PHILIP MORRIS, et. Al vs.

CA and FORTUNE TOBACCO CORP

G.R. No. 91332. July 16, 1993
Facts:
petitioner's contention:
Philip Morris and the 2 other companies as subsidiaries of Philip Morris. The last 2 are suing
on isolated transactions
As registered owners of "MARK VII", "MARK TEN", and "LARK" per certificates of registration
issued by the Philippine Patent Office on April 26, 1973, May 28, 1964, and March 25, 1964,
plaintiffs-petitioners asserted that defendant Fortune Tobacco Corporation has no right to
manufacture and sell cigarettes bearing the allegedly identical or confusingly similar
trademark "MARK" in contravention of Section 22 of the Trademark Law, and should,
therefore, be precluded during the pendency of the case from performing the acts complained
of via a preliminary injunction
defendant's contention:
Fortune Tobacco Corporation admitted
petitioners' certificates of registration with the Philippine Patent Office subject to the affirmative and
special defense on misjoinder of party plaintiffs
it claims that the word “mark” is a common word which cannot be exclusively appropriated
Ratio Decidendi:
there is no proof whatsoever that any of plaintiffs' products which they seek to protect from
any adverse effect of the trademark applied for by defendant, is in actual use and available
for commercial purposes anywhere in the Philippines. Secondly, as shown by plaintiffs' own
evidence furnished by no less than the chief of Trademarks Division of the Philippine Patent
Office, Atty. Enrique Madarang, the abandonment of an application is of no moment, for the
same can always be refiled. He said there is no specific provision in the rules prohibiting such
refiling
The petitioner will not be prejudiced nor stand to suffer irreparably as a consequence of the
lifting of the preliminary injunction considering that they are not actually engaged in the
manufacture of the cigarettes with the trademark in question and the filing of the counterbond
will amply answer for such damages.
a foreign corporation not doing business in the Philippines may have the right to sue before
Philippine Courts, but existing adjective axioms require that qualifying circumstances
necessary for the assertion of such right should first be affirmatively pleaded
it is not sufficient for a foreign corporation suing under Section 21-A to simply allege its alien
origin. Rather, it must additionally allege its personality to sue. Relative to this condition
precedent, it may be observed that petitioners were not remiss in averring their personality to
lodge a complaint for infringement especially so when they asserted that the main action for
infringement is anchored on an isolated transaction
Given these confluence of existing laws amidst the cases involving trademarks, there can be
no disagreement to the guiding principle in commercial law that foreign corporations not
engaged in business in the Philippines may maintain a cause of action for infringement
primarily because of Section 21-A of the Trademark Law when the legal standing to sue is
alleged, which petitioners have done in the case at hand.
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
A fundamental principle of Philippine Trademark Law is that actual use in commerce in the
Philippines is a pre- requisite to the acquisition of ownership over a trademark or a
tradename.
In other words, petitioners may have the capacity to sue for infringement irrespective of lack
of business activity in the Philippines on account of Section 21-A of the Trademark Law but
the question of whether they have an exclusive right over their symbol as to justify issuance
of the controversial writ will depend on actual use of their trademarks in the Philippines in line
with Sections 2 and 2-A of the same law.
 It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to
do business in the Philippines files a complaint for infringement, the entity need not be
actually using its trademark in commerce in the Philippines. Such a foreign corporation may
have the personality to file a suit for infringement but it may not necessarily be entitled to
protection due to absence of actual use of the emblem in the
local market.
In view of the explicit representation of
petitioners in the complaint that they are not engaged in business in the Philippines, it inevitably
follows that no conceivable damage can be suffered by them not to mention the foremost
consideration heretofore discussed on the absence of their "right" to be protected.
Petition dismissed

GENERAL GARMENTS CORP vs. DIRECTOR OF PATENTS and PURITAN SPORTSWEAR G.R.
No. L-24295. September 30, 1971
Facts:
GGC is the owner of the trademark
"Puritan," under Registration No. 10059 issued on November 15, 1962 by the Philippine Patent
Office, for assorted men's wear, such as sweaters, shirts jackets, undershirts and briefs.
On March 9, 1964 the Puritan Sportswear Corporation, organized and existing in and under the laws
of the state of Pennsylvania, U.S.A., filed a petition with the Philippine Patent Office for the
cancellation of the trademark "Puritan" registered in the name of General Garments Corporation,

central issue: WON the foreign company not doing business nor registered in the Philippines has the
standing to sue a Philippine domiciled business entity for infringement before Philippine courts.
Answer: affirmative

