PROCEDURE FOR APPLICATION OF MARK

THIRD DIVISION

G.R. No. 120900             July 20, 2000

CANON KABUSHIKI KAISHA, petitioner, 

vs.
COURT OF APPEALS and NSR RUBBER CORPORATION, respondents.

GONZAGA-REYES, J.:

Before us is a petition for review that seeks to set aside the Decision 1 dated February 21, 1995 of the Court of
Appeals in CA-GR SP No. 30203, entitled "Canon Kabushiki Kaisha vs. NSR Rubber Corporation" and its Resolution dated
June 27, 1995 denying the motion for reconsideration of herein petitioner Canon Kabushiki Kaisha (petitioner).

On January 15, 1985, private respondent NSR Rubber Corporation (private respondent) filed an application for
registration of the mark CANON for sandals in the Bureau of Patents, Trademarks, and Technology Transfer (BPTTT). A
Verified Notice of Opposition was filed by petitioner, a foreign corporation duly organized and existing under the laws of
Japan, alleging that it will be damaged by the registration of the trademark CANON in the name of private respondent. The
case was docketed as Inter Partes Case No. 3043.

Petitioner moved to declare private respondent in default for its failure to file its answer within the prescribed period.
The BPTTT then declared private respondent in default and allowed petitioner to present its evidence ex-parte.

Based on the records, the evidence presented by petitioner consisted of its certificates of registration for the mark
CANON in various countries covering goods belonging to class 2 (paints, chemical products, toner, and dye stuff).
Petitioner also submitted in evidence its Philippine Trademark Registration No. 39398, showing its ownership over the
trademark CANON also under class 2.

On November 10, 1992, the BPTTT issued its decision dismissing the opposition of petitioner and giving due course to
private respondent's application for the registration of the trademark CANON. On February 16, 1993, petitioner appealed
the decision of the BPTTT with public respondent Court of Appeals that eventually affirmed the decision of BPTTT. Hence,
this petition for review.

Petitioner anchors this instant petition on these grounds:

A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE MARK CANON BECAUSE IT IS ITS TRADEMARK AND IS
USED ALSO FOR FOOTWEAR.

B) TO ALLOW PRIVATE RESPONDENT TO REGISTER CANON FOR FOOTWEAR IS TO PREVENT PETITIONER FROM
USING CANON FOR VARIOUS KINDS OF FOOTWEAR, WHEN IN FACT, PETITIONER HAS EARLIER USED SAID MARK FOR
SAID GOODS.

C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO EXCLUSIVELY USE CANON TO PREVENT CONFUSION OF
BUSINESS.

D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE USE OF CANON BECAUSE IT FORMS PART OF ITS
CORPORATE NAME, PROTECTED BY THE PARIS CONVENTION.2

The BPTTT and the Court of Appeals share the opinion that the trademark "CANON" as used by petitioner for its
paints, chemical products, toner, and dyestuff, can be used by private respondent for its sandals because the products of
these two parties are dissimilar. Petitioner protests the appropriation of the mark CANON by private respondent on the
ground that petitioner has used and continues to use the trademark CANON on its wide range of goods worldwide.
Allegedly, the corporate name or tradename of petitioner is also used as its trademark on diverse goods including footwear
and other related products like shoe polisher and polishing agents. To lend credence to its claim, petitioner points out that
it has branched out in its business based on the various goods carrying its trademark CANON 3 , including footwear which
petitioner contends covers sandals, the goods for which private respondent sought to register the mark CANON. For
petitioner, the fact alone that its trademark CANON is carried by its other products like footwear, shoe polisher and
polishing agents should have precluded the BPTTT from giving due course to the application of private respondent.

We find the arguments of petitioner to be unmeritorious. Ordinarily, the ownership of a trademark or tradename is a
property right that the owner is entitled to protect4 as mandated by the Trademark Law.5 However, when a trademark is
used by a party for a product in which the other party does not deal, the use of the same trademark on the latter's
product cannot be validly objected to.6

A review of the records shows that with the order of the BPTTT declaring private respondent in default for failure to
file its answer, petitioner had every opportunity to present ex-parte all of its evidence to prove that its certificates of
registration for the trademark CANON cover footwear. The certificates of registration for the trademark CANON in other
countries and in the Philippines as presented by petitioner, clearly showed that said certificates of registration cover goods
belonging to class 2 (paints, chemical products, toner, dyestuff). On this basis, the BPTTT correctly ruled that since the
certificate of registration of petitioner for the trademark CANON covers class 2 (paints, chemical products, toner, dyestuff),
private respondent can use the trademark CANON for its goods classified as class 25 (sandals). Clearly, there is a world of
difference between the paints, chemical products, toner, and dyestuff of petitioner and the sandals of private respondent.

Petitioner counters that notwithstanding the dissimilarity of the products of the parties, the trademark owner is
entitled to protection when the use of by the junior user "forestalls the normal expansion of his business". 7Petitioner's
opposition to the registration of its trademark CANON by private respondent rests upon petitioner's insistence that it would
be precluded from using the mark CANON for various kinds of footwear, when in fact it has earlier used said mark for said
goods. Stretching this argument, petitioner claims that it is possible that the public could presume that petitioner would
also produce a wide variety of footwear considering the diversity of its products marketed worldwide.

We do not agree. Even in this instant petition, except for its bare assertions, petitioner failed to attach evidence that
would convince this Court that petitioner has also embarked in the production of footwear products. We quote with
approval the observation of the Court of Appeals that:

"The herein petitioner has not made known that it intends to venture into the business of producing sandals. This is
clearly shown in its Trademark Principal Register (Exhibit "U") where the products of the said petitioner had been clearly
and specifically described as "Chemical products, dyestuffs, pigments, toner developing preparation, shoe polisher,
polishing agent". It would be taxing one's credibility to aver at this point that the production of sandals could be
considered as a possible "natural or normal expansion" of its business operation". 8

In Faberge, Incorporated vs. Intermediate Appellate Court ,9 the Director of patents allowed the junior user to use the
trademark of the senior user on the ground that the briefs manufactured by the junior user, the product for which the
trademark BRUTE was sought to be registered, was unrelated and non-competing with the products of the senior user
consisting of after shave lotion, shaving cream, deodorant, talcum powder, and toilet soap. The senior user vehemently
objected and claimed that it was expanding its trademark to briefs and argued that permitting the junior user to register
the same trademark would allow the latter to invade the senior user's exclusive domain. In sustaining the Director of
Patents, this Court said that since "(the senior user) has not ventured in the production of briefs, an item which is not
listed in its certificate of registration, (the senior user), cannot and should not be allowed to feign that (the junior user)
had invaded (the senior user's) exclusive domain." 10 We reiterated the principle that the certificate of registration confers
upon the trademark owner the exclusive right to use its own symbol only to those goods specified in the certificate ,
subject to the conditions and limitations stated therein. 11 Thus, the exclusive right of petitioner in this case to use the
trademark CANON is limited to the products covered by its certificate of registration.

Petitioner further argues that the alleged diversity of its products all over the world makes it plausible that the public
might be misled into thinking that there is some supposed connection between private respondent's goods and petitioner.
Petitioner is apprehensive that there could be confusion as to the origin of the goods, as well as confusion of business, if
private respondent is allowed to register the mark CANON. In such a case, petitioner would allegedly be immensely
prejudiced if private respondent would be permitted to take "a free ride on, and reap the advantages of, the goodwill and
reputation of petitioner Canon".12 In support of the foregoing arguments, petitioner invokes the rulings in Sta. Ana vs.
Maliwat13 , Ang vs. Teodoro14 and Converse Rubber Corporation vs. Universal Rubber Products, Inc.15 .

The likelihood of confusion of goods or business is a relative concept, to be determined only according to the
particular, and sometimes peculiar, circumstances of each case. 16 Indeed, in trademark law cases, even more than in other
litigation, precedent must be studied in the light of the facts of the particular case. 17 Contrary to petitioner's supposition,
the facts of this case will show that the cases of Sta. Ana vs. Maliwat,, Ang vs. Teodoro and Converse Rubber Corporation
vs. Universal Rubber Products, Inc.  are hardly in point. The just cited cases involved goods that were confusingly similar, if
not identical, as in the case of Converse Rubber Corporation vs. Universal Rubber Products, Inc . Here, the products
involved are so unrelated that the public will not be misled that there is the slightest nexus between petitioner and the
goods of private respondent.

In cases of confusion of business or origin, the question that usually arises is whether the respective goods or
services of the senior user and the junior user are so related as to likely cause confusion of business or origin, and thereby
render the trademark or tradenames confusingly similar. 18 Goods are related when they belong to the same class or have
the same descriptive properties; when they possess the same physical attributes or essential characteristics with reference
to their form, composition, texture or quality.19 They may also be related because they serve the same purpose or are sold
in grocery stores.20

Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals , this Court ruled that the petroleum products on which the
petitioner therein used the trademark ESSO, and the product of respondent, cigarettes are "so foreign to each other as to
make it unlikely that purchasers would think that petitioner is the manufacturer of respondent's goods" 21 . Moreover, the
fact that the goods involved therein flow through different channels of trade highlighted their dissimilarity, a factor
explained in this wise:

"The products of each party move along and are disposed through different channels of distribution. The (petitioner's)
products are distributed principally through gasoline service and lubrication stations, automotive shops and hardware
stores. On the other hand, the (respondent's) cigarettes are sold in sari-sari stores, grocery store, and other small
distributor outlets. (Respondnet's) cigarettes are even peddled in the streets while (petitioner's) 'gasul' burners are not.
Finally, there is a marked distinction between oil and tobacco, as well as between petroleum and cigarettes. Evidently, in
kind and nature the products of (respondent) and of (petitioner) are poles apart." 22

Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that carry the trademark CANON are
unrelated to sandals, the product of private respondent. We agree with the BPTTT, following the Esso doctrine, when it
noted that the two classes of products in this case flow through different trade channels. The products of petitioner are
sold through special chemical stores or distributors while the products of private respondent are sold in grocery stores,
sari-sari stores and department stores. 23 Thus, the evident disparity of the products of the parties in the case at bar
renders unfounded the apprehension of petitioner that confusion of business or origin might occur if private respondent is
allowed to use the mark CANON.

In its bid to bar the registration of private respondent of the mark CANON, petitioner invokes the protective mantle of
the Paris Convention. Petitioner asserts that it has the exclusive right to the mark CANON because it forms part of its
corporate name or tradename, protected by Article 8 of the Paris Convention, to wit:

"A tradename 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."

Public respondents BPTTT and the Court of Appeals allegedly committed an oversight when they required petitioner
to prove that its mark is a well-known mark at the time the application of private respondent was filed. Petitioner
questions the applicability of the guidelines embodied in the Memorandum of then Minister of Trade and Industry Roberto
Ongpin (Ongpin) dated October 25, 1983 which according to petitioner implements Article 6bis of the Paris Convention,
the provision referring to the protection of trademarks. The memorandum reads:

"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 class of goods;

d) the person claiming must be the owner of the mark."

According to petitioner, it should not be required to prove that its trademark is well-known and that the products are
not similar as required by the quoted memorandum. Petitioner emphasizes that the guidelines in the memorandum of
Ongpin implement Article 6bis of the Paris Convention, the provision for the protection of trademarks, not tradenames.
Article 6bis of the Paris Convention states:

(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 or used in bad
faith."

Petitioner insists that what it seeks is the protection of Article 8 of the Paris Convention, the provision that pertains to
the protection of tradenames. Petitioner believes that the appropriate memorandum to consider is that issued by the then
Minister of Trade and Industry, Luis Villafuerte, directing the Director of patents to:
 "reject all pending applications for Philippine registration of signature and other world famous trademarks by
applicants other than the original owners or users."

As far as petitioner is concerned, the fact that its tradename is at risk would call for the protection granted by Article
8 of the Paris Convention. Petitioner calls attention to the fact that Article 8, even as embodied in par. 6, sec. 37 of RA
166, mentions no requirement of similarity of goods. Petitioner claims that the reason there is no mention of such a
requirement, is "because there is a difference between the referent of the name and that of the mark" 24 and that "since
Art. 8 protects the tradename in the countries of the Union, such as Japan and the Philippines, Petitioner's tradename
should be protected here."25

We cannot uphold petitioner's position.

The term "trademark" is defined by RA 166, the Trademark Law, as including "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 for those manufactured, sold or dealt in by others." 26 Tradename is defined by the same law as including
"individual names and surnames, firm names, tradenames, 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." 27 Simply put, a trade name refers to the business and its goodwill; a
trademark refers to the goods.28

The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, of which
both the Philippines and Japan, the country of petitioner, are signatories 29 , is a multilateral treaty that seeks to protect
industrial property consisting of patents, utility models, industrial designs, trademarks, service marks, trade names and
indications of source or appellations of origin, and at the same time aims to repress unfair competition. 30We 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.31 As pointed out by the BPTTT:

"Regarding the applicability of Article 8 of the Paris Convention, this Office believes that there is no automatic
protection afforded an entity whose tradename is alleged to have been infringed through the use of that name as a
trademark by a local entity.

In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No. 75420, 15 November 1991, the
Honorable Supreme Court held that:

'The Paris Convention for the Protection of Industrial Property does not automatically exclude all countries of the
world which have signed it from using a tradename which happens to be used in one country. To illustrate – if a taxicab or
bus company in a town in the United Kingdom or India happens to use the tradename "Rapid Transportation", it does not
necessarily follow that "Rapid" can no longer be registered in Uganda, Fiji, or the Philippines.

This office is not unmindful that in the Treaty of Paris for the Protection of Intellectual Property regarding well-known
marks and possible application thereof in this case. Petitioner, as this office sees it, is trying to seek refuge under its
protective mantle, claiming that the subject mark is well known in this country at the time the then application of NSR
Rubber was filed.

However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin, issued a memorandum dated 25
October 1983 to the Director of Patents, a set of guidelines in the implementation of Article 6bis (sic) of the Treaty of
Paris. These conditions are:

a) the mark must be internationally known;

b) the subject of the right must be a trademark, not a patent or copyright or anything else;

c) the mark must be for use in the same or similar kinds of goods; and

d) the person claiming must be the owner of the mark (The Parties Convention Commentary on the Paris Convention.
Article by Dr. Bogsch, Director General of the World Intellectual Property Organization, Geneva, Switzerland, 1985)'

From the set of facts found in the records, it is ruled that the Petitioner failed to comply with the third requirement of
the said memorandum that is the mark must be for use in the same or similar kinds of goods. The Petitioner is using the
mark "CANON" for products belonging to class 2 (paints, chemical products) while the Respondent is using the same mark
for sandals (class 25). Hence, Petitioner's contention that its mark is well-known at the time the Respondent filed its
application for the same mark should fail. "32

Petitioner assails the application of the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court  to this case.
Petitioner points out that in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court,  petitioner therein was
found to have never at all conducted its business in the Philippines unlike herein petitioner who has extensively conducted
its business here and also had its trademark registered in this country. Hence, petitioner submits that this factual
difference renders inapplicable our ruling in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court  that Article
8 of the Paris Convention does not automatically extend protection to a tradename that is in danger of being infringed in a
country that is also a signatory to said treaty . This contention deserves scant consideration. Suffice it to say that the just
quoted pronouncement in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court,  was made independent of
the factual finding that petitioner in said case had not conducted its business in this country.

WHEREFORE, in view of the foregoing, the instant petition for review on certiorari is DENIED for lack of merit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 166886               July 30, 2008

MATTEL, INC. Petitioner, 
vs.
EMMA FRANCISCO, Director-General >of the Intellectual Property Office, HON. ESTRELLITA B. ABELARDO,
Director of the Bureau of Legal Affairs (IPO), and JIMMY UY, Respondents.**

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision 1dated
June 11, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 80480 and the CA Resolution 2 dated January 19, 2005 which
denied petitioner's Motion for Reconsideration.

The factual background of the case is as follows:

On November 14, 1991, Jimmy A. Uy (Uy) filed a trademark application Serial No. 78543 3 with the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) for registration of the trademark "BARBIE" for use on confectionary
products, such as milk, chocolate, candies, milkbar and chocolate candies in Class 30 of the International Classification of
Goods. The trademark application was published in the March-April 1993 issue of the BPTTT Official Gazette, Vol. VI, No.
2, which was released for circulation on May 31, 1993.

On July 19, 1993, Mattel, Inc. (Mattel), a corporation organized under the laws of the State of Delaware, United
States of America, filed a Notice of Opposition 4 against Uy's "Barbie" trademark as the latter was confusingly similar to its
trademark on dolls, doll clothes and doll accessories, toys and other similar commercial products. It was docketed as Inter
Partes Case No. 3898.

On August 26, 1993, Uy filed his Answer 5 to the Notice of Opposition, denying the allegations therein and claiming
that there is no similarity between the two goods.

While the case was pending, Republic Act (R.A.) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines was enacted and took effect on January 1, 1998. The BPTTT was abolished and its functions transferred to the
newly created Intellectual Property Office (IPO).

On May 18, 2000, public respondent Estrellita B. Abelardo, the Director of the Bureau of Legal Affairs, IPO, rendered
a Decision6 dismissing Mattel's opposition and giving due course to Uy’s application for the registration of the trademark
"Barbie" used on confectionary products. The Director held that there was no confusing similarity between the two
competing marks because the goods were non-competing or unrelated.

On June 5, 2000, Mattel filed a Motion for Reconsideration. 7 On May 27, 2002, the Director of the Bureau of Legal
Affairs, IPO issued a Resolution8 denying Mattel's Motion for Reconsideration.

On June 24, 2002, Mattel filed an Appeal Memorandum 9 with the Office of the Director General, IPO. Despite due
notice, no comment was submitted by Uy. Thus, in an Order 10 dated October 7, 2002, Uy was deemed to have waived his
right to file a comment on the appeal.

On September 3, 2003, public respondent Emma C. Francisco, the Director General, rendered a Decision 11 denying
the appeal on the ground that there was no proof on record that Mattel had ventured into the production of chocolates
and confectionary products under the trademark "Barbie" to enable it to prevent Uy from using an identical "Barbie"
trademark on said goods; that the records were bereft of the fact that the Director of the Bureau of Trademarks (BOT)
had already declared the subject trademark application abandoned due to the non-filing of the Declaration of Actual Use
(DAU) by Uy.

On September 12, 2003, Mattel filed a Motion for New Trial 12 on the ground of newly discovered evidence -- i.e.,
Mattel's Trademark Application Serial No. 4-1997-124327 for registration of the trademark "Barbie" for use on
"confectionaries, sweets and chewing gum, none being medicated, sweetmeats included in Class 30, chocolate, popcorn,
chocolate biscuits (other than biscuits for animals), pastries, preparations for cereals for food for human consumption,
ices, ice creams" under Class 30 of the International Classification of Goods -- was unopposed after publication in Vol. VI
No. 3 of the IPO Official Gazette which was released on June 20, 2003.

On October 22, 2003, the Director General issued an Order13 denying the motion for new trial.

On November 12, 2003, Mattel filed a Petition for Review 14 with the CA. Again, despite due notice, no comment on
the petition was filed by Uy. Thus, in a Resolution 15 dated April 20, 2004, the CA resolved to dispense with the filing of the
comment and considered the petition submitted for resolution/decision sans comment.

On June 11, 2004, the CA rendered a Decision16 affirming the decision of the Director General.

On July 15, 2004, Mattel filed a Motion for Reconsideration 17 but it was denied by the CA in a Resolution 18 dated
January 19, 2005.

Hence, the present petition raising the following issues:

I.

WHETHER OR NOT IT IS GRAVE ERROR ON THE PART OF THE HON. COURT OF APPEALS TO RULE THAT "Dolls, Doll
Clothes, and Doll Accessories, Costumes, Toys and other similar commercial products" VIS-À-VIS "Confectionery products,
namely, milk chocolate, candies, milkbar, and chocolate candies" ARE UNRELATED SUCH THAT USE OF IDENTICAL
TRADEMARKS IS UNLIKELY TO CAUSE CONFUSION IN THE MINDS OF THE PURCHASING PUBLIC.

II.

WHETHER OR NOT IT IS GRAVE ERROR ON THE PART OF THE HON. COURT OF APPEALS TO SUSTAIN THE
FINDINGS OF THE DIRECTOR GENERAL OF THE INTELLECTUAL PROPERTY OFFICE (IPO) THAT IT IS PREMATURE TO
CONCLUDE THAT APPLICATION SERIAL NO. 78543 BE DEEMED WITHDRAWN FOR FAILURE TO FILE THE DECLARATION
OF ACTUAL USE (DAU), CONSIDERING THAT SUCH DECLARATION IS THE PREROGATIVE OF THE DIRECTOR OF
TRADEMARKS.

III.

WHETHER OR NOT PRIVATE-RESPONDENT SHOULD BE PRESUMED TO HAVE INTENDED TO CASH-IN AND RIDE ON
THE GOODWILL AND WIDESPREAD RECOGNITION OF THE PETITIONER'S MARK CONSIDERING THAT PRIVATE
RESPONDENT ADOPTED A MARK THAT IS EXACTLY IDENTICAL TO PETITIONER'S MARK IN SPELLING AND STYLE.

IV.

WHETHER OR NOT TRADEMARK APPLICATION NO. 4-1997-124327 SHOULD BE CONSIDERED "NEWLY-DISCOVERED

EVIDENCE."19

Mattel argues that its products are items related to Uy's products; hence, identical trademarks should not be used
where the possibility of confusion as to source or origin of the product is certain; that the Director General of the IPO has
the power to act on a pending trademark application considered as "withdrawn" for failure to file the DAU; that by
adopting an exactly identical mark, in spelling and style, Uy should be presumed to have intended to cash in or ride on the
goodwill and widespread recognition enjoyed by Mattel's mark; that Mattel should be allowed to introduce Trademark
Application Serial No. 4-1997-124327 as "newly discovered evidence."

On the other hand, Uy submits that the case has become moot and academic since the records of the IPO will show
that no DAU was filed on or before December 1, 2001; thus, he is deemed to have abandoned his trademark application
for failure to comply with the mandatory filing of the DAU.

For its part, the OSG contends that the petition primarily raised factual issues which are not proper subject of a
petition for review under Rule 45 of the Rules of Court and that, at any rate, Mattel failed to establish any grave error on
the part of respondent public officials which will warrant the grant of the present petition. It submits that confectionary
products, namely: milk chocolate, candies, milkbar and chocolate candies, on the one hand; and dolls, doll clothes and doll
accessories, costumes, toys and other similar commercial products, on the other hand, are products which are completely
unrelated to one another; that withdrawal of pending application for failure to file a DAU must first be the subject of an
administrative proceeding before the Director of Trademarks; that Mattel's Trademark Application Serial No. 4-1997-
124327 cannot be considered as newly discovered evidence since said trademark application was filed only on September
3, 1997, or more than two years after the case had been deemed submitted for decision.

The instant case has been rendered moot and academic.

Uy's declaration in his Comment and Memorandum before this Court that he has not filed the DAU as mandated by
pertinent provisions of R.A. No. 8293 is a judicial admission that he has effectively abandoned or withdrawn any right or
interest in his trademark.

Section 124.2 of R.A. No. 8293 provides:

The applicant or the registrant shall file a declaration of actual use of the mark with evidence to that effect, as
prescribed by the Regulations within three (3) years from the filing date of the application. Otherwise, the applicant
shall be refused or the marks shall be removed from the Register by the Director. (Emphasis supplied)

Moreover, Rule 204 of the Rules and Regulations on Trademarks provides:

Declaration of Actual Use. The Office will not require any proof of use in commerce in the processing of trademark
applications.1avvphi1 However, without need of any notice from the Office, all applicants or registrants, shall file a
declaration of actual use of the mark with evidence to that effect within three years, without possibility of extension,from
the filing date of the application. Otherwise, the application shall be refused or the mark shall be removed from the
register by the Director motu propio. (Emphasis supplied)

Meanwhile, Memorandum Circular No. BT 2K1-3-04 dated March 29, 2001 20 of the IPO provides:

2. For pending applications prosecuted under R.A. 166 we distinguish as follows:

2.1. Based on use – must submit DAU and evidence of use on or before December 1, 2001, subject to a
single six (6) month extension. (Sec. 3.2, Final Provisions of the Trademark Regulations, R.A. 8293, IPO Fee Structure and
MC. No. BT Y2K-8-02)

x x x x21

Uy's admission in his Comment and Memorandum of non-compliance with the foregoing requirements is a judicial
admission and an admission against interest 22 combined. A judicial admission binds the person who makes the same. 23 In
the same vein, an admission against interest is the best evidence which affords the greatest certainty of the facts in
dispute.24 The rationale for the rule is based on the presumption that no man would declare anything against himself
unless such declaration is true. 25 Thus, it is fair to presume that the declaration corresponds with the truth, and it is his
fault if it does not.26

In the present case, Mattel is seeking a ruling on whether Uy's "Barbie" trademark is confusingly similar to it's
(Mattel's) "Barbie" trademark. Given Uy's admission that he has effectively abandoned or withdrawn any rights or interest
in his trademark by his non-filing of the required DAU, there is no more actual controversy, or no useful purpose will be
served in passing upon the merits of the case. It would be unnecessary to rule on the trademark conflict between the
parties. A ruling on the matter would practically partake of a mere advisory opinion, which falls beyond the
realm of judicial review. The exercise of the power of judicial review is limited to actual cases and
controversies. Courts have no authority to pass upon issues through advisory opinions or to resolve
hypothetical or feigned problems.27lawphi1

It cannot be gainsaid that for a court to exercise its power of adjudication, there must be an actual case or
controversy — one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial
resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable
by a court of justice.28 Where the issue has become moot and academic, there is no justiciable controversy, and an
adjudication thereof would be of no practical use or value as courts do not sit to adjudicate mere academic questions to
satisfy scholarly interest, however intellectually challenging.29

Admittedly, there were occasions in the past when the Court passed upon issues although supervening events had
rendered those petitions moot and academic. After all, the "moot and academic" principle is not a magical formula that can
automatically dissuade the courts from resolving a case. Courts will decide cases, otherwise moot and academic, if: first,
there is a grave violation of the Constitution; second, the exceptional character of the situation and the paramount public
interest is involved; third, when the constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public; and fourth, the case is capable of repetition yet evading review.30

Thus, in Constantino v. Sandiganbayan (First Division),31 Constantino, a public officer, and his co-accused, Lindong, a
private citizen, filed separate appeals from their conviction by the Sandiganbayan for violation of Section 3(e) of Republic
Act No. 3019 or the Anti-Graft and Corrupt Practices Act. While Constantino died during the pendency of his appeal, the
Court still ruled on the merits thereof, considering the exceptional character of the appeals of Constantino and Lindong in
relation to each other; that is, the two petitions were so intertwined that the absolution of the deceased Constantino was
determinative of the absolution of his co-accused Lindong.

In Public Interest Center, Inc. v. Elma ,32 the petition sought to declare as null and void the concurrent appointments
of Magdangal B. Elma as Chairman of the Presidential Commission on Good Government (PCGG) and as Chief Presidential
Legal Counsel (CPLC) for being contrary to Section 13, Article VII and Section 7, par. 2, Article IX-B of the 1987
Constitution. While Elma ceased to hold the two offices during the pendency of the case, the Court still ruled on the merits
thereof, considering that the question of whether the PCGG Chairman could concurrently hold the position of CPLC was
one capable of repetition.

In David v. Arroyo, 33 seven petitions for certiorari and prohibition were filed assailing the constitutionality of the
declaration of a state of national emergency by President Gloria Macapagal-Arroyo. While the declaration of a state of
national emergency was already lifted during the pendency of the suits, this Court still resolved the merits of the petitions,
considering that the issues involved a grave violation of the Constitution and affected the public interest. The Court also
affirmed its duty to formulate guiding and controlling constitutional precepts, doctrines or rules, and recognized that the
contested actions were capable of repetition.

In Pimentel, Jr. v. Ermita, 34 the petition questioned the constitutionality of President Gloria Macapagal-Arroyo’s
appointment of acting secretaries without the consent of the Commission on Appointments while Congress was in session.
While the President extended ad interim appointments to her appointees immediately after the recess of Congress, the
Court still resolved the petition, noting that the question of the constitutionality of the President’s appointment of
department secretaries in acting capacities while Congress was in session was one capable of repetition.

In Atienza v. Villarosa,35 the petitioners, as Governor and Vice-Governor, sought for clarification of the scope of the
powers of the Governor and Vice-Governor under the pertinent provisions of the Local Government Code of 1991. While
the terms of office of the petitioners expired during the pendency of the petition, the Court still resolved the issues
presented to formulate controlling principles to guide the bench, bar and the public.

In Gayo v. Verceles,36 the petition assailing the dismissal of the petition for quo warranto filed by Gayo to declare void
the proclamation of Verceles as Mayor of the Municipality of Tubao, La Union during the May 14, 2001 elections, became
moot upon the expiration on June 30, 2004 of the contested term of office of Verceles. Nonetheless, the Court resolved
the petition since the question involving the one-year residency requirement for those running for public office was one
capable of repetition.

In Albaña v. Commission on Elections, 37 the petitioners therein assailed the annulment by the Commission on
Elections of their proclamation as municipal officers in the May 14, 2001 elections. When a new set of municipal officers
was elected and proclaimed after the May 10, 2004 elections, the petition was mooted but the Court resolved the issues
raised in the petition in order to prevent a repetition thereof and to enhance free, orderly, and peaceful elections.

The instant case does not fall within the category of any of these exceptional cases in which the Court was persuaded
to resolve moot and academic issues to formulate guiding and controlling constitutional principles, precepts, doctrines or
rules for future guidance of both bench and bar. The issues in the present case call for an appraisal of factual
considerations which are peculiar only to the transactions and parties involved in this controversy. The issues raised in this
petition do not call for a clarification of any constitutional principle. Perforce, the Court dispenses with the need to
adjudicate the instant case.

WHEREFORE, the petition is DISMISSED for being moot and academic.

No pronouncement as to costs.

SO ORDERED.

CANCELLATION, NON-USE OF MARK, WHEN EXCUSE, NON-OWNERSHIP

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-18289             March 31, 1964

 ANDRES ROMERO, petitioner, 
vs.
MAIDEN FORM BRASSIERE CO., INC., and THE DIRECTOR OF PATENTS, respondents.

Alafriz Law Office for petitioner.

Ross, Selph & Carrascoso for respondent Maiden Form Brassiere Co., Inc.
Office of the Solicitor General and Tiburcio S. Evalle for respondent Director of Patents.

BARRERA, J.:

From the decision of the Director of Patents (of January 17, 1961) dismissing his petition for cancellation of the
registration of the trademark "Adagio" for brassieres manufactured by respondent Maiden Form Brassiere Co., Inc.,
petitioner Andres Romero, interposed this appeal.

On February 12, 1957, respondent company, a foreign corporation, filed with respondent Director of Patents an
application for registration (pursuant to Republic Act No. 166) of the trademark "Adagio" for the brassieres manufactured
by it. In its application, respondent company alleged that said trademark was first used by it in the United States on
October 26, 1937, and in the Philippines on August 31, 1946; that it had been continuously used by it in trade in, or with
the Philippines for over 10 years; that said trademark "is on the date of this application, actually used by respondent
company on the following goods, classified according to the official classification of goods (Rule 82) - Brassieres, Class 40";
and that said trademark is applied or affixed by respondent to the goods by placing thereon a woven label on which the
trademark is shown.

Acting on said application, respondent Director, on August 13, 1957, approved for publication in the Official Gazette
said trademark of respondent company, in accordance with Section 7 of Republic Act No. 166 (Trademark Law), having
found, inter alia, that said trademark is "a fanciful and arbitrary use of a foreign word adopted by applicant as a trademark
for its product; that it is neither a surname nor a geographical term, nor any that comes within the purview of Section 4 of
Republic Act No. 166; and that the mark as used by respondent company convincingly shows that it identifies and
distinguishes respondent company's goods from others."

On October 17, 1957, respondent Director issued to respondent company a certificate of registration of with,
trademark "Adagio".

On February 26, 1958, petitioner filed with respondent Director a petition for cancellation of said trademark, on the
grounds that it is a common descriptive name of an article or substance on which the patent has expired; that its
registration was obtained fraudulently or contrary to the provisions of Section 4, Chapter II of Republic Act No. 166; and
that the application for its registration was not filed in accordance with the provisions of Section 37, Chapter XI of the
same Act. Petitioner also alleged that said trademark has not become distinctive of respondent company's goods or
business; that it has been used by respondent company to classify the goods (the brassieres) manufactured by it, in the
same manner as petitioner uses the same; that said trademark has been used by petitioner for almost 6 years; that it has
become a common descriptive name; and that it is not registered in accordance with the requirements of Section 37(a),
Chapter XI of Republic Act No. 166.

Issues having been joined, the case was heard and, after hearing, respondent Director (on January 17, 1961)
rendered the decision above adverted to.

Petitioner filed a motion for reconsideration of said decision, on the grounds that (1) it is contrary to the evidence,
and (2) it is contrary to law. Said motion was denied by respondent Director by resolution of March 7, 1961.

Hence, this appeal.

Appellant claims that the trademark "Adagio" has become a common descriptive name of a particular style of
brassiere and is, therefore, unregistrable. It is urged that said trademark had been used by local brassiere manufacturers
since 1948, without objection on the part of respondent company.

This claim is without basis in fact. The evidence shows that the trademark "Adagio" is a musical term, which means
slowly or in an easy manner, and was used as a trademark by the owners thereof (the Rosenthals of Maiden Form Co.,
New York) because they are musically inclined. Being a musical term, it is used in an arbitrary (fanciful) sense as a
trademark for brassieres manufactured by respondent company. It also appears that respondent company has, likewise,
adopted other musical terms such as "Etude" (Exh. W-2), "Chansonette" (Exh. W-3), "Prelude" (Exh. W-4), "Over-ture"
(Exh. W-6), and "Concerto" (Exh. V), to identify, as a trademark, the different styles or types of its brassieres. As
respondent Director pointed out, "the fact that said mark is used also to designate a particular style of brassiere, does not
affect its registrability as a trademark" (Kiekhaefer Corp. v. Willys-Overland Motors, Inc., 111 USPQ 105).1äwphï1.ñët

It is not true that respondent company did not object to the use of said trademark by petitioner and other local
brassiere manufacturers. The records show that respondent company's agent, Mr. Schwartz, warned the Valleson
Department Store to desist from the sale of the "Adagio" Royal Form brassieres manufactured by petitioner (t.s.n., pp. 27-
28, Oct. 7, 1958), and even placed an advertisement (Exhs. 3 & 4) in the local newspapers (Manila Daily Bulletin, Manila
Times, Fookien Times, and others) warning the public against unlawful use of said trademark (t.s.n., p. 15, Aug. 17,
1959). The advertisement (Exh. U) in the Manila Times made by respondent company on February 9, 1958, was brought
to petitioner's attention (t.s.n., p. 24, Oct. 7, 1958), which must have prompted him to file this present petition for
cancellation, on February 26, 1958.

On the other hand, respondent company's long and continuous use of the trademark "Adagio" has not rendered it
merely descriptive of the product. In Winthrop Chemical Co. v. Blackman (268 NYS 653), it was held that widespread
dissemination does not justify the defendants in the use of the trademark.

Veronal has been widely sold in this country by the plaintiff; over 5,250,000 packages have been sold since 1919.
This is a consequence of the long and continued use by the plaintiff of this trademark and is the result of its efforts to
inform the profession and the public of its product. This widespread dissemination does not justify the defendants in the
use of this trademark. If this argument were sound, then every time a plaintiff obtained the result of having the public
purchase its article, that fact of itself would destroy a trademark. Arbitrary trademarks cannot become generic in this way.
Jacobs v. Beecham, 221 U.S. 263, 31 S. Ct. 555, 55 L. Ed. 729; Coca-Cola Co. v. Koke Co. of American, 254 U.S. 143, 41
S. Ct. 113, 65 L. Ed. 189. (emphasis supplied.)

Appellant next contends that the trademark "Adagio at the time it was registered (in the Philippines) on October 17,
1957, had long been used by respondent company, only "to designate a particular style or quality of brassiere and,
therefore, is unregistrable as a trademark. In support of the contention, he alleges that the sentence "Maidenform bras are
packaged for your quick shopping convenience. For other popular Maidenform styles writ for free style booklet to: Maiden
Form Brassiere Co., Inc 200 Madison Avenue, New York 16, N.Y." printed on the package (Exh. W), shows that the
trademark "Adagio" is used to designate a particular style or quality of brassiere. He also cites portions of the testimonies
of his witnesses Bautista and Barro, to the effect that said trademark refers to the style of brassieres sold in the stores of
which they are salesmen.

This contention is untenable. Said sentence appearing on the package (Exh. W), standing alone, does not conclusively
indicate that the trademark "Adagio" is merely a style of brassiere. The testimony of Mr. Schwartz, witness of respondent
company, belies petitioner's claim:

Q. There is a statement at the bottom of Exhibit W which reads, 'There is a Maidenform for every type of figure'. As
you stated you are very familiar with these bras manufacture by Maidenform Brassiere Company, what are these types of
figures this Exhibit W refer to?

A. This is a product sold primarily in the United States they have cold climate there, and a style to suit the climate
and we have different here. This kind of bra very seldom comes here. This type is very expensive and sold primarily in the
United States. We do not sell it here; it is very expensive an import restrictions do not allow our dollar allocations for such
sort.

As to the testimonies of Bautista and Barro, they are me conclusions of said witnesses. Note that when Bautista was
asked why he considered the trademark "Adagio" as a style, he replied that the brand "Adagio" is attached distinguish the
style. He stated as follows:

Q. You said that those bras mentioned by you such as Adagio, Prelude, Alloette, are styles, will you please tell us the
reason why you said that those are styles?

A. You know his brand like Adagio, Alloette are just attached to the bras just to distinguish the style: It is not the
main brand.

Barro, on the other hand, said that "Adagio" is a mark. She declared as follows:

Q. You state that you used to sell brassieres in the store in which you work; when customers come to your store and
ask for brassieres, what do they usually ask from you?

A. Well, I tell you there are so many types and certain types of people ask for certain brassiere. There are people
who ask for Royal Form Adagio and there are others who ask for Duchess Ideal Form, and so many kinds of marks.

Brassieres are usually of different types or styles, and appellee has used different trademarks for every type as shown
by its labels, Exhibits W-2 (Etude), W-3 (Chansonette), W-4 (Prelude), W-5 (Maidenette), and W-6, (Overture). The mere
fact that appellee uses "Adagio" for one type or style, does not affect the validity of such word as a trademark. In. the
case of Kiekhaefer Corp. v. Willys-Overland Motors, 111 USPQ 105, it was held that the fact that the word "Hurricane" was
used to designate only one model of automobile, did not affect the validity of that word as a trademark. In Minnesota
Mining Co. V. Motloid Co., 74 USPQ 235, the applicant sought to register the letters "MM" in diagonal relationship within a
circle. Applicant admitted that this mark was used only for its medium price and medium quality denture-base materials.
The Assistant Commissioner of Patents held:

It clearly appears, however, that the mark serves to indicate origin of applicant's goods; and the fact that it is used
on only one of several types or grades does not affect its registrability as a trade mark.
 Appellant also claims that respondent Director erred in registering the trademark in question, despite appellee's non-
compliance with Section 37, paragraphs 1 and 4 (a) of Republic Act No. 166.

This contention flows from a misconception of the application for registration of trademark of respondent. As we see
it, respondent's application was filed under the provisions of Section 2 of Republic Act No. 166 as amended by Section 1 of
Republic Act 865 which reads as follows:

"SEC. 2. What are registrable — Trademarks, ... own 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: ..."

Section 37 of Republic Act No. 166 can be availed of only where the Philippines is a party to an international
convention or treaty relating to trademarks, in which the trade-mark sought to be registered need not be use in the
Philippines. The applicability of Section 37 has been commented on by the Director of Patents, in this wise:

Trademark rights in the Philippines, without actual use the trademark in this country can, of course, be created
artificially by means of a treaty or convention with another country or countries. Section 37 of the present Philippine
Trademark Law, Republic Act No. 166 (incorporated as Rule 82 in the Rules of Practice for Registration of Trademarks)
envisions the eventual entrance of the Philippines into such convention treaty. It is provided in said section that
applications filed thereunder need not allege use in the Philippines of the trade mark sought to be registered. The
Philippines has, however not yet entered into any such treaty or convention and, until she does, actual use in the
Philippines of the trademark sought to be registered and allegation in the application of such fact, will be required in all
applications for original or renewal registration submitted to the Philippine Patent Office. (Circular Release No. 8.)

Appellant, likewise, contends that the registration the trademark in question was fraudulent or contrary Section 4 of
Republic Act No. 166. There is no evidence to show that the registration of the trademark "Adagio" was obtained
fraudulently by appellee. The evidence record shows, on the other hand, that the trademark "Adagio" was first exclusively
in the Philippines by a appellee in the year 1932. There being no evidence of use of the mark by others before 1932, or
that appellee abandoned use thereof, the registration of the mark was made in accordance with the Trademark Law.
Granting that appellant used the mark when appellee stopped using it during the period of time that the Government
imposed restrictions on importation of respondent's brassiere bearing the trademark, such temporary non-use did not
affect the rights of appellee because it was occasioned by government restrictions and was not permanent, intentional,
and voluntary.

To work an abandonment, the disuse must be permanent and not ephemeral; it must be intentional and voluntary,
and not involuntary or even compulsory. There must be a thorough-going discontinuance of any trade-mark use of the
mark in question (Callman, Unfair Competition and Trademark, 2nd Ed., p. 1341).

The use of the trademark by other manufacturers did not indicate an intention on the part of appellee to abandon it.

"The instances of the use by others of the term 'Budweiser, cited by the defendant, fail, even when liberally
construed, to indicate an intention upon the part of the complainant to abandon its rights to that name. 'To establish the
defense of abandonment, it is necessary to show not only acts indicating a practical abandonment, but an actual intention
to abandon. Saxlehner v. Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 60). (Anheuser-Busch, Inc. v.
Budweiser Malt Products Corp., 287 F. 245.)

Appellant next argues that respondent Director erred in declaring illegal the appropriation in the Philippines of the
trademark in question by appellant and, therefore, said appropriation did not affect appellee's right thereto and the
subsequent registration thereof. Appellant urges that its appropriation of the trademark in question cannot be considered
illegal under Philippine laws, because of non-compliance by appellee of Section 37 of Republic Act No. 166. But we have
already shown that Section 37 is not the provision invoked by respondent because the Philippines is not as yet a party to
any international convention or treaty relating to trademarks. The case of United Drug Co. v. Rectanus, 248 U.S. 90, 39 S.
Ct. 48, 63 L. Ed. 141, cited by appellant, is not applicable to the present case, as the records show that appellee was the
first user of the trademark in the Philippines, whereas appellant was the later user. Granting that appellant used the trade-
mark at the time appellee stopped using it due to government restrictions on certain importations, such fact did not, as
heretofore stated, constitute abandonment of the trademark as to entitle anyone to its free use.

Non-use because of legal restrictions is not evidence of an intent to abandon. Non-use of their ancient trade-mark
and the adoption of new marks by the Carthusian Monks after they had been compelled to leave France was consistent
with an intention to retain their right to use their old mark. Abandonment will not be inferred from a disuse over a period
of years occasioned by statutory restrictions on the name of liquor. (Nims Unfair Competition and Trade-Mark p. 1269.)

IN VIEW OF ALL THE FOREGOING, we are of the opinion and so hold, that respondent Director of Patents did not err
in dismissing the present petition for cancellation of the registered trademark of appellee company, and the decision
appealed from is therefore hereby affirmed, with costs against the appellant. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-23035 July 31, 1975

PHILIPPINE NUT INDUSTRY, INC., petitioner, 

vs.
STANDARD BRANDS INCORPORATED and TIBURCIO S. EVALLE as Director of Patents, respondents.

Perfecta E. De Vera for petitioner.

Paredes, Poblador, Cruz and Nazareno for private respondent.

Office of the Solicitor General Arturo A. Alafriz, Acting Assistant Solicitor General Isidro C. Borromeo and Solicitor
Francisco J. Bautista for respondent Director.

MUNOZ PALMA, J.:

Challenged in this petition for review is the decision of respondent Director of Patents which orders the cancellation of
Certificate of Registration No. SR-416 issued in favor of herein petitioner Philippine Nut Industry, Inc. (hereinafter called
Philippine Nut) for the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," upon complaint of Standard Brands Inc.
(hereinafter to be called Standard Brands).

The records of the case show the following incidents:

Philippine Nut, a domestic corporation, obtained from the Patent Office on August 10, 1961, Certificate of Registration
No. SR-416 covering the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," the label used on its product of salted
peanuts.

On May 14, 1962, Standard Brands a foreign corporation, 1 filed with the Director of Patents Inter Partes Case No. 268
asking for the cancellation of Philippine Nut's certificate of registration on the ground that "the registrant was not entitled
to register the mark at the time of its application for registration thereof" for the reason that it (Standard Brands) is the
owner of the trademark "PLANTERS COCKTAIL PEANUTS" covered by Certificate of Registration No. SR-172, issued by the
Patent Office on July 28, 1958. Standard Brands alleged in its petition that Philippine Nut's trademark "PHILIPPINE
PLANTERS CORDIAL PEANUTS" closely resembles and is confusingly similar to its trademark "PLANTERS COCKTAIL
PEANUTS" used also on salted peanuts, and that the registration of the former is likely to deceive the buying public and
cause damage to it.

On June 1, 1962, Philippine Nut filed its answer invoking the special defense that its registered label is not confusingly
similar to that of Standard Brands as the latter alleges.

At the hearing of October 4, 1962, the parties submitted a partial stipulation of facts. On December 12, 1962, an
amended partial stipulation of facts was submitted, the pertinent agreements contained in which are: (1) that Standard
Brands is the present owner of the trademark "PLANTERS COCKTAIL PEANUTS" covered by Certificate of Registration No.
SR-172 issued on July 28, 1958; (2) that Standard Brands trademark was first used in commerce in the Philippines in
December, 1938 and (3) that Philippine Nut's trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" was first used in the
Philippines on December 20, 1958 and registered with the Patent Office on August 10, 1961.

On December 10, 1963, after the presentation of oral and documentary evidence and the filing by the parties of their
memoranda, respondent Director of Patents rendered Decision No. 281 giving due course to Standard Brand's petition and
ordering the cancellation of Philippine Nut's Certificate of Registration No. SR-416. The Director of Patents found and held
that in the labels using the two trademarks in question, the dominant part is the word "Planters" , displayed "in a very
similar manner" so much so that "as to appearance and general impression" there is "a very confusing similarity," and he
concluded that Philippine Nut "was not entitled to register the mark at the time of its filing the application for registration"
as Standard Brands will be damaged by the registration of the same. Its motion for reconsideration having been denied,
Philippine Nut came up to this Court for a review of said decision.

In seeking a reversal of the decision of respondent Director of Patents, petitioner brings forth eleven assigned errors
all of which revolve around one main issue: is the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" used by
Philippine Nut on its label for salted peanuts confusingly similar  to the trademark "PLANTERS COCKTAIL PEANUTS" used
by Standard Brands on its product so as to constitute an infringement of the latter's trademark rights and justify its
cancellation?2

The applicable law to the case is found in Republic Act 166 otherwise known as the Trade-Mark Law from which We
quote the following pertinent provisions:

Chapter II-A. —

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:

(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; ... (emphasis Ours)

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:

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

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).

In the cases involving infringement of trademark brought before the Court it has been consistently held that there is
infringement of trademark when the use of the mark involved would be likely to cause confusion or mistake in the mind of
the public or to deceive purchasers as to the origin or source of the commodity; that 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 pIace; that duplication or imitation is
not necessary, a similarity in the dominant features of the trademarks would be sufficient. 3

1. The first argument advanced by petitioner which We believe goes to the core of the matter in litigation is that the
Director of Patents erred in holding that the dominant portion of the label of Standard Brands in its cans of salted peanuts
consists of the word PLANTERS which has been used in the label of Philippine Nut for its own product. According to
petitioner, PLANTERS cannot be considered as the dominant feature of the trademarks in question because it is a mere
descriptive term, an ordinary word which is defined in Webster International Dictionary as "one who or that which plants
or sows, a farmer or an agriculturist." (pp. 10-11, petitioner's brief)

We find the argument without merit. While it is true that PLANTERS is an ordinary word, nevertheless it is used in the
labels not to describe the nature of the product, but to project the source or origin of the salted peanuts contained in the
cans. The word PLANTERS printed across the upper portion of the label in bold letters easily attracts and catches the eye
of the ordinary consumer and it is that word and none other that sticks in his mind when he thinks of salted peanuts.

In cases of this nature there can be no better evidence as to what is the dominant feature of a label and as to
whether there is a confusing similarity in the contesting trademarks than the labels themselves. A visual and graphic
presentation of the labels will constitute the best argument for one or the other, hence, we are reproducing hereunder a
picture of the cans of salted peanuts of the parties to the case.

