIDE . Insofar as
they pertain to acts governed by Article 168 of R.A. 8293 and other sections
enumerated in Section 163 of the same Code, respondent's claims in its
Complaint docketed as IPV No. 10-2001-00004 are hereby DISMISSED . 2 6
The Court of Appeals, in a Resolution dated 31 July 2007, 2 7 denied petitioner's

Motion for Reconsideration of its aforementioned Decision. acTDCI
Hence, the present Petition, where petitioner raises the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE

QUESTIONED DECISION DATED 18 JULY 2006 AND RESOLUTION DATED 31
JULY 2007 DECLARING THAT THE IPO HAS NO JURISDICTION OVER
ADMINISTRATIVE COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS
VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISION DATED 18 JULY 2006 AND RESOLUTION DATED 31
JULY 2007 DECLARING THAT SEHWANI AND BENITA ARE NOT GUILTY OF: (A)
SUBMITTING A PATENTLY FALSE CERTIFICATION OF NON-FORUM SHOPPING;
AND (B) FORUM SHOPPING PROPER. 2 8
As previously narrated herein, on 15 October 2007, during the pendency of the

present Petition, this Court already promulgated its Decision 2 9 in G.R. No. 171053 on
15 October 2007, which af rmed the IPO Director General's dismissal of respondents'
appeal for being led beyond the reglementary period, and left the 22 December 2003
Decision of the IPO Director for Legal Affairs, canceling the trademark registration of
respondent Sehwani, Incorporated and enjoining respondents from using the disputed
marks.
Before discussing the merits of this case, this Court must rst rule on the
procedural flaws that each party has attributed to the other.
Formal Defects of the Petition
Respondents contend that the Veri cation/Certi cation executed by Atty.
Edmund Jason Barranda of Villaraza and Angangco, which petitioner attached to the
present Petition, is defective and should result in the dismissal of the said Petition.

Respondents point out that the Secretary's Certi cate executed by Arnold M.
Wensinger on 20 August 2007, stating that petitioner had authorized the lawyers of
Villaraza and Angangco to represent it in the present Petition and to sign the
Veri cation and Certi cation against Forum Shopping, among other acts, was not
properly notarized. The jurat of the aforementioned Secretary's Certificate reads:
Subscribed and sworn to me this 20th day of August 2007 in Irving California.
(Sgd.) Rachel A. Blake

Notary Public 3 0
Respondents aver that the said Secretary's Certi cate cannot properly authorize
Atty. Barranda to sign the Veri cation/Certi cation on behalf of petitioner because the
notary public Rachel A. Blake failed to state that: (1) petitioner's Corporate Secretary,
Mr. Wensinger, was known to her; (2) he was the same person who acknowledged the
instrument; and (3) he acknowledged the same to be his free act and deed, as required
under Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines. 3 1
Respondents likewise impugn the validity of the notarial certi cate of Atty.
Aldrich Fitz B. Uy, on Atty. Baranda's Veri cation/Certi cation attached to the instant
Petition, noting the absence of (1) the serial number of the commission of the notary
public; (2) the of ce address of the notary public; (3) the roll of attorneys' number and
the IBP membership number; and (4) a statement that the Veri cation/Certi cation
was notarized within the notary public's territorial jurisdiction, as required under the
2004 Rules on Notarial Practice. 3 2 SDTIHA
Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not
applicable to the present case. The requirements enumerated therein refer to
documents which require an acknowledgement, and not a mere jurat.
A jurat is that part of an af davit in which the notary certi es that before him/her,
the document was subscribed and sworn to by the executor. Ordinarily, the language of
the jurat should avow that the document was subscribed and sworn to before the
notary public. In contrast, an acknowledgment is the act of one who has executed a
deed in going before some competent of cer or court and declaring it to be his act or
deed. It involves an extra step undertaken whereby the signor actually declares to the
notary that the executor of a document has attested to the notary that the same is
his/her own free act and deed. 3 3 A Secretary's Certi cate, as that executed by
petitioner in favor of the lawyers of the Angangco and Villaraza law of ce, only requires
a jurat. 3 4
Even assuming that the Secretary's Certi cate was awed, Atty. Barranda may
still sign the Veri cation attached to the Petition at bar. A pleading is veri ed by an
af davit that the af ant has read the pleading and that the allegations therein are true
and correct of his personal knowledge or based on authentic records. 3 5 The party
itself need not sign the veri cation. A party's representative, lawyer or any other person
who personally knows the truth of the facts alleged in the pleading may sign the
veri cation. 3 6 Atty. Barranda, as petitioner's counsel, was in the position to verify the
truth and correctness of the allegations of the present Petition. Hence, the Veri cation
signed by Atty. Barranda substantially complies with the formal requirements for such.
Moreover, the Court deems it proper not to focus on the supposed technical
in rmities of Atty. Baranda's Veri cation. It must be borne in mind that the purpose of
requiring a veri cation is to secure an assurance that the allegations of the petition has
been made in good faith; or are true and correct, not merely speculative. This
requirement is simply a condition affecting the form of pleadings, and non-compliance
therewith does not necessarily render it fatally defective. Indeed, veri cation is only a
formal, not a jurisdictional requirement. In the interest of substantial justice, strict
observance of procedural rules may be dispensed with for compelling reasons. 3 7 The
vital issues raised in the instant Petition on the jurisdiction of the IPO Director for Legal
Affairs and the IPO Director General over trademark cases justify the liberal application
of the rules, so that the Court may give the said Petition due course and resolve the
same on the merits. TcEAIH
This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and
Aldrich Fitz B. Uy, were less than careful with their jurats or notarial certi cates. Parties
and their counsel should take care not to abuse the Court's zeal to resolve cases on
their merits. Notaries public in the Philippines are reminded to exert utmost care and
effort in complying with the 2004 Rules on Notarial Practice. Parties and their counsel
are further charged with the responsibility of ensuring that documents notarized
abroad be in their proper form before presenting said documents before Philippine
courts.
Forum Shopping
Petitioner next avers that respondents are guilty of forum shopping in ling the
Petition in CA-G.R. SP No. 92785, following their earlier ling of the Petition in CA-G.R.
SP No. 88004. Petitioner also asserts that respondents were guilty of submitting to the
Court of Appeals a patently false Certi cation of Non-forum Shopping in CA-G.R. SP No.
92785, when they failed to mention therein the pendency of CA-G.R. SP No. 88004.
Forum shopping is the institution of two or more actions or proceedings
grounded on the same cause on the supposition that one or the other court would
make a favorable disposition. It is an act of malpractice and is prohibited and
condemned as tri ing with courts and abusing their processes. In determining whether
or not there is forum shopping, what is important is the vexation caused the courts and
parties-litigants by a party who asks different courts and/or administrative bodies to
rule on the same or related causes and/or grant the same or substantially the same
reliefs and in the process creates the possibility of conflicting decisions being rendered
by the different bodies upon the same issues. 3 8
Forum shopping is present when, in two or more cases pending, there is identity
of (1) parties (2) rights or causes of action and reliefs prayed for, and (3) the identity of
the two preceding particulars is such that any judgment rendered in the other action,
will, regardless of which party is successful, amount to res judicata in the action under
consideration. 3 9
After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and CA-G.R.
SP No. 92785, it would at first seem that respondents are guilty of forum shopping. CSDcTA
There is no question that both Petitions involved identical parties, and raised at
least one similar ground for which they sought the same relief. Among the grounds
stated by the respondents for their Petition in CA-G.R. SP No. 88004 was that "[T]he
Bureau of Legal Affair's (sic) Decision and Resolution (1) canceling [herein respondent
Sehwani, Incorporated]'s certi cate of registration for the mark 'IN-N-OUT' and (2)
ordering [herein respondents] to permanently cease and desist from using the subject
mark on its goods and business are contrary to law and/or is (sic) not supported by
evidence." 4 0 The same ground was again invoked by respondents in their Petition in
CA-G.R. SP No. 92785, rephrased as follows: "The IPO Director General committed
grave error in af rming the Bureau of Legal Affair's (sic) Decision (1) canceling [herein
respondent Sehwani, Incorporated]'s certi cate of registration for the mark "IN-N-OUT",
and (2) ordering [herein respondents] to permanently cease and desist from using the
subject mark on its goods and business." 4 1 Both Petitions, in effect, seek the reversal
of the 22 December 2003 Decision of the IPO Director of Legal Affairs. Undoubtedly, a
judgment in either one of these Petitions af rming or reversing the said Decision of the
IPO Director of Legal Affairs based on the merits thereof would bar the Court of
Appeals from making a contrary ruling in the other Petition, under the principle of res
judicata.
Upon a closer scrutiny of the two Petitions, however, the Court takes notice of
one issue which respondents did not raise in CA-G.R. SP No. 88004, but can be found in
CA-G.R. SP No. 92785, i.e., whether respondents are liable for unfair competition.
Hence, respondents seek additional reliefs in CA-G.R. SP No. 92785, seeking the
reversal of the nding of the IPO Director General that they are guilty of unfair
competition, and the nulli cation of the award of damages in favor of petitioner
resulting from said nding. Undoubtedly, respondents could not have raised the issue
of unfair competition in CA-G.R. SP No. 88004 because at the time they led their
Petition therein on 28 December 2004, the IPO Director General had not yet rendered
its Decision dated 23 December 2005 wherein it ruled that respondents were guilty
thereof and awarded damages to petitioner.
In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for
unfair competition, it is only predictable, although not necessarily legally tenable, for
respondents to reassert their right to register, own, and use the disputed mark.
Respondents again raise the issue of who has the better right to the disputed mark,
because their defense from the award of damages for unfair competition depends on
the resolution of said issue in their favor. While this reasoning may be legally unsound,
this Court cannot readily presume bad faith on the part of respondents in ling their
Petition in CA-G.R. SP No. 92785; or hold that respondents breached the rule on forum
shopping by the mere filing of the second petition before the Court of Appeals.
True, respondents should have referred to CA-G.R. SP No. 88004 in the
Certification of Non-Forum Shopping, which they attached to their Petition in CA-G.R. SP
No. 92785. Nonetheless, the factual background of this case and the importance of
resolving the jurisdictional and substantive issues raised herein, justify the relaxation of
another procedural rule. Although the submission of a certi cate against forum
shopping is deemed obligatory, it is not jurisdictional. 4 2 Hence, in this case in which
such a certi cation was in fact submitted, only it was defective, the Court may still
refuse to dismiss and, instead, give due course to the Petition in light of attendant
exceptional circumstances.
The parties and their counsel, however, are once again warned against taking
procedural rules lightly. It will do them well to remember that the Courts have taken a
stricter stance against the disregard of procedural rules, especially in connection with
the submission of the certi cate against forum shopping, and it will not hesitate to
dismiss a Petition for non-compliance therewith in the absence of justi able
circumstances. ADCETI
The Jurisdiction of the IPO

The Court now proceeds to resolve an important issue which arose from the
Court of Appeals Decision dated 18 July 2006 in CA-G.R. SP No. 92785. In the afore-
stated Decision, the Court of Appeals adjudged that the IPO Director for Legal Affairs
and the IPO Director General had no jurisdiction over the administrative proceedings
below to rule on issue of unfair competition, because Section 163 of the Intellectual
Property Code confers jurisdiction over particular provisions in the law on trademarks
on regular courts exclusively. According to the said provision:
Section 163. Jurisdiction of Court. — All actions under Sections 150, 155, 164,
and 166 to 169 shall be brought before the proper courts with appropriate
jurisdiction under existing laws.
The provisions referred to in Section 163 are: Section 150 on License Contracts;
Section 155 on Remedies on Infringement; Section 164 on Notice of Filing Suit Given to
the Director; Section 166 on Goods Bearing Infringing Marks or Trade Names; Section
167 on Collective Marks; Section 168 on Unfair Competition, Rights, Regulation and
Remedies; and Section 169 on False Designations of Origin, False Description or
Representation.
The Court disagrees with the Court of Appeals.
Section 10 of the Intellectual Property Code speci cally identi es the functions
of the Bureau of Legal Affairs, thus:
Section 10. The Bureau of Legal Affairs. — The Bureau of Legal Affairs shall
have the following functions:
10.1 Hear and decide opposition to the application for registration of
marks; cancellation of trademarks ; subject to the provisions of Section 64,
cancellation of patents and utility models, and industrial designs; and petitions
for compulsory licensing of patents;
10.2 (a ) Exercise original jurisdiction in administrative complaints
for violations of laws involving intellectual property rights; Provided,
That its jurisdiction is limited to complaints where the total damages
claimed are not less than Two hundred thousand pesos (P200,000):
Provided, futher, That availment of the provisional remedies may be
granted in accordance with the Rules of Court . The Director of Legal Affairs
shall have the power to hold and punish for contempt all those who disregard
orders or writs issued in the course of the proceedings.
(b) After formal investigation, the Director for Legal Affairs may impose one
(1) or more of the following administrative penalties:
(i) The issuance of a cease and desist order which shall specify the
acts that the respondent shall cease and desist from and shall require him
to submit a compliance report within a reasonable time which shall be
fixed in the order;
(ii) The acceptance of a voluntary assurance of compliance or
discontinuance as may be imposed. Such voluntary assurance may
include one or more of the following:
(1) An assurance to comply with the provisions of the

intellectual property law violated;
(2) An assurance to refrain from engaging in unlawful and
unfair acts and practices subject of the formal investigation
(3) An assurance to recall, replace, repair, or refund the money

value of defective goods distributed in commerce; and ISCaDH

(4) An assurance to reimburse the complainant the expenses
and costs incurred in prosecuting the case in the Bureau of Legal
Affairs.
The Director of Legal Affairs may also require the respondent to

submit periodic compliance reports and le a bond to guarantee
compliance of his undertaking.
(iii) The condemnation or seizure of products which are subject of the

offense. The goods seized hereunder shall be disposed of in such manner
as may be deemed appropriate by the Director of Legal Affairs, such as by
sale, donation to distressed local governments or to charitable or relief
institutions, exportation, recycling into other goods, or any combination
thereof, under such guidelines as he may provide;
(iv) The forfeiture of paraphernalia and all real and personal properties
which have been used in the commission of the offense;
(v) The imposition of administrative nes in such amount as deemed
reasonable by the Director of Legal Affairs, which shall in no case be less
than Five thousand pesos (P5,000) nor more than One hundred fty
thousand pesos (P150,000). In addition, an additional ne of not more
than One thousand pesos (P1,000) shall be imposed for each day of
continuing violation;
(vi) The cancellation of any permit, license, authority, or
registration which may have been granted by the Of ce , or the
suspension of the validity thereof for such period of time as the Director of
Legal Affairs may deem reasonable which shall not exceed one (1) year;
(vii) The withholding of any permit, license, authority, or registration
which is being secured by the respondent from the Office;
(viii) The assessment of damages ;

(ix) Censure; and
(x) Other analogous penalties or sanctions.
10.3 The Director General may by Regulations establish the procedure to

govern the implementation of this Section. 4 3 (Emphasis provided.) TAcDHS
Unquestionably, petitioner's complaint, which seeks the cancellation of the disputed

mark in the name of respondent Sehwani, Incorporated, and damages for violation of
petitioner's intellectual property rights, falls within the jurisdiction of the IPO Director of
Legal Affairs.
The Intellectual Property Code also expressly recognizes the appellate
jurisdiction of the IPO Director General over the decisions of the IPO Director of Legal
Affairs, to wit:
Section 7. The Director General and Deputies Director General. 7.1 Functions.
— The Director General shall exercise the following powers and functions:
xxx xxx xxx

b) Exercise exclusive appellate jurisdiction over all decisions rendered by the
Director of Legal Affairs, the Director of Patents, the Director of Trademarks, and
the Director of Documentation, Information and Technology Transfer Bureau. The
decisions of the Director General in the exercise of his appellate jurisdiction in
respect of the decisions of the Director of Patents, and the Director of Trademarks
shall be appealable to the Court of Appeals in accordance with the Rules of Court;
and those in respect of the decisions of the Director of Documentation,
Information and Technology Transfer Bureau shall be appealable to the Secretary
of Trade and Industry;
The Court of Appeals erroneously reasoned that Section 10 (a) of the Intellectual
Property Code, conferring upon the BLA-IPO jurisdiction over administrative complaints
for violations of intellectual property rights, is a general provision, over which the
speci c provision of Section 163 of the same Code, found under Part III thereof
particularly governing trademarks, service marks, and tradenames, must prevail.
Proceeding therefrom, the Court of Appeals incorrectly concluded that all actions
involving trademarks, including charges of unfair competition, are under the exclusive
jurisdiction of civil courts.
Such interpretation is not supported by the provisions of the Intellectual Property
Code. While Section 163 thereof vests in civil courts jurisdiction over cases of unfair
competition, nothing in the said section states that the regular courts have sole
jurisdiction over unfair competition cases, to the exclusion of administrative bodies. On
the contrary, Sections 160 and 170, which are also found under Part III of the
Intellectual Property Code, recognize the concurrent jurisdiction of civil courts and the
IPO over unfair competition cases. These two provisions read:
Section 160. Right of Foreign Corporation to Sue in Trademark or Service
Mark Enforcement Action. — Any foreign national or juridical person who meets
the requirements of Section 3 of this Act and does not engage in business in the
Philippines may bring a civil or administrative action hereunder for opposition,
cancellation, infringement, unfair competition, or false designation of origin and
false description, whether or not it is licensed to do business in the Philippines
under existing laws.
xxx xxx xxx

Section 170. Penalties. — Independent of the civil and administrative
sanctions imposed by law, a criminal penalty of imprisonment from two (2)
years to ve (5) years and a ne ranging from Fifty thousand pesos (P50,000) to
Two hundred thousand pesos (P200,000), shall be imposed on any person who is
found guilty of committing any of the acts mentioned in Section 155, Section 168,
and Subsection 169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs had
jurisdiction to decide the petitioner's administrative case against respondents and the
IPO Director General had exclusive jurisdiction over the appeal of the judgment of the
IPO Director of Legal Affairs. cCSHET
Unfair Competition
The Court will no longer touch on the issue of the validity or propriety of the 22
December 2003 Decision of the IPO Director of Legal Affairs which: (1) directed the
cancellation of the certi cate of registration of respondent Sehwani, Incorporated for
the mark "IN-N-OUT" and (2) ordered respondents to permanently cease and desist
from using the disputed mark on its goods and business. Such an issue has already
been settled by this Court in its nal and executory Decision dated 15 October 2007 in
G.R. No. 171053, Sehwani, Incorporated v. In-N-Out Burger, 4 4 ultimately af rming the
foregoing judgment of the IPO Director of Legal Affairs. That petitioner has the superior
right to own and use the "IN-N-OUT" trademarks vis-à-vis respondents is a nding which
this Court may no longer disturb under the doctrine of conclusiveness of judgment. In
conclusiveness of judgment, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in
which judgment is rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and their privies whether or
not the claims, demands, purposes, or subject matters of the two actions are the same.
45
Thus, the only remaining issue for this Court to resolve is whether the IPO
Director General correctly found respondents guilty of unfair competition for which he
awarded damages to petitioner.
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. 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. Actual
fraudulent intent need not be shown. 4 6
In his Decision dated 23 December 2005, the IPO Director General ably explains
the basis for his finding of the existence of unfair competition in this case, viz.:
The evidence on record shows that the [herein respondents] were not using their
registered trademark but that of the [petitioner]. [Respondent] SEHWANI, INC. was
issued a Certi cate of Registration for IN N OUT (with the Inside of the Letter "O"
Formed like a Star) for restaurant business in 1993. The restaurant opened only in
2000 but under the name IN-N-OUT BURGER. Apparently, the [respondents] started
constructing the restaurant only after the [petitioner] demanded that the latter
desist from claiming ownership of the mark IN-N-OUT and voluntarily cancel their
trademark registration. Moreover, [respondents] are also using [petitioner's]
registered mark Double-Double for use on hamburger products. In fact, the burger
wrappers and the French fries receptacles the [respondents] are using do not bear
the mark registered by the [respondent], but the [petitioner's] IN-N-OUT Burger's
name and trademark IN-N-OUT with Arrow design.
There is no evidence that the [respondents] were authorized by the [petitioner] to
use the latter's marks in the business. [Respondents'] explanation that they are
not using their own registered trademark due to the dif culty in printing the "star"
does not justify the unauthorized use of the [petitioner's] trademark instead.
Further, [respondents] are giving their products the general appearance that would
likely in uence purchasers to believe that these products are those of the
[petitioner]. The intention to deceive may be inferred from the similarity of the
goods as packed and offered for sale, and, thus, action will lie to restrain such
unfair competition. . . . .
xxx xxx xxx

[Respondents'] use of IN-N-OUT BURGER in business signages reveals fraudulent
intent to deceive purchasers. Exhibit "GG", which shows the business
establishment of [respondents] illustrates the imitation of [petitioner's] corporate
name IN-N-OUT and signage IN-N-OUT BURGER. Even the Director noticed it and
held:
"We also note that In-N-Out Burger is likewise, [petitioner's] corporate name.
It has used the "IN-N-OUT" Burger name in its restaurant business in
Baldwin Park, California in the United States of America since 1948. Thus
it has the exclusive right to use the tradenems * "In-N-Out" Burger in the
Philippines and the respondents' are unlawfully using and appropriating
the same." DCcHAa
The Of ce cannot give credence to the [respondent's] claim of good faith and that
they have openly and continuously used the subject mark since 1982 and is (sic)
in the process of expanding its business. They contend that assuming that there
is value in the foreign registrations presented as evidence by the [petitioner], the
purported exclusive right to the use of the subject mark based on such foreign
registrations is not essential to a right of action for unfair competition.
[Respondents] also claim that actual or probable deception and confusion on the
part of customers by reason of respondents' practices must always appear, and
in the present case, the BLA has found none. This Of ce nds the arguments
untenable.
In contrast, the [respondents] have the burden of evidence to prove that they do
not have fraudulent intent in using the mark IN-N-OUT. To prove their good faith,
[respondents] could have easily offered evidence of use of their registered
trademark, which they claimed to be using as early as 1982, but did not.
[Respondents] also failed to explain why they are using the marks of [petitioner]
particularly DOUBLE DOUBLE, and the mark IN-N-OUT Burger and Arrow Design.
Even in their listing of menus, [respondents] used [Appellants'] marks of DOUBLE
DOUBLE and IN-N-OUT Burger and Arrow Design. In addition, in the wrappers and
receptacles being used by the [respondents] which also contained the marks of
the [petitioner], there is no notice in such wrappers and receptacles that the
hamburger and French fries are products of the [respondents]. Furthermore, the
receipts issued by the [respondents] even indicate "representing IN-N-OUT". These
acts cannot be considered acts in good faith. 4 7
Administrative proceedings are governed by the "substantial evidence rule". A

nding of guilt in an administrative case would have to be sustained for as long as it is
supported by substantial evidence that the respondent has committed acts stated in
the complaint or formal charge. As de ned, substantial evidence is such relevant
evidence as a reasonable mind may accept as adequate to support a conclusion. 4 8 As
recounted by the IPO Director General in his decision, there is more than enough
substantial evidence to support his nding that respondents are guilty of unfair
competition.
With such nding, the award of damages in favor of petitioner is but proper. This
is in accordance with Section 168.4 of the Intellectual Property Code, which provides
that the remedies under Sections 156, 157 and 161 for infringement shall apply mutatis
mutandis to unfair competition. The remedies provided under Section 156 include the
right to damages, to be computed in the following manner:
Section 156. Actions, and Damages and Injunction for Infringement. — 156.1
The owner of a registered mark may recover damages from any person who
infringes his rights, and the measure of the damages suffered shall be either the
reasonable pro t which the complaining party would have made, had the
defendant not infringed his 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, then the court may award as
damages a 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. AHDaET
In the present case, the Court deems it just and fair that the IPO Director General
computed the damages due to petitioner by applying the reasonable percentage of
30% to the respondents' gross sales, and then doubling the amount thereof on account
of respondents' actual intent to mislead the public or defraud the petitioner, 4 9 thus,
arriving at the amount of actual damages of P212,574.28.
Taking into account the deliberate intent of respondents to engage in unfair
competition, it is only proper that petitioner be awarded exemplary damages. Article
2229 of the Civil Code provides that such damages may be imposed by way of example
or correction for the public good, such as the enhancement of the protection accorded
to intellectual property and the prevention of similar acts of unfair competition.
However, exemplary damages are not meant to enrich one party or to impoverish
another, but to serve as a deterrent against or as a negative incentive to curb socially
deleterious action. 5 0 While there is no hard and fast rule in determining the fair amount
of exemplary damages, the award of exemplary damages should be commensurate
with the actual loss or injury suffered. 5 1 Thus, exemplary damages of P500,000.00
should be reduced to P250,000.00 which more closely approximates the actual
damages awarded.
In accordance with Article 2208 (1) of the Civil Code, attorney's fees may
likewise be awarded to petitioner since exemplary damages are awarded to it.
Petitioner was compelled to protect its rights over the disputed mark. The amount of
P500,000.00 is more than reasonable, given the fact that the case has dragged on for
more than seven years, despite the respondent's failure to present countervailing
evidence. Considering moreover the reputation of petitioner's counsel, the actual
attorney's fees paid by petitioner would far exceed the amount that was awarded to it.
52
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed

Decision of the Court of Appeals in CA-G.R. SP No. 92785, promulgated on 18 July
2006, is REVERSED. The Decision of the IPO Director General, dated 23 December
2005, is hereby REINSTATED IN PART, with the modi cation that the amount of
exemplary damages awarded be reduced to P250,000.00. DaTHAc
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Nachura and Reyes, JJ., concur.
Footnotes
1. Penned by Associate Justice Magdangal M. de Leon with Associate Justices Godardo A.
Jacinto and Marina L. Buzon, concurring. Rollo, pp. 51-74. TaCIDS
2. Penned by IPO Director General Adrian S. Cristobal, Jr. Rollo, pp. 116-131.
3. Rollo, p. 139.
4. Id. at 166.
5. Id. at 144-145.
6. Id. at 140-144.
7. Id. at 148-158.
8. Id. at 53.
9. Id. at 15.
10. Id. at 19-20.
11. Id. at 430.
12. Id. at 166-174.
13. Id. at 178-195.
14. Id. at 195.
15. Id. at 697-704.
16. Id. at 705-722.
17. Id. at 619.
18. Id. at 727-731.
19. Id. at 619.
20. Sehwani, Incorporated v. In-N-Out Burger, Inc., 536 SCRA 225.
21. Rollo, pp. 120-130.
22. Id. at 130-131.
23. Id. at 75-108.
24. Id. at 106-107.
25. Id. at 51-73.
26. Id. at 73.
27. Id. at 363-364.
28. Id. at 981. IaHSCc
29. Sehwani, Incorporated v. In-N-Out Burger, Inc., supra note 20.

30. This Court notes that Section 8202 of the Government Code of the State of California
provides that:
8202 (a) When executing a jurat, a notary shall administer an oath or af rmation to the
af ant and shall determine, from satisfactory evidence as described in Section 1185 of
the Civil Code, that the af ant is the person executing the document. The af ant shall
sign the document in the presence of the notary.
(b) To any affidavit subscribed and sworn to before a notary, these shall be
attached a jurat in the following form:
State of California
County of ____________
Subscribed and sworn to (or affirmed) before me on this ___ day of ______, 20__, by
________________, proved to me on the basis of satisfactory evidence to be the person(s)
who appeared before me.
Seal _______________
Signature ____________
31. G.R. No. 164948, 27 June 2006, 493 SCRA 415.
32. Rule 8, Section 2 and Rule 3, Section 11 of the 2004 Rules on Notarial Practice state
that:
SEC. 2. Contents of the Concluding Part of the Notarial Certificate. — The notarial
certificate shall include the following:
(a) the name of the notary public as exactly indicated in the commission;
(b) the serial number of the commission of the notary public;
(c) the words "Notary Public" and the province or city where the notary public is
commissioned, the expiration date of the commission, the of ce address of the notary
public; and
(d) the roll of attorney's number, the professional tax receipt number and the
place and date of issuance thereof, and the IBP membership number.
SEC. 11. Jurisdiction and Term . — A person commissioned as notary public may
perform notarial acts in any place within the territorial jurisdiction of the commissioning
court for a period of two (2) years commencing the rst day of January of the year in
which the commissioning is made, unless earlier revoked or the notary public has
resigned under these Rules and the Rules of Court. HCEcaT
33. See Azuela v. Court of Appeals, G.R. No. 122880, 12 April 2006, 487 SCRA 119, 143.
34. Agpalo, LEGAL FORMS (2006), pp. 71-72.
35. LDP Marketing, Inc. v. Monter, G.R. No. 159653, 25 January 2006, 480 SCRA 137, 141.
36. Pajuyo v. Court of Appeals, G.R. No. 146364, 3 June 2004, 430 SCRA 492, 509.
37. Torres v. Specialized Packaging Development Corporation, G.R. No. 149634, 6 July
2004, 433 SCRA 455, 463-464.
38. MSF Tire and Rubber, Inc. v. Court of Appeals, 370 Phil. 824, 832 (1999).
39. La Campana Development Corporation v. See, G.R. No. 149195, 26 June 2006, 492
SCRA 584, 588-589.
40. Sehwani, Incorporated v. In-N-Out Burger, Inc., supra note 20 at 232-233.

41. Rollo, p. 83.
42. See Ateneo de Naga University v. Manalo, G.R. No. 160455, 9 May 2005, 458 SCRA 325,
336-337.
43. Aguilar, THE INTELLECTUAL PROPERTY CODE (1st ed., 2004), pp. 7-9.
44. Supra note 20.

45. Oropeza Marketing Corporation v. Allied Banking Corporation, 441 Phil. 551, 564
(2002).
46. McDonald's Corporation v. L.C. Big Mak Burger, Inc. , G.R. No. 143993,18 August 2004,
437 SCRA 10, 37.
47. Rollo, pp. 121-124.

48. Of ce of the Ombudsman v. Santos, G.R. No. 166116, 31 March 2006, 486 SCRA 463,
470.
49. Section 156.3 of the Intellectual Property Code states that:
156.3 In cases where actual intent to mislead the public or defraud the complainant is
shown, in the discretion of the court, the damages may be doubled.
50. Lamis v. Ong, G.R. No. 148923, 11 August 2005, 466 SCRA 510, 519-520 and Cebu
Country Club, Inc. v. Elizagaque, G.R. No. 160273, 18 January 2008, 542 SCRA 65, 75-76.
51. Del Rosario v. Court of Appeals, 334 Phil. 812, 827-829 (1997).
52. Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. of Iloilo, Inc. , G.R. No.
159831, 14 October 2005, 473 SCRA 151, 175. CTHDcE

SECOND DIVISION
[G.R. No. 185917. June 1, 2011.]
FREDCO MANUFACTURING CORPORATION , petitioner, vs . PRESIDENT

AND FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY) ,
respondents.
DECISION
CARPIO , J : p
The Case
Before the Court is a petition for review 1 assailing the 24 October 2008 Decision
2 and 8 January 2009 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 103394.
The Antecedent Facts
On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a
corporation organized and existing under the laws of the Philippines, led a Petition for
Cancellation of Registration No. 56561 before the Bureau of Legal Affairs of the
Intellectual Property O ce (IPO) against respondents President and Fellows of
Harvard College (Harvard University), a corporation organized and existing under the
laws of Massachusetts, United States of America. The case was docketed as Inter
Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard University on
25 November 1993 for the mark "Harvard Veritas Shield Symbol" for decals, tote bags,
serving trays, sweatshirts, t-shirts, hats and ying discs under Classes 16, 18, 21, 25
and 28 of the Nice International Classi cation of Goods and Services. Fredco alleged
that the mark "Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and slacks was
rst used in the Philippines on 2 January 1982 by New York Garments Manufacturing &
Export Co., Inc. (New York Garments), a domestic corporation and Fredco's
predecessor-in-interest. On 24 January 1985, New York Garments led for trademark
registration of the mark "Harvard" for goods under Class 25. The application matured
into a registration and a Certi cate of Registration was issued on 12 December 1988,
with a 20-year term subject to renewal at the end of the term. The registration was later
assigned to Romeo Chuateco, a member of the family that owned New York Garments.
CEASaT
Fredco alleged that it was formed and registered with the Securities and
Exchange Commission on 9 November 1995 and had since then handled the
manufacture, promotion and marketing of "Harvard" clothing articles. Fredco alleged
that at the time of issuance of Registration No. 56561 to Harvard. University, New York
Garments had already registered the mark "Harvard" for goods under Class 25. Fredco
alleged that the registration was cancelled on 30 July 1998 when New York Garments
inadvertently failed to le an a davit of use/non-use on the fth anniversary of the
registration but the right to the mark "Harvard" remained with its predecessor New York
Garments and now with Fredco.
Harvard University, on the other hand, alleged that it is the lawful owner of the
name and mark "Harvard" in numerous countries worldwide, including the Philippines.
Among the countries where Harvard University has registered its name and mark
"Harvard" are:
1. Argentina
2. Benelux 4
3. Brazil
4. Canada
5. Chile
6. China P.R.
7. Colombia
8. Costa Rica
9. Cyprus
10. Czech Republic
11. Denmark
12. Ecuador
13. Egypt
14. Finland
15. France
16. Great Britain
17. Germany
18. Greece DCcTHa
19. Hong Kong

20. India
21. Indonesia
22. Ireland
23. Israel
24. Italy
25. Japan
26. South Korea
27. Malaysia
28. Mexico
29. New Zealand
30. Norway
31. Peru
32. Philippines
33. Poland
34. Portugal
35. Russia
36. South Africa
37. Switzerland
38. Singapore
39. Slovak Republic
40. Spain
41. Sweden
42. Taiwan
43. Thailand
44. Turkey TaCSAD
45. United Arab Emirates

46. Uruguay
47. United States of America
48. Venezuela
49. Zimbabwe
50. European Community 5
The name and mark "Harvard" was adopted in 1639 as the name of Harvard College 6 of
Cambridge, Massachusetts, U.S.A. The name and mark "Harvard" was allegedly used in
commerce as early as 1872. Harvard University is over 350 years old and is a highly
regarded institution of higher learning in the United States and throughout the world.
Harvard University promotes, uses, and advertises its name "Harvard" through various
publications, services, and products in foreign countries, including the Philippines.
Harvard University further alleged that the name and the mark have been rated as one
of the most famous brands in the world, valued between US$750,000,000 and
US$1,000,000,000.
Harvard University alleged that in March 2002, it discovered, through its
international trademark watch program, Fredco's website www.harvard-usa.com. The
website advertises and promotes the brand name "Harvard Jeans USA" without Harvard
University's consent. The website's main page shows an oblong logo bearing the mark
"Harvard Jeans USAÂ®," "Established 1936," and "Cambridge, Massachusetts." On 20
April 2004, Harvard University led an administrative complaint against Fredco before
the IPO for trademark infringement and/or unfair competition with damages.
Harvard University alleged that its valid and existing certi cates of trademark
registration in the Philippines are:
1. Trademark Registration No. 56561 issued on 25 November 1993 for
"Harvard Veritas Shield Design" for goods and services in Classes 16,
18, 21, 25 and 28 (decals, tote bags, serving trays, sweatshirts, t-
shirts, hats and ying discs) of the Nice International Classi cation of
Goods and Services;
2. Trademark Registration No. 57526 issued on 24 March 1994 for
"Harvard Veritas Shield Symbol" for services in Class 41; Trademark
Registration No. 56539 issued on 25 November 1998 for "Harvard"
for services in Class 41; and
3. Trademark Registration No. 66677 issued on 8 December 1998 for
"Harvard Graphics" for goods in Class 9. Harvard University further
alleged that it led the requisite a davits of use for the mark
"Harvard Veritas Shield Symbol" with the IPO.
Further, on 7 May 2003 Harvard University led Trademark Application No. 4-
2003-04090 for "Harvard Medical International & Shield Design" for services in Classes
41 and 44. In 1989, Harvard University established the Harvard Trademark Licensing
Program, operated by the O ce for Technology and Trademark Licensing, to oversee
and manage the worldwide licensing of the "Harvard" name and trademarks for various
goods and services. Harvard University stated that it never authorized or licensed any
person to use its name and mark "Harvard" in connection with any goods or services in
the Philippines. DcaSIH
In a Decision 7 dated 22 December 2006, Director Estrellita Beltran-Abelardo of

the Bureau of Legal Affairs, IPO cancelled Harvard University's registration of the mark
"Harvard" under Class 25, as follows:
WHEREFORE, premises considered, the Petition for Cancellation is hereby
GRANTED. Consequently, Trademark Registration Number 56561 for the
trademark "HARVARD VE RI TAS 'SHIELD' SYMBOL" issued on November 25,
1993 to PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD
UNIVERSITY) should be CANCELLED only with respect to goods falling under
Class 25. On the other hand, considering that the goods of Respondent-Registrant
falling under Classes 16, 18, 21 and 28 are not confusingly similar with the
Petitioner's goods, the Respondent-Registrant has acquired vested right over the
same and therefore, should not be cancelled.
Let the lewrapper of the Trademark Registration No. 56561 issued on November
25, 1993 for the trademark "HARVARD VE RI TAS 'SHIELD' SYMBOL", subject
matter of this case together with a copy of this Decision be forwarded to the
Bureau of Trademarks (BOT) for appropriate action.
SO ORDERED. 8
Harvard University led an appeal before the O ce of the Director General of the
IPO. In a Decision 9 dated 21 April 2008, the Office of the Director General, IPO reversed
the decision of the Bureau of Legal Affairs, IPO.
The Director General ruled that more than the use of the trademark in the
Philippines, the applicant must be the owner of the mark sought to be registered. The
Director General ruled that the right to register a trademark is based on ownership and
when the applicant is not the owner, he has no right to register the mark. The Director
General noted that the mark covered by Harvard University's Registration No. 56561 is
not only the word "Harvard" but also the logo, emblem or symbol of Harvard University.
The Director General ruled that Fredco failed to explain how its predecessor New York
Garments came up with the mark "Harvard." In addition, there was no evidence that
Fredco or New York Garments was licensed or authorized by Harvard University to use
its name in commerce or for any other use.
The dispositive portion of the decision of the O ce of the Director General, IPO
reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The appealed
decision is hereby REVERSED and SET ASIDE. Let a copy of this Decision as well
as the trademark application and records be furnished and returned to the
Director of Bureau of Legal Affairs for appropriate action. Further, let also the
Directors of the Bureau of Trademarks and the Administrative, Financial and
Human Resources Development Services Bureau, and the library of the
Documentation, Information and Technology Transfer Bureau be furnished a
copy of this Decision for information, guidance, and records purposes.aIcETS
SO ORDERED. 1 0
Fredco led a petition for review before the Court of Appeals assailing the
decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals a rmed the decision of the O ce
of the Director General of the IPO.
The Court of Appeals adopted the ndings of the O ce of the Director General
and ruled that the latter correctly set aside the cancellation by the Director of the
Bureau of Legal Affairs of Harvard University's trademark registration under Class 25.
The Court of Appeals ruled that Harvard University was able to substantiate that it
appropriated and used the marks "Harvard" and "Harvard Veritas Shield Symbol" in
Class 25 way ahead of Fredco and its predecessor New York Garments. The Court of
Appeals also ruled that the records failed to disclose any explanation for Fredco's use
of the name and mark "Harvard" and the words "USA," "Established 1936," and
"Cambridge, Massachusetts" within an oblong device, "US Legend" and "Europe's No. 1
Brand." Citing Shangri-La International Hotel Management, Ltd. v Developers Group of
Companies, Inc., 1 1 the Court of Appeals ruled:
One who has imitated the trademark of another cannot bring an action for
infringement, particularly against the true owner of the mark, because he would
be coming to court with unclean hands. Priority is of no avail to the bad faith
plaintiff. Good faith is required in order to ensure that a second user may not
merely take advantage of the goodwill established by the true owner. 1 2
The dispositive portion of the decision of the Court of Appeals reads:

WHEREFORE, premises considered, the petition for review is DENIED. The
Decision dated April 21, 2008 of the Director General of the IPO in Appeal No. 14-
07-09 Inter Partes Case No. 14-2005-00094 is hereby AFFIRMED.
SO ORDERED. 1 3
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of Appeals denied
the motion for lack of merit.
Hence, this petition before the Court. CaAcSE
The Issue
The issue in this case is whether the Court of Appeals committed a reversible
error in affirming the decision of the Office of the Director General of the IPO.
The Ruling of this Court
The petition has no merit.
There is no dispute that the mark "Harvard" used by Fredco is the same as the
mark "Harvard" in the "Harvard Veritas Shield Symbol" of Harvard University. It is also
not disputed that Harvard University was named Harvard College in 1639 and that then,
as now, Harvard University is located in Cambridge, Massachusetts, U.S.A. It is also
unrefuted that Harvard University has been using the mark "Harvard" in commerce since
1872. It is also established that Harvard University has been using the marks "Harvard"
and "Harvard Veritas Shield Symbol" for Class 25 goods in the United States since
1953. Further, there is no dispute that Harvard University has registered the name and
mark "Harvard" in at least 50 countries.
On the other hand, Fredco's predecessor-in-interest, New York Garments, started
using the mark "Harvard" in the Philippines only in 1982. New York Garments led an
application with the Philippine Patent O ce in 1985 to register the mark "Harvard,"
which application was approved in 1988. Fredco insists that the date of actual use in
the Philippines should prevail on the issue of who has the better right to register the
marks.
Under Section 2 of Republic Act No. 166, 1 4 as amended (R.A. No. 166), before a
trademark can be registered, it must have been actually used in commerce for not less
than two months in the Philippines prior to the ling of an application for its
registration. While Harvard University had actual prior use of its marks abroad for a
long time, it did not have actual prior use in the Philippines of the mark "Harvard Veritas
Shield Symbol" before its application for registration of the mark "Harvard" with the
then Philippine Patents O ce. However, Harvard University's registration of the name
"Harvard" is based on home registration which is allowed under Section 37 of R.A. No.
166. 1 5 As pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the registration of
trademark that the applicant thereof must prove that the same has been actually
in use in commerce or services for not less than two (2) months in the Philippines
before the application for registration is led, where the trademark sought to be
registered has already been registered in a foreign country that is a member of the
Paris Convention, the requirement of proof of use in the commerce in the
Philippines for the said period is not necessary. An applicant for registration
based on home certi cate of registration need not even have used the mark or
trade name in this country. 1 6
Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco alleged that
Harvard University's registration "is based on 'home registration' for the mark 'Harvard
Veritas Shield' for Class 25." 1 7 HESIcT
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293), 1 8 "
[m]arks registered under Republic Act No. 166 shall remain in force but shall be
deemed to have been granted under this Act . . .," which does not require actual
prior use of the mark in the Philippines. Since the mark "Harvard Veritas Shield Symbol"
is now deemed granted under R.A. No. 8293, any alleged defect arising from the
absence of actual prior use in the Philippines has been cured by Section 239.2. 1 9 In
addition, Fredco's registration was already cancelled on 30 July 1998 when it failed to
le the required a davit of use/non-use for the fth anniversary of the mark's
registration. Hence, at the time of Fredco's ling of the Petition for Cancellation before
the Bureau of Legal Affairs of the IPO, Fredco was no longer the registrant or
presumptive owner of the mark "Harvard."
There are two compelling reasons why Fredco's petition must fail.
First, Fredco's registration of the mark "Harvard" and its identi cation of origin as
"Cambridge, Massachusetts" falsely suggest that Fredco or its goods are connected
with Harvard University, which uses the same mark "Harvard" and is also located in
Cambridge, Massachusetts. This can easily be gleaned from the following oblong logo
of Fredco that it attaches to its clothing line:
[image]
Fredco's registration of the mark "Harvard" should not have been allowed
because Section 4 (a) of R.A. No. 166 prohibits the registration of a mark "which may
disparage or falsely suggest a connection with persons, living or dead,
institutions , beliefs . . . ." Section 4 (a) of R.A. No. 166 provides:
Section 4. Registration of trade-marks, trade-names and service-marks on the
principal register. — There is hereby established a register of trade-mark, trade-
names and service-marks which shall be known as the principal register. The
owner of a trade-mark, a trade-name or service-mark used to distinguish his
goods, business or services from the goods, business or services of others shall
have the right to register the same on the principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous manner, or
matter which may disparage or falsely suggest a connection with persons,
living or dead, institutions , beliefs, or national symbols, or bring them into
contempt or disrepute;
(b) . . . (emphasis supplied)