RatioDecidendi:

It should be postulated at this point that respondent is not suing in our courts "for the recovery
of any debt, claim or demand," for which a license to transact business in the Philippines is
required by Section 69 of the Corporation Law,
"A foreign corporation which has never done . . . business in the Philippine Islands and which
is unlicensed and unregistered to do business here, but is widely and favorably known in the
Islands through the use therein of its products bearing its corporate and trade name has a
legal right to maintain an action in the Islands.
"The purpose of such a suit is to protect its reputation, corporate name and goodwill which
has been established through the natural development of its trade for a long period of years,
in the doing of which it does not seek to enforce any legal or contract rights arising from, or
growing out of any business which it has transacted in the Philippine Islands.
"The right to the use of the corporate or trade name is a property right, a right in rem, which it
may assert and protect in any of the courts of the world — even in jurisdictions where it does
not transact business — just the same as it may protect its tangible property, real or personal
against trespass or conversion."
Republic Act No. 638, inserting Section 21-A in the Trademark Law, allows a foreign
corporation or juristic person to bring an action in Philippine courts for infringement of a mark
or trade-name, 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 fifty-nine, as amended, otherwise known as the Corporation Law, at
the time it brings complaint."
In any event, respondent in the present case is not suing for infringement or unfair
competition under Section 21-A, but for cancellation under Section 17, on one of the grounds
enumerated in Section 4.
◦ The first kind of action, it may be stated, is cognizable by the Courts of First Instance (Sec. 27); the
second partakes of an administrative proceeding before the Patent Office (Sec. 18, in relation to Sec.
8).
◦ while a suit under Section 21-A requires that the mark or tradename alleged to have been infringed
has been "registered or assigned" to the suing foreign corporation, a suit for cancellation of the
registration of a mark or tradename under Section 17 has no such requirement.

Provisions:
"Section 17(c) and Section 4(d) of the Trade Law provide respectively as follows:
"SEC. 17. 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:
Xxxx xxx xxx
(c) That the registration was obtained fraudulently or contrary to the provisions of section four,
Chapter II thereof; . . ."
"SEC. 4. Registration 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
(d)
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 goods, business or services of the applicant, to cause confusion or mistake
or to deceive purchasers; or . . ."

EMERALD GARMENT MFTG. CORP vs. CA, BOP and H.D. LEE COMPANY, INC
G.R. No. 100098. December 29, 1995
Facts:
On 18 September 1981 H.D. Lee Co., Inc., (Delaware, U.S.A.) filed with the 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
Emerald Garment (Philippines)
H.D. Lee Co. invokes 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."
the Director of Patents rendered a decision granting H.D. Lee's petition for cancellation and
opposition to registration.
using the test of dominancy, Director of Patents 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."
CA affirmed the Director of Patents' decision
Emerald contends that H.D. Lee 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
Emerald 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 filed a petition for cancellation of petitioner's certificate of registration for the said
trademark.
Issue/ Answer:
WON H. D. Lee's prior registration is enough to confer upon it the exclusive ownership of the
trademark Lee in opposition to Emerald's / negative

Ratio Decidendi:

•
the reckoning point of ownership of Emerald is 27 October 1980, 20 the date the certificate of
registration SR No. 5054 was published in the Official Gazette and issued to petitioner and not May 1,
1975.
It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered "officially" 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.
the essential element of infringement is colorable imitation. This term has been defined 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 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.
2 tests:
◦
◦
test of dominancy: 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 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 buyingpublic. • ◦ Holistic test: mandates that the entirety
of the marks in question must be considered in determining confusing similarity

◦ 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.
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
◦ the products involved in the case at bar are, in the main, various kinds of jeans.
◦ the average Filipino consumer generally buys his jeans by brand.
◦ the ordinary purchaser is not the "completely unwary consumer" but is
the "ordinarily intelligent buyer" considering the type of product involved.
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive
ownership over and singular use of said term.
 private respondent failed to prove prior actual commercial use of its "LEE" trademark in the
Philippines before filing its application for registration with the BPTTT and hence, has not
acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark
The Trademark Law is very clear. It requires actual commercial use of the mark prior to its
registration. There is no dispute that respondent corporation was the first registrant, yet it
failed to fully substantiate its claim that it used in trade or business in the Philippines the
subject mark; it did not present proof to invest it with exclusive, continuous adoption of the
trademark which should consist among others, of considerable sales since its first use.
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.