The picture below is part of the documentary evidence appearing in the original records, and it clearly demonstrates
the correctness of the finding of respondent Director that the word PLANTERS is the dominant, striking mark of the labels
in question.

It is true that there are other words used such as "Cordial" in petitioner's can and "Cocktail" in Standard Brands',
which are also prominently displayed, but these words are mere adjectives describing the type of peanuts in the labeled
containers and are not sufficient to warn the unwary customer that the two products come form distinct sources. As a
whole it is the word PLANTERS which draws the attention of the buyer and leads him to conclude that the salted peanuts
contained in the two cans originate from one and the same manufacturer. In fact, when a housewife sends her housemaid
to the market to buy canned salted peanuts, she will describe the brand she wants by using the word PLANTERS and not
"Cordial" nor "Cocktail".

2. The next argument of petitioner is that respondent Director should not have based his decision simply on the use
of the term PLANTERS, and that what he should have resolved is whether there is a confusing similarity in the trademarks
of the parties.

It is quite obvious from the record, that respondent Director's decision is based not only on the fact that petitioner
herein adopted the same dominant mark of Standard Brands, that is, the word PLANTERS, but that it also used in its label
the same coloring scheme of gold, blue, and white, and basically the same lay-out of words such as "salted peanuts" and
"vacuum packed" with similar type and size of lettering as appearing in Standard Brands' own trademark, all of which
result in a confusing similarity between the two labels. 4 Thus, the decision states: "Furthermore, as to appearance and
general impression of the two trademarks, I find a very confusing similarity." (Emphasis supplied)5

Referring again to the picture We have reproduced, the striking similarity between the two labels is quite evident not
only in the common use of PLANTERS but also in the other words employed. As a matter of fact, the capital letter "C" of
petitioner's "Cordial" is alike to the capital "C" of Standard's "Cocktail", with both words ending with an "1".

Admittedly, no producer or manufacturer may have a monopoly of any color scheme or form of words in a label. But
when a competitor adopts a distinctive or dominant mark or feature of another's trademark and with it makes use of the
same color ensemble, employs similar words written in a style, type and size of lettering almost identical with those found
in the other trademark, the intent to pass to the public his product as that of the other is quite obvious. Hence, there is
good reason for Standard Brands' to ask why did petitioner herein use the word PLANTERS, the same coloring scheme,
even almost identical size and contour of the cans, the same lay-out of words on its label when there is a myriad of other
words, colors, phrases, symbols, and arrangements to choose from to distinguish its product from Standard Brands, if
petitioner was not motivated to simulate the label of the latter for its own can of salted peanuts, and thereby deceive the
public?

A similar question was asked by this Court in Clarke vs. Manila Candy Co., 36 Phil. 100, when it resolved in favor of
plaintiff a case of unfair competition based on an imitation of Clarke's packages and wrappers of its candies the main
feature of which was one rooster. The Court queried thus: "... why, with all the birds in the air, and all the fishes in the
sea, and all the animals on the face of the earth to choose from, the defendant company (Manila Candy Co.) selected two
roosters as its trademark, although its directors and managers must have been well aware of the long-continued use of a
rooster by the plaintiff with the sale and advertisement of its goods? ... A cat, a dog, a carabao, a shark or an eagle
stamped upon the container in which candies are sold would serve as well as a rooster for purposes of identification as the
product of defendant's factory. Why did defendant select two roosters as its trademark ?" (p.109, supra)

Petitioner contends, however, that there are differences between the two trademarks, such as, the presence of the
word "Philippine" above PLANTERS on its label, and other phrases, to wit: "For Quality and Price, Its Your Outstanding
Buy", the address of the manufacturer in Quezon City, etc., plus a pictorial representation of peanuts overflowing from a
tin can, while in the label of Standard Brands it is stated that the product is manufactured in San Francisco, California, and
on top of the tin can is printed "Mr. Peanut" and the representation of a "humanized peanut". (pp. 30-33, petitioner's brief)

We have taken note of those alleged differences but We find them insignificant in the sense that they are not
sufficient to call the attention of the ordinary buyer that the labeled cans come from distinct and separate sources. The
word "Philippine" printed in small type in petitioner's label may simply give to the purchaser the impression that that
particular can of PLANTERS salted peanuts is locally produced or canned but that what he is buying is still PLANTERS
canned salted peanuts and nothing else. As regards "Mr. Peanut" on Standard Brands' label, the same appears on the top
cover and is not visible when the cans are displayed on the shelves, aside from the fact that the figure of "Mr. Peanut" is
printed on the tin cover which is thrown away after opening the can, leaving no lasting impression on the consumer. It is
also for this reason that We do not agree with petitioner that it is "Mr. Peanut and the Humanized Peanut" which is the
trademark of Standard Brands salted peanuts, it being a mere descriptive pictorial representation of a peanut not
prominently displayed on the very body of the label covering the can, unlike the term PLANTERS which dominates the
label.

It is correctly observed by respondent Director that the merchandize or goods being sold by the parties herein are
very ordinary commodities purchased by the average person and many times by the ignorant and unlettered 6 and these
are the persons who will not as a rule examine the printed small letterings on the container but will simply be guided by
the presence of the striking mark PLANTERS on the label. Differences there will always be, but whatever differences exist,
these pale into insignificance in the face of an evident similarity in the dominant feature and overall appearance of the
labels of the parties.

It is not necessary, to constitute trademark "infringement", that every word of a trade-mark should be appropriated,
but it is sufficient that enough be taken to deceive the public in the purchase of a protected article. (Bunte Bros. v.
Standard Chocolates, D.C. Mass., 45 F. Supp. 478, 481)

A trade-name in order to be an `infringement' upon another need not be exactly like it in form and sound, but it is
enough if the one so resembles another as to deceive or mislead persons of ordinary caution into the belief that they are
dealing with the one concern when in fact they are dealing with the other. (Foss v. Culbertson, 136 P. 2d 711, 718, 17
Wash. 2d 610)

Where a trade-mark contains a dominating or distinguishing word, and purchasing public has come to know and
designate the article by such dominating word, the use of such word by another in marking similar goods may constitute
Infringement though the marks aside from such dominating word may be dissimilar. (Queen Mfg. Co. v. lsaac Ginsberg &
Bros., C.C.A. Mon., 25 F. 2d 284, 287)

(d) "Infringement" of trade-mark does not depend on the use of identical words, nor on the question whether they
are so similar that a person looking at one would be deceived into the belief that it was the other; it being sufficient if one
mark is so like another in form, spelling, or sound that one with not a very definite or clear recollection as to the real mark
is likely to be confused or misled. (Northam Warren Corporation v. Universal Cosmetic Co., C. C. A; III., 18 F. 2d 774, 775)

3. What is next submitted by petitioner is that it was error for respondent Director to have enjoined it from using
PLANTERS in the absence of evidence showing that the term has acquired secondary meaning. Petitioner, invoking
American jurisprudence, asserts that the first user of a tradename composed of common words is given no special
preference unless it is shown that such words have acquired secondary meaning, and this, respondent Standard Brands
failed to do when no evidence was presented to establish that fact. (pp. 14-16, petitioner's brief)

The doctrine of secondary meaning is found in Sec. 4 (f), Chapter II-A of the Trade-Mark Law, viz:

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 the five years next preceding the date of the filing of the application for its registration. (As amended by Sec. 3, Rep.
Act No. 638.)

This Court held that the doctrine is to the effect that a word or phrase originally incapable of exclusive appropriation
with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been
used so long and so exclusively by one producer with reference to his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his product. 7

By way of illustration, is the word "Selecta" which according to this Court is a common ordinary term in the sense that
it may be used or employed by any one in promoting his business or enterprise, but which once adopted or coined in
connection with one's business as an emblem, sign or device to characterize its products, or as a badge of authenticity,
may acquire a secondary meaning as to be exclusively associated with its products and business, so that its use by another
may lead to confusion in trade and cause damage to its business. 8

The applicability of the doctrine of secondary meaning to the situation now before Us is appropriate because there is
oral and documentary evidence showing that the word PLANTERS has been used by and closely associated with Standard
Brands for its canned salted peanuts since 1938 in this country. Not only is that fact admitted by petitioner in the amended
stipulation of facts (see p. 2 of this Decision), but the matter has been established by testimonial (tsn October 4, 1962, pp.
2-8) and documentary evidence consisting of invoices covering the sale of "PLANTERS cocktail peanuts". (Exhibits C to C-
4; D to D-10; E to E-10; F to F-2) In other words, there is evidence to show that the term PLANTERS has become a
distinctive mark or symbol insofar as salted peanuts are concerned, and by priority of use dating as far back as 1938,
respondent Standard Brands has acquired a preferential right to its adoption as its trademark warranting protection against
its usurpation by another. Ubi jus ibi remedium. Where there is a right there is a remedy. Standard Brands has shown the
existence of a property right(Arce Sons & Co. vs. Selecta Biscuit Co., Inc., supra, pp. 262-263) and respondent Director,
has afforded the remedy.

Still on this point, petitioner contends that Standard Brands' use of the trademark PLANTERS was interrupted during
the Japanese occupation and in fact was discontinued when the importation of peanuts was prohibited by Central Bank
regulations effective July 1, 1953, hence it cannot be presumed that it has acquired a secondary meaning. We hold
otherwise. Respondent Director correctly applied the rule that non-use of a trademark on an article of merchandize due to
legal restrictions or circumstances beyond one's control is not to be considered as an abandonment.

In the case of Andres Romero vs. Maiden Form Brassiere Co., Inc ., L-18289, March 31, 1964, 10 SCRA 556, the same
question was raised by petitioner Romero when he filed with the Bureau of Patents a petition to cancel the registration of
the trademark "Adagio" for brassieres manufactured by Maiden Form Brassiere Co., Inc. His petition having been
dismissed by the Director of Patents, Romero appealed to this Court and one of the issues posed by him was that when
the Government imposed restrictions on importations of brassieres bearing that particular trademark, there was
abandonment of the same by respondent company which entitled petitioner to adopt it for his own use and which in fact
he had been using for a number of years. That argument was met by the Court in the words of Justice Jesus Barrera thus:

... The evidence on record shows, on the other hand, that the trademark "Adagio" was first used exlusively in the
Philippines by appellee in the year 1932. There being no evidence of use of the mark by others before 1932, or that
appellee abandoned use thereof, the registration of the mark was made in accordance with the Trademark Law. Granting
that appellant used the mark when appellee stopped using it during the period of time that the Government imposed
restrictions on importation of respondent's brassiere being the trademark, such temporary non-use did not affect the
rights of appellee because it was occasioned by government restrictions and was not permanent, intentional, and
voluntary.

To work an abandonment, the disuse must be permanent and not ephemeral; it must, be intentional and voluntary,
and not involuntary or even compulsory. There must be a thoroughgoing discontinuance of any trade-mark use of the
mark in question (Callman, Unfair Competition and Trademark, 2nd Ed., p. 1341).1äwphï1.ñët

The use of the trademark by other manufacturers did not indicate an intention on the part of appellee to abandon it.

The instances of the use by others of the term Budweiser, cited by the defendant, fail, even when liberally construed,
to indicate an intention upon the part of the complainant to abandon its rights to that name. "To establish the defense of
abandonment, it is necessary to show not only acts indicating a practical abandonment, but an actual intention to
abandon." Sanlehner v. Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 6.0).(Anheuser-Busch, Inc, v.
Budweiser Malt Products Corp., 287 F. 245.)

xxx xxx xxx

Non-use because of legal restrictions is not evidence of an intent to abandon. Non-use of their ancient trade-mark
and the adoption of new marks by the Carthusian Monks after they had been compelled to leave France was consistent
with an intention to retain their right to use their old mark. Abandonment will not be inferred from a disuse over a period
of years occasioned by statutory restrictions on the name of liquor. (Nims, Unfair Competition and Trade-Mark, p. 1269.)
(pp. 562-564, supra) (emphasis Ours)

Applying the words of Justice Roman Ozaeta in the "Ang Tibay" case (Ang vs. Toribio Teodoro, p. 56, supra) to the
case now before Us, petitioner herein must not be allowed to get a free ride on the reputation and selling power of
Standard Brands PLANTERS salted peanuts, for a self-respecting person, or a reputable business concern as is the case
here, does not remain in the shelter of another's popularity and goodwill but builds one of his own.

4. Findings of fact by the Director of Patents are conclusive and binding on this Court provided they are supported by
substantial evidence. 9 The testimonial and documentary evidence in addition to the stipulation of facts submitted by the
parties fully support the findings of respondent Director that(1) there is a confusing similarity between the labels or
trademarks of Philippine Nut and Standard Brands used in their respective canned salted peanuts; (2) respondent
Standard Brands has priority of adoption and use of the label with PLANTERS as the dominant feature and the same has
acquired secondary meaning in relation to salted peanuts; and (3) there has been no abandonment or non-use of said
trademark by Standard Brands which would justify its adoption by petitioner or any other competitor for the sale of salted
peanuts in the market.

PREMISES CONSIDERED, We AFFIRM the decision of respondent Director of Patents with costs against petitioner.

So Ordered.

SECOND DIVISION

G.R. No. 222366, December 04, 2017

W LAND HOLDINGS, INC., Petitioner, v. STARWOOD HOTELS AND RESORTS WORLDWIDE,

INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 22, 2015 and the Resolution 3dated
January 7, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 133825 affirming the Decision 4 dated January 10, 2014 of
the Intellectual Property Office (IPO) - Director General (IPO DG), which, in turn, reversed the Decision 5 dated May 11,
2012 of the IPO Bureau of Legal Affairs (BLA) in Inter Partes Case No. 14-2009-00143, and accordingly, dismissed
petitioner W Land Holdings, Inc.'s (W Land) petition for cancellation of the trademark "W" registered in the name of
respondent Starwood Hotels and Resorts, Worldwide, Inc. (Starwood).

The Facts

On December 2, 2005, Starwood filed before the IPO an application for registration of the trademark "W" for Classes
436 and 447 of the International Classification of Goods and Services for the Purposes of the Registration of Marks 8 (Nice
Classification).9 On February 26, 2007, Starwood's application was granted and thus, the "W" mark was registered in its
name.10 However, on April 20, 2006, W Land applied 11 for the registration of its own "W" mark for Class 36, 12 which
thereby prompted Starwood to oppose the same. 13 In a Decision14 dated April 23, 2008, the BLA found merit in Starwood's
opposition, and ruled that W Land's "W" mark is confusingly similar with Starwood's mark, 15 which had an earlier filing
date. W Land filed a motion for reconsideration 16 on June 11, 2008, which was denied by the BLA in a Resolution 17 dated
July 23, 2010.

On May 29, 2009, W Land filed a Petition for Cancellation 18 of Starwood's mark for non-use under Section 151.1 19 of
Republic Act No. 8293 or the "Intellectual Property Code of the Philippines" (IP Code), 20 claiming that Starwood has failed
to use its mark in the Philippines because it has no hotel or establishment in the Philippines rendering the services covered
by its registration; and that Starwood's "W" mark application and registration barred its own "'W" mark application and
registration for use on real estate.21

In its defense,22 Starwood denied having abandoned the subject mark on the ground of non-use, asserting that it filed
with the Director of Trademarks a notarized Declaration of Actual Use 23 (DAU)24 with evidence of use on December 2,
2008,25 which was not rejected. In this relation, Starwood argued that it conducts hotel and leisure business both directly
and indirectly through subsidiaries and franchisees, and operates interactive websites for its W Hotels in order to
accommodate its potential clients worldwide. 26 According to Starwood, apart from viewing agents, discounts, promotions,
and other marketing fields being offered by it, these interactive websites allow Philippine residents to make reservations
and bookings, which presuppose clear and convincing use of the "W'' mark in the Philippines. 27

The BLA Ruling

In a Decision28 dated May 11, 2012, the BLA ruled in W Land's favor, and accordingly ordered the cancellation of
Starwood's registration for the "W" mark. The BLA found that the DAU and the attachments thereto submitted by
Starwood did not prove actual use of the "W" mark in the Philippines, considering that the "evidences of use" attached to
the DAU refer to hotel or establishments that are located abroad. 29 In this regard, the BLA opined that "the use of a
trademark as a business tool and as contemplated under [Section 151.1 (c) of RA 8293] refers to the actual attachment
thereof to goods and services that are sold or availed of and located in the Philippines." 30

Dissatisfied, Starwood appealed31 to the IPO DG.

The IPO DG Ruling

In a Decision32 dated January 10, 2014, the IPO DG granted Starwood's appeal, 33 thereby dismissing W Land's
Petition for Cancellation. Contrary to the BLA's findings, the IPO DG found that Starwood's submission of its DAU and
attachments, coupled by the acceptance thereof by the IPO Bureau of Trademarks, shows that the "W" mark still bears a
"registered" status. Therefore, there is a presumption that Starwood sufficiently complied with the registration
requirements for its mark.34 The IPO DG likewise held that the absence of any hotel or establishment owned by Starwood
in the Philippines bearing the "W" mark should not be equated to the absence of its use in the country, opining that
Starwood's pieces of evidence, particularly its interactive website, indicate actual use in the Philippines, 35 citing Rule
20536 of the Trademark Regulations, as amended by IPO Office Order No. 056-13. 37 Finally, the IPO DG stressed that since
Starwood is the undisputed owner of the "W" mark for use in hotel and hotel-related services, any perceived damage on
the part of W Land in this case should be subordinated to the essence of protecting Starwood's intellectual property rights.
To rule otherwise is to undermine the intellectual property system.38

Aggrieved, W Land filed a petition for review39 under Rule 43 of the Rules of Court before the CA.

The CA Ruling

In a Decision40 dated June 22, 2015, the CA affirmed the IPO DG ruling. At the onset, the CA observed that the hotel
business is peculiar in nature in that the offer, as well as the acceptance of room reservations or bookings wherever in the
world is an indispensable element. As such, the actual existence or presence of a hotel in one place is not necessary
before it can be considered as doing business therein. 41 In this regard, the CA recognized that the internet has become a
powerful tool in allowing businesses to reach out to consumers in a given market without being physically present thereat;
thus, the IPO DG correctly held that Starwood's interactive websites already indicate its actual use in the Philippines of the
"W" mark.42 Finally, the CA echoed the IPO DG's finding that since Starwood is the true owner of the "W" mark - as shown
by the fact that Starwood had already applied for the registration of this mark even before W Land was incorporated - its
registration over the same should remain valid, absent any showing that it has abandoned the use thereof. 43

Unperturbed, W Land moved for reconsideration, 44 but was denied in a Resolution 45 dated January 7, 2016; hence,
this petition.
 The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly affirmed the IPO DG's dismissal of W
Land's Petition for Cancellation of Starwood's "W'' mark.

The Court's Ruling

The petition is without merit.

The IP Code defines a "mark" as "any visible sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise." 46 Case law explains that "[t]rademarks deal with the psychological function of symbols and the
effect of these symbols on the public at large." 47 It is a merchandising short-cut, and, "[w]hatever 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."48 Thus, the protection of trademarks as intellectual property is intended not only to preserve the
goodwill and reputation of the business established on the goods or services bearing the mark through actual use over a
period of time, but also to safeguard the public as consumers against confusion on these goods or services. 49 As viewed by
modern authorities on trademark law, trademarks perform three (3) distinct functions: (1) they indicate origin or
ownership of the articles to which they are attached; (2) they guarantee that those articles come up to a certain standard
of quality; and (3) they advertise the articles they symbolize. 50

In Berris Agricultural Co., Inc. v. Abyadang,51 this Court explained that "[t]he 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.
x x x. A certificate of registration of a mark, once issued, constitutes  prima facieevidence 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 specified in the certificate." 52 However, "the prima facie presumption
brought about by the registration of a mark may be challenged and overcome, in an appropriate action,  by proof of[,
among others,] non-use of the mark, except when excused."53

The actual use of the mark representing the goods or services introduced and transacted in commerce over a period
of time creates that goodwill which the law seeks to protect. For this reason, the IP Code, under Section 124.2, 54 requires
the registrant or owner of a registered mark to declare "actual use of the mark" (DAU) and present evidence of such use
within the prescribed period. Failing in which, the IPO DG may cause the motu propio removal from the register of the
mark's registration.55 Also, any person, believing that "he or she will be damaged by the registration of a mark," which has
not been used within the Philippines, may file a petition for cancellation. 56 Following the basic rule that he who alleges
must prove his case,57 the burden lies on the petitioner to show damage and non-use.

The IP Code and the Trademark Regulations have not specifically defined "use." However, it is understood that  the
"use" which the law requires to maintain the registration of a mark must be genuine , and not merely token.
Based on foreign authorities,58 genuine use may be characterized as a bona fide use which results or tends to result,
in one way or another, into a commercial interaction or transaction "in the ordinary course of trade."59

What specific act or acts would constitute use of the mark sufficient to keep its registration in force may be gleaned
from the Trademark Regulations, Rule 205 of which reads:

RULE 205. Contents of the Declaration and Evidence of Actual Use.  — The declaration shall be under oath, must
refer to only one application or registration, must contain the name and address of the applicant or registrant  declaring
that the mark is in actual use in the Philippines, list of goods where the mark is attached; list the name or names
and the exact location or locations of the outlet or outlets where the products are being sold or where the
services are being rendered, recite sufficient facts to show that the mark described in the application or
registration is being actually used in the Philippines and, specifying the nature of such use. The declarant shall
attach five labels as actually used on the goods or the picture of the stamped or marked container visibly and legibly
showing the mark as well as proof of payment of the prescribed fee. [As amended by Office Order No. 08 (2000)]
(Emphases supplied)

The Trademark Regulations was amended by Office Order No. 056-13. Particularly, Rule 205 now mentions certain
items which "shall be accepted as proof of actual use of the mark:"

RULE 205. Contents of the Declaration and Evidence of Actual Use.—

(a) The declaration shall be under oath and filed by the applicant or registrant (or the authorized officer in case of a
juridical entity) or the attorney or authorized representative of the applicant or registrant. The declaration must refer to
only one application or registration, shall contain the name and address of the applicant or registrant declaring that the
mark is in actual use in the Philippines, the list of goods or services where the mark is used, the name/s of the
establishment and address where the products are being sold or where the services are being rendered. If the goods or
services are available only by online purchase, the website must be indicated on the form in lieu of name or address of the
establishment or outlet. The applicant or registrant may include other facts to show that the mark described in the
application or registration is actually being used in the Philippines. The date of first use shall not be required.
 (b) Actual use for some of the goods and services in the same class shall constitute use for the entire class of goods
and services. Actual use for one class shall be considered use for related classes. In the event that some classes are not
covered in the declaration, a subsequent declaration of actual use may be filed for the other classes of goods or services
not included in the first declaration, provided that the subsequent declaration is filed within the three year period or the
extension period, in case an extension of time to file the declaration was timely made. In the event that no subsequent
declaration of actual use for the other classes of goods and services is filed within the prescribed period, the classes shall
be automatically dropped from the application or registration without need of notice to the applicant or registrant.

(c) The following shall be accepted as proof of actual use of the mark: (1) labels of the mark as these are
used; (2) downloaded pages from the website of the applicant or registrant clearly showing that the goods
are being sold or the services are being rendered in the Philippines; (3) photographs (including digital
photographs printed on ordinary paper) of goods bearing the marks as these are actually used or of the stamped or
marked container of goods and of the establishment/s where the services are being rendered; (4) brochures or advertising
materials showing the actual use of the mark on the goods being sold or services being rendered in the Philippines; (5) for
online sale, receipts of sale of the goods or services rendered or other similar evidence of use, showing that
the goods are placed on the market or the services are available in the Philippines or that the transaction
took place in the Philippines; (6) copies of contracts for services showing the use of the mark. Computer printouts of
the drawing or reproduction of marks will not be accepted as evidence of use.

(d) The Director may, from time to time, issue a list of acceptable evidence of use and those that will
not be accepted by the Office. (Emphases and underscoring supplied)

Office Order No. 056-13 was issued by the IPO DG on April 5, 2013, pursuant to his delegated rule-making authority
under Section 7 of the IP Code.60 The rationale for this issuance, per its whereas clauses, is to further "the policy of the
[IPO] to streamline administrative procedures in registering trademarks" and in so doing, address the need "to clarify what
will be accepted as proof of use." In this regard, the parameters and list of evidence introduced under the amended
Trademark Regulations are thus mere administrative guidelines which are only meant to flesh out the types of acceptable
evidence necessary to prove what the law already provides, i.e., the requirement of actual use. As such, contrary to W
Land's postulation,61 the same does not diminish or modify any substantive right and hence, may be properly applied to
"all pending and registered marks,"62 as in Starwood's "W" mark for hotel / hotel reservation services being rendered or, at
the very least, made available in the Philippines.

Based on the amended Trademark Regulations, it is apparent that the IPO has now given due regard to the advent of
commerce on the internet. Specifically, it now recognizes, among others, "downloaded pages from the website of the
applicant or registrant clearly showing that the goods are being sold or the services are being rendered in the Philippines,"
as well as "for online sale, receipts of sale of the goods or services rendered or other similar evidence of use, showing that
the goods are placed on the market or the services are available in the Philippines or that the transaction took place in the
Philippines,"63 as acceptable proof of actual use. Truly, the Court discerns that these amendments are but an inevitable
reflection of the realities of the times. In Mirpuri v. CA,64 this Court noted that "[a]dvertising on the Net and cybershopping
are turning the Internet into a commercial marketplace:"65

The Internet is a decentralized computer network linked together through routers and communications protocols that
enable anyone connected to it to communicate with others likewise connected, regardless of physical location. Users of the
Internet have a wide variety of communication methods available to them and a tremendous wealth of information that
they may access. The growing popularity of the Net has been driven in large part by the World Wide Web,  i.e., a system
that facilitates use of the Net by sorting through the great mass of information available on it. Advertising on the Net
and cybershopping are turning the Internet into a commercial marketplace. 66 (Emphasis and underscoring
supplied)

Thus, as modes of advertising and acquisition have now permeated into virtual zones over cyberspace, the concept of
commercial goodwill has indeed evolved:

In the last half century, the unparalleled growth of industry and the rapid development of communications technology
have enabled trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does
not actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market
penetration; it extends to zones where the marked article has been fixed in the public mind through
advertising. Whether in the print, broadcast or electronic communications medium, particularly on the
Internet, advertising has paved the way for growth and expansion of the product by creating and earning a
reputation that crosses over borders, virtually turning the whole world into one vast
marketplace.67 (Emphasis and underscoring supplied)

Cognizant of this current state of affairs, the Court therefore agrees with the IPO DG, as affirmed by the CA, that the
use of a registered mark representing the owner's goods or services by means of an interactive website may constitute
proof of actual use that is sufficient to maintain the registration of the same. Since the internet has turned the world into
one vast marketplace, the owner of a registered mark is clearly entitled to generate and further strengthen his commercial
goodwill by actively marketing and commercially transacting his wares or services throughout multiple platforms on the
internet. The facilities and avenues present in the internet are, in fact, more prominent nowadays as they conveniently
cater to the modern-day consumer who desires to procure goods or services at any place and at any time, through the
simple click of a mouse, or the tap of a screen. Multitudinous commercial transactions are accessed, brokered, and
consummated everyday over websites. These websites carry the mark which represents the goods or services sought to be
transacted. For the owner, he intentionally exhibits his mark to attract the customers' interest in his goods or services. The
mark displayed over the website no less serves its functions of indicating the goods or services' origin and symbolizing the
owner's goodwill than a mark displayed in the physical market. Therefore, there is no less premium to recognize actual use
of marks through websites than their actual use through traditional means. Indeed, as our world evolves, so too should
our appreciation of the law. Legal interpretation - as it largely affects the lives of people in the here and now - never
happens in a vacuum. As such, it should not be stagnant but dynamic; it should not be ensnared in the obsolete but
rather, sensitive to surrounding social realities.

It must be emphasized, however, that the mere exhibition of goods or services over the internet, without more, is not
enough to constitute actual use. To reiterate, the "use" contemplated by law is genuine use - that is, a bona fide kind of
use tending towards a commercial transaction in the ordinary course of trade. Since the internet creates a borderless
marketplace, it must be shown that the owner has actually transacted, or at the very least, intentionally
targeted customers of a particular jurisdiction in order to be considered as having used the trade mark in
the ordinary course of his trade in that country. A showing of an actual commercial link to the country is
therefore imperative. Otherwise, an unscrupulous registrant would be able to maintain his mark by the mere expedient
of setting up a website, or by posting his goods or services on another's site, although no commercial activity is intended
to be pursued in the Philippines. This type of token use renders inutile the commercial purpose of the mark, and hence,
negates the reason to keep its registration active. As the IP Code expressly requires, the use of the mark must be
"within the Philippines." This is embedded in Section 151 of the IP Code on cancellation, which reads:

SECTION 151. Cancellation. — 151.1. A petition to cancel a registration of a mark under this Act may be filed with
the Bureau of Legal Affairs by any person who believes that he is or will be damaged by the registration of a mark under
this Act as follows:

(a) Within five (5) years from the date of the registration of the mark under this Act.

At any time, if the registered mark becomes the generic name for the goods or services, or a portion thereof, for
which it is registered, or has been abandoned, or its registration was obtained fraudulently or contrary to the provisions
of this Act, or if the registered mark is being used by, or with the permission of, the registrant so as to misrepresent the
source of the goods or services on or in connection with which the mark is used. If the registered mark becomes the
generic name for less than all of the goods or services for which it is registered, a petition to cancel the registration for
(b)
only those goods or services may be filed. A registered mark shall not be deemed to be the generic name of goods or
services solely because such mark is also used as a name of or to identify a unique product or service. The primary
significance of the registered mark to the relevant public rather than purchaser motivation shall be the test for
determining whether the registered mark has become the generic name of goods or services on or in connection with
which it has been used.

At any time, if the registered owner of the mark without legitimate reason fails to use the mark
the
(c)Philippines, or to cause it to be used in the Philippines by virtue of a license  during an uninterrupted period
of three (3) years or longer. (Emphasis and underscoring supplied)

The hotel industry is no stranger to the developments and advances in technology. Like most businesses nowadays,
hotels are utilizing the internet to drive almost every aspect of their operations, most especially the offering and accepting
of room reservations or bookings, regardless of the client or customer base. The CA explained this booking process in that
the "business transactions commence with the placing of room reservations, usually by or through a travel agent who acts
for or in behalf of his principal, the hotel establishment. [The] reservation is first communicated to the reservations and
booking assistant tasked to handle the transaction. After the reservation is made, the specific room reserved for the guest
will be blocked and will not be offered to another guest. As such, on the specified date of arrival, the room reserved will be
available to the guest."68

In this accord, a hotel's website has now become an integral element of a hotel business. Especially with the uptrend
of international travel and tourism, the hotel's website is now recognized as an efficient and necessary tool in advertising
and promoting its brand in almost every part of the world. More so, interactive websites that allow customers or clients to
instantaneously book and pay for, in advance, accommodations and other services of a hotel anywhere in the world,
regardless of the hotel's actual location, dispense with the need for travel agents or hotel employees to transact the
reservations for them. In effect, the hotel's website acts as a bridge or portal through which the hotel reaches out and
provides its services to the client/customer anywhere in the world, with the booking transaction completed at the
client/customer's own convenience. It is in this sense that the CA noted that the "actual existence or presence of a hotel in
one place is not necessary before it can be considered as doing business therein." 69

As earlier intimated, mere use of a mark on a website which can be accessed anywhere in the world will not
automatically mean that the mark has been used in the ordinary course of trade of a particular country. Thus, the use of
mark on the internet must be shown to result into a within-State sale, or at the very least, discernibly intended to target
customers that reside in that country. This being so, the use of the mark on an interactive website, for instance,
may be said to target local customers when they contain specific details regarding or pertaining to the
target State, sufficiently showing an intent towards realizing a within-State commercial activity or
interaction. These details may constitute a local contact phone number, specific reference being available to local
customers, a specific local webpage, whether domestic language and currency is used on the website, and/or whether
domestic payment methods are accepted. 70 Notably, this paradigm of ascertaining local details to evince within-state
commercial intent is subscribed to by a number of jurisdictions, namely, the European Union, Hong Kong, Singapore,
Malaysia, Japan, Australia, Germany, France, Russia, and the United Kingdom. 71 As for the U.S. - where most of our
intellectual property laws have been patterned 72 - there have been no decisions to date coming from its Trademark Trial
and Appeal Board involving cases challenging the validity of mark registrations through a cancellation action based on the
mark's internet use. However, in International Bancorp LLC v. Societe des Bains de Mer et du Cercle des Etrangers a
Monaco,73 it was ruled that mere advertising in the U.S. combined with rendering of services to American customers in a
foreign country constituted "use" for the purpose of establishing trademark rights in the U.S.

In this case, Starwood has proven that it owns Philippine registered domain
names,74 i.e., www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph, for its website that
showcase its mark. The website is readily accessible to Philippine citizens and residents, where they can avail and book
amenities and other services in any of Starwood's W Hotels worldwide. Its website also readily provides a phone
number75 for Philippine consumers to call for information or other concerns. The website further uses the English
language76 - considered as an official language in this country 77 - which the relevant market in the Philippines understands
and often uses in the daily conduct of affairs. In addition, the prices for its hotel accommodations and/or services can be
converted into the local currency or the Philippine Peso. 78 Amidst all of these features, Starwood's "W" mark is prominently
displayed in the website through which consumers in the Philippines can instantaneously book and pay for their
accommodations, with immediate confirmation, in any of its W Hotels. Furthermore, it has presented data showing a
considerably growing number of internet users in the Philippines visiting its website since 2003, which is enough to
conclude that Starwood has established commercially-motivated relationships with Philippine consumers. 79

Taken together, these facts and circumstances show that Starwood's use of its "W" mark through its interactive
website is intended to produce a discernable commercial effect or activity within the Philippines, or at the very least, seeks
to establish commercial interaction with local consumers. Accordingly, Starwood's use of the "W" mark in its reservation
services through its website constitutes use of the mark sufficient to keep its registration in force.

To be sure, Starwood's "W" mark is registered for Classes 43, i.e., for hotel, motel, resort and motor inn
services, hotel reservation services, restaurant, bar and catering services, food and beverage preparation services, cafe
and cafeteria services, provision of conference, meeting and social function facilities, under the Nice Classification. 80 Under
Section 152.3 of the IP Code, "[t]he use of a mark in connection with one or more of the goods or services belonging to
the class in respect of which the mark is registered shall prevent its cancellation or removal in respect of all other goods or
services of the same class." Thus, Starwood's use of the "W" mark for reservation services through its website constitutes
use of the mark which is already sufficient to protect its registration under the entire subject classification from non-use
cancellation. This, notwithstanding the absence of a Starwood hotel or establishment in the Philippines.

Finally, it deserves pointing out that Starwood submitted in 2008 its DAU with evidence of use which the IPO, through
its Director of Trademarks and later by the IPO DG in the January 10, 2014 Decision, had accepted and recognized as
valid. The Court finds no reason to disturb this recognition. According to jurisprudence, administrative agencies, such as
the IPO, by means of their special knowledge and expertise over matters falling within their jurisdiction are in a better
position to pass judgment on this issue. 81 Thus, their findings are generally accorded respect and finality, as long as they
are supported by substantial evidence. In this case, there is no compelling basis to reverse the IPO DG's findings - to keep
Starwood's registration for the "W" mark in force - as they are well supported by the facts and the law and thus, deserve
respect from this Court.

WHEREFORE, the petition is DENIED. The Decision dated June 22, 2015 and the Resolution dated January 7, 2016
of the Court of Appeals in CA-G.R. SP No. 133825 are hereby AFFIRMED.

SO ORDERED.

RIGHTS CONFERRED TO OWNER OF A REGISTERED MARK

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 190065               August 16, 2010

DERMALINE, INC., Petitioner, 
vs.
MYRA PHARMACEUTICALS, INC. Respondent.

DECISION
 NACHURA, J.:

This is a petition for review on certiorari 1 seeking to reverse and set aside the Decision dated August 7, 2009 2 and the
Resolution dated October 28, 20093 of the Court of Appeals (CA) in CA-G.R. SP No. 108627.

The antecedent facts and proceedings—

On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual Property Office (IPO) an
application for registration of the trademark "DERMALINE DERMALINE, INC." (Application No. 4-2006011536). The
application was published for Opposition in the IPO E-Gazette on March 9, 2007.

On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified Opposition 4 alleging that the
trademark sought to be registered by Dermaline so resembles its trademark "DERMALIN" and will likely cause confusion,
mistake and deception to the purchasing public. Myra said that the registration of Dermaline’s trademark will violate
Section 1235 of Republic Act (R.A.) No. 8293 (Intellectual Property Code of the Philippines). It further alleged that
Dermaline’s use and registration of its applied trademark will diminish the distinctiveness and dilute the goodwill of Myra’s
"DERMALIN," registered with the IPO way back July 8, 1986, renewed for ten (10) years on July 8, 2006. Myra has been
extensively using "DERMALIN" commercially since October 31, 1977, and said mark is still valid and subsisting.

Myra claimed that, despite Dermaline’s attempt to differentiate its applied mark, the dominant feature is the term
"DERMALINE," which is practically identical with its own "DERMALIN," more particularly that the first eight (8) letters of
the marks are identical, and that notwithstanding the additional letter "E" by Dermaline, the pronunciation for both marks
are identical. Further, both marks have three (3) syllables each, with each syllable identical in sound and appearance, even
if the last syllable of "DERMALINE" consisted of four (4) letters while "DERMALIN" consisted only of three (3).

Myra also pointed out that Dermaline applied for the same mark "DERMALINE" on June 3, 2003 and was already
refused registration by the IPO. By filing this new application for registration, Dermaline appears to have engaged in a
fishing expedition for the approval of its mark. Myra argued that its intellectual property right over its trademark is
protected under Section 1476 of R.A. No. 8293.

Myra asserted that the mark "DERMALINE DERMALINE, INC." is aurally similar to its own mark such that the
registration and use of Dermaline’s applied mark will enable it to obtain benefit from Myra’s reputation, goodwill and
advertising and will lead the public into believing that Dermaline is, in any way, connected to Myra. Myra added that even
if the subject application was under Classification 44 7 for various skin treatments, it could still be connected to the
"DERMALIN" mark under Classification 5 8 for pharmaceutical products, since ultimately these goods are very closely
related.

In its Verified Answer, 9 Dermaline countered that a simple comparison of the trademark "DERMALINE DERMALINE,
INC." vis-à-vis Myra’s "DERMALIN" trademark would show that they have entirely different features and distinctive
presentation, thus it cannot result in confusion, mistake or deception on the part of the purchasing public. Dermaline
contended that, in determining if the subject trademarks are confusingly similar, a comparison of the words is not the only
determinant, but their entirety must be considered in relation to the goods to which they are attached, including the other
features appearing in both labels. It claimed that there were glaring and striking dissimilarities between the two
trademarks, such that its trademark "DERMALINE DERMALINE, INC." speaks for itself (Res ipsa loquitur). Dermaline
further argued that there could not be any relation between its trademark for health and beauty services from Myra’s
trademark classified under medicinal goods against skin disorders.

The parties failed to settle amicably. Consequently, the preliminary conference was terminated and they were
directed to file their respective position papers. 10

On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No. 2008-70 11 sustaining Myra’s opposition
pursuant to Section 123.1(d) of R.A. No. 8293. It disposed—

WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED. Consequently, Application Serial No. 4-2006-
011536 for the mark ‘DERMALINE, DERMALINE, INC. Stylized Wordmark’ for Dermaline, Inc. under class 44 covering the
aforementioned goods filed on 21 October 2006, is as it is hereby, REJECTED.

Let the file wrapper of ‘DERMALINE, DERMALINE, INC. Stylized Wordmark’ subject matter of this case be forwarded
to the Bureau of Trademarks (BOT) for appropriate action in accordance with this Decision.

SO ORDERED.12

Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under Resolution No. 2009-12(D) 13 dated
January 16, 2009.

Expectedly, Dermaline appealed to the Office of the Director General of the IPO. However, in an Order 14 dated April
17, 2009, the appeal was dismissed for being filed out of time.
 Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated April 17, 2009 and the
rejection of Dermaline’s application for registration of trademark. The CA likewise denied Dermaline’s motion for
reconsideration; hence, this petition raising the issue of whether the CA erred in upholding the IPO’s rejection of
Dermaline’s application for registration of trademark.

The petition is without merit.

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.15 Inarguably, it is an intellectual property deserving protection by law. In trademark controversies, each case
must be scrutinized according to its peculiar circumstances, such that jurisprudential precedents should only be made to
apply if they are specifically in point.16

As Myra correctly posits, as a registered trademark owner, it has the right under Section 147 of R.A. No. 8293 to
prevent third parties from using a trademark, or similar signs or containers for goods or services, without its consent,
identical or similar to its registered trademark, where such use would result in a likelihood of confusion.

In determining likelihood of confusion, case law has developed two (2) 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 or deception.17 It is applied when the trademark sought to be registered contains the main, essential and
dominant features of the earlier registered trademark, and confusion or deception is likely to result. Duplication or
imitation is not even required; neither is it necessary that the label of the applied mark for registration should suggest an
effort to imitate. The important issue is whether the use of the marks involved would likely cause confusion or mistake in
the mind of or deceive the ordinary purchaser, or one who is accustomed to buy, and therefore to some extent familiar
with, the goods in question.18 Given greater consideration are 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. 19 The test of dominancy
is now explicitly incorporated into law in Section 155.1 of R.A. No. 8293 which provides—

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; (emphasis supplied)

On the other hand, the Holistic Test entails a consideration of the entirety of the marks as applied to the products,
including labels and packaging, in determining confusing similarity. The scrutinizing eye of the observer must focus not
only on the predominant words but also on the other features appearing in both labels so that a conclusion may be drawn
as to whether one is confusingly similar to the other. 20

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.21

In rejecting the application of Dermaline for the registration of its mark "DERMALINE DERMALINE, INC.," the IPO
applied the Dominancy Test. It declared that both confusion of goods and service and confusion of business or of origin
were apparent in both trademarks. It also noted that, per Bureau Decision No. 2007-179 dated December 4, 2007, it
already sustained the opposition of Myra involving the trademark "DERMALINE" of Dermaline under Classification 5. The
IPO also upheld Myra’s right under Section 138 of R.A. No. 8293, which provides that a certification of registration of a
mark is 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 and those that are related thereto specified in the
certificate.

We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are no set rules that
can be deduced as what constitutes a dominant feature with respect to trademarks applied for registration; usually, what
are taken into account are signs, color, design, peculiar shape or name, or some special, easily remembered earmarks of
the brand that readily attracts and catches the attention of the ordinary consumer. 22

Dermaline’s insistence that its applied trademark "DERMALINE DERMALINE, INC." had differences "too striking to be
mistaken" from Myra’s "DERMALIN" cannot, therefore, be sustained. While it is true that the two marks are presented
differently – Dermaline’s mark is written with the first "DERMALINE" in script going diagonally upwards from left to right,
with an upper case "D" followed by the rest of the letters in lower case, and the portion "DERMALINE, INC." is written in
upper case letters, below and smaller than the long-hand portion; while Myra’s mark "DERMALIN" is written in an upright
font, with a capital "D" and followed by lower case letters – the likelihood of confusion is still apparent. This is because
they are almost spelled in the same way, except for Dermaline’s mark which ends with the letter "E," and they are
pronounced practically in the same manner in three (3) syllables, with the ending letter "E" in Dermaline’s mark
pronounced silently. Thus, when an ordinary purchaser, for example, hears an advertisement of Dermaline’s applied
trademark over the radio, chances are he will associate it with Myra’s registered mark.

Further, Dermaline’s stance that its product belongs to a separate and different classification from Myra’s products
with the registered trademark does not eradicate the possibility of mistake on the part of the purchasing public to
associate the former with the latter, especially considering that both classifications pertain to treatments for the
skin.1avvphi1

Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of
the market, and at different price levels depending on variations of the products for specific segments of the market. The
Court is cognizant that the registered trademark owner enjoys protection in product and market areas that are the normal
potential expansion of his business. Thus, we have held –

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his
goods or business from actual market competition with identical or similar products of the parties, but extends to all cases
in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where
prospective purchasers would be misled into thinking that the complaining party has extended his business into the field
(see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). 23 (Emphasis supplied)

Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such that, considering
the current proliferation of health and beauty products in the market, the purchasers would likely be misled that Myra has
already expanded its business through Dermaline from merely carrying pharmaceutical topical applications for the skin to
health and beauty services.

Verily, when one applies for the registration of a trademark or label which is almost the same or that 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 is intended
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.24

Besides, the issue on protection of intellectual property, such as trademarks, is factual in nature. The findings of the
IPO, upheld on appeal by the same office, and further sustained by the CA, bear great weight and deserves respect from
this Court. Moreover, the decision of the IPO had already attained finality when Dermaline failed to timely file its appeal
with the IPO Office of the Director General.

WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution dated October 28, 2009
of the Court of Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against petitioner.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 86683 January 21, 1993

PHILIP S. YU, petitioner, 
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE PRESIDING JUDGE, RTC OF MANILA, BRANCH
XXXIV (34) and UNISIA MERCHANDISING CO., INC., respondents.

Oscar M. Manahan for petitioner.

Ruben L. Pasamonte collaborating counsel for petitioner.

Alfredo G. De Guzman for private respondent.

 MELO, J.:

Petitioner, the exclusive distributor of the House of Mayfair wallcovering products in the Philippines, cried foul when
his former dealer of the same goods, herein private respondent, purchased the merchandise from the House of Mayfair in
England through FNF Trading in West Germany and sold said merchandise in the Philippines. Both the court of origin and
the appellate court rejected petitioner's thesis that private respondent was engaged in a sinister form of unfair competition
within the context of Article 28 of the New Civil Code (pp. 23 and 64, Rollo). Hence, the petition at bar.

There is no dispute that petitioner has had an exclusive sales agency agreement with the House of Mayfair since 1987
to promote and procure orders for Mayfair wallcovering products from customers in the Philippines (Annex "B", Petition; p.
30, Rollo). Even as petitioner was such exclusive distributor, private respondent, which was then petitioner's dealer,
imported the some goods via the FNF Trading which eventually sold the merchandise in the domestic market (TSN,
September 20, 1988, p. 9; p. 117, Rollo). In the suit for injunction which petitioner filed before the Regional Trial Court of
the National Capital Judicial Region stationed at Manila, petitioner pressed the idea that he was practically by-passed and
that private respondent acted in concert with the FNF Trading in misleading Mayfair into believing that the goods ordered
by the trading firm were intended for shipment to Nigeria although they were actually shipped to and sold in the
Philippines (Paragraph 5, Complaint: p. 34, Rollo). Private respondent professed ignorance of the exclusive contract in
favor of petitioner. Even then, private respondent responded by asserting that petitioner's understanding with Mayfair is
binding only between the parties thereto (Paragraph 5, Answer; p. 50, Rollo).

In the course of hearing the arguments for and against the issuance of the requested writ of preliminary injunction,
petitioner impressed before the lower court that he is seeking to enjoin the sale and distribution by private respondent of
the same goods in the market (TSN, September 20, 1988, p. 35; p. 142, Rollo) but the Honorable Cesar V. Alejandria,
Presiding Judge of Branch 34 was unperturbed, thusly:

Resolving plaintiff's motion embodied in the complaint for the issuance of a writ of preliminary injunction after
hearing, but without prejudging the merits of the case, and finding from the evidences adduced by the plaintiff, that the
terms and conditions of the agency agreement, Exhibit "A-inj." between the plaintiff and The House of Mayfair of England
for the exclusive distributorship by the plaintiff of the latter's goods, apertain to them; that there is no privity of contract
between the plaintiff and the defendant; that the controversy in this case arose from a breach of contract by the FNF
Trading of Germany, for having shipped goods it had purchased from The House of Mayfair to the Philippines: that as
shown in Exh. "J-inj.", the House of Mayfair was demanding payment of 4,500.00 from the FNF Trading for restitution of
plaintiff's alleged loss on account of the shipment of the goods in question here in the Philippines and now in the
possession of the defendant; it appears to the Court that to restrain the defendant from selling the goods it has ordered
from the FNF Trading of Germany, would be without legal justification.

WHEREFORE, the motion for the issuance of a writ of preliminary injunction to restrain the defendant from selling the
goods it has ordered from the FNF Trading of Germany is hereby DENIED. (p. 64, Rollo.)

The indifference of the trial court towards petitioner's supplication occasioned the filing of a petition for review
on certiorari  with the Court of Appeals but Justice Ordoñez-Benitez, with whom Justices Bellosillo and Kalalo concurred,
reacted in the same nonchalant fashion. According to the appellate court, petitioner was not able to demonstrate the
unequivocal right which he sought to protect and that private respondent is a complete stranger  vis-a-vis  the covenant
between petitioner and Mayfair. Apart from these considerations, the reviewing authority noted that petitioner could be
fully compensated for the prejudice he suffered judging from the tenor of Mayfair's correspondence to FNF Trading
wherein Mayfair took the cudgels for petitioner in seeking compensation for the latter's loss as a consequence of private
respondent's scheme (p. 79, Rollo; pp. 23-29, Rollo).