Fredco's use of the mark "Harvard," coupled with its claimed origin in Cambridge,
Massachusetts, obviously suggests a false connection with Harvard University. On this
ground alone, Fredco's registration of the mark "Harvard" should have been disallowed.
EcDATH
Indisputably, Fredco does not have any a liation or connection with Harvard
University, or even with Cambridge, Massachusetts. Fredco or its predecessor New
York Garments was not established in 1936, or in the U.S.A. as indicated by Fredco in
its oblong logo. Fredco offered no explanation to the Court of Appeals or to the IPO
why it used the mark "Harvard" on its oblong logo with the words "Cambridge,
Massachusetts," "Established in 1936," and "USA." Fredco now claims before this Court
that it used these words "to evoke a 'lifestyle' or suggest a 'desirable aura' of
petitioner's clothing lines." Fredco's belated justi cation merely con rms that it sought
to connect or associate its products with Harvard University, riding on the prestige and
popularity of Harvard University, and thus appropriating part of Harvard University's
goodwill without the latter's consent.
Section 4 (a) of R.A. No. 166 is identical to Section 2 (a) of the Lanham Act, 2 0 the
trademark law of the United States. These provisions are intended to protect the right
of publicity of famous individuals and institutions from commercial exploitation of their
goodwill by others. 2 1 What Fredco has done in using the mark "Harvard" and the words
"Cambridge, Massachusetts," "USA" to evoke a "desirable aura" to its products is
precisely to exploit commercially the goodwill of Harvard University without the latter's
consent. This is a clear violation of Section 4 (a) of R.A. No. 166. Under Section 17 (c) 2 2
of R.A. No. 166, such violation is a ground for cancellation of Fredco's registration of
the mark "Harvard" because the registration was obtained in violation of Section 4 of
R.A. No. 166. acHTIC
Second, the Philippines and the United States of America are both signatories to
the Paris Convention for the Protection of Industrial Property (Paris Convention). The
Philippines became a signatory to the Paris Convention on 27 September 1965.
Articles 6 bis and 8 of the Paris Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake either administratively if their
legislation so permits, or at the request of an interested party, to refuse or to
cancel the registration and to prohibit the use of a trademark which constitutes a
reproduction, imitation or translation, liable to create confusion or a mark
considered by the competent authority of the country as being already the mark
of a person entitled to the bene ts of the present Convention and used
for identical or similar goods. These provisions shall also apply when
the essential part of the mark constitutes a reproduction of any such
well-known mark or an imitation liable to create confusion therewith .
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the
obligation of ling or registration , whether or not it forms part of a
trademark. (Emphasis supplied)
Thus, this Court has ruled that the Philippines is obligated to assure nationals of
countries of the Paris Convention that they are afforded an effective protection against
violation of their intellectual property rights in the Philippines in the same way that their
own countries are obligated to accord similar protection to Philippine nationals. 2 3
Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No.
166, as follows:
Section 37. Rights of foreign registrants. — Persons who are nationals of,
domiciled in, or have a bona de or effective business or commercial
establishment in any foreign country, which is a party to any international
convention or treaty relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be entitled to the
bene ts and subject to the provisions of this Act to the extent and under the
conditions essential to give effect to any such convention and treaties so long as
the Philippines shall continue to be a party thereto, except as provided in the
following paragraphs of this section.
xxx xxx xxx
Trade-names of persons described in the rst paragraph of this section
shall be protected without the obligation of ling or registration
whether or not they form parts of marks . 2 4 DcSACE
xxx xxx xxx (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a State that is a party to the
Paris Convention, whether or not the trade name forms part of a trademark, is
protected "without the obligation of filing or registration."
"Harvard" is the trade name of the world famous Harvard University, and it is also
a trademark of Harvard University. Under Article 8 of the Paris Convention, as well as
Section 37 of R.A. No. 166, Harvard University is entitled to protection in the Philippines
of its trade name "Harvard" even without registration of such trade name in the
Philippines. This means that no educational entity in the Philippines can use the trade
name "Harvard" without the consent of Harvard University. Likewise, no entity in the
Philippines can claim, expressly or impliedly through the use of the name and mark
"Harvard," that its products or services are authorized, approved, or licensed by, or
sourced from, Harvard University without the latter's consent.
Article 6 bis of the Paris Convention has been administratively implemented in the
Philippines through two directives of the then Ministry (now Department) of Trade,
which directives were upheld by this Court in several cases. 2 5 On 20 November 1980,
then Minister of Trade Secretary Luis Villafuerte issued a Memorandum directing the
Director of Patents to reject, pursuant to the Paris Convention, all pending applications
for Philippine registration of signature and other world-famous trademarks by
applicants other than their original owners. 2 6 The Memorandum states:
Pursuant to the Paris Convention for the Protection of Industrial Property to which
the Philippines is a signatory, you are hereby directed to reject all pending
applications for Philippine registration of signature and other world-famous
trademarks by applicants other than its original owners or users.
The con icting claims over internationally known trademarks involve such name
brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci,
Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey
Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such
trademarks should be asked to surrender their certi cates of registration, if any, to
avoid suits for damages and other legal action by the trademarks' foreign or local
owners or original users.
You are also required to submit to the undersigned a progress report on the
matter.
For immediate compliance. 2 7
In a Memorandum dated 25 October 1983, then Minister of Trade and Industry

Roberto Ongpin a rmed the earlier Memorandum of Minister Villafuerte. Minister
Ongpin directed the Director of Patents to implement measures necessary to comply
with the Philippines' obligations under the Paris Convention, thus: EScaIT
1. Whether the trademark under consideration is well-known in the Philippines

or is a mark already belonging to a person entitled to the bene ts of the
CONVENTION, this should be established, pursuant to Philippine Patent O ce
procedures in inter partes and ex parte cases, according to any of the following
criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark
being considered is already well-known in the Philippines such that permission for
its use by other than its original owner will constitute a reproduction, imitation,
translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by
proof that goods bearing the trademark are sold on an international scale,
advertisements, the establishment of factories, sales o ces, distributorships, and
the like, in different countries, including volume or other measure of international
trade and commerce;
(c) that the trademark is duly registered in the industrial property
o ce(s) of another country or countries, taking into consideration the
dates of such registration ;
(d) that the trademark has been long established and obtained goodwill and
general international consumer recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership and
has the right to registration under the provisions of the aforestated PARIS
CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include
tradenames, service marks, logos, signs, emblems, insignia or other
similar devices used for identification and recognition by consumers .
3. The Philippine Patent O ce shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or
imitation of a trademark owned by a person, natural or corporate, who is a citizen
of a country signatory to the PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY.
xxx xxx xxx 2 8 (Emphasis supplied)
In Mirpuri, the Court ruled that the essential requirement under Article 6 bis of the
Paris Convention is that the trademark to be protected must he "well-known" in the
country where protection is sought. 2 9 The Court declared that the power to determine
whether a trademark is well-known lies in the competent authority of the country of
registration or use. 3 0 The Court then stated that the competent authority would either
be the registering authority if it has the power to decide this, or the courts of the
country in question if the issue comes before the courts. 3 1 caEIDA
To be protected under the two directives of the Ministry of Trade, an

internationally well-known mark need not be registered or used in the Philippines. 3 2 All
that is required is that the mark is well-known internationally and in the Philippines for
identical or similar goods, whether or not the mark is registered or used in the
Philippines. The Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.: 3 3
The fact that respondent's marks are neither registered nor used in the
Philippines is of no moment . The scope of protection initially afforded by
Article 6b i s of the Paris Convention has been expanded in the 1999 Joint
Recommendation Concerning Provisions on the Protection of Well-Known Marks,
wherein the World Intellectual Property Organization (WIPO) General Assembly
and the Paris Union agreed to a nonbinding recommendation that a well-known
mark should be protected in a country even if the mark is neither
registered nor used in that country . Part I, Article 2(3) thereof provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State shall not
require, as a condition for determining whether a mark is a well-known mark:
(i) that the mark has been used in, or that the mark has been registered or that
an application for registration of the mark has been led in or in respect of, the
Member State;
(ii) that the mark is well known in, or that the mark has been registered or that
an application for registration of the mark has been led in or in respect of, any
jurisdiction other than the Member State; or
(iii) that the mark is well known by the public at large in the Member State. 3 4
(Italics in the original decision; boldface supplied)
Indeed, Section 123.1 (e) of R.A. No. 8293 now categorically states that "a mark
which is considered by the competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is registered here ,"
cannot be registered by another in the Philippines. Section 123.1 (e) does not require
that the well-known mark be used in commerce in the Philippines but only that it be
well-known in the Philippines. Moreover, Rule 102 of the Rules and Regulations on
Trademarks, Service Marks, Trade Names and Marked or Stamped Containers, which
implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a mark is well-known. In
determining whether a mark is well-known, the following criteria or any
combination thereof may be taken into account: CSTHca
(a) the duration, extent and geographical area of any use of the mark, in
particular, the duration, extent and geographical area of any promotion of the
mark, including advertising or publicity and the presentation, at fairs or
exhibitions, of the goods and/or services to which the mark applies;
(b) the market share, in the Philippines and in other countries, of the goods
and/or services to which the mark applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;

(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of registration attained by the mark in the world;

(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;
(i) the commercial value attributed to the mark in the world;

(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the mark is a
well-known mark; and
(l) the presence or absence of identical or similar marks validly registered for
or used on identical or similar goods or services and owned by persons other than
the person claiming that his mark is a well-known mark. (Emphasis supplied)
Since "any combination " of the foregoing criteria is su cient to determine that a
mark is well-known, it is clearly not necessary that the mark be used in commerce in the
Philippines. Thus, while under the territoriality principle a mark must be used in
commerce in the Philippines to be entitled to protection, internationally well-known
marks are the exceptions to this rule.
In the assailed Decision of the O ce of the Director General dated 21 April 2008,
the Director General found that:
Traced to its roots or origin, HARVARD is not an ordinary word. It refers to no other
than Harvard University, a recognized and respected institution of higher learning
located in Cambridge, Massachusetts, U.S.A. Initially referred to simply as "the
new college," the institution was named "Harvard College" on 13 March 1639,
after its first principal donor, a young clergyman named John Harvard. A graduate
of Emmanuel College, Cambridge in England, John Harvard bequeathed about
four hundred books in his will to form the basis of the college library collection,
along with half his personal wealth worth several hundred pounds. The earliest
known o cial reference to Harvard as a "university" rather than "college" occurred
in the new Massachusetts Constitution of 1780. IcTaAH
Records also show that the rst use of the name HARVARD was in 1638 for
educational services, policy courses of instructions and training at the university
level. It has a Charter. Its rst commercial use of the name or mark HARVARD for
Class 25 was on 31 December 1953 covered by UPTON Reg. No. 2,119,339 and
2,101,295. Assuming in arguendo, that the Appellate may have used the mark
HARVARD in the Philippines ahead of the Appellant, it still cannot be denied that
the Appellant's use thereof was decades, even centuries, ahead of the Appellee's.
More importantly, the name HARVARD was the name of a person whose deeds
were considered to be a cornerstone of the university. The Appellant's logos,
emblems or symbols are owned by Harvard University. The name HARVARD and
the logos, emblems or symbols are endemic and cannot be separated from the
institution. 3 5
Finally, in its assailed Decision, the Court of Appeals ruled:

Records show that Harvard University is the oldest and one of the foremost
educational institutions in the United States, it being established in 1636. It is
located primarily in Cambridge, Massachusetts and was named after John
Harvard, a puritan minister who left to the college his books and half of his estate.
The mark "Harvard College" was rst used in commerce in the United States in
1638 for educational services, speci cally, providing courses of instruction and
training at the university level (Class 41). Its application for registration with the
United States Patent and Trademark O ce was led on September 20, 2000 and
it was registered on October 16, 2001. The marks "Harvard" and "Harvard Ve ri tas
'Shield' Symbol" were rst used in commerce in the the United States on
December 31, 1953 for athletic uniforms, boxer shorts, briefs, caps, coats, leather
coats, sports coats, gym shorts, infant jackets, leather jackets, night shirts, shirts,
socks, sweat pants, sweatshirts, sweaters and underwear (Class 25). The
applications for registration with the USPTO were led on September 9, 1996, the
mark "Harvard" was registered on December 9, 1997 and the mark "Harvard Ve ri
tas 'Shield' Symbol" was registered on September 30, 1997. 3 6
We also note that in a Decision 3 7 dated 18 December 2008 involving a separate

case between Harvard University and Streetward International, Inc., 3 8 the Bureau of
Legal Affairs of the IPO ruled that the mark "Harvard" is a "well-known mark." This
Decision, which cites among others the numerous trademark registrations of Harvard
University in various countries, has become final and executory. SCEDAI
There is no question then, and this Court so declares, that "Harvard" is a well-
known name and mark not only in the United States but also internationally, including
the Philippines. The mark "Harvard" is rated as one of the most famous marks in the
world. It has been registered in at least 50 countries. It has been used and promoted
extensively in numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more than 350 years ago.
It is easily recognizable as the trade name and mark of Harvard University of
Cambridge, Massachusetts, U.S.A., internationally known as one of the leading
educational institutions in the world. As such, even before Harvard University applied
for registration of the mark "Harvard" in the Philippines, the mark was already protected
under Article 6 bis and Article 8 of the Paris Convention. Again, even without applying
the Paris Convention, Harvard University can invoke Section 4 (a) of R.A. No. 166 which
prohibits the registration of a mark "which may disparage or falsely suggest a
connection with persons, living or dead, institutions , beliefs . . . ."
WHEREFORE , we DENY the petition. We AFFIRM the 24 October 2008 Decision
and 8 January 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 103394.
SO ORDERED .
Nachura, Peralta, Abad and Mendoza, JJ., concur.
Footnotes
1.Under Rule 45 of the 1997 Rules of Civil Procedure.
2.Rollo, pp. 103-116. Penned by Associate Justice Remedios A. Salazar-Fernando with

Associate Justices Rosalinda Asuncion-Vicente and Ramon M. Bato, Jr., concurring.
3.Id. at 118-119. Penned by Associate Justice Remedios A. Salazar-Fernando with Associate

Justices Arcangelita M. Romilla-Lontok and Ramon M. Bato, Jr., concurring.
4.Belgium, the Netherlands and Luxembourg.
5.Exhibits "5" to "5-r." Rollo, pp. 288-306.

6.Originally called "New College," founded in 1636. Rollo, p. 129.
7.Id. at 135-156.
8.Id. at 156.
9.Id. at 121-133. Penned by Director General Adrian S. Cristobal, Jr.

10.Id. at 133.
11.G.R. No. 159938, 31 March 2006, 486 SCRA 405.
12.Rollo, p. 114.
13.Id. at 115-116.
14.An Act to Provide for the Registration and Protection of Trade-Marks, Trade-Names and
Service-Marks, De ning Unfair Competition and False Markings and Providing Remedies
Against the Same, and for Other Purposes.
15.Decision of the Bureau of Legal Affairs, rollo, p. 154; Decision of the Director General, rollo,
p. 122.
16.Id. at 157.
17.Id. at 122.
18.Intellectual Property Code.

19.Harvard University led A davits of Use for the 5th and 10th Anniversaries of Registration
No. 56561. Decision of the Director General, rollo, p. 132.
20.Roger E. Schechter and John R. Thomas, INTELLECTUAL PROPERTY: THE LAW OF

COPYRIGHTS, PATENTS AND TRADEMARKS (2003), p. 603.
21.Id. at 263.
22.Section 17 (c) of R.A. No. 166, as amended, provides: "Grounds for cancellation. — Any
person, who believes that he is or will be damaged by the registration of a mark or trade-
name, may, upon the payment of the prescribed fee, apply to cancel said registration
upon any of the following grounds:
(a) . . .
xxx xxx xxx

(c) That the registration was obtained fraudulently or contrary to the provisions of
section four, Chapter II hereof;
xxx xxx xxx." (Emphasis supplied)

23.See La Chemise Lacoste, S.A. v. Hon. Fernandez, etc., et al., 214 Phil. 332 (1984).
24.The original version of R.A. No. 166 already contains this provision.
25.Mirpuri v. Court of Appeals , 376 Phil. 628 (1999); Puma Sportschuhfabriken Rudolf Dassler,
K.G. v. IAC, 241 Phil. 1029 (1988); La Chemise Lacoste, S.A. v. Hon. Fernandez, etc., et
al., supra note 23.
26.Mirpuri v. Court of Appeals, id.

27.Id. at 656-657.
28.Id. at 658-659. Also cited in La Chemise Lacoste, S.A. v. Hon. Fernandez, etc., et al., supra
note 23.
29.Id. at 656.
30.Id.
31.Id.
32.Sehwani, Incorporated v. In-N-Out Burger, Inc. , G.R. No. 171053, 15 October 2007, 536 SCRA
225.
33.Id.
34.Id. at 240.
35.Rollo, pp. 129-130.
36.Id. at 112-113.
37.Id. at 1251-1263. Penned by Bureau of Legal Affairs Director Estrellita Beltran-Abelardo.
38.IPC No. 14-2008-00107; Decision No. 2008-232.

THIRD DIVISION
[G.R. No. 209843. March 25, 2015.]
TAIWAN KOLIN CORPORATION, LTD. , petitioner, vs . KOLIN

ELECTRONICS CO., INC. , respondent.
DECISION
VELASCO, JR. , J : p
Nature of the Case

Before the Court is a petition for review under Rule 45 of the Rules of Court interposed
by petitioner Taiwan Kolin Corporation, Ltd. (Taiwan Kolin), assailing the April 30, 2013
Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 122565 and its subsequent
November 6, 2013 Resolution. 2 The assailed issuances effectively denied petitioner's
trademark application for the use of "KOLIN" on its television and DVD players.
The Facts
On February 29, 1996, Taiwan Kolin led with the Intellectual Property O ce (IPO),
then Bureau of Patents, Trademarks, and Technology Transfer, a trademark application,
docketed as Application No. 4-1996-106310, for the use of "KOLIN" on a combination of
goods, including colored televisions, refrigerators, window-type and split-type air
conditioners, electric fans and water dispensers. Said goods allegedly fall under Classes 9,
11, and 21 of the Nice Classification (NCL).
Application No. 4-1996-106310 would eventually be considered abandoned for Taiwan
Kolin's failure to respond to IPO's Paper No. 5 requiring it to elect one class of good for its
coverage. However, the same application was subsequently revived through Application
Serial No. 4-2002-011002, 3 with petitioner electing Class 9 as the subject of its application,
particularly: television sets, cassette recorder, VCD Ampli ers, camcorders and other
audio/video electronic equipment, at iron, vacuum cleaners, cordless handsets,
videophones, facsimile machines, teleprinters, cellular phones and automatic goods vending
machine. The application would in time be duly published. 4
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin Electronics) opposed
petitioner's revived application, docketed as Inter Partes Case No. 14-2006-00096. As
argued, the mark Taiwan Kolin seeks to register is identical, if not confusingly similar, with its
"KOLIN" mark registered on November 23, 2003, covering the following products under Class
9 of the NCL: automatic voltage regulator, converter, recharger, stereo booster, AC-DC
regulated power supply, step-down transformer, and PA amplified AC-DC. 5
To digress a bit, Kolin Electronics' "KOLIN" registration was, as it turns out, the subject
of a prior legal dispute between the parties in Inter Partes Case No. 14-1998-00050 before
the IPO. In the said case, Kolin Electronics' own application was opposed by Taiwan Kolin,
being, as Taiwan Kolin claimed, the prior registrant and user of the "KOLIN" trademark, having
registered the same in Taipei, Taiwan on December 1, 1988. The Bureau of Legal Affairs of
the IPO (BLA-IPO), however, did not accord priority right to Taiwan Kolin's Taipei registration
absent evidence to prove that it has already used the said mark in the Philippines as early as
1988. On appeal, the IPO Director General a rmed the BLA-IPO's Decision. Taiwan Kolin
elevated the case to the CA, but without injunctive relief, Kolin Electronics was able to register
the "KOLIN" trademark on November 23, 2003 for its products. 6 Subsequently, the CA, on
July 31, 2006, affirmed 7 the Decision of the Director General.
In answer to respondent's opposition in Inter Partes Case No. 14-2006-00096,
petitioner argued that it should be accorded the bene ts of a foreign-registered mark under
Secs. 3. and 131.1 of Republic Act No. 8293, otherwise known as the Intellectual Property
Code of the Philippines (IP Code); 8 that it has already registered the "KOLIN" mark in the
People's Republic of China, Malaysia and Vietnam, all of which are parties to the Paris
Convention for the Protection of Industrial Property (Paris Convention) and the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS); and that bene ts accorded to
a well-known mark should be accorded to petitioner. 9
Ruling of the BLA-IPO
By Decision 10 dated August 16, 2007, the BLA-IPO denied petitioner's application
disposing as follows:
In view of all the foregoing, the instant Opposition is as, it is hereby
SUSTAINED . Accordingly, application bearing Serial No. 4-1996-106310 for the
mark "KOLIN" led in the name of TAIWAN KOLIN., LTD. on February 29, 1996 for
goods falling under Class 09 of the International Classi cation of Goods such as
cassette recorder, VCD, woofer, ampli ers, camcorders and other audio/video
electronic equipment, at iron, vacuum cleaners, cordless handsets, videophones,
facsimile machines, teleprinters, cellular phones, automatic goods vending
machines and other electronic equipment is hereby REJECTED . HETDAC
Let the le wrapper of "KOLIN ", subject of this case be forwarded to the
Bureau of Trademarks (BOT) for appropriate action in accordance with this
Decision.
SO ORDERED .
Citing Sec. 123 (d) of the IP Code, 11 the BLA-IPO held that a mark cannot be
registered if it is identical with a registered mark belonging to a different proprietor in
respect of the same or closely-related goods. Accordingly, respondent, as the registered
owner of the mark "KOLIN" for goods falling under Class 9 of the NCL, should then be
protected against anyone who impinges on its right, including petitioner who seeks to
register an identical mark to be used on goods also belonging to Class 9 of the NCL. 12 The
BLA-IPO also noted that there was proof of actual confusion in the form of consumers
writing numerous e-mails to respondent asking for information, service, and complaints
about petitioner's products. 13
Petitioner moved for reconsideration but the same was denied on January 26, 2009 for
lack of merit. 14 Thus, petitioner appealed the above Decision to the O ce of the Director
General of the IPO.
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a Decision 15 reversing that
of the BLA-IPO in the following wise:
Wherefore, premises considered, the appeal is hereby GRANTED. The
Appellant's Trademark Application No. 4-1996-106310 is hereby GIVEN DUE COURSE
subject to the use limitation or restriction for the goods "television and DVD player".
Let a copy of this Decision as well as the trademark application and records be
furnished and returned to the Director of the Bureau of Legal Affairs for appropriate
action. Further, let the Director of the Bureau of Trademarks and the library of the
Documentation, Information and Technology Transfer Bureau be furnished a copy
of this Decision for information, guidance, and records purposes.
SO ORDERED.
In so ruling, the IPO Director General ratiocinated that product classi cation alone
cannot serve as the decisive factor in the resolution of whether or not the goods are related
and that emphasis should be on the similarity of the products involved and not on the
arbitrary classi cation or general description of their properties or characteristics. As held,
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. 16
Aggrieved, respondent elevated the case to the CA.
Ruling of the Court of Appeals
In its assailed Decision, the CA found for Kolin Electronics, on the strength of the
following premises: (a) the mark sought to be registered by Taiwan Kolin is confusingly
similar to the one already registered in favor of Kolin Electronics; (b) there are no other
designs, special shape or easily identifiable earmarks that would differentiate the products of
both competing companies; 17 and (c) the intertwined use of television sets with ampli er,
booster and voltage regulator bolstered the fact that televisions can be considered as within
the normal expansion of Kolin Electronics, 18 and is thereby deemed covered by its
trademark as explicitly protected under Sec. 138 19 of the IP Code. 20 Resultantly, the CA
granted respondent's appeal thusly:
WHEREFORE , the appeal is GRANTED . The November 23, 2011 Decision of
the Director General of the Intellectual Property O ce in Inter Partes Case No. 14-
2006-0096 is REVERSED and SET ASIDE . The September 17, 2007 Decision of the
Bureau of Legal Affairs of the same office is REINSTATED .
SO ORDERED .
Petitioner moved for reconsideration only to be denied by the CA through its equally
assailed November 6, 2013 Resolution. Hence, the instant recourse.
The Issue
The primordial issue to be resolved boils down to whether or not petitioner is entitled
to its trademark registration of "KOLIN" over its speci c goods of television sets and DVD
players. Petitioner postulates, in the main, that its goods are not closely related to those of
Kolin Electronics. On the other hand, respondent hinges its case on the CA's ndings that its
and petitioner's products are closely-related. Thus, granting petitioner's application for
trademark registration, according to respondent, would cause confusion as to the public.
The Court's Ruling
Identical marks may be registered for
products from the same classification
To bolster its opposition against petitioner's application to register trademark "KOLIN,"
respondent maintains that the element of mark identity argues against approval of such
application, quoting the BLA IPO's ruling in this regard: 21 IcSEAH

Indubitably, Respondent-Applicant's [herein petitioner] mark is identical to the
registered mark of herein Opposer [herein respondent] and the identical mark is used
on goods belonging to Class 9 to which Opposer's goods are also classi ed. On this
point alone, Respondent-Applicant's application should already be denied.
The argument is specious.

The parties admit that their respective sets of goods belong to Class 9 of the NCL,
which includes the following: 22
Class 9
Scienti c, nautical, surveying, photographic, cinematographic, optical,

weighing, measuring, signalling, checking (supervision), life-saving and teaching
apparatus and instruments; apparatus and instruments for conducting, switching,
transforming, accumulating, regulating or controlling electricity; apparatus for
recording, transmission or reproduction of sound or images; magnetic data carriers,
recording discs; compact discs, DVDs and other digital recording media;
mechanisms for coin-operated apparatus; cash registers, calculating machines, data
processing equipment, computers; computer software; fire-extinguishing apparatus.
But mere uniformity in categorization, by itself, does not automatically preclude the
registration of what appears to be an identical mark, if that be the case. In fact, this Court, in a
long line of cases, has held that such circumstance does not necessarily result in any
trademark infringement. The survey of jurisprudence cited in Mighty Corporation v. E. & J
Gallo Winery 23 is enlightening on this point:
(a) in Acoje Mining Co., Inc. vs. Director of Patents, 24 we ordered the approval of
Acoje Mining's application for registration of the trademark LOTUS for its soy
sauce even though Philippine Re ning 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 Re ning Co., Inc. vs. Ng Sam and Director of Patents , 25 we upheld
the Patent Director's registration of the same trademark CAMIA for Ng Sam's
ham under Class 47, despite Philippine Re ning Company's 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, 26 we dismissed Hickok's petition to cancel private respondent's
HICKOK trademark registration for its Marikina shoes as against petitioner's
earlier registration of the same trademark for handkerchiefs, briefs, belts and
wallets.
Verily, whether or not the products covered by the trademark sought to be registered
by Taiwan Kolin, on the one hand, and those covered by the prior issued certi cate of
registration in favor of Kolin Electronics, on the other, fall under the same categories in the
NCL is not the sole and decisive factor in determining a possible violation of Kolin
Electronics' intellectual property right should petitioner's application be granted. It is
hornbook doctrine, as held in the above-cited cases, that emphasis should be on the
similarity of the products involved and not on the arbitrary classi cation or general
description of their properties or characteristics. The mere fact that one person has adopted
and used a trademark on his goods would not, without more, prevent the adoption and use of
the same trademark by others on unrelated articles of a different kind. 27

The CA erred in denying petitioner's
registration application
Respondent next parlays the idea of relation between products as a factor militating
against petitioner's application. Citing Esso Standard Eastern, Inc. v. Court of Appeals , 28
respondent argues that the goods covered by petitioner's application and those covered by
its registration are actually related belonging as they do to the same class or have the same
physical characteristics with reference to their form, composition, texture, or quality, or if they
serve the same purpose. Respondent likewise draws parallelisms between the present
controversy and the following cases: 29
(a) In Arce & Sons, Inc. vs. Selecta Biscuit Company , 30 biscuits were held related to
milk because they were both food products;
(b) In Chua Che vs. Phil. Patents Office, 31 soap and perfume, lipstick and nail polish
are held to be similarly related because they are common household items;
(c) In Ang vs. Teodoro , 32 the trademark "Ang Tibay" for shoes and slippers was
disallowed to be used for shirts and pants because they belong to the same
general class of goods; and
(d) In Khe vs. Lever Bros. Co., 33 soap and pomade, although non-competitive, were
held to be similar or belong to the same class, since both are toilet articles.
Respondent avers that Kolin Electronics' and Taiwan Kolin's products are closely-
related not only because both fall under Class 9 of the NCL, but mainly because they both
relate to electronic products, instruments, apparatus, or appliances. 34 Pushing the point,
respondent would argue that Taiwan Kolin and Kolin Electronics' goods are inherently similar
in that they are all plugged into electric sockets and perform a useful function. 35
Furthermore, respondent echoes the appellate court's ratiocination in denying petitioner's
application, viz.: 36 HTASIa
Signi cantly, Kolin Electronics' goods (automatic voltage regulator; converter;

recharger; stereo booster; AC-DC regulated power supply; step-down transformer; and
PA ampli ed AC-DC) and Taiwan Kolin's television sets and DVD players are both
classi ed under class 9 of the NICE agreement. At rst glance, it is also evident that
all these goods are generally described as electrical devices. . . . [T]he goods of both
Kolin Electronics and Taiwan Kolin will inevitably be introduced to the public as
"KOLIN" products and will be offered for sale in the same channels of trade. Contrary
to Taiwan Kolin's claim, power supply as well as audio and stereo equipment like
booster and ampli er are not only sold in hardware and electrical shops. These
products are commonly found in appliance stores alongside television sets and DVD
players. With the present trend in today's entertainment of having a home theater
system, it is not unlikely to see a stereo booster, ampli er and automatic voltage
regulator displayed together with the television sets and DVD players. With the
intertwined use of these products bearing the identical "KOLIN" mark, the ordinary
intelligent consumer would likely assume that they are produced by the same
manufacturer.
In sum, the intertwined use, the same classi cation of the products
as class 9 under the NICE Agreement, and the fact that they generally ow
through the same channel of trade clearly establish that Taiwan Kolin's
television sets and DVD players are closely related to Kolin Electronics'
goods . As correctly pointed out by the BLA-IPO, allowing Taiwan Kolin's
registration would only confuse consumers as to the origin of the products
they intend to purchase. Accordingly, protection should be afforded to Kolin
Electronics, as the registered owner of the "KOLIN" trademark. 37 (emphasis added)
The CA's approach and reasoning to arrive at the assailed holding that the approval of
petitioner's application is likely to cause confusion or deceive fail to persuade.
a. The products covered by
petitioner's application and
respondent's registration are
unrelated
A certi cate of trademark registration confers upon the trademark owner the exclusive
right to sue those who have adopted a similar mark not only in connection with the goods or
services specified in the certificate, but also with those that are related thereto. 38 TIDcEH
In resolving one of the pivotal issues in this case — whether or not the products of the
parties involved are related — the doctrine in Mighty Corporation is authoritative. There, the
Court held that the goods should be tested against several factors before arriving at a sound
conclusion on the question of relatedness. Among these are:
(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;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or essential characteristics with
reference to their form, composition, texture or quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate consumption, that is, day-to-day
household items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually purchased; and
(j) the channels of trade through which the goods ow, how they are distributed,
marketed, displayed and sold. 39
As mentioned, the classi cation of the products under the NCL is merely part and
parcel of the factors to be considered in ascertaining whether the goods are related. It is not
su cient to state that the goods involved herein are electronic products under Class 9 in
order to establish relatedness between the goods, for this only accounts for one of many
considerations enumerated in Mighty Corporation. In this case, credence is accorded to
petitioner's assertions that: 40
a. Taiwan Kolin's goods are classi ed as home appliances as opposed to Kolin
Electronics' goods which are power supply and audio equipment
accessories;
b. Taiwan Kolin's television sets and DVD players perform distinct function and
purpose from Kolin Electronics' power supply and audio equipment; and
c. Taiwan Kolin sells and distributes its various home appliance products on
wholesale and to accredited dealers, whereas Kolin Electronics' goods
are sold and flow through electrical and hardware stores.

Clearly then, it was erroneous for respondent to assume over the CA to conclude that
all electronic products are related and that the coverage of one electronic product
necessarily precludes the registration of a similar mark over another. In this digital age
wherein electronic products have not only diversi ed by leaps and bounds, and are geared
towards interoperability, it is di cult to assert readily, as respondent simplistically did, that
all devices that require plugging into sockets are necessarily related goods.
It bears to stress at this point that the list of products included in Class 9 41 can be
sub-categorized into ve (5) classi cations, namely: (1) apparatus and instruments for
scienti c or research purposes, (2) information technology and audiovisual equipment, (3)
apparatus and devices for controlling the distribution and use of electricity, (4) optical
apparatus and instruments, and (5) safety equipment. 42 From this sub-classi cation, it
becomes apparent that petitioner's products, i.e., televisions and DVD players, belong to
audiovisual equipment, while that of respondent, consisting of automatic voltage regulator,
converter, recharger, stereo booster, AC-DC regulated power supply, step-down transformer,
and PA ampli ed AC-DC, generally fall under devices for controlling the distribution and use
of electricity.
b. The ordinarily intelligent
buyer is not likely to be
confused
In trademark cases, particularly in ascertaining whether one trademark is confusingly
similar to another, no rigid set rules can plausible be formulated. Each case must be decided
on its merits, with due regard to the goods or services involved, the usual purchaser's
character and attitude, among others. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of a 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. 43
For a clearer perspective and as matter of record, the following image on the left 44 is
the trademark applied for by petitioner, while the image juxtaposed to its right 45 is the
trademark registered by respondent:
[image]
While both competing marks refer to the word "KOLIN" written in upper case letters
and in bold font, the Court at once notes the distinct visual and aural differences between
them: Kolin Electronics' mark is italicized and colored black while that of Taiwan Kolin is
white in pantone red color background. The differing features between the two, though they
may appear minimal, are sufficient to distinguish one brand from the other.

It cannot be stressed enough that the products involved in the case at bar are,
generally speaking, various kinds of electronic products. These are not ordinary consumable
household items, like catsup, soy sauce or soap which are of minimal cost. 46 The products
of the contending parties are relatively luxury items not easily considered affordable.
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. 47 As
further elucidated in Del Monte Corporation v. Court of Appeals: 48
. . . Among these, what essentially determines the attitudes of the purchaser,
speci cally 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 . . . . (emphasis added)
Respondent has made much reliance on Arce & Sons, Chua Che, Ang, and Khe, oblivious
that they involved common household items — i.e., biscuits and milk, cosmetics, clothes, and
toilet articles, respectively — whereas the extant case involves luxury items not regularly and
inexpensively purchased by the consuming public. In accord with common empirical
experience, the useful lives of televisions and DVD players last for about ve (5) years,
minimum, making replacement purchases very infrequent. The same goes true with
converters and regulators that are seldom replaced despite the acquisition of new equipment
to be plugged onto it. In addition, the amount the buyer would be parting with cannot be
deemed minimal considering that the price of televisions or DVD players can exceed today's
monthly minimum wage. In light of these circumstances, it is then expected that the ordinary
intelligent buyer would be more discerning when it comes to deciding which electronic
product they are going to purchase, and it is this standard which this Court applies herein in
determining the likelihood of confusion should petitioner's application be granted. TaCIDS
To be sure, the extant case is reminiscent of Emerald Garment Manufacturing

Corporation v. Court of Appeals , 49 wherein the opposing trademarks are that of Emerald
Garment Manufacturing Corporation's "Stylistic Mr. Lee" and H.D. Lee's "LEE." In the said case,
the appellate court a rmed the decision of the Director of Patents denying Emerald
Garment's application for registration due to confusing similarity with H.D. Lee's trademark.
This Court, however, was of a different beat and ruled that there is no confusing similarity
between the marks, given that the products covered by the trademark, i.e., jeans, were, at that
time, considered pricey, typically purchased by intelligent buyers familiar with the products
and are more circumspect, and, therefore, would not easily be deceived. As held:
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 de nition laid down in Dy Buncio v. Tan Tiao Bok 50 is better suited to
the present case. There, the "ordinary purchaser" was de ned 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 ." 51 (emphasis added)
Consistent with the above ruling, this Court nds that the differences between the two
marks, subtle as they may be, are su cient to prevent any confusion that may ensue should
petitioner's trademark application be granted. As held in Esso Standard Eastern, Inc.: 52
Respondent court correctly ruled that considering the general appearances of
each mark as a whole, the possibility of any confusion is unlikely. A comparison of
the labels of the samples of the goods submitted by the parties shows a great many
differences on the trademarks used. As pointed out by respondent court in its
appealed decision, "(A) witness for the plaintiff, Mr. Buhay, admitted that the color of
the 'ESSO' used by the plaintiff for the oval design where the blue word ESSO is
contained is the distinct and unique kind of blue. In his answer to the trial court's
question, Mr. Buhay informed the court that the plaintiff never used its trademark on
any product where the combination of colors is similar to the label of the Esso
cigarettes," and "Another witness for the plaintiff, Mr. Tengco, testi ed that generally,
the plaintiff's trademark comes all in either red, white, blue or any combination of the
three colors. It is to be pointed out that not even a shade of these colors appears on
the trademark of the appellant's cigarette. The only color that the appellant uses in
its trademark is green."
Even the lower court, which ruled initially for petitioner, found that a
"noticeable difference between the brand ESSO being used by the defendants and
the trademark ESSO of the plaintiff is that the former has a rectangular background,
while in that of the plaintiff the word ESSO is enclosed in an oval background."
All told, We are convinced that petitioner's trademark registration not only covers
unrelated good, but is also incapable of deceiving the ordinary intelligent buyer. The ordinary
purchaser must be thought of as having, and credited with, at least a modicum of intelligence
to be able to see the differences between the two trademarks in question. 53
Questions of fact may still be entertained
On a nal note, the policy according factual ndings of courts a quo great respect, if
not nality, is not binding where they have overlooked, misapprehended, or misapplied any
fact or circumstance of weight and substance. 5 4 So it must be here; the nature of the
products involved materially affects the outcome of the instant case. A reversal of the
appellate court's Decision is then in order.
WHEREFORE , in view of the foregoing, the petition is hereby GRANTED . The Decision
and the Resolution of the Court of Appeals in CA-G.R. SP No. 122565, dated April 30, 2013
and November 6, 2013, respectively, are hereby REVERSE D and SET ASIDE . Accordingly,
the Decision of the Intellectual Property O ce Director General in Inter Partes Case No. 14-
2006-00096, dated November 23, 2011, is hereby REINSTATED . DCcHAa
SO ORDERED .
Peralta, Villarama, Jr., Reyes and Jardeleza, JJ., concur.
Footnotes
1. Rollo, pp. 47-58. Penned by Associate Justice Pedro B. Corales and concurred in by Associate
Justices Sesinando E. Villon and Florito S. Macalino.
2. Id. at 62-63.
3. Filed on December 27, 2002.
4. Rollo, p. 49.
5. Id.
6. Id. at 49-50.
7. Id. at 50; citing the Motion for Reconsideration filed by Taiwan Kolin before the CA in CA-G.R. SP
No. 80641 entitled Taiwan Kolin Corporation, Ltd. v. Kolin Electronics Co., Inc., CA rollo, pp.
854-868.
8. Section 3 . International Conventions and Reciprocity. — Any person who is a national or who is
domiciled or has a real and effective industrial establishment in a country which is a party
to any convention, treaty or agreement relating to intellectual property rights or the
repression of unfair competition, to which the Philippines is also a party, or extends
reciprocal rights to nationals of the Philippines by law, shall be entitled to benefits to the
extent necessary to give effect to any provision of such convention, treaty or reciprocal law,
in addition to the rights to which any owner of an intellectual property right is otherwise
entitled by this Act. (n)
Section 131 . Priority Right. — 131.1. An application for registration of a mark filed in the
Philippines by a person referred to in Section 3, and who previously duly filed an
application for registration of the same mark in one of those countries, shall be considered
as filed as of the day the application was first filed in the foreign country.
9. Rollo, p. 50.
10. Id. at 119-133. Penned by Director Estrellita Beltran-Abelardo.
11. Section 123 . Registrability. — 123.1. A mark cannot be registered if it:

xxx xxx xxx
(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion.

12. Rollo, pp. 131-132.
13. Id. at 51.

14. Id. at 135-137.
15. Id. at 64-71. Penned by Director General Ricardo R. Blancaflor.
16. Id. at 70.

17. Id. at 55.
18. Citing McDonald's Corporation v. L.C. Big Mak Burger, Inc., G.R. No. 143993, August 18, 2004,
437 SCRA 10.

19. Sec. 138. Certificates of Registration. — A certificate of registration of a mark shall be prima
facie evidence of the validity of the registration, the registrant's ownership of the mark, and
of the registrant's exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate.
20. Rollo, p. 58.

21. Id. at 1796.
22. See <http://web2.wipo.int/nicepub/edition-20150101/classheadings/?
pagination=no&lang=en&explanatory_notes=show> (visited February 13, 2015).
23. G.R. No. 154342, July 14, 2004, 434 SCRA 473, 505.
24. No. L-28744, April 29, 1971, 38 SCRA 480.
25. No. L-26676, July 30, 1982, 115 SCRA 472.

26. No. L-44707, August 31, 1982, 116 SCRA 388.
27. Hickok Manufacturing Co., Inc. v. Court of Appeals and Santos Lim Bun Liong, No. L-44707,
August 31, 1982, 116 SCRA 388, 390.
28. No. L-29971, August 31, 1982, 116 SCRA 336.
29. Rollo, pp. 1801-1802.
30. No. L-14761, January 28, 1961, 1 SCRA 253.
31. No. L-18337, January 30, 1965, 13 SCRA 67.
32. 74 Phil. 50 (1942).

33. 49 O.G. 3891 (1941).
34. Rollo, p. 1802.
35. Id. at 1803.
36. Id. at 1798-1799.

37. See also rollo, pp. 56-57.
38. Id. at 69; citing Esso Standard Eastern, Inc. v. Court of Appeals, supra note 28.
39. Supra note 23, at 510-511.

40. Rollo, pp. 31-32.
41. Supra note 22.
42. See <http://web2.wipo.int/nicepub/edition-20150101/information_files/class/9/?lang=en>

(visited February 18, 2015).
43. Diaz v. People, G.R. No. 180677, February 18, 2013, 691 SCRA 139, 153; citing McDonald's
Corporation v. Macjoy Fastfood Corporation, G.R. No. 116155, February 2, 2007, 514 SCRA
95, 107.
44. See <http://onlineservices.ipophil.gov.ph/ipophilsearch/ShowImage.ashx?id=21367d64b3a5-
787c-419f-b6ad-d9c0e7501e8d42007d64b3a5-787c-419f-b6ad-
d9c0e7501e8d20110027d64b3a5-787c-419f-b6ad-d9c0e7501e8d> (visited February 16,
2015).

45. See <http://onlineservices.ipophil.gov.ph/ipophilsearch/ShowImage.ashx?id=2136871630eb-
85f2-40e8-ad03-cf4b80943fd04199871630eb-85f2-40e8-ad03-
cf4b80943fd03087497871630eb-85f2-40e8-ad03-cf4b80943fd0> (visited February 16,
2015).
46. Diaz v. People, supra note 43, at 154; citing Emerald Garment Manufacturing Corporation v.
Court of Appeals, G.R. No. 100098, December 29, 1995, 251 SCRA 600.
47. Id.
48. No. L-78325, January 25, 1990, 181 SCRA 410, 419.
49. Supra note 46.
50. 42 Phil. 190 (1921).

51. Emerald Garment Manufacturing Corporation v. Court of Appeals, supra note 46, at 617.
52. Supra note 28, at 345; citations omitted.
53. Fruit of the Loom, Inc. v. Court of Appeals, No. L-32747, November 29, 1984, 133 SCRA 405,
411.
54. Development Bank of the Philippines v. Traders Royal Bank, G.R. No. 171982, August 18, 2010,
628 SCRA 404, 413-414.