Provisions in question:
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 office under this act, equitable principles of laches,
estoppel, and acquiescence, where applicable, may be considered and applied.
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
hereinprovided.
Sec. 4 of R.A. No. 166, particularly paragraph 4(e): CHAPTER II-A. — The Principal Register
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 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

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.

Sec. 20 of the Trademark Law

SEC. 20. Certificate of registration prima facie evidence of validity.

13. Mighty Corporation and La Campana Fabrica De Tabaco, Inc. vs. E. & J. Gallo Winery and The
Andresons Group, Inc. G.R. No. 154342 July 14, 2004

Facts: Respondent Gallo Winery is a foreign corporation not doing business in the Philippines, but
organized under the laws of California, USA. It uses the GALLO and ERNEST & JULIO GALLO wine
trademarks. Andresons has been Gallo Winery’s exclusive wine importer and distributor in the
Philippines. GALLO wine trademark was registered in the Philippine Patent Office on November 16,
1971. Mighty Corporation and La Campana are engaged in the cultivation, manufacture, and sale of
tobacco products which they have been using the GALLO cigarette trademark since 1973. GALLO
cigarette trademark was registered on 1985 in the Philippine Patent Office. Respondents sued
petitioner for trademark and trade name infringement and unfair competition Petitioners alleged that
the cigarettes and wines were totally unrelated products and that Gallo Winery’s GALLO trademarks
only covers wine and does not cover cigarettes, and that the wines and cigarettes were sold through
different channel of trade, that the GALLO cigarettes were low-cost items.

Issue: Whether or not there is infringement and/or unfair competition

Held: No. Petitioners and respondents both use "GALLO" in the labels of their respective cigarette
and wine products. But, as held in many cases, the use of an identical mark does not, by itself, lead
to a legal conclusion that there is trademark infringement. First, there is difference in the features of
the marks used by the petitioners and the respondent: 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 filters. Directly
below the large rooster device is the word GALLO. The rooster device is given prominence in the
GALLO cigarette packs in terms of size and location on the labels. Also, as admitted by respondents
themselves, 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. Directly below or above these sketches is the entire printed name of the founder-
owners, "ERNEST & JULIO GALLO" or just their surname "GALLO," 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." Second, the products are not sold in the same channels
of trade. GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are
patronized by middle-to-high-income earners while GALLO cigarettes appeal only to simple folks like
farmers, fishermen, laborers and other low-income workers. 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. 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. 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. Petitioners are not liable for
trademark infringement or unfair competition because the 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 vmark.

In-N-Out Burger vs Sehwani G.R. No. 179127, December 24, 2008

Facts: On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of
Trademarks of the IPO for “IN-N-OUT” and “IN-N-OUT Burger & Arrow Design.” Petitioner later found
out 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).” By virtue of a licensing agreement, Benita
Frites, Inc. was able to use the registered mark of respondent Sehwani, Incorporated. Petitioner filed
an administrative complaint against respondents for unfair competition and cancellation of trademark
registration. Petitioner averred that it is the owner of the trade name IN-N-OUT. 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.
Petitioner then sent a demand letter directing respondents to cease and desist from claiming
ownership of the mark “IN-N-OUT” and to voluntarily cancel its trademark registration. The
respondents refused to accede to petitioner’s demand, but expressed willingness to surrender the
registration of respondent Sehwani, Incorporated of the “IN N OUT” trademark for a fair and
reasonable consideration. Respondents, on the other hand, asserted that they had been using the
mark “IN N OUT” in the Philippines since 15 October 1982. On 15 November 1991, respondent
Sehwani, Incorporated filed 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 certificate of registration of the said mark was issued
in the name of respondent Sehwani, Incorporated on 17 December 1993

. Issue: Whether respondent Sehwani Incorporated is liable for unfair competition

. Held: Yes. 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 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. The evidence on record
shows that the respondents were not using their registered trademark but that of the petitioner.
Respondent was issued a Certificate 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.