In the petition at hand, petitioner anchors his plea for redress on his perception that private respondent has
distributed and continues to sell Mayfair covering products in contravention of petitioner's exclusive right conferred by the
covenant with the House of Mayfair.

On March 13, 1989, a temporary restraining order was issued to last until further notice from this Court directed
against private respondent (p. 188, Rollo). Notwithstanding such proscription, private respondent persisted in the
distribution and sole (p. 208; 228-229, Rollo), triggering petitioner's motion to cite private respondent's manager in
contempt of court (p. 223, Rollo). Considering that private respondent's manager, Frank Sia, admitted the acts complained
of, a fine of P500.00 was imposed on him but he failed to pay the same within the five-day period provided in Our
Resolution of June 21, 1989
(p. 236, Rollo).

Did respondent appellate court correctly agree with the lower court in disallowing the writ solicited by herein
petitioner?

That the exclusive sales contract which links petitioner and the House of Mayfair is solely the concern of the privies
thereto and cannot thus extend its chain as to bind private respondent herein is, We believe, beside the point. Verily,
injunction is the appropriate remedy to prevent a wrongful interference with contracts by strangers to such contracts
where the legal remedy is insufficient and the resulting injury is irreparable (Gilchrist vs. Cuddy, 29 Phil. 542 [1915]; 4-
A Padilla, Civil Code Annotated, 1988 Ed., p. 90). The liability of private respondent, if any, does not emanate from the
four corners of the contract for undoubtedly, Unisia Merchandising Co., Inc. is not a party thereto but its accountability is
"an independent act generative of civil liability" (Daywalt vs. Corporacion de PP. Agustinos Recoletos, 39 Phil. 587 [1919];
4 Paras, Civil Code of the Philippines Annotated, 1981 10th Ed., p. 439; 4 Tolentino, Commentaries and Jurisprudence on
the Civil Code, 1986 Ed.,
p. 439). These observations, however, do not in the least convey the message that We have placed the cart ahead of the
horse, so to speak, by pronouncing private respondent's liability at this stage in view of the pendency of the main suit for
injunction below. We are simply rectifying certain misperceptions entertained by the appellate court as regards the
feasibility of requesting a preliminary injunction to enjoin a stranger to an agreement.

To Our mind, the right to perform an exclusive distributorship agreement and to reap the profits resulting from such
performance are proprietary rights which a party may protect (30 Am. Jur. Section 19, pp. 71-72: Jurado, Comments and
Jurisprudence on Obligations and Contracts, 1983 8th Rev. Ed., p. 336) which may otherwise not be diminished, nay,
rendered illusory by the expedient act of utilizing or interposing a person or firm to obtain goods from the supplier to
defeat the very purpose for which the exclusive distributorship was conceptualized, at the expense of the sole authorized
distributor (43 C.J.S. 597).

Another circumstance which respondent court overlooked was petitioner's suggestion, which was not disputed by
herein private respondent in its comment, that the House of Mayfair in England was duped into believing that the goods
ordered through the FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to and sold in the
Philippines. A ploy of this character is akin to the scenario of a third person who induces a party to renege on or violate his
undertaking under a contract, thereby entitling the other contracting party to relief therefrom ( Article 1314, New Civil
Code). The breach caused by private respondent was even aggravated by the consequent diversion of trade from the
business of petitioner to that of private respondent caused by the latter's species of unfair competition as demonstrated no
less by the sales effected inspite of this Court's restraining order. This brings Us to the irreparable mischief which
respondent court misappreciated when it refused to grant the relief simply because of the observation that petitioner can
be fully compensated for the damage. A contrario, the injury is irreparable where it is continuous and repeated since from
its constant and frequent recurrence, no fair and reasonable redress can be had therefor by petitioner insofar as his
goodwill and business reputation as sole distributor are concerned. Withal, to expect petitioner to file a complaint for every
sale effected by private respondent will certainly court multiplicity of suits (3 Francisco, Revised Rules of Court, 1985
Edition, p. 261).

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 13, 1989 in CA-
G.R. SP No. 16019 and the Order dated October 16, 1988 issued by the magistrate at the court of origin are hereby
REVERSED and SET ASIDE. Let this case be remanded to the court of origin for issuance of a writ of preliminary injunction
upon petitioner's posting of a bond in the sum of Fifty Thousand (P50,000.00) Pesos to be approved by said court, to
remain effective during the trial on the merits until final determination of the case. The manager of private respondent.
Frank Sia, is hereby ordered to pay to the Clerk of Court within five (5) days from notice hereof the fine of P500.00, as
previously imposed on him, with a warning that failure to do so will be dealt with more severely.

Upon issuance of the writ of preliminary injunction, the restraining order issued on March 13, 1989 by this Court shall
be deemed automatically lifted.

SO ORDERED.

THIRD DIVISION

G.R. No. 192797, April 18, 2018

EXCELLENT ESSENTIALS INTERNATIONAL CORPORATION, Petitioner, v. EXTRA EXCEL INTERNATIONAL

PHILIPPINES, INC., Respondent.

DECISION

MARTIRES, J.:

We resolve the petition for review on certiorari assailing the 28 June 2010 Decision 1 of the Court of Appeals (CA) in
CA-G.R. CV No. 88388. The CA decision, in effect, reversed the Regional Trial Court, Branch 138, Makati City ( RTC, Branch
138), by ordering petitioner Excellent Essentials International Corporation (Excellent Essentials) to pay respondent Extra
Excel International Philippines, Inc. (Excel Philippines) damages, attorney's fees, and costs of suit.

FACTUAL ANTECEDENTS

The present controversy started from a complaint filed by E. Excel International, Inc. ( Excel International) and
Excellent Essentials against Excel Philippines for damages and to enjoin the latter from selling, distributing, and marketing
E. Excel products in the Philippines.

On 9 August 1996, Excel International and Excel Philippines entered into an exclusive rights contract wherein the
latter was granted exclusive rights to distribute E. Excel products in the Philippines. 2 Under the same contract, Excel
International reserved the right to discontinue or alter their agreement at any time. 3

Over the span of four (4) years, Excel International experienced intra-corporate struggle over the control of the
corporation and the operations of its various exclusive distributors in Asia. The dispute even reached the Judicial District
Court of Utah (Utah Court). Eventually, the conflict between the principal stakeholders of Excel International, Jau-Hwa
Stewart (Stewart) and Jau-Fei Chen (Chen), took a turn and Stewart somehow succeeded in gaining control of the
company.

On 1 December 2000, Stewart, in her capacity as president of Excel International, revoked Excel Philippines' exclusive
rights contract and appointed Excellent Essentials as its new exclusive distributor in the Philippines. 4

Despite the revocation of its exclusive rights contract and the appointment of Excellent Essentials, Excel Philippines
continued its operation in violation of the new exclusive distributorship agreement. Thus, on 26 January 2001, Excel
International, through counsel, demanded that Excel Philippines cease from selling, importing, distributing, or advertising,
directly or indirectly, any and all of E. Excel products. 5

With its demand unheeded, Excel International and Excellent Essentials filed a complaint for injunction and damages
against Excel Philippines. The complaint was originally filed before the RTC, Branch 56, of Makati City (RTC, Branch 56).6

On its part, Excel Philippines filed its answer with counterclaims saying that Excel International had no right to
unilaterally revoke its exclusive right to distribute E. Excel products in the Philippines. Attached to its answer was an
agreement dated 22 May 1995 between Excel International and Bright Vision Consultants, Ltd. ( Bright Vision) showing that
Excel Philippines' exclusive distributorship was irrevocable. 7 In fact, it was because of this agreement that Excel Philippines
was incorporated so that it would become Excel International's exclusive distributor within the Philippines. Pertinent
portions of this agreement read:

AGREEMENT

THIS AGREEMENT is made [on] the 22nd day of May 1995 by and between E. Excel International, Inc., a company
registered in the State of Utah, USA (hereinafter referred to as "E. Excel USA") and Bright Vision Consultants Limited, a
company registered in British Virgin Islands with Registration No. 133985 (hereinafter referred to as "BV").

WHEREAS:

E. Excel USA manufactures, markets and/or distributes the products, including but not limited to nutritional
supplements, herbal foods, skin care products, and household products (hereinafter referred to as "Products"). The term
1.
"Product" means all products manufactured, marketed and distributed by E. Excel USA under the name and style of E.
Excel USA's company name and/or its logo.

   

BV desires to invest and establish a new company with other shareholders in the Philippines for the sole purpose of
2.
distributing the Products in the Philippines.

   

The shareholders of BV have considerable marketing experience of the Products in other countries, and have [a]
3.
long term working relationship with E. Excel USA.

   

4. BV shall be the majority shareholder of the new company in the Philippines.

   

5. E. Excel USA desires to market the Products in the Philippines through the New Company.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein set forth, E. Excel USA and BV
agree as follows:
1. FORMATION OF NEW COMPANY

1.1Within six months from the date of this Agreement, BV shall form or help with the formation and establishment
of a new company for the sole purpose of distributing the Products of E. Excel USA.

     

The name of the new company shall be Extra Excel International Philippines Inc. (herein referred to as the "New
1.2
Company").

     

1.3The New Company may be jointly owned by shareholders other than BV, however, BV shall be the majority
shareholder.

   

2. BUSINESS PURPOSE OF THE NEW COMPANY

   

The formation of the New Company shall be for the following business purposes:

     

  2.1Distributing exclusively the Products licensed/manufactured by E. Excel USA in the Philippines.

     

  2.2Promote, advertise, and build up the brand name of the Products of E. Excel USA.

     

  2.3Train and recruit sales force and/or distributors for the Products of E. Excel USA.

     

  2.4Build a network of consumers for the Products of E. Excel USA.

     

2.5Set up head office, and branch offices and/or training centers and/or distributing centers as may be necessary for
 
the Products in the Philippines.

     

  2.6Warehouse and maintain necessary stock of the Products for the distributors/consumers.

     

2.7Be responsible for all the costs and expenses relating to all promotional and marketing expenditure relating to
 
the distribution of the Products in the Philippines.

3. APPOINTMENT OF EXCLUSIVE DISTRIBUTOR

     

3.1Upon formation of the New Company, the New Company shall automatically become E. Excel USA's "Authorized
 
Exclusive Distributor."

     

3.2E. Excel hereby agrees to grant the New Company the irrevocable and exclusive right to distribute, market and/or
  sell the Products of E. Excel USA in the Philippines. The New Company shall be entitled to describe itself as E. Excel
USA's "Authorized Exclusive Distributor" for its Products in the Philippines.

     

3.3E. Excel USA also hereby authorizes and gives an exclusive, irrevocable license to the New Company the right to
  use its patents, trademarks, logo, designs, product formulations, copyrights, service marks, business and trade names,
research and development and any other rights of a similar nature.

     

3.4E. Excel USA shall not directly and/or indirectly appoint any other person, firm or company other than the New
  Company, as a distributor, seller and/or agent for its Products in the Philippines or to sell, supply and/or distribute to
any other person, firm or company any of its Products, whether for use or resale in the Philippines.
     

3.5E. Excel USA shall not directly and/or indirectly sell or appoint any other person, firm or company in any other
 
country, other than the New Company, to cause a resale of the Products or export of the Products into the Philippines.

     

3.6This license of Exclusive Distributorship shall continue in force until the 21st day of May 2005. At the expiration of
the period stipulated, the New Company shall have the sole and exclusive right to renew this Exclusive Distributorship
 
for another ten (10) years by giving E. Excel USA a written notice at least six (6) months before the expiration of this
Exclusive Distributorship.

     

3.7The validity of this Exclusive Distributorship is also subject to the New Company fulfilling the sales volume
 
requirement as designated by E. Excel USA and specified in clause 3.8.

     

3.8The New Company shall need to fulfill a minimum sales volume of 200,000,000 pesos per year starting 1997 to
maintain its exclusive distributorship with E. Excel USA. Sales volume means the amount of sales in Philippine
  currency, Peso, of all the Products that are sold by the New Company's network of sales force in the Philippines, i.e.,
the price at which the Products are sold by the New Company to its sales network and/or consumer and/or
distributors.

     

3.9This exclusive distributorship awarded by E. Excel USA to the New Company may not be modified, transferred or
 
terminated except by an instrument in writing signed by the duly authorized representative of E. Excel USA, and BV.

   

  xxxx

   

7. DURATION AND TERMINATION OF AGREEMENT

   

7.1This agreement shall come into force on the 22nd day of May 1995 and shall continue in force until the 21st day
of May 2005. At the expiration of the period stipulated, BV shall have the sole and exclusive right to renew this
 
agreement for another ten (10) years by giving E. Excel USA a written notice at least six (6) months before the
expiration of this Agreement.

     

7.2The validity of this Agreement is also subject to the New Company fulfilling the sales volume requirement as
 
designated by E. Excel USA and specified in clause 3.8.

     

7.3Unless otherwise mutually agreed upon between E. Excel USA and BV, neither party may terminate and/or
 
revoke this Agreement until the expiry of the Agreement referred to in clause 7.1.

     

7.4In the event of breach of this Agreement by E. Excel USA, E. Excel USA shall pay liquidated damages to either BV
or the New Company (to be solely determined by BV) equal to 20% of the sales volume of the previous Agreement
Year before the breach of the Agreement. Agreement Year means the period of 12 months from the date of this
 
Agreement and each subsequent consecutive period of 12 months during the period of this Agreement. Nothing
contained in this clause shall preclude BV or the New Company from demanding that E. Excel USA perform the
obligations imposed in this Agreement until the expiry and/or optional renewal of this Agreement.

     

7.5In the event that the New Company is not able to fulfill the sales volume as designated in Clause 3.8, BV, as the
major shareholder of the New Company, warrants to E. Excel USA that it will ensure the New Company turns over to
  E. Excel USA all its trained [sales] network of distributors, and return to E. Excel USA any of its trademarks, logos and
any other information related to the Intellectual Property of E. Excel USA. E. Excel USA shall have the right to appoint
another agent, company or individual as its sole exclusive distributor of the Products in the Philippines.

   

8. NATURE OF AGREEMENT

   

  8.1E. Excel USA acknowledges that BV shall be the majority shareholder of the New Company, and that the New
Company shall nave other shareholders, therefore, in consideration of the mutual covenants herein set forth, E. Excel
 USA acknowledges that this Agreement may not be modified or changed by any representative of the New Company.
This Agreement can only be modified by an instrument in writing signed by duly authorized representatives of both E.
Excel USA and BV.

     

8.2The Exclusive Distributorship, the right to use of Intellectual Property and any other rights given to the New
Company by E. Excel USA is strictly for the use by the New Company and does not entitle the New Company to
 
transfer, sub-contract or in any manner make over to third party except by an instrument in writing signed by the duly
authorized representative of both BV and E. Excel USA.

     

8.3This agreement contains the entire agreement between the parties with respect to the subject matter hereof,
and supersedes all previous agreement and understanding between the Parties with respect thereto, and may not be
 
modified except by an instrument in writing signed by the duly authorized representatives of both BV and E. Excel
USA.

   

  xxxx

   

8.5Any change in the Board of Directors, shareholdings and/or management of E. Excel USA or BV shall not, in any
  event, affect the validity and continuity of the rights and obligations of E. Excel USA and BV as contained in this
Agreement.8

The RTC ruling

On 4 April 2001, after trial was conducted on the parties' respective applications for temporary restraining order
and/or writ of preliminary injunction, the RTC, Branch 56 ruled in favor of Excel Philippines and enjoined Excellent
Essentials from: (1) interfering with Excel Philippines' exclusive right to distribute; (2) claiming, publishing, and announcing
that Excel Philippines has ceased to be Excel International's exclusive distributor in the Philippines; (3) intimidating,
enticing, or persuading Excel Philippines' agents to abandon the company; and (4) infringing and using in its products,
packaging, and promotional materials the trademarks, logos, designs, and other intellectual property that Excel
International has exclusively licensed to Excel Philippines. 9

After Excellent Essentials' motion for reconsideration was denied on 31 May 2001, 10 it filed a petition for certiorari
before the CA, docketed as CA-G.R. SP No. 65115.

Prior to this, however, Excel International and Excel Philippines filed a joint motion for a judgment based on their
compromise agreement wherein both parties agreed to dismiss their claims against each other, without prejudice to the
continuation of the case with respect to Excellent Essentials and Excel Philippines. 11 On 14 June 2001, the RTC, Branch 56
approved the compromise agreement and dismissed the claims and counterclaims of both parties accordingly. 12

On 11 February 2002, the CA reversed and set aside the RTC, Branch 56's order issuing the preliminary injunction
saying it was tainted with grave abuse of discretion. 13 The CA ruled:

[Excel Philippines'] title or right over the contested exclusive distributorship of E. Excel's products cannot be said to
be clear and unmistakable since there is a cloud of doubt in said right in view of the revocation of the same by [Excel
International] and the subsequent grant of an Exclusive Rights Contract in favor of [Excellent Essentials]. The issuance by
[Excel International] of the two (2) documents should already put the court a quo on guard as to the veracity of [Excel
Philippines'] claim of exclusive distributorship. The court a quo should be, more so, be wary since both parties claim
validity of their respective Exclusive Rights Contract.

xxxx

On the second requirement, it cannot be imagined how the continued operation of [Excellent Essentials] could work
injustice on [Excel Philippines'] operation. The operation of Excellent Essentials appears to have no effect at all on [Excel
Philippines] since it has not lifted a finger despite knowledge of [Excellent Essentials'] operation. [Excel Philippines'] visible
action on the matter surfaced only when it was called by the court a quo to answer [Excellent Essentials'] cause of action.
In fact, there are no indications that it had been hindered, stopped and thwarted by the commencement of [Excellent
Essentials'] operations.

On the issue of damages, this Court is not convinced that [Excel Philippines] will suffer irreparable injury to warrant
the issuance of a writ of preliminary injunction.

xxxx
 A writ of injunction should never issue when an action for damages would adequately compensate the injuries
caused. The very foundation of the jurisdiction to issue the writ of injunction rests in the possibility of irreparable injury,
inadequacy of pecuniary compensation and prevention of multiplicity of suits. When the facts of the case fail to show the
foregoing conditions, injunction should be issued.

In the instant case, [Excel Philippines] has aptly showed that the damages it incurred and may incur are capable of
pecuniary estimation.

All told, it is clear that [the RTC, Branch 56] committed grave abuse of discretion in the issuance of a writ of
preliminary injunction.

WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders dated April 4, 2001 and May
31, 2001 issued by [the RTC, Branch 56] in Civil Case No. 01-164 are hereby REVERSED AND SET ASIDE for having
been issued with grave abuse of discretion.14

On 30 August 2002, the CA's decision in CA-G.R. SP No. 65115 became final and executor. 15

Meanwhile, the trial on the main case continued and the RTC, Branch 138, on 8 September 2006, rendered a decision
dismissing Excellent Essentials' complaint as well as Excel Philippines' counterclaims. 16 The RTC, Branch 138 found the
issue on who was rightfully Excel International's exclusive distributor in the Philippines moot and academic after the Utah
Court came out with a decision annulling Stewart's actions, as president of Excel International, in revoking Excel
Philippines' exclusive distributorship and designating Excellent Essentials as its new distributor in the Philippines. 17

As for Excel Philippines' counterclaims for damages, the RTC, Branch 138 held that there was no bad faith and malice
on the part of Excellent Essentials who merely relied on the actions of Stewart, who was then acting in her capacity as
president of Excel Internationa. 18 The RTC, Branch 38 noted as a matter of fact that Excellent Essentials immediately
desisted from distributing and marketing Excel International's products when the Utah Court came out with its decision
declaring Stewart's actions in the Philippines illegal and that Excel Philippines was the rightful exclusive
distributor.19 Moreover, the RTC said it could not award actual or compensatory damages for the decrease in sales volume
based on projected sales as the claim was not clearly substantiated with a reasonable degree of certainty. 20

Unsatisfied with the outcome, Excel Philippines appealed from this decision before the CA.

In the assailed decision, the CA granted the appeal and ordered Excellent Essentials to pay Excel Philippines
temperate and exemplary damages, attorney's fees, and costs of suit:

ACCORDINGLY, the appeal is GRANTED IN PART. The Decision dated September 8, 2006 of the Regional Trial
Court, Branch 138, Makati City in Civil Case No. 01-164 is MODIFIED to this effect only: [Excellent Essentials]
is ORDERED TO PAY [Excel Philippines] P170,897,948.00 as temperate damages, with legal interest at six percent
(6%) per annum from the date of this Decision, and when this Decision becomes final and executory, the legal interest
shall be twelve percent (12%) per annum until the amount due is fully paid; P2,500,000.00 as exemplary
damages; P25,000.00 as attorney's fees; and the COSTS OF SUIT. The [RTC, Branch 138 decision] is AFFIRMED IN
ALL OTHER RESPECTS.21

xxxx

Petition for Review

Excellent Essentials did not file a motion for reconsideration anymore and filed the present petition before this Court.
In support of its petition, Excellent Essentials raised the following arguments:

1. The Court of Appeals had earlier ruled, in CA-G.R. SP No. 65115, that [Excel Philippines] would never be
damaged by the continued actions or operations of [Excellent Essentials], which is tantamount to saying that [Excel
Philippines'] claim for damages is speculative, conjectural, and whimsical; 
2. Winniefer Go Tam, [Excel Philippines'] witness who testified on [its] purported damages, in her Affidavit-
Direct Testimony, had singled out [Stewart], not [Excellent Essentials] or its new stockholders, that strained the
contractual relationship of [Excel International] and [Excel Philippines], revoked the latter's distributorship contract with
[Excel International], diverted the supply of Excel products from and stopped the shipment of Excel products to [Excel
Philippines];
3. [Excellent Essentials'] new stockholders, who now comprised the controlling shareholdings, the present
membership in the Board of Directors and corporate officers of [Excellent Essentials], have no direct or indirect
participation in the actions of Stewart that precipitated the present controversy, since they became stockholders of
[Excellent Essentials] long after the happening of these events; and
4. [Excellent Essentials] acted in good faith and without malice. 22

OUR RULING

We DENY Excellent Essentials' petition.

 In sum, we are presented with two (2) issues that are crucial in resolving the present petition: (a) whether the CA's
ruling in CA-G.R. SP No. 65115 is conclusively binding with regard to the award for damages in the instant case; and (b)
whether Excellent Essentials' corporate existence and its business operations caused damage to Excel Philippines.

Findings of fact and opinion of a court when issuing a writ for preliminary injunction are interlocutory in
nature.

One of the aspects of res judicata, known as "conclusiveness of judgment," ordains that issues actually and directly
resolved in a former suit cannot again be raised in any future case between the parties involving a different cause of
action.23 Conclusiveness of judgment does not require identity of the causes of action; instead, it requires identity of
issues. If a particular point or question is in issue in the second action, and the judgment will depend on the determination
of that particular point or question, a former judgment between the same parties will be final and conclusive in the second
if that same point or question was in issue and adjudicated in the first suit; but the adjudication of an issue in the first
case is not conclusive of an entirely different and distinct issue arising in the second. 24 Hence, 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 claim or cause of action.25

In the case at bar, Excellent Essentials persuades us that the issues resolved during the preliminary injunction
proceedings should simply carry over in the resolution of main case. To recall, the RTC, Branch 56 initially issued a
temporary restraining order and/or writ of preliminary injunction but the CA nullified its order for being issued with grave
abuse of discretion. The CA's reasons were: (1) Excel Philippines' exclusive distributorship in the Philippines
was doubtful considering that Excel International revoked it and gave it to Excellent Essentials; and (2) Excel Philippines
would not suffer any irreparable injury should Excellent Essentials be allowed to continue distributing Excel products in the
Philippines. Thus, since it would appear that Excellent Essentials' continued operations have no effect at all on Excel
Philippines, there is no injury to speak of when it comes to awarding damages in favor of the latter.

However, we cannot ascribe to Excellent Essentials' position because of the nature of a writ of preliminary injunction.

A writ of preliminary injunction is warranted where there is a showing that there exists a right to be protected and
that the acts against which the writ is to be directed violate an established right. 26Otherwise stated, for a court to decide
on the propriety of issuing a temporary restraining order and/or a writ of preliminary injunction, it must only inquire into
the existence of two things: (1) a clear and unmistakable right that must be protected; and (2) an urgent and paramount
necessity for the writ to prevent serious damage. 27 Accordingly, we must remember that the sole object of a writ of
preliminary injunction, whether prohibitory or mandatory, is to preserve the status quo and prevent further injury on the
applicant until the merits of the main case can be heard. 28 The injunctive writ may only be resorted to by a litigant for the
preservation and protection of his rights or interests during the pendency of the principal action. 29

Given that the writ of preliminary injunction is temporary until the main case is resolved on the merits, the evidence
submitted during the hearing on the preliminary injunction is not conclusive; for only a "sampling" is needed to give the
trial court an idea of the justification for its issuance pending the decision of the case on the merits. 30 As such, the findings
of fact and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature. 31

From the foregoing, the CA's findings, despite being final and executory, were clearly limited to the issuance of an
injunctive relief pending the final resolution of the main case. In other words, the resolution of the issue as to the
existence or non-existence of an injury to Excel Philippines was determined only to preserve the status quo between the
parties and not to prejudge the outcome of the claim for damages. To our mind, when the CA reversed the RTC, Branch,
56's order to issue a writ for preliminary injunction, it did not mean to say that Excel Philippines did not suffer losses. A
closer look at the CA's decision in CA-G.R. SP No. 65115 would reveal that Excel Philippines was simply not entitled to an
injunctive relief at that stage of the case.

A corporation, who is a third party to a contract, may be held liable for damages if used as a means to
breach the obligations between the contracting parties.

Under the principle of relativity of contracts, only those who are parties to a contract are liable to its breach. 32 Under
Article 1314 of the Civil Code, however, any third person who induces another to violate his contract shall be liable to
damages to the other contracting party. Said provision of law embodies what we often refer to as tortuous or contractual
interference. In So Ping Bun v. CA,33 we laid out the elements of tortuous interference: (1) existence of a valid contract;
(2) knowledge on the part of the third person of the existence of contract; and (3) interference of the third person is
without legal justification or excuse.34

Prior to the revocation of its exclusive distributorship, Excel International had an existing contract with Bright Vision
wherein they agreed to set up a corporation to exclusively distribute E. Excel products within the Philippines. This
corporation, eventually, turned out to be Excel Philippines who was given the irrevocable and exclusive right to distribute,
market, and/or sell. Under its agreement with Bright Vision, Excel Philippines' exclusive distributorship right was
irrevocable and may only be modified, transferred, or terminated upon the mutual consent of both parties. This agreement
was effective from 22 May 1995 until 21 May 2005.
 The relationship between Excel International and Excel Philippines took an unexpected turn when Stewart, acting as
Excel International's president, unilaterally revoked Excel Philippines' right and conferred it to Excellent Essentials.
Although Stewart's actions were later considered unlawful by the Utah Court, whose opinion was adopted by both the RTC,
Branch 138 and the CA, Excellent Essentials was able to set up shop and disrupt Excel Philippines' distribution of E. Excel
products in the Philippines.

At this point, Excel International had already breached its contractual obligations by unilaterally revoking Excel
Philippines' exclusive distributorship even if it was prohibited from doing so under the 22 May 1995 agreement. Stewart
could not have done what she did during her temporary control over Excel International because, under clause 8.5 of the
agreement, any change in the management of Excel International shall not affect the validity and continuity of the rights
and obligations of both parties. In other words, Stewart, as Excel International's interim president, was bound by the
company's grant of exclusive distributorship to Excel Philippines and the conditions that came with it.

Having established the first element of tortuous interference, we now have to determine if Excellent Essentials had
knowledge of Excel Philippines' exclusive right. On this score, we note that the exclusive distributorship right was granted
to Excellent Essentials before it existed. 35 This circumstance suggests that even before Excellent Essentials was organized,
its incorporators had the preconceived plan to maneuver around Excel Philippines. Worse, after going over the records,
there is evidence showing that Excellent Essentials' incorporators were officers of and/or affiliated with Excel Philippines.
In fact, these incorporators remained at work with Excel Philippines during this time and started to pirate its supervisors,
employees, and agents to join Excellent Essentials' multi-level marketing system.

Under these circumstances, we can conclude that those behind Excellent Essentials not only had knowledge that
Excel International had the obligation to honor Excel Philippines' exclusive right, but also conspired with Stewart to
undermine Excel Philippines. Thus, we agree with the CA when it said:

It does not escape this Court's attention the stealthy maneuverings that [Excellent Essentials'] incorporators did while
still working for [Excel Philippines]. As narrated above, they anticipated the revocation of [Excel exclusive right contract
and the award to [Excellent Essentials] of the same gratuity while the latter has yet to be organized. With this expectation
comes not a foreknowledge of divine origin but a conspiracy to rig existing contractual obligations so they could swaddle
themselves with the benefits that go along with such maneuverings. The Utah Court made same observations as this Court
now does because the coincidence of the revocation of the exclusive rights contract and its conferment later appears so
surreal if they were not planned at all. It is in this sequence of events that this Court finds bad faith in [Excellent
Essentials'] actuations. Contrary to its assertions, it did not just stand as an innocent bystander but a conspirator in the
manner by which [Excel International's] corporate structure and contracts were skewed to fit the best interests of some. 36

On the last element, therefore, we cannot ascribe to Excellent Essentials' claim that it was not guilty of malice or bad
faith.

A duty which the law of torts is concerned with is respect for the property of others, and cause of action  ex
delicto may be predicated by an unlawful interference by any person of the enjoyment of the other of his private property.
This may pertain to a situation where a third person induces a person to renege on or violate his undertaking under a
contract.37

In Yu v. CA,38 we ruled that the right to perform an exclusive distributorship agreement and to reap the profits
resulting from such performance are proprietary rights which a party may protect. 39 In that case, the former dealer of the
same goods purchased the merchandise from the manufacturer in England though a trading firm in West Germany and
sold these in the Philippines. We held that the rights granted to the petitioner under the exclusive distributorship
agreement may not be diminished nor rendered illusory by the expedient act of utilising or interposing a person or firm to
obtain goods for which the exclusive distributorship was conceptualized, at the expense of the sole authorized distributor. 40

In the case before us, we observe the same unjust conduct exhibited by Excellent Essentials tantamount to tortuous
interference.

To sustain a case for tortuous interference, the defendant must have acted with malice or must have been driven by
purely impure reasons to injure plaintiff; otherwise stated, his act of interference cannot be justified. 41 We further
explained that the word induce refers to situations where a person causes another to choose one course of conduct by
persuasion or intimidation.42

Contrary to Excellent Essentials' argument in the instant petition, its participation in the scheme against Excel
Philippines transgressed the bounds of permissible financial interest. 43 Its mere corporate existence played an important
factor for Stewart to revoke Excel Philippines' exclusive right to distribute E. Excel products in the Philippines. For without
it, or the participation of its incorporators, Excel International would not have the means to connect with the marketing
network Excel Philippines established. Simply put, Excellent Essentials became the vessel for the breach of Excel
International's contractual undertaking with Excel Philippines.

Correction of the Award for Damages and Imposition of Interest Due.

 Although Excellent Essentials is guilty of tortuous interference and, therefore, Excel Philippines is entitled to damages,
we do not agree with the CA in the award of temperate damages.

Under Article 2224 of the Civil Code, temperate damages may be recovered when pecuniary loss has been suffered
but its amount, from the nature of the case, cannot be proved with certainty. The amount thereof is usually left to the
discretion of the courts but the same should be reasonable, bearing in mind that temperate damages should be more than
nominal but less than compensatory.44 Thus, to warrant an award for temperate damages, the plaintiff must prove that he
actually suffered a pecuniary loss but cannot ascertain the exact amount of damage suffered.

In the present case, Excel Philippines bolsters claim for damages based on the decrease in its sales volume, the
decline in the number of its distributors, and the expenses it incurred during the recovery period. The total amount of its
claim is P512,693,845.63, at least half a billion of which is the loss in its sales volume.

In awarding temperate damages in lieu of actual or compensatory damages, the CA thought one-third (1/3) of the
amount claimed as damages was proportionate, to wit:

As regards the relief for actual damages, the ruling in Tan v. JAM Transit teaches: "To warrant an award of actual
and compensatory damages for repair to damage sustained, the best evidence should be the receipts or other
documentary evidence proofs of the actual amount expended."

Here, this Court finds no evidence of this sort to justify an award of actual damages. However, considering it was duly
proven that the business of [Excel Philippines] was prejudiced and its operations indeed curtailed if not altogether stopped,
but the actual amounts lost were not determined with certitude, this Court deems it appropriate to award temperate
damages. Under Article 2224 of the Civil Code, temperate damages may be recovered when pecuniary loss has been
suffered but its amount cannot be proved with certainty.

xxxx

Here, 1/3 of the total amount claimed as actual damages is just and reasonable as well as temperate damages to be
adjudicated, thus: 1/3 x P512,693,845.63 equals P170,897,948.00. 45

Even though no proof of pecuniary loss is necessary in order that temperate damages may be awarded, 46 we cannot
sustain the CA's finding that Excel Philippines suffered substantial losses to warrant an award for temperate damages. In
the first place, the figures offered to prove the decline in sales were based on  projected monthly sales volume and
forecasted computations. To be more specific, according to Excel Philippines' administrative manager: (1) for calendar year
2000, the audited financial statement reported a net loss of P75,158,650.00 but the company estimated only a net loss of
P65,253,626.33; hence, a difference of P9,905,023.67; (2) for calendar year 2001, the audited financial statement
reported a net loss of P111,869,409.00 but the company estimated a net income of P127,058,622.83; hence, a difference
of P238,955,031.83; and (3) for calendar year 2002, the audited financial statement reported a net loss of P43,280,889.00
but the company estimated a net income of P209,510,170.79; hence, a difference of P252,791,059.79. The total variance
between the forecasted figures from the actual figures reported in its financial statement, roughly around
P501,651,115.29, was Excel Philippines' basis for its claim for damages for the decrease in its sales volume. 47

We cannot use these figures as basis that Excel Philippines suffered losses because of Excellent Essentials'
interference. Although attributable, we cannot be sure that Excellent Essentials solely caused the decrease in Excel
Philippines sales volume. These figures were based on undocumented sales figures, summarized into a table, and also, on
the company's projections which cannot be relied upon if we were to account for loss of profits. Thus, having no factual
basis to prove a pecuniary loss on the part of Excel Philippines, we find it appropriate to delete the award for temperate
damages and award nominal damages instead.

Under Article 2221 of the Civil Code, nominal damages may be awarded in order that the plaintiff’s right, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered. Nominal damages are recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of
contract and no substantial injury or actual damages whatsoever have been or can be shown. 48 In a number of cases, this
Court has awarded nominal damages because there was no substantial injury on the plaintiff but there was definitely a
legal right violated.49

Given the circumstances, we believe the amount of P50,000,000.00, or 30% of the award for temperate damages, is
just and reasonable as nominal damages.

Lastly, we impose the legal interest of six percent (6%) per annum from the time this judgment becomes final and
executory until this judgment is wholly satisfied. 50

WHEREFORE, premises considered, we DENY the petition. The 28 June 2010 Decision of the Court of Appeals in
CA-G.R. CV No. 88388 is AFFIRMED with the following MODIFICATIONS: (1) the award for temperate damages is
deleted and, in lieu thereof, Excellent Essentials International Corporation is ordered to pay Extra Excel International
Philippines, Inc. P50,000,000.00 as nominal damages; and (2) the total amount adjudged shall earn an interest rate of six
percent (6%) per annum on the balance and interest due from the date of finality of this decision until fully paid.
 SO ORDERED.

RIGHTS CONFERRED TO THE OWNER OF A REGISTERED MARK, INJUNCTIVE RELEIF

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 164324               August 14, 2009

TANDUAY DISTILLERS, INC., Petitioner, 

vs.
GINEBRA SAN MIGUEL, INC., Respondent.

DECISION

CARPIO, J.:

The Case

Tanduay Distillers, Inc. (Tanduay) filed this Petition for Review on Certiorari 1 assailing the Court of Appeals’ Decision
dated 9 January 20042 as well as the Resolution dated 2 July 2004 3 in CA-G.R. SP No. 79655 denying the Motion for
Reconsideration. In the assailed decision, the Court of Appeals (CA) affirmed the Regional Trial Court’s Orders 4 dated 23
September 2003 and 17 October 2003 which respectively granted Ginebra San Miguel, Inc.’s (San Miguel) prayer for the
issuance of a temporary restraining order (TRO) and writ of preliminary injunction. The Regional Trial Court of
Mandaluyong City, Branch 214 (trial court), enjoined Tanduay "from committing the acts complained of, and, specifically,
to cease and desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using in commerce
the mark "Ginebra," and manufacturing, producing, distributing, or otherwise dealing in gin products which have the
general appearance of, and which are confusingly similar with," San Miguel’s marks, bottle design, and label for its gin
products.5

The Facts

Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor business since
1854. In 2002, Tanduay developed a new gin product distinguished by its sweet smell, smooth taste, and affordable price.
Tanduay claims that it engaged the services of an advertising firm to develop a brand name and a label for its new gin
product. The brand name eventually chosen was "Ginebra Kapitan" with the representation of a revolutionary Kapitan on
horseback as the dominant feature of its label. Tanduay points out that the label design of "Ginebra Kapitan" in terms of
color scheme, size and arrangement of text, and other label features were precisely selected to distinguish it from the
leading gin brand in the Philippine market, "Ginebra San Miguel." Tanduay also states that the "Ginebra Kapitan" bottle
uses a resealable twist cap to distinguish it from "Ginebra San Miguel" and other local gin products with bottles which use
the crown cap or tansan.6

After filing the trademark application for "Ginebra Kapitan" with the Intellectual Property Office (IPO) and after
securing the approval of the permit to manufacture and sell "Ginebra Kapitan" from the Bureau of Internal Revenue,
Tanduay began selling "Ginebra Kapitan" in Northern and Southern Luzon areas in May 2003. In June 2003, "Ginebra
Kapitan" was also launched in Metro Manila.7

On 13 August 2003, Tanduay received a letter from San Miguel’s counsel. The letter informed Tanduay to
immediately cease and desist from using the mark "Ginebra" and from committing acts that violate San Miguel’s
intellectual property rights.8

On 15 August 2003, San Miguel filed a complaint for trademark infringement, unfair competition and damages, with
applications for issuance of TRO and Writ of Preliminary Injunction against Tanduay before the Regional Trial Court of
Mandaluyong. The case was raffled to Branch 214 and docketed as IP Case No. MC-03-01 and Civil Case No. MC-03-073. 9

On 25 and 29 August and 4 September 2003, the trial court conducted hearings on the TRO. San Miguel submitted
five affidavits, but only one affiant, Mercedes Abad, was presented for cross-examination because the trial court ruled that
such examination would be inconsistent with the summary nature of a TRO hearing. 10 San Miguel submitted the following
pieces of evidence:11
 1. Affidavit of Mercedes Abad, President and Managing Director of the research firm NFO Trends, Inc. (NFO Trends),
to present, among others, market survey results which prove that gin drinkers associate the term "Ginebra" with San
Miguel, and that the consuming public is being misled that "Ginebra Kapitan" is a product of San Miguel;

2. Market Survey results conducted by NFO Trends to determine the brand associations of the mark "Ginebra" and to
prove that the consuming public is confused as to the manufacturer of "Ginebra Kapitan";

3. Affidavit of Ramon Cruz, San Miguel’s Group Product Manager, to prove, among others, the prior right of San
Miguel to the mark "Ginebra" as shown in various applications for, and registrations of, trademarks that contain the mark
"Ginebra." His affidavit included documents showing that the mark "Ginebra" has been used on San Miguel’s gin products
since 1834;

4. Affidavits of Leopoldo Guanzon, Jr., San Miguel’s Trade and Promo Merchandising Head for North Luzon Area, and
Juderick Crescini, San Miguel’s District Sales Supervisor for South Luzon-East Area, to prove, among others, that Tanduay’s
salesmen or distributors misrepresent "Ginebra Kapitan" as San Miguel’s product and that numerous retailers of San
Miguel’s gin products are confused as to the manufacturer of "Ginebra Kapitan"; and

5. Affidavit of Jose Reginald Pascual, San Miguel’s District Sales Supervisor for the North-Greater Manila Area, to
prove, among others, that gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan" due to the use of
the dominant feature "Ginebra."

Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which motion was denied by the trial court.
Tanduay presented witnesses who affirmed their affidavits in open court, as follows: 12

1. Ramoncito Bugia, General Services Manager of Tanduay. Attached to his affidavit were various certificates of
registration of trademarks containing the word "Ginebra" obtained by Tanduay and other liquor companies, to prove that
the word "Ginebra" is required to be disclaimed by the IPO. The affidavit also attested that there are other liquor
companies using the word "Ginebra" as part of their trademarks for gin products aside from San Miguel and Tanduay.

2. Herbert Rosales, Vice President of J. Salcedo and Associates, Inc., the advertising and promotions company hired
by Tanduay to design the label of "Ginebra Kapitan." His affidavit attested that the label was designed to make it "look
absolutely different from the Ginebra San Miguel label."

On 23 September 2003, the trial court issued a TRO prohibiting Tanduay from manufacturing, selling and advertising
"Ginebra Kapitan."13 The dispositive portion reads in part:

WHEREFORE, the application for temporary restraining order is hereby GRANTED and made effective immediately.
Plaintiff is directed to post a bond of ONE MILLION PESOS (Php 1,000,000.00) within five (5) days from issuance hereof,
otherwise, this restraining order shall lose its efficacy. Accordingly, defendant Tanduay Distillers, Inc., and all persons and
agents acting for and in behalf are enjoined to cease and desist from manufacturing, distributing, selling, offering for sale
and/or advertising or otherwise using in commerce the mark "GINEBRA KAPITAN" which employs, thereon, or in the
wrappings, sundry items, cartons and packages thereof, the mark "GINEBRA" as well as from using the bottle design and
labels for its gin products during the effectivity of this temporary restraining order unless a contrary order is issued by this
Court.14

On 3 October 2003, Tanduay filed a petition for certiorari with the CA. 15 Despite Tanduay’s Urgent Motion to Defer
Injunction Hearing, the trial court continued to conduct hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show
cause why no writ of preliminary injunction should be issued. 16 On 17 October 2003, the trial court granted San Miguel’s
application for the issuance of a writ of preliminary injunction.17 The dispositive portion of the Order reads:

WHEREFORE, the plaintiff’s application for a writ of preliminary injunction is GRANTED. Upon plaintiff’s filing of an
injunctive bond executed to the defendant in the amount of ₱20,000,000.00 (TWENTY MILLION) PESOS, let a Writ of
Preliminary Injunction issue enjoining the defendant, its employees, agents, representatives, dealers, retailers or assigns,
and any all persons acting on its behalf, from committing the acts complained of, and, specifically, to cease and desist
from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using in commerce the mark
"GINEBRA", and manufacturing, producing, distributing or otherwise dealing in gin products which have the general
appearance of, and which are confusingly similar with, plaintiff’s marks, bottle design and label for its gin products.

SO ORDERED.18

On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the injunction order. On 10 November
2003, the CA issued a TRO enjoining the trial court from implementing its injunction order and from further proceeding
with the case.19 On 23 December 2003, the CA issued a resolution directing the parties to appear for a hearing on 6
January 2004 to determine the need for the issuance of a writ of preliminary injunction. 20

On 9 January 2004, the CA rendered a Decision dismissing Tanduay’s petition and supplemental petition. On 28
January 2004, Tanduay moved for reconsideration which was denied in a Resolution dated 2 July 2004. 21
 Aggrieved by the decision dismissing the petition and supplemental petition and by the resolution denying the Motion
for Reconsideration, Tanduay elevated the case before this Court.

The Trial Court’s Orders

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

1. San Miguel has registered the trademark "Ginebra San Miguel";

2. There is a close resemblance between "Ginebra San Miguel" and "Ginebra Kapitan";

3. The close similarity between "Ginebra San Miguel" and "Ginebra Kapitan" may give rise to confusion of goods since
San Miguel and Tanduay are competitors in the business of manufacturing and selling liquors; and

"Ginebra," which is a well-known trademark, was adopted by Tanduay to benefit from the reputation and
advertisement of the originator of the mark "Ginebra San Miguel," and to convey to the public the impression of some
supposed connection between the manufacturer of the gin product sold under the name "Ginebra San Miguel" and the
new gin product "Ginebra Kapitan."22

Based on these facts, the trial court concluded that San Miguel had demonstrated a clear, positive, and existing right
to be protected by a TRO. Otherwise, San Miguel would suffer irreparable injury if infringement would not be enjoined.
Hence, the trial court granted the application for a TRO and set the hearing for preliminary injunction. 23

In the Order dated 17 October 2003, the trial court granted the application for a writ of preliminary injunction. The
trial court ruled that while a corporation acquires a trade name for its product by choice, it should not select a name that is
confusingly similar to any other name already protected by law or is patently deceptive, confusing, or contrary to existing
law.24

The trial court pointed out that San Miguel and its predecessors have continuously used "Ginebra" as the dominant
feature of its gin products since 1834. On the other hand, Tanduay filed its trademark application for "Ginebra Kapitan"
only on 7 January 2003. The trial court declared that San Miguel is the prior user and registrant of "Ginebra" which has
become closely associated to all of San Miguel’s gin products, thereby gaining popularity and goodwill from such name. 25

The trial court noted that while the subject trademarks are not identical, it is obviously clear that the word "Ginebra"
is the dominant feature in the trademarks. The trial court stated that there is a strong indication that confusion is likely to
occur since one would inevitably be led to conclude that both products are affiliated with San Miguel due to the distinctive
mark "Ginebra" which is readily identified with San Miguel. The trial court concluded that ordinary purchasers would not
examine the letterings or features printed on the label but would simply be guided by the presence of the dominant mark
"Ginebra." Any difference would pale in significance in the face of evident similarities in the dominant features and overall
appearance of the products. The trial court emphasized that the determinative factor was whether the use of such mark
would likely cause confusion on the part of the buying public, and not whether it would actually cause confusion on the
part of the purchasers. Thus, Tanduay’s choice of "Ginebra" as part of the trademark of "Ginebra Kapitan" tended to show
Tanduay’s intention to ride on the popularity and established goodwill of "Ginebra San Miguel." 26

The trial court held that to constitute trademark infringement, it was not necessary that every word should be
appropriated; it was sufficient that enough be taken to deceive the public in the purchase of a protected article. 27

The trial court conceded to Tanduay’s assertion that the term "Ginebra" is a generic word; hence, it is non-registrable
because generic words are by law free for all to use. However, the trial court relied on the principle that even if a word is
incapable of appropriation as a trademark, the word may still acquire a proprietary connotation through long and exclusive
use by a business entity with reference to its products. The purchasing public would associate the word to the products of
a business entity. The word thus associated would be entitled to protection against infringement and unfair competition.
The trial court held that this principle could be made to apply to this case because San Miguel has shown that it has
established goodwill of considerable value, such that its gin products have acquired a well-known reputation as just
"Ginebra." In essence, the word "Ginebra" has become a popular by-word among the consumers and they had closely
associated it with San Miguel.28

On the other hand, the trial court held that Tanduay failed to substantiate its claim against the issuance of the
injunctive relief.29

The Ruling of the Court of Appeals

In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the
determination of whether the TRO and the writ of preliminary injunction were issued by the trial court with grave abuse of
discretion amounting to lack of jurisdiction.30
 To warrant the issuance of a TRO, the CA ruled that the affidavits of San Miguel’s witnesses and the fact that the
registered trademark "Ginebra San Miguel" exists are enough to make a finding that San Miguel has a clear and
unmistakable right to prevent irreparable injury because gin drinkers confuse San Miguel to be the manufacturer of
"Ginebra Kapitan."31

The CA enumerated the requisites for an injunction: (1) there must be a right in esse or the existence of a right to be
protected and (2) the act against which the injunction is to be directed is a violation of such right. The CA stated that the
trademarks "Ginebra San Miguel" and "Ginebra Kapitan" are not identical, but it is clear that the word "Ginebra" is the
dominant feature in both trademarks. There was a strong indication that confusion was likely to occur. One would be led
to conclude that both products are affiliated with San Miguel because the distinctive mark "Ginebra" is identified with San
Miguel. It is the mark which draws the attention of the buyer and leads him to conclude that the goods originated from the
same manufacturer.32

The CA observed that the gin products of "Ginebra San Miguel" and "Ginebra Kapitan" possess the same physical
attributes with reference to their form, composition, texture, or quality. The CA upheld the trial court’s ruling that San
Miguel has sufficiently established its right to prior use and registration of the mark "Ginebra" as a dominant feature of its
trademark. "Ginebra" has been identified with San Miguel’s goods, thereby, it acquired a right in such mark, and if another
infringed the trademark, San Miguel could invoke its property right.33

The Issue

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

The Ruling of the Court

Clear and Unmistakable Right

Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of a
proceeding prior to the judgment or final order, requiring a party or a court, agency, or a person to refrain from a
particular act or acts.