THIRD DIVISION
[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 : p
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 a rming the November 26, 1998 decision, 2 as modi ed 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 Winery's exclusive
wine importer and distributor in the Philippines since 1991, selling these products in its
own name and for its own account. 5
Gallo Winery's GALLO wine trademark was registered in the principal register of the
Philippine Patent O ce (now Intellectual Property O ce) on November 16, 1971 under
Certi cate 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
100's 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 manufacturer's sworn statement as basis for BIR's 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. 1 0
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 O ce. 1 1 On July 17, 1985, the National Library issued Certi cate of Copyright
Registration No. 5834 for La Campana's lifetime copyright claim over GALLO cigarette
labels. 1 2
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell
cigarettes bearing the GALLO trademark. 1 3 BIR approved Mighty Corporation's use of
GALLO 100's cigarette brand, under licensing agreement with Tobacco Industries, on May
18, 1988, and GALLO SPECIAL MENTHOL 100's cigarette brand on April 3, 1989. 1 4
Petitioners claim that GALLO cigarettes have been sold in the Philippines since
1973, initially by Tobacco Industries, then by La Campana and nally by Mighty
Corporation. 1 5
On the other hand, although the GALLO wine trademark was registered in the
Philippines in 1971, respondents claim that they rst 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. 1 6
Respondents claim that they rst 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. 1 7 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 6 2 2 They claimed that
petitioners adopted the GALLO trademark to ride on Gallo Winery's 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 Winery's 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 attorney's fees and litigation expenses. 2 3
In their answer, petitioners alleged, among other a rmative defenses, that:
petitioner's GALLO cigarettes and Gallo Winery's wines were totally unrelated products;
Gallo Winery's 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 lters and P3 for GALLO menthols, were low-cost
items compared to Gallo Winery's high-priced luxury wines which cost between P98 to
P242.50; the target market of Gallo Winery's wines was the middle or high-income bracket
with at least P10,000 monthly income while GALLO cigarette buyers were farmers,
shermen, laborers and other low-income workers; the dominant feature of the GALLO
cigarette mark was the rooster device with the manufacturer's name clearly indicated as
MIGHTY CORPORATION while, in the case of Gallo Winery's 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, 2 4 the Makati RTC denied, for lack of merit,
respondent's prayer for the issuance of a writ of preliminary injunction, 2 5 holding that
respondent's GALLO trademark registration certi cate 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. 2 6
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." 2 7
On February 20, 1995, the CA likewise dismissed respondents' petition for review on
certiorari, docketed as CA-G.R. No. 32626, thereby a rming the Makati RTC's denial of the
application for issuance of a writ of preliminary injunction against petitioners. 2 8
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 & J's 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) attorney's fees and expenses of litigation in the
amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED." 2 9
On June 24, 1999, the Makati RTC granted respondent's motion for partial
reconsideration and increased the award of actual and compensatory damages to 10% of
P199,290,000 or P19,929,000. 3 0
On appeal, the CA a rmed the Makati RTC decision and subsequently denied
petitioner's 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. 3 1
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 CA'S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only
"questions of law" 3 2 (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), 3 3 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. 3 4
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: 3 5
(1) the conclusion is grounded entirely on speculation, surmises, and
conjectures;
(2) the inference of the Court of Appeals from its ndings 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 ndings, went beyond the issues of the
case, and the same are contrary to the admissions of both the appellant
and the appellee;
(6) the ndings are without citation of speci c 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 ndings of fact of the Court of Appeals are premised on the absence
of evidence and are contradicted [by the evidence] on record. 3 6
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, 3 7 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. 3 8 (Emphasis and italics 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. 3 9 (Emphasis and italics 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 rst 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. 4 0 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. 4 1
There are only a few instances when laws may be given retroactive effect, 4 2 none of which
is present in this case.
The IP Code, repealing the Trademark Law, 4 3 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 rst 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 competitor's 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. 4 4
I n 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 6 bis of the Paris Convention, 4 6 an international agreement binding on the
Philippines and the United States (Gallo Winery's 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 bene ts 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 confusion
therewith." There is no time limit for seeking the prohibition of the use of marks used in
bad faith. 4 7
Thus, under Article 6 bis 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 4 8 to be well-known in that country and is already
the mark of a person entitled to the bene ts 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." 4 9 Trademark
registration and actual use are material to the complaining party's cause of action.
Corollary to this, Section 20 of the Trademark Law 5 0 considers the trademark

registration certi cate as prima facie evidence of the validity of the registration, the
registrant's ownership and exclusive right to use the trademark in connection with the
goods, business or services as classi ed by the Director of Patents 5 1 and as speci ed in
the certi cate, subject to the conditions and limitations stated therein. Sections 2 and 2-A
5 2 of the Trademark Law emphasize the importance of the trademark's 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. 5 3
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 con icting provisions between the Paris Convention
(which is an international agreement) and the Trademark law (which is a municipal law) the
latter will prevail. 5 4
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 registrant's express or implied consent to another's use of its trademark or a colorable
imitation thereof. This is why acquiescence, estoppel or laches may defeat the registrant's
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 rst 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. 5 5 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 manufacturer's 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. 5 6
I n Emerald Garment Manufacturing Corporation vs. Court of Appeals, 5 7 we
reiterated our rulings in Pagasa Industrial Corporation vs. Court of Appeals, 5 8 Converse
Rubber Corporation vs. Universal Rubber Products, Inc., 5 9 Sterling Products International,
Inc. vs. Farbenfabriken Bayer Aktiengesellschaft, 6 0 Kabushi Kaisha Isetan vs. Intermediate
Appellate Court, 6 1 and Philip Morris vs. Court of Appeals, 6 2 giving utmost importance to
t h e 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 ling 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) . . .
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 su ciently expounded upon and quali ed 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 les 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 le 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 certi cates 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 su ce . 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 rmly 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 certi cate of registration of one's trademark, or
its weight as evidence of validity, ownership and exclusive use, is quali ed. A
registration certi cate 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 ndings 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 certi cates as proof of use by private respondent of the trademark
"LEE" which, as we have previously discussed are not su cient . We cannot give
credence to private respondent's claim that its "LEE" mark rst 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 su ciently 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 rst 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 rst 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, de nite 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. SDTIHA
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 certi cates 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. 6 3
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery's
exclusive right to use the GALLO trademark should be limited to wines, the only product
indicated in its registration certi cates. This strict statutory limitation on the exclusive
right to use trademarks was amply clari ed in our ruling in Faberge, Inc. vs. Intermediate
Appellate Court: 6 4
Having thus reviewed the laws applicable to the case before Us, it is not
di cult 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
certi cate 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
signi cant 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 su ce 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 certi cate of registration issued by the
Director of Patents can confer upon petitioner the exclusive right to use its own
symbol only to those goods speci ed in the certi cate , subject to any conditions
and limitations stated therein. This basic point is perhaps the unwritten rationale
of Justice Escolin in Philippine Re ning 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 rst 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 rst user as speci ed in
the certificate of registration following the clear message conveyed by Section 20.
How do We now reconcile the apparent con ict 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 speci ed in the
certi cate of registration . But the rule has been laid down that the clause which
comes later shall be given paramount signi cance 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 certi cate of registration were to be deemed as
including goods not speci ed 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. 6 5
There are two types of confusion in trademark infringement. The rst 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 defendant's goods are then bought as
the plaintiff's and its poor quality re ects badly on the plaintiff's reputation. The other is
"confusion of business" wherein the goods of the parties are different but the defendant's
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. 6 6
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 registrant's
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) i n Acoje Mining Co., Inc. vs. Director of Patent, 6 7 we ordered the
approval of Acoje Mining's application for registration of the
trademark LOTUS for its soy sauce even though Philippine Re ning
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 Re ning Co ., Inc. vs. Ng Sam and Director of Patents, 6 8
we upheld the Patent Director's registration of the same trademark
CAMIA for Ng Sam's ham under Class 47, despite Philippine Re ning
Company's 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) i n Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos
Lim Bun Liong, 6 9 we dismissed Hickok's petition to cancel private
respondent's HICKOK trademark registration for its Marikina shoes
as against petitioner's earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) i n Shell Company of the Philippines vs. Court of Appeals, 7 0 in a
minute resolution, we dismissed the petition for review for lack of
merit and a rmed the Patent O ce's registration of the trademark
SHELL used in the cigarettes manufactured by respondent Fortune
Tobacco Corporation, notwithstanding Shell Company's 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, 7 1 we dismissed
ESSO's 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) i n Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation, 7 2 we a rmed the rulings of the Patent O ce and the
CA that NSR Rubber Corporation could use the trademark CANON for
its sandals (Class 25) despite Canon Kabushiki Kaisha's 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" 7 3 which has been de ned 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." 7 4
Jurisprudence has developed two tests in determining similarity and likelihood of
confusion in trademark resemblance: 7 5
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals
76 and other cases, 7 7 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court
of Appeals 7 8 and its preceding cases. 7 9
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. 8 0
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. 8 1
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 8 2 and the commercial impression likely to be conveyed by the trademarks if used
in conjunction with the respective goods of the parties. 8 3
Applying the Dominancy and Holistic Tests, we nd 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 rooster's color is either green or red — green for GALLO
menthols and red for GALLO lters. 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. 8 4
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 ghting 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). 8 5
Also, as admitted by respondents themselves, 8 6 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 Winery's 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. 8 7 Directly below or above these sketches
is the entire printed name of the founder-owners, "ERNEST & JULIO GALLO" or just their
surname "GALLO," 8 8 which appears in different fonts, sizes, styles and labels, unlike
petitioners' uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winery's wines are printed the words "VINTED AND
BOTTLED BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA." 8 9
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 Winery's 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. 9 0

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 speci ed in the certi cate of registration but also of identical or similar goods, we
have also uniformly recognized and applied the modern concept of "related goods." 9 1
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. 9 2
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. 9 3 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. 9 4 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. 9 5
In resolving whether goods are related, 9 6 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 9 7
(d) the nature and cost of the articles 9 8
(e) the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture or
quality
(f) the purpose of the goods 9 9
(g) whether the article is bought for immediate consumption, 1 0 0 that is,
day-to-day household items 1 0 1
(h) the fields of manufacture 1 0 2
(i) the conditions under which the article is usually purchased 1 0 3 and
(j) the channels of trade through which the goods ow, 1 0 4 how they are
distributed, marketed, displayed and sold. 1 0 5
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. 1 0 6 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. 1 0 7

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. 1 0 8 The "purchaser" is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the type of product involved.
1 0 9 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." 1 1 0
Hence, in the adjudication of trademark infringement, we give due regard to the
goods' usual purchaser's character, attitude, habits, age, training and education. 1 1 1
Applying these legal precepts to the present case, petitioner's use of the GALLO
cigarette trademark is not likely to cause confusion or mistake, or to deceive the "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 classi cation 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 classi cation
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 classi ed in the same section of
supermarkets and groceries."
We nd these premises patently insu cient 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 in nite 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. 1 1 3
Accordingly, the U.S. patent o ce 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. 1 1 4
In this regard, we adopted the Director of Patents' nding in Philippine Re ning Co .,
Inc. vs. Ng Sam and the Director of Patents: 1 1 5
In his decision, the Director of Patents enumerated the factors that set
respondent's 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 elds 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. Opposer's 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-à-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, shermen, laborers and other low-income workers. 1 1 6 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. 1 1 7
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. 1 1 8 On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through Gallo Winery's 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. 1 1 9
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing
Company vs. Philip Morris, Inc. 1 2 0 to support its nding 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.: 1 2 1
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),
aff'd, 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 plaintiff's 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
signi cance on the nding 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 defendant's use of the mark "BLACK LABEL" for cigarettes
because it was likely to cause confusion with the plaintiff's 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., 57 C.C.P.A. 1213, 427 F. 2d 783, 785 (1970) . The presence of
special circumstances has been found to exist where there is a nding 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 nd a relationship between products, and hence
a likelihood of confusion, because of the plaintiff's 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 (defendant's adoption of
'Dunhill' mark was not innocent). However, in Schenley , the court noted that the
relation between tobacco and whiskey products is signi cant 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. Signi cantly, 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 a liation between the tobacco and liqueur
products bearing the marks here at issue.
xxx xxx xxx
Of equal signi cance, it is undisputed that S & M Brands had no intent, by

adopting the family name 'Bailey's' 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 su cient 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 world's best selling liqueur and the second best selling
in the United States, is a well-known product. That fact alone, however, is
insu cient 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 nding 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 Winery's GALLO trademark registration, the Bureau of Patents, Trademarks and
Technology Transfer also issued on September 4, 1992 Certi cate of Registration No.
53356 under the Principal Register approving Productos Alimenticios Gallo, S.A's 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 our and bread
crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking powder,
salt, mustard, vinegar, species and ice." 1 2 2
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court
of Appeals and NSR Rubber Corporation, 1 2 3 "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

O ce 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 o ce 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 o ce 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 led its application for the same mark should fail ."
(Emphasis supplied.)
CONSENT OF THE REGISTRANT AND

OTHER AIR, JUST AND EQUITABLE
CONSIDERATIONS
Each trademark infringement case presents a unique problem which must be
answered by weighing the conflicting interests of the litigants. 1 2 4
Respondents claim that GALLO wines and GALLO cigarettes ow 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:
be likely to in uence purchasers to believe that the goods offered are those of a
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;
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 man's goods or business as that of another
constitutes unfair competition. Actual or probable deception and confusion on the part of
customers by reason of defendant's practices must always appear. 1 2 5 On this score, we
nd 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.
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, nding 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. DSHTaC
Vitug and Sandoval-Gutierrez, JJ ., concur.

Carpio Morales, J ., took no part.
Footnotes
1. Penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate

Justices Conchita Carpio Morales (now Associate Justice of the Supreme Court) and
Sergio L. Pestano of the Ninth Division.
2. Penned by Acting Presiding Judge Bonifacio Sanz Maceda.

3. Penned by Judge Reinato O. Quilala.
4. Penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate
Justices Conchita Carpio Morales (now Associate Justice of the Supreme Court) and
Sergio L. Pestano of the former Ninth Division.
5. Complaint, Exhibits "D" to "D-1," Records, pp. 1–2; TSN, June 9, 1997, Records, pp. 951–
956.
6. Exhibits "B" to "B-6," Records, pp. 80–86.

7. Records, pp. 29–31.
8. Answer, Records, pp. 255 and 264–266; TSN, April 13, 1993, Records, pp. 767, 780–796;
TSN, October 27, 1997, Records, pp. 993–1000.
9. Exhibits 9 to 12, Records, pp. 89–95, 267–268; TSN, October 27, 1997, Records, pp.
1005–1007.
10. Records, pp. 255–256, 269 and 271.

11. Records, pp. 256, 270.
12. Exhibit 15, Records, pp. 104, 256, 272.
13. Records, p. 256.

14. Exhibits 13 and 14, Records, pp. 96–98.
15. TSN, April 13, 1993, Records, pp. 780–796; TSN, December 14, 1993, Records, pp. 420–
422; TSN, October 27, 1997, Records, pp. 993–1000.
16. Complaint, Exhibit "D-2," Records, pp. 3, 110 and 328.

17. Exhibit "A," Complainants' Memorandum, Records, p. 127; TSN, December 14, 1993,
Records, pp. 326, 432–433.
18. CONVENTION OF PARIS FOR THE PROTECTION OF INDUSTRIAL PROPERTY of 20th
March, 1883 revised at BRUSSELS on 14th December, 1900, at WASHINGTON on 2nd
June, 1911, at THE HAGUE on 6th November, 1925, at LONDON on 2nd June, 1934, and
at Lisbon on 31st October, 1958.
xxx xxx xxx
Article 6bis
(1) The countries of the Union undertake, either administratively if their legislation
so permits, or at the request of an interested party, to refuse or to cancel the registration
and to prohibit the use of a trademark which constitutes a reproduction, imitation or
translation, liable to create confusion, 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 present Convention and used for identical
or similar goods. These provisions shall also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark or an imitation liable to create
confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for a
period within which the prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition of
the use of marks registered or used in bad faith.
19. Republic Act No. 166 is entitled "An Act To Provide For The Registration And Protection
Of Trademarks, Trade Names And Servicemarks, Defining Unfair Competition And False
Marking And Providing Remedies Against The Same, And For Other Purposes".
20. 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 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, shall be liable to a civil action by the registrant for any
or all of the remedies herein provided.
SEC. 23. Actions, and damages and injunction for infringement. — Any person
entitled to the exclusive use of a registered mark or tradename 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, then the court may award as damages
a reasonable percentage based upon the amount of gross sales of the defendant of the
value of the services in connection with which the mark or tradename 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.
21. 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
(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; 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.
Chapter VII
False Designation of Origin and False Description
SEC. 30. False designation of origin and false description forbidden. — Any
person who shall affix, apply, annex or use in connection with any goods or services, or
any container or containers for goods, a false designation of origin, or any false
description or representation, including words or other symbols tending falsely to
describe or represent the same, and shall cause such goods or services to enter into
commerce, and any person who shall with knowledge of the falsity of such designation
of origin or description or representation cause or procure the same to enter into
commerce, shall be liable to a civil action for damages and injunction provided in
section twenty-three, Chapter V hereof, by any person doing business in the locality
falsely indicated as that of origin or in the region in which said locality is situated, or by
any person who believes that he is or is likely to be damaged by the use of any such
false description or representation.
22. Chapter XI
Provisions in Reference to Foreign Industrial Property

SEC. 37. Rights of foreign registrants. — Persons who are nationals of, domiciled
in, or have a bona fide or effective business or commercial establishment in any foreign
country, which is a party to any international convention or treaty relating to marks or
tradenames, or the repression of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the provisions of this Act to the
extent and under the conditions essential to give effect to any such convention and
treaties so long as the Philippines shall continue to be a party thereto, except as provided
in the following paragraphs of this section.
No registration of a mark or tradename in the Philippines by a person described in the
preceding paragraph of this section shall be granted until such mark or tradename has
been registered in the country of origin of the applicant, unless the applicant alleges use
in commerce.
For the purposes of this section, the country of origin of the applicant is the country in
which he has bona fide and effective industrial or commercial establishment, or if he
has no such an establishment in the country in which he is domiciled, or if he has not a
domicile in any of the countries described in the first paragraph of this section, the
country of which he is a national.
An application for registration of a mark or tradename under the provisions of this Act
filed by a person described in the first paragraph of this section who has previously duly
filed an application for registration of the same mark or tradename in one of the
countries described in said paragraph shall be accorded the same force and effect as
would be accorded to the same application if filed in the Philippines on the same date
on which the application was first filed in such foreign country: Provided, That —
(a) The application in the Philippines is filed within six months from the date on
which the application was first filed in the foreign country; and within three months from
the date of filing or within such time as the Director shall in his discretion grant, the
applicant shall furnish a certified copy of the application for or registration in the country
of origin of the applicant, together with a translation thereof into English, if not in the
English language;
(b) The application conforms as nearly as practicable to the requirements of this
Act, but use in commerce need not be alleged;

(c) The rights acquired by third parties before the date of the filing of the first
application in the foreign country shall in no way be affected by a registration obtained
on an application filed under this paragraph;
(d) Nothing in this paragraph shall entitle the owner of a registration granted
under this section to sue for acts committed prior to the date on which his mark or
tradename was registered in this country unless the registration is based on use in
commerce; and
(e) A mark duly registered in the country of origin of the foreign applicant may be
registered on the principal register if eligible, otherwise, on the supplemental register
herein provided. The application thereof shall be accompanied by a certified copy of the
application for or registration in the country of origin of the applicant. (As added by R.A.
No. 638.)
The registration of a mark under the provisions of this section shall be independent of
the registration in the country of origin and the duration, validity or transfer in the
Philippines of such registration shall be governed by the provisions of this Act.
Tradenames of persons described in the first paragraph of this section shall be

protected without the obligation of filing or registration whether or not they form parts of
marks.
Any person designated in the first paragraph of this section as entitled to the benefits
and subject to the provisions of this Act shall be entitled to effective protection against
unfair competition, and the remedies provided herein for infringement of marks and
tradenames shall be available so far as they may be appropriate in repressing acts of
unfair competition.
Citizens or residents of the Philippines shall have the same benefits as are granted by
this section to persons described in the first paragraph hereof.
23. Complaint, Exhibits "D-1" to "D-9," Record, pp. 1–10.
24. Penned by Judge Francisco X. Velez.
25. Records, pp. 159–160.

26. Sec. 5. Preliminary injunction not granted without notice; issuance of restraining order.
— No preliminary injunction shall be granted without notice to the defendant. If it shall
appear from the facts shown by affidavits or by the verified complaint that great or
irreparable injury would result to the applicant before the matter can be heard on notice,
the judge to whom the application for preliminary injunction was made, may issue a
restraining order to be effective only for a period of twenty days from the date of its
issuance. Within the said twenty-day period, the judge must cause an order to be served
on the defendant, requiring him to show cause, at a specified time and place, why the
injunction should not be granted, and determine within the same period whether or not
the preliminary injunction shall be granted, and shall accordingly issue the
corresponding order. In the event that the application for preliminary injunction is denied,
the restraining order is deemed automatically vacated.
Nothing herein contained shall be construed to impair, affect or modify in any way
any rights granted by, or rules pertaining to injunctions contained in, existing agrarian,
labor or social legislation. (As amended by B.P. Blg. 224, approved April 16, 1982).
27. Penned by Judge Velez; Records, pp. 302–304.

28. Penned by Associate Justice Ramon Mabutas, Jr. and concurred in by Associate
Justices Nathanael P. De Pano, Jr. and Artemon D. Luna of the Special First Division;
Records, pp. 449–465.
29. Penned by Judge Maceda; Records, pp. 651–652.
30. Penned by Judge Quilala; Records, pp. 727–728.

31. Petition; Rollo, pp. 18–19.
32. Rule 45, Section 2.
33. Ramos vs. Pepsi-Cola Bottling Co. of the P.I., 19 SCRA 289, 292 [1967]; Medina vs.
Asistio, Jr., 191 SCRA 218, 223 [1990]; Caiña vs. People, 213 SCRA 309, 313 [1992].
34. Moomba Mining Exploration Company vs. Court of Appeals, 317 SCRA 338 [1999].
35. Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420 [1990].
36. Asia Brewery, Inc. vs. Court of Appeals, 224 SCRA 437, 443 [1993]; Philippine Nut
Industry Inc. vs. Standard Brands, Inc., 224 SCRA 437, 443 [1993]; Reynolds Philippine
Corporation vs. Court of Appeals, 169 SCRA 220, 223 [1989] citing Mendoza vs. Court of
Appeals, 156 SCRA 597 [1987]; Manlapaz vs. Court of Appeals, 147 SCRA 238 [1987];
Sacay vs. Sandiganbayan, 142 SCRA 593, 609 [1986]; Guita vs. Court of Appeals, 139
SCRA 576 [1985]; Casanayan vs. Court of Appeals, 198 SCRA 333, 336 [1991]; also Apex
Investment and Financing Corp. vs. IAC, 166 SCRA 458 [1988] citing Tolentino vs. De
Jesus, 56 SCRA 167 [1974]; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., 97
SCRA 734 [1980]; Manero vs. Court of Appeals, 102 SCRA 817 [1981]; and Moran, Jr. vs.
Court of Appeals, 133 SCRA 88 [1984].
37. Sec. 241, Intellectual Property Code of the Philippines.
38. Rollo, p. 191.
39. Rollo, p. 71.
40. Tolentino, CIVIL CODE OF THE PHILIPPINES COMMENTARIES AND JURISPRUDENCE,
Volume I, p. 19; See Articles 2 to 4 of the Civil Code of the Philippines.
41. Ibid.
42. Laws may be given retroactive effect only if they are:
(a) procedural statutes which prescribe rules and forms of procedures of
enforcing rights or obtaining redress for their invasion (Subido vs. Sandiganbayan, 266
SCRA 379 [1997]; Primicias vs. Ocampo, 93 Phil. 446 [1953]; Bustos vs. Lucero, 81 Phil.
640 [1948]; Lopez vs. Gloria, 40 Phil. 26 [1919]; People vs. Sumilang, 77 Phil. 764 [1946])
(b) remedial or curative statutes which cure errors and irregularities and validate
judicial or administrative proceedings, acts of public officers, or private deeds and
contracts that otherwise would not produce their intended consequences due to some
statutory disability or failure to comply with technical rules (Government vs. Municipality
of Binalonan, 32 Phil. 634 [1915]; Subido vs. Sandiganbayan, supra; Del Castillo vs.
Securities and Exchange Commission, 96 Phil. 119 [1954]; Santos vs. Duata, 14 SCRA
1041 [1965]; Development Bank of the Philippines vs. Court of Appeals, 96 SCRA 342
[1980]; Alunan III vs. Mirasol, 276 SCRA 501 [1997]).
(c) laws interpreting others.

(d) laws creating new rights (Bona vs. Briones, 38 Phil. 276 [1918]; Intestate
Estate of Bustamante vs.Cayas, 98 Phil. 107 [1955]).
(e) penal statutes insofar as they favor the accused who is not a habitual
criminal (Article 22, Revised Penal Code) or
(f) by express provision of the law, (Art. 4, Civil Code of the Philippines; Alba Vda.
De Raz vs. Court of Appeals, 314 SCRA 36 [1999]), except in cases of ex post facto laws
(U.S. vs. Diaz Conde, 42 Phil. 766 [1922]; U.S. vs. Gomez, 12 Phil. 279 [1908]) or
impairment of obligation of contract. (Asiatic Petroleum vs. Llanes, 49 Phil. 466 [1926]).
43. Sec. 239, Intellectual Property Code of the Philippines.
44. E. Spinner & Co. vs. Neuss Hesslein Corporation, 54 Phil. 225, 231–232 [1930].
45. 181 SCRA 410, 415 [1990].
46. The Paris Convention is a compact among various member countries to accord in their
own countries to citizens of the other contracting parties' trademarks and other rights
comparable to those accorded their own citizens by their domestic laws. The underlying
principle is that foreign nationals should be given the same treatment in each of the
member countries as that country makes available to its citizen. (Emerald Garden
Manufacturing Corp. vs. Court of Appeals, 251 SCRA 600 [1995]).
47. See footnote 18 for full text.
48. "conditions for the filing and registration of trademarks shall be determined in each
country of the Union by its domestic law." (Art. 6[1], Paris Convention).
49. See footnote 20 for full text.
50. SEC 20. Certificate of registration prima facie evidence of validity . — A certificate of
registration of a mark or trade-name shall be prima facie evidence of the validity of the
registration, the registrant's ownership of the mark or tradename, and of the registrant's
exclusive right to use the same in connection with the goods, business or services
specified in the certificate, subject to any conditions and limitations stated therein.
51. SEC. 6. Classification of goods and services. — The Director shall establish a
classification of goods and services, for the convenience of the Patent Office
administration, but not to limit or extend the applicant's rights. The applicant may
register his mark or tradename in one application for any or all of the goods or services
included in one class, upon or in connection with which he is actually using the mark or
tradename. The Director may issue a single certificate for one mark or tradename
registered in a plurality of classes upon payment of a fee equaling the sum of the fees
for each registration in each class.
52. SEC. 2. What are registrable. — Trademarks, tradenames, and servicemarks owned by
persons, corporations, partnerships or associations domiciled in the Philippines and by
persons, corporations, partnerships or associations domiciled in any foreign country
may be registered in accordance with the provisions of this Act; Provided, That said
trademarks, tradenames, or servicemarks are actually in use in commerce and services
not less than two months in the Philippines before the time the applications for
registration are filed. And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to citizens of the
Philippines, and such fact is officially certified, with a certified true copy of the foreign
law translated into the English language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended by R.A. 865).
SEC. 2-A. Ownership of trademarks, tradenames and servicemarks; how acquired.
— Anyone who lawfully produces or deals in merchandise of any kind or engages in any
lawful business, or who renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may appropriate to his
exclusive use a trademark, a tradename, or a servicemark not so appropriated by
another, to distinguish his merchandise, business or service from the merchandise,
business or service of others. The ownership or possession of a trademark, tradename,
servicemark heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as are other
property rights known to the law. (As amended by R.A. 638).
53. SEC. 9-A. Equitable principles to govern proceedings. — In opposition proceedings and
in all other inter partes proceedings in the Patent Office under this Act, equitable
principles of laches, estoppel, and acquiescence where applicable, may be considered
and applied. (As added by R.A. No. 638).
54. Philip Morris, Inc. vs. Court of Appeals, 224 SCRA 576 [1993].
55. Exhibits "Q" to "R-2," Records, pp. 2075–2078.
56. Exhibits "9" to "14," Records, pp. 90–98.
57. 251 SCRA 600, 619 [1995].

58. 118 SCRA 526 [1982].
59. 147 SCRA 154 [1987].
60. 27 SCRA 1214 [1969].

61. 203 SCRA 583 [1991].
62. 224 SCRA 576 [1993].
63. TSN, April 13, 1993, Records, p. 783; TSN, June 9, 1997, Records, p. 959.
64. 215 SCRA 316, 325 [1992].

65. Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336, 341 [1982].
66. Sterling Products, International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft, 27
SCRA 1214, 1227 [1969] citing 2 Callman, Unfair Competition and Trademarks, 1945 ed.,
p. 1006.
67. 38 SCRA 480 [1971].
68. 115 SCRA 472 [1982].

69. 116 SCRA 388 [1982].
70. G.R. No. L-49145, May 21, 1979.
71. 116 SCRA 336 [1982].

72. 336 SCRA 266 [2000].
73. Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600
[1995].
74. Ruben Agpalo, TRADEMARK LAW AND PRACTICE IN THE PHILIPPINES [1990], p. 41.
75. Ibid.
76. 224 SCRA 437 [1993].
77. Co Tiong vs. Director of Patents, 95 Phil. 1 [1954]; Lim Hoa vs. Director of Patents, 100
Phil. 214 [1956]; American Wire & Cable Co. vs. Director of Patents, 31 SCRA 544 [1970];
Phil. Nut Industry, Inc.vs. Standard Brands, Inc., 65 SCRA 575 [1975]; Converse Rubber
Corp. vs. Universal Rubber Products, Inc., 147 SCRA 154 [1987].
78. 181 SCRA 410 [1990].
79. Mead Johnson & Co. vs. N.V.J. Van Dorp, Ltd., 7 SCRA 771 [1963]; Bristol Myers Co. vs.
Director of Patents, 17 SCRA 128 [1966]; Fruit of the Loom, Inc. vs. Court of Appeals, 133
SCRA 405 [1984].
[1995].
81. Ibid.
82. Ibid.
83. Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents, 115 SCRA 472
[1982].
84. Exhibits "1" to "4"; Records 2095–2097.

85. TSN, October 27, 1997, Records, pp. 995–1000.
86. Reply, Records, p. 293.
87. Exhibits "N to Q".

88. TSN, December 14, 1993, Records, pp. 414, 421 and 442.
89. Exhibits "1" to "4."
90. Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336,341 [1982].
91. Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336 [1982]; Arce vs. Selecta,
1 SCRA 253 [1961]; Chua Che vs. Phil. Patents Office, 13 SCRA 67 [1965]; Ang vs.
Teodoro, 74 Phil. 50 [1942]; Khe vs. Lever Bros. Co., 49 O.G. 3891 [1941]; Ang Si Heng &
Dee vs. Wellington Dept. Store, 92 Phil. 448 [1953]; Acoje Mining Co., Inc. vs. Director of
Patents, 38 SCRA 480 [1971].
92. Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336 [1982].
93. Ibid.
94. Ibid.
95. I CALLMAN 1121 cited in Philippine Refining Co., Inc. vs. Ng Sam and the Director of
Patents, 115 SCRA 472 [1982].
96. It has been held that where the products are different, the prior owner's chance of
success is a function of many variables, such as the:
(a) strength of his mark
(b) degree of similarity between the two marks
(c) reciprocal of defendant's good faith in adopting its own mark

(d) quality of defendant's product
(e) proximity of the products
(f) likelihood that the prior owner will bridge the gap
(g) actual confusion, and
(h) sophistication of the buyers. (Polaroid Corp. vs. Polaroid Elecs. Corp., 287 F.
2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 s. Ct. 36, 7 L. Ed. 2d 25 [1961]).
[1995]; Del Monte Corporation, vs.Court of Appeals, 181 SCRA 410 [1990]; Asia Brewery,
Inc. vs. Court of Appeals, 224 SCRA 437 [1993].
[1995].
[1995].
[1982].
102. Ibid.
[1995].
[1982].
106. Thompson Medical Co. vs. Pfizer, Inc. 753 F. 2d 208, 225 USPQ 124 (2d Cir.) 1985.
107. Kiki Undies Corp. vs. Promenade Hosiery Mills, Inc., 411 F. 2d 1097, 1099 (2d Cir.
1969), cert. denied, 396 U.S. 1094, 90 S. Ct. 707, 24 L. Ed. 698 [1970]; Lever Bros. Co. vs.
American Bakeries Co., 693 F. 2d 251, C.A. N.Y., November 3, 1982.
108. Mushroom Makers, Inc. vs. R.G. Barry Corp., 580 F. 2d 44, 47 (2d Cir. 1978), cert.
denied, 439 U.S. 1116, 99 s. Ct. 1022, 59 L. Ed. 2d 75 [1979].
[1995].
110. Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190 [1921].

[1995]; Del Monte Corporation, et al. vs. Court of Appeals, 181 SCRA 410 [1990]; Asia
Brewery, Inc. vs. Court of Appeals, et al., 224 SCRA 437 [1993]; Philippine Refining Co.,
Inc. vs. Ng Sam and the Director of Patents, 115 SCRA 472 [1982].
112. Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 115 SCRA 472 [1982].
[1995]; Del Monte Corporation, vs. Court of Appeals, 181 SCRA 410 [1990]; Asia Brewery,
Inc. vs. Court of Appeals, 224 SCRA 437 [1993].
114. California Fruit Growers Exchange vs. Sunkist Baking Co., 166 F. 2d 971, 76 U.S.P.Q.
85 (7th Cir. 1947); Hot Shot Quality Products, Inc. vs. Sifer's Chemicals, Inc. 452 F.2d
1080, 172 U.S.P.Q. 350 (10th Cir. 1971); Federated Foods, Inc. vs. Ft. Howard Paper Co.,
544 F.2d 1098, 192 U.S.P.Q. 24; Faultless Starch Co. vs. Sales Producers Associates,
Inc., 530 F. 2d 1400, 189 U.S.P.Q. (C.C.P.A. 1976); Lever Bros. Co. vs. American Bakeries
Co., 693 F. 2d 251, 216 U.S.P.Q. 177 (2d Cir. 1982); Nestle Co. vs. Nash-Finch Co., 4
U.S.P.Q. 2d 1085 (T.T.A.B.).
115. 115 SCRA 472, 478 [1982].

116. Answer, Records, p. 258; TSN, December 14, 1993, Records, p. 420; TSN, June 9, 1997,
Records, p. 958; TSN, September 8, 1997, Records, p. 965–967.
117. Emerald Manufacturing, 251 SCRA 600 [1995]; Acoje Mining Co., Inc. vs. Director of
Patents, 38 SCRA 480 [1981]; Field Enterprises Educational Corp. vs. Grosset & Dunlap,
Inc. 256 F. Supp. 382, 150 U.S.P.Q. 517 (S.D.N.Y. 1966); Haviland & Co. vs. Johann
Haviland China Corp., 269 F. Supp. 928, 154 U.S.P.Q. 287 (S.D.N.Y. 1967); Estee Lauder,
Inc.vs. The Gap, Inc., 108 F. 3d. 1503, 42 U.S.P.Q. 2d 1228(2nd Cir. 1997).
118. Answer, Records, p. 257; TSN, April 13, 1993, Records, pp. 783; TSN, December 14,
1993, Records, p. 420; TSN, September 8, 1997, Records, pp. 966, 971–972.
119. TSN, June 9, 1997, Record, pp. 952–958; TSN, December 14, 1993, Records, p. 432.
120. 297 F. Supp. 1330, 160 USPQ 303.

121. 26 F. Supp. 2d 815 (E.D. Va. 1998).
122. Exhibit 18, Records, pp. 107–108.
123. 366 SCRA 266 [2000].

124. 52 Am. Jur. 577.
125. Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd., 120 Phil. 434,
439 [1964].

SECOND DIVISION
[G.R. No. 159938. March 31, 2006.]
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD.,

SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL &
RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC. ,
petitioners, vs . DEVELOPERS GROUP OF COMPANIES, INC. ,
respondent.
DECISION
GARCIA , J : p
In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-
La International Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the
Decision dated May 15, 2003 1 of the Court of Appeals (CA) in CA-G.R. CV No. 53351
and its Resolution 2 of September 15, 2003 which effectively a rmed with
modi cation an earlier decision of the Regional Trial Court (RTC) of Quezon City in Civil
Case No. Q-91-8476, an action for infringement and damages, thereat commenced by
respondent Developers Group of Companies, Inc. (DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent
DGCI claims ownership of said mark and logo in the Philippines on the strength of its
prior use thereof within the country. As DGCI stresses at every turn, it led on October
18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT)
pursuant to Sections 2 and 4 of Republic Act (RA) No. 166, 3 as amended, an
application for registration covering the subject mark and logo. On May 31, 1983, the
BPTTT issued in favor of DGCI the corresponding certi cate of registration therefor,
i.e., Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and
"S" logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with
interest in hotels and hotel-related transactions since 1969. As far back as 1962, it
adopted the name "Shangri-La" as part of the corporate names of all companies
organized under the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok
Group has used the name "Shangri-La" in all Shangri-La hotels and hotel-related
establishments around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the
"Shangri-La" mark and "S" logo, the Kuok Group had incorporated in Hong Kong and
Singapore, among other places, several companies that form part of the Shangri-La
International Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and
Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. were incorporated in the
Philippines beginning 1987 to own and operate the two (2) hotels put up by the Kuok
Group in Mandaluyong and Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of
Companies adopted and used the distinctive lettering of the name "Shangri-La" as part
of their trade names. TcHCDE
From the records, it appears that Shangri-La Hotel Singapore commissioned a

Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the
logo of the Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the
following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean
architectural structures as well as keep to the legendary Shangri-la theme with the
mountains on top being re ected on waters below and the connecting centre [sic]
line serving as the horizon. This logo, which is a bold, striking de nitive design,
embodies both modernity and sophistication in balance and thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been
used consistently and continuously by all Shangri-La hotels and companies in their
paraphernalia, such as stationeries, envelopes, business forms, menus, displays and
receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact
registered, the "Shangri-La" mark and "S" logo in the patent o ces in different countries
around the world.
On June 21, 1988, the petitioners led with the BPTTT a petition, docketed as
Inter Partes Case No. 3145, praying for the cancellation of the registration of the
"Shangri-La" mark and "S" logo issued to respondent DGCI on the ground that the same
were illegally and fraudulently obtained and appropriated for the latter's restaurant
business. They also led in the same o ce Inter Partes Case No. 3529 , praying for the
registration of the same mark and logo in their own names.
Until 1987 or 1988, the petitioners did not operate any establishment in the
Philippines, albeit they advertised their hotels abroad since 1972 in numerous business,
news, and/or travel magazines widely circulated around the world, all readily available in
Philippine magazines and newsstands. They, too, maintained reservations and booking
agents in airline companies, hotel organizations, tour operators, tour promotion
organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI led a
complaint for Infringement and Damages with the RTC of Quezon City against the
herein petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort,
Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-91-8476 and
eventually ra ed to Branch 99 of said court. The complaint with prayer for injunctive
relief and damages alleged that DGCI has, for the last eight (8) years, been the prior
exclusive user in the Philippines of the mark and logo in question and the registered
owner thereof for its restaurant and allied services. As DGCI alleged in its complaint,
SLIHM, et al., in promoting and advertising their hotel and other allied projects then
under construction in the country, had been using a mark and logo confusingly similar, if
not identical, with its mark and "S" logo. Accordingly, DGCI sought to prohibit the
petitioners, as defendants a quo, from using the "Shangri-La" mark and "S" logo in their
hotels in the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of appropriating
and illegally using the "Shangri-La" mark and "S" logo, adding that the legal and
bene cial ownership thereof pertained to SLIHM and that the Kuok Group and its
related companies had been using this mark and logo since March 1962 for all their
corporate names and affairs. In this regard, they point to the Paris Convention for the
Protection of Industrial Property as affording security and protection to SLIHM's
exclusive right to said mark and logo. They further claimed having used, since late 1975,
the internationally-known and specially-designed "Shangri-La" mark and "S" logo for all
the hotels in their hotel chain. caIACE
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a
Writ of Preliminary Injunction enjoining the petitioners from using the subject mark and
logo. The preliminary injunction issue ultimately reached the Court in G.R. No. 104583
entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In a decision 4
dated March 8, 1993, the Court nulli ed the writ of preliminary injunction issued by the
trial court and directed it to proceed with the main case and decide it with deliberate
dispatch.
While trial was in progress, the petitioners led with the court a motion to
suspend proceedings on account of the pendency before the BPTTT of Inter Partes
Case No. 3145 for the cancellation of DGCI's certi cate of registration. For its part,
respondent DGCI led a similar motion in that case, invoking in this respect the
pendency of its infringement case before the trial court. The parties' respective
motions to suspend proceedings also reached the Court via their respective petitions in
G.R. No. 114802 , entitled Developers Group of Companies, Inc. vs. Court of Appeals,
et al. and G.R. No. 111580 , entitled Shangri-La International Hotel Management LTD.,
et al. vs. Court of Appeals, et al., which were accordingly consolidated.
In a consolidated decision 5 dated June 21, 2001, the Court, limiting itself to the
core issue of whether, despite the petitioners' institution of Inter Partes Case No. 3145
before the BPTTT, herein respondent DGCI "can le a subsequent action for
infringement with the regular courts of justice in connection with the same registered
mark," ruled in the a rmative, but nonetheless ordered the BPTTT to suspend further
proceedings in said inter partes case and to await the final outcome of the main case.
Meanwhile, trial on the merits of the infringement case proceeded. Presented as
DGCI's lone witness was Ramon Syhunliong, President and Chairman of DGCI's Board
of Directors. Among other things, this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading and
restaurant businesses but only the restaurant business bears the name
"Shangri-La" and uses the same and the "S-logo" as service marks. The
restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly
known as the "Carvajal Restaurant" until December 1982, when respondent
took over said restaurant business.
2. He had traveled widely around Asia prior to 1982, and admitted knowing the
Shangri-La Hotel in Hong Kong as early as August 1982.
3. The "S-logo" was one of two (2) designs given to him in December 1982,
scribbled on a piece of paper by a jeepney signboard artist with an o ce
somewhere in Balintawak. The unnamed artist supposedly produced the
two designs after about two or three days from the time he (Syhunliong)
gave the idea of the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist supposedly
created the "Shangri-La" and "S" designs, DGCI was incorporated with the
primary purpose of "owning or operating, or both, of hotels and
restaurants".
5. On October 18, 1982, again prior to the alleged creation date of the mark and
logo, DGCI led an application for trademark registration of the mark
"SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with the BPTTT. On
said date, respondent DGCI amended its Articles of Incorporation to re ect
the name of its restaurant, known and operating under the style and name
of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained
Certi cate of Registration No. 31904 for the "Shangri-La" mark and "S"
logo.
Eventually, the trial court, on the postulate that petitioners', more particularly
petitioner SLIHM's, use of the mark and logo in dispute constitutes an infringement of
DGCI's right thereto, came out with its decision 6 on March 8, 1996 rendering judgment
for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI]
and against [SLIHM, et al.] —
a) Upholding the validity of the registration of the service mark "Shangri-la"

and "S-Logo" in the name of [respondent]; AaHTIE
b) Declaring [petitioners'] use of said mark and logo as infringement of

[respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees, assignees

and other persons acting under their authority and with their permission, to
permanently cease and desist from using and/or continuing to use said mark and
logo, or any copy, reproduction or colorable imitation thereof, in the promotion,
advertisement, rendition of their hotel and allied projects and services or in any
other manner whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any premises,
objects, materials and paraphernalia used by them and/or destroy any and all
prints, signs, advertisements or other materials bearing said mark and logo in
their possession and/or under their control; and
e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in
the amounts of P2,000,000.00 as actual and compensatory damages,
P500,000.00 as attorney's fee and expenses of litigation.
Let a copy of this Decision be certi ed to the Director, Bureau of Patents,
Trademarks and Technology Transfer for his information and appropriate action
in accordance with the provisions of Section 25, Republic Act No. 166
Costs against [petitioners].

SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their recourse was
docketed as CA G.R. SP No. 53351 .
As stated at the threshold hereof, the CA, in its assailed Decision of May 15,
2003 , 7 a rmed that of the lower court with the modi cation of deleting the award of
attorney's fees. The appellate court predicated its a rmatory action on the strength or
interplay of the following premises:

1. Albeit the Kuok Group used the mark and logo since 1962, the evidence
presented shows that the bulk use of the tradename was abroad and not in
the Philippines (until 1987). Since the Kuok Group does not have proof of
actual use in commerce in the Philippines (in accordance with Section 2 of
R.A. No. 166), it cannot claim ownership of the mark and logo in
accordance with the holding in Kabushi Kaisha Isetan v. IAC 8 , as
reiterated in Philip Morris, Inc. v. Court of Appeals. 9
2. On the other hand, respondent has a right to the mark and logo by virtue of its
prior use in the Philippines and the issuance of Certi cate of Registration
No. 31904.
3. The use of the mark or logo in commerce through the bookings made by travel
agencies is unavailing since the Kuok Group did not establish any branch
or regional o ce in the Philippines. As it were, the Kuok Group was not
engaged in commerce in the Philippines inasmuch as the bookings were
made through travel agents not owned, controlled or managed by the Kuok
Group.
4. While the Paris Convention protects internationally known marks, R.A. No. 166
still requires use in commerce in the Philippines. Accordingly, and on the
premise that international agreements, such as Paris Convention, must
yield to a municipal law, the question on the exclusive right over the mark
and logo would still depend on actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the
CA in its equally assailed Resolution of September 15, 2003 . 1 0
As formulated by the petitioners, the issues upon which this case hinges are:
1. Whether the CA erred in nding that respondent had the right to le an
application for registration of the "Shangri-La" mark and "S" logo although
respondent never had any prior actual commercial use thereof;
2. Whether the CA erred in nding that respondent's supposed use of the identical
"Shangri-La" mark and "S" logo of the petitioners was not evident bad faith
and can actually ripen into ownership, much less registration;
3. Whether the CA erred in overlooking petitioners' widespread prior use of the

"Shangri-La" mark and "S" logo in their operations;EIASDT
4. Whether the CA erred in refusing to consider that petitioners are entitled to

protection under both R.A. No. 166, the old trademark law, and the Paris
Convention for the Protection of Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the right to legally
own the "Shangri-La" mark and "S" logo by virtue of and despite their
ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and logo
constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of respondent despite the
absence of any evidence to support the same, and in failing to award relief
in favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their use of the mark
and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our
attention to, namely:
1. Whether the certi cation against forum-shopping submitted on behalf of the
petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in nature hence
improper for resolution in the instant petition for review on certiorari.
DGCI claims that the present petition for review should be dismissed outright for
certain procedural defects, to wit: an insu cient certi cation against forum shopping
and raising pure questions of fact. On both counts, we nd the instant petition formally
and substantially sound.
In its Comment, respondent alleged that the certi cation against forum shopping
signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of the petitioners was
insu cient, and that he was not duly authorized to execute such document.
Respondent further alleged that since petitioner SLIHM is a foreign entity based in
Hong Kong, the Director's Certi cate executed by Mr. Madhu Rama Chandra Rao,
embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and
execute the certification against forum shopping, should contain the authentication by a
consular officer of the Philippines in Hong Kong.
In National Steel Corporation v. CA, 1 1 the Court has ruled that the certi cation on
non-forum shopping may be signed, for and in behalf of a corporation, by a speci cally
authorized lawyer who has personal knowledge of the facts required to be disclosed in
such document. The reason for this is that a corporation can only exercise its powers
through its board of directors and/or its duly authorized o cers and agents. Physical
acts, like the signing of documents, can be performed only by natural persons duly
authorized for the purpose. 1 2
Moreover, Rule 7, Section 5 of the Rules of Court concerning the certi cation
against forum shopping does not require any consular certi cation if the petitioner is a
foreign entity. Nonetheless, to banish any lingering doubt, petitioner SLIHM furnished
this Court with a consular certi cation dated October 29, 2003 authenticating the
Director's Certi cate authorizing Atty. Lerma to execute the certi cation against forum
shopping, together with petitioners' manifestation of February 9, 2004.
Respondent also attacks the present petition as one that raises pure questions
of fact. It points out that in a petition for review under Rule 45 of the Rules of Court, the
questions that may properly be inquired into are strictly circumscribed by the express
limitation that "the petition shall raise only questions of law which must be distinctly set
forth." 1 3 We do not, however, nd that the issues involved in this petition consist purely
of questions of fact. These issues will be dealt with as we go through the questions
raised by the petitioners one by one. SHADcT
Petitioners' rst argument is that the respondent had no right to le an

application for registration of the "Shangri-La" mark and "S" logo because it did not have
prior actual commercial use thereof. To respondent, such an argument raises a
question of fact that was already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and
registrant of the subject mark and logo in the Philippines. Taken in proper context, the trial
court's nding on "prior use" can only be interpreted to mean that respondent used the
subject mark and logo in the country before the petitioners did. It cannot be construed as
being a factual finding that there was prior use of the mark and logo before registration.
Secondly, the question raised is not purely factual in nature. In the context of this
case, it involves resolving whether a certi cate of registration of a mark, and the
presumption of regularity in the performance of o cial functions in the issuance thereof,
are su cient to establish prior actual use by the registrant. It further entails answering the
question of whether prior actual use is required before there may be a valid registration of
a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended, which
was in effect up to December 31, 1997, hence, the law in force at the time of respondent's
application for registration of trademark, the root of ownership of a trademark is actual
use in commerce. Section 2 of said law requires that before a trademark can be registered,
it must have been actually used in commerce and service for not less than two months in
the Philippines prior to the filing of an application for its registration.
Registration, without more, does not confer upon the registrant an absolute right to
the registered mark. The certi cate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner in an
appropriate case. 1 4
Among the effects of registration of a mark, as catalogued by the Court in

Lorenzana v. Macagba, 1 5 are:
1. Registration in the Principal Register gives rise to a presumption of the
validity of the registration, the registrant's ownership of the mark, and his
right to the exclusive use thereof. . . .
2. Registration in the Principal Register is limited to the actual owner of the
trademark and proceedings therein pass on the issue of ownership, which
may be contested through opposition or interference proceedings,
or, after registration, in a petition for cancellation . . . . [Emphasis
supplied] DHcESI
Ownership of a mark or trade name may be acquired not necessarily by registration

but by adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails
over the latter. For a rule widely accepted and rmly entrenched, because it has come
down through the years, is that actual use in commerce or business is a pre-requisite to
the acquisition of the right of ownership. 1 6
While the present law on trademarks 1 7 has dispensed with the requirement of prior
actual use at the time of registration, the law in force at the time of registration must be
applied, and thereunder it was held that as a condition precedent to registration of
trademark, trade name or service mark, the same must have been in actual use in the
Philippines before the ling of the application for registration. 1 8 Trademark is a creation
of use and therefore actual use is a pre-requisite to exclusive ownership and its
registration with the Philippine Patent O ce is a mere administrative con rmation of the
existence of such right. 1 9
By itself, registration is not a mode of acquiring ownership. When the applicant is
not the owner of the trademark being applied for, he has no right to apply for registration
of the same. Registration merely creates a prima facie presumption of the validity of the
registration, of the registrant's ownership of the trademark and of the exclusive right to the
use thereof. 2 0 Such presumption, just like the presumptive regularity in the performance
of official functions, is rebuttable and must give way to evidence to the contrary.
Here, respondent's own witness, Ramon Syhunliong, testi ed that a jeepney
signboard artist allegedly commissioned to create the mark and logo submitted his
designs only in December 1982. 2 1 This was two-and-a-half months after the ling of the
respondent's trademark application on October 18, 1982 with the BPTTT. It was also only
in December 1982 when the respondent's restaurant was opened for business. 2 2
Respondent cannot now claim before the Court that the certi cate of registration itself is
proof that the two-month prior use requirement was complied with, what with the fact that
its very own witness testified otherwise in the trial court. And because at the time (October
18, 1982) the respondent led its application for trademark registration of the " Shangri-La"
mark and "S" logo, respondent was not using these in the Philippines commercially, the
registration is void.
Petitioners also argue that the respondent's use of the " Shangri-La" mark and "S"
logo was in evident bad faith and cannot therefore ripen into ownership, much less
registration. While the respondent is correct in saying that a nding of bad faith is factual,
not legal, 2 3 hence beyond the scope of a petition for review, there are, however, noted
exceptions thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or impossible; 2 4
2. When there is grave abuse of discretion; 2 5

3. When the judgment is based on a misapprehension of facts; 2 6
4. When the findings of fact are conflicting; 2 7 and

5. When the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondent. 2 8
And these are naming but a few of the recognized exceptions to the rule.
The CA itself, in its Decision of May 15, 2003, found that the respondent's president
and chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel
before he caused the registration of the mark and logo, and surmised that he must have
copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and
devise from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere
fact that he was a visitor of [petitioners'] hotel abroad at one time (September 27,
1982) establishes [petitioners'] allegation that he got the idea there. 2 9
Yet, in the very next paragraph, despite the preceding admission that the mark and
logo must have been copied, the CA tries to make it appear that the adoption of the same
mark and logo could have been coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The
word "Shangri-la" refers to a (a) remote beautiful imaginary place where life
approaches perfection or (b) imaginary mountain land depicted as a utopia in the
novel Lost Horizon by James Hilton. The Lost Horizon was a well-read and
popular novel written in 1976. It is not impossible that the parties, inspired by the
novel, both adopted the mark for their business to conjure [a] place of beauty and
pleasure. STHAaD
The S-logo is, likewise, not unusual. The devise looks like a modi ed Old
English print. 3 0
To jump from a recognition of the fact that the mark and logo must have been
copied to a rationalization for the possibility that both the petitioners and the respondent
coincidentally chose the same name and logo is not only contradictory, but also manifestly
mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old English" print
that the CA makes it out to be, but is obviously a symbol with oriental or Asian overtones.
At any rate, it is ludicrous to believe that the parties would come up with the exact same
lettering for the word "Shangri-La" and the exact same logo to boot. As correctly observed
by the petitioners, to which we are in full accord:
. . . When a trademark copycat adopts the word portion of another's
trademark as his own, there may still be some doubt that the adoption is
intentional. But if he copies not only the word but also the word's exact font and
lettering style and in addition, he copies also the logo portion of the trademark,
the slightest doubt vanishes. It is then replaced by the certainty that the adoption
was deliberate, malicious and in bad faith. 3 1
It is truly di cult to understand why, of the millions of terms and combination of

letters and designs available, the respondent had to choose exactly the same mark and
logo as that of the petitioners, if there was no intent to take advantage of the goodwill of
petitioners' mark and logo. 3 2
One who has imitated the trademark of another cannot bring an action for
infringement, particularly against the true owner of the mark, because he would be coming
to court with unclean hands. 3 3 Priority is of no avail to the bad faith plaintiff. Good faith is
required in order to ensure that a second user may not merely take advantage of the
goodwill established by the true owner.
This point is further bolstered by the fact that under either Section 17 of R.A. No.
166, or Section 151 of R.A. No. 8293, or Article 6 bis(3) of the Paris Convention, no time
limit is xed for the cancellation of marks registered or used in bad faith. 3 4 This is
precisely why petitioners had led an inter partes case before the BPTTT for the
cancellation of respondent's registration, the proceedings on which were suspended
pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as being
purely factual in nature, namely, whether the CA erred in overlooking petitioners'
widespread prior use of the "Shangri-La" mark and "S" logo in their operations. The
question, however, is not whether there had been widespread prior use, which would have
been factual, but whether that prior use entitles the petitioners to use the mark and logo in
the Philippines. This is clearly a question which is legal in nature.
It has already been established in the two courts below, and admitted by the
respondent's president himself, that petitioners had prior widespread use of the mark and
logo abroad:
There is, to be sure, an impressive mass of proof that petitioner SLIHM
and its related companies abroad used the name and logo for one purpose or
another . . . . 3 5 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the
mark and logo but held that such use did not confer to them ownership or exclusive right
to use them in the Philippines." 3 6 To petitioners' mind, it was error for the CA to rule that
their worldwide use of the mark and logo in dispute could not have conferred upon them
any right thereto. Again, this is a legal question which is well worth delving into.
R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are registrable . — Trademarks, trade names and service
marks owned by persons, corporations, partnerships or associations domiciled in
the Philippines and by persons, corporations, partnerships or associations
domiciled in any foreign country may be registered in accordance with the
provisions of this Act: Provided, That said trademarks trade names, or service
marks are actually in use in commerce and services not less than two
months in the Philippines before the time the applications for registration are
led: And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to citizens of
the Philippines, and such fact is officially certified, with a certified true copy of the
foreign law translated into the English language, by the government of the foreign
country to the Government of the Republic of the Philippines. SDHITE
Section 2-A. Ownership of trademarks, trade names and service marks;

how acquired. — Anyone who lawfully produces or deals in merchandise of any
kind or who engages in any lawful business, or who renders any lawful service in
commerce, by actual use thereof in manufacture or trade, in business, and in the
service rendered, may appropriate to his exclusive use a trademark, a trade name,
or a servicemark not so appropriated by another , to distinguish his
merchandise, business or service from the merchandise, business or services of
others. The ownership or possession of a trademark, trade name, service mark,
heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as are other
property rights known to this law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual use in
commerce of the said trade name and "S" logo in the Philippines. Hence, consistent with its
nding that the bulk of the petitioners' evidence shows that the alleged use of the Shangri-
La trade name was done abroad and not in the Philippines, it is understandable for that
court to rule in respondent's favor. Unfortunately, however, what the CA failed to perceive
is that there is a crucial difference between the aforequoted Section 2 and Section 2-A of
R.A. No. 166. For, while Section 2 provides for what is registrable, Section 2-A, on the other
hand, sets out how ownership is acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and
must have actually used the mark in commerce in the Philippines for 2 months prior to the
application for registration. Since "ownership" of the trademark is required for registration,
Section 2-A of the same law sets out to de ne how one goes about acquiring ownership
thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of
ownership but the provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is signi cant to note that Section 2-A does not
require that the actual use of a trademark must be within the Philippines. Hence, under R.A.
No. 166, as amended, one may be an owner of a mark due to actual use thereof but not yet
have the right to register such ownership here due to failure to use it within the Philippines
for two months.
While the petitioners may not have quali ed under Section 2 of R.A. No. 166 as a
registrant, neither did respondent DGCI, since the latter also failed to ful ll the 2-month
actual use requirement. What is worse, DGCI was not even the owner of the mark. For it to
have been the owner, the mark must not have been already appropriated ( i.e. ,
used) by someone else . At the time of respondent DGCI's registration of the mark, the
same was already being used by the petitioners, albeit abroad, of which DGCI's president
was fully aware.
It is respondent's contention that since the petitioners adopted the " Shangri-La"
mark and "S" logo as a mere corporate name or as the name of their hotels, instead of
using them as a trademark or service mark, then such name and logo are not trademarks.
The two concepts of corporate name or business name and trademark or service mark,
are not mutually exclusive. It is common, indeed likely, that the name of a corporation or
business is also a trade name, trademark or service mark. Section 38 of R.A. No. 166
defines the terms as follows:
Sec. 38. Words and terms de ned and construed — In the construction of
this Act, unless the contrary is plainly apparent from the context — The term "trade
name" includes individual names and surnames, rm names, trade names,
devices or words used by manufacturers, industrialists, merchants, agriculturists,
and others to identify their business, vocations or occupations; the names or
titles lawfully adopted and used by natural or juridical persons , unions,
and any manufacturing, industrial, commercial, agricultural or other organizations
engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or
device or any combination thereof adopted and used by a manufacturer or
merchant to identify his goods and distinguish them from those manufactured,
sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising of
services to identify the services of one person and distinguish them from
the services of others and includes without limitation the marks, names,
symbols, titles, designations, slogans, character names, and distinctive
features of radio or other advertising . [Emphasis supplied] TIcEDC
Clearly, from the broad de nitions quoted above, the petitioners can be considered
as having used the "Shangri-La" name and "S" logo as a tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly
shows the rm resolve of the Philippines to observe and follow the Paris Convention by
incorporating the relevant portions of the Convention such that persons who may question
a mark (that is, oppose registration, petition for the cancellation thereof, sue for unfair
competition) include persons whose internationally well-known mark, whether or not
registered, is identical with or confusingly similar to or constitutes a translation of a mark
that is sought to be registered or is actually registered. 3 7
However, while the Philippines was already a signatory to the Paris Convention, the
IPC only took effect on January 1, 1988, and in the absence of a retroactivity clause, R.A.
No. 166 still applies. 3 8 Under the prevailing law and jurisprudence at the time, the CA had
not erred in ruling that:
The Paris Convention mandates that protection should be afforded to
internationally known marks as signatory to the Paris Convention, without regard
as to whether the foreign corporation is registered, licensed or doing business in
the Philippines. It goes without saying that the same runs afoul to
Republic Act No. 166, which requires the actual use in commerce in the
Philippines of the subject mark or devise . The apparent con ict between the
two (2) was settled by the Supreme Court in this wise —
"Following universal acquiescence and comity, our municipal law

on trademarks regarding the requirement of actual use in the
Philippines must subordinate an international agreement
inasmuch as the apparent clash is being decided by a municipal tribunal
(Mortensen vs. Peters, Great Britain, High Court of Judiciary of Scotland,
1906, 8 Sessions 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has been made part
of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national
legislative enactments (Salonga and Yap, Public International Law, Fourth
ed., 1974, p. 16)." 3 9 [Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris Convention.
Nevertheless, with the double in rmity of lack of two-month prior use, as well as bad faith
in the respondent's registration of the mark, it is evident that the petitioners cannot be
guilty of infringement. It would be a great injustice to adjudge the petitioners guilty of
infringing a mark when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an
obstacle in the enforcement of their rights as part of the Kuok Group of Companies and as
o cial repository, manager and operator of the subject mark and logo. Besides, R.A. No.
166 did not require the party seeking relief to be the owner of the mark but "any person
who believes that he is or will be damaged by the registration of a mark or trade name." 4 0
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution
of the Court of Appeals dated May 15, 2003 and September 15, 2003, respectively, and the
Decision of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby SET
ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is ordered
DISMISSED. aHSTID
SO ORDERED.
Sandoval-Gutierrez, Corona and Azcuna, JJ., concur.
Puno, J., took no part.
Footnotes
1. Penned by Associate Justice Remedios A. Salazar-Fernando, with Associate Justices Delilah
Vidallon-Magtolis (now ret.) and Edgardo F. Sundiam, concurring; Rollo, pp. 71-91.
2. Id. at 92-93.
3. AN ACT TO PROVIDE FOR THE REGISTRATION AND PROTECTION OF TRADEMARKS,
TRADE NAMES AND SERVICE MARKS, DEFINING UNFAIR COMPETITION AND FALSE
MARKING AND PROVIDING REMEDIES AGAINST THE SAME, AND FOR OTHER
PURPOSES.
4. Developers Group of Companies, Inc. vs. Court of Appeals, et al, G.R. No. 104583, March 8,
1993, 219 SCRA 715-723.
5. Developers Group of Companies, Inc. vs. Court of Appeals, et al., G.R. No. 114802 and
Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et al. , G.R.
No. 111580, June 21, 2001, 359 SCRA 273-282.
6. Rollo, pp. 114-121.
7. Supra note 1.
8. G.R. No. 75420, November 15, 1991, 203 SCRA 583.
9. G.R. No. 91332, July 16, 1993, 224 SCRA 576.

10. Supra note 2.
11. G.R. No. 134468, August 29, 2002, 388 SCRA 85, 91-92.
12. BA Savings Bank v. Sia, G.R. No. 131214, July 27, 2000, 336 SCRA 484, 485.
13. Section 1, Rule 45, Rules of Court.
14. Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft , G.R. No. L-
19906, April 30, 1969, 27 SCRA 1214; Chung Te v. Ng Kian Giab , G.R. No. L-23791,
November 23, 1966, 18 SCRA 747.
15. G.R. No. 33773, October 22, 1987, 154 SCRA 728-729.
16. Emerald Garments Mfg. Corp. v. Court of Appeals, G.R. No. 100098, December 29, 1995, 251
SCRA 600; Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, G.R. No. L-19906, April 30, 1969, 27 SCRA 1214.
17. Section 124 of Republic No. Act 8293, The Intellectual Property Code.
18. Heirs of Crisanta Y. Gabrielle-Almoradie v. CA , G.R. No. L-91385, January 4, 1994, 229 SCRA
15.
19. Marvex Commercial v. Petra Hawpia & Co ., G.R. No. L-19297, December 22, 1966, 18 SCRA
1178.
20. Unno Commercial Enterprises, Inc. v. General Milling Corporation , G.R. No. L-28554,
February 28, 1983, 120 SCRA 804.
21. TSN, April 13, 1994, pp. 12, 13.
22. Ibid.
23. Cheesman v. Intermediate Appellate Court , G.R. No. 74833, January 21, 1991, 193 SCRA
100.
24. De Luna v. Linatoc, n 74 Phil. 15 (1942).

25. Buyco v. People, 95 Phil. 453 (1954).
26. Cruz v. Sosing and Court of Appeals, 94 Phil. 26 (1953).
27. Casica v. Villaseca, 101 Phil. 1205 (1957).

28. Garcia v. Court of Appeals , G.R. No. L-26490, June 30, 1970, 33 SCRA 622; Alsua-Betts v.
Court of Appeals, G.R. Nos. L-46430-31, July 30, 1979, 92 SCRA 332.
29. Court of Appeals Decision; Rollo, p. 87; Annex "A" of Petition.
30. Ibid.
31. Petitioner's Memorandum, pp. 1-2; Rollo, pp. 448-449.

32. American Wire & Cable Co. v. Director of Patents , G.R. No. L-26557, February 18, 1970, 31
SCRA 544, 551.
33. Ubeda v. Zialcita, 13 Phil. 11, 19 (1909).

34. American Cyanamid Company v. Director of Patents , G.R. No. L-23954, April 29, 1977, 76
SCRA 568; La Estrella Distillery v. Director of Patents, 105 Phil. 1213 (1959).
35. Respondent's Comment at p. 21 thereof; Rollo, pp. 150-201, at p. 170.

36. Ibid, p. 21; Rollo, p. 170.
37. Secs. 123(3) and 131.3, Intellectual Property Code, RA No. 9283.
38. Article 4, The Civil Code: "Laws shall have no retroactive effect, unless the contrary is
provided."
39. Philip Morris, et al. v. CA, et al., G.R. No. 91332, 593, July 16, 1993, 224 SCRA 576.
40. Section 17, RA No. 166.

n Note from the Publisher: Written as "Luna v. Linatoc" in the original document.

FIRST DIVISION
[G.R. No. 159938. January 22, 2007.]
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD.,

SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL &
RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC. ,
petitioners, vs . DEVELOPERS GROUP OF COMPANIES, INC. ,
respondent.
RESOLUTION
GARCIA , J : p
Before the Court is this Motion for Reconsideration led by respondent Developers
Group of Companies, Inc. (DGCI) praying for the reversal of this Court's Decision 1 of
March 31, 2006, the dispositive portion of which reads:
WHEREFORE , the instant petition is GRANTED . The assailed Decision
and Resolution of the Court of Appeals dated May 15, 2003 and September 15,
2003, respectively, and the Decision of the Regional Trial Court of Quezon City
dated March 8, 1996 are hereby SET ASIDE . Accordingly, the complaint for
infringement in Civil Case No. Q-91-8476 is ordered DISMISSED .
In its motion, respondent-movant DGCI raises the following grounds:

1. The certification of non-forum shopping submitted by petitioners is insufficient;
2. The word "Shangri-La" and "S" logo were adopted and used by the Kuok Group
as part of their corporate names and the names of their hotels;
3. Petitioners' claim of legal and bene cial ownership of mark and logo is
baseless and unwarranted;
4. Change of theory from owner to one who may be damaged as entitled to relief
is not allowable;
5. Finding of registration in patent o ces in different countries around the world
is inaccurate;
6. DGCI's registration of the "Shangri-La" mark and the "S" logo is valid because
there was at least two months' use thereof prior to application;
7. Section 2-A of R.A. No. 166 requires the actual commercial use of trademarks
in the Philippines pursuant to the principle of territoriality applicable to
trademarks. Hence, petitioners' use of subject marks outside of Philippine
territory did not confer on them any ownership rights thereto under
Philippine laws;
8. The Regional Trial Court and the Court of Appeals' failure to nd any bad faith
on the part of DGCI is conclusive on the Supreme Court;
9. DGCI's use of the subject marks in the Philippines is entitled to protection under
the territoriality principle of trademarks. 2
The bulk of the aforementioned grounds is a mere rehash of movant's previous

arguments. While DGCI is correct in stating that a motion for reconsideration, by its very
nature, may tend to dwell on issues already resolved in the decision sought to be
reconsidered and that this should not be an obstacle for a reconsideration, 3 the hard
reality is that movant has failed to raise matters substantially plausible or compellingly
persuasive to warrant the desired course of action.
Considering that the grounds presently raised have been su ciently considered, if
not squarely addressed, in the subject Decision, it behooves movant to convince the Court
that certain ndings or conclusions in the Decision are contrary to law. As it is, however,
the instant motion does not raise any new or substantial legitimate ground or reason to
justify the reconsideration sought.
Movant DGCI would make capital on the alleged danger the subject Decision might
wreak upon Philippine trademark law, claiming that the decision in question would render
nugatory the protection intended by the trademark law to all Philippine trademark
registrants. This assertion is a baseless and sweeping statement. The interpretation of
Republic Act No. 166 in the Decision does not in any way diminish the protection afforded
to valid trademark registrations made under said law. It was glaringly obvious, however,
from the testimony of movant's own witness that DGCI's registration of the subject mark
and logo was void due to the existence of bad faith and the absence of the requisite 2-
month prior use. Despite movant's melodramatic imputation of an abandonment of the
territoriality principle, the Decision actually upholds the principle but found that respondent
DGCI was not entitled to protection thereunder due to the double in rmity which attended
its registration of the subject mark and logo.
Anent DGCI's assertion of a change of theory on the part of the petitioners, su ce it
to say that the latter have never budged from seeking relief as rightful, legal and/or
bene cial owners of the mark and logo in dispute. The Decision ruled favorably on the
veracity of the petitioners' claim:
. . . It would be a great injustice to adjudge the petitioners guilty of
infringing a mark when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother

corporation be an obstacle in the enforcement of their rights as part of the Kuok
Group of Companies and as o cial repository, manager and operator of the
subject mark and logo. Besides , R.A. No. 166 did not require the party seeking
relief to be the owner of the mark but "any person who believes that he is or will
be damaged by the registration of a mark or trade name." 4 [Emphasis supplied]
Clearly, from the word " Besides " used in the context of the aforequoted paragraph,
all that the Decision says is that even if petitioners were not the owners, they would still
have a right of action under the law. There was never an attempt on their part at an
eleventh-hour change of theory, as movant DGCI wishes to portray.
WHEREFORE, the instant motion for reconsideration is DENIED for lack of merit.
SO ORDERED.
Sandoval-Gutierrez, Corona and Azcuna, JJ., concur.
Puno, C.J., took no part.
Footnotes
1. Rollo, pp. 529-553.

2. Id. at 555.
3. Guerra Enterprises Company, Inc. v. Court of First Instance of Lanao del Sur, et al. , G.R. No. L-
28310, April 17, 1970, 32 SCRA 314, 317. ICcDSa
4. Section 17, R.A. No. 166.

THIRD DIVISION
[G.R. No. 180073. November 25, 2009.]
PROSOURCE INTERNATIONAL, INC. , petitioner, vs . HORPHAG

RESEARCH MANAGEMENT SA , respondent.
DECISION
NACHURA , J : p
This is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Court of Appeals (CA) Decision 1 dated July 27,
2007 and Resolution 2 dated October 15, 2007 in CA-G.R. CV No. 87556. The assailed
decision a rmed the Regional Trial Court (RTC) 3 Decision 4 dated January 16, 2006
and Order 5 dated May 3, 2006 in Civil Case No. 68048; while the assailed resolution
denied petitioner's motion for reconsideration.
The facts are as follows:
Respondent Horphag Research Management SA is a corporation duly organized
and existing under the laws of Switzerland and the owner 6 of trademark
PYCNOGENOL, a food supplement sold and distributed by Zuellig Pharma Corporation.
Respondent later discovered that petitioner Prosource International, Inc. was also
distributing a similar food supplement using the mark PCO-GENOLS since 1996. 7 This
prompted respondent to demand that petitioner cease and desist from using the
aforesaid mark. 8
Without notifying respondent, petitioner discontinued the use of, and withdrew
from the market, the products under the name PCO-GENOLS as of June 19, 2000. It,
likewise, changed its mark from PCO-GENOLS to PCO-PLUS. 9
On August 22, 2000, respondent led a Complaint 10 for Infringement of
Trademark with Prayer for Preliminary Injunction against petitioner, praying that the
latter cease and desist from using the brand PCO-GENOLS for being confusingly similar
with respondent's trademark PYCNOGENOL. It, likewise, prayed for actual and nominal
damages, as well as attorney's fees. 11
In its Answer, 12 petitioner contended that respondent could not le the
infringement case considering that the latter is not the registered owner of the
trademark PYCNOGENOL, but one Horphag Research Limited. It, likewise, claimed that
the two marks were not confusingly similar. Finally, it denied liability, since it
discontinued the use of the mark prior to the institution of the infringement case.
Petitioner thus prayed for the dismissal of the complaint. By way of counterclaim,
petitioner prayed that respondent be directed to pay exemplary damages and
attorney's fees. 13 CIaDTE
During the pre-trial, the parties admitted the following:

1. Defendant [petitioner] is a corporation duly organized and existing under
the laws of the Republic of the Philippines with business address at No. 7
Annapolis Street, Greenhills, San Juan, Metro Manila;
2. The trademark PYCNOGENOL of the plaintiff is duly registered with the
Intellectual Property Office but not with the Bureau of Food and Drug (BFAD).
3. The defendant's product PCO-GENOLS is duly registered with the BFAD but
not with the Intellectual Property Office (IPO).
4. The defendant corporation discontinued the use of and had withdrawn

from the market the products under the name of PCO-GENOLS as of June 19,
2000, with its trademark changed from PCO-GENOLS to PCO-PLUS.
5. Plaintiff corporation sent a demand letter to the defendant dated 02 June

2000. 14
On January 16, 2006, the RTC decided in favor of respondent. It observed that
PYCNOGENOL and PCO-GENOLS have the same su x "GENOL" which appears to be
merely descriptive and thus open for trademark registration by combining it with other
words. The trial court, likewise, concluded that the marks, when read, sound similar, and
thus confusingly similar especially since they both refer to food supplements. The court
added that petitioner's liability was not negated by its act of pulling out of the market
the products bearing the questioned mark since the fact remains that from 1996 until
June 2000, petitioner had infringed respondent's product by using the trademark PCO-
GENOLS. As respondent manifested that it was no longer interested in recovering
actual damages, petitioner was made to answer only for attorney's fees amounting to
P50,000.00. 15 For lack of su cient factual and legal basis, the court dismissed
petitioner's counterclaim. Petitioner's motion for reconsideration was likewise denied.
On appeal to the CA, petitioner failed to obtain a favorable decision. The
appellate court explained that under the Dominancy or the Holistic Test, PCO-GENOLS
is deceptively similar to PYCNOGENOL. It also found just and equitable the award of
attorney's fees especially since respondent was compelled to litigate. 16
Hence, this petition, assigning the following errors:
I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING THE RULING OF
THE LOWER [COURT] THAT RESPONDENT'S TRADEMARK
P[YC]NOGENOLS (SIC) WAS INFRINGED BY PETITIONER'S PCO-GENOLS.
II. THAT THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF

ATTORNEY'S FEES IN FAVOR OF RESPONDENT HORPHAG RESEARCH
MANAGEMENT S.A. IN THE AMOUNT OF Php50,000.00. 17
The petition is without merit.

It must be recalled that respondent led a complaint for trademark infringement
against petitioner for the latter's use of the mark PCO-GENOLS which the former
claimed to be confusingly similar to its trademark PYCNOGENOL. Petitioner's use of
the questioned mark started in 1996 and ended in June 2000. The instant case should
thus be decided in light of the provisions of Republic Act (R.A.) No. 166 18 for the acts
committed until December 31, 1997, and R.A. No. 8293 19 for those committed from
January 1, 1998 until June 19, 2000. SHECcD
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or

any combination thereof, adopted and used by a manufacturer or merchant on his
goods to identify and distinguish them from those manufactured, sold, or dealt by
others. Inarguably, a trademark deserves protection. 20
Section 22 of R.A. No. 166, as amended, and Section 155 of R.A. No. 8293 de ne
what constitutes trademark infringement, as follows:
imitation of any registered mark or tradename in connection with the sale,
or identity of such business; or reproduce, counterfeit, copy of colorably imitate
any such mark or tradename and apply such reproduction, counterfeit, copy or
business, or services, shall be liable to a civil action by the registrant for any or all
Sec. 155. Remedies; Infringement. — Any person who shall, without the
consent of the owner of the registered mark:

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

the remedies hereinafter set forth: Provided, That infringement takes place at the
moment any of the acts stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of goods or services using
the infringing material.
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and
20 thereof, the following constitute the elements of trademark infringement: ICacDE
(a) A trademark actually used in commerce in the Philippines and registered

in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering for sale,
or advertising of any goods, business or services or in connection with which
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
business or services as to likely cause confusion or mistake or to deceive
purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and

(d) [S]uch act is done without the consent of the trademark registrant or
assignee. 21
On the other hand, the elements of infringement under R.A. No. 8293 are as
follows:
(1) The trademark being infringed is registered in the Intellectual Property
O ce; however, in infringement of trade name, the same need not be
registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or
(3) The infringing mark or trade name is used in connection with the sale,
offering for sale, or advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services;
(4) The use or application of the infringing mark or trade name is likely to
cause confusion or mistake or to deceive purchasers or others as to the
goods or services themselves or as to the source or origin of such goods or
services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the
assignee thereof. 22
In the foregoing enumeration, it is the element of "likelihood of confusion" that is

the gravamen of trademark infringement. But "likelihood of confusion" is a relative
concept. The particular, and sometimes peculiar, circumstances of each case are
determinative of its existence. Thus, in trademark infringement cases, precedents must
be evaluated in the light of each particular case. 23 CIScaA
In determining similarity and likelihood of confusion, jurisprudence has

developed two tests: the Dominancy Test and the Holistic or Totality Test. The
Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion and deception, thus constituting infringement.
24 If the competing trademark contains the main, essential and 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 to deceive
purchasers. 25 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. 26
In contrast, the Holistic Test entails a consideration of the entirety of the marks
as applied to the products, including the labels and packaging, in determining confusing
similarity. 27 The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both labels in order
that the observer may draw his conclusion whether one is confusingly similar to the
other. 28
The trial and appellate courts applied the Dominancy Test in determining whether
there was a confusing similarity between the marks PYCNOGENOL and PCO-GENOL.
Applying the test, the trial court found, and the CA affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the same su x "GENOL"
which on evidence, appears to be merely descriptive and furnish no indication of
the origin of the article and hence, open for trademark registration by the plaintiff
thru combination with another word or phrase such as PYCNOGENOL, Exhibits "A"
to "A-3". Furthermore, although the letters "Y" between P and C, "N" between O and
C and "S" after L are missing in the [petitioner's] mark PCO-GENOLS, nevertheless,
when the two words are pronounced, the sound effects are confusingly similar
not to mention that they are both described by their manufacturers as a food
supplement and thus, identi ed as such by their public consumers. And although
there were dissimilarities in the trademark due to the type of letters used as well
as the size, color and design employed on their individual packages/bottles, still
the close relationship of the competing products' name in sounds as they were
pronounced, clearly indicates that purchasers could be misled into believing that
they are the same and/or originates from a common source and manufacturer. 29
We find no cogent reason to depart from such conclusion.

This is not the rst time that the Court takes into account the aural effects of the
words and letters contained in the marks in determining the issue of confusing
similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., 30 cited in
McDonald's Corporation v. L.C. Big Mak Burger, Inc., 31 the Court held: EITcaH

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. 3 2
Finally, we reiterate that the issue of trademark infringement is factual, with both
the trial and appellate courts nding the allegations of infringement to be meritorious.
As we have consistently held, factual determinations of the trial court, concurred in by
the CA, are nal and binding on this Court. 33 Hence, petitioner is liable for trademark
infringement.
We, likewise, sustain the award of attorney's fees in favor of respondent. Article
2208 of the Civil Code enumerates the instances when attorney's fees are awarded, viz.:
Art. 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
1. When exemplary damages are awarded;
2. When the defendant's act or omission has compelled the plaintiff to

litigate with third persons or to incur expenses to protect his interest;
3. In criminal cases of malicious prosecution against the plaintiff;

4. In case of a clearly unfounded civil action or proceeding against the
plaintiff;
5. Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff"s plainly valid, just and demandable
claim;
6. In actions for legal support;
7. In actions for the recovery of wages of household helpers, laborers

and skilled workers;
8. In actions for indemnity under workmen's compensation and

employer's liability laws; ITScAE
9. In a separate civil action to recover civil liability arising from a crime;

10. When at least double judicial costs are awarded;
11. In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
As a rule, an award of attorney's fees should be deleted where the award of

moral and exemplary damages is not granted. 34 Nonetheless, attorney's fees may be
awarded where the court deems it just and equitable even if moral and exemplary
damages are unavailing. 3 5 In the instant case, we nd no reversible error in the grant of
attorney's fees by the CA.
WHEREFORE , premises considered, the petition is DENIED for lack of merit.
The Court of Appeals Decision dated July 27, 2007 and its Resolution dated October
15, 2007 in CA-G.R. CV No. 87556 are AFFIRMED .
SO ORDERED .
Corona, Chico-Nazario, Velasco, Jr. and Peralta, JJ., concur.
Footnotes
1. Penned by Associate Justice Vicente S.E. Veloso, with Associate Justices Juan Q.
Enriquez, Jr. and Marlene Gonzales-Sison, concurring; rollo, pp. 38-47.
2. Id. at 48.
3. Branch 167, Pasig City.
4. Penned by Judge Alfredo C. Flores; rollo, pp. 230-234.

5. Id. at 248-250.
6. Evidenced by Registration No. 62413 issued by the Bureau of Patents, Trademarks and
Technology Transfer.
7. Rollo, p. 39.
8. Id. at 163-164.
9. Id. at 68.
10. Id. at 49-54.
11. Id. at 50-51.
12. Id. at 57-61.
13. Id. at 60.
14. Id. at 68-69.
15. Id. at 233-234.
16. Id. at 44-46.
17. Id. at 26.
18. Trademark Law.
19. Intellectual Property Code.

20. Philip Morris, Inc. v. Fortune Tobacco Corporation, G.R. No. 158589, June 27, 2006, 493
SCRA 333, 345.
21. Id. at 360.

22. Ruben E. Agpalo, The Law on Trademark, Infringement and Unfair Competition (2000),
pp. 142-143.
23. Philip Morris, Inc. v. Fortune Tobacco Corporation, supra note 20, at 356.
24. Philip Morris, Inc. v. Fortune Tobacco Corporation, id; Mighty Corporation v. E. & J. Gallo
Winery, G.R. No. 154342, July 14, 2004, 434 SCRA 473, 506.
25. Mighty Corporation v. E. & J. Gallo Winery, supra note 24, at 506-507.
26. McDonald's Corporation v. L.C. Big Mak Burger, Inc., G.R. No. 143993, August 18, 2004,
437 SCRA 10, 32.
27. Philip Morris, Inc. v. Fortune Tobacco Corporation, supra note 20, at 356-357.
28. Mighty Corporation v. E. & J. Gallo Winery, supra note 24, at 507.
29. Rollo, p. 45.
30. 125 Phil. 295 (1966).
31. Supra note 26.
32. McDonald's Corporation v. L.C. Big Mak Burger, Inc., supra note 26, at 34.
33. Philip Morris, Inc. v. Fortune Tobacco Corporation, supra note 20, at 361-362.
34. Francisco v. Co, G.R. No. 151339, January 31, 2006, 481 SCRA 241; Ibaan Rural Bank,
Inc. v. Court of Appeals, 378 Phil. 707 (1999).
35. Villanueva v. Court of Appeals, G.R. No. 132955, October 27, 2006, 505 SCRA 564;
Carlos v. Sandoval, G.R. Nos. 135830, 136035 and 137743, September 30, 2005, 471
SCRA 266.

SECOND DIVISION
[G.R. No. 169504. March 3, 2010.]
COFFEE PARTNERS, INC. , petitioner, vs . SAN FRANCISCO COFFEE &

ROASTERY, INC. , respondent.
DECISION
CARPIO , J : p
The Case
This is a petition for review 1 of the 15 June 2005 Decision 2 and the 1
September 2005 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 80396. In its 15
June 2005 Decision, the Court of Appeals set aside the 22 October 2003 Decision 4 of
the Of ce of the Director General-Intellectual Property Of ce and reinstated the 14
August 2002 Decision 5 of the Bureau of Legal Affairs-Intellectual Property Of ce. In its
1 September 2005 Resolution, the Court of Appeals denied petitioner's motion for
reconsideration and respondent's motion for partial reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of
establishing and maintaining coffee shops in the country. It registered with the
Securities and Exchange Commission (SEC) in January 2001. It has a franchise
agreement 6 with Coffee Partners Ltd. (CPL), a business entity organized and existing
under the laws of British Virgin Islands, for a non-exclusive right to operate coffee
shops in the Philippines using trademarks designed by CPL such as "SAN FRANCISCO
COFFEE."
Respondent is a local corporation engaged in the wholesale and retail sale of
coffee. It registered with the SEC in May 1995. It registered the business name "SAN
FRANCISCO COFFEE & ROASTERY, INC." with the Department of Trade and Industry
(DTI) in June 1995. Respondent had since built a customer base that included Figaro
Company, Tagaytay Highlands, Fat Willy's, and other coffee companies.
In 1998, respondent formed a joint venture company with Boyd Coffee USA
under the company name Boyd Coffee Company Philippines, Inc. (BCCPI). BCCPI
engaged in the processing, roasting, and wholesale selling of coffee. Respondent later
embarked on a project study of setting up coffee carts in malls and other commercial
establishments in Metro Manila.
In June 2001, respondent discovered that petitioner was about to open a coffee
shop under the name "SAN FRANCISCO COFFEE" in Libis, Quezon City. According to
respondent, petitioner's shop caused confusion in the minds of the public as it bore a
similar name and it also engaged in the business of selling coffee. Respondent sent a
letter to petitioner demanding that the latter stop using the name "SAN FRANCISCO
COFFEE." Respondent also filed a complaint with the Bureau of Legal Affairs-Intellectual
Property Of ce (BLA-IPO) for infringement and/or unfair competition with claims for
damages. DAHSaT

In its answer, petitioner denied the allegations in the complaint. Petitioner alleged
it led with the Intellectual Property Of ce (IPO) applications for registration of the
mark "SAN FRANCISCO COFFEE & DEVICE" for class 42 in 1999 and for class 35 in
2000. Petitioner maintained its mark could not be confused with respondent's trade
name because of the notable distinctions in their appearances. Petitioner argued
respondent stopped operating under the trade name "SAN FRANCISCO COFFEE" when
it formed a joint venture with Boyd Coffee USA. Petitioner contended respondent did
not cite any speci c acts that would lead one to believe petitioner had, through
fraudulent means, passed off its mark as that of respondent, or that it had diverted
business away from respondent.
Mr. David Puyat, president of petitioner corporation, testi ed that the coffee
shop in Libis, Quezon City opened sometime in June 2001 and that another coffee shop
would be opened in Glorietta Mall, Makati City. He stated that the coffee shop was set
up pursuant to a franchise agreement executed in January 2001 with CPL, a British
Virgin Island Company owned by Robert Boxwell. Mr. Puyat said he became involved in
the business when one Arthur Gindang invited him to invest in a coffee shop and
introduced him to Mr. Boxwell. For his part, Mr. Boxwell attested that the coffee shop
"SAN FRANCISCO COFFEE" has branches in Malaysia and Singapore. He added that he
formed CPL in 1997 along with two other colleagues, Shirley Miller John and Leah
Warren, who were former managers of Starbucks Coffee Shop in the United States. He
said they decided to invest in a similar venture and adopted the name "SAN FRANCISCO
COFFEE" from the famous city in California where he and his former colleagues once
lived and where special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property Office
In its 14 August 2002 Decision, the BLA-IPO held that petitioner's trademark
infringed on respondent's trade name. It ruled that the right to the exclusive use of a
trade name with freedom from infringement by similarity is determined from priority of
adoption. Since respondent registered its business name with the DTI in 1995 and
petitioner registered its trademark with the IPO in 2001 in the Philippines and in 1997 in
other countries, then respondent must be protected from infringement of its trade
name.
The BLA-IPO also held that respondent did not abandon the use of its trade name
as substantial evidence indicated respondent continuously used its trade name in
connection with the purpose for which it was organized. It found that although
respondent was no longer involved in blending, roasting, and distribution of coffee
because of the creation of BCCPI, it continued making plans and doing research on the
retailing of coffee and the setting up of coffee carts. The BLA-IPO ruled that for
abandonment to exist, the disuse must be permanent, intentional, and voluntary.
The BLA-IPO held that petitioner's use of the trademark "SAN FRANCISCO
COFFEE" will likely cause confusion because of the exact similarity in sound, spelling,
pronunciation, and commercial impression of the words "SAN FRANCISCO" which is the
dominant portion of respondent's trade name and petitioner's trademark. It held that no
signi cant difference resulted even with a diamond-shaped gure with a cup in the
center in petitioner's trademark because greater weight is given to words — the
medium consumers use in ordering coffee products. DIcTEC
On the issue of unfair competition, the BLA-IPO absolved petitioner from liability.
It found that petitioner adopted the trademark "SAN FRANCISCO COFFEE" because of
the authority granted to it by its franchisor. The BLA-IPO held there was no evidence of
intent to defraud on the part of petitioner.
The BLA-IPO also dismissed respondent's claim of actual damages because its
claims of pro t loss were based on mere assumptions as respondent had not even
started the operation of its coffee carts. The BLA-IPO likewise dismissed respondent's
claim of moral damages, but granted its claim of attorney's fees.
Both parties moved for partial reconsideration. Petitioner protested the nding
of infringement, while respondent questioned the denial of actual damages. The BLA-
IPO denied the parties' partial motion for reconsideration. The parties appealed to the
Office of the Director General-Intellectual Property Office (ODG-IPO).
The Ruling of the Office of the Director General-
Intellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that
petitioner's use of the trademark "SAN FRANCISCO COFFEE" did not infringe on
respondent's trade name. The ODG-IPO found that respondent had stopped using its
trade name after it entered into a joint venture with Boyd Coffee USA in 1998 while
petitioner continuously used the trademark since June 2001 when it opened its rst
coffee shop in Libis, Quezon City. It ruled that between a subsequent user of a trade
name in good faith and a prior user who had stopped using such trade name, it would
be inequitable to rule in favor of the latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003
decision of the ODG-IPO in so far as it ruled that there was no infringement. It
reinstated the 14 August 2002 decision of the BLA-IPO nding infringement. The
appellate court denied respondent's claim for actual damages and retained the award
of attorney's fees. In its 1 September 2005 Resolution, the Court of Appeals denied
petitioner's motion for reconsideration and respondent's motion for partial
reconsideration.
The Issue
The sole issue is whether petitioner's use of the trademark "SAN FRANCISCO
COFFEE" constitutes infringement of respondent's trade name "SAN FRANCISCO
COFFEE & ROASTERY, INC.," even if the trade name is not registered with the Intellectual
Property Office (IPO).
The Court's Ruling
The petition has no merit.
Petitioner contends that when a trade name is not registered, a suit for
infringement is not available. Petitioner alleges respondent has abandoned its trade
name. Petitioner points out that respondent's registration of its business name with the
DTI expired on 16 June 2000 and it was only in 2001 when petitioner opened a coffee
shop in Libis, Quezon City that respondent made a belated effort to seek the renewal of
its business name registration. Petitioner stresses respondent's failure to continue the
use of its trade name to designate its goods negates any allegation of infringement.
Petitioner claims no confusion is likely to occur between its trademark and
respondent's trade name because of a wide divergence in the channels of trade,
petitioner serving ready-made coffee while respondent is in wholesale blending,
roasting, and distribution of coffee. Lastly, petitioner avers the proper noun "San
Francisco" and the generic word "coffee" are not capable of exclusive appropriation. cACTaI

Respondent maintains the law protects trade names from infringement even if
they are not registered with the IPO. Respondent claims Republic Act No. 8293 (RA
8293) 7 dispensed with registration of a trade name with the IPO as a requirement for
the ling of an action for infringement. All that is required is that the trade name is
previously used in trade or commerce in the Philippines. Respondent insists it never
abandoned the use of its trade name as evidenced by its letter to petitioner demanding
immediate discontinuation of the use of its trademark and by the ling of the
infringement case. Respondent alleges petitioner's trademark is confusingly similar to
respondent's trade name. Respondent stresses ordinarily prudent consumers are likely
to be misled about the source, affiliation, or sponsorship of petitioner's coffee.
As to the issue of alleged abandonment of trade name by respondent, the BLA-
IPO found that respondent continued to make plans and do research on the retailing of
coffee and the establishment of coffee carts, which negates abandonment. This nding
was upheld by the Court of Appeals, which further found that while respondent stopped
using its trade name in its business of selling coffee, it continued to import and sell
coffee machines, one of the services for which the use of the business name has been
registered. The binding effect of the factual ndings of the Court of Appeals on this
Court applies with greater force when both the quasi-judicial body or tribunal like the
BLA-IPO and the Court of Appeals are in complete agreement on their factual ndings.
It is also settled that absent any circumstance requiring the overturning of the factual
conclusions made by the quasi-judicial body or tribunal, particularly if af rmed by the
Court of Appeals, the Court necessarily upholds such findings of fact. 8
Coming now to the main issue, in Prosource International, Inc. v Horphag
Research Management SA, 9 this Court laid down what constitutes infringement of an
unregistered trade name, thus:
(1) The trademark being infringed is registered in the Intellectual Property
Of ce; however, in infringement of trade name, the same need not be
registered ;
(2) The trademark or trade name is reproduced, counterfeited, copied, or
(3) The infringing mark or trade name is used in connection with the sale,
offering for sale, or advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels, signs, prints, packages,
wrappers, receptacles, or advertisements intended to be used upon or in
connection with such goods, business, or services;
(4) The use or application of the infringing mark or trade name is likely to
cause confusion or mistake or to deceive purchasers or others as to the goods or
services themselves or as to the source or origin of such goods or services or the
identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the
assignee thereof. 1 0 (Emphasis supplied)
Clearly, a trade name need not be registered with the IPO before an infringement
suit may be led by its owner against the owner of an infringing trademark. All that is
required is that the trade name is previously used in trade or commerce in the
Philippines. 1 1 SCETHa
Section 22 of Republic Act No. 166, 1 2 as amended, required registration of a

trade name as a condition for the institution of an infringement suit, to wit:
the consent of the registrant , any reproduction, counterfeit, copy, or colorable
imitation of any registered mark or trade name in connection with the sale,
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
business, or services, shall be liable to a civil action by the registrant for
any or all of the remedies herein provided. (Emphasis supplied)
However, RA 8293, which took effect on 1 January 1998, has dispensed with the
registration requirement. Section 165.2 of RA 8293 categorically states that trade
names shall be protected, even prior to or without registration with the IPO, against any
unlawful act including any subsequent use of the trade name by a third party, whether
as a trade name or a trademark likely to mislead the public. Thus:
SEC. 165.2 (a) Notwithstanding any laws or regulations providing for
any obligation to register trade names, such names shall be protected,
even prior to or without registration , against any unlawful act committed by
third parties.
(b) In particular, any subsequent use of a trade name by a third party, whether
as a trade name or a mark or collective mark, or any such use of a similar trade
name or mark, likely to mislead the public, shall be deemed unlawful. (Emphasis
supplied)
It is the likelihood of confusion that is the gravamen of infringement. But there is

no absolute standard for likelihood of confusion. Only the particular, and sometimes
peculiar, circumstances of each case can determine its existence. Thus, in infringement
cases, precedents must be evaluated in the light of each particular case. 1 3
In determining similarity and likelihood of confusion, our jurisprudence has
developed two tests: the dominancy test and the holistic test. The dominancy test
focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion and deception, thus constituting infringement. If the competing
trademark contains the main, essential, and dominant features of another, and
confusion or deception is likely to result, infringement occurs. Exact duplication or
imitation is not required. The question is whether the use of the marks involved is likely
to cause confusion or mistake in the mind of the public or to deceive consumers. 1 4 THIAaD
In contrast, the holistic test entails a consideration of the entirety of the marks as
applied to the products, including the labels and packaging, in determining confusing
similarity. 1 5 The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both marks in order
that the observer may draw his conclusion whether one is confusingly similar to the
other. 1 6
Applying either the dominancy test or the holistic test, petitioner's "SAN
FRANCISCO COFFEE" trademark is a clear infringement of respondent's "SAN
FRANCISCO COFFEE & ROASTERY, INC." trade name. The descriptive words "SAN
FRANCISCO COFFEE" are precisely the dominant features of respondent's trade name.
Petitioner and respondent are engaged in the same business of selling coffee, whether
wholesale or retail. The likelihood of confusion is higher in cases where the business of
one corporation is the same or substantially the same as that of another corporation. In
this case, the consuming public will likely be confused as to the source of the coffee
being sold at petitioner's coffee shops. Petitioner's argument that "San Francisco" is
just a proper name referring to the famous city in California and that "coffee" is simply a
generic term, is untenable. Respondent has acquired an exclusive right to the use of the
trade name "SAN FRANCISCO COFFEE & ROASTERY, INC." since the registration of the
business name with the DTI in 1995. Thus, respondent's use of its trade name from
then on must be free from any infringement by similarity. Of course, this does not mean
that respondent has exclusive use of the geographic word "San Francisco" or the
generic word "coffee." Geographic or generic words are not, per se, subject to exclusive
appropriation. It is only the combination of the words "SAN FRANCISCO COFFEE," which
is respondent's trade name in its coffee business, that is protected against
infringement on matters related to the coffee business to avoid confusing or deceiving
the public.
In Philips Export B.V. v. Court of Appeals, 1 7 this Court held that a corporation
has an exclusive right to the use of its name. The right proceeds from the theory that it
is a fraud on the corporation which has acquired a right to that name and perhaps
carried on its business thereunder, that another should attempt to use the same name,
or the same name with a slight variation in such a way as to induce persons to deal with
it in the belief that they are dealing with the corporation which has given a reputation to
the name. 1 8
This Court is not just a court of law, but also of equity. We cannot allow petitioner
to pro t by the name and reputation so far built by respondent without running afoul of
the basic demands of fair play. Not only the law but equity considerations hold
petitioner liable for infringement of respondent's trade name.
The Court of Appeals was correct in setting aside the 22 October 2003 Decision
of the Of ce of the Director General-Intellectual Property Of ce and in reinstating the
14 August 2002 Decision of the Bureau of Legal Affairs-Intellectual Property Office.
WHEREFORE , we DE NY the petition for review. We AFFIRM the 15 June 2005
Decision and 1 September 2005 Resolution of the Court of Appeals in CA-G.R. SP No.
80396.
Costs against petitioner. IaHAcT
SO ORDERED .
Velasco, Jr., * Del Castillo, Abad and Perez, JJ., concur.
Footnotes
* Designated additional member per Raffle dated 15 February 2010.