5. LEVI STRAUSS (PHILS.), INC., vs TONY LIM, GR 162311,December 4, 2008

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 tradenames for the
manufacture and sale of various garment products, primarily pants, jackets, and shirts, in the
Philippines. 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, and were first used in
commerce in the Philippines in 1946. Sometime in 1995, petitioner lodged a complaint before the
Inter-Agency Committee on Intellectual Property Rights, alleging that a certain establishment owned
by respondent Tony Lim, doing business under the name Vogue Traders Clothing Company, was
engaged in the manufacture, sale, and distribution of products similar to those of petitioner and under
the brand name “LIVE’S,” and was granted the filing of an information against respondent.
Respondent then filed his own motion for reconsideration of the Bello resolution, the DOJ then
ordered the dismissal of the complaint.. Dissatisfied with the DOJ rulings, petitioner sought recourse
with the CA via a petition for review under Rule 43 of the 1997 Rules of Civil Procedure. On October
17, 2003, the appellate court affirmed the dismissal of the unfair competition complaint. 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.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 affirmative
and precautionary distinguishing features in his products for differentiation. The appellate court
considered the spelling and pronunciation of the marks; the difference in the designs of the back
pockets; the dissimilarity between the carton tickets; and the pricing and sale of 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

. 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.

Held: 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. The elements of unfair competition under Article 189(1) 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. All these elements must be proven. In finding that
probable cause for unfair competition does not exist, the investigating prosecutor Secretaries
Guingona and Cuevas arrived at the same conclusion that there is insufficient evidence to prove all
the elements of the crime that would allow them to secure a conviction. Secretary Guingona
discounted the element of actual intent to deceive by taking into consideration the differences in
spelling, meaning, and phonetics between “LIVE’S” and “LEVI’S,” as well as the fact that respondent
had registered his own mark. While it is true that there may be unfair competition even if the
competing mark is registered in the Intellectual Property Office, it is equally true that the same may
show prima facie good faith. Indeed, registration does not negate unfair competition where the goods
are packed or offered for sale and passed off as those of complainant. 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. Petitioner argues that the element of intent to deceive
may be inferred from the similarity of the goods or their appearance. 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. 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 finding that such confusing similarity exists. Since confusing similarity was not found, the
element of fraud or deception could not be inferred. 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 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. 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. To reiterate, the resemblance
must be such as is likely to deceive the ordinary purchaser exercising ordinary care. 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 five
feet away from them. From that distance, they were asked to identify the jeans’ brand and state the
reasons for thinking so. This method discounted the possibility that the ordinary intelligent buyer
would be able to closely scrutinize, and even fit, the jeans to determine if they were “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.” We find no
reason to go beyond the point of sale to determine if there is probable cause for unfair competition.
WHEREFORE, the petition is DENIED and the appealed Decision of the Court of Appeals
AFFIRMED. SO ORDERED.

14. SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES, INC. vs. COURT OF
APPEALS and CFC CORPORATION. G. R. No. 112012, April 4, 2001
Facts: CFC Corporation filed with the BPTTT an application for the registration of the trademark
"FLAVOR MASTER" for instant coffee. Societe Des Produits Nestle, S.A., a Swiss company
registered under Swiss laws and domiciled in Switzerland, claimed that the trademark of private
respondent’s product is "confusingly similar to its trademarks for coffee and coffee extracts, MASTER
ROAST and MASTER BLEND." Nestle Philippines, Inc. claimed that the use of 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. CFC argued that FLAVOR MASTER, is not
confusingly similar with the former’s trademarks, MASTER ROAST and MASTER BLEND, 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." BPTTT: denied CFC’s application for registration. Court of Appeals: reversed
decision of BPTTT.

Issue: Whether the trademark FLAVOR MASTER is a colorable imitation of the trademarks MASTER
ROAST and MASTER BLEND.

Held: The petition is impressed with merit. A trademark has been generally defined 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." Section 4 (d) of Republic Act No. 166
or the Trademark Law: 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 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: x x x xxx x x x (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; x x x xxx
x x x 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. 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. In
determining if colorable imitation exists, jurisprudence has developed two kinds of tests - the
Dominancy Test and the Holistic Test. 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. 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. 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. 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 specific 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 specific 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. Court agrees with the BPTTT when it applied the test of dominancy.

It is the observation of this Office 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. 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.