A preliminary injunction is a provisional remedy for the protection of substantive rights and interests. It is not a cause
of action in itself but merely an adjunct to the main case. Its objective is to prevent a threatened or continuous irreparable
injury to some of the parties before their claims can be thoroughly investigated and advisedly adjudicated. It is resorted to
only when there is a pressing need to avoid injurious consequences which cannot be remedied under any standard
compensation.34

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

SECTION 3. Grounds for issuance of a writ of preliminary injunction.—A preliminary injunction may be granted when
it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would
probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to
be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.

Before an injunctive writ is issued, it is essential that the following requisites are present: (1) the existence of a right
to be protected and (2) the acts against which the injunction is directed are violative of the right. The onus probandi is on
the movant to show that the invasion of the right sought to be protected is material and substantial, that the right of the
movant is clear and unmistakable, and that there is an urgent and paramount necessity for the writ to prevent serious
damage.35

San Miguel claims that the requisites for the valid issuance of a writ of preliminary injunction were clearly established.
The clear and unmistakable right to the exclusive use of the mark "Ginebra" was proven through the continuous use of
"Ginebra" in the manufacture, distribution, marketing and sale of gin products throughout the Philippines since 1834. To
the gin-drinking public, the word "Ginebra" does not simply indicate a kind of beverage; it is now synonymous with San
Miguel’s gin products.36
 San Miguel contends that "Ginebra" can be appropriated as a trademark, and there was no error in the trial court’s
provisional ruling based on the evidence on record. Assuming that "Ginebra" is a generic word which is proscribed to be
registered as a trademark under Section 123.1(h) 37 of Republic Act No. 8293 or the Intellectual Property Code (IP
Code),38 it can still be appropriated and registered as a trademark under Section 123.1(j) 39 in relation to Section 123.240 of
the IP Code, considering that "Ginebra" is also a mark which designates the kind of goods produced by San Miguel. 41 San
Miguel alleges that although "Ginebra," the Spanish word for "gin," may be a term originally incapable of exclusive
appropriation, jurisprudence dictates that the mark has become distinctive of San Miguel’s products due to its substantially
exclusive and continuous use as the dominant feature of San Miguel’s trademarks since 1834. Hence, San Miguel is
entitled to a finding that the mark is deemed to have acquired a secondary meaning. 42 San Miguel states that Tanduay
failed to present any evidence to disprove its claims; thus, there is no basis to set aside the grant of the TRO and writ of
preliminary injunction.43

San Miguel states that its disclaimer of the word "Ginebra" in some of its registered marks is without prejudice to, and
did not affect, its existing or future rights over "Ginebra," especially since "Ginebra" has demonstrably become distinctive
of San Miguel’s products. 44 San Miguel adds that it did not disclaim "Ginebra" in all of its trademark registrations and
applications like its registration for "Ginebra Cruz de Oro," "Ginebra Ka Miguel," "Ginebra San Miguel" bottle, "Ginebra San
Miguel," and "Barangay Ginebra."45

Tanduay asserts that not one of the requisites for the valid issuance of a preliminary injunction is present in this case.
Tanduay argues that San Miguel cannot claim the exclusive right to use the generic word "Ginebra" for its gin products
based on its registration of the composite marks "Ginebra San Miguel," "Ginebra S. Miguel 65," and "La Tondeña Cliq!
Ginebra Mix," because in all of these registrations, San Miguel disclaimed any exclusive right to use the non-registrable
word "Ginebra" for gin products. 46 Tanduay explains that the word "Ginebra," which is disclaimed by San Miguel in all of its
registered trademarks, is an unregistrable component of the composite mark "Ginebra San Miguel." Tanduay argues that
this disclaimer further means that San Miguel does not have an exclusive right to the generic word "Ginebra." 47 Tanduay
states that the word "Ginebra" does not indicate the source of the product, but it is merely descriptive of the name of the
product itself and not the manufacturer thereof.48

Tanduay submits that it has been producing gin products under the brand names Ginebra 65, Ginebra Matador, and
Ginebra Toro without any complaint from San Miguel. Tanduay alleges that San Miguel has not filed any complaint against
other liquor companies which use "Ginebra" as part of their brand names such as Ginebra Pinoy, a registered trademark of
Webengton Distillery; Ginebra Presidente and Ginebra Luzon as registered trademarks of Washington Distillery, Inc.; and
Ginebra Lucky Nine and Ginebra Santiago as registered trademarks of Distileria Limtuaco & Co., Inc. 49 Tanduay claims that
the existence of these products, the use and registration of the word "Ginebra" by other companies as part of their
trademarks belie San Miguel’s claim that it has been the exclusive user of the trademark containing the word "Ginebra"
since 1834.

Tanduay argues that before a court can issue a writ of preliminary injunction, it is imperative that San Miguel must
establish a clear and unmistakable right that is entitled to protection. San Miguel’s alleged exclusive right to use the
generic word "Ginebra" is far from clear and unmistakable. Tanduay claims that the injunction issued by the trial court was
based on its premature conclusion that "Ginebra Kapitan" infringes "Ginebra San Miguel." 50

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,51 we held:

While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial
court, this discretion must be exercised based upon the grounds and in the manner provided by law. The exercise of
discretion by the trial court in injunctive matters is generally not interfered with save in cases of manifest abuse. And to
determine whether there was grave abuse of discretion, a scrutiny must be made of the bases, if any, considered by the
trial court in granting injunctive relief. Be it stressed that injunction is the strong arm of equity which must be issued with
great caution and deliberation, and only in cases of great injury where there is no commensurate remedy in damages. 52

The CA upheld the trial court’s ruling that San Miguel has sufficiently established its right to prior use and registration
of the word "Ginebra" as a dominant feature of its trademark. The CA ruled that based on San Miguel’s extensive,
continuous, and substantially exclusive use of the word "Ginebra," it has become distinctive of San Miguel’s gin products;
thus, a clear and unmistakable right was shown.

We hold that the CA committed a reversible error. The issue in the main case is San Miguel’s right to the exclusive
use of the mark "Ginebra." The two trademarks "Ginebra San Miguel" and "Ginebra Kapitan" apparently differ when taken
as a whole, but according to San Miguel, Tanduay appropriates the word "Ginebra" which is a dominant feature of San
Miguel’s mark.

It is not evident whether San Miguel has the right to prevent other business entities from using the word "Ginebra." It
is not settled (1) whether "Ginebra" is indeed the dominant feature of the trademarks, (2) whether it is a generic word
that as a matter of law cannot be appropriated, or (3) whether it is merely a descriptive word that may be appropriated
based on the fact that it has acquired a secondary meaning.

The issue that must be resolved by the trial court is whether a word like "Ginebra" can acquire a secondary meaning
for gin products so as to prohibit the use of the word "Ginebra" by other gin manufacturers or sellers. This boils down to
whether the word "Ginebra" is a generic mark that is incapable of appropriation by gin manufacturers.
 In Asia Brewery, Inc. v. Court of Appeals,53 the Court ruled that "pale pilsen" are generic words, "pale" being the
actual name of the color and "pilsen" being the type of beer, a light bohemian beer with a strong hops flavor that
originated in Pilsen City in Czechoslovakia and became famous in the Middle Ages, and hence incapable of appropriation by
any beer manufacturer.54 Moreover, Section 123.1(h) of the IP Code states that a mark cannot be registered if it "consists
exclusively of signs that are generic for the goods or services that they seek to identify."1avvphi1

In this case, a cloud of doubt exists over San Miguel’s exclusive right relating to the word "Ginebra." San Miguel’s
claim to the exclusive use of the word "Ginebra" is clearly still in dispute because of Tanduay’s claim that it has, as others
have, also registered the word "Ginebra" for its gin products. This issue can be resolved only after a full-blown trial.

In Ong Ching Kian Chuan v. Court of Appeals, 55 we held that in the absence of proof of a legal right and the injury
sustained by the movant, the trial court’s order granting the issuance of an injunctive writ will be set aside, for having
been issued with grave abuse of discretion.

We find that San Miguel’s right to injunctive relief has not been clearly and unmistakably demonstrated. The right to
the exclusive use of the word "Ginebra" has yet to be determined in the main case. The trial court’s grant of the writ of
preliminary injunction in favor of San Miguel, despite the lack of a clear and unmistakable right on its part, constitutes
grave abuse of discretion amounting to lack of jurisdiction.

Prejudging the Merits of the Case

Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary injunction, has prejudged the merits
of the case since nothing is left to be decided by the trial court except the amount of damages to be awarded to San
Miguel.56

San Miguel claims that neither the CA nor the trial court prejudged the merits of the case. San Miguel states that the
CA did not rule on the ultimate correctness of the trial court’s evaluation and appreciation of the evidence before it, but
merely found that the assailed Orders of the trial court are supported by the evidence on record and that Tanduay was not
denied due process.57 San Miguel argues that the CA only upheld the trial court’s issuance of the TRO and writ of
preliminary injunction upon a finding that there was sufficient evidence on record, as well as legal authorities, to warrant
the trial court’s preliminary findings of fact. 58

The instructive ruling in Manila International Airport Authority v. Court of Appeals 59 states:

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

"It has been consistently held that there is no power the exercise of which is more delicate, which requires greater
caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is
the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford
an adequate or commensurate remedy in damages.

Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and
should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law
permits it and the emergency demands it." (Emphasis in the original)

We believe that the issued writ of preliminary injunction, if allowed, disposes of the case on the merits as it effectively
enjoins the use of the word "Ginebra" without the benefit of a full-blown trial. In Rivas v. Securities and Exchange
Commission,60 we ruled that courts should avoid issuing a writ of preliminary injunction which would in effect dispose of
the main case without trial. The issuance of the writ of preliminary injunction had the effect of granting the main prayer of
the complaint such that there is practically nothing left for the trial court to try except the plaintiff’s claim for damages.

Irreparable Injury

Tanduay points out that the supposed damages that San Miguel will suffer as a result of Tanduay’s infringement or
unfair competition cannot be considered irreparable because the damages are susceptible of mathematical computation.
Tanduay invokes Section 156.1 of the IP Code61 as the basis for the computation of damages.62

San Miguel avers that it stands to suffer irreparable injury if the manufacture and sale of Tanduay’s "Ginebra Kapitan"
are not enjoined. San Miguel claims that the rough estimate of the damages 63 it would incur is simply a guide for the trial
court in computing the appropriate docket fees. San Miguel asserts that the full extent of the damage it would suffer is
difficult to measure with any reasonable accuracy because it has invested hundreds of millions over a period of 170 years
to establish goodwill and reputation now being enjoyed by the "Ginebra San Miguel" mark. 64 San Miguel refutes Tanduay’s
claim that the injury which San Miguel stands to suffer can be measured with reasonable accuracy as the legal formula to
determine such injury is provided in Section 156.1 of the IP Code. San Miguel reasons that if Tanduay’s claim is upheld,
then there would never be a proper occasion to issue a writ of preliminary injunction in relation to complaints for
infringement and unfair competition, as the injury which the owner of the mark suffers, or stands to suffer, will always be
susceptible of mathematical computation.65

In Levi Strauss & Co. v. Clinton Apparelle, Inc., 66 this Court upheld the appellate court’s ruling that the damages Levi
Strauss & Co. had suffered or continues to suffer may be compensated in terms of monetary consideration. This Court,
quoting Government Service Insurance System v. Florendo,67 held:

x x x a writ of injunction should never issue when an action for damages would adequately compensate the injuries
caused. The very foundation of the jurisdiction to issue the writ of injunction rests in the probability of irreparable injury,
inadequacy of pecuniary compensation and the prevention of the multiplicity of suits, and where facts are not shown to
bring the case within these conditions, the relief of injunction should be refused.

Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has failed to
prove the probability of irreparable injury which it will stand to suffer if the sale of "Ginebra Kapitan" is not enjoined. San
Miguel has not presented proof of damages incapable of pecuniary estimation. At most, San Miguel only claims that it has
invested hundreds of millions over a period of 170 years to establish goodwill and reputation now being enjoyed by the
"Ginebra San Miguel" mark such that the full extent of the damage cannot be measured with reasonable accuracy. Without
the submission of proof that the damage is irreparable and incapable of pecuniary estimation, San Miguel’s claim cannot
be the basis for a valid writ of preliminary injunction.

Wherefore, we GRANT the petition. We SET ASIDE the Decision of the Court of Appeals dated 9 January 2004 and
the Resolution dated 2 July 2004 in CA-G.R. SP No. 79655. We declare VOID the Order dated 17 October 2003 and the
corresponding writ of preliminary injunction issued by Branch 214 of the Regional Trial Court of Mandaluyong City in IP
Case No. MC-03-01 and Civil Case No. MC-03-073.

The Regional Trial Court of Mandaluyong City, Branch 214, is directed to continue expeditiously with the trial to
resolve the merits of the case.

SO ORDERED.

RIGHT OF FOREIGN CORPORATION TO SUE

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 171053               October 15, 2007

SEHWANI, INCORPORATED and/or BENITA'S FRITES, INC., Petitioner, 

vs.
IN-N-OUT BURGER, INC., Respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review assails the Decision 1 of the Court of Appeals in CA-G.R. SP No. 88004 dated October 21, 2005,
which affirmed the December 7, 2004 Order 2 of Director General Emma C. Francisco of the Intellectual Property Office
(IPO), in Appeal No. 14-2004-0004 finding that petitioners’ appeal was filed out of time, as well as the Resolution 3 dated
January 12, 2006 denying the motion for reconsideration.

Respondent IN-N-OUT Burger, Inc., a foreign corporation organized under the laws of California, U.S.A., and not
doing business in the Philippines, filed before the Bureau of Legal Affairs of the IPO (BLA-IPO), an administrative complaint
against petitioners Sehwani, Inc. and Benita’s Frites, Inc. for violation of intellectual property rights, attorney’s fees and
damages with prayer for the issuance of a restraining order or writ of preliminary injunction. 4

Respondent alleged that it is the owner of the tradename "IN-N-OUT" and trademarks "IN-N-OUT," "IN-N-OUT
Burger & Arrow Design" and "IN-N-OUT Burger Logo," which are used in its business since 1948 up to the present. These
tradename and trademarks were registered in the United States as well as in other parts of the world. 5
 On June 2, 1997, respondent applied with the IPO for the registration of its trademark "IN-N-OUT Burger & Arrow
Design" and servicemark "IN-N-OUT." In the course of its application, respondent discovered that petitioner Sehwani, Inc.
had obtained Trademark Registration No. 56666 for the mark "IN N OUT" (THE INSIDE OF THE LETTER "O" FORMED LIKE
A STAR) on December 17, 1993 without its authority.6 Respondent thus demanded that petitioner Sehwani, Inc. desist
from claiming ownership of the mark "IN-N-OUT" and to voluntarily cancel its Trademark Registration No. 56666.
Petitioner Sehwani, Inc. however refused to accede to the demand and even entered into a Licensing Agreement granting
its co-petitioner Benita’s Frites, Inc. license to use for a period of five years the trademark "IN-N-OUT BURGER" in its
restaurant in Pasig City.7 Hence, respondent filed a complaint for violation of intellectual property rights.

In their answer with counterclaim, petitioners alleged that respondent lack the legal capacity to sue because it was
not doing business in the Philippines and that it has no cause of action because its mark is not registered or used in the
Philippines. Petitioner Sehwani, Inc. also claimed that as the registered owner of the "IN-N-OUT" mark, it enjoys the
presumption that the same was validly acquired and that it has the exclusive right to use the mark. Moreover, petitioners
argued that other than the bare allegation of fraud in the registration of the mark, respondent failed to show the existence
of any of the grounds for cancellation thereof under Section 151 of Republic Act (R.A.) No. 8293, otherwise known as  The
Intellectual Property Code of the Philippines.8

On December 22, 2003, Bureau Director Estrellita Beltran-Abelardo rendered Decision No. 2003-02 finding that
respondent has the legal capacity to sue and that it is the owner of the internationally well-known trademarks; however,
she held that petitioners are not guilty of unfair competition, thus:

With the foregoing disquisition, Certificate 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 regard to mark "Double-
Double", considering that as earlier discussed, the mark has been approved by this Office for publication and that as
shown by the evidence, Complainant is the owner of the said mark, Respondents are also ordered to permanently cease
and desist from using the mark Double-Double. NO COSTS.

SO ORDERED.9

Petitioners filed a motion for reconsideration 10 insisting that respondent has no legal capacity to sue, that no ground
for cancellation was duly proven, and that the action is barred by laches; while respondent moved for partial
reconsideration11 assailing the finding that petitioners are not guilty of unfair competition. Both, however, were denied in
Resolution No. 2004-18 dated October 28, 2004 12 and Resolution No. 2005-05 dated April 25, 2005, 13respectively.

On separate dates, the parties appealed to the Office of the Director General which rendered an Order dated
December 7, 2004,14 in Appeal No. 14-2004-0004, dismissing petitioners’ appeal for being filed out of time, thus:

WHEREFORE, premises considered, the MOTION TO ADMIT COPY OF DECISION NO. 2003-02 is hereby granted. The
instant appeal, however, is hereby DISMISSED for having been filed out of time. 15

Aggrieved, petitioners filed a petition before the Court of Appeals which was dismissed for lack of merit. It held that
the right to appeal is not a natural right or a part of due process, but a procedural remedy of statutory origin, hence, its
requirements must be strictly complied with. The appeal being filed out of time, the December 22, 2003 Decision and the
October 28, 2004 Orders of Bureau Director Beltran-Abelardo are now final and executory. 16

Meanwhile, respondent filed a Manifestation with the Court of Appeals that on December 23, 2005, Director General
Adrian S. Cristobal, Jr. had rendered a Decision in Appeal 10-05-01 finding petitioners guilty of unfair competition. 17

Petitioners’ motion for reconsideration was denied; hence, the instant petition raising the following issues:

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN UPHOLDING THE IPO DIRECTOR GENERAL’S DISMISSAL OF
APPEAL NO. 14-2004-0004 ON A MERE TECHNICALITY.

SUBSTANTIAL JUSTICE WOULD BE BETTER SERVED IF THE COURT OF APPEALS AND THE IPO DIRECTOR GENERAL
ENTERTAINED PETITIONERS APPEAL AS THE BUREAU OF LEGAL AFFAIR’S DECISION AND RESOLUTION (1) CANCELING
PETITIONER SEHWANI’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 NOT SUPPORTED BY EVIDENCE. 18

Petitioners contend that the Court of Appeals erred when it dismissed the petition on mere technicality which resulted
in a miscarriage of justice and deprivation of intellectual property rights. They claim that their counsel believed in good
faith that Resolution No. 2004-18 dated October 28, 2004, denying the motion for reconsideration, was received only on
November 3, 2004, thus, they have until November 18, 2004 within which to file an appeal memorandum with the Office
of the Director General. They claim that they should not be prejudiced by their counsel’s mistake in computing the period
to appeal; besides, the same is understandable and excusable as their counsel is a solo practitioner with only a handful of
non-legal staff assisting him. They also reiterate their position that respondent has no legal capacity to sue, that no ground
for cancellation was duly proven, and that the complaint is barred by laches, if not, by prescription. 19
 The petition has no merit.

The Court has invariably ruled that perfection of an appeal within the statutory or reglementary period is not only
mandatory but also jurisdictional; failure to do so renders the questioned decision/final order final and executory, and
deprives the appellate court of jurisdiction to alter the judgment or final order, much less to entertain the appeal. 20True,
this rule had been relaxed but only in highly meritorious cases to prevent a grave injustice from being done. 21Such does
not obtain in this case.

Director General Francisco, as affirmed by the Court of Appeals, correctly held:

[T]hat the appeal must be dismissed outright. Section 2 of the Uniform Rules on Appeal (Office Order no. 12, s.
2002) states that:

Section 2. Appeal to the Director General. – The decisions or final orders of the Bureau Director shall become final
and executory thirty (30) days after receipt of a copy thereof by the appellant or appellants unless, within the same
period, a motion for reconsideration is filed with the Bureau Director or an appeal to the Director General has been
perfected; Provided, that only one (1) motion for reconsideration of the decision or order of the Bureau Director shall be
allowed, and, in case the motion for reconsideration is denied, the appellant or appellants has/have the balance of the
period prescribed above within which to file the appeal.

Considering that the Respondent-Appellants received a copy of the appealed Decision on 15 January 2004 and filed
their MOTION FOR RECONSIDERATION on 30 January 2004, said parties had a balance of 15 days from their receipt of
the Resolution denying said motion within which to file the APPEAL MEMORANDUM. Per records of the Bureau of Legal
Affairs, the Respondents-Appellants received a copy of the Resolution on 29 October 2004. Hence the deadline for the
filing of the APPEAL MEMORANDUM was on 13 November 2004. Since said date fell on a Saturday, the appeal should have
been filed on the ensuing working day, that is, 15 November 2004.

On this score, Section 5(c) of the Uniform Rules on Appeal provides:

Section 5. Action on the Appeal Memorandum – The Director General shall:

xxxx

c) Dismiss the appeal for being patently without merit, provided that the dismissal shall be outright if the appeal is
not filed within the prescribed period or for failure of the appellant to pay the required fee within the period of
appeal.22 (Underscoring supplied)

Petitioners’ allegation that they honestly believed that they received Resolution No. 2004-18 dated October 28, 2004
on November 3, 2004 and not on October 29, 2004, as what appears on the records of the BLA-IPO, is self-serving and
unbelievable. The inadvertent computation of the period for one to file a pleading is inexcusable, and has become an all
too familiar and ready excuse on the part of lawyers remiss in their bounden duty to comply with the mandatory periods. 23

This Court has always reminded the members of the legal profession that every case they handle deserves full and
undivided attention, diligence, skill and competence, regardless of its importance. 24 A lawyer has the responsibility of
monitoring and keeping track of the period of time left to file pleadings and to see to it that said pleadings are filed before
the lapse of the period. If he fails to do so, his client is bound by his conduct, negligence and mistakes. 25This responsibility
is imposed on all lawyers notwithstanding the presence or absence of staff assisting them in the discharge thereof.

Thus, as correctly held by the Court of Appeals, petitioners’ belated filing of an appeal memorandum rendered the
December 22, 2003 Decision and the October 28, 2004 Order of Bureau Director Beltran-Abelardo final and executory.

At this point, the Court could very well write finis to this petition. However, in disposing of the instant case, we shall
resolve the principal issues raised by petitioners.

Contrary to petitioners’ argument, respondent has the legal capacity to sue for the protection of its trademarks, albeit
it is not doing business in the Philippines. Section 160 in relation to Section 3 of R.A. No. 8293, provides:

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.

Section 3 thereof provides:

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.

Respondent anchors its causes of action under Articles 6 bis and 8 of The Convention of Paris for the Protection of
Industrial Property, otherwise known as the Paris Convention, wherein both the United States and the Philippines are
signatories.26 The Articles read:

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.

x x x x.

Article 8

A tradename shall be protected in all countries of the Union without the obligation of filing or registration whether or
not it forms part of a trademark.

Article 6bis which governs the protection of well-known trademarks, is a self-executing provision and does not require
legislative enactment to give it effect in the member country. It may be applied directly by the tribunals and officials of
each member country by the mere publication or proclamation of the Convention, after its ratification according to the
public law of each state and the order for its execution. The essential requirement under this Article is that the trademark
to be protected must be "well-known" in the country where protection is sought. The power to determine whether a
trademark is well-known lies in the "competent authority of the country of registration or use." This competent authority
would be either the registering authority if it has the power to decide this, or the courts of the country in question if the
issue comes before a court.27

The question of whether or not respondent’s trademarks are considered "well-known" is factual in nature, involving as
it does the appreciation of evidence adduced before the BLA-IPO. The settled rule is that the factual findings of quasi-
judicial agencies, like the IPO, which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but, at times, even finality if such findings are supported by substantial evidence. 28

Director Beltran-Abelardo found that:

Arguing mainly that it is the owner of an internationally well-known mark, complainant presented its United States
trademark registrations, namely: United States Trademark Registration No. 1,514,689 for the mark "IN-N-OUT Burger and
Arrow Design" under class 25 dated November 29, 1988 for the shirts (Exhibit "L"); United States Trademark Registration
No. 1,528,456 for the mark "IN-N-OUT Burger and Arrow Design" under Class 29, 30, 32 and 42 dated March 7, 1989 for
milk and french-fried potatoes for consumption on or off the premises, for hamburger sandwiches, cheeseburger
sandwiches, hot coffee and milkshakes for consumption on or off the premises, lemonade and softdrinks for consumption
on and off the premises, restaurant services respectively (Exhibit "M"); US Trademark Registration No. 1,101,638 for the
mark "IN-N-OUT" under Class No. 30 dated September 5, 1978 for cheeseburgers, hamburgers, hot coffee and milkshake
for consumption on or off premises (Exhibit "N"); US Trademark Registration No. 1,085,163 "IN-N-OUT" under Class 42
dated February 7, 1978 for Restaurant Services and carry-out restaurant services (Exhibit "Q"). For its mark "Double-
Double" it submitted Certificates of Registration of said mark in several countries (Exhibits "MM" and submarkings).

xxxx

Moreover, complainant also cites our decision in Inter Pares Case No. 14-1998-00045 dated 12 September 2000, an
opposition case involving the mark "IN-N-OUT" between IN-N-OUT Burger (herein complainant) and Nestor SJ Bonjales
where we ruled:

"And last but not the lease, the herein Opposer was able to prove substantially that its mark "IN-N-OUT Burger and
Arrow Design" is an internationally well known mark as evidenced by its trademark registrations around the world and its
comprehensive advertisements therein."

The nub of complainant’s reasoning is that the Intellectual Property Office as a competent authority had declared in
previous inter partes case that "IN-N-OUT Burger and Arrow Design" is an internationally well known mark.
 In the aforementioned case, we are inclined to favor the declaration of the mark "IN-N-OUT" as an internationally
well-known mark on the basis of "registrations in various countries around the world and its comprehensive
advertisements therein."

The Ongpin Memorandum dated 25 October 1983 which was the basis for the decision in the previous inter partes
case and which set the criteria for determining whether a mark is well known, takes into consideration the extent of
registration of a mark. Similarly, the implementing rules of Republic Act 8293, specifically Section (e) Rule 102 Criteria for
determining whether a mark is well known, also takes into account the extent to which the mark has been registered in
the world in determining whether a mark is well known.

Likewise, as shown by the records of the instant case, Complainant submitted evidence consisting of articles about
"IN-N-OUT Burger" appearing in magazines, newspapers and print-out of what appears to be printed representations of its
internet website (www.innout.com) (Exhibits "CCC" to "QQQ"), as well as object evidence consisting of videotapes of
famous celebrities mentioning IN-N-OUT burgers in the course of their interviews (Exhibits "EEEE" and "FFFF") showing a
tremendous following among celebrities.

The quality image and reputation acquired by the complainant’s IN-N-OUT mark is unmistakable. With this,
complainant’s mark have met other criteria set in the Implementing Rules of Republic Act 8293, namely, ‘a’ and ‘d’ of Rule
102, to wit:

"Rule 102:

(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 publicity and the presentation at fairs or exhibitions, of the
goods and/or services to which the mark applies;

xxxx

(d) the quality image or reputation acquired by the mark"

Hence, on the basis of evidence presented consisting of worldwide registration of mark "IN-N-OUT" almost all of
which were issued earlier than the respondent’s date of filing of its application and the subsequent registration of the mark
"IN-N-OUT" in this Office, as well as the advertisements therein by the complainant, this Office hereby affirms its earlier
declaration that indeed, the mark "IN-N-OUT BURGER LOGO" is an internally well-known mark. 29

We find the foregoing findings and conclusions of Director Beltran-Abelardo fully substantiated by the evidence on
record and in accord with law.

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 6bis 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 filed 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 filed 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. (Underscoring supplied)

Moreover, petitioners’ claim that no ground exists for the cancellation of their registration lacks merit. Section 151(b)
of RA 8293 provides:

SECTION 151. Cancellation. — 151.1. A petition to cancel a registration of a mark under this Act may be filed with the
Bureau of Legal Affairs by any person who believes that he is or will be damaged by the registration of a mark under this
Act as follows:

xxxx

(b) At any time, if the registered mark becomes the generic name for the goods or services, or a portion thereof, for
which it is registered, or has been abandoned, or its registration was obtained fraudulently or contrary to the provisions of
this Act, or if the registered mark is being used by, or with the permission of, the registrant so as to misrepresent the
source of the goods or services on or in connection with which the mark is used. x x x.1âwphi1

The evidence on record shows that not only did the petitioners use the IN-N-OUT Burger trademark for the name of
their restaurant, but they also used identical or confusingly similar mark for their hamburger wrappers and french-fries
receptacles, thereby effectively misrepresenting the source of the goods and services. 30

Finally, petitioner’s contention that respondent is precluded from asserting its claim by laches, if not by prescription,
lacks basis. Section 151(b) of R.A. No. 8293 specifically provides that a petition to cancel the registration of a mark which
is registered contrary to the provisions thereof, or which is used to misrepresent the source of the goods or services, may
be filed at any time. Moreover, laches may not prevail against a specific provision of law, since equity, which has been
defined as ‘justice outside legality’ is applied in the absence of and not against statutory law or rules of procedure. 31 Aside
from the specific provisions of R.A. No. 8293, the Paris Convention and the WIPO Joint Recommendation have the force
and effect of law, for under Section 2, Article II of the Constitution, the Philippines adopts the generally accepted principles
of international law as part of the law of the land. To rule otherwise would be to defeat the equitable consideration that no
one other than the owner of the well-known mark shall reap the fruits of an honestly established goodwill.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 88004,
dated October 21, 2005 and January 16, 2006, affirming the December 7, 2004 Order of Director General Emma C.
Francisco, in Appeal No. 14-2004-0004, and denying the motion for reconsideration, respectively, are AFFIRMED.

SO ORDERED.

TRADEMARK INFRINGEMENT

FIRST DIVISION

G.R. No. 111580      June 21, 2001

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD., SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA
HOTEL AND RESORT, INC. and KUOK PHILIPPINE PROPERTIES, INC., petitioners, 
vs.
THE COURT OF APPEALS, HON. FELIX M. DE GUZMAN, as Judge, RTC of Quezon City, Branch 99 and
DEVELOPERS GROUP OF COMPANIES, INC., respondents.

----------------------------------------

G.R. No. 114802      June 21, 2001

DEVELOPERS GROUP OF COMPANIES, INC., petitioner, 

vs.
THE COURT OF APPEALS, HON. IGNACIO S. SAPALO, in his capacity as Director, Bureau of Patents,
Trademarks and Technology Transfer, and SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT,
LTD.,respondents.

YNARES-SANTIAGO, J.:

On June 21, 1988, the Shangri-La International Hotel Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-
La Hotel and Resort, Inc. and Kuok Philippine Properties, Inc. (hereinafter collectively referred as the "Shangri-La Group"),
filed with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) a petition, docketed as Inter Partes Case
No. 3145, praying for the cancellation of the registration of the "Shangri-La" mark and "S" device/logo issued to the
Developers Group of Companies, Inc., on the ground that the same was illegally and fraudulently obtained and
appropriated for the latter's restaurant business. The Shangri-La Group alleged that it is the legal and beneficial owners of
the subject mark and logo; that it has been using the said mark and logo for its corporate affairs and business since March
1962 and caused the same to be specially designed for their international hotels in 1975, much earlier than the alleged
first use thereof by the Developers Group in 1982.
 Likewise, the Shangri-La Group filed with the BPTTT its own application for registration of the subject mark and logo.
The Developers Group filed an opposition to the application, which was docketed as Inter Partes Case No. 3529.

Almost three (3) years later, or on April 15, 1991, the Developers Group instituted with the Regional Trial Court of
Quezon City, Branch 99, a complaint for infringement and damages with prayer for injunction, docketed as Civil Case No.
Q-91-8476, against the Shangri-La Group.

On January 8, 1992, the Shangri-La Group moved for the suspension of the proceedings in the infringement case on
account of the pendency of the administrative proceedings before the BPTTT. 1 This was denied by the trial court in a
Resolution issued on January 16, 1992.2 The Shangri-La Group filed a Motion for Reconsideration. 3 Soon thereafter, it also
filed a Motion to Inhibit against Presiding Judge Felix M. de Guzman. 4 On July 1, 1992, the trial court denied both
motions.5

The Shangri-La Group filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP No.
29006.6 On February 15, 1993, the Court of Appeals rendered its decision dismissing the petition for certiorari. 7 The
Shangri-La Group filed a Motion for Reconsideration, which was denied on the ground that the same presented no new
matter that warranted consideration.8

Hence, the instant petition, docketed as G.R. No. 111580, based on the following grounds:

THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED A REVERSIBLE ERROR
IN NOT FINDING THAT:

I. THE INFRINGEMENT CASE SHOULD BE DISMISSED OR AT LEAST SUSPENDED; AND

II. THE HONORABLE PRESIDING JUDGE SHOULD INHIBIT HIMSELF FROM TRYING THE INFRINGEMENT CASE. 9

Meanwhile, on October 28, 1991, the Developers Group filed in Inter Partes Case No. 3145 an Urgent Motion to
Suspend Proceedings, invoking the pendency of the infringement case it filed before the Regional Trial Court of Quezon
City.10 On January 10, 1992, the BPTTT, through Director Ignacio S. Sapalo, issued an Order denying the Motion. 11 A
Motion for Reconsideration was filed which was, however, denied in a Resolution dated February 11, 1992. 12

From the denial by the BPTTT of its Urgent Motion to Suspend Proceedings and Motion for Reconsideration, the
Developers Group filed with the Court of Appeals a petition for certiorari, mandamus and prohibition, docketed as CA-G.R.
SP No. 27742.13 On March 29, 1994, the Court of Appeals dismissed the petition for lack of merit. 14

A petition for review was thereafter filed, docketed as G.R. No. 114802, raising the issue of:

WHETHER OR NOT, GIVEN THE ESTABLISHED FACTS AND CIRCUMSTANCES ON RECORD AND THE LAW AND
JURISPRUDENCE APPLICABLE TO THE MATTER, THE RESPONDENT COURT ERRED IN HOLDING THAT, INASMUCH AS
BOTH THE CIVIL ACTION AND THE ADMINISTRATIVE PROCEEDINGS HERE INVOLVED MAY CO-EXIST AND THE LAW
DOES NOT PROVIDE FOR ANY PREFERENCE BY ONE OVER THE OTHER, THE RESPONDENT DIRECTOR HAD
JURISDICTION TO RULE AS HE DID AND HAD NOT INCURRED ANY GRAVE ABUSE OF DISCRETION CORRECTIBLE BY THE
EXTRAORDINARY REMEDIES OF CERTIORARI, PROHIBITION AND MANDAMUS. 15

On February 2, 1998, G.R. Nos. 111580 and 114802 were ordered consolidated.

The core issue is simply whether, despite the institution of an Inter Partes case for cancellation of a mark with the
BPTTT (now the Bureau of Legal Affairs, Intellectual Property Office) by one party, the adverse party can file a subsequent
action for infringement with the regular courts of justice in connection with the same registered mark.

We rule in the affirmative.

Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual Property Code, provides, as follows –

Section 151.2. Notwithstanding the foregoing provisions, the court or the administrative agency vested with
jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall likewise exercise jurisdiction
to determine whether the registration of said mark may be cancelled in accordance with this Act. The filing of a suit to
enforce the registered mark with the proper court or agency shall exclude any other court or agency from assuming
jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of
petition to cancel the mark with the Bureau of Legal Affairs shall not constitute a prejudicial question that
must be resolved before an action to enforce the rights to same registered mark may be decided.  (Emphasis
provided)

Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings, provides to wit –
 Section 7. Effect of filing of a suit before the Bureau or with the proper court . - The filing of a suit to enforce the
registered mark with the proper court or Bureau shall exclude any other court or agency from assuming jurisdiction over a
subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the
mark with the Bureau shall not constitute a prejudicial question that must be resolved before an action to
enforce the rights to same registered mark may be decided. (Emphasis provided)

Hence, as applied in the case at bar, the earlier institution of an Inter Partes case by the Shangri-La Group for the
cancellation of the "Shangri-La" mark and "S" device/logo with the BPTTT cannot effectively bar the subsequent filing of
an infringement case by registrant Developers Group. The law and the rules are explicit.

The rationale is plain: Certificate of Registration No. 31904, upon which the infringement case is based, remains valid
and subsisting for as long as it has not been cancelled by the Bureau or by an infringement court. As such, Developers
Group's Certificate of Registration in the principal register continues as "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." 16 Since the certificate still subsists,
Developers Group may thus file a corresponding infringement suit and recover damages from any person who infringes
upon the former's rights.17

Furthermore, the issue raised before the BPTTT is quite different from that raised in the trial court. The issue raised
before the BPTTT was whether the mark registered by Developers Group is subject to cancellation, as the Shangri-La
Group claims prior ownership of the disputed mark. On the other hand, the issue raised before the trial court was whether
the Shangri-La Group infringed upon the rights of Developers Group within the contemplation of Section 22 of Republic Act
166.

The case of Conrad and Company, Inc. v. Court of Appeals 18  is in point. We held:

We cannot see any error in the above disquisition. It might be mentioned that while an application for the
administrative cancellation of a registered trademark on any of the grounds enumerated in Section 17 of Republic Act No.
166, as amended, otherwise known as the Trade-Mark Law, falls under the exclusive cognizance of BPTTT (Sec. 19,
Trade-Mark Law), an action, however, for infringement or unfair competition, as well as the remedy of injunction and relief
for damages, is explicitly and unquestionably within the competence and jurisdiction of ordinary courts.

x x x      x x x      x x x

Surely, an application with BPTTT for an administrative cancellation of a registered trade mark cannot per se have the
effect of restraining or preventing the courts from the exercise of their lawfully conferred jurisdiction. A contrary rule
would unduly expand the doctrine of primary jurisdiction which, simply expressed, would merely behoove regular courts, in
controversies involving specialized disputes, to defer to the findings or resolutions of administrative tribunals on certain
technical matters. This rule, evidently, did not escape the appellate court for it likewise decreed that for "good cause
shown, the lower court, in its sound discretion, may suspend the action pending outcome of the cancellation proceedings"
before the BPTTT.

However, while the instant Petitions have been pending with this Court, the infringement court rendered a Decision,
dated March 8, 1996, in Civil Case No. Q-91-8476,19 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Developers Group of Companies, Inc. and against
defendants Shangri-La International Hotel Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and
Resort, Inc., and Kuok Philippine Properties, Inc. –

a) Upholding the validity of the registration of the service mark "Shangri-La" and "S-Logo" in the name of plaintiff;

b) Declaring defendants' use of said mark and logo as an infringement of plaintiff's right thereto;

c) Ordering defendants, 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 defendants 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 defendants, jointly and severally, to indemnify plaintiff in the amounts of P2,000,000.00 as actual and
compensatory damages, P500,000.00 as attorney's fees and expenses of litigation.

Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and Technology Transfer, for
his information and appropriate action in accordance with the provisions of Section 25, Republic Act No. 166.
 Costs against defendants.

SO ORDERED.20

The said Decision is now on appeal with respondent Court of Appeals. 21

Following both law and the jurisprudence enunciated in Conrad and Company, Inc. v. Court of Appeals,22 the
infringement case can and should proceed independently from the cancellation case with the Bureau so as to afford the
owner of certificates of registration redress and injunctive writs. In the same light, so must the cancellation case with the
BPTTT (now the Bureau of Legal Affairs, Intellectual Property Office) continue independently from the infringement case
so as to determine whether a registered mark may ultimately be cancelled. However, the Regional Trial Court, in granting
redress in favor of Developers Group, went further and upheld the validity and preference of the latter's registration over
that of the Shangri-La Group.

There can be no denying that the infringement court may validly pass upon the right of registration. Section 161 of
Republic Act No. 8293 provides to wit –

SEC. 161. Authority to Determine Right to Registration – In any action involving a registered mark the court
may determine the right to registration, order the cancellation of the registration, in whole or in part, and
otherwise rectify the register with respect to the registration of any party to the action in the exercise of
this.  Judgement and orders shall be certified by the court to the Director, who shall make appropriate entry upon the
records of the Bureau, and shall be controlled thereby. (Sec. 25, R.A. No. 166a). (Emphasis provided)

With the decision of the Regional Trial Court upholding the validity of the registration of the service mark "Shangri-La"
and "S" logo in the name of Developers Group, the cancellation case filed with the Bureau hence becomes moot. To allow
the Bureau to proceed with the cancellation case would lead to a possible result contradictory to that which the Regional
Trial Court has rendered, albeit the same is still on appeal. Such a situation is certainly not in accord with the orderly
administration of justice. In any event, the Court of Appeals has the competence and jurisdiction to resolve the merits of
the said RTC decision.

We are not unmindful of the fact that in G.R. No. 114802, the only issue submitted for resolution is the correctness of
the Court of Appeals' decision sustaining the BPTTT's denial of the motion to suspend the proceedings before it. Yet, to
provide a judicious resolution of the issues at hand, we find it apropos  to order the suspension of the proceedings before
the Bureau pending final determination of the infringement case, where the issue of the validity of the registration of the
subject trademark and logo in the name of Developers Group was passed upon.

WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing G.R. No. 111580 for being moot
and academic, and ordering the Bureau of Legal Affairs, Intellectual Property Office, to suspend further proceedings in
Inter Partes Case No. 3145, to await the final outcome of the appeal in Civil Case No. Q-91-8476.1âwphi1.nêt

SO ORDERED.

THIRD DIVISION

G.R. No. 139300            March 14, 2001

AMIGO MANUFACTURING, INC., petitioner, 

vs.
CLUETT PEABODY CO., INC., respondent.

PANGANIBAN, J.:

The findings of the Bureau of Patents that two trademarks are confusingly and deceptively similar to each other are
binding upon the courts, absent any sufficient evidence to the contrary. In the present case, the Bureau considered the
totality of the similarities between the two sets of marks and found that they were of such degree, number and quality as
to give the overall impression that the two products are confusingly if not deceptively the same.

Statement of the Case

Petitioner Amigo Manufacturing Inc. challenges, under Rule 45 of the Rules of Court, the January 14, 1999
Resolution1 of the Court of Appeals (CA) in CA-GR SP No. 22792, which reversed, on reconsideration, its own September
29, 1998 Decision.2 The dispositive portion of the assailed Resolution reads as follows:

"WHEREFORE, the Motion for Reconsideration is GRANTED, and the Decision dated September 29, 1998 REVERSED.
Consequently, the decision rendered by the Director of Patents dated September 3, 1990 is hereby AFFIRMED."

The Decision of the Director of Patents, referred to by the CA, disposed as follows:

"WHEREFORE, the Petition is GRANTED. Consequently, Certificate of Registration No. SR-2206 issued to Respondent-
Registrant [herein petitioner] is hereby cancelled.

"Let the records of this case be remanded to the Patent/Trademark Registry and EDP Division for appropriate action
in accordance with this Decision."

Petitioner also seeks the reversal of the June 30, 1999 CA Resolution 3 denying its own Motion for Reconsideration.

The Facts

The facts, which are undisputed, are summarized by the Court of Appeals in its original Decision, as follows:

"The source of the controversy that precipitated the filing by [herein Respondent] Cluett Peabody Co., Inc. (a New
York corporation) of the present case against [herein Petitioner] Amigo Manufacturing Inc. (a Philippine corporation) for
cancellation of trademark is [respondent's] claim of exclusive ownership (as successor in interest of Great American
Knitting Mills, Inc.) of the following trademark and devices, as used on men's socks:

a) GOLD TOE, under Certificate of Registration No. 6797 dated September 22, 1958;

b) DEVICE, representation of a sock and magnifying glass on the toe of a sock, under Certificate of Registration No.
13465 dated January 25, 1968;

c) DEVICE, consisting of a 'plurality of gold colored lines arranged in parallel relation within a triangular area of toe of
the stocking and spread from each other by lines of contrasting color of the major part of the stocking' under Certificate of
Registration No. 13887 dated May 9, 1968; and

d) LINENIZED, under Certificate of Registration No. 15440 dated April 13, 1970.

On the other hand, [petitioner's] trademark and device 'GOLD TOP, Linenized for Extra Wear' has the dominant color
'white' at the center and a 'blackish brown' background with a magnified design of the sock's garter, and is labeled 'Amigo
Manufacturing Inc., Mandaluyong, Metro Manila, Made in the Philippines'.

In the Patent Office, this case was heard by no less than six Hearing Officers: Attys. Rodolfo Gilbang, Rustico Casia,
M. Yadao, Fabian Rufina, Neptali Bulilan and Pausi Sapak. The last named officer drafted the decision under appeal which
was in due court signed and issued by the Director of Patents (who never presided over any hearing) adversely against the
respondent Amigo Manufacturing, Inc. as heretofore mentioned (supra, p.1).

The decision pivots on two point: the application of the rule of idem sonans and the existence of a confusing
similarity in appearance between two trademarks (Rollo, p. 33)." 4

Ruling of the Court of Appeals

In its assailed Resolution, the CA held as follows:

"After a careful consideration of [respondent's] arguments and a re-appreciation of the records of this case. [w]e find
[respondent's] motion for reconsideration meritorious. As shown by the records, and as correctly held by the Director of
Patents, there is hardly any variance in the appearance of the marks 'GOLD TOP' and 'GOLD TOE' since both show a
representation of a man's foot wearing a sock, and the marks are printed in identical lettering. Section 4(d) of R.A. No.
166 declares to be unregistrable, 'a mark which consists o[r] comprises a mark or trademark which so resembles a mark or
tradename registered in the Philippines of tradename 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 the purchasers. [Petitioner]'s mark is a combination of the different registered marks
owned by [respondent]. As held in Del Monte Corporation v. Court of Appeals, 181 SCRA 410 (1990), the question is not
whether the two articles are distinguishable by their label when set aside 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
confounding it with the original. As held by the Court in the same decision[,] '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.'
Furthermore, [petitioner]'s mark is only registered with the Supplemental Registry which gives no right of exclusivity to the
owner and cannot overturn the presumption of validity and exclusiv[ity] given to a registered mark.

"Finally, the Philippines and the United States are parties to the Union Convention for the Protection of Industrial
Property adopted in Paris on March 20, 1883, otherwise known as the Paris Convention. (Puma Sportschuhfabriken Rudolf
Dassler K.G. v. Intermediate Appellate Court, 158 SCRA 233). [Respondent] is domiciled in the United States of America
and is the lawful owner of several trademark registrations in the United States for the mark 'GOLD TOE'.

x x x           x x x           x x x'

By virtue of the Philippines' membership to the Paris Union, trademark rights in favor of the [respondent] were
created. The object of the Convention is to accord a national of a member nation extensive protection against infringement
and other types of unfair competition. (Puma Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate Appellate Court, 158
SCRA 233; La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373)" 5

Hence, this Petition.6

Issues

In its Memorandum,7 petitioner raises the following issues for the consideration of this Court:

"I

Whether or not the Court of Appeals overlooked that petitioner's trademark was used in commerce in the Philippines
earlier than respondent's actual use of its trademarks, hence the Court of Appeals erred in affirming the Decision of the
Director of Patents dated September 3, 1990.

II

Since the petitioner's actual use of its trademark was ahead of the respondent, whether or not the Court of Appeals
erred in canceling the registration of petitioner's trademark instead of canceling the trademark of the respondent.

III

Whether or not the Court of Appeals erred in affirming the findings of the Director of Patents that petitioner's
trademark [was] confusingly similar to respondent's trademarks.

IV

Whether or not the Court of Appeals erred in applying the Paris Convention in holding that respondent ha[d] an
exclusive right to the trademark 'gold toe' without taking into consideration the absence of actual use in the Philippines." 8

In the main, the Court will resolve three issues: (1) the date of actual use of the two trademarks; (2) their confusing
similarities, and (3) the applicability of the Paris Convention.

The Court's Ruling

The Petition has no merit.

First Issue:
Dates of First Use of Trademark and Devices

Petitioner claims that it started the actual use of the trademark "Gold Top and Device" in September 1956, while
respondent began using the trademark "Gold Toe" only on May 15, 1962. It contends that the claim of respondent that it
had been using the "Gold Toe" trademark at an earlier date was not substantiated. The latter's witnesses supposedly
contradicted themselves as to the date of first actual use of their trademark, coming up with different dates such as 1952,
1947 and 1938.

We do not agree. Based on the evidence presented, this Court concurs in the findings of the Bureau of Patents that
respondent had actually used the trademark and the devices in question prior to petitioner's use of its own. During the
hearing at the Bureau of Patents, respondent presented Bureau registrations indicating the dates of first use in the
Philippines of the trademark and the devices as follows: a) March 16, 1954, Gold Toe; b) February 1, 1952, the
Representation of a Sock and a Magnifying Glass; c) January 30, 1932, the Gold Toe Representation; and d) February 28,
1952, "Linenized."