1. Under Rule 45 of the Rules of Court.
2. Rollo, pp. 71-98. Penned by Associate Justice Arturo D. Brion, with Associate Justices
Eugenio S. Labitoria and Eliezer R. Delos Santos, concurring.
3. Id. at 100-101.
4. Id. at 195-212.
5. Id. at pp. 149-161.
6. Id. at 128-140.
7. Otherwise known as the Intellectual Property Code. Took effect on 1 January 1998.
8. New City Builders, Inc. v. NLRC, 499 Phil. 207 (2005).
9. G.R. No. 180073, 25 November 2009.
10. Id.
11. Philips Export B.V. v. Court of Appeals, G.R. No. 96161, 21 February 1992, 206 SCRA
457.
12. Otherwise known as the Trademark Law. Took effect on 20 June 1947.
13. Philip Morris, Inc. v. Fortune Tobacco Corporation, G.R. No. 158589, 27 June 2006, 493
SCRA 333.
14. Id.
15. Id.
16. Prosource International, Inc. v. Horphag Research Management SA, supra note 9.
17. Supra note 11.
18. Id.

FIRST DIVISION
[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 : p
Before Us is a petition for review on certiorari, led under Rule 45 of the Rules of
Court, to set aside and reverse the June 16, 2005 Decision 1 of the Court of Appeals in
CA-G.R. CR No. 28308 , which af rmed the September 23, 2003 Decision 2 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 lifted 4 and set aside 5 the same after Gemma
voluntarily surrendered on August 4, 2000, and filed a cash bond for P12,000.00.
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 Of ce (Quasha Law Of ce), Juliet Flores, to show that PMPI, being
one of Quasha Law Of ce's clients, paid the amount of $4,069.12 for legal services
rendered. 1 0 The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a senior
law partner at Quasha Law Of ce, who testi ed 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. 1 1 aCITEH
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 of cers of Philip Morris, Inc., owner of the
trademark Marlboro Label in the Philippines duly registered with the Philippine
Patents Of ce and subsequently with the Intellectual Property Of ce (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 of cial indorsement by the EIIB, Senior Investigator Lara led
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 nding 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 Of ce,] the law rm 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 rst, 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 fty (50) reams inside
each box which were packed in black plastic sacks like in "balikbayan boxes." The
"Inventory" and "Certi cation 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
Con scated Articles led 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 Of ce,
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 scienti c 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 con scated boxes of cigarettes bearing the Marlboro brand,
which con rmed the same to be unauthorized products and not genuine Marlboro
cigarettes, the EIIB led 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. 1 2
AaCcST
After the prosecution rested its case, the defense filed a Demurrer to Evidence, 1 3 which
the RTC denied on March 26, 2003. 1 4 The defense moved for a reconsideration of this
order but the same was denied on April 22, 2003. 1 5
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. 1 6 She denied that she is the Gemma Ong accused in this case. She
testi ed that she was arrested on August 4, 2000, without the arresting of cers 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 P12,000.00. Gemma averred that
when she posted her bond and signed her certi cate of arraignment, she did so under
her real name Maria Teresa Gemma Catacutan, as opposed to the signatures in the
Inventory and Certi cation 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 rst saw during her trial,
couldn't even point to her as the person present during the raid when they testi ed 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 Identi cation 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 estate 1 7 under the business name "Fascinate
Trading" based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased operations in
February 1998. 1 8 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. 1 9
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 (P50,000.00)
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.
With costs against accused Gemma Catacutan. 2 0
In resolving the case, the RTC narrowed down the issue to whether Gemma
Catacutan was the same accused identi ed as Gemma Ong. The RTC answered this in
the af rmative 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. 2 1
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. 2 2
Aggrieved, Gemma appealed the RTC's decision to the Court of Appeals based
on the following grounds: HAECID
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. 2 3
The Court of Appeals found Gemma's appeal to be unmeritorious. It said that

Gemma was positively identi ed 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 Certi cation 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' af davits was
explained during the hearing, and although the original af davits were the ones marked
during the pre-trial, the amended ones provided the basis for the ling 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 speci cally
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. 2 4
The Court of Appeals af rmed 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. 2 5
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"). EIaDHS
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. 2 6
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 af davits 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 rst time in the
amended af davits 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. 2 7
Gemma further claims that the courts below were wrong in nding that she never
protested that she was mistakenly identi ed. She claims that she was arrested without
the bene t 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" 2 8 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, 2 9 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) . 3 0
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. 3 1 Respondent asseverates that Gemma's conviction was
warranted as the prosecution had suf ciently 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. 3 2
Issues
A study of the pleadings led before this Court shows that the only issues to be resolved
are the following: DHEACI
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
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 review. 3 3 However, in exceptional cases, this Court has
taken cognizance of questions of fact in order to resolve legal issues, such as when there
was palpable error or a grave misapprehension of facts by the lower court. 3 4 In Armed
Forces of the Philippines Mutual Bene t Association, Inc. v. Court of Appeals , 3 5 we said
that although submission of issues of fact in an appeal by certiorari taken to this Court is
ordinarily proscribed, this Court nonetheless retains the option in the exercise of its sound
discretion, taking into account the attendant circumstances, either to decide the case or
refer it to the proper court for determination. 3 6 Since the determination of the identity of
Gemma is the very issue affecting her guilt or innocence, this Court chooses to take
cognizance of this case in the interest of proper administration of justice.
Gemma is guilty of violating
Section 155 in relation to Section 170 of
Republic Act No. 8293
Gemma was charged and convicted of violating Section 155 in relation to Section 170 of
Republic Act No. 8293, or the Intellectual Property Code of the Philippines.
Section 155. Remedies; Infringement. — Any person who shall, without the
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
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
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. (Sec. 22, R.A. No. 166a)
Section 170. Penalties. — Independent of the civil and administrative
sanctions imposed by law, a criminal penalty of imprisonment from two (2) years
to ve (5) years and a ne ranging from Fifty thousand pesos (P50,000) to Two
hundred thousand pesos (P200,000), shall be imposed on any person who is
found guilty of committing any of the acts mentioned in Section 155, Section 168
and Subsection 169.1. (Arts. 188 and 189, Revised Penal Code.) (Emphases
supplied.)
A "mark" is any visible sign capable of distinguishing the goods (trademark) or services
(service mark) of an enterprise and shall include a stamped or marked container of goods.
37
In McDonald's Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc. ,
3 8 this Court held:
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 the alleged infringer results in
"likelihood of confusion." Of these, it is the element of likelihood of confusion that
is the gravamen of trademark infringement.
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. 3 9
The prosecution was able to establish that the trademark "Marlboro" was not only valid for
being neither generic nor descriptive, it was also exclusively owned by PMPI, as evidenced
by the certi cates of registration issued by the Intellectual Property Of ce of the
Department of Trade and Industry. 4 0 HDAaIS
Anent the element of confusion, both the RTC and the Court of Appeals have correctly held
that the counterfeit cigarettes seized from Gemma's possession were intended to confuse
and deceive the public as to the origin of the cigarettes intended to be sold, as they not
only bore PMPI's mark, but they were also packaged almost exactly as PMPI's products.
41
Regarding the Claim of Mistaken Identity

Despite all these ndings, 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 discrepancies in the prosecution witnesses' original
af davits vis-à-vis the amended ones, which discrepancies, according to her, strongly
suggest her innocence.
This Court has time and again held that between an af davit executed outside the court,
and a testimony given in open court, the latter almost always prevails.
Discrepancies between a sworn statement and testimony in court do not
outrightly justify the acquittal of an accused. Such discrepancies do not
necessarily discredit the witness since ex parte af davits are often incomplete.
They do not purport to contain a complete compendium of the details of the event
narrated by the af ant. Thus, our rulings generally consider sworn statements
taken out of court to be inferior to in court testimony. . . . . 4 2
A reading of the original af davits 4 3 executed by Slagle and Atty. Ancheta, readily reveals
that they concentrated on the facts and events leading up to the search and seizure of the
contraband materials from the subject premises. They not only failed to mention Gemma
Ong's presence there, but they also failed to mention the other witnesses' names and
presence there as well. Although this might appear to be a mistake on the part of a known
and established law rm like the Quasha Law Of ce, the rm immediately sought to rectify
this by having the affidavits of Slagle, Atty. Ancheta, and Lara amended.
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 have brought up her defense of mistaken identity or
absence at the raid in the preliminary investigation conducted prior to the issuance of her
warrant of arrest; but instead, she chose to ignore her subpoena and disregard the
preliminary investigation. Even then, Gemma had the opportunity to raise the fact that she
was not Gemma Ong; not only during her arrest, but also during the posting of the cash
bond for her bail, and more importantly, during her arraignment, when she was asked if
she understood the charges against her . Gemma also knew that the Information was
led against her on the basis of the amended af davits, thus, she could have led a motion
to quash the information before she entered her plea, or asked that a 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 identi ed, accused, arrested, and
potentially imprisoned. If what she says were true, she would not have agreed to post bail
or to be arraigned without at the very least, bringing up the fact that she was not the
Gemma Ong the police of cers 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
correcting the Information, and not to contest it, to wit:
WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR
CONTINUATION OF DIRECT EXAMINATION BY:
ATTY. ERESE:
With the kind permission of the hon. court.
COURT:
Proceed.
ATTY. MAGLINAO:
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.
COURT:
Do you have any objection to the amendment of the information?
ATTY. MAGLINAO: EHTADa
No, your Honor. May we request to correct the information from Gemma Ong
to Gemma Catacutan. 4 4
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 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 Principio v.
Hon. Barrientos, 4 5 we said:
Bad faith is never presumed while good faith is always presumed and the chapter
on Human Relations of 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." . . . . 4 6
The prosecution witnesses, contrary to Gemma's claim, had positively identi ed her as the
person who 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
af davit, he was sure that she was at the subject premises on the day that they searched
it:
Testimony of Roger Sherman Slagle
ATTY. MAGLINAO:
Q In this amended af davit you mentioned the name, Gemma Catacutan as
one of the accused?
A Yes sir.
Q Can you tell the court how you were able to include the name of
Gemma Catacutan in your amended af davit, 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.
xxx xxx xxx

A It is very clear to me when I arrived there that she was somehow involved.
4 7 (Emphases ours.)
Lara on the other hand, even pointed to her and thus positively identi ed her to be the one
who had signed the search documents, 4 8 as the owner of the subject premises, to wit:
Testimony of Jesse Lara
ATTY. FREZ
Q: Mr. Witness, do you know this person who wrote the name Gemma
Ong?
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.
Q: Were you able to gain entry at the premises?

A: Yes, sir.
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?
A: Yes, sir, that lady in pink is Mrs. Gemma Ong.
(As witness is pointing to the accused Gemma Ong).
Q: Mr. Witness, why do you say that the person whom you pointed to
us is the one who wrote the name Mrs. Gemma Ong?
WITNESS
Because when we served the search warrant she signed it in our

presence and that is her own signature.
xxx xxx xxx
ATTY. FREZ
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 Ong?
A: Yes, sir, Gemma Ong signed that in my presence . EcDSTI
Q: Your Honor, during the pre-trial conference, it was previously marked as

Exhibit "D-1". Mr. Witness, I also see here a Veri cation 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.
xxx xxx xxx
Q: Mr. Witness, in this document which is the certi cation in the Conduct of
Search and I have here above the entry (Owner/Representative), a
handwritten name which reads Gemma Ong and there exist a signature
above the handwritten name, can you identify the signature?
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:
ATTY. FREZ
Mr. Witness, the person to whom you served the search warrant is identi ed
as Mrs. Gemma Ong, do you 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. 5 0
Positive identi cation of a culprit is of great weight in determining whether an accused is

guilty or not. 5 1 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 dif cult to prove; thus, it cannot take precedence over
the positive testimony of the offended party. 5 2 The defense of denial is unavailing
when placed astride the undisputed fact that there was positive identi cation of
the accused . 5 3
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." 5 4 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 identi cation 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 handwriting expert to testify on her behalf that there is no way
that the signatures in the search documents and the signature on her PRC identi cation
card could have been written by one and the same person; instead, she relied on the imsy
contention that the two signatures were, on their face, different.
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 CA-G.R. CR No. 28308 is AFFIRMED .
SO ORDERED . DAaEIc
Corona, C.J., Carpio, * Del Castillo and Perlas-Bernabe, ** JJ., concur.
Footnotes
* Per raffle dated October 19, 2011.
** Per raffle dated October 19, 2011.

1. Rollo, pp. 19-36; penned by Associate Justice Martin S. Villarama, Jr. (now Associate
Justice of this Court) with Associate Justices Lucas P. Bersamin (now Associate Justice
of this Court) and Lucenito N. Tagle, concurring.
2. Records, pp. 325-331.

3. Id. at 1.
4. Id. at 30.
5. Id. at 28-30.
6. Id. at 38.
7. Id. at 51-53.
8. TSN, November 14, 2001, pp. 3-9.
9. TSN, January 22, 2002, pp. 6-25.

10. TSN, October 10, 2001, pp. 3-13.
11. TSN, April 12, 2002, pp. 3-20.

12. Rollo, pp. 19-21.
13. Records, pp. 229-235.
14. Id. at 261.
15. Id. at 282.
16. TSN, May 26, 2003, pp. 36-37.
17. Id. at 39-40.
18. TSN, June 9, 2003, pp. 13-15.
19. TSN, May 26, 2003, pp. 5-30.
20. Records, pp. 330-331.
21. Id. at 329-330.

22. Id. at 330.
23. Rollo, pp. 29-30.
24. Id. at 32-33.
25. Id. at 34-35.
26. Id. at 47-48.
27. Id. at 49-50.
28. Id. at 57.
29. Id. at 119-139.
30. Id. at 126-127.
31. Id. at 127-128.
32. Id. at 127-132.
33. Hko Ah Pao v. Ting, G.R. No. 153476, September 27, 2006, 503 SCRA 551, 559.
34. Santos v. People and Sandiganbayan, 400 Phil. 1175, 1201 (2000).
35. 370 Phil. 150 (1999).
36. Id. at 165.

37. Section 121.1, Republic Act No. 8293.
38. 480 Phil. 402 (2004).
39. Id. at 424-425.

40. Records (thin folder), pp. 13-54.
41. TSN, November 27, 2001, pp. 3-14.

42. People v. Minangga and Agando, 388 Phil. 353, 362 (2000).
43. Records, pp. 158-169.
44. TSN, November 26, 2001, pp. 3-4.

45. 515 Phil. 799 (2005).
46. Id. at 811.

47. TSN, November 27, 2001, pp. 16-17.
48. Records, pp. 153 and 155.
49. TSN, January 22, 2002, pp. 15-22.

50. TSN, January 22, 2002, pp. 24-25.
51. People v. Bihag, Jr. and Hilot, 396 Phil. 289, 296 (2000).
52. People v. Pangilinan, 443 Phil. 198, 235-236 (2003).
53. People v. Quimzon, 471 Phil. 182, 203 (2004).
54. Records, p. 298.

THIRD DIVISION
[G.R. No. 194062. June 17, 2013.]
REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI ANTONETTE N.

TY, ORLANDO REYES, FERRER SUAZO and ALVIN U. TY , petitioners, vs .
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM
CORPORATION, and SHELL INTERNATIONAL PETROLEUM
COMPANY LIMITED , respondents.
DECISION
PERALTA , J : p
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court led
by petitioners seeking the reversal of the Decision 1 dated July 2, 2010, and Resolution 2
dated October 11, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 106385.
Stripped of non-essentials, the facts of the case, as summarized by the CA, are as follows:
Petitioners Petron Corporation ("Petron" for brevity) and Pilipinas Shell Petroleum
Corporation ("Shell" for brevity) are two of the largest bulk suppliers and
producers of LPG in the Philippines. Petron is the registered owner in the
Philippines of the trademarks GASUL and GASUL cylinders used for its LPG
products. It is the sole entity in the Philippines authorized to allow re llers and
distributors to re ll, use, sell, and distribute GASUL LPG containers, products and
its trademarks. Pilipinas Shell, on the other hand, is the authorized user in the
Philippines of the tradename, trademarks, symbols or designs of its principal,
Shell International Petroleum Company Limited, including the marks SHELLANE
and SHELL device in connection with the production, sale and distribution of
SHELLANE LPGs. It is the only corporation in the Philippines authorized to allow
re llers and distributors to re ll, use, sell and distribute SHELLANE LPG
containers and products. Private respondents, on the other hand, are the directors
and of cers of Republic Gas Corporation ("REGASCO" for brevity), an entity duly
licensed to engage in, conduct and carry on, the business of re lling, buying,
selling, distributing and marketing at wholesale and retail of Lique ed Petroleum
Gas ("LPG"). cHATSI
LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron
Gasul Dealers Association, Inc. and Totalgaz Dealers Association, received
reports that certain entities were engaged in the unauthorized re lling, sale and
distribution of LPG cylinders bearing the registered tradenames and trademarks
of the petitioners. As a consequence, on February 5, 2004, Genesis Adarlo
(hereinafter referred to as Adarlo), on behalf of the aforementioned dealers
associations, led a letter-complaint in the National Bureau of Investigation
("NBI") regarding the alleged illegal trading of petroleum products and/or
underdelivery or underfilling in the sale of LPG products.
Acting on the said letter-complaint, NBI Senior Agent Marvin E. De Jemil

(hereinafter referred to as "De Jemil") was assigned to verify and con rm the
allegations contained in the letter-complaint. An investigation was thereafter
conducted, particularly within the areas of Caloocan, Malabon, Novaliches and
Valenzuela, which showed that several persons and/or establishments, including
REGASCO, were suspected of having violated provisions of Batas Pambansa Blg.
33 (B.P. 33). The surveillance revealed that REGASCO LPG Re lling Plant in
Malabon was engaged in the re lling and sale of LPG cylinders bearing the
registered marks of the petitioners without authority from the latter. Based on its
General Information Sheet led in the Securities and Exchange Commission,
REGASCO's members of its Board of Directors are: (1) Arnel U. Ty — President, (2)
Marie Antoinette Ty — Treasurer, (3) Orlando Reyes — Corporate Secretary, (4)
Ferrer Suazo and (5) Alvin Ty (hereinafter referred to collectively as private
respondents). TIaEDC
De Jemil, with other NBI operatives, then conducted a test-buy operation on

February 19, 2004 with the former and a con dential asset going undercover.
They brought with them four (4) empty LPG cylinders bearing the trademarks of
SHELLANE and GASUL and included the same with the purchase of J&S, a
REGASCO's regular customer. Inside REGASCO's re lling plant, they witnessed
that REGASCO's employees carried the empty LPG cylinders to a re lling station
and re lled the LPG empty cylinders. Money was then given as payment for the
re lling of the J&S's empty cylinders which included the four LPG cylinders
brought in by De Jemil and his companion. Cash Invoice No. 191391 dated
February 19, 2004 was issued as evidence for the consideration paid.
After leaving the premises of REGASCO LPG Re lling Plant in Malabon, De Jemil
and the other NBI operatives proceeded to the NBI headquarters for the proper
marking of the LPG cylinders. The LPG cylinders re lled by REGASCO were
likewise found later to be underrefilled.
Thus, on March 5, 2004, De Jemil applied for the issuance of search warrants in
the Regional Trial Court, Branch 24, in the City of Manila against the private
respondents and/or occupants of REGASCO LPG Re lling Plant located at
Asucena Street, Longos, Malabon, Metro Manila for alleged violation of Section 2
(c), in relation to Section 4, of B.P. 33, as amended by PD 1865. In his sworn
af davit attached to the applications for search warrants, Agent De Jemil alleged
as follows:
"xxx xxx xxx.
"4. Respondent's REGASCO LPG Re lling Plant-Malabon is not one of

those entities authorized to re ll LPG cylinders bearing the marks of PSPC,
Petron and Total Philippines Corporation. A Certi cation dated February 6,
2004 con rming such fact, together with its supporting documents, are
attached as Annex "E" hereof. SHADcT
6. For several days in the month of February 2004, the other NBI
operatives and I conducted surveillance and investigation on respondents'
REGASCO LPG re lling Plant-Malabon. Our surveillance and investigation
revealed that respondents' REGASCO LPG Re lling Plant-Malabon is
engaged in the re lling and sale of LPG cylinders bearing the marks of
Shell International, PSPC and Petron.
xxx xxx xxx.
8. The con dential asset and I, together with the other operatives of
[the] NBI, put together a test-buy operation. On February 19, 2004, I,
together with the con dential asset, went undercover and executed our
test-buy operation. Both the con dential assets and I brought with us four
(4) empty LPG cylinders branded as Shellane and Gasul. . . . in order to
have a successful test buy, we decided to "ride-on" our purchases with the
purchase of Gasul and Shellane LPG by J & S, one of REGASCO's regular
customers.
9. We proceeded to the location of respondents' REGASCO LPG

Re lling Plant-Malabon and asked from an employee of REGASCO inside
the re lling plant for re ll of the empty LPG cylinders that we have brought
along, together with the LPG cylinders brought by J & S. The REGASCO
employee, with some assistance from other employees, carried the empty
LPG cylinders to a re lling station and we witnessed the actual re lling of
our empty LPG cylinders. ETIDaH
10. Since the REGASCO employees were under the impression that we
were together with J & S, they made the necessary re lling of our empty
LPG cylinders alongside the LPG cylinders brought by J & S. When we
requested for a receipt, the REGASCO employees naturally counted our
LPG cylinders together with the LPG cylinders brought by J & S for re lling.
Hence, the amount stated in Cash Invoice No. 191391 dated February 19,
2004, equivalent to Sixteen Thousand Two Hundred Eighty-Six and 40/100
(Php16,286.40), necessarily included the amount for the re lling of our
four (4) empty LPG cylinders. . . . .
11. After we accomplished the purchase of the illegally re lled LPG

cylinders from respondents' REGASCO LPG Refilling Plant-Malabon, we left
its premises bringing with us the said LPG cylinders. Immediately, we
proceeded to our headquarters and made the proper markings of the
illegally re lled LPG cylinders purchased from respondents' REGASCO LPG
Re lling Plant-Malabon by indicating therein where and when they were
purchased. Since REGASCO is not an authorized re ller, the four (4) LPG
cylinders illegally re lled by respondents' REGASCO LPG Re lling Plant-
Malabon, were without any seals, and when [weighed], were underre lled.
Photographs of the LPG cylinders illegally re lled from respondents'
REGASCO LPG Re lling Plant-Malabon are attached as Annex "G" hereof. .
. . ."
After conducting a personal examination under oath of Agent De Jemil and his
witness, Joel Cruz, and upon reviewing their sworn af davits and other attached
documents, Judge Antonio M. Eugenio, Presiding Judge of the RTC, Branch 24, in
the City of Manila found probable cause and correspondingly issued Search
Warrants Nos. 04-5049 and 04-5050. cSCTID
Upon the issuance of the said search warrants, Special Investigator Edgardo C.
Kawada and other NBI operatives immediately proceeded to the REGASCO LPG
Re lling Station in Malabon and served the search warrants on the private
respondents. After searching the premises of REGASCO, they were able to seize
several empty and lled Shellane and Gasul cylinders as well as other allied
paraphernalia.
Subsequently, on January 28, 2005, the NBI lodged a complaint in the Department
of Justice against the private respondents for alleged violations of Sections 155
and 168 of Republic Act (RA) No. 8293, otherwise known as the Intellectual
Property Code of the Philippines.
On January 15, 2006, Assistant City Prosecutor Armando C. Velasco
recommended the dismissal of the complaint. The prosecutor found that there
was no proof introduced by the petitioners that would show that private
respondent REGASCO was engaged in selling petitioner's products or that it
imitated and reproduced the registered trademarks of the petitioners. He further
held that he saw no deception on the part of REGASCO in the conduct of its
business of re lling and marketing LPG. The Resolution issued by Assistant City
Prosecutor Velasco reads as follows in its dispositive portion:
"WHEREFORE, foregoing considered, the undersigned nds the evidence
against the respondents to be insuf cient to form a well-founded belief
that they have probably committed violations of Republic Act No. 9293.
The DISMISSAL of this case is hereby respectfully recommended for
insufficiency of evidence."
On appeal, the Secretary of the Department of Justice af rmed the prosecutor's
dismissal of the complaint in a Resolution dated September 18, 2008, reasoning
therein that: TAIEcS
". . ., the empty Shellane and Gasul LPG cylinders were brought by the NBI
agent speci cally for re lling. Re lling the same empty cylinders is by no
means an offense in itself — it being the legitimate business of Regasco to
engage in the re lling and marketing of lique ed petroleum gas. In other
words, the empty cylinders were merely lled by the employees of Regasco
because they were brought precisely for that purpose. They did not pass
off the goods as those of complainants' as no other act was done other
than to refill them in the normal course of its business.
"In some instances, the empty cylinders were merely swapped by
customers for those which are already lled. In this case, the end-users
know fully well that the contents of their cylinders are not those produced
by complainants. And the reason is quite simple — it is an independent
refilling station.
"At any rate, it is settled doctrine that a corporation has a personality
separate and distinct from its stockholders as in the case of herein
respondents. To sustain the present allegations, the acts complained of
must be shown to have been committed by respondents in their individual
capacity by clear and convincing evidence. There being none, the
complaint must necessarily fail. As it were, some of the respondents are
even gainfully employed in other business pursuits. . . . ." 3
Dispensing with the ling of a motion for reconsideration, respondents sought recourse to
the CA through a petition for certiorari.
In a Decision dated July 2, 2010, the CA granted respondents' certiorari petition. The fallo
states: IHTaCE
WHEREFORE , in view of the foregoing premises, the petition led in this case is
hereby GRANTED . The assailed Resolution dated September 18, 2008 of the
Department of Justice in I.S. No. 2005-055 is hereby REVERSED and SET
ASIDE .
SO ORDERED . 4
Petitioners then led a motion for reconsideration. However, the same was denied by the
CA in a Resolution dated October 11, 2010.
Accordingly, petitioners led the instant Petition for Review on Certiorari raising the
following issues for our resolution:
Whether the Petition for Certiorari led by RESPONDENTS should have been
denied outright.
Whether suf cient evidence was presented to prove that the crimes of
Trademark Infringement and Unfair Competition as de ned and penalized in
Section 155 and Section 168 in relation to Section 170 of Republic Act No. 8293
(The Intellectual Property Code of the Philippines) had been committed.
Whether probable cause exists to hold INDIVIDUAL PETITIONERS liable for the
offense charged. 5
Let us discuss the issues in seriatim.

Anent the rst issue, the general rule is that a motion for reconsideration is a condition
sine qua non before a certiorari petition may lie, its purpose being to grant an opportunity
for the court a quo to correct any error attributed to it by re-examination of the legal and
factual circumstances of the case. 6
However, this rule is not absolute as jurisprudence has laid down several recognized
exceptions permitting a resort to the special civil action for certiorari without rst ling a
motion for reconsideration, viz.: DCESaI
(a) Where the order is a patent nullity, as where the court a quo has no
jurisdiction;
(b) Where the questions raised in the certiorari proceedings have
been duly raised and passed upon by the lower court, or are the
same as those raised and passed upon in the lower court.
(c) Where there is an urgent necessity for the resolution of the question and
any further delay would prejudice the interests of the Government or of the
petitioner or the subject matter of the petition is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be

useless;
(e) Where petitioner was deprived of due process and there is extreme
urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the
granting of such relief by the trial court is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due
process;
(h) Where the proceeding was ex parte or in which the petitioner had no
opportunity to object; and,
(i) Where the issue raised is one purely of law or public interest is involved. 7
In the present case, the ling of a motion for reconsideration may already be dispensed
with considering that the questions raised in this petition are the same as those that have
already been squarely argued and passed upon by the Secretary of Justice in her assailed
resolution. AcICHD

Apropos the second and third issues, the same may be simpli ed to one core issue:
whether probable cause exists to hold petitioners liable for the crimes of trademark
infringement and unfair competition as de ned and penalized under Sections 155 and 168,
in relation to Section 170 of Republic Act (R.A.) No. 8293.
Section 155 of R.A. No. 8293 identi es the acts constituting trademark infringement as
follows:
Section 155 . 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 of 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. 8
cDCEIA
From the foregoing provision, the Court in a very similar case, made it categorically clear
that the mere unauthorized use of a container bearing a registered trademark in
connection with the sale, distribution or advertising of goods or services which is likely to
cause confusion, mistake or deception among the buyers or consumers can be considered
as trademark infringement. 9
Here, petitioners have actually committed trademark infringement when they re lled,
without the respondents' consent, the LPG containers bearing the registered marks of the
respondents. As noted by respondents, petitioners' acts will inevitably confuse the
consuming public, since they have no way of knowing that the gas contained in the LPG
tanks bearing respondents' marks is in reality not the latter's LPG product after the same
had been illegally re lled. The public will then be led to believe that petitioners are
authorized re llers and distributors of respondents' LPG products, considering that they
are accepting empty containers of respondents and refilling them for resale.
As to the charge of unfair competition, Section 168.3, in relation to Section 170, of R.A. No.
8293 describes the acts constituting unfair competition as follows:
Section 168 . Unfair Competition, Rights, Regulations and Remedies. — . . . .

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: EcICDT
(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 in uence
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;
xxx xxx xxx
Section 170 . Penalties. — Independent of the civil and administrative

sanctions imposed by law, a criminal penalty of imprisonment from two (2) years
to ve (5) years and a ne ranging from Fifty thousand pesos (P50,000) to Two
hundred thousand pesos (P200,000), shall be imposed on any person who is
found guilty of committing any of the acts mentioned in Section 155, Section 168
and Subsection 169.1.
From jurisprudence, unfair competition has been de ned as the passing off (or palming
off) or attempting to pass off upon the public of the goods or business of one person as
the goods or business of another with the end and probable effect of deceiving the public.
10
Passing off (or palming off) takes place where the defendant, by imitative devices on the
general appearance of the goods, misleads prospective purchasers into buying his
merchandise under the impression that they are buying that of his competitors. Thus, the
defendant gives his goods the general appearance of the goods of his competitor with the
intention of deceiving the public that the goods are those of his competitor. 1 1
In the present case, respondents pertinently observed that by re lling and selling LPG
cylinders bearing their registered marks, petitioners are selling goods by giving them the
general appearance of goods of another manufacturer. HSacEI
What's more, the CA correctly pointed out that there is a showing that the consumers may
be misled into believing that the LPGs contained in the cylinders bearing the marks
"GASUL" and "SHELLANE" are those goods or products of the petitioners when, in fact, they
are not. Obviously, the mere use of those LPG cylinders bearing the trademarks "GASUL"
and "SHELLANE" will give the LPGs sold by REGASCO the general appearance of the
products of the petitioners.
In sum, this Court nds that there is suf cient evidence to warrant the prosecution of
petitioners for trademark infringement and unfair competition, considering that petitioner
Republic Gas Corporation, being a corporation, possesses a personality separate and
distinct from the person of its of cers, directors and stockholders. 1 2 Petitioners, being
corporate of cers and/or directors, through whose act, default or omission the
corporation commits a crime, may themselves be individually held answerable for the
crime. 1 3 Veritably, the CA appropriately pointed out that petitioners, being in direct control
and supervision in the management and conduct of the affairs of the corporation, must
have known or are aware that the corporation is engaged in the act of re lling LPG
cylinders bearing the marks of the respondents without authority or consent from the
latter which, under the circumstances, could probably constitute the crimes of trademark
infringement and unfair competition. The existence of the corporate entity does not shield
from prosecution the corporate agent who knowingly and intentionally caused the
corporation to commit a crime. Thus, petitioners cannot hide behind the cloak of the
separate corporate personality of the corporation to escape criminal liability. A corporate
of cer cannot protect himself behind a corporation where he is the actual, present and
efficient actor. 1 4 AHCcET
WHEREFORE , premises considered, the petition is hereby DENIED and the Decision
dated July 2, 2010 and Resolution dated October 11, 2010 of the Court of Appeals in CA-
G.R. SP No. 106385 are AFFIRMED .
SO ORDERED .
Velasco, Jr., Abad, Mendoza and Leonen, JJ., concur.
Footnotes
1.Penned by Associate Justice Isaias Dicdican, with Associate Justices Andres B. Reyes, Jr.
(now Presiding Justice) and Stephen Cruz, concurring; rollo, pp. 7-24.
2.Id. at 26-27.
3.Id. at 8-13.
4.Id. at 24. (Emphasis in the original.)
5.Id. at 38.
6.Medado v. Heirs of the Late Antonio Consing , G.R. No. 186720, February 8, 2012, 665 SCRA
534, 547.
7.HPS Software and Communication Corporation, et al. v. Philippine Long Distance Telephone
Company (PLDT), et al., G.R. Nos. 170217 & 170694, December 10, 2012. (Emphasis
supplied.)
8.(Emphasis and underscoring supplied.)
9.Ty v. De Jemil, G.R. No. 182147, December 15, 2010, 638 SCRA 671, 689.
10.Superior Commercial Enterprises, Inc. v. Kunnan Enterprises Ltd. and Sports Concept &
Distributor, Inc., G.R. No. 169974, April 20, 2010, 618 SCRA 531, 555.
11.McDonald's Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., et
al., 480 Phil. 402, 440 (2004).
12.Kukan International Corporation v. Hon. Amor Reyes, et al. , G.R. No. 182729, September 29,
2010, 631 SCRA 596, 617-618.
13.Ching v. Secretary of Justice, 517 Phil. 151, 178 (2006).

14.Rollo, p. 23.

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[A.M. No. 02-1-11-SC.February 19, 2002]
RE:DESIGNATION OF AN INTELLECTUAL PROPERTY JUDGE FOR MLA.
EN BANC
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated FEB 19 2002.
A.M. No. 02-1-11-SC (Re:Designation of an Intellectual Property Judge for Manila.)
(A) - Acting on the memorandum dated 15 January 2002 of Deputy Court Administrator Christopher O.
Lock, favorably endorsed by Court Administrator Presbitero J. Velasco, Jr., the Court hereby designates
Branch 24 of the Regional Trial Court of Manila, presided over by Judge ANTONIO M. EUGENIO, JR., as
Special Intellectual Property Court for Manila in substitution of Branch 1 of said Court which was
designated Special Intellectual Property Court, then presided over by Judge Rebecca de Guia Salvador
(now Associate Justice of the Court of Appeals), pursuant to Administrative Order No. 113-95 dated 5
October 1995.
As judge of the Special Intellectual Property Court, Judge Antonio M. Eugenio, Jr. shall try and decide
cases involving violations of intellectual property rights under the Intellectual Property Code (R.A. No.
DebtKollect Company, Inc. 8293) committed within the City of Manila.
The earlier designation of Branch 1 of the Regional Trial Court of Manila as a Special Intellectual Property
Court is hereby REVOKED, and the cases involving violations of intellectual property rights earlier
assigned to said Branch 1 pursuant to and by virtue of Administrative Order No. 113-95 are hereby re-
assigned to Branch 24 of said Court.
(B) - Furthermore, acting on the recommendation of Hon. Associate Justice Reynato S. Puno, Chairman
of the Committee on Revision of the Rules of Court, and the Office of the Court Administrator, and in
order to ensure speedy disposition of cases involving violations of intellectual property rights under the
Intellectual Property Code (R.A. No. 8293), the following Regional Trial Courts (RTCs) are hereby
designated Special Intellectual Property Courts:
Region 1:
1)Hon. Antonio M. Esteves

Presiding Judge, Branch 5
RTC, Baguio City
2)Hon. Manuel L. Argel
ChanRobles Intellectual Property Division
RTC, Laoag City
Region 2:
1)Hon. Rolando R. Velasco
RTC, Aparri, Cagayan
Region 5:
1)Hon. Vladimir B. Bruselas
RTC, Legazpi City
http://www.chanrobles.com/scresolutions/resolutions/2002/february/02_1_11.php 1/3
8/17/2018 Re: Designation of an Intellectual Property Judge for Mla. : 02-1-11 : February 19, 2002 : Atty. Villarama : En Banc
2)Hon. Filemon B. Montenegro
RTC, Naga City
Region 8:
1)Hon. Frisco T. Lilagan
RTC, Tacloban City
Region 12:
1)Hon. Albert B. Abragan
RTC, Iligan City
The foregoing Special Intellectual Property Courts shall try and decide cases involving violations of
intellectual property rights defined under the Intellectual Property Code committed within their respective
territorial areas.Since there are only a few cases of violations of intellectual property rights now pending
in other branches of the aforementioned Regional Trial Courts, such cases shall remain with and shall be
decided by the branches to which they have been assigned.Only cases hereafter filed may be assigned to
the above designated special courts.
(C) - Finally, in order to ensure a just and equitable distribution of cases among the Judges concerned, all
UNITED STATES SUPREME COURT JURISPRUDENCE the aforementioned Special Intellectual Property Courts shall continue to participate in the raffles of other
cases:Provided, however, that the Executive Judges concerned shall adopt a procedure whereby every
intellectual property right case assigned to a Special Intellectual Property Court should be considered a
PHILIPPINE SUPREME COURT JURISPRUDENCE
case raffled to it and be duly credited to such court.
This Resolution shall take effect immediately and the Office of the Court Administrator shall implement it.
Very truly yours,
LUZVIMINDA D. PUNO
Clerk of Court
(Sgd.) MA. LUISA D. VILLARAMA
Asst. Clerk of Court
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June 17, 2003
A.M. No. 03-03-03-SC
RE: CONSOLIDATION OF INTELLECTUAL PROPERTY COURTS WITH COMMERCIAL

COURTS
RESOLUTION
WHEREAS, to implement the provisions of Section 5.2 of Republic Act No. 8799
(The Securities Regulation Code), and in the interest of a speedy and e cient
administration of justice, the Supreme Court en banc, in the (a) Resolution dated 21
November 2000 (Annex 1), 4 July 2001 (Annex 1-a), 12 November 2002 (Annex 1-b),
and 9 July 2002 (Annex 1-c), all issued in A.M. No. 00-11-03-SC; (b) Resolution dated 27
August 2001 in A.M. No. 01-5-298 RTC (Annex 2); and (c) Resolution dated 8 July 2002
in A.M. No. 01-12-656-RTC (Annex 3), resolved to designate certain branches of the
Regional Trial Courts to try and decide cases formerly cognizable by the Securities and
Exchange Commission;
WHEREAS, pursuant to the same Resolution, sixty- ve (65) Regional Trial Courts,
distributed in all regions (NCJR and Regions 1-XII), were designated as SEC courts
("SEC Courts"), which courts have presently a total of 812 pending SEC cases (see
Annex 6, Table);
WHEREAS, in A.O. No. 113-95, dated 2 October 1995, as amended by A.O. No.
104-96, dated 21 October 1996, the Regional Trial Courts in the National Capital
Regions and Regions 3, 4, 6, 7, 9, 10 and 11, with-twenty seven (27) judges, were
specially designated to try and decide cases for violations of Intellectual Property
Rights (Annex 4), and to ensure the speedy disposition of cases involving violations of
intellectual property rights under the Intellectual Property Code (Rep. Act No. 8293), the
Supreme Court en banc, in A.M. No. 02-1-11-SC, dated February 19, 2002, designated
the Regional Trial Courts in Regions 1, 2, 5, 8 and 12, with a total of seven (7) judges,
and Branch 24 of the Regional Trial Court of Manila with one (1) judge, as Special
Intellectual Property Courts ("Special IP Courts") (Annex 5);
WHEREAS, pursuant to A.M. No. 02-1-11-SC and A.O. No. 113-95, these Special
IP Courts have a total caseload of 503 cases. Of this number 434 IP cases are pending
in the NCJR (Annex 6, Table);
WHEREAS, since the establishment of Special IP Courts (except for the Special
IP Courts in Manila), 15 designated courts, in Regions 1, 2, 3, 4, 5, 6, 7, 8, 9 and 12 have
zero (0) IP cases, and do not warrant their continued designations as Intellectual
Property Courts (Annex 7, Table);
WHEREAS, intellectual property cases are commercial in nature;
WHEREAS, to streamline the court structure and to promote expediency and
e ciency in handling such special cases, the jurisdiction to hear and decide IPC and
SEC cases are best consolidated in one court;
NOW, THEREFORE, the Court Resolves:
1. The Regional Courts previously designated as SEC Courts through
the: (a) Resolutions of this Court dated 21 November 2000, 4 July
2001, 12 November 2002, and 9 July 2002, all issued in A.M. No. 00-
11-03-SC, (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-
RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC
are hereby DESIGNATED and shall be CALLED as Special Commercial
Courts to try and decide cases involving violations of Intellectual
Property Rights which fall within their jurisdiction and those cases
formerly cognizable by the Securities and Exchange Commission;
2. The designation of Intellectual Property Courts under Administrative
Order No. 113-95 dated 2 October 1995, as amended by
Administrative Order No. 104-96 dated 21 October 1996 and
Resolution dated 19 February 2002 in A.M. No. 02-1-11-SC, is hereby
revoked. However, the Regional Trial Court, Branch 24, Manila is
hereby designated as an additional Special Commercial Court in the
City of Manila;IHCSET
3 . Upon the effectivity of this Resolution, all IP cases shall be

transferred to the designated Special Commercial Courts except
those which have undergone the pretrial stage in civil cases or those
where any of the accused has been arraigned in criminal cases which
shall be retained by the court previously assigned to try them;
4. The Special Commercial Courts shall have jurisdiction over cases
arising within their respective territorial jurisdiction with respect to
the National Capital Judicial Region and within the respective
provinces with respect to the First to Twelfth Judicial Regions. Thus,
cases shall be led in the O ce of the Clerk of Court in the o cial
station of the designated Special Commercial Court;
5. In the event of inhibition of the judge of a designated Special
Commercial Court, the following guidelines shall be observed: (a)
where there is only one (1) Special Commercial Court, the case shall
be ra ed among the other judges in the station; (b) where there are
two (2) Special Commercial Courts in the station, the Executive Judge
shall immediately assign the case to the other Special Commercial
Court; and (c) in case of inhibition of both judges of the Special
Commercial Courts, the Executive judge shall ra e the case among
the judges in the station; and
6. In order to ensure a just and equitable distribution of cases, the
designated Special Commercial Courts shall continue to participate in
the ra es of other cases. Provided, however, that the Executive
Judge concerned shall adopt a procedure whereby every IP and SEC
case assigned to a Special Commercial Court should be considered a
case raffled to it and duly credited to such court.
This Resolution shall take effect on 1 July 2003 and shall be published in two (2)
newspapers of general circulation. TAIEcS
(SGD.) HILARIO G. DAVIDE, JR.