The registration of the above marks in favor of respondent constitutes prima facie evidence, which petitioner failed to
overturn satisfactorily, of respondent's ownership of those marks, the dates of appropriation and the validity of other
pertinent facts stated therein. Indeed, Section 20 of Republic Act 166 provides as follows:

"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." 9

Moreover, the validity of the Certificates of Registration was not questioned. Neither did petitioner present any
evidence to indicate that they were fraudulently issued. Consequently, the claimed dates of respondent's first use of the
marks are presumed valid. Clearly, they were ahead of petitioner's claimed date of first use of "Gold Top and Device" in
1958.

Section 5-A of Republic Act No. 166 10 states that an applicant for a trademark or trade name shall, among others,
state the date of first use. The fact that the marks were indeed registered by respondent shows that it did use them on
the date indicated in the Certificate of Registration.

On the other hand, petitioner failed to present proof of the date of alleged first use of the trademark "Gold Top and
Device". Thus, even assuming that respondent started using it only on May 15, 1962, we can make no finding that
petitioner had started using it ahead of respondent.

Furthermore, petitioner registered its trademark only with the supplemental register. In La Chemise Lacoste v.
Fernandez,11 the Court held that registration with the supplemental register gives no presumption of ownership of the
trademark. Said the Court:

"The registration of a mark upon the supplemental register is not, as in the case of the principal register, prima facie
evidence of (1) the validity of registration; (2) registrant's ownership of the mark; and (3) registrant's exclusive right to
use the mark. It is not subject to opposition, although it may be cancelled after its issuance. Neither may it be the subject
of interference proceedings. Registration [i]n the supplemental register is not constructive notice of registrant's claim of
ownership. A supplemental register is provided for the registration because of some defects (conversely, defects which
make a mark unregistrable on the principal register, yet do not bar them from the supplemental register.)' (Agbayani, II
Commercial Laws of the Philippines, 1978, p. 514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of Director of
Patents, Apr. 30, 1968."

As to the actual date of first use by respondent of the four marks it registered, the seeming confusion may have
stemmed from the fact that the marks have different dates of first use. Clearly, however, these dates are indicated in the
Certificates of Registration.

In any case, absent any clear showing to the contrary, this Court accepts the finding of the Bureau of Patents that it
was respondent which had prior use of its trademark, as shown in the various Certificates of Registration issued in its
favor. Verily, administrative agencies' findings of fact in matters falling under their jurisdiction are generally accorded great
respect, if not finality. Thus, the Court has held:

"x x x. By reason of the special knowledge and expertise of said administrative agencies over matters falling under
their jurisdiction, they are in a better position to pass judgment thereon; thus, their findings of fact in that regard are
generally accorded great respect, if not finality, by the courts. The findings of fact of an administrative agency must be
respected as long as they are supported by substantial evidence, even if such evidence might not be overwhelming or
even preponderant. It is not the task of an appellate court to weigh once more the evidence submitted before the
administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of
evidence."12

Second Issue:
Similarity of Trademarks

Citing various differences between the two sets of marks, petitioner assails the finding of the director of patents that
its trademark is confusingly similar to that of respondent. Petitioner points out that the director of patents erred in its
application of the idem sonans rule, claiming that the two trademarks "Gold Toe" and "Gold Top" do not sound alike and
are pronounced differently. It avers that since the words gold and toe are generic, respondent has no right to their
exclusive use.

The arguments of petitioner are incorrect. True, it would not be guilty of infringement on the basis alone of the
similarity in the sound of petitioner's "Gold Top" with that of respondent's "Gold Toe." Admittedly, the pronunciations of
the two do not, by themselves, create confusion.
 The Bureau of Patents, however, did not rely on the idem sonans test alone in arriving at its conclusion. This fact is
shown in the following portion of its Decision:

"As shown by the drawings and labels on file, the mark registered by Respondent-Registrant under Registration No.
SR-2206 is a combination of the abovementioned trademarks registered separately by the petitioner in the Philippines and
the United States.

"With respect to the issue of confusing similarity between the marks of the petitioner and that of the respondent-
registrant applying the tests of idem sonans, the mark 'GOLD TOP & DEVICE' is confusingly similar with the mark 'GOLD
TOE'. The difference in sound occurs only in the final letter at the end of the marks. For the same reason, hardly is there
any variance in their appearance. 'GOLD TOE' and 'GOLD TOP' are printed in identical lettering. Both show [a]
representation of a man's foot wearing a sock. 'GOLD TOP' blatantly incorporates petitioner's 'LINENIZED' which by itself is
a registered mark."13

The Bureau considered the drawings and the labels, the appearance of the labels, the lettering, and the
representation of a man's foot wearing a sock. Obviously, its conclusion is based on the totality of the similarities between
the parties' trademarks and not on their sounds alone.

In Emerald Garment Manufacturing Corporation v. Court of Appeals ,14 this Court stated that in determining whether
trademarks are confusingly similar, jurisprudence has developed two kinds of tests, the Dominancy Test 15 and the Holistic
Test.16 In its words:

"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 and other cases and the Holistic Test developed in Del Monte
Corporation v. Court of Appeals 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.

x x x           x x x           x x x

. . . . 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. [C. Neilman Brewing Co. v. 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. Hanover Rubber Co., 107 F. 2d 588; x x x.)

x x x           x x x           x x x

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."

In the present case, a resort to either the Dominancy Test or the Holistic Test shows that colorable imitation exists
between respondent's "Gold Toe" and petitioner's "Gold Top." A glance at petitioner's mark shows that it definitely has a
lot of similarities and in fact looks like a combination of the trademark and devices that respondent has already registered;
namely, "Gold Toe," the representation of a sock with a magnifying glass, the "Gold Toe" representation and "linenized."

Admittedly, there are some minor differences between the two sets of marks. The similarities, however, are of such
degree, number and quality that the overall impression given is that the two brands of socks are deceptively the same, or
at least very similar to each another. An examination of the products in question shows that their dominant features are
gold checkered lines against a predominantly black background and a representation of a sock with a magnifying glass. In
addition, both products use the same type of lettering. Both also include a representation of a man's foot wearing a sock
and the word "linenized" with arrows printed on the label. Lastly, the names of the brands are similar -- "Gold Top" and
"Gold Toe." Moreover, it must also be considered that petitioner and respondent are engaged in the same line of business.

Petitioner cannot therefore ignore the fact that, when compared, most of the features of its trademark are strikingly
similar to those of respondent. In addition, these representations are at the same location, either in the sock itself or on
the label. Petitioner presents no explanation why it chose those representations, considering that these were the exact
symbols used in respondent's marks. Thus, the overall impression created is that the two products are deceptively and
confusingly similar to each other. Clearly, petitioner violated the applicable trademark provisions during that time.

Let it be remembered that duly registered trademarks are protected by law as intellectual properties and cannot be
appropriated by others without violating the due process clause. An infringement of intellectual rights is no less vicious and
condemnable as theft of material property, whether personal or real.

Third Issue:
The Paris Convention
 Petitioner claims that the Court of Appeals erred in applying the Paris Convention. Although respondent registered its
trademark ahead, petitioner argues that the actual use of the said mark is necessary in order to be entitled to the
protection of the rights acquired through registration.

As already discussed, respondent registered its trademarks under the principal register, which means that the
requirement of prior use had already been fulfilled. To emphasize, Section 5-A of Republic Act 166 requires the date of
first use to be specified in the application for registration. Since the trademark was successfully registered, there exists a
prima facie presumption of the correctness of the contents thereof, including the date of first use. Petitioner has failed to
rebut this presumption.

Thus, applicable is the Union Convention for the Protection of Industrial Property adopted in Paris on March 20, 1883,
otherwise known as the Paris Convention, of which the Philippines and the United States are members. Respondent is
domiciled in the United States and is the registered owner of the "Gold Toe" trademark. Hence, it is entitled to the
protection of the Convention. A foreign-based trademark owner, whose country of domicile is a party to an international
convention relating to protection of trademarks, 17 is accorded protection against infringement or any unfair competition as
provided in Section 37 of Republic Act 166, the Trademark Law which was the law in force at the time this case was
instituted.

In sum, petitioner has failed to show any reversible error on the part of the Court of Appeals. Hence, its Petition must
fail.

WHEREFORE, the Petition is hereby DENIED and the assailed Resolution AFFIRMED. Costs against petitioner.

SO ORDERED.

THIRD DIVISION

G.R. No. 148222               August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, 

vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents.

DECISION

CORONA, J.:

In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean (Phil.) Inc.
(P & D) assails the May 22, 2001 decision1 of the Court of Appeals reversing the October 31, 1996 decision2 of the Regional
Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart Inc. (SMI) and
North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and unfair competition.

FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:

"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display
units simply referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and
illuminated with back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20,
1981 over these illuminated display units. The advertising light boxes were marketed under the trademark "Poster Ads".
The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology
Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165. From 1981 to
about 1988, Pearl and Dean employed the services of Metro Industrial Services to manufacture its advertising displays.

Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and
installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI
offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and
Dean’s General Manager, Rodolfo Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to
SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati, however,
was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding him that
their agreement for installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not
bother to reply.

Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the
contract for SM Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara
protested the unilateral action of SMI, saying it was without basis. In the same letter, he pushed for the signing of the
contract for SM Cubao.

Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display
units, offered to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes
were subsequently fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI
engaged the services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in
1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and
in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported
SM branches, light boxes similar to those it manufactures were also installed in two (2) other SM stores. It further
discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing
Services, was set up primarily to sell advertising space in lighted display units located in SMI’s different branches. Pearl
and Dean noted that NEMI is a sister company of SMI.

In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining
them to cease using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the
discontinued use of the trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the
amount of Twenty Million Pesos (P20,000,000.00).

Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and
NEMI took down its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI
and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for infringement of trademark and
copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using
commonly known techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI
noted that the registration of the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like.
Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as
such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its
complaint since its advertising display units contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged
that Pearl and Dean had no cause of action against it and that the suit was purely intended to malign SMI’s good name.
On this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed for moral, actual and exemplary
damages and for the cancellation of Pearl and Dean’s Certification of Copyright Registration No. PD-R-2558 dated January
20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in
the business of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and
counterclaims as SMI."

The RTC of Makati City decided in favor of P & D:

Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under
Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are
hereby penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended. Accordingly,
defendants are hereby directed:

(1) to pay plaintiff the following damages:

(a) actual damages - ₱16,600,000.00,

representing profits
derived by defendants
as a result of infringe-
ment of plaintiff’s copyright
from 1991 to 1992

(b) moral damages - ₱1,000.000.00

(c) exemplary damages - ₱1,000,000.00

 (d) attorney’s fees - ₱1,000,000.00

plus

(e) costs of suit;

(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by
Metro Industrial Services and EYD Rainbow Advertising Corporation;

(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction;
and

(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes and its trademark "Poster Ads".

Defendants’ counterclaims are hereby ordered dismissed for lack of merit.

SO ORDERED.4

On appeal, however, the Court of Appeals reversed the trial court:

Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations,
advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O" work, we have to agree
with SMI when it posited that what was copyrighted were the technical drawings only, and not the light boxes themselves,
thus:

42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellant’s
will not extend to the actual object. It has so been held under jurisprudence, of which the leading case is  Baker vs.
Selden (101 U.S. 841 (1879). In that case, Selden had obtained a copyright protection for a book entitled "Selden’s
Condensed Ledger or Bookkeeping Simplified" which purported to explain a new system of bookkeeping. Included as part
of the book were blank forms and illustrations consisting of ruled lines and headings, specially designed for use in
connection with the system explained in the work. These forms showed the entire operation of a day or a week or a
month on a single page, or on two pages following each other. The defendant Baker then produced forms which were
similar to the forms illustrated in Selden’s copyrighted books. The Court held that exclusivity to the actual forms is not
extended by a copyright. The reason was that "to grant a monopoly in the underlying art when no examination of its
novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent, not of
copyright." And that is precisely the point. No doubt aware that its alleged original design would never pass the rigorous
examination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by conveniently
resorting to a copyright registration which merely employs a recordal system without the benefit of an in-depth
examination of novelty.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298
(S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished drawing entitled "Bridge Approach –
the drawing showed a novel bridge approach to unsnarl traffic congestion". The defendant constructed a bridge approach
which was alleged to be an infringement of the new design illustrated in plaintiff’s drawings. In this case it was held that
protection of the drawing does not extend to the unauthorized duplication of the object drawn because copyright extends
only to the description or expression of the object and not to the object itself. It does not prevent one from using the
drawings to construct the object portrayed in the drawing.

In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox , 379 F. 2d
84, it was held that there is no copyright infringement when one who, without being authorized, uses a copyrighted
architectural plan to construct a structure. This is because the copyright does not extend to the structures themselves.

In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical drawings of the latter’s
advertising display units.

xxx xxx xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court  that the protective
mantle of the Trademark Law extends only to the goods used by the first user as specified in the certificate of registration,
following the clear mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise known as the Trademark
Law, which reads:

SEC. 20. Certification 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." (underscoring supplied)
 The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads"
with the Bureau of Patents, Trademarks, and Technology Transfer. Said trademark was recorded in the Principal Register
on September 12, 1988 under Registration No. 41165 covering the following products: stationeries such as letterheads,
envelopes and calling cards and newsletters.

With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants
for their use of the words "Poster Ads", in the advertising display units in suit. Jurisprudence has interpreted Section 20 of
the Trademark Law as "an implicit permission to a manufacturer to venture into the production of goods and allow that
producer to appropriate the brand name of the senior registrant on goods other than those stated in the certificate of
registration." The Supreme Court further emphasized the restrictive meaning of Section 20 when it stated, through Justice
Conrado V. Sanchez, that:

Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation
may arise whereby an applicant may be tempted to register a trademark on any and all goods which his mind may
conceive even if he had never intended to use the trademark for the said goods. We believe that such omnibus registration
is not contemplated by our Trademark Law.

While we do not discount the striking similarity between Pearl and Dean’s registered trademark and defendants-
appellants’ "Poster Ads" design, as well as the parallel use by which said words were used in the parties’ respective
advertising copies, we cannot find defendants-appellants liable for infringement of trademark. "Poster Ads" was registered
by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who used the same words in
their advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us.
But, having already done so, it must stand by the consequence of the registration which it had caused.

xxx xxx xxx

We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple contraction
of the generic term poster advertising. In the absence of any convincing proof that "Poster Ads" has acquired a secondary
meaning in this jurisdiction, we find that Pearl and Dean’s exclusive right to the use of "Poster Ads" is limited to what is
written in its certificate of registration, namely, stationeries.

Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".

There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetary
award granted by the lower court to Pearl and Dean has no leg to stand on.

xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is rendered
DISMISSING the complaint and counterclaims in the above-entitled case for lack of merit. 5

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the
Court’s consideration:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT WAS
COMMITTED BY RESPONDENTS SM AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL & DEAN’S
TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE THE
LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN
ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL
& DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT. 6

ISSUES

In resolving this very interesting case, we are challenged once again to put into proper perspective four main
concerns of intellectual property law — patents, copyrights, trademarks and unfair competition arising from infringement
of any of the first three. We shall focus then on the following issues:

(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection
(copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawings ipso
facto also protected by such copyright?
 (2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents
Trademarks and Technology Transfer (now Intellectual Property Office) — in addition to the copyright of the engineering
drawings?

(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere
abbreviation of a term descriptive of his goods, services or business?

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when SMI had the units
manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioner’s position was premised on
its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depicted or illustrated in
said drawings. In ruling that there was no copyright infringement, the Court of Appeals held that the copyright was limited
to the drawings alone and not to the light box itself. We agree with the appellate court.

First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No. PD-R2588 issued by the
National Library on January 20, 1981 — clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The
Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the works
subject to copyright:

SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the
following works:

x x x           x x x          x x x

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

x x x           x x x          x x x

Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which depicted the box-type
electrical devices), its claim of copyright infringement cannot be sustained.

Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are
limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons,
and on terms and conditions specified in the statute. 7 Accordingly, it can cover only the works falling within the statutory
enumeration or description.8

P & D secured its copyright under the classification class "O" work. This being so, petitioner’s copyright protection
extended only to the technical drawings and not to the light box itself because the latter was not at all in the category of
"prints, pictorial illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D
indeed owned a valid copyright, the same could have referred only to the technical drawings within the category of
"pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The strict application 9 of
the law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright
certificate was entitled "Advertising Display Units." What the law does not include, it excludes, and for the good reason:
the light box was not a literary or artistic piece which could be copyrighted under the copyright law. And no less clearly,
neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of
entitling the copyright certificate issued by the National Library as "Advertising Display Units."

In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license from P & D, then
no doubt they would have been guilty of copyright infringement. But this was not the case. SMI’s and NEMI’s acts
complained of by P & D were to have units similar or identical to the light box illustrated in the technical drawings
manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of
petitioner’s copyright over the technical drawings? We do not think so.

During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work
but an "engineering or marketing invention." 10 Obviously, there appeared to be some confusion regarding what ought or
ought not to be the proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of
Appeals,11 we ruled that these three legal rights are completely distinct and separate from one another, and the protection
afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others:

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one
another. A trademark 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 . In relation thereto, a trade name means the name
or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and
artistic works which are original intellectual creations in the literary and artistic domain protected from the moment of their
creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human
activity which is new, involves an inventive step and is industrially applicable.
 ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license
from petitioner, private respondents cannot be held legally liable for infringement of P & D’s copyright over its  technical
drawings of the said light boxes, should they be liable instead for infringement of patent? We do not think so either.

For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent
rights which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not
legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs.
Court of Appeals,12 we held that "there can be no infringement of a patent until a patent has been issued, since whatever
right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no
common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he
voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however,
gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, selling or using the
invention.13 On the assumption that petitioner’s advertising units were patentable inventions, petitioner revealed them fully
to the public by submitting the engineering drawings thereof to the National Library.

To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a
primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and
technologies into the public domain through disclosure. 14 Ideas, once disclosed to the public without the protection of a
valid patent, are subject to appropriation without significant restraint. 15

On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be
protected. As held in Bauer & Cie vs. O’Donnel,16 "The act secured to the inventor the exclusive right to make use, and
vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention and promoting new and useful inventions by the
protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the
exclusive privileges granted the benefit of such inventions and improvements."

The law attempts to strike an ideal balance between the two interests:

"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new
useful and non-obvious advances in technology and design, in return for the exclusive right to practice the invention for a
number of years. The inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its
disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him
for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use."17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes
disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent
expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public domain remain there
for the free use of the public."18

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation
is required because "in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with and
effectively guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a patent is issued,
the limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight
technological advance in art."19

There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a
person is claiming the creation of a work. The law confers the copyright from the moment of creation 20 and the copyright
certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation.

Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from
the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical
drawings.

Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize
the light box’s eligibility as a patentable invention. The irony here is that, had petitioner secured a patent instead, its
exclusivity would have been for 17 years only. But through the simplified procedure of copyright-registration with the
National Library — without undergoing the rigor of defending the patentability of its invention before the IPO and the
public — the petitioner would be protected for 50 years. This situation could not have been the intention of the law.

In the oft-cited case of Baker vs. Selden 21 , the United States Supreme Court held that only the expression of an idea
is protected by copyright, not the idea itself . In that case, the plaintiff held the copyright of a book which expounded on a
new accounting system he had developed. The publication illustrated blank forms of ledgers utilized in such a system. The
defendant reproduced forms similar to those illustrated in the plaintiff’s copyrighted book. The US Supreme Court ruled
that:
 "There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may
be the subject of a copyright; but, then, it is claimed only as a book. x x x. But there is a clear distinction between the
books, as such, and the art, which it is, intended to illustrate. The mere statement of the proposition is so evident that it
requires hardly any argument to support it. The same distinction may be predicated of every other art as well as that of
bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of
drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would contend that the
copyright of the treatise would give the exclusive right to the art or manufacture described therein. The copyright of the
book, if not pirated from other works, would be valid without regard to the novelty or want of novelty of its subject matter.
The novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To give to the
author of the book an exclusive property in the art described therein, when no examination of its novelty
has ever been officially made, would be a surprise and a fraud upon the public. That is the province of
letters patent, not of copyright. The claim to an invention of discovery of an art or manufacture must be
subjected to the examination of the Patent Office before an exclusive right therein can be obtained; and a
patent from the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects
just enumerated. Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the
discoverer writes and publishes a book on the subject (as regular physicians generally do), he gains no
exclusive right to the manufacture and sale of the medicine; he gives that to the public. If he desires to
acquire such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or
composition of matter. He may copyright his book, if he pleases; but that only secures to him the exclusive
right of printing and publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no
exclusive right to the modes of drawing described, though they may never have been known or used before. By publishing
the book without getting a patent for the art, the latter is given to the public.

xxx

Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey
instruction in the art, any person may practice and use the art itself which he has described and illustrated therein.  The
use of the art is a totally different thing from a publication of the book explaining it. The copyright of a book on
bookkeeping cannot secure the exclusive right to make, sell and use account books prepared upon the plan set forth in
such book. Whether the art might or might not have been patented, is a question, which is not before us. It was not
patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.

The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced by
the peculiar nature of the art described in the books, which have been made the subject of copyright. In describing the
art, the illustrations and diagrams employed happened to correspond more closely than usual with the actual work
performed by the operator who uses the art. x x x The description of the art in a book, though entitled to the
benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is
explanation; the object of the other is use. The former may be secured by copyright. The latter can only be
secured, if it can be secured at all, by letters patent." (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s president said was a
contraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one where the goods
specified were "stationeries such as letterheads, envelopes, calling cards and newsletters." 22 Petitioner admitted it did not
commercially engage in or market these goods. On the contrary, it dealt in electrically operated backlit advertising units
and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court ,23where
we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration issued by the Director of
Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods specified in the
certificate, subject to any conditions and limitations specified in the certificate x x x. 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."24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court
of Appeals.25

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark
registration for specific use on the light boxes meant that there could not have been any trademark infringement since
registration was an essential element thereof.1âwphi1

ON THE ISSUE OF UNFAIR COMPETITION

 If at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D had
no registration.26 However, while the petitioner’s complaint in the RTC also cited unfair competition, the trial court did not
find private respondents liable therefor. Petitioner did not  appeal this particular point; hence, it cannot now revive its claim
of unfair competition.

But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.

By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to
disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may,
by long and exclusive use by a business (such that the name or phrase becomes associated with the business or product
in the mind of the purchasing public), be entitled to protection against unfair competition. 27 In this case, there was no
evidence that P & D’s use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals, petitioner’s
expert witnesses himself had testified that " ‘Poster Ads’ was too generic a name. So it was difficult to identify it with any
company, honestly speaking."28 This crucial admission by its own expert witness that "Poster Ads" could not be associated
with P & D showed that, in the mind of the public, the goods and services carrying the trademark "Poster Ads" could not
be distinguished from the goods and services of other entities.

This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and
incapable of being used as a trademark because it was used in the field of poster advertising, the very business engaged
in by petitioner. "Secondary meaning" means that a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have been
used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of
the purchasing public, the word or phrase has come to mean that the article was his property. 29 The admission by
petitioner’s own expert witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too
generic" definitely precluded the application of this exception.

Having discussed the most important and critical issues, we see no need to belabor the rest.

All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial
Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is
AFFIRMED in toto.

SO ORDERED.

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.:

The Case
 This is a petition for review 1 of the Decision dated 26 November 1999 of the Court of Appeals 2 finding respondent L.C.
Big Mak Burger, Inc. not liable for trademark infringement and unfair competition and ordering petitioners to pay
respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000 denying reconsideration. The Court of
Appeals' Decision reversed the 5 September 1994 Decision 3 of the Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair competition.

The Facts

Petitioner 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 marks5 including the "Big Mac" mark for its "double-decker hamburger sandwich." 6McDonald's registered this
trademark with the United States Trademark Registry on 16 October 1979. 7 Based on this Home Registration, McDonald's
applied for the registration of the same mark in the Principal Register of the then Philippine Bureau of Patents, Trademarks
and Technology ("PBPTT"), now the Intellectual Property Office ("IPO"). Pending approval of its application, McDonald's
introduced its "Big Mac" hamburger sandwiches in the Philippine market in September 1981. On 18 July 1985,  the PBPTT
allowed registration of the "Big Mac" mark in the Principal Register based on its Home Registration in the United States.

Like its other marks, McDonald's displays the "Big Mac" mark in items 8 and paraphernalia9 in its restaurants, and in its
outdoor and indoor signages. From 1982 to 1990, McDonald's spent P10.5 million in advertisement for "Big Mac"
hamburger sandwiches alone.10

Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic corporation, is McDonald's Philippine
franchisee.11

Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a domestic corporation which operates fast-food
outlets and snack vans in Metro Manila and nearby provinces. 12 Respondent corporation's menu includes hamburger
sandwiches and other food items.13 Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo,
Araceli Aycardo, and Grace Huerto ("private respondents") are the incorporators, stockholders and directors of respondent
corporation.14

On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak" mark for its
hamburger sandwiches. McDonald's opposed respondent corporation's application on the ground that "Big Mak" was a
colorable imitation of its registered "Big Mac" mark for the same food products. McDonald's also informed respondent
Francis Dy ("respondent Dy"), the chairman of the Board of Directors of respondent corporation, of its exclusive right to
the "Big Mac" mark and requested him to desist from using the "Big Mac" mark or any similar mark.

Having received no reply from respondent Dy, petitioners on 6 June 1990 sued respondents in the Regional Trial
Court of Makati, Branch 137 ("RTC"), for trademark infringement and unfair competition. In its Order of 11 July 1990, the
RTC issued a temporary restraining order ("TRO") against respondents enjoining them from using the "Big Mak" mark
in the operation of their business in the National Capital Region. 15 On 16 August 1990, the RTC issued a writ of preliminary
injunction replacing the TRO.16

In their Answer, respondents admitted that they have been using the name "Big Mak Burger" for their fast-food
business. Respondents claimed, however, that McDonald's does not have an exclusive right to the "Big Mac" mark or
to any other similar mark. Respondents point out that the Isaiyas Group of Corporations ("Isaiyas Group") registered the
same mark for hamburger sandwiches with the PBPTT on 31 March 1979. One Rodolfo Topacio ("Topacio") similarly
registered the same mark on 24 June 1983, prior to McDonald's registration on 18 July 1985. Alternatively, respondents
claimed that they are not liable for trademark infringement or for unfair competition, as the "Big Mak" mark they sought to
register does not constitute a colorable imitation of the "Big Mac" mark. Respondents asserted that they did not
fraudulently pass off their hamburger sandwiches as those of petitioners' Big Mac hamburgers. 17 Respondents sought
damages in their counterclaim.

In their Reply, petitioners denied respondents' claim that McDonald's is not the exclusive owner of the "Big Mac"
mark. Petitioners asserted that while the Isaiyas Group and Topacio did register the "Big Mac" mark ahead of McDonald's,
the Isaiyas Group did so only in the Supplemental Register of the PBPTT and such registration does not
provide any protection. McDonald's disclosed that it had acquired Topacio's rights to his registration in a Deed of
Assignment dated 18 May 1981.18

The Trial Court's Ruling

On 5 September 1994, the RTC rendered judgment ("RTC Decision") finding respondent corporation liable for
trademark infringement and unfair competition. However, the RTC dismissed the complaint against private respondents
and the counterclaim against petitioners for lack of merit and insufficiency of evidence. The RTC held:

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

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

xxxx

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

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

The answer is in the affirmative. xxxx

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

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

The dispositive portion of the RTC Decision provides:

WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's Corporation and McGeorge Food Industries, Inc.
and against defendant L.C. Big Mak Burger, Inc., as follows:

1. The writ of preliminary injunction issued in this case on [16 August 1990] is made permanent;

2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual damages in the amount ofP400,000.00,
exemplary damages in the amount of P100,000.00, and attorney's fees and expenses of litigation in the amount
of P100,000.00;

3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli
Aycardo and Grace Huerto, as well as all counter-claims, are dismissed for lack of merit as well as for insufficiency of
evidence.20

Respondents appealed to the Court of Appeals.

The Ruling of the Court of Appeals

On 26 November 1999, the Court of Appeals rendered judgment ("Court of Appeals' Decision") reversing the RTC
Decision and ordering McDonald's to pay respondents P1,600,000 as actual and compensatory damages and P300,000 as
moral damages. The Court of Appeals held:
 Plaintiffs-appellees in the instant case would like to impress on this Court that  the use of defendants-appellants of its
corporate name – the whole "L.C. B[ig] M[ak] B[urger], I[nc]." which appears on their food packages, signages and
advertisements is an infringement of their trademark "B[ig] M[ac]" which they use to identify [their] double decker
sandwich, sold in a Styrofoam box packaging material with the McDonald's logo of umbrella "M" stamped
thereon, together with the printed mark in red bl[o]ck capital letters, the words being separated by a single space.
Specifically, plaintiffs-appellees argue that defendants-appellants' use of their corporate name is a colorable imitation of
their trademark "Big Mac".

xxxx

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

xxxx

xxx [I]t is readily apparent to the naked eye that there appears a vast difference in the appearance of the product
and the manner that the tradename "Big Mak" is being used and presented to the public. As earlier noted, there are
glaring dissimilarities between plaintiffs-appellees' trademark and defendants-appellants' corporate name. Plaintiffs-
appellees' product carrying the trademark "B[ig] M[ac]" is a double decker sandwich (depicted in the tray mat containing
photographs of the various food products xxx sold in a Styrofoam box with the "McDonald's" logo and trademark in red,
bl[o]ck capital letters printed thereon xxx at a price which is more expensive than the defendants-appellants' comparable
food products. In order to buy a "Big Mac", a customer needs to visit an air-conditioned "McDonald's" restaurant
usually located in a nearby commercial center, advertised and identified by its logo - the umbrella "M", and its mascot –
"Ronald McDonald". A typical McDonald's restaurant boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow customers with cars to make orders without alighting from their
vehicles, the interiors of the building are well-lighted, distinctly decorated and painted with pastel colors xxx. In buying a
"B[ig] M[ac]", it is necessary to specify it by its trademark. Thus, a customer needs to look for a "McDonald's" and enter it
first before he can find a hamburger sandwich which carry the mark "Big Mac". On the other hand, defendants-appellants
sell their goods through snack vans xxxx

Anent the allegation that defendants-appellants are guilty of unfair competition, We likewise find the same untenable.

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

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

In the case at bar, We find no sufficient evidence adduced by plaintiffs-appellees that defendants-appellants

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

Petitioners sought reconsideration of the Court of Appeals' Decision but the appellate court denied their motion in its
Resolution of 11 July 2000.

Hence, this petition for review.

 Petitioners raise the following grounds for their petition:

I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS' CORPORATE NAME "L.C. BIG MAK BURGER,
INC." IS NOT A COLORABLE IMITATION OF THE MCDONALD'S TRADEMARK "BIG MAC", SUCH COLORABLE IMITATION
BEING AN ELEMENT OF TRADEMARK INFRINGEMENT.

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

B. As a trademark, respondents' "Big Mak" is undeniably and unquestionably similar to petitioners' "Big Mac"
trademark based on the dominancy test and the idem sonans test resulting inexorably in confusion on the part of the
consuming public.

II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE INHERENT SIMILARITY BETWEEN THE MARK
"BIG MAK" AND THE WORD MARK "BIG MAC" AS AN INDICATION OF RESPONDENTS' INTENT TO DECEIVE OR DEFRAUD
FOR PURPOSES OF ESTABLISHING UNFAIR COMPETITION.22

Petitioners pray that we set aside the Court of Appeals' Decision and reinstate the RTC Decision.

In their Comment to the petition, respondents question the propriety of this petition as it allegedly raises only
questions of fact. On the merits, respondents contend that the Court of Appeals committed no reversible error in finding
them not liable for trademark infringement and unfair competition and in ordering petitioners to pay damages.

The Issues

The issues are:

1. Procedurally, whether the questions raised in this petition are proper for a petition for review under Rule 45.

2. On the merits, (a) whether respondents used the words "Big Mak" not only as part of the corporate name "L.C. Big
Mak Burger, Inc." but also as a trademark for their hamburger products, and (b) whether respondent corporation is liable
for trademark infringement and unfair competition.23

The Court's Ruling

The petition has merit.

On Whether the Questions Raised in the Petition are Proper for a Petition for Review

A party intending to appeal from a judgment of the Court of Appeals may file with this Court a petition for review
under Section 1 of Rule 45 ("Section 1") 24 raising only questions of law. A question of law exists when the doubt or
difference arises on what the law is on a certain state of facts. There is a question of fact when the doubt or difference
arises on the truth or falsity of the alleged facts. 25

Here, petitioners raise questions of fact and law in assailing the Court of Appeals' findings on respondent
corporation's non-liability for trademark infringement and unfair competition. Ordinarily, the Court can deny due course to
such a petition. In view, however, of the contradictory findings of fact of the RTC and Court of Appeals, the Court opts to
accept the petition, this being one of the recognized exceptions to Section 1. 26 We took a similar course of action in Asia
Brewery, Inc. v. Court of Appeals27 which also involved a suit for trademark infringement and unfair competition in
which the trial court and the Court of Appeals arrived at conflicting findings.

On the Manner Respondents Used 

"Big Mak" in their Business

Petitioners contend that the Court of Appeals erred in ruling that the corporate name "L.C. Big Mak Burger, Inc."
appears in the packaging for respondents' hamburger products and not the words "Big Mak" only.

The contention has merit.

The evidence presented during the hearings on petitioners' motion for the issuance of a writ of preliminary injunction
shows that the plastic wrappings and plastic bags used by respondents for their hamburger sandwiches bore the words
"Big Mak." The other descriptive words "burger" and "100% pure beef" were set in smaller type, along with the locations
of branches.28 Respondents' cash invoices simply refer to their hamburger sandwiches as "Big Mak." 29It is respondents'
snack vans that carry the words "L.C. Big Mak Burger, Inc."30

It was only during the trial that respondents presented in evidence the plastic wrappers and bags for their hamburger
sandwiches relied on by the Court of Appeals. 31 Respondents' plastic wrappers and bags were identical with those
petitioners presented during the hearings for the injunctive writ except that the letters "L.C." and the words "Burger, Inc."
in respondents' evidence were added above and below the words "Big Mak," respectively. Since petitioners' complaint was
based on facts existing before and during the hearings on the injunctive writ, the facts established during those hearings
are the proper factual bases for the disposition of the issues raised in this petition.

On the Issue of Trademark Infringement

Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"), the law applicable to this case, 32 defines
trademark infringement as follows:

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

Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly used, without
petitioners' consent, a colorable imitation of the "Big Mac" mark in advertising and selling respondents' hamburger
sandwiches. This likely caused confusion in the mind of the purchasing public on the source of the hamburgers or the
identity of the business.

To establish trademark infringement, the following elements must be shown: (1) the validity of 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." 34 Of these, it is the element of likelihood of confusion that is the gravamen of trademark
infringement.35

On the Validity of the "Big 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 36 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.37

Respondents contend that of the two words in the "Big Mac" mark, it is only the word "Mac" that is valid because the
word "Big" is generic and descriptive (proscribed under Section 4[e]), and thus "incapable of exclusive appropriation." 38

The contention has no merit. The "Big Mac" mark, which should be treated in its entirety and not dissected word for
word,39 is neither generic nor descriptive. Generic marks are commonly used as the name or description of
a kind ofgoods,40 such as "Lite" for beer 41 or "Chocolate Fudge" for chocolate soda drink. 42 Descriptive marks, on the other
hand, convey the characteristics, functions, qualities or ingredients of a product to one who has never seen it or does not
know it exists,43 such as "Arthriticare" for arthritis medication. 44 On the contrary, "Big Mac" falls under theclass of fanciful
or arbitrary marks as it bears no logical relation to the actual characteristics of the product it represents. 45 As such, it is
highly distinctive and thus valid. Significantly, the trademark "Little Debbie" for snack cakes was found arbitrary or
fanciful.46

The Court also finds 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, 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.47 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 specified in the certificate. 48

On Types of Confusion

Section 22 covers two types of confusion arising from the use of similar or colorable imitation marks, namely,
confusion of goods (product confusion) and confusion of business (source or origin confusion). In Sterling Products
International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,49 the Court distinguished these two types of
confusion, thus:

[Rudolf] Callman notes two types of confusion. The first is the confusion of goods "in which event the ordinarily
prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other." xxx The
other is the confusion of business: "Here though the goods of the parties are different, the 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. 666,50 the first trademark law, infringement was limited to confusion of goods only, when the infringing
mark is used on "goods of a similar kind." 51 Thus, no relief was afforded to the party whose registered mark or its
colorable imitation is used on different although related goods. To remedy this situation, Congress enacted RA 166 on 20
June 1947. In defining trademark infringement, Section 22 of RA 166 deleted the requirement in question and expanded
its scope to include such use of the mark or its colorable imitation that is likely to result in confusion on "the source or
origin of such goods or services, or identity of such business." 52 Thus, while there is confusion of goods when the products
are competing, confusion of business exists when the products are non-competing but related enough to produce
confusion of affiliation.53

On Whether Confusion of Goods and 

Confusion of Business are Applicable

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

1.15. Defendants have unduly prejudiced and clearly infringed upon the property rights of plaintiffs in the 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.54 (Emphasis supplied)

Since respondents used the "Big Mak" mark on the same goods, i.e. hamburger sandwiches, that petitioners' "Big
Mac" mark is used, trademark infringement through confusion of goods is a proper issue in this case.

Petitioners also claim that respondents' use of the "Big Mak" mark in the sale of hamburgers, the same business that
petitioners are engaged in, results in confusion of business. Petitioners alleged in their complaint:

1.10. For some period of time, and without the consent of plaintiff 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]",
xxx. Defendant Big Mak Burger has thus unjustly created the impression that its business is approved and
sponsored by, or affiliated with, plaintiffs .xxxx

2.2 As a consequence of the acts committed by defendants, which unduly prejudice and infringe upon the property
rights of plaintiffs 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 affiliation of defendants' food products and restaurant
business, plaintiffs have suffered and continue to suffer actual damages in the form of injury to their business reputation
and goodwill, and of the dilution of the distinctive quality of the McDonald's marks, in particular, the mark "B[ig] M[ac]".55 
(Emphasis supplied)

Respondents admit that their business includes selling hamburger sandwiches, the same food product that petitioners
sell using the "Big Mac" mark. Thus, trademark infringement through confusion of business is also a proper issue in this
case.

Respondents assert that their "Big Mak" hamburgers cater mainly to the low-income group while petitioners' "Big
Mac" hamburgers cater to the middle and upper income groups. Even if this is true, the likelihood of confusion of business
remains, since the low-income group might be led to believe that the "Big Mak" hamburgers are the low-end hamburgers
marketed by petitioners. After all, petitioners have the exclusive right to use the "Big Mac" mark. On the other
hand, respondents would benefit by associating their low-end hamburgers, through the use of the "Big Mak" mark, with
petitioners' high-end "Big Mac" hamburgers, leading to likelihood of confusion in the identity of business.

Respondents further claim that petitioners use the "Big Mac" mark only on petitioners' double-decker hamburgers,
while respondents use the "Big Mak" mark on hamburgers and other products like siopao, noodles and pizza. Respondents
also point out that petitioners sell their Big Mac double-deckers in a styrofoam box with the "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 specific segments of the market. The
Court has recognized that the registered trademark owner enjoys protection in product and market areas that are
the normal potential expansion of his business. Thus, the Court has declared:

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

On Whether Respondents' Use of the "Big Mak" 

Mark Results in Likelihood of Confusion

In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the holistic
test.57 The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might
cause confusion. In contrast, the holistic test requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.

The Court of Appeals, in finding that there is no likelihood of confusion that could arise in the use of respondents' "Big
Mak" mark on hamburgers, relied on the holistic test. Thus, the Court of Appeals ruled that "it is not sufficientthat a
similarity exists in both name(s), but that more importantly, the overall presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the genuine
article." The holistic test considers the two marks in their entirety, as they appear on the goods with their labels and
packaging. It is not enough to consider their words and compare the spelling and pronunciation of the words.58

Respondents now vigorously argue that the Court of Appeals' application of the holistic test to this case is correct and
in accord with prevailing jurisprudence.

This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences.59 Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and
market segments.

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

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

The Court reiterated the dominancy test in Lim Hoa v. Director of Patents ,61 Phil. Nut Industry, Inc. v.
Standard Brands Inc.,62 Converse Rubber Corporation v. Universal Rubber Products, Inc. ,63 and Asia Brewery,
Inc. v. Court of Appeals .64 In the 2001 case of Societe Des Produits Nestlé, S.A. v. Court of Appeals ,65 the Court
explicitly rejected the holistic test in this wise:

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

The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which
defines infringement as the "colorable imitation of a registered mark xxx or a dominant feature thereof."

Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in likelihood of
confusion. First, "Big Mak" sounds exactly the same as "Big Mac." Second, the first word in "Big Mak" is exactly the same
as the first word in "Big Mac." Third, the first two letters in "Mak" are the same as the first two letters in "Mac." Fourth, the
last letter in "Mak" while a "k" sounds the same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k"
replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."

In short, aurally the two marks are the same, with the first word of both marks phonetically the same, and the
second word of both marks also phonetically the same. Visually, the two marks have both two words and six letters, with
the first word of both marks having the same letters and the second word having the same first two letters. In spelling,
considering the Filipino language, even the last letters of both marks are the same.
 Clearly, respondents have adopted in "Big Mak" not only the dominant but also almost all the features
of "Big Mac." Applied to the same food product of hamburgers, the two marks will likely result in confusion in the public
mind.

The Court has taken into account the aural effects of the words and letters contained in the marks in determining
the issue of confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al. ,66 the Court
held:

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

Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater confusion, not only aurally but also visually.

Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their sound. When one hears a "Big Mac" or "Big
Mak" hamburger advertisement over the radio, one would not know whether the "Mac" or "Mak" ends with a "c" or a "k."

Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their advertisement expenses, has built goodwill
and reputation for such mark making it one of the easily recognizable marks in the market today. This increases the
likelihood that consumers will mistakenly associate petitioners' hamburgers and business with those of respondents'.

Respondents' inability to explain sufficiently how and why they came to choose "Big Mak" for their hamburger
sandwiches indicates their intent to imitate petitioners' "Big Mac" mark. Contrary to the Court of Appeals' finding,
respondents' claim that their "Big Mak" mark was inspired by the first names of respondent Dy's mother (Maxima) and
father (Kimsoy) is not credible. As petitioners well noted:

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

Absent proof that respondents' adoption of the "Big Mak" mark was due to honest mistake or was fortuitous,68 the
inescapable conclusion is that respondents adopted the "Big Mak" mark to "ride on the coattails" of the more established
"Big Mac" mark.69 This saves respondents much of the expense in advertising to create market recognition of their mark
and hamburgers.70

Thus, we hold that confusion is likely to result in the public mind. We sustain petitioners' claim of trademark
infringement.

On the Lack of Proof of 

Actual Confusion

Petitioners' failure to present proof of actual confusion does not negate their claim of trademark infringement. As
noted in American Wire & Cable Co. v. Director of Patents ,71 Section 22 requires the less stringent standard of
"likelihood of confusion" only. While proof of actual confusion is the best evidence of infringement, its absence is
inconsequential.72

On the Issue of Unfair Competition

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

xxxx

Any person who will employ deception or any other means contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, or his business, or services for those of the one having established such
goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
 In particular, and without in any way limiting the scope of unfair competition, the following shall be deemed
guilty of unfair competition:

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

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

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary

to good faith of a nature calculated to discredit the goods, business or services of another. (Emphasis supplied)

The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of
the goods, and (2) intent to deceive the public and defraud a competitor. 74 The confusing similarity may or may not result
from similarity in the marks, but may result from other external factors in the packaging or presenta tion of the goods. The
intent to deceive and defraud may be inferred from the similarity of the appearance of the goods as offered for sale to the
public.75 Actual fraudulent intent need not be shown.76

Unfair competition is broader than trademark infringement and includes passing off goods with or without trademark
infringement. Trademark infringement is a form of unfair competition. 77 Trademark infringement constitutes unfair
competition when there is not merely likelihood of confusion, but also actual or probable deception on the public because
of the general appearance of the goods. There can be trademark infringement without unfair competition as when the
infringer discloses on the labels containing the mark that he manufactures the goods, thus preventing the public from
being deceived that the goods originate from the trademark owner. 78

To support their claim of unfair competition, petitioners allege that respondents fraudulently passed off their
hamburgers as "Big Mac" hamburgers. Petitioners add that respondents' fraudulent intent can be inferred from the
similarity of the marks in question.79

Passing off (or palming off) takes place where the defendant, by imitative devices on the general appearance of the
goods, misleads prospective purchasers into buying his merchandise under the impression that they are buying that of his
competitors.80 Thus, the defendant gives his goods the general appearance of the goods of his competitor with the
intention of deceiving the public that the goods are those of his competitor.

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

The mark "B[ig] M[ac]" is used by plaintiff 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. xxxx Further, plaintiffs' logo and mascot are the umbrella "M" and "Ronald McDonald's",  respectively, compared
to the mascot of defendant Corporation which is a chubby boy called "Macky" displayed or printed between the words
"Big" and "Mak."81 (Emphasis supplied)

Respondents point to these dissimilarities as proof that they did not give their hamburgers the general appearance of
petitioners' "Big Mac" hamburgers.

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

Section 29(a) also provides that the defendant gives "his goods the general appearance of goods of another
manufacturer." Respondents' goods are hamburgers which are also the goods of petitioners. If respondents sold egg
sandwiches only instead of hamburger sandwiches, their use of the "Big Mak" mark would not give their goods the general
appearance of petitioners' "Big Mac" hamburgers. In such case, there is only trademark infringement but no unfair
competition. However, since respondents chose to apply the "Big Mak" mark on hamburgers, just like petitioner's use of
the "Big Mac" mark on hamburgers, respondents have obviously clothed their goods with the general appearance of
petitioners' goods.
 Moreover, there is no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc."
Respondents introduced during the trial plastic wrappers and bags with the words "L.C. Big Mak Burger, Inc." to inform the
public of the name of the seller of the hamburgers. However, petitioners introduced during the injunctive hearings plastic
wrappers and bags with the "Big Mak" mark without the name "L.C. Big Mak Burger, Inc." Respondents' belated
presentation of plastic wrappers and bags bearing the name of "L.C. Big Mak Burger, Inc." as the seller of the hamburgers
is an after-thought designed to exculpate them from their unfair business conduct. As earlier stated, we cannot consider
respondents' evidence since petitioners' complaint was based on facts existing before and during the injunctive hearings.

Thus, there is actually no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger,
Inc." and not those of petitioners who have the exclusive right to the "Big Mac" mark. This clearly shows respondents'
intent to deceive the public. Had respondents' placed a notice on their plastic wrappers and bags that the hamburgers are
sold by "L.C. Big Mak Burger, Inc.", then they could validly claim that they did not intend to deceive the public. In such
case, there is only trademark infringement but no unfair competition. 82 Respondents, however, did not give such notice.
We hold that as found by the RTC, respondent corporation is liable for unfair competition.

The Remedies Available to Petitioners

Under Section 2383 ("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.84

The RTC also did not err in awarding exemplary damages by way of correction for the public good 85 in view of the
finding of unfair competition where intent to deceive the public is essential. The award of 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, finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair
competition.

SO ORDERED.

FIRST DIVISION

G.R. No. 233073, February 14, 2018

L.C. BIG MAK BURGER, INC., Petitioner, v. MCDONALD'S CORPORATION, Respondent.

DECISION

TIJAM, J.:

This is a Petition for Review on Certiorari1 under Rule 45, assailing the Decision 2 dated February 2, 2017 and
Resolution3 dated July 26, 2017 of the Court of Appeals (CA) in CA-G.R. CR No. 36768 entitled McDonald's Corporation v.
L.C. Big Mak Burger, Inc. and Francis Dy (in his capacity as President of L.C. Big Mak Burger, Inc.).

The Factual Antecedents

The instant petition stemmed from Civil Case No. 90-1507, which McDonald's Corporation (respondent) filed against
L.C. Big Mak Burger, Inc. (petitioner) for trademark infringement and unfair competition raffled to the Regional Trial Court
(RTC) of Makati City, Branch 137 (Infringement Court).4
 In the said case, the Infringement Court, acting on the prayer for the issuance of a writ preliminary injunction, issued
an Order5 dated August 16, 1990, directing petitioner to refrain from:

a) using for its fast food restaurant business the name "Big Mak" or any other mark, word, name, or device, which by
colorable imitation is likely to confuse, mislead or deceive the public into believing that the [petitioner's] goods and
services originate from, or are sponsored by or affiliated with those of [respondent's], and from otherwise unfairly trading
on the reputation and goodwill of the Mcdonald's Marks, in particular the mark "BIG MAC";

b) selling, distributing, advertising, offering for sale or procuring to be sold, or otherwise disposing of any article
described as or purporting to be manufactured by [respondent];

c) directly or indirectly using any mark, or doing any set or thing, likely to induce the belief on the part of the public
that [petitioner] and their products and services are in any way connected with [respondent's] and their products and
services

in such places within the jurisdiction of the National Capital Judicial Region.

xxxx

SO ORDERED.6

After trial, the said court rendered a Decision7 dated September 5, 1994, disposing of the case as follows:

WHEREFORE, judgment is rendered in favor of [respondent] McDonald's Corporation and McGeorge Food Industries
Inc. and against [petitioner] L.C. Big Mak Burgers, Inc. as follows:

1. The writ of preliminary injunction issued in this case on 11 November 1190 [sic] is made permanent;

2. [Petitioner] L.C. Mak Burger, Inc. is ordered to pay [respondent] actual damages in the amount of P400,000.00,
exemplary damages in the amount of P100,000.00 and attorneys fees and expenses of litigation in the amount of
P100,000.00;

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

SO ORDERED.8

The CA overturned the September 5, 1994 Decision in a decision 9 dated November 26, 1999 in CA-G.R. CV No.
53722. However, We reversed the CA in Our Decision 10 dated August 18, 2004 in G.R. No. 143993 and thus reinstated the
Infringement Court's Decision, viz.:

WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision dated 26 November 1999 of the Court of
Appeals and its Resolution dated 11 July 2000 and REINSTATE the Decision dated 5 September 1994 of the Regional Trial
Court of Makati, Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair
competition.

SO ORDERED.11

Thusly, on November 14, 2005, Infringement Court, issued a Writ of Execution 12 to implement its September 5, 1994
Decision.

On May 5, 2008, however, respondent filed a Petition for Contempt 13 against petitioner and Francis Dy, in his
capacity as President of L.C. Big Mak Burger, Inc., docketed as Spec. Pro. No. 08-370 and raffled to the RTC of Makati,
Branch 59 (Contempt Court). Basically, respondent averred therein that despite service upon the petitioner and its
president of the Writ of Execution in the trademark infringement and unfair competition case, the latter continues to
disobey and ignore their judgment obligation by continuously using, as part of their food and restaurant business, the
words "Big Mak." It was also alleged that petitioner refused to fully pay the damages awarded to the respondent in the
said case.14

In its Answer with Compulsory Counterclaims, 15 petitioner denied refusing to settle its judgment debt, averring that as
a matter of fact, it offered and tendered payment to the respondent through the sheriff but respondent refused to accept
the same and demanded that payment be made directly to it. Petitioner further argued that it is evident from the August
18, 2004 Decision of the Supreme Court, that the prohibition covers only the use of the mark "Big Mak" and not the name
"L.C. Big Mak Burger, Inc." Petitioner then averred that at that time, its stalls were using its company name "L.C. Big Mak
Burger, Inc." and not the mark "Big Mak" and that it had already stopped selling "Big Mak" burgers for several years
already. Moreover, petitioner averred that it has already changed the name of some of its stalls and products to
"Supermak" as evidenced by pictures of its stalls in Metro Manila. Also, petitioner pointed out that the preliminary
injunction issued in Civil Case No. 90-1507 was enforceable only within the National Capital Judicial Region as can be
gleaned from its express provision.16

On April 7, 2014, RTC-Makati Branch 59, rendered a Decision17 as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of [petitioner] L.C. BIG MAK BURGER,
INC. and FRANCIS DY, and against [respondent] DISMISSINGthis instant petition for lack of merit. [Respondent] is also
ordered to pay the [petitioner and Francis Dy] the following sums:

1. P500,000.00 to [petitioner] L.C. Big Mak Burger, Inc. for the damages it suffered to its business reputation;

2. P500,000.00 to xxx Francis Dy as moral damages;

3. P100,000.00 for exemplary damages; and

4. P100,000.00 as and for attorney's fees. Costs against [respondent].

SO ORDERED.18

On appeal, the CA, in its assailed Decision, 19 reversed the Contempt Court's ruling and instead found petitioner guilty
of indirect contempt, thus:

WHEREFORE, premises considered, the present appeal is GRANTED. The Decision dated April 7, 2014 issued by
the RTC, Branch 59, Makati City in  Civil Case No. 08-370 is REVERSED and a new one is entered finding [petitioner] L.C.
Big Mak Burger, Inc. guiltyof indirect contempt.

Accordingly, [petitioner] L.C. Big Mak Burger, Inc. is ordered to pay a FINE in the amount of Thirty Thousand Pesos
(P30,000.00) and is enjoined to faithfully comply with the ruling of the Supreme Court in  G.R. No. 143993  as implemented
by RTC, Branch 59, [sic] Makati City.

SO ORDERED.20

Petitioner's motion for reconsideration was denied m the CA's Resolution 21 dated July 26, 2017, thus:

WHEREFORE, the Motion for Reconsideration filed by [petitioner and Francis Dy] is hereby DENIED.

The Decision promulgated on February 2, 2017 stays.

SO ORDERED.22

Hence, this petition.

The Issue

Is petitioner guilty of indirect contempt?

The Ruling of this Court

At the outset, once again, it is important to emphasize that the only issue for Our resolution is whether or not
petitioner is guilty of indirect contempt.

Section 3, Rule 71 of the Rules of Court provides:

SEC. 3. Indirect Contempt to be punished after charge and hearing  - After a charge in writing has been filed, and an
opportunity given to the respondent to comment thereon within such period as may be fixed by the court and to be heard
by himself or counsel, a person guilty of any of the following acts may be punished for indirect contempt:

xxxx

b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the act of a person
who, after being dispossessed or ejected from any real property by the judgment or process of any court of competent
jurisdiction, enters or attempts or induces another to enter into or upon such real property, for the purpose of executing
acts of ownership or possession, or in any manner disturbs the possession given to the person adjudged to be entitled
thereto;
 c) Any abuse of or any unlawful interference with the processes or proceedings of a court not constituting direct
contempt under section 1 of this Rule:

d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice;

xxxx

But nothing in this section shall be construed as to prevent the court from issuing process to bring the respondent
into court, or from holding him in custody pending such proceedings.

Respondent maintains that even after the service of the writ of execution of the said Decision on November 17, 2005
upon the petitioner, the latter continues to use the words "Big Mak" in its stalls and products in and out of Metro Manila.
Also, respondent averred that petitioner continuously refused to fully pay the damages awarded to it.

We resolve.

Let Us examine once again the court's lawful order that was allegedly defied by the petitioner. In the August 16, 1990
injunction order made permanent by this Court in Our final and executory Decision in G.R. No. 143993 dated August 18,
2004, petitioner was ordered to refrain from:

a) using for its fast food restaurant business the name "Big Mak" or any other mark, word, name, or device, which by
colorable imitation is likely to confuse, mislead or deceive the public into believing that the [petitioner's] goods and
services originate from, or are sponsored by or affiliated with those of [respondent's], and from otherwise unfairly trading
on the reputation and goodwill of the Mcdonald's Marks, in particular the mark "BIG MAC";

b) selling, distributing, advertising, offering for sale or procuring to be sold, or otherwise disposing of any article
described as or purporting to be manufactured by [respondent];

c) directly or indirectly using any mark, or doing any set or thing, likely to induce the belief on the part of the public
that [petitioner] and their products and services are in any way connected with [respondent's] and their products and
services

in such places within the jurisdiction of the National Capital Judicial Region.

xxxx

SO ORDERED.23

In ruling that there was disobedience tantamount to an indirect contempt on the part of the petitioner, the CA found
that: (1) there is an express admission on Francis Dy's judicial affidavit 24 that the company complied with the court's order
only in 2009 or after the petition for indirect contempt was filed against them; 25 (2) that petitioner's use of its corporate
name is likewise an infringement of respondent's mark, a defiance therefore to the subject injunction order. 26

We do not agree.

First, contrary to what respondent attempted to impress to the courts, it is not wholly true that petitioner continues to
use the mark "Big Mak" in its business, in complete defiance to this Court's Decision.

Testimonial and documentary evidence were in fact presented to show that petitioner had been using "Super Mak"
and/or its corporate name "L.C. Big Mak Burger Inc." in its business operations instead of the proscribed mark "Big Mak"
pursuant to the ruling of the Infringement Court.

There is also nothing on record that will show that Francis Dy made an admission that petitioner began to comply
with the writ of execution only in 2009. If at all, the CA misinterpreted Francis Dy's allegation in the said. judicial affidavit
that "by early 2009" petitioner's stalls and vans only reflected "Super Mak" and the corporate name "L.C. Big Mak Burger,
Inc." Also, the fact that the photographs presented during trial were taken in 2009 was taken by the CA as the time when
the petitioner started to implement changes in their business operations pursuant to the writ of execution. A careful
reading of the pertinent portions of the said judicial affidavit, however, would show no such admission, thus:

29.Q: What did you do when you received the Writ of Execution?

We issued 6 checks each for P100,000.00 to pay the P600,000.00 that our company was ordered to pay. I
A:
believe we gave the checks to the Sheriff.

     

30.Q: What else did you do?

 Since the decision of the trial court also ordered us to stop using the name "Big Mak" in our restaurants in Metro
Manila,
A: we complied. We desisted from using the words "Big Mak", standing alone, within Metro Manila, and even
outside of it.

     

xxxx

     

36.Q: Aside from complying with the order to stop the use of Big Mak, what else did you do?

A: We changed the name of our stalls within Metro Manila from "Big Mak" to "Super Mak".

     

37.Q: Do you have any proof that would show the change of the name?

A: There are some photographs of the stalls within Metro Manila that now reflect the name "Super Mak".

     

xxxx

     

I am now showing you six (6) photographs of stalls bearing the name "Super Mak". What relation do these
39.Q:
documents have with the photographs you mentioned?

A: These photographs are accurate depictions of our stalls in Metro Manila that have the name "Super Mak".

     

xxxx

     

40.Q: So you have already stopped using "Big Mak" in Metro Manila?

Yes. In fact, by early 2009, our stalls and vans in Metro Manila only reflect "Super Mak" and our corporate name
A:
"L.C. Big Mak Burger, Inc."

     

41.Q: Do you have any proof to show the use of "Super Mak" and "L.C. Big Mak Burger, Inc.” in early 2009?

There are photographs of our stalls and vans in Pasig, Trinoma, V. Luna, Lagro, and Fatima were taken on 12
A:
January 2009 as depicted by the newspaper being held in front of our vans and stalls.

     

If I show you the photographs of the stalls and vans in Pasig, Trinoma, V. Luna, Lagro, and Fatima, would you
42.Q:
be able to identify those?

A: Yes, Sir.

     

I am now showing you fourteen (14) phtographs of stalls bearing the name "Super Mak" and or "L.C. Big Mak
43.Q:
Burger, Inc." What relation do these documents have with the photographs you mentioned.

These photographs are accurate depictions of our stalls in Pasig, Trinoma, V. Luna, Lagro, and Fatima in that
A:
have [sic] the name "Super Mak” or "LC Big Mak Burger, Inc."

     

xxxx

     

44.Q: What about the newspaper you mentioned that was in the photographs?

The newspaper, The Philippine Star, being held in the photographs shows the date when the photographs were
taken. The date of the newspaper is 12 January 2009, to show that the photographs were taken on 12 January 2009.
A:
Photographs were also taken on February 28, 2009 and the front page of the said issue of the Philippine Star was also
shown in some of them.27

   

xxxx
 Evidently, there is nothing on the aforequoted judicial affidavit which may be taken as an admission of a belated
compliance with the subject injunction order. At most, what was established is the fact that the subject photographs were
taken in 2009, which does not in any way mean that the changes depicted in those photographs were implemented only at
the time they were taken.

What could readily be seen in the aforecited circumstances is the fact that petitioner indeed implemented changes in
its business to address the matter of infringement and unfair competition. In fact, in as early as during the trial of the said
case, certain changes had already been made by the petitioner to rule out the charge of infringement and unfair
competition. During the trial of the infringement and unfair competition case, the wrappers and bags for petitioner's burger
sandwiches already reflected its corporate name instead of the words "Big Mak."

These circumstances belie the imputation of disobedience, much less contemptuous acts, against the petitioner.

Second, petitioner's use of its corporate name in its stalls and products cannot, by itself, be considered to be
tantamount to indirect contempt, contrary to the CA's conclusion.

What is actually being argued in this case is petitioner's use of its corporate name. According to the respondent, as
the proscribed "Big Mak" words appears in petitioner's corporate name, the use of the same in petitioner's stalls and
products is still an infringement of respondent's mark. Ultimately, thus, respondent argues that petitioner's use of its
corporate name is a defiance to the injunction order. This argument was sustained by the CA in its assailed Decision.

Again, We do not agree.

It bears stressing that the proscription in the injunction order is against petitioner's use of the mark "Big Mak."
However, as established, petitioner had already been using its corporate name instead of the proscribed mark. The use of
petitioner's corporate name instead of the words "Big Mak" solely was evidently pursuant to the directive of the court in
the injunction order. Clearly, as correctly found by the RTC, petitioner had indeed desisted from the use of "Big Mak" to
comply with the injunction order.

Third, at any rate, whether or not petitioner's action in complying with the court's order was proper is not an issue in
this contempt case. Settled is the rule that in contempt proceedings, what should be considered is the intent of the alleged
contemnor to disobey or defy the court.

Contempt of court has been defined as a willful disregard or disobedience of a public authority. In its broad sense,
contempt is a disregard of, or disobedience to, the rules or orders of a legislative or judicial body or an interruption of its
proceedings by disorderly behavior or insolent language in its presence or so near thereto as to disturb its proceedings or
to impair the respect due to such a body. In its restricted and more usual sense, contempt comprehends a despising of the
authority, justice, or dignity of a court.28(emphasis supplied)

Indeed, as can be gleaned from the above-cited jurisprudential definition of contempt, the intent goes to the
gravamen of the offense. Thus, the good faith, or lack of it, of the alleged contemnor should be considered. 29 A person
should not be condemned for contempt where he contends for what he believes to be right and in good faith however
erroneous may be his conclusion as to his rights. To constitute contempt, the act must be done willfully and for an
illegitimate or improper purpose.30

Petitioner's good faith in complying with the court's order is manifest in this case.

Petitioner's questioned action, i.e., the use of its corporate name, is anchored upon the January 3, 1994 Decision 31 of
the Securities and Exchange Commission (SEC) in SEC-AC No. 426 entitled McDonald's Corporation and McGeorge Food
Industries, Inc. v. L.C. Big Mak Burger, Inc., et al. , wherein respondent sought the change of petitioner's corporate name
to some other name which is not confusingly or deceptively similar to respondent's "Big Mac" mark. In the said case, the
SEC dismissed respondent's case, ruling that petitioner's use of the name "Big Mak Burger" has priority in right; and that
petitioner's corporate name is not identical or confusingly similar to respondent's "Big Mac" mark, hence, there is no basis
to cancel petitioner's corporate name, among others.

Notably, it was a patent error on the part of the CA to rule that the said SEC Decision was binding upon the
parties until this Court issued its final and executory Decision in G.R. No. 143993, giving the impression that the latter
Decision overturned or modified SEC's final and executory Decision. 32 To be sure, the complaint for change of corporate
name before the SEC is a separate and distinct case from that of the infringement and unfair competition case before the
trial court. Hence, inasmuch as the SEC Decision had long attained finality, the judgment in the separate case of
infringement and unfair competition cannot reverse nor modify the said SEC Decision.

In any event, what is relevant and essential in this contempt case is the fact that by virtue of petitioner's reliance
upon the said lawful and binding SEC Decision in the use of its corporate name in lieu of the proscribed "Big Mak" mark to
comply with the subject injunction order, petitioner's good faith is clearly manifest. Petitioner's justification of its
questioned action is not at all implausible. This Court finds no reason to reject petitioner's explanation or doubt its good
faith as certainly, the use of its corporate name was warranted by the SEC Decision. It was also not unreasonable for the
petitioner, through its officers, to think that the stalls and products bearing its corporate name would send the message to
the public that the products were the petitioner's and not those of respondent's, the very evil sought to be prevented
and/or eradicated by the decision in the infringement/unfair competition case.

Considering that condemnation for contempt should not be made lightly, and that the power to punish contempt
should be exercised on the preservative and not on the vindictive principle, the Court finds no difficulty in reaching the
conclusion that there was no willful disregard or defiance of its order/decision. 33

We are, therefore, one with the Contempt Court in dismissing the contempt case. There being no issue raised as to
the damages awarded and more importantly, finding that the Contempt Court had correctly discussed the rationale for
such award, We find it unnecessary to disturb the same.

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated February 2, 2017
and Resolution dated July 26, 2017 of the Court of Appeals (CA) in CA-G.R. CR No. 36768 are hereby REVERSED and
SET ASIDE. Accordingly, the Decision dated April 7, 2014 of the Regional Trial Court of Makati City, Branch 59
is REINSTATED.

SO ORDERED.

FIRST DIVISION

G.R. No. 132993               June 29, 2005

LEVI STRAUSS (PHILS.), INC., petitioner, 

vs.
VOGUE TRADERS CLOTHING COMPANY, respondent.

DECISION

AZCUNA, J.:

This is a petition for review on certiorari seeking to annul the decision1 of the Court of Appeals, dated August 13,
1997, which annulled and set aside the orders, 2 dated December 10, 1996 and April 11, 1997, issued by the Regional Trial
Court of Manila, Branch 1 and which directed the trial court to desist from proceeding with the said case until the Bureau
of Patents, Trademarks and Technology Transfer (BPTTT) has finally resolved Inter PartesCases Nos. 4216 and 4217, and
the resolution of the Court of Appeals, dated March 5, 1998, denying petitioner’s motion for reconsideration.

The factual antecedents are as follows:

In 1972, per "Trademark, Technical Data, and Technical Assistance Agreement," 3 Levi Strauss & Co., the principal
based in Delaware, United States of America, granted petitioner Levi Strauss (Phils.) a non-exclusive license to use LEVI’S
trademark, design, and name in the manufacturing, marketing, distribution, and sale of its clothing and other goods. 4 The
licensing agreement was renewed several times, the recent one being under Certificate of Registration No. 1379-A. 5 Levi
Strauss & Co. obtained certificates of registration from the BPTTT for the following trademarks: "LEVI’S" 6; "501"7; "Two
Horse Design"8; "Two Horse Label"9; "Two Horse Patch" 10; "Two Horse Label with Patterned Arcuate Design" 11; "Arcuate
Design"12; and the composite trademarks, 13 namely, "Arcuate," "Tab," and "Two Horse Patch."

Petitioner discovered the existence of some trademark registrations belonging to respondent which, in its view, were
confusingly similar to its trademarks. Thus, it instituted two cases before the BPTTT for the cancellation of respondent’s
trademark registrations, to wit: Inter Partes Case No. 4216, a petition for cancellation of Certificate of Registration No.
53918 (for "LIVE’S") and Inter Partes  Case No. 4217, a petition for cancellation of Certificate of Registration No. 8868 (for
"LIVE’S" Label Mark).

Petitioner then applied for the issuance of a search warrant on the premises of respondent Vogue Traders Clothing
Company, owned by one Tony Lim, with the Regional Trial Court of Manila, Branch 3. On December 12, 1995, said trial
court issued Search Warrant No. 95-757 14 and Search Warrant No. 95-75815 based on its finding of probable cause that the
respondent had violated Article 189 of the Revised Penal Code 16 in manufacturing, selling, and incorporating designs or
marks in its jeans which were confusingly similar to petitioner’s "LEVI’s jeans." These search warrants commanded the
seizure of certain goods bearing copies or imitations of the trademarks which belonged to petitioner. 17 On December 13,
1995, the search warrants were enforced and several goods belonging to respondent were seized. 18 Meanwhile, it appears
that criminal charges were filed against Tony Lim of respondent company in the Department of Justice, 19 but the same
were eventually dismissed and the search warrants were quashed.

Consequently, on February 1, 1996, respondent filed a complaint 20 for damages in the Regional Trial Court of Manila,
Branch 50, against petitioner. The complaint alleged that since January 1, 1988, respondent, through Antonio Sevilla, with
business address at 1082 Carmen Planas Street, Tondo, Manila, had been a lawful assignee and authorized user of: (a) the
trademark "LIVE’S" under Certificate of Registration No. 53918 issued by the BPTTT, (b) the trademark "LIVE’S LABEL
MARK" under Certificate of Registration No. SR 8868 issued by the BPTTT, and (c) the copyright registrations of "LIVE’S
ORIGINAL JEANS," its pocket design, and hand tag; that the goods, articles, and effects seized from respondent’s
establishment were manufactured and used in its legitimate business of manufacturing and selling of the duly registered
trademark "LIVE’S" and "LIVE’S ORIGINAL JEANS;" and that the trademarks of respondent did not have any deceptive
resemblance with the trademarks of petitioner. Respondent sought to recover the seized assorted sewing materials,
equipment, and finished products or the value thereof, in case the same had been destroyed or impaired as a result of the
seizure. Respondent also prayed that, after due trial, judgment be rendered ordering the petitioner to pay compensatory
damages of ₱320,000 with an additional amount of damages of ₱11,000 per day until the seized properties are restored;
₱2,000,000 as exemplary damages; ₱100,000 for attorney’s fees with an additional amount of ₱100,000 in the event of an
appeal plus ₱1,500 per court appearance and the costs of the suit.

In its amended answer with counterclaim,21 petitioner countered that respondent’s LIVE’S brand infringed upon its
licensed brand name LEVI’S. It sought to cancel respondent’s Copyright Registration No. I-3838 and enjoin the respondent
from further manufacturing, selling, offering for sale, and advertising the denim jeans or slacks by using a design
substantially, if not exactly similar to, or a colorable imitation of the trademarks 22 of petitioner.

Upon manifestation/motion23 by petitioner, the RTC of Manila, Branch 50 issued an order dated May 9,
1996,24forwarding the case to the Executive Judge (RTC of Manila, Branch 23) for re-raffle among the courts designated as
Special Courts to try and decide cases involving violations of Intellectual Property Rights pursuant to Administrative Order
No. 113-95, dated October 2, 1995. On May 17, 1996, Branch 23 issued an order 25 directing that the case be forwarded to
Branch 1 (a designated Special Court per said administrative order) for further proceedings.

On the scheduled hearing on December 4, 1996 in the RTC of Manila, Branch 1, respondent (as therein plaintiff)
failed to appear. Upon motion of petitioner, the trial court declared respondent to have waived its right to present
evidence to controvert petitioner’s application for a writ of preliminary injunction. 26

In an order dated December 10, 1996, the trial court found that the respondent intended to appropriate, copy, and
slavishly imitate the genuine appearance of authentic LEVI’s jeans and pass off its LIVE’s jeans as genuine LEVI’s jeans.
Thus,

In opposing defendant’s application for preliminary in injunction, plaintiff alleges that it has obtained Certificates of
Registration for the trademarks "LIVE[‘]S," "LIVE[‘]S LABEL MARK," ["]LIVE[‘]S ORIGINAL JEANS["] as well as the patch
pocket design and hand tag. It did not, however, present any evidence to support the same.

In any event, plaintiff’s backpocket design is not copyrightable, as it is neither an original work nor a novel design.
Rather it is a copy or slavish imitation of LS & Co./LSPI’s Arcuate trademark which was first used by LS & Co. worldwide in
1873 and the Philippines Registration of which is based on LS & Co.’s US Certificate of Registration No. 404243, issued on
November 16, 1943. Thus, no rights attendant to a copyright can ever attach to plaintiff’s infringing backpocket design.

Also, it could not have been pure chance or coincidence that plaintiff’s LIVE’S jeans use a trademark, symbol or
design which is substantially, if not exactly similar to, or a colorable imitation of LS & CO./LSPI trademarks, since there is a
practically limitless array of other marks, words, numbers, devices, symbols and designs which plaintiff could have used on
its products to identify and distinguish them from those of defendant and other manufacturers. All told, from the mass of
evidence adduced, plaintiff’s intent to appropriate, copy, and slavishly imitate the genuine appearance of authentic LEVI’s
jeans and pass off its LIVE’s jeans as genuine LEVI’S jeans in much too stark.

As above-discussed, through more than a century’s use and continuous substantial promotions and advertising of the
LEVI’s TRADEMARKS on its products — on jeans and trousers in particular — LS & Co. has cultivated, gained and
established an invaluable goodwill in its name "LEVI’s STRAUSS & COMPANY" and in the products which carry such name
and the LEVI’s TRADEMARKS. Hence, unless plaintiff is immediately enjoined from further manufacturing, selling, offering
for sale and advertising denims, jeans or slacks using a design substantially, if not exactly similar to, or a colorable
imitation of the LS & Co./LSPI trademarks, it will continue to have a free ride on, and erode such invaluable goodwill and
reputation by the mere effortless expedient of imitating the overall visual impression of genuine LEVI’s JEANS on its own
designs, employing minute points of distinction sufficient to muddle the overall conclusion which is actually generated, but
do not dispel the similitude between the trademarks. Well has 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 court. [(]Del
Monte Corporation vs. Court of Appeals, 181 SCRA 418[)].
 There is no question that the above-discussed circumstances call for the intervention of equity to prevent further
irreparable harm to defendant’s goodwill and reputation. In consonance with Section 3 (a), (b) and (c), Rule 58 of the
Rules, defendant is thus entitled to the ancillary relief demanded either for a limited period or perpetually.

Corollarily, defendant is hereby directed to execute a bond to the party enjoined to the effect that defendant will pay
to plaintiff all damages it may sustain by reason of the injunction if the court should finally decide that defendant is not
entitled thereto.

WHEREFORE, upon the filing of a bond in the sum of FIVE HUNDRED THOUSAND PESOS (₱500,000.00), let a writ of
preliminary injunction issue restraining plaintiff, its officers, employees, agents, representatives, dealers, retailers or
assigns from manufacturing, distributing, selling, offering for sale, advertising or otherwise using denims or jeans with a
design which is substantially, if not exactly similar to defendant’s trademarks.

Meanwhile, the hearing on the main cause of action is hereby set on February 5 and 12, 1997, both at 9:00 a.m.

SO ORDERED.27

On motion for reconsideration, respondent prayed that the petitioner’s counterclaim be dismissed and that the order
dated December 10, 1996, be set aside. In an order dated April 11, 1997, the trial court denied the motion, stating that:

Considering:

(1) That the defendant’s application for injunctive relief was properly directed against the real property in interest, the
self-proclaimed lawful assignee and authorized user of the subject trademarks, hence, the party who would be benefited
or injured by this court’s final decision on the application;

(2) That the acts which plaintiff was enjoined from doing are within the scope of the reliefs demanded by defendant;

(3) That the institution of defendant’s counterclaim for infringement and damages does not amount to forum-
shopping in that the elements of litis pendentia which form the basis for a charge for forum-shopping are not all present in
the instant case;

(4) That the injunctive order sought to be reconsidered, by its very nature, is merely provisional and does not dispose
of the case on the merits. Hence, it would not amount to a prejudgment considering that the defendant still has the
burden of proving during trial on the merits that it is entitled to protection and that confusion does, in fact, or likely to
exist, and, on the other hand, plaintiff would have its opportunity to prove that confusion does not exist or is not likely to
happen; and

(5) That the evidence on record justifies the injunctive relief granted by this court in favor of defendant.

WHEREFORE, in view of all the foregoing, plaintiff’s motion for reconsideration and supplemental motion for
reconsideration are DENIED for lack of merit.

SO ORDERED.28

Respondent took the matter to the Court of Appeals. On August 13, 1997, the Court of Appeals rendered a decision in
favor of the respondent, enjoining the trial court from further proceeding with the case. The dispositive portion thereof
reads:

WHEREFORE, the petition is GRANTED. The assailed Orders dated December 10, 1996 and April 11, 1997 are
annulled and set aside for having been issued with grave abuse of discretion and in excess of jurisdiction. Respondent
court is ordered to desist from proceeding with Civil Case No. 96-76944, entitled "Vogue Traders Clothing Company,
Plaintiff, versus Levi Strauss (Phil.), Inc., Defendant.", until the Bureau of Patents, Trademarks and Technology Transfer
has finally resolved Inter Partes Cases Nos. 4216 and 4217.

No costs.

SO ORDERED.29

After its motion for reconsideration was denied, petitioner filed the present petition for review on certiorari,  raising
the following assignment of errors:

THE COURT OF APPEALS COMMITTED CLEARLY REVERSIBLE ERROR IN HOLDING THAT THE DOCTRINE OF
PRIMARY JURISDICTION OPERATES TO SUSPEND ANY AND ALL PROCEEDINGS IN CIVIL CASE NO. 96-76944,
PARTICULARLY THE ABILITY OF THE TRIAL COURT TO ISSUE PRELIMINARY INJUNCTIVE RELIEF, AND THAT THE TRIAL
COURT JUDGE THEREFORE COMMITTED ABUSE OF DISCRETION IN GRANTING SUCH RELIEF.

II

THE COURT OF APPEALS ERRED IN FAILING TO HOLD THAT THE CERTIFICATION AGAINST FORUM-SHOPPING
ATTACHED BY RESPONDENT TO ITS PETITION FOR CERTIORARI AND PROHIBITION IS FATALLY DEFECTIVE.

III

THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT JUDGE COMMITTED GRAVE ABUSE OF
DISCRETION IN DECLARING RESPONDENT TO HAVE WAIVED ITS RIGHT TO ADDUCE EVIDENCE TO COUNTER
PETITIONER’S EVIDENCE IN SUPPORT OF ITS APPLICATION FOR PRELIMINARY INJUNCTIVE RELIEF.

IV

THE COURT OF APPEALS ERRED IN HOLDING THAT THE PRELIMINARY INJUNCTIVE ORDER ISSUED IN CIVIL CASE
NO. 96-76944 PREJUDGES THE CASE.30

The petition has merit.

First. Petitioner points out that while the Court of Appeals categorically stated that it did not commit forum-shopping
when it filed its counterclaim for infringement (to the petitioner’s complaint for damages in the Regional Trial Court of
Manila, Branch 1 — Civil Case No. 96-76944) as the causes of action in the said civil case and the two inter partes  cases
(Inter Partes Cases Nos. 4216 and 4217 pending before the BPTTT) are different and do not involve the same subject
matter and issues, it erred in applying the "doctrine of primary jurisdiction." The appeals court declared that the trial court
never had the authority to hear and grant petitioner’s prayer for injunctive relief nor to proceed with the hearing of the
case in view of the pendency of the two inter partes  cases.

Petitioner is a holder of Certificate of Registration No. 1379-A for its Levi’s trademarks. The registration gives rise to a
presumption of its validity and the right to the exclusive use of the same. As set forth in Section 17 of Republic Act (R.A.)
No. 166 or "The Trademark Law," an entity having a duly registered trademark can file a suit against another entity for the
protection of its right:

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:

(a) That the registered mark or trade-name becomes the common descriptive name of an article or substance on
which the patent has expired;

(b) That it has been abandoned;

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

(d) That the registered mark or trade-name has been assigned, and is being used by, or with the permission of, the
assignee, so as to misrepresent the source of the goods, business or services in connection with which the mark or trade-
name is used; or

(e) That cancellation is authorized by other provisions of this Act.

Section 27 thereof states that the proper Regional Trial Court shall have jurisdiction over the damage suits.

In Conrad and Company, Inc. v. Court of Appeals,31 as reiterated in the case of Shangri-La International Hotel
Management Ltd. v. Court of Appeals,32 the Court clarified that while an administrative cancellation of a registered
trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an action for
infringement or any other incidental remedy sought is within the jurisdiction of the ordinary courts. Thus,

. . . It might be mentioned that while an application for the administrative  cancellation of a registered trademark on
any of the grounds enumerated in Section 17 of Republic Act No. 166, as amended, otherwise known as the Trade-Mark
Law, falls under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action, however, for infringement or
unfair competition, as well as the remedy of injunction and relief for damages, is explicitly and unquestionably within the
competence and jurisdiction of ordinary courts.

...
 Surely, an application with BPTTT for an administrative cancellation of a registered trade mark cannot per se have the
effect of restraining or preventing the courts from the exercise of their lawfully conferred jurisdiction. A contrary rule
would unduly expand the doctrine of primary jurisdiction which, simply expressed, would merely behoove regular courts, in
controversies involving specialized disputes, to defer to the findings or resolutions of administrative tribunals on certain
technical matters. This rule, evidently, did not escape the appellate court for it likewise decreed that for "good cause
shown, the lower court, in its sound discretion, may suspend the action pending outcome of the cancellation proceedings"
before BPTTT. (Underscoring supplied.)

The passage of Republic Act No. 8293, otherwise known as the "Intellectual Property Code of the
Philippines,"33expanded the rights accorded to an owner of a registered trademark. Sections 151 (2), 156, and 161 thereof
state:

Section 151.2. Notwithstanding the foregoing provisions, the court or the administrative agency vested with
jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall likewise exercise jurisdiction
to determine whether the registration of said mark may be cancelled in accordance with this Act. The filing of a suit to
enforce the registered mark with the proper court or agency shall exclude any other court or agency from assuming
jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to
cancel the mark with the Bureau of Legal Affairs {formerly BPTTT] shall not constitute a prejudicial question that must be
resolved before an action to enforce the rights to same registered mark may be decided.(Sec. 17, R.A. No. 166a)

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 profit 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 (Sec. 23, first par., R.A. No. 166a).

156.2 On application of the complainant, the court may impound during the pendency of the action, sales invoices
and other documents evidencing sales. (n)

156.3. In cases where actual intent to mislead the public or to defraud the complainant is shown, in the discretion of
the court, the damages may be doubled. (Sec. 23, first par., R.A. No. 166)

156.4 The complainant, upon proper showing, may also be granted injunction. (Sec. 23, second par., R.A. No. 166a)

Section 161. Authority to Determine Right to Registration.  — In any action involving a registered mark, the court may
determine the right to registration, order the cancellation of a registration, in whole or in part, and otherwise rectify the
register with respect to the registration of any party to the action in the exercise of this. Judgment and orders shall be
certified by the court to the Director, who shall make appropriate entry upon the records of the Bureau, and shall be
controlled thereby (Sec. 25, R.A. No. 166a).

Sections 155 (2), 156, and 163 of the said law further provide for the remedy of an owner of a registered mark to
institute an action for infringement or damages against a person or entity that may 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.

Finally, Rule 8, Section 7 of the Regulations on Inter Partes Proceedings, provides:

Section 7. Effect of filing of a suit before the Bureau or with the proper court. — The filing of a suit to enforce the
registered mark with the proper court or Bureau shall exclude any other court or agency from assuming jurisdiction over a
subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark
with the Bureau shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to
same registered mark may be decided. (Emphasis supplied)

It bears stressing that an action for infringement or unfair competition, including the available remedies of injunction
and damages, in the regular courts can proceed independently or simultaneously with an action for the administrative
cancellation of a registered trademark in the BPTTT. As applied to the present case, petitioner’s prior filing of two  inter
partes  cases against the respondent before the BPTTT for the cancellation of the latter’s trademark registrations, namely,
"LIVE’S" and "LIVE’S Label Mark," does not preclude petitioner’s right (as a defendant) to include in its answer (to
respondent’s complaint for damages in Civil Case No. No. 96-76944) a counterclaim for infringement with a prayer for the
issuance of a writ of preliminary injunction.

Second. As to the procedural matter, petitioner argues that the Court of Appeals erred in giving due course to the
respondent’s petition for certiorari even if it was the latter’s counsel, Atty. Danilo A. Soriano, not one of its duly authorized
officers, who executed the certification of non-forum shopping.
 Section 5, Rule 7 of the Rules of Civil Procedure incorporating Administrative Circular Nos. 28-91 (effective January 1,
1992) and 04-94 (effective April 1, 1994) states the requirement of a plaintiff or petitioner to include in his initiatory
pleading or petition a certification of non-forum shopping. Thus,

Sec. 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in the complaint
or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court,
tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if
there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five
(5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein
shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions.

In Digital Microwave Corp. v. CA,34 this Court gave the rationale for this rule, namely, that the certification against
forum shopping is required to be accomplished by petitioner himself because only the petitioner himself has actual
knowledge of whether or not he has initiated similar actions or proceedings in different courts or agencies. Even his
counsel may be unaware of such fact as he may only be aware of the action for which he has been retained. As to
corporations, the law requires that the certification could be made by its duly authorized director or officer. The Court also
stresses that the petitioner’s non-compliance and utter disregard of the rules cannot be rationalized by invoking the policy
of liberal construction.

The requirement of certification against forum shopping under the Rules is to be executed by the petitioner, or in the
case of a corporation, its duly authorized director or officer, but not petitioner’s counsel whose professional services have
been engaged to handle the subject case. The reason is that it is the petitioner who has personal knowledge whether
there are cases of similar nature pending with the other courts, tribunals, or agencies. Thus, in the present case, the Court
of Appeals should have outrightly dismissed the petition for certiorari filed by the respondent (as therein petitioner in the
appeals court) due to the defective certification of non-forum shopping. The certification made by Atty. Soriano, counsel
for the respondent, who is not one of its duly authorized directors or officers, is defective.Even if Atty. Soriano was the "in-
house counsel," the fact remains that no board resolution, or even a Secretary’s Certificate containing the board resolution,
was submitted to show that he was indeed authorized to file the said petition in the Court of Appeals.

Third. Petitioner avers that the Court of Appeals erred in finding that the respondent was denied due process. It
contends that the trial court had correctly ruled that respondent was deemed to have waived its right to present evidence
due to its non-appearance at the scheduled hearing (to oppose the petitioner’s application for the issuance of a writ of
preliminary injunction) on December 4, 1996.

The records show that respondent, through its former counsel, Atty. Alfonso R. Yatco, was present during the hearing
on November 6, 1996 as reflected in the minutes of the court proceedings that day. The counsels for both parties had
been duly notified in open court. The Branch Clerk of Court of RTC of Manila, Branch 1, Atty. Joselito C. Frial, even made a
notation in the minutes that respondent (as oppositor) shall be given a period of 10 days to interpose its opposition to the
petitioner’s prayer for injunctive relief.35 The Order dated November 6, 1996 states:

After witness Atty. Gilbert Raymond T. Reyes [witness for the petitioner] had finished his testimony, the counsel for
defendant [herein petitioner] moved for and was allowed ten (10) days from today within which to file a written formal
offer of exhibits, copy furnish[ed] the counsel for plaintiff [herein respondent] who is allowed a similar period of time from
receipt thereof within which to file comment and/or objection.

In the meantime, let the hearing be continued on December 4 & 11, 1996, both at 9:00 a.m. as previously scheduled.

The counsels are notified of this order in open court.

SO ORDERED.36

However, on December 4, 1996, Atty. Yatco failed to appear without proferring any valid reason which prompted the
trial court to issue an order that respondent was deemed to have waived its right to present evidence:

On call for hearing, only the counsel for defendant [herein petitioner] appeared. There was no appearance for
plaintiff [herein respondent] although its counsel was duly notified. In view thereof, upon motion of counsel for defendant,
plaintiff is considered to have waived its right to present evidence to controvert defendant’s application for a writ of
preliminary injunction, which, consequently, is hereby deemed submitted for resolution.

The counsel for defendant is notified in open court. Furnish the counsel for plaintiff with a copy hereof.
 SO ORDERED.37

Respondent explained to the trial court that its former counsel, Atty. Yatco, had honestly thought that the December
4, 1996 hearing had been rescheduled to December 11, 1996 per agreement with the petitioner’s counsel. This is not a
sufficient ground. It was correct for the trial court, upon motion of petitioner, to consider the matter submitted for
resolution on the basis of petitioner’s evidence. Respondent cannot find solace in its lame excuse of honest mistake which
was, in fact, negligence and lack of vigilance.

Fourth. Petitioner claims that the assailed orders of the trial court, dated December 10, 1996 and April 11, 1997, did
not prejudge the case. On the other hand, respondent counters that the trial court’s order dated December 10, 1996
amounted to a prejudgment of the case, to wit: that its LIVE’s backpocket design was not copyrightable because it was
neither an original work nor a novel design; that it was a copy or slavish imitation of petitioner’s LEVI’s Arcuate trademark;
and that no rights attendant to a copyright can ever attach to respondent’s backpocket design.

The trial court granted petitioner’s prayer for the issuance of a writ of preliminary injunction in its answer with
counterclaim (to respondent’s complaint for damages). The writ did not have the effect of prejudging or disposing of the
merits of the case, but merely enjoined the respondent’s acts of manufacturing, distributing, selling, or offering for sale the
jeans which had allegedly incorporated exact or colorable imitations of the products belonging to petitioner. The Order
dated April 11, 1997 of the trial court denying the respondent’s motion for reconsideration categorically stated that the
said Order did not amount to a prejudgment of the case. Petitioner has yet to establish during the trial that it is entitled to
a permanent injunction by reason of respondent’s confusingly similar LIVE’S products. Otherwise, the trial court could
declare that the LIVE’S trademark belonging to respondent was not confusingly similar with the LEVI’s trademark of
petitioner.

Indeed, a writ of preliminary injunction is generally based solely on initial and incomplete evidence adduced by the
applicant (herein petitioner). The evidence submitted during the hearing of the incident is not conclusive, for only a
"sampling" is needed to give the trial court an idea of the justification for its issuance pending the decision of the case on
the merits. As such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction are
interlocutory in nature. Moreover, the sole object of a preliminary injunction is to preserve the  status quo until the merits
of the case can be heard. Since Section 4 of Rule 58 of the Rules of Civil Procedure gives the trial courts sufficient
discretion to evaluate the conflicting claims in an application for a provisional writ which often involves a factual
determination, the appellate courts generally will not interfere in the absence of manifest abuse of such discretion. 38 A writ
of preliminary injunction would become a prejudgment of a case only when it grants the main prayer in the complaint or
responsive pleading, so much so that there is nothing left for the trial court to try except merely incidental matters. 39 Such
fact does not obtain in the present case.

WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals dated August 13, 1997 and its
Resolution dated March 5, 1998 are REVERSED and SET ASIDE. The Regional Trial Court of Manila, Branch 1 is ORDERED
to proceed with the hearing of Civil Case No. 96-76944 with dispatch.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

G.R. No. 158589             June 27, 2006

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A.,
(now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners, 
vs.
FORTUNE TOBACCO CORPORATION, 

Respondent.

DECISION

GARCIA, J.:
 Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson &
Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal and
setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:

1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig City, Branch 166,
in its Civil Case No. 47374, which dismissed the complaint for trademark infringement and damages thereat commenced
by the petitioners against respondent Fortune Tobacco Corporation; and

2. Resolution dated May 30, 20032 denying petitioners’ motion for reconsideration.

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

The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their
respective trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of Trademark and
Damages against respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of
Pasig, Branch 166.

The decision under review summarized what happened next, as follows:

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

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

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

xxx xxx xxx.

lawphil.net

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

xxx xxx xxx

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

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

Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial court stated
that the general rule is that an infringement exists if the resemblance is so close that it deceives or is likely to deceive a
customer exercising ordinary caution in his dealings and induces him to purchase the goods of one manufacturer in the
belief that they are those of another. xxx. The trial court ruled that the [petitioners] failed to pass these tests as it neither
presented witnesses or purchasers attesting that they have bought [respondent’s] product believing that they bought
[petitioners’] "MARK VII", "MARK TEN" or "LARK", and have also failed to introduce in evidence a specific magazine or
periodical circulated locally, which promotes and popularizes their products in the Philippines. It, moreover, elucidated that
the words consisting of the trademarks allegedly infringed by [respondent] failed to show that they have acquired a
secondary meaning as to identify them as [petitioners’] products. Hence, the court ruled that the [petitioners] cannot avail
themselves of the doctrine of secondary meaning.

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

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

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

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

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

In its Comment,5 respondent, aside from asserting the correctness of the CA’s finding on its liability for trademark
infringement and damages, also puts in issue the propriety of the petition as it allegedly raises questions of fact.

The petition is bereft of merit.

Dealing first with the procedural matter interposed by respondent, we find that the petition raises both questions of
fact and law contrary to the prescription against raising factual questions in a petition for review on certiorari filed before
the Court. A question of law exists when the doubt or difference arises as to what the law is on a certain state of facts;
there is a question of fact when the doubt or difference arises as to the truth or falsity of alleged facts. 6

Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts. 7 Unless the factual
findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or
contrary to the findings culled by the court of origin, 8 we will not disturb them.

It is petitioners’ posture, however, that their contentions should

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

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

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

A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted
and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or
dealt in by others. 11 Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter observed in Mishawaka
Mfg. Co. v. Kresge Co.:12

The protection of trademarks is the law’s recognition of the psychological function of symbols. If it is true that we live
by symbols, it is no less true that we purchase goods by them. A trade-mark is a merchandising short-cut which induces a
purchaser to select what he wants, or what he has been led to believe what he wants. The owner of a mark exploits this
human propensity by making every effort to impregnate the atmosphere of the market with the drawing power of a
congenial symbol. Whatever the means employed, the aim is the same - to convey through the mark, in the minds of
potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trade-mark owner
has something of value. If another poaches upon the commercial magnetism of the symbol he has created, the owner can
obtain legal redress.

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

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

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

Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that
cigarettes bearing their trademarks are not available and sold locally. Citing Converse Rubber Corporation v. Universal
Rubber Products, Inc.,16 petitioners state that such availability and sale may be effected through the acts of importers and
distributors.

Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks in
the country in view of the Philippines’ adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS
Agreement and the enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the "IP Code"), both of
which provide that the fame of a trademark may be acquired through promotion or advertising with no explicit
requirement of actual use in local trade or commerce.

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

Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of
their trademarks in the Philippines.

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

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

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

True, the Philippines’ adherence to the Paris Convention24 effectively obligates the country to honor and enforce its
provisions25 as regards the protection of industrial property of foreign nationals in this country. However, any protection
accorded has to be made subject to the limitations of Philippine laws. 26 Hence, despite Article 2 of the Paris Convention
which substantially provides that (1) nationals of member-countries shall have in this country rights specially provided by
the Convention as are consistent with Philippine laws, and enjoy the privileges that Philippine laws now grant or may
hereafter grant to its nationals, and (2) while no domicile requirement in the country where protection is claimed shall be
required of persons entitled to the benefits of the Union for the enjoyment of any industrial property rights, 27 foreign
nationals must still observe and comply with the conditions imposed by Philippine law on its nationals.

Considering that R.A. No. 166, as amended, specifically Sections 2 28 and 2-A29 thereof, mandates actual use of the
marks and/or emblems in local commerce and trade before they may be registered and ownership thereof acquired, the
petitioners cannot, therefore, dispense with the element of actual use. Their being nationals of member-countries of the
Paris Union does not alter the legal situation.

In Emerald Garment Mfg. Corporation v. Court of Appeals, 30 the Court reiterated its rulings in Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 31 Kabushi Kaisha Isetan v. Intermediate Appellate
Court,32 and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation 33 on the importance of actual commercial
use of a trademark in the Philippines notwithstanding the Paris Convention:

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

xxx xxx xxx

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

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement … but the question of whether
they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of
their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to
claim that when a foreign corporation not licensed to do business in the Philippines files a complaint for infringement, the
entity need not be actually using its trademark in commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be entitled to protection due to absence of actual use
of the emblem in the local market.

Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual use
of such trademark in local commerce. As it were, registration does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration merely constitutes prima facie evidence that the registrant is the owner of
the registered mark. Evidence of non-usage of the mark rebuts the presumption of trademark ownership, 34 as what
happened here when petitioners no less admitted not doing business in this country. 35

Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an absolute
right or exclusive ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development
Group of Companies, Inc.36 trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive
ownership; registration is only an administrative confirmation of the existence of the right of ownership of the mark, but
does not perfect such right; actual use thereof is the perfecting ingredient. 37

Petitioners’ reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast in a different factual
milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in,
business in the Philippines, may actually earn reputation or goodwill for its goods in the country. But unlike in the instant
case, evidence of actual sales of Converse rubber shoes, such as sales invoices, receipts and the testimony of a legitimate
trader, was presented in Converse.

This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein
having been filed in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however, took
effect only on January 1, 1998 without a provision as to its retroactivity. 39 In the same vein, the TRIPS Agreement was
inexistent when the suit for infringement was filed, the Philippines having adhered thereto only on December 16, 1994.

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

This brings us to the principal issue of infringement.

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

Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy of color ably imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.

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

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

In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and
the holistic test.42 The dominancy test 43 sets sight on the similarity of the prevalent features of the competing trademarks
that might cause confusion and deception, thus constitutes infringement. Under this norm, the question at issue turns on
whether the use of the marks involved would be likely to cause confusion or mistake in the mind of the public or deceive
purchasers.44

In contrast, the holistic test 45 entails a consideration of the entirety of the marks as applied to the products, including
the labels and packaging, in determining confusing similarity.