Chief Justice
Supreme Court of the Philippines
(SGD.) JOSUE N. BELLOSILLO

Associate Justice
(SGD.) JOSE C. VITUG

Associate Justice
(SGD.) LEONARDO A. QUISUMBING

Associate Justice
(SGD.) ANGELINA SANDOVAL-GUTIERREZ

Associate Justice
(official leave)
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
(SGD.) CONCHITA C. MORALES

Associate Justice
(SGD.) REYNATO S. PUNO

Associate Justice
(SGD.) ARTEMIO V. PANGANIBAN

Associate Justice
(SGD.) CONSUELO YNARES-SANTIAGO

Associate Justice
(SGD.) ANTONIO T. CARPIO

Associate Justice
(SGD.) RENATO C. CORONA

Associate Justice
(SGD.) ROMEO J. CALLEJO, SR.

Associate Justice
(SGD.) ADOLFO S. AZCUNA

Associate Justice

THIRD DIVISION
[G.R. No. 189669. February 16, 2015.]
PILIPINAS SHELL PETROLEUM CORPORATION and PETRON

CORPORATION , petitioners, vs . ROMARS INTERNATIONAL GASES
DECISION
PERALTA , J : p
This deals with the Petition for Review on Certiorari under Rule 45 of the Rules of
Court praying that the Decision 1 of the Court of Appeals (CA), dated March 13, 2009, and
the Resolution 2 dated September 14, 2009, denying petitioner's motion for
reconsideration thereof, be reversed and set aside.
The antecedent facts are:
Petitioners received information that respondent was selling, offering for sale, or
distributing lique ed petroleum gas ( LPG) by illegally re lling the steel cylinders
manufactured by and bearing the duly registered trademark and device of respondent
Petron. Petron then obtained the services of a paralegal investigation team who sent their
people to investigate. The investigators went to respondent's premises located in San
Juan, Baao, Camarines Sur, bringing along four empty cylinders of Shellane, Gasul, Total
and Superkalan and asked that the same be re lled. Respondent's employees then re lled
said empty cylinders at respondent's refilling station. The refilled cylinders were brought to
the Marketing Coordinator of Petron Gasul who veri ed that respondent was not
authorized to distribute and/or sell, or otherwise deal with Petron LPG products, and/or
use or imitate any Petron trademarks. Petitioners then requested the National Bureau of
Investigation (NBI) to investigate said activities of respondent for the purpose of
apprehending and prosecuting establishments conducting illegal re lling, distribution
and/or sale of LPG products using the same containers of Petron and Shell, which acts
constitute a violation of Section 168, 3 in relation to Section 170 4 of Republic Act (R.A.)
No. 8293, otherwise known as the Intellectual Property Code of the Philippines, and/or
Section 2 5 of R.A. No. 623, otherwise known as An Act to Regulate the Use of Duly
Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers.
The NBI proceeded with their investigation and reportedly found commercial
quantities of Petron Gasul and Shellane cylinders stockpiled at respondent's warehouse.
They also witnessed trucks coming from respondent's re lling facility loaded with Gasul,
Shellane and Mars ame cylinders, which then deposit said cylinders in different places,
one of them a store called "Edrich Enterprises" located at 272 National. Highway, San
Nicolas, Iriga City. The investigators then bought Shellane and Gasul cylinders from Edrich
Enterprises, for which they were issued an official receipt. ADcEST
Thus, the NBI, in behalf of Petron and Shell, led with the Regional Trial Court of
Naga City (RTC-Naga), two separate Applications for Search Warrant for Violation
of Section 155.1, 6 in relation to Section 170 7 of R.A. No. 8293 against respondent and/or
its occupants. On October 23, 2002, the RTC-Naga City issued an Order granting said
Applications and Search Warrant Nos. 2002-27 and 2002-28 were issued. On the same
day, the NBI served the warrants at the respondent's premises in an orderly and peaceful
manner, and articles or items described in the warrants were seized.
On November 4, 2002, respondent led a Motion to Quash Search Warrant Nos.
2002-27 and 2002-28, where the only grounds cited were: (a) there was no probable
cause; (b) there had been a lapse of four weeks from the date of the test-buy to the date of
the search and seizure operations; (c) most of the cylinders seized were not owned by
respondent but by a third person; and (d) Edrich Enterprises is an authorized outlet of
Gasul and Mars ame. In an Order dated February 21, 2003, the RTC-Naga denied the
Motion to Quash.
However, on March 27, 2003, respondent's new counsel led an Appearance with
Motion for Reconsideration. It was only in said motion where respondent raised for the
rst time, the issue of the impropriety of ling the Application for Search Warrant at the
RTC-Naga City when the alleged crime was committed in a place within the
territorial jurisdiction of the RTC-Iriga City . Respondent pointed out that the
application led with the RTC-Naga failed to state any compelling reason to
justify the ling of the same in a court which does not have territorial jurisdiction over the
place of the commission of the crime, as required by Section 2 (b), Rule 126 of the Revised
Rules of Criminal Procedure. Petitioner opposed the Motion for Reconsideration, arguing
that it was already too late for respondent to raise the issue regarding the venue of the
ling of the application for search warrant, as this would be in violation of the Omnibus
Motion Rule.
In an Order dated July 28, 2003, the RTC-Naga issued an Order granting
respondent's Motion for Reconsideration, thereby quashing Search Warrant Nos. 2002-27
and 2002-28.
Petitioner then appealed to the CA, but the appellate court, in its Decision dated
March 13, 2009, a rmed the RTC Order quashing the search warrants. Petitioner's motion
for reconsideration of the CA Decision was denied per Resolution dated September 14,
2009.
Elevating the matter to this Court via a petition for review on certiorari, petitioner
presents herein the following issues:
A.
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT VENUE IN AN
APPLICATION FOR SEARCH WARRANT IS JURISDICTIONAL. THIS IS BECAUSE A
SEARCH WARRANT CASE IS NOT A CRIMINAL CASE.
B.
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT'S

MOTION TO QUASH IS NOT SUBJECT TO THE OMNIBUS MOTION RULE AND
THAT THE ISSUE OF LACK OF JURISDICTION MAY NOT BE WAIVED AND MAY
EVEN BE RAISED FOR THE FIRST TIME ON APPEAL. 8
Petitioner's arguments deserve closer examination.

Section 2, Rule 126 of the Revised Rules of Criminal Procedure provides thus:

SEC. 2. Court where applications for search warrant shall be led. — An
application for search warrant shall be filed with the following:
(a) Any court within whose territorial jurisdiction a crime was
committed.
(b) For compelling reasons stated in the application, any

court within the judicial region where the crime was committed if
the place of the commission of the crime is known, or any court
within the judicial region where the warrant shall be enforced. SDIaHE
However, if the criminal action has already been led, the application shall
only be made in the court where the criminal action is pending. (Emphasis
supplied)
The above provision is clear enough. Under paragraph (b) thereof, the application for
search warrant in this case should have stated compelling reasons why the same was
being led with the RTC-Naga instead of the RTC-Iriga City, considering that it is the latter
court that has territorial jurisdiction over the place where the alleged crime was committed
and also the place where the search warrant was enforced. The wordings of the provision
is of a mandatory nature, requiring a statement of compelling reasons if the application is
led in a court which does not have territorial jurisdiction over the place of commission of
the crime. Since Section 2, Article III of the 1987 Constitution guarantees the right of
persons to be free from unreasonable searches and seizures, and search warrants
constitute a limitation on this right, then Section 2, Rule 126 of the Revised Rules of
Criminal Procedure should be construed strictly against state authorities who would be
enforcing the search warrants. On this point, then, petitioner's application for a search
warrant was indeed insu cient for failing to comply with the requirement to state therein
the compelling reasons why they had to le the application in a court that did not have
territorial jurisdiction over the place where the alleged crime was committed.
Notwithstanding said failure to state the compelling reasons in the application, the
more pressing question that would determine the outcome of the case is, did the RTC-
Naga act properly in taking into consideration the issue of said defect in resolving
respondent's motion for reconsideration where the issue was raised for the very first time?
The record bears out that, indeed, respondent failed to include said issue at the rst
instance in its motion to quash. Does the omnibus motion rule cover a motion to quash
search warrants?
The omnibus motion rule embodied in Section 8, Rule 15, in relation to Section 1,
Rule 9, demands that all available objections be included in a party's motion, otherwise,
said objections shall be deemed waived ; and, the only grounds the court could take
cognizance of, even if not pleaded in said motion are: (a) lack of jurisdiction over the
subject matter ; (b) existence of another action pending between the same parties for the
same cause; and (c) bar by prior judgment or by statute of limitations. 9 It should be
stressed here that the Court has ruled in a number of cases that the omnibus motion rule
is applicable to motions to quash search warrants. 10 Furthermore, the Court distinctly
stated in Abuan v. People, 11 that "the motion to quash the search warrant which the
accused may le shall be governed by the omnibus motion rule, provided,
however, that objections not available, existent or known during the proceedings
for the quashal of the warrant may be raised in the hearing of the motion to
suppress . . . . " 12
In accordance with the omnibus motion rule, therefore, the trial court could only take
cognizance of an issue that was not raised in the motion to quash if, (1) said issue was not
available or existent when they led the motion to quash the search warrant; or (2) the
issue was one involving jurisdiction over the subject matter. Obviously, the issue of the
defect in the application was available and existent at the time of ling of the motion to
quash. What remains to be answered then is, if the newly raised issue of the defect in the
application is an issue of jurisdiction.
In resolving whether the issue raised for the rst time in respondent's motion for
reconsideration was an issue of jurisdiction, the CA ratiocinated, thus:
It is jurisprudentially settled that the concept of venue of actions in
criminal cases, unlike in civil cases, is jurisdictional. The place where the crime
was committed determines not only the venue of the action but is an essential
element of jurisdiction. It is a fundamental rule that for jurisdiction to be acquired
by courts in criminal cases, the offense should have been committed or any one
of its essential ingredients should have taken place within the territorial
jurisdiction of the court. Territorial jurisdiction in criminal cases is the territory
where the court has jurisdiction to take cognizance or to try the offense allegedly
committed therein by the accused. Thus, it cannot take jurisdiction over a person
charged with an offense allegedly committed outside of that limited territory. 13
aIHSEc
Unfortunately, the foregoing reasoning of the CA, is inceptionally awed, because as

pronounced by the Court in Malaloan v. Court of Appeals , 14 and reiterated in the more
recent Worldwide Web Corporation v. People of the Philippines, 15 to wit:
. . . as we held in Malaloan v. Court of Appeals , an application for a
search warrant is a "special criminal process," rather than a criminal
action:
The basic aw in this reasoning is in erroneously equating

the application for and the obtention of a search warrant with the
institution and prosecution of a criminal action in a trial court. It
would thus categorize what is only a special criminal process , the
power to issue which is inherent in all courts , as equivalent to a
criminal action, jurisdiction over which is reposed in specific courts of
indicated competence. It ignores the fact that the requisites, procedure and
purpose for the issuance of a search warrant are completely different from
those for the institution of a criminal action.
For, indeed, a warrant, such as a warrant of arrest or a search

warrant, merely constitutes process. A search warrant is de ned in our
jurisdiction as an order in writing issued in the name of the People of the
Philippines signed by a judge and directed to a peace o cer, commanding
him to search for personal property and bring it before the court. A search
warrant is in the nature of a criminal process akin to a writ of discovery. It
is a special and peculiar remedy, drastic in its nature, and made necessary
because of a public necessity.
In American jurisdictions, from which we have taken our
jural concept and provisions on search warrants, such warrant is
de nitively considered merely as a process, generally issued by a
court in the exercise of its ancillary jurisdiction, and not a
criminal action to be entertained by a court pursuant to its
original jurisdiction. . . . (Emphasis supplied)

Clearly then, an application for a search warrant is not a criminal
action . . . . 16 (Emphasis supplied)
The foregoing explanation shows why the CA arrived at the wrong conclusion. It
gravely erred in equating the proceedings for applications for search warrants with
criminal actions themselves. As elucidated by the Court, proceedings for said applications
are not criminal in nature and, thus, the rule that venue is jurisdictional does not apply
thereto. Evidently, the issue of whether the application should have been led in RTC-Iriga
City or RTC-Naga, is not one involving jurisdiction because, as stated in the afore-quoted
case, the power to issue a special criminal process is inherent in all courts.
Inferring from the foregoing, the Court deems it improper for the RTC-Naga to have
even taken into consideration an issue which respondent failed to raise in its motion to
quash, as it did not involve a question of jurisdiction over the subject matter. It is quite
clear that the RTC-Naga had jurisdiction to issue criminal processes such as a search
warrant.
Moreover, the Court must again emphasize its previous admonition in Spouses
Anunciacion v. Bocanegra, 17 that:
We likewise cannot approve the trial court's act of entertaining
supplemental motions . . . which raise grounds that are already deemed waived.
To do so would encourage lawyers and litigants to le piecemeal objections to a
complaint in order to delay or frustrate the prosecution of the plaintiff's cause of
action. 18
WHEREFORE , the petition is GRANTED . The Decision of the Court of Appeals,

dated March 13, 2009, and the Resolution dated September 14, 2009 in CA-G.R. CV No.
80643 are REVERSED . The Order dated February 21, 2003 issued by the Regional Trial
Court of Naga, Camarines Sur, Branch 24, denying respondent's motion to quash, is
REINSTATED . cCaSHA
SO ORDERED .
Velasco, Jr., Del Castillo, * Villarama, Jr. and Reyes, JJ., concur.
Footnotes
* Designated Acting Member in lieu of Associate Francis H. Jardeleza, per Special Order No.
1934 dated February 11, 2015.
1. Penned by Associate Justice Japar B. Dimaampao, with Associate Justices Rebecca De Guia
Salvador and Sixto C. Marella, Jr., concurring; rollo, pp. 54-65.
2. Id. at 67-70.
3. Sec. 168. Unfair Competition, Rights, Regulation and Remedies. — 168.1. 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 registered mark 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.
168.2. Any person who shall employ deception or any other means contrary to good faith by
which he shall pass off the goods manufactured by him or in which 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.
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;
(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.
168.4. The remedies provided by Section 156, 157 and 161 shall apply mutatis mutandis.
(Sec. 29, R.A. No. 166a)
4. Sec. 170. Penalties. — Independent of the civil and administrative sanctions imposed by law,
a criminal penalty of imprisonment from two (2) years to five (5) years and a fine
ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos
(P200,000), shall be imposed on any person who is found guilty of committing any of
the acts mentioned in Section 155, Section 168 and Subsection 169.1. (Arts. 188 and
189, Revised Penal Code)
5. SECTION 2. It shall be unlawful for any person, without the written consent of the
manufacturer, bottler or seller who has successfully registered the marks of ownership in
accordance with the provisions of the next preceding section, to fill such bottles, boxes,
kegs, barrels, or other similar containers so marked or stamped, for the purpose of sale,
or to sell, dispose of, buy, or traffic in, or wantonly destroy the same, whether filled or not,
or to use the same for drinking vessels or glasses or for any other purpose than that
registered by the manufacturer, bottler or seller. Any violation of this section shall be
punished by a fine or not more than one hundred pesos or imprisonment of not more
than thirty days or both.
6. Sec. 155. 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 colourable 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.
7. Supra.
8. Rollo, p. 21.
9. Spouses Anunciacion v. Bocanegra, 611 Phil. 705, 716-717 (2009).
10. Abuan v. People, 536 Phil. 672, 692 (2006); Garaygay v. People, 390 Phil. 586, 594 (2000);
People v. Court of Appeals, G.R. No. 126379, June 26, 1998, 291 SCRA 400.
11. Supra.
12. Abuan v. People, supra note 10. (Emphasis ours)
13. CA Decision, rollo, p. 61. (Emphasis omitted)
14. G.R. No. 104879, May 6, 1994, 232 SCRA 249.
15. G.R. No. 161106 and G.R. No. 161266, January 13, 2014, 713 SCRA 18.
16. Id. at 36.

17. Supra note 9.
18. Id. at 717.

THIRD DIVISION
[G.R. No. 195549. September 3, 2014.]
WILLAWARE PRODUCTS CORPORATION, petitioner, vs.

JESICHRIS MANUFACTURING CORPORATION, respondent.
DECISION
PERALTA, J : p
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court seeking to set aside the Decision 1 dated November 24, 2010 and
Resolution 2 dated February 10, 2011 of the Court of Appeals (CA) in CA-G.R. CV
No. 86744.
The facts, as found by the Regional Trial Court (RTC), are as follows:
[Respondent] Jesichris Manufacturing Company ([respondent] for short)
filed this present complaint for damages for unfair competition with
prayer for permanent injunction to enjoin [petitioner] Willaware Products
Corporation ([petitioner] for short) from manufacturing and distributing
plastic-made automotive parts similar to those of [respondent].
[Respondent] alleged that it is a duly registered partnership engaged in
the manufacture and distribution of plastic and metal products, with
principal office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since
its registration in 1992, [respondent] has been manufacturing in its
Caloocan plant and distributing throughout the Philippines plastic-made
automotive parts. [Petitioner], on the other hand, which is engaged in the
manufacture and distribution of kitchenware items made of plastic and
metal has its office near that of [respondent].
[Respondent] further alleged that in view of the physical proximity of

[petitioner's] office to [respondent's] office, and in view of the fact that
some of the [respondent's] employees had transferred to [petitioner],
[petitioner] had developed familiarity with [respondent's] products,
especially its plastic-made automotive parts.
That sometime in November 2000, [respondent] discovered that

[petitioner] had been manufacturing and distributing the same automotive
parts with exactly similar design, same material and colors but was selling
these products at a lower price as [respondent's] plastic-made
automotive parts and to the same customers.
[Respondent] alleged that it had originated the use of plastic in place of
rubber in the manufacture of automotive underchassis parts such as
spring eye bushing, stabilizer bushing, shock absorber bushing, center
bearing cushions, among others. [Petitioner's] manufacture of the same
automotive parts with plastic material was taken from [respondent's] idea
of using plastic for automotive parts. Also, [petitioner] deliberately copied
[respondent's] products all of which acts constitute unfair competition, is
and are contrary to law, morals, good customs and public policy and
have caused [respondent] damages in terms of lost and unrealized
profits in the amount of TWO MILLION PESOS as of the date of
[respondent's] complaint.
Furthermore, [petitioner's] tortuous conduct compelled [respondent] to

institute this action and thereby to incur expenses in the way of
attorney's fees and other litigation expenses in the amount of FIVE
HUNDRED THOUSAND PESOS (P500,000.00).
In its Answer, [petitioner] denies all the allegations of the [respondent]

except for the following facts: that it is engaged in the manufacture and
distribution of kitchenware items made of plastic and metal and that
there's physical proximity of [petitioner's] office to [respondent]'s office,
and that some of [respondent's] employees had transferred to
[petitioner] and that over the years [petitioner] had developed familiarity
with [respondent's] products, especially its plastic made automotive
parts.
As its Affirmative Defenses, [petitioner] claims that there can be no unfair

competition as the plastic-made automotive parts are mere reproductions
of original parts and their construction and composition merely conforms
to the specifications of the original parts of motor vehicles they intend to
replace. Thus, [respondent] cannot claim that it "originated" the use of
plastic for these automotive parts. Even assuming for the sake of
argument that [respondent] indeed originated the use of these plastic
automotive parts, it still has no exclusive right to use, manufacture and
sell these as it has no patent over these products. Furthermore,
[respondent] is not the only exclusive manufacturer of these plastic-
made automotive parts as there are other establishments which were
already openly selling them to the public. 3HDIaST
After trial on the merits, the RTC ruled in favor of respondent. It ruled that
petitioner clearly invaded the rights or interest of respondent by deliberately
copying and performing acts amounting to unfair competition. The RTC further
opined that under the circumstances, in order for respondent's property rights to
be preserved, petitioner's acts of manufacturing similar plastic-made automotive
parts such as those of respondent's and the selling of the same products to
respondent's customers, which it cultivated over the years, will have to be
enjoined. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the court finds the defendant liable
to plaintiff Two Million (P2,000,000.00) Pesos, as actual damages, One
Hundred Thousand (P100,000.00) Pesos as attorney's fees and One
Hundred Thousand (P100,000.00) Pesos for exemplary damages. The
court hereby permanently [enjoins] defendant from manufacturing the
plastic-made automotive parts as those manufactured by plaintiffs.
SO ORDERED. 4
Thus, petitioner appealed to the CA.

On appeal, petitioner asserts that if there is no intellectual property protecting a
good belonging to another, the copying thereof for production and selling does
not add up to unfair competition as competition is promoted by law to benefit
consumers. Petitioner further contends that it did not lure away respondent's
employees to get trade secrets. It points out that the plastic spare parts sold by
respondent are traded in the market and the copying of these can be done by
simply buying a sample for a mold to be made.
Conversely, respondent averred that copyright and patent registrations are
immaterial for an unfair competition case to prosper under Article 28 of the Civil
Code. It stresses that the characteristics of unfair competition are present in the
instant case as the parties are trade rivals and petitioner's acts are contrary to
good conscience for deliberately copying its products and employing its former
employees.
In a Decision dated November 24, 2010, the CA affirmed with modification the
ruling of the RTC. Relevant portions of said decision read:
Despite the evidence showing that Willaware took dishonest steps in
advancing its business interest against Jesichris, however, the Court finds
no basis for the award by the RTC of actual damages. One is entitled to
actual damages as one has duly proven. The testimony of Quejada, who
was engaged by Jesichris in 2001 to audit its business, only revealed that
there was a discrepancy between the sales of Jesichris from 2001 to
2002. No amount was mentioned. As for Exhibit "Q," which is a copy of
the comparative income statement of Jesichris for 1999-2002, it shows
the decline of the sales in 2002 in comparison with those made in 2001
but it does not disclose if this pertains to the subject automotive parts or
to the other products of Jesichris like plates.
In any event, it was clearly shown that there was unfair competition on
the part of Willaware that prejudiced Jesichris. It is only proper that
nominal damages be awarded in the amount of Two Hundred Thousand
Pesos (P200,000.00) in order to recognize and vindicate Jesichris' rights.
The RTC's award of attorney's fees and exemplary damages is also
maintained.
xxx xxx xxx
WHEREFORE, premises considered, the Decision dated April 15, 2003 of
the Regional Trial Court of Caloocan City, Branch 131, in Civil Case No. C-
19771 is hereby MODIFIED. The award of Two Million Pesos
(P2,000,000.00) actual damages is deleted and in its place, Two Hundred
Thousand Pesos nominal damages is awarded.
SO ORDERED. 5
Dissatisfied, petitioner moved for reconsideration. However, the same was denied
for lack of merit by the CA in a Resolution dated February 10, 2011.
Hence, the present Petition for Review wherein petitioner raises the following
issues for our resolution:
(1) Whether or not there is unfair competition under human relations
when the parties are not competitors and there is actually no
damage on the part of Jesichris?
(2) Consequently, if there is no unfair competition, should there be moral
damages and attorney's fees?
(3) Whether or not the addition of nominal damages is proper although
no rights have been established?
(4) If ever the right of Jesichris refers to its copyright on automotive
parts, should it be considered in the light of the said copyrights
were considered to be void by no less than this Honorable Court in
SC GR No. 161295?
(5) If the right involved is "goodwill" then the issue is: whether or not
Jesichris has established "goodwill?" 6
HaTAEc
In essence, the issue for our resolution is: whether or not petitioner committed
acts amounting to unfair competition under Article 28 of the Civil Code.
Prefatorily, we would like to stress that the instant case falls under Article 28 of
the Civil Code on human relations, and not unfair competition under Republic Act
No. 8293, 7 as the present suit is a damage suit and the products are not covered
by patent registration. A fortiori, the existence of patent registration is
immaterial in the present case.
The concept of "unfair competition" under Article 28 is very much broader than
that covered by intellectual property laws. Under the present article, which
follows the extended concept of "unfair competition" in American jurisdictions,
the term covers even cases of discovery of trade secrets of a competitor, bribery
of his employees, misrepresentation of all kinds, interference with the fulfillment
of a competitor's contracts, or any malicious interference with the latter's
business. 8
With that settled, we now come to the issue of whether or not petitioner
committed acts amounting to unfair competition under Article 28 of the Civil
Code.
We find the petition bereft of merit.
Article 28 of the Civil Code provides that "unfair competition in agricultural,
commercial or industrial enterprises or in labor through the use of force,
intimidation, deceit, machination or any other unjust, oppressive or high-handed
method shall give rise to a right of action by the person who thereby suffers
damage."
From the foregoing, it is clear that what is being sought to be prevented is not
competition per se but the use of unjust, oppressive or high-handed methods
which may deprive others of a fair chance to engage in business or to earn a
living. Plainly, what the law prohibits is unfair competition and not competition
where the means used are fair and legitimate.
In order to qualify the competition as "unfair," it must have two characteristics:
(1) it must involve an injury to a competitor or trade rival, and (2) it must
involve acts which are characterized as "contrary to good conscience," or
"shocking to judicial sensibilities," or otherwise unlawful; in the language of our
law, these include force, intimidation, deceit, machination or any other unjust,
oppressive or high-handed method. The public injury or interest is a minor factor;
the essence of the matter appears to be a private wrong perpetrated by
unconscionable means. 9
Here, both characteristics are present.
First, both parties are competitors or trade rivals, both being engaged in the
manufacture of plastic-made automotive parts. Second, the acts of the petitioner
were clearly "contrary to good conscience" as petitioner admitted having
employed respondent's former employees, deliberately copied respondent's
products and even went to the extent of selling these products to respondent's
customers. 10
To bolster this point, the CA correctly pointed out that petitioner's hiring of the
former employees of respondent and petitioner's act of copying the subject
plastic parts of respondent were tantamount to unfair competition, viz.:
The testimonies of the witnesses indicate that [petitioner] was in bad faith
in competing with the business of [respondent]. [Petitioner's] acts can be
characterized as executed with mischievous subtle calculation. To
illustrate, in addition to the findings of the RTC, the Court observes that
[petitioner] is engaged in the production of plastic kitchenware previous
to its manufacturing of plastic automotive spare parts, it engaged the
services of the then mold setter and maintenance operator of
[respondent], De Guzman, while he was employed by the latter. De
Guzman was hired by [petitioner] in order to adjust its machinery since
quality plastic automotive spare parts were not being made. It baffles the
Court why [petitioner] cannot rely on its own mold setter and
maintenance operator to remedy its problem. [Petitioner's] engagement
of De Guzman indicates that it is banking on his experience gained from
working for [respondent].
Another point we observe is that Yabut, who used to be a warehouse and

delivery man of [respondent], was fired because he was blamed of spying
in favor of [petitioner]. Despite this accusation, he did not get angry. Later
on, he applied for and was hired by [petitioner] for the same position he
occupied with [respondent]. These sequence of events relating to his
employment by [petitioner] is suspect too like the situation with De
Guzman. 11
Thus, it is evident that petitioner is engaged in unfair competition as shown by

his act of suddenly shifting his business from manufacturing kitchenware to
plastic-made automotive parts; his luring the employees of the respondent to
transfer to his employ and trying to discover the trade secrets of the respondent.
12 aESICD
Moreover, when a person starts an opposing place of business, not for the sake of
profit to himself, but regardless of loss and for the sole purpose of driving his
competitor out of business so that later on he can take advantage of the effects
of his malevolent purpose, he is guilty of wanton wrong. 13 As aptly observed by
the court a quo, the testimony of petitioner's witnesses indicate that it acted in
bad faith in competing with the business of respondent, to wit:
[Petitioner], thru its General Manager, William Salinas, Jr., admitted that it
was never engaged in the business of plastic-made automotive parts until
recently, year 2000:
Atty. Bautista:
The business name of Willaware Product Corporation is kitchenware, it is
(sic) not? Manufacturer of kitchenware and distributor of
kitchenware, is it not?
Mr. Salinas:
Yes, sir.
Atty. Bautista:
And you said you have known the [respondent] Jesichris Manufacturing
Co., you have known it to be manufacturing plastic automotive
products, is it not?
Mr. Salinas:
Yes, sir.
Atty. Bautista:
In fact, you have been (sic) physically become familiar with these
products, plastic automotive products of Jesichris?
Mr. Salinas:
Yes, sir.
How [petitioner] was able to manufacture the same products, in terms of

color, size, shape and composition as those sold by Jesichris was due
largely to the sudden transfer of Jesichris' employees to Willaware.
Atty. Bautista:
Since when have you been familiar with Jesichris Manufacturing
Company?
Mr. Salinas:
Since they transferred there (sic) our place.

Atty. Bautista:
And that was in what year?
Mr. Salinas:
Maybe four (4) years. I don't know the exact date.
Atty. Bautista:
And some of the employees of Jesichris Manufacturing Co. have
transferred to your company, is it not?
Mr. Salinas:
Yes, sir.
Atty. Bautista:

How many, more or less?
Mr. Salinas:
More or less, three (3).
Atty. Bautista:
And when, in what year or month did they transfer to you?
Mr. Salinas:
First, November 1.
Atty. Bautista:
Year 2000?
Mr. Salinas:
Yes sir. And then the other maybe February, this year. And the other one,
just one month ago.
That [petitioner] was clearly out to take [respondent] out of business was
buttressed by the testimony of [petitioner's] witness, Joel Torres:
Q: Are you familiar with the [petitioner], Willaware Product Corporation?
A: Yes, sir.
Q: Will you kindly inform this court where is the office of this Willaware
Product Corporation (sic)?
A: At Mithi Street, Caloocan City, sir.
Q: And Mr. Witness, sometime second Saturday of January 2001, will you
kindly inform this court what unusual even (sic) transpired between
you and Mr. Salinas on said date?
A: There was, sir.
Q: What is that?
A: Sir, I was walking at that time together with my wife going to the
market and then I passed by the place where they were having a
drinking spree, sir.
Q: You mentioned they, who were they who were drinking at that time?
A: I know one Jun Molina, sir.
Q: And who else was there?
A: William Salinas, sir.
Q: And will you kindly inform us what happened when you spotted upon
them drinking?
A: Jun Molina called me, sir.

Q: And what happened after that?
A: At that time, he offered me a glass of wine and before I was able to
drink the wine, Mr. Salinas uttered something, sir.
Q: And what were those words uttered by Mr. Salinas to you?
A: "O, ano naapektuhan na kayo sa ginaya (sic) ko sa inyo?"
Q: And what did you do after that, after hearing those words?
A: And he added these words, sir. "sabihin mo sa amo mo, dalawang taon
na lang pababagsakin ko na siya." DHITSc
Q: Alright, hearing those words, will you kindly tell this court whom did
you gather to be referred to as your "amo"?
A: Mr. Jessie Ching, sir. 14
In sum, petitioner is guilty of unfair competition under Article 28 of the Civil

Code.
However, since the award of Two Million Pesos (P2,000,000.00) in actual
damages had been deleted and in its place Two Hundred Thousand Pesos
(P200,000.00) in nominal damages is awarded, the attorney's fees should
concomitantly be modified and lowered to Fifty Thousand Pesos (P50,000.00).
WHEREFORE, the instant petition is DENIED. The Decision dated November 24,
2010 and Resolution dated February 10, 2011 of the Court of Appeals in CA-G.R.
CV No. 86744 are hereby AFFIRMED with MODIFICATION that the award of
attorney's fees be lowered to Fifty Thousand Pesos (P50,000.00).
SO ORDERED.
Velasco, Jr., Bersamin, * Villarama, Jr. and Reyes, JJ., concur.
Footnotes
* Designated as Acting Member in lieu of Associate Justice Francis H. Jardeleza, per
Special Order No. 1777 dated September 1, 2014.
1. Penned by Associate Justice Florito S. Macalino, with Associate Justices Juan Q.
Enriquez, Jr. and Ramon M. Bato, Jr., concurring; rollo, pp. 128-135.
2. Id. at 145-146.
3. Id. at 38-39.
4. Id. at 45.
5. Id. at 134-135. (Emphasis in the original)
6. Id. at 14-15.
7. AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND ESTABLISHING
THE INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND
FUNCTIONS, AND FOR OTHER PURPOSES.
8. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines , Vol.
1, p. 117.
9. Id. at 116-117.
10. Rollo, p. 41.
11. Id. at 133-134.
12. Id. at 44.

13. Supra note 8.
14. Rollo, pp. 41-44. (Citations omitted)

SECOND DIVISION
[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 o cers
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 : p
This case is about the offense or offenses that arise from the reloading of the
lique ed petroleum gas cylinder container of one brand with the lique ed petroleum
gas of another brand.
The Facts and the Case
Respondent Petron Corporation (Petron) sold and distributed lique ed
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 Re lling 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 re ll 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 re lling 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 rst
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. TCASIH
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 signi cantly 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 lled up by Bicol Gas. Misal then mentioned that his manager was a
certain Rolly Mirabena.
Because of the above incident, KPE led a complaint 3 for violations of Republic
Act (R.A.) 623 (illegally lling 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, o cers, and stockholders of Bicol Gas. These directors, o cers, 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 lling 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.
Dissatis ed, Petron and KPE led a petition for review with the O ce of the
Regional State Prosecutor, Region V, which initially denied the petition but partially
granted it on motion for reconsideration. The O ce of the Regional State Prosecutor
ordered the ling 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 led 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 certi cate of non-forum shopping, given that only Atty.
Joel Angelo C. Cruz signed it on behalf of Petron. In its Decision 5 dated October 17,
2005, the Court of Appeals ruled, however, that Atty. Cruz's certi cation constituted
su cient 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 ling
of additional charges of trademark infringement against the concerned Bicol Gas
employees as well. CcAHEI
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
review 6 before this Court.
The Issues Presented
The petition presents the following issues:
1. Whether or not the certi cate of non-forum shopping that accompanied the
petition led 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 ling 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 certi cate of non-forum
shopping that respondents KPE and Petron attached to the petition they led 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 certi cate of
non-forum shopping cannot be totally disregarded, they may be deemed substantially
complied with under justi able circumstances. 7 One of these circumstances is where
the petitioners led 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 certi cation 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 certi cation that he was
executing it "for and on behalf of the Corporation, and co-petitioner Carmen J. Doloiras".
9 Thus, 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
certi cate of non-forum shopping does not render the petition defective with respect
to Petron which signed it through Atty. Cruz. 1 0 The Court of Appeals, therefore, acted
correctly in giving due course to the petition before it. DaCTcA
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
lling 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 lled up by BICOL GAS". 1 1 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, 1 2 punishes any person who, without the written consent
of the manufacturer or seller of gases contained in duly registered steel cylinders or
tanks, lls the steel cylinder or tank, for the purpose of sale, disposal or tra cking,
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 lled up with their rm'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) 1 3 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

or to deceive.
KPE and Petron have to show that the alleged infringer, the responsible o cers
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. 1 4 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. IHTASa
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:
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 in uence 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
lling 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.
Bicol Gas is a corporation. As such, it is an entity separate and distinct from the
persons of its o cers, directors, and stockholders. It has been held, however, that
corporate o cers or employees, through whose act, default or omission the
corporation commits a crime, may themselves be individually held answerable for the
crime. 1 5 IATSHE
Jose claimed in his a davit 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". 1 6
The "owners" of a corporate organization are its stockholders and they are to be
distinguished from its directors and o cers. 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. 1 7 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
o cers 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 nding 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" 1 8 is a sweeping speculation especially since, as
demonstrated above, what was involved was just one Petron Gasul tank found in a
truck lled 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. 1 9 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 speci cally 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 lling 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 lling 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 O ce 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 . DaEcTC
Carpio, Leonardo-de Castro, Brion and Del Castillo, JJ., concur.
Footnotes
1. The LPG cylinders and the trademark "Gasul" are registered under the name of Petron in
the Intellectual Property Office under Registration Nos. 142, 147, 57945 and 61920. CA
rollo, pp. 52-57.
2. As shown by a dealership agreement. Id. at 60-71.
3. Docketed as I.S. 2001-9231 but was inadvertently referred to in subsequent documents
and proceedings as I.S. 2001-9234.
4. Docketed as CA-G.R. SP 87711.

5. CA rollo, pp. 371-399. Penned by Associate Justice Renato C. Dacudao and concurred in
by Associate Justices Rodrigo V. Cosico and Lucas P. Bersamin (now a member of this
Court).
6. Under Rule 45 of the Rules of Court.
7. Cavile v. Heirs of Cavile, 448 Phil. 302, 311 (2003); MC Engineering, Inc. v. National Labor
Relations Commission, 412 Phil. 614, 622-623 (2001).
8. San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005, 461 SCRA 392, 412.
9. CA rollo, p. 43.
10. See Toyota Motor Phils. Corp. Workers Association v. National Labor Relations
Commission, G.R. Nos. 158786 & 158789, October 19, 2007, 537 SCRA 171, 199.
11. Rollo, p. 54.
12. Sec. 1. Persons engaged or licensed to engage in the manufacture, bottling, or selling of
soda water, mineral or aerated waters, cider, milk, cream or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar containers, or in the manufacture,
compressing or selling of gases such as oxygen, acetylene, nitrogen, carbon dioxide,
ammonia, hydrogen, chloride, helium, sulphur dioxide, butane, propane, freon, methyl
chloride or similar gases contained in steel cylinders, tanks, flasks, accumulators or
similar containers, with their names or the names of their principals of products, or other
marks of ownership stamped or marked thereon, may register with the Philippines Patent
Office a description of the names or marks, and the purpose for which the containers so
marked are used by them, under the same conditions, rules, and regulations, made
applicable by law or regulation to the issuance of trademarks.
Sec. 2. It shall be unlawful for any person, without the written consent of the manufacturer,
bottler, or seller, who has successfully registered the marks of ownership in accordance
with the provisions of the next preceding section, to fill such bottles, boxes, kegs, barrels,
steel cylinders, tanks, flasks, accumulators, or other similar containers so marked or
stamped, for the purpose of sale, or to sell, dispose of, buy or traffic in, or wantonly
destroy the same, whether filled or not to use the same for drinking vessels or glasses or
drain pipes, foundation pipes, for any other purpose than that registered by the
manufacturer, bottler or seller. Any violation of this section shall be punished by a fine of
not more than one thousand pesos or imprisonment of not more than one year or both.
13. Sec. 170. Penalties. — Independent of the civil and administrative sanctions imposed
by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine
the acts mentioned in Section 155, Section 168 and Subsection 169.1.
14. McDonald's Corporation v. L.C. Big Mak Burger, Inc., 480 Phil. 402, 439 (2004).
15. Ching v. Secretary of Justice, G.R. No. 164317, February 6, 2006, 481 SCRA 609, 635-
636.
16. CA rollo, pp. 396-397.
17. Section 23, P.D. 902-A.

18. CA rollo, p. 397.
19. As shown by certified true copies of birth certificates of Carlo F. Espiritu, Rafael F.
Espiritu, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, and Ken Ryan A. Mirabuna.
Rollo, pp. 492-496.