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

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

This said, the CA then, in finding that respondent’s goods cannot be mistaken as any of the three cigarette brands of
the petitioners, correctly relied on the holistic test.

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

Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral "VII," does not
point to the origin or ownership of the cigarettes to which they apply, the local buying public could not possibly be
confused or deceived that respondent’s "MARK" is the product of petitioners and/or originated from the U.S.A., Canada or
Switzerland. And lest it be overlooked, no actual commercial use of petitioners’ marks in local commerce was proven.
There can thus be no occasion for the public in this country, unfamiliar in the first place with petitioners’ marks, to be
confused.

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

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

When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary customer" but to the
"ordinarily intelligent buyer" considering the type of product involved. 51

It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by those who are
already predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be all too familiar with his brand and
discriminating as well. We, thus, concur with the CA when it held, citing a definition found in Dy Buncio v. Tan Tiao
Bok,52 that the "ordinary purchaser" in this case means "one accustomed to buy, and therefore to some extent familiar
with, the goods in question."

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

This Court is not persuaded.

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

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

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

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

(d) such act is done without the consent of the trademark registrant or assignee.lawphil.net

As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN" and "LARK" for
cigarettes in the Philippines, prior actual commercial use thereof had not been proven. In fact, petitioners’ judicial
admission of not doing business in this country effectively belies any pretension to the contrary.

Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known and/or
have acquired goodwill in the Philippines so as to be entitled to protection even without actual use in this country in
accordance with Article 6bis55 of the Paris Convention. As correctly found by the CA, affirming that of the trial court:

xxx the records are bereft of evidence to establish that the appellants’ [petitioners’] products are indeed well-known
in the Philippines, either through actual sale of the product or through different forms of advertising. This finding is
supported by the fact that appellants admit in their Complaint that they are not doing business in the Philippines, hence,
admitting that their products are not being sold in the local market. We likewise see no cogent reason to disturb the trial
court’s finding that the appellants failed to establish that their products are widely known by local purchasers as "(n)o
specific magazine or periodical published in the Philippines, or in other countries but circulated locally" have been
presented by the appellants during trial. The appellants also were not able to show the length of time or the extent of the
promotion or advertisement made to popularize their products in the Philippines. 56
 Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and
appellate courts having peremptorily found allegations of infringement on the part of respondent to be without basis. As
we said time and time again, factual determinations of the trial court, concurred in by the CA, are final and binding on this
Court.57

For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to
respondent’s use of its mark and for petitioners’ failure to demonstrate confusing similarity between said trademarks, the
dismissal of their basic complaint for infringement and the concomitant plea for damages must be affirmed. The law, the
surrounding circumstances and the equities of the situation call for this disposition.

WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of Appeals
are AFFIRMED.

Costs against the petitioners.

SO ORDERED.

DECISION

GARCIA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, herein petitioner McDonald’s Corporation
seeks the reversal and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to
wit:

1. Decision dated 29 July 2004 1 reversing an earlier decision of the Intellectual Property Office (IPO) which rejected
herein respondent MacJoy FastFood Corporation’s application for registration of the trademark "MACJOY & DEVICE"; and

2. Resolution dated 12 November 20042 denying the petitioner’s motion for reconsideration.

As culled from the record, the facts are as follows:

On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic corporation engaged in the sale of fast food
products in Cebu City, filed with the then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the
Intellectual Property Office (IPO), an application, thereat identified as Application Serial No. 75274, for the registration of
the trademark "MACJOY & DEVICE" for fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos,
sandwiches, halo-halo and steaks under classes 29 and 30 of the International Classification of Goods.

Petitioner McDonald’s Corporation, a corporation duly organized and existing under the laws of the State of Delaware,
USA, filed a verified Notice of 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 affiliation with petitioner’s restaurant services and food products, thus, constituting a fraud
upon the general public and further cause the dilution of the distinctiveness of petitioner’s registered and internationally
recognized MCDONALD’S marks to its prejudice and irreparable damage. The application and the opposition thereto was
docketed as Inter Partes Case No. 3861.

Respondent denied the aforementioned allegations of the petitioner and averred that it has used the mark "MACJOY"
for the past many years in good faith and has spent considerable sums of money for said mark’s extensive promotion in
tri-media, especially in Cebu City where it has been doing business long before the petitioner opened its outlet thereat
sometime in 1992; and that its use of said mark would not confuse affiliation with the petitioner’s restaurant services and
food products because of the differences in the design and detail of the two (2) marks.

In a decision4 dated December 28, 1998, the IPO, ratiocinating that the predominance of the letter "M," and the
prefixes "Mac/Mc" in both the "MACJOY" and the "MCDONALDS" marks lead to the conclusion that there is confusing
similarity between them especially since both are used on almost the same products falling under classes 29 and 30 of the
International Classification of Goods, i.e., food and ingredients of food, sustained the petitioner’s opposition and rejected
the respondent’s application, viz:
 WHEREFORE, the Opposition to the registration of the mark MACJOY & DEVICE for use in fried chicken and chicken
barbecue, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks is, as it is hereby, SUSTAINED.
Accordingly, Application Serial No. 75274 of the herein Respondent-Applicant is REJECTED.

Let the filewrapper of MACJOY subject matter of this case be sent to the Administrative, Financial and Human
Resources Development Bureau for appropriate action in accordance with this Decision, with a copy to be furnished the
Bureau of Trademarks for information and to update its record.

SO ORDERED.

In time, the respondent moved for a reconsideration but the IPO denied the motion in its Order 5 of January 14, 2000.

Therefrom, the respondent went to the CA via a Petition for Review with prayer for Preliminary 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
Decision7 dated July 29, 2004, reversed and set aside the appealed IPO decision and order, thus:

WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING ASIDE the
Decision of the IPO dated 28 December 1998 and its Order dated 14 January 2000 and ORDERING the IPO to give due
course to petitioner’s Application Serial No. 75274.

SO ORDERED.

Explains the CA in its decision:

xxx, it is clear that the IPO brushed aside and rendered useless the glaring and drastic differences and variations in
style of the two trademarks and even decreed that these pronounced differences are "miniscule" and considered them to
have been "overshadowed by the appearance of the predominant features" such as "M," "Mc," and "Mac" appearing in
both MCDONALD’S and MACJOY marks. Instead of taking into account these differences, the IPO unreasonably shrugged
off these differences in the device, letters and marks in the trademark sought to be registered. The IPO brushed aside and
ignored the following irrefutable facts and circumstances showing differences between the marks of MACJOY and
MCDONALD’S. They are, as averred by the petitioner [now respondent]:

1. The word "MacJoy" is written in round script while the word "McDonald’s" is written in single stroke gothic;

2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie and wings sprouting on both
sides, while the word "McDonald’s" comes with an arches "M" in gold colors, and absolutely without any picture of a
chicken;

3. The word "MacJoy" is set in deep pink and white color scheme while "McDonald’s" is written in red, yellow and
black color combination;

4. The façade of the respective stores of the parties are entirely different. Exhibits 1 and 1-A, show that
[respondent’s] restaurant is set also in the same bold, brilliant and noticeable color scheme as that of its wrappers,
containers, cups, etc., while [petitioner’s] restaurant is in yellow and red colors, and with the mascot of "Ronald McDonald"
being prominently displayed therein." (Words in brackets supplied.)

Petitioner promptly filed a motion for reconsideration. However, in its similarly challenged Resolution 8 of November
12, 2004, the CA denied the motion, as it further held:

Whether a mark or label of a competitor resembles another is to be determined by an inspection of the points of
difference and resemblance as a whole, and not merely the points of resemblance. The articles and trademarks employed
and used by the [respondent] Macjoy Fastfood Corporation are so different and distinct as to preclude any probability or
likelihood of confusion or deception on the part of the public to the injury of the trade or business of the [petitioner]
McDonald’s Corporation. The "Macjoy & Device" mark is dissimilar in color, design, spelling, size, concept and appearance
to the McDonald’s marks. (Words in brackets supplied.)

Hence, the petitioner’s present recourse on the following grounds:

I.

THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT’S "MACJOY & DEVICE" MARK IS NOT
CONFUSINGLY SIMILAR TO PETITIONER’S "McDONALD’S MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY
TEST WHICH HAS BEEN CONSISTENTLY APPLIED BY THIS HONORABLE COURT IN DETERMINING THE EXISTENCE OF
CONFUSING SIMILARITY BETWEEN COMPETING MARKS.
 A. The McDonald’s Marks belong to a well-known and established "family of marks" distinguished by the use of the
prefix "Mc" and/or "Mac" and the corporate "M" logo design.

B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner’s McDonald’s Marks and the Respondent’s
"Macjoy & Device" mark. As such, the marks are confusingly similar under the Dominancy Test.

C. Petitioner’s McDonald’s Marks are well-known and world-famous marks which must be protected under the Paris
Convention.

II.

THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO DATED 28 DECEMBER 1998 AND ITS
ORDER DATED 14 JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL EVIDENCE.

In its Comment,9 the respondent asserts that the petition should be dismissed outright for being procedurally
defective: first, because the person who signed the certification against forum shopping in behalf of the petitioner was not
specifically authorized to do so, and second, because the petition does not present a reviewable issue as what it
challenges are the factual findings of the CA. In any event, the respondent insists that the CA committed no reversible
error in finding no confusing similarity between the trademarks in question.

The petition is impressed with merit.

Contrary to respondent’s claim, the petitioner’s Managing Counsel, Sheila Lehr, was specifically authorized to sign on
behalf of the petitioner the Verification and Certification 10 attached to the petition. As can be gleaned from the petitioner’s
Board of Director’s Resolution dated December 5, 2002, as embodied in the Certificate of the Assistant Secretary dated
December 21, 2004, 11 Sheila Lehr was one of those authorized and empowered "to execute and deliver for and on behalf
of [the petitioner] all documents as may be required in connection with x x x the protection and maintenance of any
foreign patents, trademarks, trade-names, and copyrights owned now or hereafter by [the petitioner], including, but not
limited to, x x x documents required to institute opposition or cancellation proceedings against conflicting trademarks, and
to do such other acts and things and to execute such other documents as may be necessary and appropriate to effect and
carry out the intent of this resolution." Indeed, the afore-stated authority given to Lehr necessarily includes the authority
to execute and sign the mandatorily required certification of non-forum shopping to support the instant petition for review
which stemmed from the "opposition proceedings" lodged by the petitioner before the IPO. Considering that the person
who executed and signed the certification against forum shopping has the authority to do so, the petition, therefore, is not
procedurally defective.

As regards the respondent’s argument that the petition raises only questions of fact which are not proper in a petition
for review, suffice it to say that the contradictory findings of the IPO and the CA constrain us to give due course to the
petition, this being one of the recognized exceptions to Section 1, Rule 45 of the Rules of Court. True, this Court is not the
proper venue to consider factual issues as it is not a trier of facts. 12 Nevertheless, when the factual findings of the
appellate court are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or
contrary to the findings culled by the court of origin, 13 as here, this Court will review them.

The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a "trademark" as any distinctive word,
name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a manufacturer or merchant on
his goods to identify and distinguish them from those manufactured, sold, or dealt in by others. 14

Under the same law, the registration of a trademark is subject to the provisions of Section 4 thereof, paragraph (d) of
which is pertinent to this case. The provision reads:

Section 4. Registration of trademarks, trade-names and service-marks on the principal register. – There is hereby
established a register of trademarks, tradenames and service-marks which shall be known as the principal register. The
owner of the trade-mark, trade-name or service-mark used to distinguish his goods, business or services of others shall
have the right to register the same on the principal register, unless it:

xxx xxx xxx

(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the
Philippines or a mark or trade-name previously used in the Philippines by another and not abandoned, as to be likely,
when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or mistake
or to deceive purchasers;

xxx xxx xxx

Essentially, the issue here is whether there is a confusing similarity between the MCDONALD’S marks of the petitioner
and the respondent’s "MACJOY & DEVICE" trademark when applied to Classes 29 and 30 of the International Classification
of Goods, i.e., food and ingredients of food.
 In determining similarity and likelihood of confusion, jurisprudence has developed two tests, the dominancy test and
the holistic test.15 The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion or deception. 16 In contrast, the holistic test requires the court to consider the entirety of the marks
as applied to the products, including the labels and packaging, in determining confusing similarity. 17 Under the latter test, a
comparison of the words is not the only determinant factor. 18 1awphi1.net

Here, the IPO used the dominancy test in concluding that there was confusing similarity between the two (2)
trademarks in question as it took note of the appearance of the predominant features "M", "Mc" and/or "Mac" in both the
marks. In reversing the conclusion reached by the IPO, the CA, while seemingly applying the dominancy test, in fact
actually applied the holistic test. The appellate court ruled in this wise:

Applying the Dominancy test to the present case, the IPO should have taken into consideration the entirety of the
two marks instead of simply fixing its gaze on the single letter "M" or on the combinations "Mc" or "Mac". A mere cursory
look of the subject marks will reveal that, save for the letters "M" and "c", no other similarity exists in the subject marks.

We agree with the [respondent] that it is entirely unwarranted for the IPO to consider the prefix "Mac" as the
predominant feature and the rest of the designs in [respondent’s] mark as details. Taking into account such paramount
factors as color, designs, spelling, sound, concept, sizes and audio and visual effects, the prefix "Mc" will appear to be the
only similarity in the two completely different marks; and it is the prefix "Mc" that would thus appear as the miniscule
detail. When pitted against each other, the two marks reflect a distinct and disparate visual impression that negates any
possible confusing similarity in the mind of the buying public. (Words in brackets supplied.)

Petitioner now vigorously points out that the dominancy test should be the one applied in this case.

We agree.

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules
can be deduced because each case must be decided on its merits. 19 In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. 20 That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point. 21

While we agree with the CA’s detailed enumeration of differences between the two (2) competing trademarks herein
involved, we believe that the holistic test is not the one applicable in this case, the dominancy test being the one more
suitable. In recent cases with a similar factual milieu as here, the Court has consistently used and applied the dominancy
test in determining confusing similarity or likelihood of confusion between competing trademarks. 22

Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc., 23 a case where the trademark "Big Mak" was found to be
confusingly similar with the "Big Mac" mark of the herein the petitioner, the Court explicitly held:

This Court, xxx, has relied on the dominancy test rather than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. Courts will consider more the aural and visual impressions
created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market
segments.

Moreover, in Societe Des Produits Nestle, S.A. v. CA 24 the Court, applying the dominancy test, concluded that the use
by the respondent therein of the word "MASTER" for its coffee product "FLAVOR MASTER" was likely to cause confusion
with therein petitioner’s coffee products’ "MASTER ROAST" and "MASTER BLEND" and further ruled:

xxx, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in the marketplace. The totality or holistic
test only relies on visual comparisons between two trademarks whereas the dominancy test relies not only on the visual
but also on the aural and connotative comparisons and overall impressions between the two trademarks.

Applying the dominancy test to the instant case, the Court finds that herein petitioner’s "MCDONALD’S" and
respondent’s "MACJOY" marks are confusingly similar with each other such that an ordinary purchaser can conclude an
association or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant
features. The first letter "M" in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which
they are depicted i.e. in an arch-like, capitalized and stylized manner. 25

For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally catches the attention of the
consuming public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries,"
"McSpaghetti," "McDo," "Big Mac" and the rest of the MCDONALD’S marks which all use the prefixes Mc and/or Mac.
 Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the
respondent’s trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the
International Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the
petitioner’s trademark registration for the MCDONALD’S marks in the Philippines covers goods which are similar if not
identical to those covered by the respondent’s application.

Thus, we concur with the IPO’s findings that:

In the case at bar, the predominant features such as the "M," "Mc," and "Mac" appearing in both McDonald’s marks
and the MACJOY & DEVICE" easily attract the attention of would-be customers. Even non-regular customers of their
fastfood restaurants would readily notice the predominance of the "M" design, "Mc/Mac" prefixes shown in both marks.
Such that the common awareness or perception of customers that the trademarks McDonalds mark and MACJOY &
DEVICE are one and the same, or an affiliate, or under the sponsorship of the other is not far-fetched.

The differences and variations in styles as the device depicting a head of chicken with cap and bowtie and wings
sprouting on both sides of the chicken head, the heart-shaped "M," and the stylistic letters in "MACJOY & DEVICE;" in
contrast to the arch-like "M" and the one-styled gothic letters in McDonald’s marks are of no moment. These minuscule
variations are overshadowed by the appearance of the predominant features mentioned hereinabove.

Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in both marks, the inevitable conclusion
is there is confusing similarity between the trademarks Mc Donald’s marks and "MACJOY AND DEVICE" especially
considering the fact that both marks are being used on almost the same products falling under Classes 29 and 30 of the
International Classification of Goods i.e. Food and ingredients of food.

With the existence of confusing similarity between the subject trademarks, the resulting issue to be resolved is who,
as between the parties, has the rightful claim of ownership over the said marks.

We rule for the petitioner.

A mark is valid if it is distinctive and hence not barred from registration under the Trademark Law. However, once
registered, not only the mark’s validity but also the registrant’s ownership thereof is prima facie presumed. 26

Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision regarding the protection of industrial
property of foreign nationals in this country as embodied in the Paris Convention 28 under which the Philippines and the
petitioner’s domicile, the United States, are adherent-members, the petitioner was able to register its MCDONALD’S marks
successively, i.e., "McDonald’s" in 04 October, 1971 29 ; the corporate logo which is the "M" or the golden arches design
and the "McDonald’s" with the "M" or golden arches design both in 30 June 1977 30 ; and so on and so forth.31

On the other hand, it is not disputed that the respondent’s application for registration of its trademark "MACJOY &
DEVICE" was filed only on March 14, 1991 albeit the date of first use in the Philippines was December 7, 1987. 32

Hence, from the evidence on record, it is clear that the petitioner has duly established its ownership of the mark/s.

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

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

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

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

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

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

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

No pronouncement as to costs.

SO ORDERED.

THIRD DIVISION

[G.R. NO. 180073 : November 25, 2009]

PROSOURCE INTERNATIONAL, INC.,Petitioner, v. HORPHAG RESEARCH MANAGEMENT SA, Respondent.

DECISION

NACHURA, J.:

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) Decision1 dated July 27, 2007 and Resolution 2dated October 15, 2007 in CA-G.R. CV No. 87556. The
assailed decision affirmed the Regional Trial Court (RTC) 3 Decision4 dated January 16, 2006 and Order5 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 filed 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 file 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

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 suffix "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 sufficient 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 filed 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.

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 define what constitutes trademark
infringement, as follows:

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

(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. 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 Office; 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; andcralawlibrary

(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

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. 27The 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 suffix "GENOL" which on evidence, appears to be
merely descriptive and furnish no indication of the origin of the article and hence, open for trademark registration by the
plaintiff 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, identified as such by their public consumers. And
although there were dissimilarities in the trademark due to the type of letters used as well as the size, color and design
employed on their individual packages/bottles, still the close relationship of the competing products' name 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 first 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:

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 sonansrule, "Yusea" and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and
"Seven-Up" and "Lemon-Up." In Co Tiong v. Director of Patents, this Court unequivocally said that "Celdura" and "Cordura"
are confusingly similar in sound; this Court held in Sapolin Co. v. 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. 32

Finally, we reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts
finding the allegations of infringement to be meritorious. As we have consistently held, factual determinations of the trial
court, concurred in by the CA, are final 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;

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. 35 In the instant case, we find 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.
 Republic of the Philippines
SUPREME COURT
Baguio City

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.:

We review in this petition for review on certiorari 1 the (1) decision2 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 ₱2,000,000.00 in damages, ₱500,000.00 as attorney’s fees, and costs of
the suit.

THE FACTUAL ANTECEDENTS

On February 23, 1993, SUPERIOR5 filed a complaint for trademark infringement and unfair competition with
preliminary injunction against KUNNAN6 and SPORTS CONCEPT7 with the RTC, docketed as Civil Case No. Q-93014888.

In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles, company
names and business names8 "KENNEX",9 "KENNEX & DEVICE",10 "PRO KENNEX"11 and "PRO-KENNEX" (disputed
trademarks).12 Second, it also asserted its prior use of these trademarks, presenting as evidence of ownership the Principal
and Supplemental Registrations of these trademarks in its name. Third, SUPERIOR also alleged that it extensively sold and
advertised sporting goods and products covered by its trademark registrations. Finally, SUPERIOR presented as evidence
of its ownership of the disputed trademarks the preambular clause of the Distributorship Agreement dated October 1, 1982
(Distributorship Agreement) it executed with KUNNAN, which states:

Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark registered by the [sic] Superior in the
Philippines. Whereas, the [sic] Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in the
territory of the Philippines." [Emphasis supplied.] 13

In its defense, KUNNAN disputed 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 1972.14 It created and first used "PRO KENNEX," derived from its original corporate name, as a distinctive
trademark for its products in 1976. KUNNAN also alleged that it registered the "PRO KENNEX" trademark not only in the
Philippines but also in 31 other countries, and widely promoted the "KENNEX" and "PRO KENNEX" trademarks through
worldwide advertisements in print media and sponsorships of known tennis players.

On October 1, 1982, after the expiration of its initial distributorship agreement with another company, 15 KUNNAN
appointed SUPERIOR as its exclusive distributor in the Philippines under a Distributorship Agreement whose pertinent
provisions state:16

Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered by the Superior in the Philippines.
Whereas, the Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in the territory of the
Philippines.

Now, therefore, the parties hereto agree as follows:

1. KUNNAN in accordance with this Agreement, will appoint the sole distributorship right to Superior in the
Philippines, and this Agreement could be renewed with the consent of both parties upon the time of expiration.
 2. The Superior, in accordance with this Agreement, shall assign the ownership of KENNEX trademark, under the
registration of Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on the effects [sic] of its ten (10) years contract
of distributorship, and it is required that the ownership of the said trademark shall be genuine, complete as a whole and
without any defects.

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

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

5. The Superior will be granted from [sic] 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.

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 Certificate 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 officers into believing that KUNNAN was not qualified to hold the same due to the "many requirements set by
the Philippine Patent Office" that KUNNAN could not meet. 17 KUNNAN further asserted that SUPERIOR deceived it into
assigning its applications for registration of the "PRO KENNEX" trademark in favor of SUPERIOR, through an Assignment
Agreement dated June 14, 1983 whose pertinent provisions state: 18

1. In consideration of the distributorship relationship between KUNNAN and Superior, KUNNAN, who is the seller in
the distributorship relationship, agrees to assign the following trademark applications owned by itself in the Philippines to
Superior who is the buyer in the distributorship relationship.

Trademark
Application
Class
Number

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.1avvphi1

4. Superior agrees that the abovementioned trademarks when requested by KUNNAN shall be clean and without any
incumbency.

5. Superior agrees that after the assignment of the abovementioned trademarks, it shall have no right to reassign or
license the said trademarks to any other parties except KUNNAN. [Emphasis supplied]

Prior to and during the pendency of the infringement and unfair competition case before the RTC, KUNNAN filed with
the now defunct Bureau of Patents, Trademarks and Technology Transfer 19 separate Petitions for the Cancellation of
Registration Trademark Nos. 41032, SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709,
3710, 3811, 3812, 3813 and 3814, as well as Opposition to Application Serial Nos. 84565 and 84566, docketed as Inter
Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for Cancellation) involving the KENNEX and PRO KENNEX
trademarks.20 In essence, KUNNAN filed the Petition for Cancellation and Opposition on the ground that SUPERIOR
fraudulently registered and appropriated the disputed trademarks; as mere distributor and not as lawful owner, it obtained
the registrations and assignments of the disputed trademarks in violation of the terms of the Distributorship Agreement
and Sections 2-A and 17 of Republic Act No. 166, as amended. 21

On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR, KUNNAN appointed
SPORTS CONCEPT as its new distributor. Subsequently, KUNNAN also caused the publication of a Notice and Warning in
the Manila 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 file its Complaint for Infringement of Trademark and Unfair Competition with Preliminary
Injunction against KUNNAN.22

The RTC Ruling

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

The RTC found that SUPERIOR sufficiently proved that it was the first user and owner of the disputed trademarks in
the Philippines, based on the findings of the Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR
was "rightfully entitled to register the mark ‘KENNEX’ as user and owner thereof." It also considered the "Whereas clause"
of the Distributorship Agreement, which categorically stated that "KUNNAN intends to acquire ownership of [the] KENNEX
trademark registered by SUPERIOR in the Philippines." According to the RTC, this clause amounts to KUNNAN’s express
recognition of SUPERIOR’s ownership of the KENNEX trademarks. 24

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 filed on December 19, 2003 a Manifestation and Motion praying that
the decision of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the
Consolidated Petitions for Cancellation be made of record and be considered by the CA in resolving the case. 25The BLA
ruled in this decision –

In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its rights to the
mark "PRO KENNEX". It was proven that actual use by Respondent-Registrant is not in the concept of an owner but as a
mere distributor (Exhibits "I", "S" to "S-1", "P" and "P-1" and "Q" and "Q-2") and as enunciated in the case of Crisanta Y.
Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, "a mere distributor of a product bearing a trademark, even if permitted to use
said trademark has no right to and cannot register the said trademark."

WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer (KUNNAN) is the prior user and
owner of the trademark "PRO-KENNEX", the consolidated Petitions for Cancellation and the Notices of Opposition are
hereby GRANTED. Consequently, the trademark "PRO-KENNEX" bearing Registration Nos. 41032, 40326, 39254, 4730,
49998 for the mark PRO-KENNEX issued in favor of Superior Commercial Enterprises, Inc., herein Respondent-Registrant
under the Principal Register and SR No. 6663 are hereby CANCELLED. Accordingly, trademark application Nos. 84565 and
84566, likewise for the registration of the mark PRO-KENNEX are hereby REJECTED.

Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the Administrative Finance and
Human Resources Development Services Bureau (AFHRDSB) for appropriate action in accordance with this Decision and a
copy thereof be furnished the Bureau of Trademarks (BOT) for information and update of its record. 26

On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director General’s decision
on appeal dated December 8, 2004, denying SUPERIOR’s appeal, be given weight in the disposition of the case. 27 The
dispositive portion of the decision reads: 28

WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35 dated 30 October 2003
rendered by the Director of the Bureau of Legal Affairs. Accordingly, the instant appeal is DENIED and the appealed
decision is hereby AFFIRMED.

We take judicial notice that SUPERIOR questioned the IPO Director 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. 29 On December 3, 2007, the CA
decision was declared final 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, 1998.30 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 Certificates of Principal and Supplemental
Registrations and the "whereas clause" of the Distributorship Agreement insufficient to support SUPERIOR’s claim of
ownership over the disputed trademarks.
 The CA stressed that SUPERIOR’s possession of the aforementioned Certificates of Principal Registration does not
conclusively establish its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact of
registration alone;31 at best, registration merely raises a presumption of ownership that can be rebutted by contrary
evidence.32 The CA further emphasized that the Certificates of Supplemental Registration issued in 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. 33

In contrast with the failure of SUPERIOR’s evidence, the CA found that KUNNAN presented sufficient 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 confirmed 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;"

(2) that "KUNNAN will appoint the sole distributorship right to Superior in the Philippines;" and

(3) that "no third parties will be permitted to supply KENNEX PRODUCTS in the Philippines except only to Superior."

The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which states that "KUNNAN
intends to acquire ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines" without considering
the entirety of the Distributorship Agreement indicating that SUPERIOR had been merely appointed by KUNNAN as its
distributor.

Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment Agreement to
"acknowledge that KUNNAN is still the real and truthful owner of the [PRO KENNEX] trademarks," and that it "shall agree
that it will not use the right of the abovementioned trademarks to do anything which is unfavourable or harmful to
KUNNAN." To the CA, these provisions are clearly inconsistent with 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.
16634 and established jurisprudence, 35 the CA held that SUPERIOR – as an exclusive distributor – did not acquire any
proprietary interest in the principal’s (KUNNAN’s) trademark.

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 first consider the effect of the final and executory decision in the Registration Cancellation Case on the present
case. This decision - rendered after the CA decision for trademark infringement and unfair competition in CA-G.R. CV No.
60777 (root of the present case) - states:

As to whether respondent Kunnan was able to overcome the presumption of ownership in favor of Superior, the
former sufficiently established the fraudulent registration of the questioned trademarks by Superior. The Certificates of
Registration No. SR-4730 (Supplemental Register) and 33487 (Principal Register) for the KENNEX trademark were
fraudulently obtained by petitioner Superior. Even before PROKENNEX products were imported by Superior into the
Philippines, the same already enjoyed popularity in various countries and had been distributed worldwide, particularly
among the sports and tennis enthusiasts since 1976. Riding on the said popularity, Superior caused the registration thereof
in the Philippines under its name when it knew fully well that it did not own nor did it manufacture the PROKENNEX
products. Superior claimed ownership of the subject marks and failed to disclose in its application with the IPO that it was
merely a distributor of KENNEX and PROKENNEX products in the Philippines.

While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to Kunnan in
exchange for the appointment by the latter as its exclusive distributor, Superior however breached its obligation and failed
to assign the same to Kunnan. In a letter dated 13 February 1987, Superior, through Mr. Tan Bon Diong, misrepresented
to Kunnan that the latter cannot own trademarks in the Philippines. Thus, Kunnan was misled into assigning to Superior its
(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 fine, We see no error in the decision of the Director General of the IPO which affirmed the decision of the Director
of the Bureau of Legal Affairs canceling the registration of the questioned marks in the name of petitioner Superior and
denying its new application for registration, upon a finding that Superior is not the rightful owner of the subject marks.

WHEREFORE, the foregoing considered, the petition is DISMISSED.

The CA decided that the registration of the "KENNEX" and "PRO KENNEX" trademarks should be cancelled because
SUPERIOR was not the owner of, and could not in the first place have validly registered these trademarks. Thus, as of the
finality of the CA decision on December 3, 2007, these trademark registrations were effectively cancelled and SUPERIOR
was no longer the registrant of the disputed trademarks.

Section 22 of Republic Act No. 166, as amended ("RA 166"), 36 the law applicable to this case, defines trademark
infringement as follows:

Section 22. Infringement, what constitutes. — Any person who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection
withthe 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 file a case for infringement. Corollary to
this, Section 19 of RA 166 provides that any right conferred upon the registrant under the provisions of RA 166 37terminates
when the judgment or order of cancellation has become final, viz:

Section 19. Cancellation of registration. - If the Director finds that a case for cancellation has been made out he shall
order the cancellation of the registration. The order shall not become effective until the period for appeal has elapsed, or if
appeal is taken, until the judgment on appeal becomes final. When the order or judgment becomes final, any right
conferred by such registration upon the registrant or any person in interest of record shall terminate. Notice of cancellation
shall be published in the Official Gazette. [Emphasis supplied.]

Thus, we have previously held that the cancellation of registration of a trademark has the effect of depriving the
registrant of protection from infringement from the moment judgment or order of cancellation has become final. 38
 In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect of
SUPERIOR’s case has been rendered moot and academic in view of the finality of the decision in the Registration
Cancellation Case. In short, SUPERIOR is left without any cause of action for trademark infringement since the cancellation
of registration of a trademark deprived it of protection from infringement from the moment judgment or order of
cancellation became final. To be sure, in a trademark infringement, title to the trademark is indispensable to a valid cause
of action and such title is shown by its certificate of registration. 39 With its certificates of registration over the disputed
trademarks effectively cancelled with finality, SUPERIOR’s case for trademark infringement lost its legal basis and no
longer presented a valid cause of action.

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 finality to be the rightful owner of the disputed
trademarks in the Registration Cancellation Case. Even prior to the cancellation of the registration of the disputed
trademarks, SUPERIOR – as a mere distributor and not the owner – cannot assert any protection from trademark
infringement as it had no right in the first place to the registration of the disputed trademarks. In fact, jurisprudence holds
that in the absence of any inequitable conduct on the part of the manufacturer, an exclusive distributor who employs the
trademark of the manufacturer does not acquire proprietary rights of the manufacturer, and a registration of the
trademark by the distributor as such belongs to the manufacturer, provided the fiduciary relationship does not terminate
before application for registration is filed.40 Thus, the CA in the Registration Cancellation Case correctly held:

As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its name. Well-
entrenched in our jurisdiction is the rule that the right to register a trademark should be based on ownership. When the
applicant is not the owner of the trademark being applied for, he has no right to apply for the registration of the same.
Under the Trademark Law, only the owner of the trademark, trade name or service mark used to distinguish his goods,
business or service from the goods, business or service of others is entitled to register the same. An exclusive distributor
does not acquire any proprietary interest in the 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 first is "bar by prior judgment" under paragraph (b) of Rule
39, Section 47, and the second is "conclusiveness of judgment" under paragraph (c) thereof.

In the present case, the second concept – conclusiveness of judgment – applies. Under the concept of res judicata by
conclusiveness of judgment, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of
the rights of the parties or their privies in all later suits on points and matters determined in the former suit. 41 Stated
differently, facts and issues actually and directly resolved in a former suit cannot again be raised in any future case
between the same parties, even if the latter suit may involve a different cause of action. 42 This second branch of the
principle of res judicata bars the re-litigation of particular facts or issues in another litigation between the same parties on
a different claim or cause of action.43

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

To establish  trademark infringement, the following elements must be proven: (1) the validity of 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."44

Based on these elements, we find it immediately obvious that the second element – the plaintiff’s ownership of the
mark – was what the Registration Cancellation Case decided with finality. On this element depended the validity of the
registrations that, on their own, only gave rise to the presumption of, but was not conclusive on, the issue of ownership. 45

In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a mere
distributor and could not have been the owner, and was thus an invalid registrant of the disputed trademarks.
Significantly, these are the exact terms of the ruling the CA arrived at in the present petition now under our review. Thus,
whether with one or the other, the ruling on the issue of ownership of the trademarks is the same. Given, however, the
final and executory ruling in the Registration Cancellation Case on the issue of ownership that binds us and the parties,
any further discussion and review of the issue of ownership – although the current CA ruling is legally correct and can
stand on its own merits – becomes a pointless academic discussion.

On the Issue of Unfair Competition

Our review of the records shows that the neither the RTC nor the CA made any factual findings with respect to the
issue of unfair competition. In its Complaint, SUPERIOR alleged that: 46

17. In January 1993, the plaintiff learned that the defendant Kunnan Enterprises, Ltd., is intending to appoint the
defendant Sports Concept and Distributors, Inc. as its alleged distributor for sportswear and sporting goods bearing the
trademark "PRO-KENNEX." For this reason, on January 20, 1993, the plaintiff, through counsel, wrote the defendant
Sports Concept and Distributor’s Inc. advising said defendant that the trademark "PRO-KENNEX" was registered and
owned by the plaintiff herein.

18. The above information was affirmed by an announcement made by the defendants in The Manila Bulletin issue of
January 29, 1993, informing the public that defendant Kunnan Enterprises, Ltd. has appointed the defendant Sports
Concept and Distributors, Inc. as its alleged distributor of sportswear and sporting goods and equipment bearing the
trademarks "KENNEX and "PRO-KENNEX" which trademarks are owned by and registered in the name of plaintiff herein as
alleged hereinabove.

xxxx

27. The acts of defendants, as previously complained herein, were designed to and are of the nature so as to create
confusion with the commercial activities of plaintiff in the Philippines and is liable to mislead the public as to the nature
and suitability for their purposes of 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 defined as the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one person as the goods or business of another with the end and probable
effect of deceiving the public. The essential elements of unfair competition 47 are (1) confusing similarity in the general
appearance of the goods; and (2) intent to deceive the public and defraud a competitor. 48

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

In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e.
sportswear, sporting goods and equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith or fraud
imputable to KUNNAN in using the disputed trademarks. Specifically, SUPERIOR failed to adduce any evidence to show
that KUNNAN by the above-cited acts intended to deceive the public as to the identity of the goods sold or of the
manufacturer of the goods sold. In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., 50 we held that there can be
trademark infringement without unfair competition such as when the infringer discloses on the labels containing the mark
that he manufactures the goods, thus preventing the public from being deceived that the goods originate from the
trademark owner. In this case, no issue of confusion arises because the same manufactured products are sold; only the
ownership of the trademarks is at issue. Furthermore, 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: 51

NOTICE AND WARNING

Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned trademarks KENNEX and PRO
KENNEX for sportswear and sporting goods and equipment. Kunnan Enterprises Ltd. has registered the trademarks
KENNEX and PRO KENNEX in the industrial property offices of at least 31 countries worldwide where KUNNAN Enterprises
Ltd. has been selling its sportswear and sporting goods and equipment bearing the KENNEX and PRO KENNEX trademarks.

Kunnan Enterprises Ltd. further informs the public that it had terminated its Distributorship Agreement with Superior
Commercial Enterprises, Inc. on December 31, 1991. As a result, Superior Commercial Enterprises, Inc. is no longer
authorized to sell sportswear and sporting goods and equipment manufactured by Kunnan Enterprises Ltd. and bearing the
trademarks KENNEX and PRO KENNEX.

xxxx

In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its exclusive Philippine
distributor of sportswear and sporting goods and equipment bearing the trademarks KENNEX and PRO KENNEX. The public
is advised to buy sporting goods and equipment bearing these trademarks only from SPORTS CONCEPT AND
DISTRIBUTORS, INC. to ensure that the products they are buying are manufactured by Kunnan Enterprises Ltd. [Emphasis
supplied.]

Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods that SUPERIOR
asserts are being unfairly sold by KUNNAN under trademarks registered in SUPERIOR’s name, the latter is left with no
effective right to make a claim. In other words, with the CA’s final 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.
 SO ORDERED.

SOCIETE DES PRODUITS NESTLE, S.A. V. MARTIN

DECISION

CARPIO, J.:

The Case

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

The Facts

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

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

Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia and repacks the powdered milk into
three sizes of plastic packs bearing the name "NANNY." The packs weigh 80, 180 and 450 grams and are sold for ₱8.90,
₱17.50 and ₱39.90, respectively. NANNY is is also classified under Class 6 — "full cream milk for adults in [sic] all ages."
Dy, Jr. distributes and sells the powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.

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

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

The 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 the 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 figure 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 field, 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.

The foregoing has clearly shown that infringement in the instant case cannot be proven with the use of the "test of
dominancy" because the deceptive tendency of the unregistered trademark NANNY is not apparent from the essential
features of the registered trademark NAN.

However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971, Aug. 31, 1982, the Supreme Court took
the occasion of discussing what is implied in the definition of "infringement" when it stated: "Implicit in this definition is
the concept that the goods must be so related that there is likelihood either of confusion of goods or business. x x x But as
to whether trademark infringement exists depends for the most part upon whether or not the goods are so related that
the public may be, or is actually, deceived and misled that they came from the same maker or manufacturer. For non-
competing goods may be those which, though they are not in actual competition, are so related to each other that it might
reasonably be assumed that they originate from one manufacturer. Non-competing goods may also be those which, being
entirely unrelated, could not reasonably be assumed to have a common source. In the former case of related goods,
confusion of business could arise out of the use of similar marks; in the latter case of non-related goods, it could not."

Furthermore, in said case the Supreme Court as well discussed on when goods may become so related for purposes
of infringement when it stated: "Goods are related when they belong to the same class or have same descriptive
properties; when they possess the same physical attributes or essential characteristics with reference to their form,
composition, texture or quality. They may also be related because they serve the same purpose or are sold in grocery
stores. x x x

Considering that 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.

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 finding 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, flow through different trade channels, and since the possibility of confusion is unlikely in the general
appearances of each mark as a whole, the Court held in this case that they cannot be so related in the context of
infringement.

In applying the concept of related goods in the present case, the trial court haphazardly concluded that since plaintiff-
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."

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 ₱8.90, ₱17.50 and ₱39.90
per milk pack. The labels of NAN products are of the colors blue and white and have at the bottom portion an elliptical
shaped figure containing inside it a drawing of nestling birds, which is overlapped by the trade-name "Nestle." On the
other hand, the plastic packs NANNY have a drawing of milking cows lazing on a vast green field, back-dropped with
snow-capped mountains and using the predominant colors of blue and green. The word NAN are [sic] all in large, formal
and conservative-like block letters, while the word NANNY are [sic] all in small and irregular style of letters with curved
ends. With these material differences apparent in the packaging of both milk products, NANNY full cream milk cannot
possibly be an infringement of NAN infant milk.1avvphi1

Moreover, NAN infant milk preparation is more expensive than NANNY instant full cream milk. The cheaper price of
NANNY would give, at the very first instance, a considerable warning to the ordinary purchaser on whether he is buying an
infant milk or a full cream milk for adults. A cursory examination of the packaging would confirm the striking differences
between the products in question.

In view of the foregoing, we find that the mark NANNY is not confusingly similar to NAN. Dy therefore cannot be held
liable for infringement.

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

Issue

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

The 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 such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services, shall be liable to a civil action by the
registrant for any or all of the remedies herein provided.

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

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

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection
are committed regardless of whether there is actual sale of goods or services using the infringing material.
 In Prosource International, Inc. v. Horphag Research Management SA , the Court laid down the elements of
infringement under R.A. Nos. 166 and 8293:

In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following
constitute the elements of trademark infringement:

"(a) A trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine
Patent Office[;]

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

(c) [T]he trademark is used for identical or similar goods[;] and

(d) [S]uch act is done without the consent of the trademark registrant or assignee."

On the other hand, the elements of infringement under R.A. No. 8293 are as follows:

·The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade
name, the same need not be registered;

·The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;

·The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods,
business or services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business or services;

·The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive
purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the
idenity of such business; and

·It is without the consent of the trademark or trade name owner or the assignee thereof.

Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement. There are
two types of confusion in trademark infringement: confusion of goods and confusion of business. In  Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, the Court distinguished the two types of confusion:

Callman notes two types of confusion. The first is the confusion of goods "in which event the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the other." In which case,
"defendant’s goods are then bought as the plaintiff’s, and the poorer quality of the former reflects 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."

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

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

In cases involving trademark infringement, no set of rules can be deduced. Each case must be decided on its own
merits. Jurisprudential precedents must be studied in the light of the facts of each particular case. In McDonald’s
Corporation v. MacJoy Fastfood Corporation, the Court held:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules
can be deduced because each case must be decided on its merits. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point.
 In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In recent cases
with similar factual milieus, the Court has consistently applied the dominancy test. In Prosource International, Inc., the
Court applied the dominancy test in holding that "PCO-GENOLS" is confusingly similar to "PYCNOGENOL." The Court held:

The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity
between the marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:

"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which on evidence, appears to be
merely descriptive and furnish no indication of the origin of the article and hence, open for trademark registration by the
plaintiff through combination with another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3." Furthermore,
although the letters "Y" between P and C, "N" between O and C and "S" after L are missing in the [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, identified as such by their public
consumers. And although there were dissimilarities in the trademark due to the type of letters used as well as the size,
color and design employed on their individual packages/bottles, still the close relationship of the competing 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 first time the Court takes into account the aural effects of the words and letters contained in the marks
in determining the issue of confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al. , cited
in 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."

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.

xxxx

Applying the dominancy test to the instant case, the Court finds that herein petitioner’s "MCDONALD’S" and
respondent’s "MACJOY" marks are are confusingly similar with each other that an ordinary purchaser can conclude an
association or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant
features. x x x

For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and aurally catches the attention of the
consuming public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries,"
"McSpaghetti," "McDo," "Big Mac" and the rest of the MCDONALD’S marks which all use the prefixes Mc and/or Mac.

Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the
respondent’s trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the
International Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the
petitioner’s trademark registration for the MCDONALD’S marks in the Philippines covers goods which are similar if not
identical to those covered by the respondent’s application.

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 x x x has relied on the dominancy test rather than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. Courts will consider more the aural and visual impressions
created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market
segments.

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

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

xxxx

The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which
defines infringement as the "colorable imitation of a registered mark x x x or a dominant feature thereof."

Applying the dominancy test, the Court finds that respondents’ use of the "Big Mak" mark results in likelihood of
confusion. First, "Big Mak" sounds exactly the same as "Big Mac." Second, the first word in "Big Mak" is exactly the same
as the first word in "Big Mac." Third, the first two letters in "Mak" are the same as the first two letters in "Mac." Fourth, the
last letter "Mak" while a "k" sounds the same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k"
replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."

In Societe Des Produits Nestle, S.A v. Court of Appeals , the Court applied the dominancy test in holding that "FLAVOR
MASTER" is confusingly similar to "MASTER ROAST" and "MASTER BLEND." The Court held:

While this Court agrees with the Court of Appeals’ detailed enumeration of differences between the respective
trademarks of the two coffee products, this Court cannot agree that totality test is the one applicable in this case. Rather,
this Court believes that the dominancy test is more suitable to this case in light of its peculiar factual milieu.

Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in the realities of the marketplace. The
totality or holistic test only relies on visual comparison between two trademarks whereas the dominancy test relies not
only on the visual but also on the aural and connotative comparisons and overall impressions between the two trademarks.

For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:

From the evidence at hand, it is sufficiently established that the word MASTER is the dominant feature of 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. x x x In due time, because of these advertising schemes the mind of the
buying public had come to learn to associate the word MASTER with the opposer’s goods.

x x x. 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.

Applying the dominancy test in the present case, the Court finds 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 first three letters of "NANNY" are exactly the same as the letters of "NAN." When "NAN" and "NANNY" are
pronounced, the aural effect is confusingly similar.

In determining the issue of confusing similarity, the Court takes into account the aural effect of the letters contained
in the marks. In Marvex Commercial Company, Inc. v. Petra Hawpia & Company , the Court held:

It is our considered view that the trademarks "SALONPAS" and "LIONPAS" are confusingly similar in sound.

Both these words have the same suffix, "PAS", which is used to denote a plaster that adheres to the body with
curative powers. "PAS," being merely descriptive, furnishes no indication of the origin of the article and therefore is open
for appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31, 1966) and may properly become the
subject of a trademark by combination with another word or phrase.
 xxxx

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

The scope of protection afforded to registered trademark owners is not limited to protection from infringers with
identical goods. The scope of protection extends to protection from infringers with related goods, and to market areas that
are the normal expansion of business of the registered trademark owners. Section 138 of R.A. No. 8293 states:

Certificates of Registration. — A certificate of registration of a mark shall be prima facie evidence of validity of the
registration, the 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. (Emphasis supplied)

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

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

The Court agrees with the lower courts that there are differences between NAN and NANNY: (1) NAN is intended for
infants while NANNY is intended for children past their infancy and for adults; and (2) NAN is more expensive than NANNY.
However, as the registered owner of the "NAN" mark, Nestle should be free to use its mark on similar products, in
different segments of the market, and at different price levels. In 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

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.

The registered trademark owner may use his mark on the same or similar products, in different
segments of the market, and at different price levels depending on variations of the products for specific
segments of the market. The Court has recognized that the registered trademark owner enjoys protection in
product and market areas that are the normal potential expansion of his business . Thus, the Court has
declared:

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

WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision and 4 April 2006 Resolution
of the Court of Appeals in CA-G.R. CV No. 62730 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.
 Republic of the Philippines
SUPREME COURTBaguio City

SECOND DIVISION

G.R. No. 164321               March 23, 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, officers, employees and/or occupants of its premises located at S-7, Ed &
Joe's Commercial Arcade, No. 153 Quirino Avenue, Parañaque City, Respondents.

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

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.

RESOLUTION

PERALTA, J.:

For resolution are the twin Motions for Reconsideration 1 filed by petitioner and petitioner-intervenor from the Decision
rendered in favor of respondents, dated November 30, 2006.

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 filed with Branch 24 of the Regional Trial Court (RTC) of Manila an
application for the issuance of search warrants against an outlet and warehouse operated by 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 warrants5 were issued by the RTC and were served on the premises of respondents. As a result of the
raid, more than 6,000 pairs of shoes bearing the "S" logo were seized.

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 filed a petition for certiorari 7 with the Court of Appeals (CA) assailing the RTC Order. On
November 17, 2003, the CA issued a Decision8 affirming the ruling of the RTC.

Subsequently, petitioner filed the present petition9 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.

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.10
 In the meantime, petitioner-intervenor filed a Petition-in-Intervention 11 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 Decision12 dismissing the petition.

Both petitioner and petitioner-intervenor filed 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.13

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;

(b) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW IN HOLDING THAT
THERE IS NO PROBABLE CAUSE FOR TRADEMARK INFRINGEMENT; AND

(c) THE COURT OF APPEALS SANCTIONED THE TRIAL COURT’S DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDINGS WHEN IT UPHELD THE QUASHAL OF THE SEARCH WARRANT ON THE BASIS
SOLELY OF A FINDING THAT THERE IS NO CONFUSING SIMILARITY.14

A perusal of the motions submitted by petitioner and petitioner-intervenor would show that the primary issue posed
by them dwells on the issue of whether or not respondent is guilty of trademark infringement.

After a thorough review of the arguments raised herein, this Court reconsiders its earlier decision.