THIRD DIVISION
[G.R. No. 162311. December 4, 2008.]
LEVI STRAUSS (PHILS.), INC. , petitioner, vs . TONY LIM , respondent.
DECISION
REYES, R.T. , J : p
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 SDITAC
During preliminary investigation, the prosecutor is vested with authority and

discretion to determine if there is suf cient evidence to justify the ling of an
information. If he nds probable cause to indict the respondent for a criminal offense, it
is his duty to le the corresponding information in court. However, it is equally his duty
not to prosecute when after an investigation, the evidence adduced is not suf cient 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), af rming the resolutions of the Department
of Justice (DOJ) nding 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
LEVI'S trademarks or to use such trademarks in the Philippines. These trademarks are
registered in over 130 countries, including the Philippines, 8 and were rst used in
commerce in the Philippines in 1946. 9
Sometime in 1995, petitioner lodged a complaint 1 0 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 LEVI'S
trademarks. 1 1 Thus, surveillance was conducted on the premises of respondent Tony
Lim, doing business under the name Vogue Traders Clothing Company. 1 2 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
"LIVE'S." 1 3
On December 13, 1995, operatives of the Philippine National Police (PNP)
Criminal Investigation Unit 1 4 served search warrants 1 5 on respondent's premises at
1042 and 1082 Carmen Planas Street, Tondo, Manila. As a result, several items 1 6 were
seized from the premises. 1 7
The PNP Criminal Investigation Command (PNP CIC) then led a complaint 1 8
against respondent before the DOJ for unfair competition 1 9 under the old Article 189
of the Revised Penal Code, prior to its repeal by Section 239 of Republic Act (RA) No.
8293. 2 0 The PNP CIC claimed that a "confusing similarity" could be noted between
petitioner's LEVI's jeans and respondent's LIVE'S denim jeans and pants.
In his counter-af davit, 2 1 respondent alleged, among others, that (1) his
products bearing the LIVE'S brand name are not fake LEVI'S garments; (2) "LIVE'S" is a
registered trademark, 2 2 while the patch pocket design for "LIVE'S" pants has copyright
registration, 2 3 thus conferring legal protection on his own intellectual property rights,
which stand on equal footing as "LEVI'S"; (3) confusing similarity, the central issue in the
trademark cancellation proceedings 2 4 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. 2 5
In its reply-af davit, petitioner maintained that there is likelihood of confusion
between the competing products because: (1) a slavish imitation of petitioner's
"arcuate" trademark has been stitched on the backpocket of "LIVE'S" jeans; (2) the
appearance of the mark "105" on respondent's product is obviously a play on
petitioner's "501" trademark; (3) the appearance of the word/phrase "LIVE'S" and
"LIVE'S ORIGINAL JEANS" is confusingly similar to petitioner's "LEVI'S" trademark; (4) a
red tab, made of fabric, attached at the left seam of the right backpocket of petitioner's
standard ve-pocket jeans, also appears at the same place on "LIVE'S" jeans; (5) the
patch used on "LIVE'S" jeans (depicting three men on each side attempting to pull apart
a pair of jeans) obviously thrives on petitioner's own patch showing two horses being
whipped by two men in an attempt to tear apart a pair of jeans; and (6) "LEVI'S" jeans
are packaged and sold with carton tickets, which are slavishly copied by respondent in
his own carton ticket bearing the marks "LIVE'S," "105," the horse mark, and basic
features of petitioner's ticket designs, such as two red arrows curving and pointing
outward, the arcuate stitching pattern, and a rectangular portion with intricate border
orientation. 2 6 THAICD
DOJ Rulings
On October 8, 1996, Prosecution Attorney Florencio D. Dela Cruz recommended
the dismissal 2 7 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 Teo sto Guingona af rmed the prosecutor's
dismissal of the complaint on January 9, 1998. 2 8 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. Respondent's product, which bears the trademark
LIVE's, has an entirely different spelling and meaning with the trademark owned
by complainant which is LEVI's. Complainant's 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 respondent's "LIVE's"
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 respondent's 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. 2 9
On February 13, 1998, petitioner led a motion for reconsideration of Secretary
Guingona's 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 3 0 involving a comparison of petitioner's and respondent's products.
On June 5, 1998, Justice Secretary Silvestre Bello III, Guingona's successor,
granted petitioner's motion and directed the ling of an information against
respondent. 3 1
WHEREFORE, our resolution dated 9 January 1998 is hereby reversed and
set aside. You are directed to le 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. 3 2
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
Guingona's resolution incorrectly dwelt on the speci c differences in the details of the
products. 3 3 Secretary Bello's own factual findings revealed:
. . . [I]t is not dif cult to discern that respondent gave his products the
general appearance as that of the product of the complainant. This was
established by the respondent's use of the complainant's 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
complainant's 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.
Respondent's registration of his trademark can not afford him any
remedy. Unfair competition may still be prosecuted despite such registration. 3 4
(Citation omitted)
Respondent then led his own motion for reconsideration of the Bello resolution.
On May 7, 1999, new DOJ Secretary Sera n Cuevas granted respondent's motion and
ordered the dismissal of the charges against him. 3 5 CaASIc
CA Disposition
Dissatis ed 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. 3 6
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. 3 7
Thus, the existence of some similarities between LIVE'S jeans and LEVI'S
garments would not ipso facto equate to fraudulent intent on the part of respondent.
The CA noted that respondent used af rmative 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 petitioner's
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. 3 8
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

RESPONDENT'S LIVE'S JEANS DO NOT UNFAIRLY COMPETE WITH LEVI'S ®
JEANS AND/OR THAT THERE IS NO POSSIBILITY THAT THE FORMER WILL BE
CONFUSED FOR THE LATTER, CONSIDERING THAT RESPONDENT'S LIVE'S
JEANS BLATANTLY COPY OR COLORABLY IMITATE NO LESS THAN SIX (6)
TRADEMARKS OF LEVI'S 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 RESPONDENT'S LIVE'S JEANS ARE,
IN FACT, BEING CONFUSED FOR LEVI'S JEANS. AIECSD
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. 3 9 (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 4 0 the resolution of which is improper in a Rule 45
petition. 4 1 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 suf cient 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 led with the CA a petition for review under Rule 43 of the 1997 Rules
of Civil Procedure. 4 2 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 nal orders of the Court of Tax Appeals and from] awards,
judgments, nal 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, Of ce of the President, Land Registration Authority,
Social Security Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer, National Electri cation 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. 4 3
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. IEHDAT
The Court has consistently ruled that the ling with the CA of a petition for
review under Rule 43 to question the Justice Secretary's resolution regarding the
determination of probable cause is an improper remedy . 4 4
Under the 1993 Revised Rules on Appeals from Resolutions in Preliminary
Investigations or Reinvestigations, 4 5 the resolution of the investigating prosecutor is
subject to appeal to the Justice Secretary 4 6 who, under the Revised Administrative
Code, exercises the power of control and supervision over said Investigating
Prosecutor; and who may af rm, nullify, reverse, or modify the ruling of such
prosecutor. 4 7 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. 4 8 Thus, the Resolution of the Justice Secretary af rming,
modifying or reversing the resolution of the Investigating Prosecutor is final. 4 9
There being no more appeal or other remedy available in the ordinary course of
law, the remedy of the aggrieved party is to le 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. 5 0
Verily, when respondent led 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 . 5 1
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.
5 2 The determination of probable cause is one such matter because that authority has
been given to the executive branch, through the DOJ. 5 3
It bears stressing that the main function of a government prosecutor is to
determine the existence of probable cause and to le the corresponding information
should he nd it to be so. 5 4 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. 5 5
A prosecutor, by the nature of his of ce, is under no compulsion to le 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 suf cient 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. 5 6
In nding that respondent's 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 LIVE'S mark of the respondent's goods is spelled and
pronounced differently from the LEVI'S mark of the complainant. DCScaT
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 LEVI's
jeans form a diamond instead. And assuming arguendo that there is similarity
in the design of backpockets between the respondent's goods and that of the
complainant, this alone does not establish that respondent's jeans were
intended to copy the complainant's goods and pass them off as the latter's
products as this design is simple and may not be said to be strikingly distinct
absent the other LEVI'S trademark such as the prints on the button, rivets, tags
and the like. . . . Further, the presence of accessories bearing Levi's trademark
was not established as there were no such accessories seized from the
respondent and instead genuine LIVE'S hangtags, button and patches were
confiscated during the search of latter's premises.
Second, the design of the patches attached to the backpockets of the
respondent's 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 Levi's 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. . . . .
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 . . . . 5 7
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. 5 8
The court's duty in an appropriate case is con ned 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. 5 9 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. 6 0
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 nding that there is no confusing similarity between petitioner's
and respondent's 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. 6 1 DcAEIS
We are disinclined to nd that grave of abuse of discretion was

committed when records show that the nding 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. 6 2
The elements of unfair competition under Article 189 (1) 6 3 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. 6 4
All these elements must be proven. 6 5 In nding 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 insuf cient 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 "LIVE'S"
and "LEVI'S", as well as the fact that respondent had registered his own mark. 6 6 While it
is true that there may be unfair competition even if the competing mark is registered in
the Intellectual Property Of ce, it is equally true that the same may show prima facie
good faith. 6 7 Indeed, registration does not negate unfair competition where the goods
are packed or offered for sale and passed off as those of complainant. 6 8 However, the
mark's registration, coupled with the stark differences between the competing marks,
negate the existence of actual intent to deceive, in this particular case. acCTSE
For his part, Justice Cuevas failed to nd the possibility of confusion and of
intent to deceive the public, relying on Emerald Garment Manufacturing Corporation v.
Court of Appeals. 6 9 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 petitioner's stance that Emerald Garment cannot apply
because there was only one point of comparison, i.e., "LEE" as it appears in Emerald
Garment's "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, 7 0 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 of Appeals, 7 1 where the Court held that in resolving cases of
infringement and unfair competition, the courts 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 consumption and also the conditions under which it is usually purchased. 7 2
Petitioner argues that the element of intent to deceive may be inferred from the
similarity of the goods or their appearance. 7 3 The argument is specious on two fronts.
First, where the similarity in the appearance of the goods as packed and offered for
sale is so striking , intent to deceive may be inferred. 7 4 However, as found by the
investigating prosecutor and the DOJ Secretaries, striking similarity between the
competing goods is not present.
Second, the confusing similarity of the goods was precisely in issue during the
preliminary investigation. As such, the element of intent to deceive could not arise
without the investigating prosecutor's or the DOJ Secretary's nding that such
confusing similarity exists. Since confusing similarity was not found, the element of
fraud or deception could not be inferred. SaHcAC
We cannot sustain Secretary Bello's opinion that to establish probable cause, "it
is enough that the respondent gave to his product the general appearance of the
product" 7 5 of petitioner. It bears stressing that that is only one element of unfair
competition. All others must be shown to exist. More importantly, the likelihood of
confusion exists not only if there is confusing similarity. It should also be likely to cause
confusion or mistake or deceive purchasers. 7 6 Thus, the CA correctly ruled that the
mere fact that some resemblance can be pointed out between the marks used does
not in itself prove unfair competition. 7 7 To reiterate, the resemblance must be such as
is likely to deceive the ordinary purchaser exercising ordinary care. 7 8
The consumer survey alone does not equate to actual confusion. We note that
the survey was made by showing the interviewees actual samples of petitioner's and
respondent's respective products, approximately ve feet away from them. From
that distance, they were asked to identify the jeans' brand and state the reasons for
thinking so. 7 9 This method discounted the possibility that the ordinary intelligent buyer
would be able to closely scrutinize, and even t, the jeans to determine if they were
"LEVI'S" 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 "LIVE'S" jeans
are priced much lower than "LEVI'S".
The Court's 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. . . . 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, speci cally 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. 8 0 (Emphasis supplied)ESTAIH
We nd 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 nd no basis to give weight to petitioner's 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 in exible 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 plaintiff's goods, or, to state it in
another way, whether defendant, as a matter of fact, is, by his conduct, passing
off defendant's goods as plaintiff's goods or his business as plaintiff's
business. The universal test question is whether the public is likely to be
deceived.
In the case before us, we are of the view that the probability of deception
must 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 test of fraudulent simulation is to be found in the
likelihood of deception, or the possibility of 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. 8 1
In sum, absent a grave abuse of discretion on the part of the executive branch
tasked with the determination of probable cause during preliminary investigation, We
cannot nullify acts done in the exercise of the executive of cers' discretion. Otherwise,
We shall violate the principle that the purpose of a preliminary investigation is to secure
the innocent against hasty, malicious and oppressive prosecution, and to protect him
from 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. 8 2
WHEREFORE, the petition is DENIED and the appealed Decision of the Court of
Appeals AFFIRMED.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Chico-Nazario and Nachura, JJ., concur.
Footnotes
1. Alcaraz v. Gonzalez, G.R. No. 164715, September 20, 2006, 502 SCRA 518.
2. Monfort III v. Salvatierra, G.R. No. 168301, March 5, 2007, 517 SCRA 447, 459-460. HIACac
3. Under Rule 45 of the 1997 Rules of Civil Procedure.
4. Rollo, pp. 95-103. Dated October 17, 2003. Penned by Associate Justice Eubulo G.
Verzola, with Associate Justices Remedios Salazar-Fernando and Edgardo F. Sundiam,
concurring.
5. Id. at 105-106. Dated February 20, 2004.
6. LS & Co.'s registered trademarks and trade names in the Philippines are as follows:
1. "Levi's" issued on August 10, 1982, renewed on August 10, 2002.

2. "Levi Strauss & Co." issued on March 21, 1978.
3. "Arcuate Stitching Design" issued on October 8, 1973, renewed on October 8, 1993.
4. "Two Horse Design" issued on February 12, 1974, renewed on February 12, 1994.
5. "Two Horse Patch" issued on December 27, 1988.
6. "Two Horse Label with Patterned Arcuate Design" issued on October 9, 1985.
7. "Tab Design" issued on May 12, 1976, renewed on May 12, 1996.
8. "Composite Mark (Arcuate, Tab, Two Horse Patch)" issued on December 12, 1988.
9. "501" issued on March 3, 1989.
10. "Levi's Salmon Ticket & Design" issued on February 13, 1976, renewed on February
13, 1996. HcTIDC
11. "Levi's and Device" issued on May 22, 1981, renewed on May 22, 2001.
7. Rollo, pp. 25-26.

8. Id. at 29.
9. Id. at 30.
10. Id. at 307, 341. Dated November 22, 1995.
11. Id. at 9.
12. Id. at 31.
13. CA rollo, pp. 71-72.
14. Now the Criminal Investigation and Detection Group (CIDG).

15. Search Warrant No. 95-757 dated December 12, 1995 in People v. Tony Lim of Vogue
Traders Clothing Company, 1082 Carmen Planas Street, Tondo, Manila, and Search
Warrant No. 95-758 dated December 12, 1995 in People v. Tony Lim of Vogue Traders
Clothing Company, 1042 Carmen Planas Street, Tondo, Manila, both issued by Judge
Antonio I. de Castro, Regional Trial Court of Manila, Branch 3.
16. Pursuant to Search Warrant No. 95-757 implemented at 1082 Carmen Planas Street,
Tondo Manila:
100 Sacks of Live's pants (20 pants/sack);

1 Box containing 500 sets of Live's buttons;
12 Sacks of Live's Hangtags (2,000/sack);

2 Sewing Machines; and
2 Riveter Machines.
Pursuant to Search Warrant No. 95-758 implemented at 1042 Carmen Planas Street,
Tondo Manila:
151 pcs. of unfinished pants with arcuate design;
160 pcs. of finished Westside jeans with arcuate design;

725 pcs. of Live's Patches;
520 pcs. of Live's Buttons;
900 pcs. of Live's Rivets;

261 pcs. of back pocket with arcuate design;
1 Singer Sewing Machine with SN-U4884707342;
1 Singer Sewing Machine with SN-U86400783;

1 Juki Sewing Machine with SN-A555-59278;
1 Juki Sewing Machine with SN-A555-2-24344;
1 Juki Sewing Machine with SN-A227-03839;

1 Juki Sewing Machine with SN-D555-38961; and
1 Riveter.
17. Rollo, pp. 222-223.
18. Through a letter dated December 28, 1995.
19. Entitled PNP-CIS/Levi Strauss (Phils.), Inc. v. Tony Lim, docketed as I.S. No. 95-799.
20. The Intellectual Property Code of the Philippines. Effective January 1, 1998.
21. Rollo, pp. 282-285. DCESaI
22. Under Certi cate of Registration No. 53918 dated November 16, 1992 (Principal
Register, Bureau of Patents, Trademarks and Technology Transfer) and SR 8868 dated
November 3, 1992 (Supplemental Register, same office).
23. Covered by Certi cate of Copyright Registration No. I-3838 dated September 25, 1991
issued by the National Library.
24. IPC Case Nos. 4216 and 4217, Bureau of Patents, Trademarks, and Technology
Transfer; and Civil Case No. 96-76944, RTC Manila, Branch 50.
25. Rollo, pp. 282-283.

26. Id. at 294-295.
27. Id. at 222-226.
28. CA rollo, pp. 4-7. Resolution No. 052, Series of 1998.
29. Id. at 73-74.
30. Rollo, pp. 375-404.
31. Id. at 358-360.
32. Id. at 450.
33. Id. at 449.
34. Id. at 450.
35. CA rollo, pp. 8-12.
36. Rollo, p. 15.
37. Id. at 13.
38. Id. at 14-15.

39. Id. at 47. TcEaDS
40. Asia Brewery, Inc. v. Court of Appeals, G.R. No. 103543, July 5, 1993, 224 SCRA 437,
443.
41. See Cosmos Bottling Corporation v. National Labor Relations Commission, G.R. No.
146397, July 1, 2003, 405 SCRA 258.
42. CA rollo, p. 19.
43. As amended by Section 11 of Republic Act No. 9282 entitled "An Act Expanding the
Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to the Level of a
Collegiate Court with Special Jurisdiction and Enlarging its Membership, Amending for
the Purpose Certain Sections or Republic Act No. 1125, As Amended, Otherwise Known
as the Law Creating the Court of Tax Appeals, and for Other Purposes." Approved on
March 30, 2004.
44. Alcaraz v. Gonzalez, supra note 1, at 529; Orosa v. Roa, G.R. No. 140423, July 14, 2006,
495 SCRA 22; Santos v. Go, G.R. No. 156081, October 19, 2005, 473 SCRA 350, 361.
45. Now the 2000 National Prosecution Service Rules on Appeals.
46. Filadams Pharma, Inc. v. Court of Appeals, G.R. No. 132422, March 30, 2004, 426 SCRA
460, 466-467.
47. Alcaraz v. Gonzalez, supra note 1, at 529.
48. See Filadams Pharma, Inc. v. Court of Appeals, supra note 46.
50. Id.
51. Public Utilities Department v. Guingona, Jr., 417 Phil. 798, 805 (2001).
52. Id.
53. See Buan v. Matugas, G.R. No. 161179, August 7, 2007, 529 SCRA 263, 270.
54. R.R. Paredes v. Calilung, G.R. No. 156055, March 5, 2007, 517 SCRA 369, 395.
56. R.R. Paredes v. Calilung, supra at 395-396.
57. Rollo, pp. 224-225.
59. First Women's Credit Corporation v. Baybay, G.R. No. 166888, January 31, 2007, 513
SCRA 637, 644-645.
60. R.R. Paredes v. Calilung, supra note 54, at 397, citing Sarigumba v. Sandiganbayan,
G.R. Nos. 154239-41, February 16, 2005, 451 SCRA 533, 549. IAEcCa
61. See R.R. Paredes v. Calilung, supra note 54, at 396-397.
62. Reyes, L., The Revised Penal Code, Book II, 13th ed., p. 264.
63. Art. 189. Unfair competition, fraudulent registration of trade-mark, trade-name or service
mark, fraudulent designation of origin, and false description. — The penalty provided in
the next preceding article shall be imposed upon:
1. Any person who, in unfair competition and for the purposes of deceiving or
defrauding another of his legitimate trade or the public in general, shall sell his goods
giving 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 device or words thereon or in any other features of their appearance
which would be likely to induce the public to believe that the goods offered are those of
a manufacturer or dealer other than the actual manufacturer or dealer or shall give other
persons a chance or opportunity to do the same with a like purpose.
64. Sony Computer Entertainment, Inc. v. Supergreen, Incorporated, G.R. No. 161823, March
22, 2007, 518 SCRA 750, 757; NBI-Microsoft Corporation v. Hwang, G.R. No. 147043,
June 21, 2005, 460 SCRA 428, 445, citing L. Reyes, The Revised Penal Code, Vol. II, 15th
ed., p. 282.
65. Mendoza-Arce v. Of ce of the Ombudsman (Visayas), G.R. No. 149148, April 5, 2002,
380 SCRA 325, 336.
66. CA rollo, p. 73.

67. Agpalo, The Law on Trademark, Infringement and Unfair Competition, 2000 ed., pp.
189-190, citing R.F. Alexander & Co. v. Ang, 97 Phil. 157 (1955); Parke Davis & Co. v. Kim
Foo & Co., 60 Phil. 928 (1934).
68. Id.
69. G.R. No. 100098, December 29, 1995, 251 SCRA 600.
70. G.R. No. 78325, January 25, 1990, 181 SCRA 410.
71. G.R. No. 103543, July 5, 1993, 224 SCRA 437.

72. Id. at 455.
73. Rollo, pp. 51-52.
74. See note 67, at 190, citing Rueda Hermanos & Co. v. Felix Paglinawan & Co. , 33 Phil.
196 (1916); U.S. v. Gaw Chiong, 23 Phil. 138 (1912); Inchausti & Co. v. Song Fo & Co. , 21
Phil. 278 (1912).
75. CA rollo, p. 459. THADEI
76. See Societe Des Produits Nestlé, S.A. v. Court of Appeals, G.R. No. 112012, April 4,
2001, 356 SCRA 207, 215.
77. Rollo, p. 100.

78. Pro Line Sports Center, Inc. v. Court of Appeals, G.R. No. 118192, October 23, 1997, 281
SCRA 162, 173.
79. Id. at 380.

80. Emerald Garment Manufacturing Corporation v. Court of Appeals, supra note 69.
81. Rollo, pp. 101-102.
82. R.R. Paredes v. Calilung, supra note 54, at 395.

SECOND DIVISION
[G.R. No. 154491. November 14, 2008.]
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga Plant , petitioner,

vs . QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E. GALICIA,
a.k.a. "DANNY GALICIA" , respondents.
DECISION
BRION , J : p
Is the hoarding of a competitor's product containers punishable as unfair

competition under the Intellectual Property Code (IP Code, Republic Act No. 8293) that
would entitle the aggrieved party to a search warrant against the hoarder? This is the
issue we grapple with in this petition for review on certiorari involving two rival
multinational softdrink giants; petitioner Coca-Cola Bottlers, Phils., Inc. (Coca-Cola)
accuses Pepsi Cola Products Phils., Inc. (Pepsi), represented by the respondents, of
hoarding empty Coke bottles in bad faith to discredit its business and to sabotage its
operation in Bicolandia. IAaCST
BACKGROUND
The facts, as culled from the records, are summarized below.
On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi for
hoarding Coke empty bottles in Pepsi's yard in Concepcion Grande, Naga City, an act
allegedly penalized as unfair competition under the IP Code. Coca-Cola claimed that the
bottles must be con scated to preclude their illegal use, destruction or concealment by
the respondents. 1 In support of the application, Coca-Cola submitted the sworn
statements of three witnesses: Naga plant representative Arnel John Ponce said he
was informed that one of their plant security guards had gained access into the Pepsi
compound and had seen empty Coke bottles; acting plant security of cer Ylano A.
Regaspi said he investigated reports that Pepsi was hoarding large quantities of Coke
bottles by requesting their security guard to enter the Pepsi plant and he was informed
by the security guard that Pepsi hoarded several Coke bottles; security guard Edwin
Lirio stated that he entered Pepsi's yard on July 2, 2001 at 4 p.m. and saw empty Coke
bottles inside Pepsi shells or cases. 2
Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga City, after
taking the joint deposition of the witnesses, issued Search Warrant No. 2001-01 3 to
seize 2,500 Litro and 3,000 eight and 12 ounces empty Coke bottles at Pepsi's Naga
yard for violation of Section 168.3 (c) of the IP Code. 4 The local police seized and
brought to the MTC's custody 2,464 Litro and 4,036 eight and 12 ounces empty Coke
bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells for smaller (eight and 12
ounces) empty Coke bottles, and later led with the Of ce of the City Prosecutor of
Naga a complaint against two Pepsi of cers for violation of Section 168.3 (c) in
relation to Section 170 of the IP Code. 5 The named respondents, also the respondents
in this petition, were Pepsi regional sales manager Danilo E. Galicia (Galicia) and its
Naga general manager Quintin J. Gomez, Jr. (Gomez). aEHTSc

In their counter-af davits, Galicia and Gomez claimed that the bottles came from
various Pepsi retailers and wholesalers who included them in their return to make up
for shortages of empty Pepsi bottles; they had no way of ascertaining beforehand the
return of empty Coke bottles as they simply received what had been delivered; the
presence of the bottles in their yard was not intentional nor deliberate; Ponce and
Regaspi's statements are hearsay as they had no personal knowledge of the alleged
crime; there is no mention in the IP Code of the crime of possession of empty bottles;
and that the ambiguity of the law, which has a penal nature, must be construed strictly
against the State and liberally in their favor. Pepsi security guards Eduardo E. Miral and
Rene Acebuche executed a joint af davit stating that per their logbook, Lirio did not
visit or enter the plant premises in the afternoon of July 2, 2001.
The respondents also led motions for the return of their shells and to quash the
search warrant. They contended that no probable cause existed to justify the issuance
of the search warrant; the facts charged do not constitute an offense; and their Naga
plant was in urgent need of the shells.
Coca-Cola opposed the motions as the shells were part of the evidence of the
crime, arguing that Pepsi used the shells in hoarding the bottles. It insisted that the
issuance of warrant was based on probable cause for unfair competition under the IP
Code, and that the respondents violated R.A. 623, the law regulating the use of stamped
or marked bottles, boxes, and other similar containers.
THE MTC RULINGS
On September 19, 2001, the MTC issued the rst assailed order 6 denying the
twin motions. It explained there was an exhaustive examination of the applicant and its
witnesses through searching questions and that the Pepsi shells are prima facie
evidence that the bottles were placed there by the respondents.
In their motion for reconsideration, the respondents argued for the quashal of the
warrant as the MTC did not conduct a probing and exhaustive examination; the
applicant and its witnesses had no personal knowledge of facts surrounding the
hoarding; the court failed to order the return of the "borrowed" shells; there was no
crime involved; the warrant was issued based on hearsay evidence; and the seizure of
the shells was illegal because they were not included in the warrant. ITScHa
On November 14, 2001, the MTC denied the motion for reconsideration in the
second assailed order, 7 explaining that the issue of whether there was unfair
competition can only be resolved during trial.
The respondents responded by ling a petition for certiorari under Rule 65 of the
Revised Rules of Court before the Regional Trial Court (RTC) of Naga City on the ground
that the subject search warrant was issued without probable cause and that the empty
shells were neither mentioned in the warrant nor the objects of the perceived crime.
THE RTC RULINGS
On May 8, 2002, the RTC voided the warrant for lack of probable cause and the
non-commission of the crime of unfair competition, even as it implied that other laws
may have been violated by the respondents. The RTC, though, found no grave abuse of
discretion on the part of the issuing MTC judge. 8 Thus,
Accordingly, as prayed for, Search Warrant No. 2001-02 issued by the
Honorable Judge Julian C. Ocampo III on July 2, 2001 is ANNULLED and SET
ASIDE. The Orders issued by the Pairing Judge of Br. 1, MTCC of Naga City
dated September 19, 2001 and November 14, 2001 are also declared VOID and
SET ASIDE. The City Prosecutor of Naga City and SPO1 Ernesto Paredes are
directed to return to the Petitioner the properties seized by virtue of Search
Warrant No. 2001-02. No costs.
SO ORDERED. 9
In a motion for reconsideration, which the RTC denied on July 12, 2002, the
petitioner stressed that the decision of the RTC was contradictory because it absolved
Judge Ocampo of grave abuse of discretion in issuing the search warrant, but at the
same time nulli ed the issued warrant. The MTC should have dismissed the petition
when it found out that Judge Ocampo did not commit any grave abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us through this petition for
review on certiorari under Rule 45 of the Rules of Court to reverse the decision of the
RTC. Essentially, the petition raises questions against the RTC's nulli cation of the
warrant when it found no grave abuse of discretion committed by the issuing judge. IEAaST
THE PETITION and THE PARTIES' POSITIONS

In its petition, the petitioner insists the RTC should have dismissed the
respondents' petition for certiorari because it found no grave abuse of discretion by the
MTC in issuing the search warrant. The petitioner further argues that the IP Code was
enacted into law to remedy various forms of unfair competition accompanying
globalization as well as to replace the inutile provision of unfair competition under
Article 189 of the Revised Penal Code. Section 168.3 (c) of the IP Code does not limit
the scope of protection on the particular acts enumerated as it expands the meaning of
unfair competition to include "other acts contrary to good faith of a nature calculated to
discredit the goods, business or services of another". The inherent element of unfair
competition is fraud or deceit, and that hoarding of large quantities of a competitor's
empty bottles is necessarily characterized by bad faith. It claims that its Bicol bottling
operation was prejudiced by the respondents' hoarding and destruction of its empty
bottles.
The petitioner also argues that the quashal of the search warrant was improper
because it complied with all the essential requisites of a valid warrant. The empty
bottles were concealed in Pepsi shells to prevent discovery while they were
systematically being destroyed to hamper the petitioner's bottling operation and to
undermine the capability of its bottling operations in Bicol.
The respondents counter-argue that although Judge Ocampo conducted his own
examination, he gravely erred and abused his discretion when he ignored the rule on the
need of suf cient evidence to establish probable cause; satisfactory and convincing
evidence is essential to hold them guilty of unfair competition; the hoarding of empty
Coke bottles did not cause actual or probable deception and confusion on the part of
the general public; the alleged criminal acts do not show conduct aimed at deceiving
the public; there was no attempt to use the empty bottles or pass them off as the
respondents' goods.
The respondents also argue that the IP Code does not criminalize bottle
hoarding, as the acts penalized must always involve fraud and deceit. The hoarding
does not make them liable for unfair competition as there was no deception or fraud on
the end-users.
THE ISSUE
Based on the parties' positions, the basic issue submitted to us for resolution is
whether the Naga MTC was correct in issuing Search Warrant No. 2001-01 for the
seizure of the empty Coke bottles from Pepsi's yard for probable violation of Section
168.3 (c) of the IP Code. This basic issue involves two sub-issues, namely, the
substantive issue of whether the application for search warrant effectively charged an
offense, i.e., a violation of Section 168.3 (c) of the IP Code; and the procedural issue of
whether the MTC observed the procedures required by the Rules of Court in the
issuance of search warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the RTC decision, our agreement
is more in the result than in the reasons that supported it. The decision is correct in
nullifying the search warrant because it was issued on an invalid substantive basis —
the acts imputed on the respondents do not violate Section 168.3 (c) of the IP Code.
For this reason, we deny the present petition. CcAITa
The issuance of a search warrant 1 0 against a personal property 1 1 is governed

by Rule 126 of the Revised Rules of Court whose relevant sections state:
Section 4. Requisites for issuing search warrant. — A search warrant
shall not issue except upon probable cause in connection with one
speci c offense to be determined personally by the judge after examination
under oath or af rmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the things to
be seized which may be anywhere in the Philippines.
Section 5. Examination of complainant; record. — The judge must,
before issuing the warrant, personally examine in the form of searching
questions and answers, in writing and under oath, the complainant
and the witnesses he may produce on facts personally known to them and
attach to the record their sworn statements together with the af davits
submitted.
Section 6. Issuance and form of search warrant. — If the judge is
satis ed of the existence of facts upon which the application is based or that
there is probable cause to believe that they exist, he shall issue the warrant,
which must be substantially in the form prescribed by these Rules. [Emphasis
supplied]
To paraphrase this rule, a search warrant may be issued only if there is probable
cause in connection with a speci c offense alleged in an application based on the
personal knowledge of the applicant and his or her witnesses. This is the substantive
requirement in the issuance of a search warrant. Procedurally, the determination of
probable cause is a personal task of the judge before whom the application for search
warrant is led, as he has to examine under oath or af rmation the applicant and his or
her witnesses in the form of "searching questions and answers" in writing and under
oath. The warrant, if issued, must particularly describe the place to be searched and the
things to be seized. DHcSIT
We paraphrase these requirements to stress that they have substantive and

procedural aspects. Apparently, the RTC recognized this dual nature of the
requirements and, hence, treated them separately; it approved of the way the MTC
handled the procedural aspects of the issuance of the search warrant but found its
action on the substantive aspect wanting. It therefore resolved to nullify the warrant,
without however expressly declaring that the MTC gravely abused its discretion when it
issued the warrant applied for. The RTC's error, however, is in the form rather than the
substance of the decision as the nulli cation of the issued warrant for the reason the
RTC gave was equivalent to the declaration that grave abuse of discretion was
committed. In fact, we so rule as the discussions below will show.
Jurisprudence teaches us that probable cause, as a condition for the issuance of
a search warrant, is such reasons supported by facts and circumstances as will warrant
a cautious man in the belief that his action and the means taken in prosecuting it are
legally just and proper. Probable cause requires facts and circumstances that would
lead a reasonably prudent man to believe that an offense has been committed and the
objects sought in connection with that offense are in the place to be searched. 1 2
Implicit in this statement is the recognition that an underlying offense must, in the rst
place, exist. In other words, the acts alleged, taken together, must constitute an offense
and that these acts are imputable to an offender in relation with whom a search warrant
is applied for. DcITHE
In the context of the present case, the question is whether the act charged —
alleged to be hoarding of empty Coke bottles — constitutes an offense under Section
168.3 (c) of the IP Code. Section 168 in its entirety states:
SEC. 168. Unfair Competition, Rights, Regulation and Remedies. —
168.1. A person who has identi ed 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 registered mark is employed, has a property right in the
goodwill of the said goods, business or services so identi ed, which will be
protected in the same manner as other property rights.
168.2. Any person who shall employ deception or any other means
contrary to good faith by which he shall pass off the goods manufactured by
him or in which 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.
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:
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 in uence 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;
other means calculated to induce the false belief that such person is offering
the services of another who has identi ed such services in the mind of the
public; or
calculated to discredit the goods, business or services of another.

168.4. The remedies provided by Sections 156, 157 and 161 shall
apply mutatis mutandis. (Sec. 29, R.A. No. 166a)
The petitioner theorizes that the above section does not limit the scope of
protection on the particular acts enumerated as it expands the meaning of unfair
competition to include "other acts contrary to good faith of a nature calculated to
discredit the goods, business or services of another". Allegedly, the respondents'
hoarding of Coca Cola empty bottles is one such act.
We do not agree with the petitioner's expansive interpretation of Section 168.3
(c).
"Unfair competition", previously defined in Philippine jurisprudence in relation with
R.A. No. 166 and Articles 188 and 189 of the Revised Penal Code, is now covered by
Section 168 of the IP Code as this Code has expressly repealed R.A. No. 165 and R.A.
No. 166, and Articles 188 and 189 of the Revised Penal Code. IHaECA
Articles 168.1 and 168.2, as quoted above, provide the concept and general rule
on the de nition of unfair competition. The law does not thereby cover every unfair act
committed in the course of business; it covers only acts characterized by "deception or
any other means contrary to good faith" in the passing off of goods and services as
those of another who has established goodwill in relation with these goods or services,
or any other act calculated to produce the same result.
What unfair competition is, is further particularized under Section 168.3 when it
provides speci cs of what unfair competition is "without in any way limiting the scope
of protection against unfair competition". Part of these particulars is provided under
Section 168.3 (c) which provides the general "catch-all" phrase that the petitioner cites.
Under this phrase, a person shall be guilty of unfair competition "who shall commit any
other act contrary to good faith of a nature calculated to discredit the goods, business
or services of another".
From jurisprudence, unfair competition has been de ned as the passing off (or
palming off) or attempting to pass off upon the public the goods or business of one
person as the goods or business of another with the end and probable effect of
deceiving the public. It formulated the "true test" of unfair competition: whether the acts
of defendant are such as are calculated to deceive the ordinary buyer making his
purchases under the ordinary conditions which prevail in the particular trade to which
the controversy relates. 1 3 One of the essential requisites in an action to restrain unfair
competition is proof of fraud; the intent to deceive must be shown before the right to
recover can exist. 1 4 The advent of the IP Code has not signi cantly changed these
rulings as they are fully in accord with what Section 168 of the Code in its entirety
provides. Deception, passing off and fraud upon the public are still the key elements
that must be present for unfair competition to exist.
The act alleged to violate the petitioner's rights under Section 168.3 (c) is
hoarding which we gather to be the collection of the petitioner's empty bottles so that
they can be withdrawn from circulation and thus impede the circulation of the
petitioner's bottled products. This, according to the petitioner, is an act contrary to
good faith — a conclusion that, if true, is indeed an unfair act on the part of the
respondents. The critical question, however, is not the intrinsic unfairness of the act of
hoarding; what is critical for purposes of Section 168.3 (c) is to determine if the
hoarding, as charged, "is of a nature calculated to discredit the goods, business or
services" of the petitioner. DcSTaC
We hold that it is not. Hoarding as de ned by the petitioner is not even an act
within the contemplation of the IP Code.
The petitioner's cited basis is a provision of the IP Code, a set of rules that refer
to a very speci c subject — intellectual property. Aside from the IP Code's actual
substantive contents (which relate speci cally to patents, licensing, trademarks, trade
names, service marks, copyrights, and the protection and infringement of the
intellectual properties that these protective measures embody), the coverage and
intent of the Code is expressly reflected in its "Declaration of State Policy" which states:
Section 2. Declaration of State Policy. — The State recognizes that
an effective intellectual and industrial property system is vital to the
development of domestic and creative activity, facilitates transfer of technology,
attracts foreign investments, and ensures market access for our products. It
shall protect and secure the exclusive rights of scientists, inventors, artists and
other gifted citizens to their intellectual property and creations, particularly when
beneficial to the people, for such periods as provided in this Act.
The use of intellectual property bears a social function. To this end, the
State shall promote the diffusion of knowledge and information for the
promotion of national development and progress and the common good.
It is also the policy of the State to streamline administrative procedures
of registering patents, trademarks and copyright, to liberalize the registration on
the transfer of technology, and to enhance the enforcement of intellectual
property rights in the Philippines. (n)
"Intellectual property rights" have furthermore been defined under Section 4 of the Code
to consist of: a) Copyright and Related Rights; b) Trademarks and Service Marks; c)
Geographic Indications; d) Industrial Designs; e) Patents; f) Layout-Designs
(Topographies) of Integrated Circuits; and g) Protection of Undisclosed Information.
Given the IP Code's speci c focus, a rst test that should be made when a
question arises on whether a matter is covered by the Code is to ask if it refers to an
intellectual property as de ned in the Code. If it does not, then coverage by the Code
may be negated. THaAEC
A second test, if a disputed matter does not expressly refer to an intellectual

property right as defined above, is whether it falls under the general "unfair competition"
concept and de nition under Sections 168.1 and 168.2 of the Code. The question then
is whether there is "deception" or any other similar act in "passing off" of goods or
services to be those of another who enjoys established goodwill.
Separately from these tests is the application of the principles of statutory
construction giving particular attention, not so much to the focus of the IP Code
generally, but to the terms of Section 168 in particular. Under the principle of "noscitur a
sociis", when a particular word or phrase is ambiguous in itself or is equally susceptible
of various meanings, its correct construction may be made clear and speci c by
considering the company of words in which it is found or with which it is associated. 1 5
As basis for this interpretative analysis, we note that Section 168.1 speaks of a
person who has earned goodwill with respect to his goods and services and who is
entitled to protection under the Code, with or without a registered mark. Section
168.2 , as previously discussed, refers to the general de nition of unfair competition.
Section 168.3 , on the other hand, refers to the speci c instances of unfair
competition, with Section 168.1 referring to the sale of goods given the appearance
of the goods of another; Section 168.2 , to the inducement of belief that his or her
goods or services are that of another who has earned goodwill; while the disputed
Section 168.3 being a "catch all" clause whose coverage the parties now dispute.
Under all the above approaches, we conclude that the "hoarding" — as de ned
and charged by the petitioner — does not fall within the coverage of the IP Code and of
Section 168 in particular. It does not relate to any patent, trademark, trade name or
service mark that the respondents have invaded, intruded into or used without proper
authority from the petitioner. Nor are the respondents alleged to be fraudulently
"passing off" their products or services as those of the petitioner. The respondents are
not also alleged to be undertaking any representation or misrepresentation that would
confuse or tend to confuse the goods of the petitioner with those of the respondents,
or vice versa. What in fact the petitioner alleges is an act foreign to the Code, to the
concepts it embodies and to the acts it regulates; as alleged, hoarding in icts
unfairness by seeking to limit the opposition's sales by depriving it of the bottles it can
use for these sales. cHDAIS
In this light, hoarding for purposes of destruction is closer to what another law —
R.A. No. 623 — covers, to wit:
SEC. 1. Persons engaged or licensed to engage in the manufacture,
bottling or selling of soda water, mineral or aerated waters, cider, milk, cream, or
other lawful beverages in bottles, boxes, casks, kegs, or barrels, and other
similar containers, with their names or the names of their principals or products,
or other marks of ownership stamped or marked thereon, may register with the
Philippine Patent Of ce a description of the names or are used by them, under
the same conditions, rules, and regulations, made applicable by law or
regulation to the issuance of trademarks. ScCEIA
SEC. 2. It shall be unlawful for any person, without the written

consent of the manufacturer, bottler or seller who has successfully registered
the marks of ownership in accordance with the provisions of the next preceding
section, to ll such bottles, boxes, kegs, barrels, or other similar
containers so marked or stamped, for the purpose of sale, or to sell,
dispose of, buy, or traf c in, or wantonly destroy the same, whether
lled or not, or to use the same for drinking vessels or glasses or for
any other purpose than that registered by the manufacturer, bottler or
seller. Any violation of this section shall be punished by a ne or not more than
one hundred pesos or imprisonment of not more than thirty days or both.
As its coverage is de ned under Section 1, the Act appears to be a measure that
may overlap or be affected by the provisions of Part II of the IP Code on "The Law on
Trademarks, Service Marks and Trade Names". What is certain is that the IP Code has
not expressly repealed this Act. The Act appears, too, to have speci c reference to a
special type of registrants — the manufacturers, bottlers or sellers of soda water,
mineral or aerated waters, cider, milk, cream, or other lawful beverages in bottles,
boxes, casks, kegs, or barrels, and other similar containers — who are given special
protection with respect to the containers they use. In this sense, it is in fact a law of
speci c coverage and application, compared with the general terms and application of
the IP Code. Thus, under its Section 2, it speaks speci cally of unlawful use of
containers and even of the unlawfulness of their wanton destruction — a matter that
escapes the IP Code's generalities unless linked with the concepts of "deception" and
"passing off" as discussed above.
Unfortunately, the Act is not the law in issue in the present case and one that the
parties did not consider at all in the search warrant application. The petitioner in fact
could not have cited it in its search warrant application since the "one speci c offense"
that the law allows and which the petitioner used was Section 168.3 (c). If it serves any
purpose at all in our discussions, it is to show that the underlying factual situation of
the present case is in fact covered by another law, not by the IP Code that the petitioner
cites. Viewed in this light, the lack of probable cause to support the disputed search
warrant at once becomes apparent.
Where, as in this case, the imputed acts do not violate the cited offense, the
ruling of this Court penned by Mr. Justice Bellosillo is particularly instructive:
In the issuance of search warrants, the Rules of Court requires a nding
of probable cause in connection with one speci c offense to be determined
personally by the judge after examination of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the
things to be seized. Hence, since there is no crime to speak of, the search
warrant does not even begin to fulfill these stringent requirements and
is therefore defective on its face . The nullity of the warrant renders moot
and academic the other issues raised in petitioners' Motion to Quash and
Motion for Reconsideration. Since the assailed search warrant is null and void,
all property seized by virtue thereof should be returned to petitioners in
accordance with established jurisprudence. 1 6
Based on the foregoing, we conclude that the RTC correctly ruled that the
petitioner's search warrant should properly be quashed for the petitioner's failure to
show that the acts imputed to the respondents do not violate the cited offense. There
could not have been any probable cause to support the issuance of a search warrant
because no crime in the rst place was effectively charged. This conclusion renders
unnecessary any further discussion on whether the search warrant application properly
alleged that the imputed act of holding Coke empties was in fact a "hoarding" in bad
faith aimed to prejudice the petitioner's operations, or whether the MTC duly complied
with the procedural requirements for the issuance of a search warrant under Rule 126
of the Rules of Court. DHEaTS
WHEREFORE, we hereby DENY the petition for lack of merit. Accordingly, we

con rm that Search Warrant No. 2001-01, issued by the Municipal Trial Court, Branch 1,
Naga City, is NULL and VOID. Costs against the petitioner.
SO ORDERED.
Quisumbing, Acting C.J., Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.
Footnotes
1. See Paragraph 3 of the Application; records, p. 96.
2. Id., pp. 98-101.
3. Id., pp. 108-109.
4. Sec. 168. Unfair Competition, Rights, Regulations and Remedies. —
xxx xxx xxx
Sec. 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:
TcADCI
xxx xxx xxx
(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 service of another.
5. Sec. 170. Penalties. — Independent of the civil and administrative sanctions imposed by
law, a criminal penalty of imprisonment from two years to five years and a fine ranging
from Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall
be imposed on any person who is found guilty of committing any of the acts mentioned
in Section 155, Section 168 and Subsection 169.1. HCaIDS
6. Penned by Pairing Judge Irma Isidora M. Boncodin, MTC, Branch 1, Naga; records, p. 23.
7. Penned by Acting Presiding Judge Jose P. Nacional, MTC, Branch 1, Naga; id., p. 22.
8. Decision penned by Judge Ramon A. Cruz, RTC, Branch 21; id., pp. 202-211.
9. Id., p. 210.
10. Rule 126, Section 1. Search warrant defined. — A search warrant is an order in writing
issued in the name of the People of the Philippines, signed by a judge and directed to a
peace officer, commanding him to search for personal property described therein and
bring it before the court.
11. Rule 126, Section 3. Personal property to be seized. — A search warrant may be issued
for the search and seizure of personal property: HSDCTA
(a) Subject of the offense;

(b) Stolen or embezzled and other proceeds or fruits of the offense; or
(c) Used or intended to be used as the means of committing an offense.
12. La Chemise Lacoste, S. A. v. Judge Fernandez, G.R. Nos. 63796-97, May 21, 1984, 129
SCRA 373.
13. Alhambra Cigar & Cigarette Manufacturing Co v. Mojica, 27 Phil. 266 (1914).
14. Compania General de Tabacos de Filipinas v. Alhambra Cigar & Cigarette
Manufacturing Co., 33 Phil. 485 (1916). DCTHaS
15. Agpalo, Statutory Construction, 3rd (1995) Ed., at p. 159, citing Co Kim Chan v. Valdez
Tan Keh, 75 Phil 371, and Soriano v. Sandiganbayan, G.R. No. 65952, July 1, 1984,
among others.
16. Supra note 12, pp. 705-706.

SECOND DIVISION
[G.R. No. 202423. January 28, 2013.]
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-ONG ,

petitioners, vs . VICENTE LO , respondent.
RESOLUTION
BRION , J : p
We resolve the motion for reconsideration 1 dated October 22, 2012 filed by petitioners
Chester Uyco, Winston Uychiyong and Cherry C. Uyco-Ong to set aside the Resolution 2
dated September 12, 2012 of this Court, which affirmed the decision 3 dated March 9,
2012 and the resolution 4 dated June 21, 2012 of the Court of Appeals (CA) in CA-G.R. SP
No. 111964. The CA affirmed the resolution 5 dated September 1, 2008 of the Department
of Justice (DOJ). Both the CA and the DOJ found probable cause to charge the petitioners
with false designation of origin, in violation of Section 169.1, in relation with Section 170,
of Republic Act No. (RA) 8293, otherwise known as the "Intellectual Property Code of the
Philippines." 6
The disputed marks in this case are the "HIPOLITO & SEA HORSE & TRIANGULAR DEVICE,"
"FAMA," and other related marks, service marks and trade names of Casa Hipolito S.A.
Portugal appearing in kerosene burners. Respondent Vicente Lo and Philippine Burners
Manufacturing Corporation (PBMC) filed a complaint against the officers of Wintrade
Industrial Sales Corporation (Wintrade), including petitioners Chester Uyco, Winston
Uychiyong and Cherry Uyco-Ong, and of National Hardware, including Mario Sy Chua, for
violation of Section 169.1, in relation to Section 170, of RA 8293.
Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes para Gass,
Lda. (Gasirel), the owner of the disputed marks, executed a deed of assignment
transferring these marks in his favor, to be used in all countries except for those in Europe
and America. 7 In a test buy, Lo purchased from National Hardware kerosene burners with
the subject marks and the designations "Made in Portugal" and "Original Portugal" in the
wrappers. These products were manufactured by Wintrade. Lo claimed that as the
assignee for the trademarks, he had not authorized Wintrade to use these marks, nor had
Casa Hipolito S.A. Portugal. While a prior authority was given to Wintrade's predecessor-in-
interest, Wonder Project & Development Corporation (Wonder), Casa Hipolito S.A. Portugal
had already revoked this authority through a letter of cancellation dated May 31, 1993. 8
The kerosene burners manufactured by Wintrade have caused confusion, mistake and
deception on the part of the buying public. Lo stated that the real and genuine burners are
those manufactured by its agent, PBMC. TIaCAc
In their Answer, the petitioners stated that they are the officers of Wintrade which owns
the subject trademarks and their variants. To prove this assertion, they submitted as
evidence the certificates of registration with the Intellectual Property Office. They alleged
that Gasirel, not Lo, was the real party-in-interest. They allegedly derived their authority to
use the marks from Casa Hipolito S.A. Portugal through Wonder, their predecessor-in-
interest. Moreover, PBMC had already ceased to be a corporation and, thus, the licensing
agreement between PBMC and Lo could not be given effect, particularly because the
agreement was not notarized and did not contain the provisions required by Section 87 of
RA 8293. The petitioners pointed out that Lo failed to sufficiently prove that the burners
bought from National Hardware were those that they manufactured. But at the same time,
they also argued that the marks "Made in Portugal" and "Original Portugal" are merely
descriptive and refer to the source of the design and the history of manufacture.
In a separate Answer, Chua admitted that he had dealt with Wintrade for several years and
had sold its products. He had not been aware that Wintrade had lost the authority to
manufacture, distribute, and deal with products containing the subject marks, and he was
never informed of Wintrade's loss of authority. Thus, he could have not been part of any
conspiracy.
After the preliminary investigation, the Chief State Prosecutor found probable cause to
indict the petitioners for violation of Section 169.1, in relation with Section 170, of RA
8293. This law punishes any person who uses in commerce any false designation of origin
which is likely to cause confusion or mistake as to the origin of the product. The law seeks
to protect the public; thus, even if Lo does not have the legal capacity to sue, the State can
still prosecute the petitioners to prevent damage and prejudice to the public.
On appeal, the DOJ issued a resolution affirming the finding of probable case. It gave
credence to Lo's assertion that he is the proper assignee of the subject marks. More
importantly, it took note of the petitioners' admission that they used the words "Made in
Portugal" when in fact, these products were made in the Philippines. Had they intended to
refer to the source of the design or the history of the manufacture, they should have
explicitly said so in their packaging. It then concluded that the petitioners' defenses would
be better ventilated during the trial and that the admissions of the petitioners make up a
sufficient basis for probable cause.
The CA found no grave abuse of discretion on the part of the DOJ and affirmed the DOJ's
ruling. cCAIDS
When the petitioners filed their petition before us, we denied the petition for failure to
sufficiently show any reversible error in the assailed judgment to warrant the exercise of
the Court's discretionary power.
We find no reversible error on the part of the CA and the DOJ to merit reconsideration. The
petitioners reiterate their argument that the products bought during the test buy bearing
the trademarks in question were not manufactured by, or in any way connected with, the
petitioners and/or Wintrade. They also allege that the words "Made in Portugal" and
"Original Portugal" refer to the origin of the design and not to the origin of the goods.
The petitioners again try to convince the Court that they have not manufactured the
products bearing the marks "Made in Portugal" and "Original Portugal" that were bought
during the test buy. However, their own admission and the statement given by Chua bear
considerable weight.
The admission in the petitioners' Joint Affidavit is not in any way hypothetical, as they
would have us believe. They narrate incidents that have happened. They refer to Wintrade's
former association with Casa Hipolito S.A. Portugal; to their decision to produce the
burners in the Philippines; to their use of the disputed marks; and to their justification for
their use. It reads as follows:
24. As earlier mentioned, the predecessor-in-interest of Wintrade was the
former exclusive licensee of Casa Hipolito SA of Portugal since the 1970's,
and that Wintrade purchased all the rights on the said trademarks prior to
the closure of said company. Indeed, the burners sold by Wintrade used to
be imported from Portugal, but Wintrade later on discovered the possibility
of obtaining these burners from other sources or of manufacturing the
same in the Philippines. Wintrade's decision to procure these burners from
sources other than Portugal is certainly its management prerogative. The
presence of the words "made in Portugal" and "original Portugal" on the
wrappings of the burners and on the burners themselves which are
manufactured by Wintrade is an allusion to the fact that the origin of the
design of said burners can be traced back to Casa Hipolito SA of Portugal,
and that the history of the manufacture of said burners are rooted in
Portugal. These words were not intended to deceive or cause mistake and
confusion in the minds of the buying public. 9
Chua, the owner of National Hardware — the place where the test buy was conducted —
admits that Wintrade has been furnishing it with kerosene burners with the markings
"Made in Portugal" for the past 20 years, to wit: EISCaD
5. I hereby manifests (sic) that I had been dealing with Wintrade Industrial
Sales Corporation (WINTRADE for brevity) for around 20 years now by
buying products from it. I am not however aware that WINTRADE was no
longer authorized to deal, distribute or sell kerosene burner bearing the
mark HIPOLITO and SEA HORSE Device, with markings "Made in Portugal"
on the wrapper as I was never informed of such by WINTRADE nor was
ever made aware of any notices posted in the newspapers informing me of
such fact. Had I been informed, I would have surely stopped dealing with
WINTRADE. 1 0
Thus, the evidence shows that petitioners, who are officers of Wintrade, placed the words
"Made in Portugal" and "Original Portugal" with the disputed marks knowing fully well —
because of their previous dealings with the Portuguese company — that these were the
marks used in the products of Casa Hipolito S.A. Portugal. More importantly, the products
that Wintrade sold were admittedly produced in the Philippines, with no authority from
Casa Hipolito S.A. Portugal. The law on trademarks and trade names precisely precludes a
person from profiting from the business reputation built by another and from deceiving the
public as to the origins of products. These facts support the consistent findings of the
State Prosecutor, the DOJ and the CA that probable cause exists to charge the petitioners
with false designation of origin. The fact that the evidence did not come from Lo, but had
been given by the petitioners, is of no significance.
The argument that the words "Made in Portugal" and "Original Portugal" refer to the origin
of the design and not to the origin of the goods does not negate the finding of probable
cause; at the same time, it is an argument that the petitioners are not barred by this
Resolution from raising as a defense during the hearing of the case.
WHEREFORE , premises considered, we hereby DENY the motion for reconsideration for
lack of merit.
SO ORDERED .
Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
Footnotes

1. Rollo, pp. 453-463.
2. Id. at 451-452.
3. Id. at 46-60.
4. Id. at 63-64.
5. Id. at 256-263.
6. Sections 169.1 and 170 of RA 8293 read:
Section 169. False Designations of Origin; False Description or Representation. — 169.1.

Any person who, on or in connection with any goods or services, or any container for
goods, uses in commerce any word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or misleading description of fact, or
false or misleading representation of fact, which:
(a) Is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation,

connection, or association of such person with another person, or as to the origin,
sponsorship, or approval of his or her goods, services, or commercial activities by
another person; or
(b) In commercial advertising or promotion, misrepresents the nature, characteristics,
qualities, or geographic origin of his or her or another person's goods, services, or
commercial activities, shall be liable to a civil action for damages and injunction
provided in Sections 156 and 157 of this Act by any person who believes that he or she
is or is likely to be damaged by such act.
xxx xxx xxx

Section 170. Penalties. — Independent of the civil and administrative sanctions imposed
by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine
the acts mentioned in Section 155, Section 168 and Subsection 169.1. (Arts. 188 and
189, Revised Penal Code)
7. Rollo, p. 47.
8. Id. at 47-48.
9. Id. at 199.
10. Id. at 228.

THIRD DIVISION
[G.R. No. 188526. November 11, 2013.]
CENTURY CHINESE MEDICINE CO., MING SENG CHINESE

DRUGSTORE, XIANG JIAN CHINESE DRUG STORE, TEK SAN
CHINESE DRUG STORE, SIM SIM CHINESE DRUG STORE, BAN
SHIONG TAY CHINESE DRUG STORE and/or WILCENDO TAN
MENDEZ, SHUANG YING CHINESE DRUGSTORE, and BACLARAN
CHINESE DRUG STORE , petitioners, vs . PEOPLE OF THE PHILIPPINES
and LING NA LAU , respondents.
DECISION
PERALTA , J : p
Before us is a petition for review on certiorari which seeks to reverse and set aside the
Decision 1 dated March 31, 2009 of the Court of Appeals in CA-G.R. CV No. 88952 and the
Resolution 2 dated July 2, 2009, which denied reconsideration thereof. The CA reversed the
Order 3 dated September 25, 2006 of the Regional Trial Court (RTC), Branch 143, Makati
City, quashing Search Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-
042 and 05-043, and the Order 4 dated March 7, 2007 denying reconsideration thereof.
The antecedent facts are as follows:
Respondent Ling Na Lau, doing business under the name and style Worldwide Pharmacy, 5
is the sole distributor and registered trademark owner of TOP GEL T.G. & DEVICE OF A
LEAF papaya whitening soap as shown by Certi cate of Registration 4-2000-009881
issued to her by the Intellectual Property Of ce (IPO) for a period of ten years from August
24, 2003. 6 On November 7, 2005, her representative, Ping Na Lau, (Ping) wrote a letter 7
addressed to National Bureau of Investigation (NBI) Director Reynaldo Wycoco, through
Atty. Jose Justo Yap and Agent Joseph G. Furing (Agent Furing), requesting assistance for
an investigation on several drugstores which were selling counterfeit whitening papaya
soaps bearing the general appearance of their products. IaDcTC
Agent Furing was assigned to the case and he executed an af davit 8 stating that: he
conducted his own investigation, and on November 9 and 10, 2005, he, together with
Junayd Esmael (Esmael), were able to buy whitening soaps bearing the trademark "TOP-
GEL", "T.G." & "DEVICE OF A LEAF" with corresponding receipts from a list of drugstores
which included herein petitioners Century Chinese Medicine Co., Min Seng Chinese
Drugstore, Xiang Jiang Chinese Drug Store, Tek San Chinese Drug Store, Sim Sim Chinese
Drug Store, Ban Shiong Tay Drugstore, Shuang Ying Chinese Drugstore, and Baclaran
Chinese Drug Store; while conducting the investigation and test buys, he was able to
con rm Ping's complaint to be true as he personally saw commercial quantities of
whitening soap bearing the said trademarks being displayed and offered for sale at the
said drugstores; he and Esmael took the purchased items to the NBI, and Ping, as the
authorized representative and expert of Worldwide Pharmacy in determining counterfeit
and unauthorized reproductions of its products, personally examined the purchased
samples, and issued a Certification 9 dated November 18, 2005 wherein he con rmed that,
indeed, the whitening soaps bearing the trademarks "TOP-GEL", "T.G." & "DEVICE OF A
LEAF" from the subject drugstores were counterfeit.
Esmael also executed an af davit 1 0 corroborating Agent Furing's statement. Pings
af davit 1 1 stated that upon his personal examination of the whitening soaps purchased
from petitioners bearing the subject trademark, he found that the whitening soaps were
different from the genuine quality of their original whitening soaps with the trademarks
"TOP-GEL", "T.G." & "DEVICE OF A LEAF" and certified that they were all counterfeit.
On November 21, 2005, Agent Furing applied for the issuance of search warrants before
the Regional Trial Court (RTC), Branch 143, Makati City, against petitioners and other
establishments for violations of Sections 168 and 155, both in relation to Section 170 of
Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines. Section 168, in relation to Section 170, penalizes unfair competition; while
Section 155, in relation to Section 170, punishes trademark infringement. HAEDIS
On November 23, 2005, after conducting searching questions upon Agent Furing and his
witnesses, the RTC granted the applications and issued Search Warrants Nos. 05-030, 05-
033, and 05-038 for unfair competition and Search Warrants Nos. 05-022, 05-023, 05-025,
05-042 and 05-043 for trademark infringement against petitioners.
On December 5, 2005, Agent Furing filed his Consolidated Return of Search Warrants. 1 2
On December 8, 2005, petitioners collectively led their Motion to Quash 1 3 the Search
Warrants contending that their issuances violated the rule against forum shopping; that
Benjamin Yu (Yu) is the sole owner and distributor of the product known as "TOP-GEL"; and
there was a prejudicial question posed in Civil Case No. 05-54747 entitled Zenna Chemical
Industry v. Ling Na Lau, et al. , pending in Branch 93 of the RTC of Quezon City, which is a
case led by Yu against respondent for damages due to infringement of
trademark/tradename, unfair competition with prayer for the immediate issuance of a
temporary restraining order and/or preliminary prohibitory injunction.
On January 9, 2006, respondent led her Comment/Opposition 1 4 thereto arguing the non-
existence of forum shopping; that Yu is not a party-respondent in these cases and the
pendency of the civil case led by him is immaterial and irrelevant; and that Yu cannot be
considered the sole owner and distributor of "TOP GEL T.G. & DEVICE OF A LEAF." The
motion was then submitted for resolution in an Order dated January 30, 2006. DAaEIc
During the pendency of the case, respondent, on April 20, 2006, led a Submission 1 5 in
relation to the Motion to Quash attaching an Order 1 6 dated March 21, 2006 of the IPO in
IPV Case No. 10-2005-00001 led by respondent against Yu, doing business under the
name and style of MCA Manufacturing and Heidi S. Cua, proprietor of South Ocean Chinese
Drug Stores for trademark infringement and/or unfair competition and damages with
prayer for preliminary injunction. The Order approved therein the parties' Joint Motion to
Approve Compromise Agreement filed on March 8, 2006. We quote in its entirety the Order
as follows:
The Compromise Agreement between the herein complainant and respondents
provides as follows:
1. Respondents acknowledge the exclusive right of Complainant over
the trademark TOP GEL T.G. & DEVICE OF A LEAF for use on papaya
whitening soap as registered under Registration No. 4-2000-009881 issued
on August 24, 2003.
2. Respondents acknowledge the appointment by Zenna Chemical
Industry Co., Ltd. of Complainant as the exclusive Philippine distributor of
its products under the tradename and trademark TOP GEL MCA & MCA
DEVICE (A SQUARE DEVICE CONSISTING OF A STYLIZED
REPRESENTATION OF A LETTER "M" ISSUED OVER THE LETTER "CA") as
registered under Registration No. 4-1996-109957 issued on November 17,
2000, as well as the assignment by Zenna Chemical Industry Co., Ltd. to
Complainant of said mark for use on papaya whitening soap. cSEAHa
3. Respondents admit having used the tradename and trademark

aforesaid but after having realized that Complainant is the legitimate
assignee of TOP GEL MCA & MCA DEVICE and the registered owner of TOP
GEL T.G. & DEVICE OF A LEAF, now undertake to voluntarily cease and
desist from using the aforesaid tradename and trademark and further
undertake not to manufacture, sell, distribute, and otherwise compete with
Complainant, now and at anytime in the future, any papaya whitening
soap using or bearing a mark or name identical or confusingly similar to, or
constituting a colorable imitation of, the tradename and trademark TOP
GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF as
registered and described above.
4. Respondents further undertake to withdraw and/or dismiss their
counterclaim and petition to cancel and/or revoke Registration No. 4-2000-
009881 issued to Complainant. Respondents also further undertake to pull
out within 45 days from approval of the Compromise Agreement all their
products bearing a mark or name identical or confusingly similar to, or
constituting a colorable imitation of, the tradename and trademark TOP
GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF, from
the market nationwide. aEAIDH
5. Respondents nally agree and undertake to pay Complainant

liquidated damages in the amount of FIVE HUNDRED THOUSAND
(Php500,000.00) PESOS for every breach or violation of any of the
foregoing undertakings which complainant may enforce by securing a writ
of execution from this Office, under this case.
6. Complainant, on the other hand, agrees to waive all her claim for
damages against Respondents as alleged in her complaint led in the
Intellectual Property Office only.
7. The Parties hereby agree to submit this Compromise Agreement for

Approval of this Of ce and pray for issuance of a decision on the basis
thereof.
Finding the Compromise Agreement to have been duly executed and signed by
the parties and/or their representatives/counsels and the terms and conditions
thereof to be in conformity with the law, morals, good customs, public order and
public policy, the same is hereby APPROVED . Accordingly, the above-entitled
case is DISMISSED as all issues raised concerning herein parties have been
rendered MOOT AND ACADEMIC .
SO ORDERED. 1 7 CAHaST
On September 25, 2006, the RTC issued its Order 1 8 sustaining the Motion to Quash the
Search Warrants, the dispositive portion of which reads as follows:
WHEREFORE, nding that the issuance of the questioned search warrants were
not supported by probable cause, the Motion to Quash is GRANTED. Search
warrants nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-043 are
ordered lifted and recalled.
The NBI Of cers who effected the search warrants are hereby ordered to return
the seized items to herein respondents within ten (10) days from receipt of this
Order.
So Ordered. 1 9
In quashing the search warrants, the RTC applied the Rules on Search and Seizure for Civil
Action in Infringement of Intellectual Property Rights. 2 0 It found the existence of a
prejudicial question which was pending before Branch 93 of RTC Quezon City, docketed as
Civil Case No. 05-54747, on the determination as to who between respondent and Yu is the
rightful holder of the intellectual property right over the trademark TOP GEL T.G. & DEVICE
OF A LEAF; and there was also a case for trademark infringement and/or unfair
competition led by respondent against Yu before the IPO which was pending at the time
of the application for the search warrants. It is clear, therefore, that at the time of the ling
of the application for the search warrants, there is yet no determination of the alleged right
of respondent over the subject trademark/tradename. Also, the RTC found that petitioners
relied heavily on Yu's representation that he is the sole owner/distributor of the Top Gel
whitening soap, as the latter even presented Registration No. 4-1996-109957 from the IPO
for a term of 20 years from November 17, 2000 covering the same product. There too was
the notarized certification from Zenna Chemical Industry of Taiwan, owner of Top Gel MCA,
with the caveat that the sale, production or representation of any imitated products under
its trademark and tradename shall be dealt with appropriate legal action. SaTAED
The RTC further said that in the determination of probable cause, the court must
necessarily resolve whether or not an offense exists to justify the issuance of a search
warrant or the quashal of the one already issued. In this case, respondent failed to prove
the existence of probable cause, which warranted the quashal of the questioned search
warrants.
On November 13, 2006, respondent led an Urgent Motion to Hold in Abeyance the
Release of Seized Evidence. 2 1
Respondent led a motion for reconsideration, which the RTC denied in its Order 22 dated
March 7, 2007.
Respondent then led her appeal with the CA. After respondent led her appellant's brief
and petitioners their appellee's brief, the case was submitted for decision.
On March 31, 2009, the CA rendered its assailed Decision, the dispositive portion of which
reads:
WHEREFORE , in view of the foregoing premises, judgment is hereby rendered by
u s GRANTING the appeal led in this case and SETTING ASIDE the Order
dated March 7, 2007 issued by Branch 143 of the Regional Trial Court of the
National Capital Judicial Region stationed in Makati City in the case involving
Search Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-
043. 2 3 HaAISC
In reversing the RTC's quashal of the search warrants, the CA found that the search
warrants were applied for and issued for violations of Sections 155 and 168, in relation to
Section 170, of the Intellectual Property Code and that the applications for the search
warrants were in anticipation of criminal actions which are to be instituted against
petitioners; thus, Rule 126 of the Rules of Criminal Procedure was applicable. It also ruled
that the basis for the applications for issuance of the search warrants on grounds of
trademarks infringement and unfair competition was the trademark TOP GEL T.G. &
DEVICE OF A LEAF; that respondent was the registered owner of the said trademark, which
gave her the right to enforce and protect her intellectual property rights over it by seeking
assistance from the NBI.
The CA did not agree with the RTC that there existed a prejudicial question, since Civil Case
No. 05-54747 was already dismissed on June 10, 2005, i.e., long before the search
warrants subject of this appeal were applied for; and that Yu's motion for reconsideration
was denied on September 15, 2005 with no appeal having been led thereon as evidenced
by the Certificate of Finality issued by the said court.
Petitioners' motion for reconsideration was denied by the CA in a Resolution dated July 2,
2009. HcACST
Hence, this petition filed by petitioners raising the issue that:

(A) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS
DISCRETION IN REVERSING THE FINDINGS OF THE REGIONAL TRIAL COURT
AND HELD THAT THE LATTER APPLIED THE RULES ON SEARCH AND SEIZURE
IN CIVIL ACTIONS FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
24
(B) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS

DISCRETION WHEN IT BASED ITS RULING ON THE ARGUMENT WHICH WAS
BROUGHT UP FOR THE FIRST TIME IN RESPONDENT LING NA LAU'S
APPELLANT'S BRIEF. 2 5
Petitioners contend that the products seized from their respective stores cannot be the
subject of the search warrants and seizure as those Top Gel products are not fruits of any
crime, infringed product nor intended to be used in any crime; that they are legitimate
distributors who are authorized to sell the same, since those genuine top gel products
bore the original trademark/tradename of TOP GEL MCA, owned and distributed by Yu.
Petitioners also claim that despite the RTC's order to release the seized TOP GEL
products, not one had been returned; that one or two samples from each petitioner's'
drugstore would have suf ced in case there is a need to present them in a criminal
prosecution, and that confiscation of thousands of these products was an overkill.
Petitioners also argue that the issue that the RTC erred in applying the rules on search and
seizure in anticipation of a civil action was never raised in the RTC.
The issue for resolution is whether or not the CA erred in reversing the RTC's quashal of the
assailed search warrants.
We find no merit in the petition. SDEITC
The applications for the issuance of the assailed search warrants were for violations of
Sections 155 and 168, both in relation to Section 170 of Republic Act (RA) No. 8293,
otherwise known as the Intellectual Property Code of the Philippines. Section 155, in
relation to Section 170, punishes trademark infringement; while Section 168, in relation to
Section 170, penalizes unfair competition, to wit:

Sec. 155. Remedies; Infringement. — Any person who shall, without the
155.1Use 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
caITAC
While
Sec. 168. Unfair Competition, Rights, Regulation and Remedies. —
xxx xxx xxx
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 in uence 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;
And
SEC. 170. Penalties. — Independent of the civil and administrative sanctions
imposed by law, a criminal penalty of imprisonment from two (2) years to ve (5)
years and a ne ranging from Fifty thousand pesos (P50,000.00) to Two hundred
thousand pesos (P200,000.00) shall be imposed on any person who is found
guilty of committing any of the acts mentioned in Section 155 [Infringement],
Section 168 [Unfair Competition] and Subsection 169.1 [False Designation of
Origin and False Description or Representation]. aTICAc
Thus, we agree with the CA that A.M. No. 02-1-06-SC, which provides for the Rules on the
Issuance of the Search and Seizure in Civil Actions for Infringement of Intellectual Property
Rights, is not applicable in this case as the search warrants were not applied based
thereon, but in anticipation of criminal actions for violation of intellectual property rights
under RA 8293. It was established that respondent had asked the NBI for assistance to
conduct investigation and search warrant implementation for possible apprehension of
several drugstore owners selling imitation or counterfeit TOP GEL T.G. & DEVICE OF A
LEAF papaya whitening soap. Also, in his af davit to support his application for the
issuance of the search warrants, NBI Agent Furing stated that "the items to be seized will
be used as relevant evidence in the criminal actions that are likely to be instituted." Hence,
Rule 126 of the Rules of Criminal Procedure applies.
Rule 126 of the Revised Rules of Court, which governs the issuance of the assailed Search
Warrants, provides, to wit:
SEC. 3. Personal property to be seized. — A search warrant may be issued for
the search and seizure of personal property:
(a) Subject of the offense;
(b) Stolen or embezzled and other proceeds or fruits of the

offense; or
(c) Used or intended to be used as the means of committing
an offense. ASHaDT
SEC. 4. Requisites for issuing search warrant. — A search warrant shall not
issue except upon probable cause in connection with one speci c offense to be
determined personally by the judge after examination under oath or affirmation of
the complainant and the witnesses he may produce, and particularly describing
the place to be searched and the things to be seized which may be anywhere in
the Philippines.
SEC. 5. Examination of complainant; record. — The judge must, before
issuing the warrant, personally examine in the form of searching questions and
answers, in writing and under oath, the complainant and the witnesses he may
produce on facts personally known to them and attach to the record their sworn
statements together with the affidavits submitted.
A core requisite before a warrant shall validly issue is the existence of a probable cause,
meaning "the existence of such facts and circumstances which would lead a reasonably
discreet and prudent man to believe that an offense has been committed and that the
objects sought in connection with the offense are in the place to be searched." 2 6 And
when the law speaks of facts, the reference is to facts, data or information personally
known to the applicant and the witnesses he may present. Absent the element of personal
knowledge by the applicant or his witnesses of the facts upon which the issuance of a
search warrant may be justi ed, the warrant is deemed not based on probable cause and
is a nullity, its issuance being, in legal contemplation, arbitrary. 2 7 The determination of
probable cause does not call for the application of rules and standards of proof that a
judgment of conviction requires after trial on the merits. 2 8 As implied by the words
themselves, "probable cause" is concerned with probability, not absolute or even moral
certainty. The prosecution need not present at this stage proof beyond reasonable doubt.
The standards of judgment are those of a reasonably prudent man, 2 9 not the exacting
calibrations of a judge after a full-blown trial. 3 0 EITcaH
The RTC quashed the search warrants, saying that (1) there exists a prejudicial question
pending before Branch 93 of the RTC of Quezon City, docketed as Civil Case No. 05-54747,
i.e., the determination as to who between respondent and Yu is the rightful holder of the
intellectual property right over the trademark TOP GEL T.G. & DEVICE OF A LEAF; and there
was also a case for trademark infringement and/or unfair competition led by respondent
against Yu pending before the IPO, docketed as IPV Case No. 10-2005-00001; and (2) Yu's
representation that he is the sole distributor of the Top Gel whitening soap, as the latter
even presented Registration No. 4-1996-109957 issued by the IPO to Zenna Chemical
Industry as the registered owner of the trademark TOP GEL MCA & DEVICE MCA for a
term of 20 years from November 17, 2000 covering the same product.
We do not agree. We af rm the CA's reversal of the RTC Order quashing the search
warrants.
The af davits of NBI Agent Furing and his witnesses, Esmael and Ling, clearly showed that
they are seeking protection for the trademark "TOP GEL T.G. and DEVICE OF A LEAF"
registered to respondent under Certi cate of Registration 4-2000-009881 issued by the
IPO on August 24, 2003, and no other. While petitioners claim that the product they are
distributing was owned by Yu with the trademark TOP GEL MCA and MCA DEVISE under
Certi cate of Registration 4-1996-109957, it was different from the trademark TOP GEL
T.G. and DEVICE OF A LEAF subject of the application. We agree with the CA's nding in
this wise:
. . . It bears stressing that the basis for the applications for issuances of the
search warrants on grounds of trademark infringement and unfair competition
is the trademark TOP GEL T.G. & DEVICE OF A LEAF. Private complainant-
appellant was issued a Certi cate of Registration No. 4-2000-009881 of said
trademark on August 24, 2003 by the Intellectual Property Of ce, and is thus
considered the lawful holder of the said trademark. Being the registrant and the
holder of the same, private complainant-appellant had the authority to enforce
and protect her intellectual property rights over it. This prompted her to request
for assistance from the agents of the NBI, who thereafter conducted a series of
investigation, test buys and inspection regarding the alleged trademark
infringement by herein respondents-appellees. Subsequently, Ping Na Lau,
private complainant-appellant's representative, issued a certi cation with the
finding that the examined goods were counterfeit. This prompted the NBI agents
to apply for the issuances of search warrants against the respondents-
appellees. Said applications for the search warrants were granted after by
Judge Laguilles after examining under oath the applicant Agent Furing of the
NBI and his witnesses Ping Na Lau and Junayd R. Ismael. TAHCEc
Based on the foregoing, it is clear that the requisites for the issuance of the
search warrants had been complied with and that there is probable cause to
believe that an offense had been committed and that the objects sought in
connection with the offense were in the places to be searched. The offense
pertains to the alleged violations committed by respondents-appellees upon the
intellectual property rights of herein private complainant-appellant, as holder of
the trademark TOP GEL T.G. & DEVICE OF A LEAF under Certi cate of
Registration No. 4-2000-009881, issued on August 24, 2003 by the Intellectual
Property Office. 3 1
Notably, at the time the applications for the issuance of the search warrants were led on
November 21, 2005, as the CA correctly found, Civil Case No. Q-05-54747, which the RTC
found to be where a prejudicial question was raised, was already dismissed on June 10,
2005, 3 2 because of the pendency of a case involving the same issues and parties before
the IPO. Yu's motion for reconsideration was denied in an Order 3 3 dated September 15,
2005. In fact, a Certificate of Finality 3 4 was issued by the RTC on January 4, 2007.
Moreover, the IPO case for trademark infringement and unfair competition and damages
with prayer for preliminary injunction led by respondent against Yu and Heidi Cua,
docketed as IPV Case No. 10-2005-00001, would not also be a basis for quashing the
warrants. In fact, prior to the applications for the issuance of the assailed search warrants
on November 21, 2005, the IPO had issued an Order 3 5 dated October 20, 2005 granting a
writ of preliminary injunction against Yu and Cua, the dispositive portion of which reads: cESDCa
WHEREFORE, the WRIT OF PRELIMINARY INJUNCTION is hereby issued

against Respondent, Benjamin Yu, doing business under the name and style of
MCA Manufacturing and Heidi S. Cua, Proprietor of South Ocean Chinese Drug
Store, and their agents, representatives, dealers and distributors and all persons
acting in their behalf, to cease and desist using the trademark "TOP GEL T.G. &
DEVICE OF A LEAF" or any colorable imitation thereof on Papaya whitening soaps
they manufacture, sell, and/or offer for sale, and otherwise, from packing their
Papaya Whitening Soaps in boxes with the same general appearance as those of
complainant's boxes within a period of NINETY (90) DAYS , effective upon the
receipt of respondent of the copy of the COMPLIANCE led with this Of ce by the
Complainant stating that it has posted a CASH BOND in the amount of ONE
HUNDRED THOUSAND PESOS (Php100,000.00) together with the
corresponding Of cial Receipt Number and date thereof. Consequently,
complainant is directed to inform this Of ce of actual date of receipt by
Respondent of the aforementioned COMPLIANCE. 3 6 DcIHSa
To inform the public of the issuance of the writ of preliminary injunction, respondent's
counsel had the dispositive portion of the Order published in The Philippine Star
newspaper on October 30, 2005. 3 7 Thus, it was clearly stated that Yu, doing business
under the name and style of MCA Manufacturing, his agents, representatives, dealers and
distributors and all persons acting in his behalf, were to cease and desist from using the
trademark "TOP GEL & DEVICE OF A LEAF" or any colorable imitation thereof on Papaya
Whitening soaps they manufacture, sell and/or offer for sale. Petitioners, who admitted
having derived their TOP GEL products from Yu, are, therefore, noti ed of such injunction
and were enjoined from selling the same.
Notwithstanding, at the time of the application of the search warrants on November 21,
2005, and while the injunction was in effect, petitioners were still selling the alleged
counterfeit products bearing the trademark TOP GEL T.G. & DEVICE OF A LEAF. There
exists a probable cause for violation of respondent's intellectual property rights, which
entitles her as the registered owner of the trademark TOP GEL and DEVICE OF A LEAF to
be protected by the issuance of the search warrants.
More importantly, during the pendency of petitioners' motion to quash in the RTC,
respondent submitted the Order dated March 8, 2006 of the IPO in IPV Case No. 10-2005-
00001, where the writ of preliminary injunction was earlier issued, approving the
compromise agreement entered into by respondent with Yu and Cua where it was stated,
among others, that:
1. Respondents acknowledge the exclusive right of Complainant over the
trademark TOP GEL T.G. & DEVICE OF A LEAF for use on papaya whitening
soap as registered under Registration No. 4-2000-009881 issued on August 24,
2003.
2. Respondents acknowledge the appointment by Zenna Chemical Industry

Co., Ltd. of Complainant as the exclusive Philippine distributor of its products
under the tradename and trademark TOP GEL MCA & MCA DEVICE (A SQUARE
DEVICE CONSISTING OF A STYLIZED REPRESENTATION OF A LETTER "M"
OVER THE LETTER "CA") as registered under Registration No. 4-1996-109957
issued on November 17, 2000, as well as the assignment by Zenna Chemical
Industry Co., Ltd. to Complainant of said mark for use on papaya whitening
soap. STIcaE
3. Respondents admit having used the tradename and trademark aforesaid,

but after having realized that Complainant is the legitimate assignee of TOP
GEL MCA & MCA DEVICE and the registered owner of TOP GEL T.G. & DEVICE
OF A LEAF, now undertake to voluntarily cease and desist from using the
aforesaid tradename and trademark, and further undertake not to manufacture,
sell and distribute and otherwise compete with complainant, now and at
anytime in the future, any papaya whitening soap using or bearing a mark or
name identical or confusingly similar to, or constituting a colorable imitation of
the tradename and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL
T.G. & DEVICE OF A LEAF as registered and described above. 3 8
Hence, it appears that there is no more controversy as to who is the rightful holder of the
trademark TOP GEL T.G. & DEVICE OF A LEAF. Therefore, respondent, as owner of such
registered trademark has the right to the issuance of the search warrants.
Anent petitioners' claim that one or two samples of the Top Gel products from each of
them, instead of con scating thousands of the products, would have suf ced for the
purpose of an anticipated criminal action, citing our ruling in Summerville General
Merchandising Co. v. Court of Appeals, 3 9 is not meritorious. DHCSTa
We do not agree.
The factual milieu of the two cases are different. In Summerville, the object of the violation
of Summerville's intellectual property rights, as assignee of Royal playing cards and Royal
brand playing cards case, was limited to the design of Summerville's Royal plastic
container case which encased and wrapped the Crown brand playing cards. In the
application for the search warrant which the RTC subsequently issued, one of the items to
be seized were the Crown brand playing cards using the copyright plastic and Joker of
Royal brand. Thus, numerous boxes containing Crown playing cards were seized and upon
the RTC's instruction were turned over to Summerville, subject to the condition that the key
to the said warehouse be turned over to the court sheriff. Respondents moved for the
quashal of the search warrant and for the return of the seized properties. The RTC partially
granted the motion by ordering the release of the seized Crown brand playing cards and
the printing machines; thus, only the Royal plastic container cases of the playing cards
were left in the custody of Summerville. The CA sustained the RTC order. On petition with
us, we af rmed the CA. We found therein that the Crown brand playing cards are not the
subject of the offense as they are genuine and the Crown trademark was registered to
therein respondents' names; that it was the design of the plastic container/case that is
alleged to have been utilized by respondents to deceive the public into believing that the
Crown brand playing cards are the same as those manufactured by Summerville. We then
said that assuming that the Crown playing cards could be considered subject of the
offense, a sample or two are more than enough to retain should there have been a need to
examine them along with the plastic container/case; and that there was no need to hold
the hundreds of articles seized. We said so in the context that since what was in dispute
was the design of the Royal plastic cases/containers of playing cards and not the playing
card per se, a small number of Crown brand playing cards would suf ce to examine them
with the Royal plastic cases/containers. And the return of the playing cards would better
serve the purposes of justice and expediency.
However, in this case, the object of the violation of respondent's intellectual property right
is the alleged counterfeit TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap being
sold by petitioners, so there is a need to con scate all these articles to protect
respondent's right as the registered owner of such trademark.
Petitioners next contend that the CA's ruling on the applicability of Rule 126 of the Rules of
Court that the search warrants were issued in anticipation of a criminal action was only
based on respondent's claim which was only brought for the rst time in her appellant's
brief. ADaEIH
We are not persuaded.

We find worth quoting respondent's argument addressing this issue in its Comment, thus:
In the assailed Decision, the Court of Appeals found that the Rule correctly
applicable to the subject search warrants was Rule 126 of the Rules of Court.
Petitioners fault the appellate court for ruling that the Regional Trial Court
incorrectly applied the Rules on Search and Seizure in Civil Actions for
Infringement of Intellectual Property Rights on the basis of an argument that
private respondent brought up for the first time in her Appellant's Brief.
A cursory perusal of the Appellant's Brief shows that the following issues/errors
were raised, that: (1) the Honorable Trial Court erred in holding that the "Rules on
Search and Seizure for Infringement of Intellectual Property Rights" apply to the
search warrants at bar; (2) . . . .
It must be remembered that there was no trial on the merits to speak of in the trial
court, and the matter of the application of the wrong set of Rules only arose in the
Order dated 25th September 2006 which sustained the Motion to Quash. A
thorough examination of the Appellee's Brief led by petitioners
(respondents-appellees in the Court of Appeals) reveals, however, that
petitioners NEVER assailed the rst issue/error on the ground that the
same was raised for the rst time on appeal. It is only now, after the
appellate court rendered a Decision and Resolution unfavorable to
them , that petitioners questioned the alleged procedural error.
Petitioners should now be considered in estoppel to question the same .
40
Indeed, perusing the appellee's (herein petitioners) brief led with the CA, the matter of the
non-applicability of the rules on search and seizure in civil action for infringement of
intellectual property rights was never objected as being raised for the rst time. On the
contrary, petitioners had squarely faced respondent's argument in this wise: IDaCcS
Appellant (herein respondent) contends that the rule (SC Adm. Memo 1-06, No. 02-
1-06, Rule on Search and Seizure in Civil Actions for Infringement of Intellectual
Property Rights) does [not] apply to the search warrants in the [case] at bar, for
the reason that the search warrants themselves reveal that the same were applied
for and issued for violations of "Section 155 in relation to Section 170 of RA
8293" and violations of "Section 168 in relation to Section 170 of RA 8293," and
that a perusal of the records would show that there is no mention of a civil action
or anticipation thereof, upon which the search warrants are applied for.
Appellees (herein petitioners) cannot agree with the contention of the appellant.
Complainant NBI Agent Joseph G. Furing, who applied for the search warrants,
violated the very rule on search and seizure for infringement of Intellectual
Property Rights. The search warrants applied for by the complainants cannot be
considered a criminal action. There was no criminal case yet to speak of when
complainants applied for issuance of the search warrants. There is distinction
here because the search applied for is civil in nature and no criminal case had
been led. The complaint is an afterthought after the respondents-appellees led
their Motion to Quash Search Warrant before the Regional Trial Court of Manila,
Branch 24. The grounds enumerated in the rule must be complied with in order to
protect the constitutional mandate that "no person shall be deprived of life liberty
or property without due process of law nor shall any person be denied the equal
protection of the law." Clearly, the application of the search warrants for violation
of unfair competition and infringement is in the nature of a civil action. 4 1ACaTIc
WHEREFORE , the petition for review is DENIED . The Decision dated March 31, 2009 and
the Resolution dated July 2, 2009 of the Court of Appeals, in CA-G.R. CV No. 88952, are
hereby AFFIRMED .
SO ORDERED .
Velasco, Jr., Abad, Mendoza and Leonen, JJ., concur.
Footnotes
1. Penned by Associate Justice Isaias Dicdican, with Associate Justices Bienvenido L.

Reyes (now a member of this Court) and Marlene Gonzales-Sison, concurring; rollo, pp.
46-62.
2. Id. at 9-14.
3. Per Judge Zenaida T. Galapate-Laguilles; rollo, pp. 66-71.
4. Records, Vol. III, pp. 732-736.
5. Records, Vol. II, p. 275.

6. Records, Vol. I, pp. 97-98.
7. Id. at 75.
8. Id. at 73-74.
9. Records, Vol. I, pp. 83-84.
10. Id. at 96.

11. Id. at 88-89.
12. Id. at 172-175.
13. Records, Vol. II, pp. 239-259.
14. Id. at 611-620.
15. Id. at 624-628.
16. Per Bureau of Legal Affairs Director Estrellita Beltran-Abelardo; id. at 629-632.
17. Id. at 631-632. (Emphasis in the original)

18. Rollo, pp. 66-71.
19. Id. at 71.
20. SECTION 6. Grounds for the issuance of the order. — Before the Order can be issued,
the evidence proffered by the applicant and personally evaluated by the judge must
show that:
(a) he is the right holder or his duly authorized representative;
(b) there is probable cause to believe that the applicant's right is being infringed or that
such infringement is imminent and there is a prima facie case for nal relief against the
alleged infringing defendant or expected adverse party;
(c) damage, potential or actual, likely to be caused to the applicant is irreparable;

(d) there is demonstrable risk of evidence that the alleged infringing defendant or
expected adverse party may destroy, hide or remove the documents or articles before
any application inter partes can be made; and
(e) the documents and articles to be seized constitute evidence of the alleged
infringing defendant's or expected adverse party's infringing activity or that they infringe
upon the intellectual property right of the applicant or that they are used or intended to
be used as means of infringing the applicant's intellectual property right.
21. Records, Vol. III, pp. 639-644.

22. Id. at 733-737.
23. Rollo, p. 62. (Emphasis in the original)
24. Id. at 32.
25. Id. at 39.
26. Sony Music Entertainment (Phils.), Inc. v. Español, 493 Phil. 507, 517 (2005), citing
People v. Aruta, G.R. No. 120915, April 3, 1998, 288 SCRA 626.
27. Id., citing Columbia Pictures, Inc. v. Court of Appeals , 329 Phil. 875, 918 (1996), citing
79 CJS, Search and Seizures, Section 74, 862.
28. Microsoft Corporation v. Maxicorp, Inc., 481 Phil. 550, 566 (2004).
29. Id. at 566-567, citing People v. Sy Juco, 64 Phil. 667 (1937).
30. Id. at 567.
31. Rollo, pp. 60-61.
32. Records, Vol. III, pp. 670-671; per Judge Apolinario D. Bruselas, Jr.
33. Id. at 672; per pairing Judge Samuel H. Gaerlan.

34. Id. at 731; per Atty. Cecilia L. Cuevas-Torrijos, Clerk of Court of RTC, Branch 93, Quezon
City.
35. Id. at 674-681; per Hearing Of cer Adoracion R. Umipig, Bureau of Legal Affairs,
concurred in by Director Estrellita Beltran-Abelardo.
36. Id. at 681.
37. Id. at 682.
38. Records, Vol. II, pp. 631-632.
39. G.R. No. 158767, June 26, 2007, 525 SCRA 602.
40. Rollo, p. 154.

41. CA rollo, pp. 116-117.

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LIP

(Law on Intellectual Property)

[G.R. No. 194307. November 20, 2013.]

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly

However, registration proceedings of the subject applications were suspended in view of

The Ruling of the BLA

Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter

It must be emphasized that registration of a trademark, by itself, is not a mode of

* Designated Additional Member per Raffle dated October 17, 2012.

1. Rollo, pp. 11-74.

33. See id. at 378-381.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

[G.R. No. 169974. April 20, 2010.]

SUPERIOR COMMERCIAL ENTERPRISES, INC. , petitioner, vs . KUNNAN

Wh erea s, KUNNAN intends to acquire the ownership of KENNEX

In its defense, KUNNAN disputed SUPERIOR's claim of ownership and maintained

Now, therefore, the parties hereto agree as follows:

2. The Superior, in accordance with this Agreement, shall assign the

4. If there is a necessity, the Superior will be appointed, for the protection of

6. Without KUNNAN's permission, the Superior cannot procure other goods

Trademark Application Number Class

2. Superior shall acknowledge that KUNNAN is still the real and

3. Superior agrees that it will return back the abovementioned

4. Superior agrees that the abovementioned trademarks when requested by

5. Superior agrees that after the assignment of the abovementioned

Prior to and during the pendency of the infringement and unfair

WHEREFORE , there being sufficient evidence to prove that the Petitioner-Opposer

On February 4, 2005, KUNNAN again led another Manifestation requesting that

The CA stressed that SUPERIOR's possession of the aforementioned Certi cates

CD Technologies Asia, Inc. 2018 cdasiaonline.com

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN REVERSING

THE COURT'S RULING

WHEREFORE, the foregoing considered, the petition is DISMISSED.

The CA decided that the registration of the "KENNEX" and "PRO

Thus, we have previously held that the cancellation of registration of a trademark

On the Issue of Unfair Competition

xxx xxx xxx

CD Technologies Asia, Inc. 2018 cdasiaonline.com

xxx xxx xxx

CD Technologies Asia, Inc. 2018 cdasiaonline.com

1.Under Rule 45 of the RULES OF COURT.

3.CA rollo, pp. 11-22.

5.SUPERIOR is a domestic corporation duly organized under Philippine laws; id at 34.

e.) Defendants should pay the cost of the suit.

27.Supra note 23.

30.The dispositive portion of which states:

SO ORDERED. Rollo, p. 49.

34.The provision states:

CD Technologies Asia, Inc. 2018 cdasiaonline.com

xxx xxx xxx

See also Gutierrez v. Court of Appeals, 193 SCRA 437 (1991).

43.Mata v. Court of Appeals, 376 Phil. 525 (1999).

45.Supra note 31.

46.Original Records, pp. 5-8.

50.G.R. No. 143993, August 18, 2004, 437 SCRA 10.

CD Technologies Asia, Inc. 2018 cdasiaonline.com

[G.R. No. 185830. June 5, 2013.]

ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

A trade name shall be protected in all the countries of the Union