The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 8293. Specifically,
Section 155 of R.A. No. 8293 states:

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

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection
are committed regardless of whether there is actual sale of goods or services using the infringing material. 15

The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause confusion. In
determining similarity and likelihood of confusion, jurisprudence has developed tests  the Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the purchasing public.
Duplication or imitation is not necessary; neither is it required that the mark sought to be registered suggests an effort to
imitate. Given more consideration are the aural and visual impressions created by the marks on the buyers of goods,
giving little weight to factors like prices, quality, sales outlets, and market segments. 16

In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must
focus not only on the predominant words, but also on the other features appearing on both labels so that the observer
may draw conclusion on whether one is confusingly similar to the other. 17

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion,
viz.: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase
one product in the belief that he was purchasing the other; and (2) confusion of business (source or origin confusion),
where, although the goods of the parties are different, the product, the mark of which registration is applied for by one
party, is such as might reasonably be assumed to originate with the registrant of an earlier product, and the public would
then be deceived either into that belief or into the belief that there is some connection between the two parties, though
inexistent.18

Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by respondent in its
Strong rubber shoes infringes on the mark already registered by petitioner with the IPO. While it is undisputed that
petitioner’s stylized "S" is within an oval design, to this Court’s mind, the dominant feature of the trademark is the stylized
"S," as it is precisely the stylized "S" which catches the eye of the purchaser. Thus, even if respondent did not use an oval
design, the mere fact that it used the same stylized "S", the same being the dominant feature of petitioner’s trademark,
already constitutes infringement under the Dominancy Test.

This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be considered as
highly identifiable to the products of petitioner alone. The CA even supported its conclusion by stating that the letter "S"
has been used in so many existing trademarks, the most popular of which is the trademark "S" enclosed by an inverted
triangle, which the CA says is identifiable to Superman. Such reasoning, however, misses the entire point, which is that
respondent had used a stylized "S," which is the same stylized "S" which petitioner has a registered trademark for. The
letter "S" used in the Superman logo, on the other hand, has a block-like tip on the upper portion and a round elongated
tip on the lower portion. Accordingly, the comparison made by the CA of the letter "S" used in the Superman trademark
with petitioner’s stylized "S" is not appropriate to the case at bar.

Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the font and the
size of the lettering, the stylized "S" utilized by respondent is the very same stylized "S" used by petitioner; a stylized "S"
which is unique and distinguishes petitioner’s trademark. Indubitably, the likelihood of confusion is present as purchasers
will associate the respondent’s use of the stylized "S" as having been authorized by petitioner or that respondent’s product
is connected with petitioner’s business.

Both the RTC and the CA applied the Holistic Test in ruling that respondent had not infringed petitioner’s trademark.
For its part, the RTC noted the following supposed dissimilarities between the shoes, to wit:

1. The mark "S" found in Strong Shoes is not enclosed in an "oval design."

2. The word "Strong" is conspicuously placed at the backside and insoles.

3. The hang tags and labels attached to the shoes bears the word "Strong" for respondent and "Skechers U.S.A." for
private complainant;

4. Strong shoes are modestly priced compared to the costs of Skechers Shoes. 19

While there may be dissimilarities between the appearances of the shoes, to this Court’s mind such dissimilarities do
not outweigh the stark and blatant similarities in their general features. As can be readily observed by simply comparing
petitioner’s Energy20 model and respondent’s Strong21 rubber shoes, respondent also used the color scheme of blue, white
and gray utilized by petitioner. Even the design and "wavelike" pattern of the midsole and outer sole of respondent’s shoes
are very similar to petitioner’s shoes, if not exact patterns thereof. At the side of the midsole near the heel of both shoes
are two elongated designs in practically the same location. Even the outer soles of both shoes have the same number of
ridges, five at the back and six in front. On the side of respondent’s shoes, near the upper part, appears the stylized "S,"
placed in the exact location as that of the stylized "S" on petitioner’s shoes. On top of the "tongue" of both shoes appears
the stylized "S" in practically the same location and size. Moreover, at the back of petitioner’s shoes, near the heel counter,
appears "Skechers Sport Trail" written in white lettering. However, on respondent’s shoes appears "Strong Sport Trail"
noticeably written in the same white lettering, font size, direction and orientation as that of petitioner’s shoes. On top of
the heel collar of petitioner’s shoes are two grayish-white semi-transparent circles. Not surprisingly, respondent’s shoes
also have two grayish-white semi-transparent circles in the exact same location.lihpwa1

Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test, ruled that
there was no colorable imitation, when it cannot be any more clear and apparent to this Court that there is colorable
imitation. The dissimilarities between the shoes are too trifling and frivolous that it is indubitable that respondent’s
products will cause confusion and mistake in the eyes of the public. Respondent’s shoes may not be an exact replica of
petitioner’s shoes, but the features and overall design are so similar and alike that confusion is highly likely.1avvphi1

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

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

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

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his
goods or business from actual market competition with identical or similar products of the parties, but extends to all cases
in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where
prospective purchasers would be misled into thinking that the complaining party has extended his business into the field
(see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). x x x 25

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

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

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

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

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.:

Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of Court, to set aside and reverse the
June 16, 2005 Decision1 of the Court of Appeals in CA-G.R. CR No. 28308, which affirmed the September 23, 2003
Decision2 of the Regional Trial Court (RTC) of Manila, Branch 24 in Criminal Case No. 00-184454.

On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma) was charged before the
RTC for Infringement under Section 155 in relation to Section 170 of Republic Act No. 8293 or the Intellectual Property
Code. The accusatory portion of the Information reads:

That sometime in September 25, 1998 and prior thereto at Sta. Cruz, Manila and within the jurisdiction of this
Honorable Court, the above-named accused did then and there, knowingly, maliciously, unlawfully and feloniously engage
in the distribution, sale, [and] offering for sale of counterfeit Marlboro cigarettes which had caused confusion, deceiving
the public that such cigarettes [were] Marlboro cigarettes and those of the Telengtan Brothers and Sons, Inc., doing
business under the style of La Suerte Cigar and Cigarettes Factory, the exclusive manufacturer of Marlboro Cigarette in the
Philippines and that of Philip Morris Products, Inc. (PMP7) the registered owner and proprietor of the MARLBORO
trademark together with the devices, including the famous-Root Device, to their damage and prejudice, without the
accused seeking their permit or authority to manufacture and distribute the same. 3

On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a warrant of arrest against Gemma,
but lifted4 and set aside5 the same after Gemma voluntarily surrendered on August 4, 2000, and filed a cash bond for ₱
12,000.00.

Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000. 6 After the pre-trial conference on
February 13, 2001,7 trial on the merits ensued.

The prosecution called to the witness stand the following: Roger Sherman Slagle, the Director of Operations of Philip
Morris Malaysia, and Philip Morris Philippines, Inc.’s (PMPI) product/brand security expert, to testify that according to his
examination, the products they seized at the subject premises were counterfeit cigarettes; 8 as well as Jesse Lara, who, as
then Senior Investigator III at the Intellectual Property Rights (IPR) Unit of the Economic Intelligence and Investigation
Bureau (EIIB), Department of Finance, led the investigating team, to testify on the events that led to the arrest of
Gemma.9 The prosecution also presented the billing accountant of Quasha Ancheta Peña & Nolasco Law Office (Quasha
Law Office), Juliet Flores, to show that PMPI, being one of Quasha Law Office’s clients, paid the amount of $4,069.12 for
legal services rendered.10 The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a senior law partner at Quasha
Law Office, who testified that as the duly appointed Attorney-in-Fact of PMPI, he was in charge of the EIIB search
operation in the subject premises. Atty. Ancheta said that while he was not personally present during the implementation
of the search warrant, he sent Atty. Leonardo Salvador, who constantly reported the developments to him. 11

The facts, as succinctly summarized by the Court of Appeals, are as follows:

On September 10, 1998, Jesse S. Lara, then Senior Investigator III at the Intellectual Property Rights (IPR) Unit of
the Economic Intelligence and Investigation Bureau (EIIB), Department of Finance, received reliable information that
counterfeit "Marlboro" cigarettes were being distributed and sold by two (2) Chinese nationals, Johnny Sia and Jessie
Concepcion, in the areas of Tondo, Binondo, Sta. Cruz and Quiapo, Manila. A mission team formed by EIIB, including Lara,
conducted surveillance operation to verify the report. EIIB agents Leonardo Villanueva and Jigo Madrigal did a "test-buy"
on the different sari-sari stores of Manila located in Quiapo, Tondo, Sta. Cruz and Blumentritt areas and took samples of
"Marlboro" cigarettes sold therein. During the surveillance, the container van delivering the "Marlboro" packed in black
plastic bags was seen parked at 1677 Bulacan corner Hizon Streets, Sta. Cruz, Manila [(the subject premises)]. Upon
inquiry from the Barangay Chairman, they also learned that the place is owned by a certain Mr. Jackson Ong.

The EIIB team coordinated with officers of Philip Morris, Inc., owner of the trademark Marlboro Label in the
Philippines duly registered with the Philippine Patents Office and subsequently with the Intellectual Property Office (IPO)
since 1956. Initial examination made by Philip Morris, Inc. on those random sample purchases revealed that the cigarettes
were indeed fake products unauthorized by the company. With official indorsement by the EIIB, Senior Investigator Lara
filed an application for search warrant before the Regional Trial Court of Dasmariñas, Cavite, Branch 90.

On September 24, 1998, Executive Judge Dolores L. Español issued a search warrant after finding probable cause to
believe that Mr. Jackson Ong has in his possession/control in the premises located at 1675-1677 Bulacan St. cor. M. Hizon
St., Sta. Cruz, Manila, the following properties:

"Substantial number of fake locally made and imported fake cigarettes bearing the Marlboro brand, together with the
corresponding labels, cartons, boxes and other packaging as well as receipts, invoices and other documents relative to the
purchase, sale, and distribution of the aforesaid fake Marlboro cigarettes."

On September 25, 1998, the EIIB team led by Senior Investigator Lara implemented the search warrant, together
with SPO2 Rommel P. Sese of the Western Police District (WPD) as representative of the Philippine National Police (PNP),
Barangay Chairman Ernesto Traje, Sr., Barangay Kagawad Vivian V. Rallonza and Atty. Leonardo P. Salvador who was sent
by [Quasha Peña & Nolasco Law Office,] the law firm engaged by Philip Morris, Inc. They proceeded to the subject
premises but Jackson Ong, the alleged owner, was not there. It was accused, who is supposedly either the spouse or
common-law wife of Jackson Ong, who entertained them. At first, accused refused to allow them entry into the premises
but eventually the team was able to search the premises and found Marlboro cigarettes stocked in several boxes
containing fifty (50) reams inside each box which were packed in black plastic sacks like in "balikbayan boxes." The
"Inventory" and "Certification In the Conduct of Search" were duly accomplished and signed by the members of the EIIB
and the other representatives present during the actual search (SPO2 Sese, Jess Lara, Traje, Sr., Henry Mariano, Isidro
Burgos and Atty. Salvador). Accused signed her name in the said documents as "Gemma Ong," as the
Owner/Representative, while a certain employee, Girlie Cantillo, also signed as witness.

On September 28, 1998, a Return of Search Warrant was submitted by the EIIB to the issuing court stating that the
articles seized pursuant to the warrant were stored in the premises of the EIIB and requesting that EIIB be granted
temporary custody of the goods. Acting on the Urgent Motion To Transfer Custody of Confiscated Articles filed by Philip
Morris Products, Inc. (PMPI) of Virginia, U.S.A., Executive Judge Dolores L. Español ordered the custody of the seized
goods transferred from EIIB to PMPI c/o Quasha Ancheta Peña and Nolasco Law Office, the Attorney-in-Fact of PMPI.
Judge Español subsequently also issued an order dated October 15, 1998 authorizing PMPI to secure and take out samples
of the unauthorized products from the confiscated cartons/boxes of Marlboro cigarettes which are stored at Four Winds
Phils. Inc. warehouse located at No. 2241 Pasong Tamo Extension, Makati City under the direct and personal control and
supervision of Sheriff IV Tomas C. Azurin. PMPI had earlier sought such order from the court for the purpose of laboratory
analysis and scientific testing of the samples from the confiscated cigarettes.

On the basis of the results of the examination conducted by PMPI on the samples obtained from the confiscated
boxes of cigarettes bearing the Marlboro brand, which confirmed the same to be unauthorized products and not genuine
Marlboro cigarettes, the EIIB filed a case for Violation of Sections 155 and 168 in relation to Section 170 of Republic Act
No. 8293 against Jackson Ong who is not an authorized distributor of Marlboro products in the Philippines. 12

After the prosecution rested its case, the defense filed a Demurrer to Evidence, 13 which the RTC denied on March 26,
2003.14 The defense moved for a reconsideration of this order but the same was denied on April 22, 2003. 15

Gemma, as the lone witness for the defense, then took the witness stand. She said that she is married to Co Yok
Piao, a Chinese national, but she still uses her maiden name Catacutan. 16 She denied that she is the Gemma Ong accused
in this case. She testified that she was arrested on August 4, 2000, without the arresting officers asking for her name. She
said that when she pleaded to be released, she was instructed to post a cash bond, which she did in the amount of ₱
12,000.00. Gemma averred that when she posted her bond and signed her certificate of arraignment, she did so under her
real name Maria Teresa Gemma Catacutan, as opposed to the signatures in the Inventory and Certification in the Conduct
of Search (search documents), which she denied signing. She claimed that she was not able to bring up her defense of
mistaken identity early on as she did not know when the proper time to raise it was. She avowed that she was not
interrogated by the police prior to her arrest, despite the two-year gap between it and the search of the subject premises.
She alleged that she did not know Jackson Ong and that the prosecution witnesses, whom she first saw during her trial,
couldn’t even point to her as the person present during the raid when they testified in court. Gemma further asseverated
that while she could not remember where she was on September 25, 1998, she was sure that she was not at the subject
premises on that date. Gemma presented her Identification Card issued by the Professional Regulation Commission (PRC)
to show that she is a dentist by profession, although she claimed that she is a businessperson in practice. She said that
she used to buy and sell gear fabrics, t-shirts, truck materials, and real estate 17 under the business name "Fascinate
Trading" based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased operations in February 1998. 18 Gemma denied
ever having engaged in the manufacture and sale of any kind of cigarettes and claimed that she could not even distinguish
between a fake and a genuine Marlboro cigarette. 19

On September 30, 2003, the RTC convicted Gemma of the crime as charged. The dispositive portion of its Decision
reads:

Accordingly, this Court finds accused Gemma Catacutan guilty beyond reasonable doubt of violation of Section 155 in
relation to Section 170 of Republic Act No. 8293 and hereby sentences her to suffer the penalty of imprisonment of two
(2) years and to pay a fine of Fifty Thousand (₱ 50,000.00) Pesos.

Accused is further directed to indemnify private complainant the sum of US$4,069.12 or its peso equivalent, as actual
damages.

The records of the case as against Jackson Ong is hereby ordered archived pending his arrest.

With costs against accused Gemma Catacutan.20

In resolving the case, the RTC narrowed down the issue to whether Gemma Catacutan was the same accused
identified as Gemma Ong. The RTC answered this in the affirmative as it found Gemma’s defense of mistaken identity as
untenable, especially since she claimed to be a professional. The RTC explained:

Ranged against the positive and forthright declaration of the prosecution witnesses, the mere uncorroborated and
self-serving denials of the accused cannot stand. (People vs. Hortaleza, 258 SCRA 201)
 We note in disbelief that it was only in the hearing of November 26, 2001, that accused’[s] former lawyer manifested
that accused is known as Gemma Catacutan never as Gemma Ong (tsn, November 26, 2001, p. 3) and as admitted by her,
she never revealed her true identity when arrested, when she posted her bail bond and even during her arraignment.

She could have protested at the time of her arrest that they were arresting the wrong person but this she did not do.
She proceeded to post a bond for her provisional liberty, hired a lawyer to defend her but failed to divulge the very
information that could have led to an early dismissal of the case, if true.

Her pretensions of ignorance as to the proper stage of when to explain (tsn, May 26, 2003), p. 13 can hardly be
given credit. A dentist by profession, it is utterly incredible that she remained meek all through-out her arrest and the
posting of her bail bond.21

The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale and manufacture of
Marlboro cigarettes, the address of her business "Fascinate Trading" is registered as 1677 Bulacan Street, Sta. Cruz,
Manila, the same property raided by the EIIB that contained the counterfeit cigarettes. 22

Aggrieved, Gemma appealed the RTC’s decision to the Court of Appeals based on the following grounds:

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.

THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN CONVICTING ACCUSED-APPELLANT DESPITE
THE UTTER AND PATHETIC LACK OF EVIDENCE TO SUSTAIN THE PROSECUTION’S LAME, SHALLOW AND
UNCONFOUNDED THEORY OF GUILT.23

The Court of Appeals found Gemma’s appeal to be unmeritorious. It said that Gemma was positively identified by the
prosecution witnesses as the woman who entertained them during the search of the subject premises on September 25,
1998, and the woman who signed the Certification in the Conduct of Search and Inventory. The Court of Appeals agreed
with the RTC’s rejection of Gemma’s defense of mistaken identity, as she should have raised it at the earliest opportunity,
which was at the time of her arrest, the posting of her bail bond, or during her arraignment. The Court of Appeals held
that the amendment of the prosecution witnesses’ affidavits was explained during the hearing, and although the original
affidavits were the ones marked during the pre-trial, the amended ones provided the basis for the filing of the Information
against Gemma and her co-accused Jackson Ong. The Court of Appeals also noted that the March 20, 2000 Resolution of
the State Prosecutor specifically mentioned that the search warrant was served on Gemma Ong. The Court of Appeals then
proclaimed that in the hierarchy of evidence, the testimony of the witness in court commands greater weight than his
written affidavit.24

The Court of Appeals affirmed the conviction of Gemma for trademark infringement under Section 155 of Republic Act
No. 8293, as the counterfeit goods seized by the EIIB were not only found in her possession and control, but also in the
building registered under her business, Fascinate Trading. The Court of Appeals said that the prosecution had satisfactorily
proven Gemma’s commission of the offense since the unauthorized use of the trademark Marlboro, owned by PMPI, was
clearly intended to deceive the public as to the origin of the cigarettes being distributed and sold, or intended to be
distributed and sold. The Court of Appeals further sustained the penalty and damages imposed by the RTC for being in
accord with the law and facts.25
 Gemma is now before this Court with the following assignment of errors:

A.

THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION WITNESSES
IDENTIFYING PETITIONER AS PRESENT AT THE TIME AND PLACE WHEN THE SEARCH AND SEIZURE TOOK PLACE.

B.

THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION WITNESSES THAT
THEY SAW PETITIONER SIGN HER NAME AS "GEMMA ONG" AS OWNER/CLAIMANT/REPRESENTATIVE (OF THE ARTICLES
SEIZED) ON THE SEARCH WARRANT (EXH. "A"), CERTIFICATION IN THE CONDUCT OF SEARCH (EXH. "B") AND
INVENTORY OF THE S[E]IZED ARTICLES AT THE TIME OF THE SEARCH (EXH. "D").

C.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER’S SIGNATURE IN EXHIBITS "A", "B" AND "C"
ARE NOT HERS BUT WERE FORGED, BEING COMPLETELY AND PATENTLY DISSIMILAR TO HER TRUE AND REAL
SIGNATURE AS SHOWN IN HER OFFICIAL I.D AS PROFESSIONAL DENTIST.

D.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF THE PROSECUTION WITNESSES
WHICH DID NOT MENTION PETITIONER’S PRESENCE AT THE TIME AND PLACE OF THE SEARCH CANNOT TAKE
PRECEDENCE OVER THEIR CONTRARY TESTIMONIES IN COURT THAT SHE WAS PRESENT AND IN FACT THE OCCUPANT
AND OWNER OF THE PREMISES FROM WHICH SHE INITIALLY BLOCKED THEIR ENTRY INTO.

E.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS THE VERY SAME PERSON WHO WAS
CAUGHT IN POSSESSION AND CONTROL OF THE PREMISES WHERE THE COUNTERFEIT ARTICLES WERE SEIZED
BECAUSE SHE ALLEGEDLY NEVER PROTESTED BEING WRONGFULLY ACCUSED AT THE TIME OF HER ARREST ON 4
AUGUST 2000, WHEN SHE POSTED HER CASH BOND AND WHEN SHE EVEN SIGNED HER NAME AS MA. TERESA GEMMA
CATACUTAN IN THE WAIVER, UNDERTAKING AND CERTIFICATE OR ARRAIGNMENT, ALL IN THE NAME OF THE ACCUSED
AS "GEMMA ONG, a.k.a. MA. THERESA CATACUTAN."

F.

THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR FAILURE OF THE PROSECUTION TO
PROVE THE GUILT OF THE ACCUSED-APPELLANT BEYOND REASONABLE DOUBT.26

Gemma argues that if it were true that she was in the subject premises when it was raided on September 25, 1998,
then her name and presence would have been mentioned in the respective affidavits of Slagle and Atty. Ancheta; and the
EIIB agents who conducted the search would have confronted, investigated, or arrested her. Gemma insists that the fact
that her name was only mentioned for the first time in the amended affidavits yields to the conclusion that she was not in
the subject premises when it was searched and that the testimonies of the prosecution witnesses were perjured. 27

Gemma further claims that the courts below were wrong in finding that she never protested that she was mistakenly
identified. She claims that she was arrested without the benefit of a preliminary investigation and all she wanted to do at
that point was to "get out [of] the clutches of overzealous and eager beaver policemen who were exuberant in arresting
an innocent party like"28 her. Gemma also explains that her non-protest during her arraignment was upon the advice of her
former lawyer, who said that he would correct it in the proper time during the trial.

Respondent People of the Philippines, in its comment, 29 avers that there are only two issues to be resolved in this
case, to wit:

1. THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES QUESTIONS OF FACT WHICH ARE NOT PROPER
FOR REVIEW UNDER RULE 45 OF THE REVISED RULES OF COURT.

2. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONER’S CONVICTION FOR VIOLATION OF SECTION
155 IN RELATION TO SECTION 170 OF R.A. 8293 (INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES). 30

Respondent claims that a perusal of the issues in Gemma’s petition readily discloses that only questions of fact have
been raised, which are not reviewable in an appeal by certiorari. 31 Respondent asseverates that Gemma’s conviction was
warranted as the prosecution had sufficiently established her presence during the search of the subject premises where
she signed the search documents as "Gemma Ong." Moreover, the respondent avers, Gemma failed to timely protest her
arrest and raise her claim that she is not Gemma Ong. 32
 Issues

A study of the pleadings filed before this Court shows that the only issues to be resolved are the following:

1. Whether or not accused-appellant’s petition for review on certiorari under Rule 45 of the Rules of Court is fatally
defective as it raises questions of fact; and

2. Whether or not Gemma’s guilt was proven beyond reasonable doubt in light of her alleged mistaken identity.

This Court’s Ruling

Procedural Issue

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. 33 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. 34 In Armed Forces of the Philippines Mutual Benefit
Association, Inc. v. Court of Appeals, 35 we said that although submission of issues of fact in an appeal by certiorari taken
to this Court is ordinarily 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.36 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 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. (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 five (5) years and a fine ranging from Fifty thousand pesos (₱ 50,000) to Two
hundred thousand pesos (₱ 200,000), 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., 38 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. 39

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 certificates of registration issued by the
Intellectual Property Office of the Department of Trade and Industry. 40
 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 findings, Gemma has posited only a single defense, from the RTC all the way up to this Court: that
she is not the Gemma Ong named and accused in this case. She bases this claim on the alleged discrepancies in the
prosecution witnesses’ original affidavits 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 affidavit 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 affidavits are often incomplete. They do not
purport to contain a complete compendium of the details of the event narrated by the affiant. Thus, our rulings generally
consider sworn statements taken out of court to be inferior to in court testimony. x x x. 42

A reading of the original affidavits 43 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 firm like
the Quasha Law Office, the firm 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 filed against her on the basis of the
amended affidavits, thus, she could have filed 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 identified, 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 officers were looking for. In addition, her own lawyer, Atty. Maglinao, brought up the fact that she was not
Gemma Ong, only for the purpose of 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:

No, your Honor. May we request to correct the information from Gemma Ong to Gemma Catacutan. 44

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, 45 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." x x x. 46

The prosecution witnesses, contrary to Gemma’s claim, had positively identified 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 affidavit, 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 affidavit 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 affidavit,
when in fact it did not appear in the first affidavit?

A When we arrived she was there and she was very nervous and upset.

xxxx

A It is very clear to me when I arrived there that she was somehow involved. 47 (Emphases ours.)

Lara on the other hand, even pointed to her and thus positively identified her to be the one who had signed the
search documents,48 as the owner of the subject premises, to wit:

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.

xxxx

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.

 Q : Your Honor, during the pre-trial conference, it was previously marked as Exhibit "D-1". Mr. Witness, I also see
here a Verification but there also exist an entry below the name and I quote "Owner/Claimant/Representative", there
appears a handwritten name Gemma Ong and a signature above it, are you familiar with this person which appears to be
Gemma Ong?

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

xxxx

Q : Mr. Witness, in this document which is the certification 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 identified 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.50

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

While Gemma claims she does not know Jackson Ong, the subject premises where the counterfeit cigarettes were
seized was registered under her admitted business "Fascinate Trading." 54 Aside from the bare allegation that she had
stopped operations in the subject premises as early as February 1998, she has neither proven nor shown any evidence
that she had relinquished control of the building after that date. Gemma’s allegation that she did not sign the search
documents, and that the signatures therein did not match the signature on her PRC identification card, must also be struck
down as she has not shown proof that her PRC signature is the only way she has ever signed her name. She could have,
at the very least, gotten a 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 identification card could have been written by one and the same person; instead,
she relied on the flimsy contention that the two signatures were, on their face, different.1awp++i1

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.

Republic of the Philippines

SUPREME COURT
Manila

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.:

It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen
of the offense of infringement of a registered trademark. The acquittal of the accused should follow if the allegedly
infringing mark is not likely to cause confusion. Thereby, the evidence of the State does not satisfy the quantum of proof
beyond reasonable doubt.

Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 2007 1 and November 22,
2007,2whereby the Court of Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated
filing of the appellant's brief, and denied his motion for reconsideration. Thereby, the decision rendered on February 13,
2006 in Criminal Case No. 00-0318 and Criminal Case No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias
City (RTC) convicting him for two counts of infringement of trademark were affirmed. 3

Antecedents

On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Piñas City, charging Diaz
with violation of Section 155, in relation to Section 170, of Republic Act No. 8293, also known as the  Intellectual Property
Code of the Philippines  (Intellectual Property Code), to wit:

Criminal Case No. 00-0318

That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this
Honorable Court, the abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred
to as LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating Levi’s registered trademarks or dominant features thereof such
as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE
DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for sale,
manufactured, distributed counterfeit patches and jeans, including other preparatory steps necessary to carry out the sale
of said patches and jeans, which likely caused confusion, mistake, and /or deceived the general consuming public, without
the consent, permit or authority of the registered owner, LEVI’S, thus depriving and defrauding the latter of its right to the
exclusive use of its trademarks and legitimate trade, to the damage and prejudice of LEVI’S.

CONTRARY TO LAW.4

Criminal Case No. 00-0319

That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this
Honorable Court, the abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred
to as LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating Levi’s registered trademarks or dominant features thereof such
as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE
DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for sale,
manufactured, distributed counterfeit patches and jeans, including other preparatory steps necessary to carry out the sale
of said patches and jeans, which likely caused confusion, mistake, and /or deceived the general consuming public, without
the consent, permit or authority of the registered owner, LEVI’S, thus depriving and defrauding the latter of its right to the
exclusive use of its trademarks and legitimate trade, to the damage and prejudice of LEVI’S.

CONTRARY TO LAW.5

The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty  to each information on June 21,
2000.6

1.

Evidence of the Prosecution

Levi Strauss and Company (Levi’s), a foreign corporation based in the State of Delaware, United States of America,
had been engaged in the apparel business. It is the owner of trademarks and designs of Levi’s jeans like LEVI’S 501, the
arcuate design, the two-horse brand, the two-horse patch, the two-horse patch with pattern arcuate, and the composite
tab arcuate. LEVI’S 501 has the following registered trademarks, to wit: (1) the leather patch showing two horses pulling a
pair of pants; (2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;" (3) the arcuate design that refers to "the
two parallel stitching curving downward that are being sewn on both back pockets of a Levi’s Jeans;" and (4) the tab or
piece of cloth located on the structural seam of the right back pocket, upper left side. All these trademarks were registered
in the Philippine Patent Office in the 1970’s, 1980’s and early part of 1990’s. 7

Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After receiving information that Diaz was
selling counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza and Talon, Las Piñas City, Levi’s Philippines hired a
private investigation group to verify the information. Surveillance and the purchase of jeans from the tailoring shops of
Diaz established that the jeans bought from the tailoring shops of Diaz were counterfeit or imitations of LEVI’S 501. Levi’s
Philippines then sought the assistance of the National Bureau of Investigation (NBI) for purposes of applying for a search
warrant against Diaz to be served at his tailoring shops. The search warrants were issued in due course. Armed with the
search warrants, NBI agents searched the tailoring shops of Diaz and seized several fake LEVI’S 501 jeans from them.
Levi’s Philippines claimed that it did not authorize the making and selling of the seized jeans; that each of the jeans were
mere imitations of genuine LEVI’S 501 jeans by each of them bearing the registered trademarks, like the arcuate design,
the tab, and the leather patch; and that the seized jeans could be mistaken for original LEVI’S 501 jeans due to the
placement of the arcuate, tab, and two-horse leather patch. 8

2.

Evidence of the Defense

On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.

Diaz stated that he did not manufacture Levi’s jeans, and that he used the label "LS Jeans Tailoring" in the jeans that
he made and sold; that the label "LS Jeans Tailoring" was registered with the Intellectual Property Office; that his shops
received clothes for sewing or repair; that his shops offered made-to-order jeans, whose styles or designs were done in
accordance with instructions of the customers; that since the time his shops began operating in 1992, he had received no
notice or warning regarding his operations; that the jeans he produced were easily recognizable because the label "LS
Jeans Tailoring," and the names of the customers were placed inside the pockets, and each of the jeans had an "LSJT" red
tab; that "LS" stood for "Latest Style;" and that the leather patch on his jeans had two buffaloes, not two horses. 9

Ruling of the RTC

On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:

WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond
reasonable doubt of twice violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the Informations in
Criminal Case Nos. 00-0318 & 00-0319, respectively, and hereby sentences him to suffer in each of the cases the penalty
of imprisonment of TWO (2) YEARS of prision correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as
maximum, as well as pay a fine of ₱50,000.00 for each of the herein cases, with subsidiary imprisonment in case of
insolvency, and to suffer the accessory penalties provided for by law.

Also, accused Diaz is hereby ordered to pay to the private complainant Levi’s Strauss (Phils.), Inc. the following, thus:

1. ₱50,000.00 in exemplary damages; and

2. ₱222,000.00 as and by way of attorney’s fees.

Costs de officio.

SO ORDERED.10
 Ruling of the CA

Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his appellant’s
brief on time despite being granted his requested several extension periods.

Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.

Issue

Diaz submits that:

THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE RULE ON
TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE PETITIONER FOR LATE
FILING OF APPELLANT’S BRIEF.11

Ruling

The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his appellant’s
brief.

Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellant’s brief in the CA "within
forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the
record, seven (7) copies of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies
thereof upon the appellee." Section 1(e) of Rule 50 of the Rules of Court  grants to the CA the discretion to dismiss an
appeal either motu proprio  or on motion of the appellee should the appellant fail to serve and file the required number of
copies of the appellant’s brief within the time provided by the Rules of Court.12

The usage of the word may  in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file
the appellant’s brief is not mandatory, but discretionary. Verily, the failure to serve and file the required number of copies
of the appellant’s brief within the time provided by the Rules of Court  does not have the immediate effect of causing the
outright dismissal of the appeal. This means that the discretion to dismiss the appeal on that basis is lodged in the CA, by
virtue of which the CA may still allow the appeal to proceed despite the late filing of the appellant’s brief, when the
circumstances so warrant its liberality. In deciding to dismiss the appeal, then, the CA is bound to exercise its sound
discretion upon taking all the pertinent circumstances into due consideration.

The records reveal that Diaz’s counsel thrice sought an extension of the period to file the appellant’s brief. The first
time was on March 12, 2007, the request being for an extension of 30 days to commence on March 11, 2007. The CA
granted his motion under its resolution of March 21, 2007. On April 10, 2007, the last day of the 30-day extension, the
counsel filed another motion, seeking an additional 15 days. The CA allowed the counsel until April 25, 2007 to serve and
file the appellant’s brief. On April 25, 2007, the counsel went a third time to the CA with another request for 15 days. The
CA still granted such third motion for extension, giving the counsel until May 10, 2007. Notwithstanding the liberality of the
CA, the counsel did not literally comply, filing the appellant’s brief only on May 28, 2007, which was the 18th day beyond
the third extension period granted.

Under the circumstances, the failure to file the appellant’s brief on time rightly deserved the outright rejection of the
appeal. The acts of his counsel bound Diaz like any other client. It was, of course, only the counsel who was well aware
that the Rules of Court  fixed the periods to file pleadings and equally significant papers like the appellant’s brief with the
lofty objective of avoiding delays in the administration of justice.

Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by the CA
on appeal because of the failure of his counsel to serve and file the appellant’s brief on time despite the grant of several
extensions the counsel requested. Diaz was convicted and sentenced to suffer two indeterminate sentences that would
require him to spend time in detention for each conviction lasting two years, as minimum, to five years, as maximum, and
to pay fines totaling ₱100,000.00 (with subsidiary imprisonment in case of his insolvency). His personal liberty is now no
less at stake. This reality impels us to look beyond the technicality and delve into the merits of the case to see for
ourselves if the appeal, had it not been dismissed, would have been worth the time of the CA to pass upon. After all, his
appellant’s brief had been meanwhile submitted to the CA. While delving into the merits of the case, we have uncovered a
weakness in the evidence of guilt that cannot be simply ignored and glossed over if we were to be true to our oaths to do
justice to everyone.

We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable negligence
tendered by Diaz’s counsel to justify the belated filing of the appellant’s brief as unworthy of serious consideration, Diaz
should not be made to suffer the dire consequence. Any accused in his shoes, with his personal liberty as well as his
personal fortune at stake, expectedly but innocently put his fullest trust in his counsel’s abilities and professionalism in the
handling of his appeal. He thereby delivered his fate to the hands of his counsel. Whether or not those hands were
efficient or trained enough for the job of handling the appeal was a learning that he would get only in the end. Likelier
than not, he was probably even unaware of the three times that his counsel had requested the CA for extensions. If he
were now to be left to his unwanted fate, he would surely suffer despite his innocence. How costly a learning it would be
for him! That is where the Court comes in. It is most important for us as dispensers of justice not to allow the
inadvertence or incompetence of any counsel to result in the outright deprivation of an appellant’s right to life, liberty or
property.13

We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on the line,
the people whose futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of
professionalism of any member of the Law Profession. They reasonably expect a just result in every litigation. The courts
must give them that just result. That assurance is the people’s birthright. Thus, we have to undo Diaz’s dire fate.

Even as we now set aside the CA’s rejection of the appeal of Diaz, we will not remand the records to the CA for its
review. In an appeal of criminal convictions, the records are laid open for review. To avoid further delays, therefore, we
take it upon ourselves to review the records and resolve the issue of guilt, considering that the records are already before
us.

Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:

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

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

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

The elements of the offense of trademark infringement under the Intellectual Property Code  are, therefore, the
following:

1. The trademark being infringed is registered in the Intellectual Property Office;

2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;

3. The infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services;

4. The use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such
business; and

5. The use or application of the infringing mark is without the consent of the trademark owner or the assignee
thereof.14

As can be seen, the likelihood of confusion is the gravamen of the offense of trademark infringement. 15 There are two
tests to determine likelihood of confusion, namely: the dominancy test, and the holistic test. The contrasting concept of
these tests was explained in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:

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

The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing
similarity. The focus is not only on the predominant words but also on the other features appearing on the labels. 16

As to what test should be applied in a trademark infringement case, we said in McDonald’s Corporation v. Macjoy
Fastfood Corporation17 that:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules
can be deduced because each case must be decided on its merits. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point.
 The case of Emerald Garment Manufacturing Corporation v. Court of Appeals ,18 which involved an alleged trademark
infringement of jeans products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the
United States of America, claimed that Emerald Garment’s trademark of "STYLISTIC MR. LEE" that it used on its jeans
products was confusingly similar to the "LEE" trademark that H.D. Lee used on its own jeans products. Applying the
holistic test, the Court ruled that there was no infringement.

The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in
relation to jeans products. Accordingly, the jeans trademarks of Levi’s Philippines and Diaz must be considered as a whole
in determining the likelihood of confusion between them. The maong  pants or jeans made and sold by Levi’s Philippines,
which included LEVI’S 501, were very popular in the Philippines. The consuming public knew that the original LEVI’S 501
jeans were under a foreign brand and quite expensive. Such jeans could be purchased only in malls or boutiques as ready-
to-wear items, and were not available in tailoring shops like those of Diaz’s as well as not acquired on a "made-to-order"
basis. Under the circumstances, the consuming public could easily discern if the jeans were original or fake LEVI’S 501, or
were manufactured by other brands of jeans. Confusion and deception were remote, for, as the Court has observed
in Emerald Garments:

First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your ordinary
household items like catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive.
Accordingly, the casual buyer is predisposed to be more cautious and discriminating in and would prefer to mull over his
purchase. Confusion and deception, then, is less likely. In Del Monte Corporation v. Court of Appeals,  we noted that:

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

Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales
clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less
knowledgeable and familiar with his preference and will not easily be distracted.

Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this
particular controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent
buyer" considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok  is better suited to the present case. There, the "ordinary
purchaser" was defined as one "accustomed to buy, and therefore to some extent familiar with, the goods  in question.
The test of fraudulent simulation is to be found in the likelihood of the deception of some persons in some measure
acquainted with an established design and desirous of purchasing the commodity with which that design has been
associated. The test is not found in the deception, or the possibility of deception, of the person who knows nothing about
the design which has been counterfeited, and who must be indifferent between that and the other. The simulation, in
order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase. 19

Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. His
trademark was visually and aurally different from the trademark "LEVI STRAUSS & CO" appearing on the patch of original
jeans under the trademark LEVI’S 501. The word "LS" could not be confused as a derivative from "LEVI STRAUSS" by
virtue of the "LS" being connected to the word "TAILORING", thereby openly suggesting that the jeans bearing the
trademark "LS JEANS TAILORING" came or were bought from the tailoring shops of Diaz, not from the malls or boutiques
selling original LEVI’S 501 jeans to the consuming public.

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

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

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

xxxx

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

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

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

WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of trademark

charged in Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for failure of the State to establish his guilt by proof
beyond reasonable doubt.

No pronouncement on costs of suit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

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. TV, Petitioners, 
vs.
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM CORPORATION, and SHELL INTERNATIONAL
PETROLEUM COMPANY LIMITED, Respondents.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioners seeking the
reversal of the Decision1 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 LGP products. It is the sole entity in the Philippines authorized
to allow refillers and distributors to refill, 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 refillers and distributors to refill, use, sell and distribute SHELLANE LGP containers and products.
Private respondents, on the other hand, are the directors and officers of Republic Gas Corporation ("REGASCO" for
brevity), an entity duly licensed to engage in, conduct and carry on, the business of refilling, buying, selling, distributing
and marketing at wholesale and retail of Liquefied Petroleum Gas ("LPG").

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 refilling, 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,
filed 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 confirm 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 Refilling Plant in Malabon was engaged in the refilling and sale of LPG
cylinders bearing the registered marks of the petitioners without authority from the latter. Based on its General
Information Sheet filed 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).

De Jemil, with other NBI operatives, then conducted a test-buy operation on February 19, 2004 with the former and a
confidential 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
refilling plant, they witnessed that REGASCO’s employees carried the empty LPG cylinders to a refilling station and refilled
the LPG empty cylinders. Money was then given as payment for the refilling 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 Refilling 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 refilled 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 Refilling 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 affidavit attached to the applications for search warrants, Agent De Jemil alleged as
follows:

"x x x.

"4. Respondent’s REGASCO LPG Refilling Plant-Malabon is not one of those entities authorized to refill LPG cylinders
bearing the marks of PSPC, Petron and Total Philippines Corporation. A Certification dated February 6, 2004 confirming
such fact, together with its supporting documents, are attached as Annex "E" hereof.

6. For several days in the month of February 2004, the other NBI operatives and I conducted surveillance and
investigation on respondents’ REGASCO LPG refilling Plant-Malabon. Our surveillance and investigation revealed that
respondents’ REGASCO LPG Refilling Plant-Malabon is engaged in the refilling and sale of LPG cylinders bearing the marks
of Shell International, PSPC and Petron.

x x x.

8. The confidential 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 confidential asset, went undercover and executed our testbuy operation. Both the
confidential assets and I brought with us four (4) empty LPG cylinders branded as Shellane and Gasul. x x x 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 Refilling Plant-Malabon and asked from an employee
of REGASCO inside the refilling plant for refill 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 refilling station and we witnessed the actual refilling of our empty LPG cylinders.

10. Since the REGASCO employees were under the impression that we were together with J & S, they made the
necessary refilling 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
refilling. 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 refilling of our four (4)
empty LPG cylinders. x x x.

11. After we accomplished the purchase of the illegally refilled 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 refilled LPG cylinders purchased from respondents’ REGASCO
LPG Refilling Plant-Malabon by indicating therein where and when they were purchased. Since REGASCO is not an
authorized refiller, the four (4) LPG cylinders illegally refilled by respondents’ REGASCO LPG Refilling Plant-Malabon, were
without any seals, and when weighed, were underrefilled. Photographs of the LPG cylinders illegally refilled from
respondents’ REGASCO LPG Refilling Plant-Malabon are attached as Annex "G" hereof. x x x."
 After conducting a personal examination under oath of Agent De Jemil and his witness, Joel Cruz, and upon reviewing
their sworn affidavits 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.

Upon the issuance of the said search warrants, Special Investigator Edgardo C. Kawada and other NBI operatives
immediately proceeded to the REGASCO LPG Refilling 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 filled 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 refilling and
marketing LPG. The Resolution issued by Assistant City Prosecutor Velasco reads as follows in its dispositive portion:

"WHEREFORE, foregoing considered, the undersigned finds the evidence against the respondents to be insufficient 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 affirmed the prosecutor’s dismissal of the complaint in a
Resolution dated September 18, 2008, reasoning therein that:

"x x x, the empty Shellane and Gasul LPG cylinders were brought by the NBI agent specifically for refilling. Refilling
the same empty cylinders is by no means an offense in itself – it being the legitimate business of Regasco to engage in the
refilling and marketing of liquefied petroleum gas. In other words, the empty cylinders were merely filled 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 filled. 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. x x x." 3

Dispensing with the filing 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:

WHEREFORE, in view of the foregoing premises, the petition filed 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 filed a motion for reconsideration. However, the same was denied by the CA in a Resolution dated
October 11, 2010.

Accordingly, petitioners filed the instant Petition for Review on Certiorari raising the following issues for our
resolution:

Whether the Petition for Certiorari filed by RESPONDENTS should have been denied outright.

Whether sufficient evidence was presented to prove that the crimes of Trademark Infringement and Unfair
Competition as defined 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 first 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 first filing a motion for reconsideration, viz.:

(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 filing 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.

Apropos the second and third issues, the same may be simplified to one core issue: whether probable cause exists to
hold petitioners liable for the crimes of trademark infringement and unfair competition as defined 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 identifies 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

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 refilled, 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 refilled. The public
will then be led to believe that petitioners are authorized refillers 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. x x x.

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;

xxxx

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 ranging from Fifty thousand pesos (₱50,000) to Two hundred
thousand pesos (₱200,000), 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 defined as the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one person as the goods or business of another with the end and probable
effect of deceiving the public.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. 11

In the present case, respondents pertinently observed that by refilling and selling LPG cylinders bearing their
registered marks, petitioners are selling goods by giving them the general appearance of goods of another manufacturer.

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 finds that there is sufficient 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 officers, directors and stockholders. 12Petitioners, being corporate
officers and/or directors, through whose act, default or omission the corporation commits a crime, may themselves be
individually held answerable for the crime. 13 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 refilling 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 officer cannot protect himself
behind a corporation where he is the actual, present and efficient actor.14

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.
 FIRST DIVISION

January 20, 2016

G.R. No. 198889

UFC PHILIPPINES, INC. (now merged with NUTRI-ASIA, INC., with NUTRI-ASIA, INC. as the
surviving entity),Petitioner, 
vs.
BARRIO FIESTA MANUFACTURING CORPORATION, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

For our disposition is a petition for review on certiorari  under Rule 45 seeking to annul and set aside the
June 23, 2011 Decision1 and the October 4, 2011 Resolution2 of the Court of Appeals in CA-G.R. SP No.
107570, which reversed and set aside the March 26, 2008 Decision3 of the Bureau of Legal Affairs of the
Intellectual Property Office (IPO-BLA) and the January 29, 2009 Decision4 of the Director General of the IPO.

Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly organized and existing under Philippine
laws.5 It is the emergent entity in a merger with UFC Philippines, Inc. that was completed on February 11,
2009.6 Respondent Barrio Fiesta Manufacturing Corporation (respondent) is likewise a corporation organized
and existing under Philippine laws.

On April 4, 2002, respondent filed Application No. 4-2002-002757 for the mark "PAPA BOY & DEVICE" for
goods under Class 30, specifically for "lechon sauce." 7 The Intellectual Property Office (IPO) published said
application for opposition in the IP Phil. e-Gazette released on September 8, 2006. The mark appears as
follows:

On December 11, 2006, petitioner filed with the IPO-BLA a Verified Notice of Opposition to the above-
mentioned application and alleged that:

1. The mark "PAPA" for use on banana catsup and other similar goods was first used [in] 1954 by Neri
Papa, and thus, was taken from his surname;

2. After using the mark "PAP A" for about twenty-seven (27) years, Neri Papa subsequently assigned the
mark "PAPA" to Heman D. Reyes who, on September 17, 1981, filed an application to register said mark "PAP
A" for use on banana catsup, chili sauce, achara, banana chips, and instant ube powder;

3. On August 14, 1983, Heman D. Reyes was issued Certificate of Registration No. 32416;

4. [Certificate of] Registration No. 32416 was subsequently assigned to the following in successive
fashion: Acres & Acres Food, Inc., Southeast Asia Food, Inc., Heinz-UFC Philippines, Inc., and Opposer UFC
Philippines, Inc.;
 5. Last October 28, 2005, Heinz-UFC Philippines, Inc. filed Application Serial No. 4-2005-010788 which, in
effect, is a re-registration of Registration No. 32416 which expired on August 11, 2003;

6. Heman D. Reyes also filed on March 04, 1982 an application to register in the Supplemental Register
the "PAPA BANANA CATSUP Label";

7. On August 11, 1983, Heman D. Reyes was issued Certificate of Registration No. SR-6282 which was
subsequently assigned to Acres & Acres Food, Inc., Southeast Asia Food, Inc., Heinz-UFC Philippines, Inc.;

8. After its expiration, Opposer filed on November 15, 2006 Trademark Application Serial No. 4-2006-
012346 for the re-registration of the "PAP A Label Design";

9. The mark "PAP A KETSARAP" for use on banana sauce falling under Class 30 was also registered in
favor of Acres & Acres Food, Inc. under Registration No. 34681 issued on August 23, 1985 and renewed last
August 23, 2005 by Heinz-UFC Philippines, Inc. for ten (10) years;

10. On November 07, 2006, Registration No. 34681 was assigned to Opposer;

11. Opposer has not abandoned the use of the mark "PAP A" and the variations thereof as Opposer has
continued their use up to the present;

12. The mark "PAPA BOY & DEVICE" is identical to the mark "PAPA" owned by Opposer and duly
registered in its favor, particularly the dominant feature thereof;

13. [With the] dominant feature of respondent-applicant's mark "PAPA BOY & DEVICE", which is
Opposer's "PAPA" and the variations thereof, confusion and deception is likely to result: The consuming public,
particularly the unwary customers, will be deceived, confused, and mistaken into believing that respondent-
applicant's goods come from Opposer or are authorized by Opposer to Opposer's prejudice, which is
particularly true considering that Opposer's sister company, Southeast Asia Food, Inc., and its predecessors-in-
interest have been major manufacturers and distributors of lechon sauce and other table sauces since 1965
under its registered mark "Mang Tomas";

14. Respondent-applicant's mark "PAPA BOY & DEVICE" which nearly resembles Opposer's mark "PAPA"
and the variations thereof will impress upon the gullible or unsuspecting public that it is the same or related to
Opposer as to source because its dominant part is the same as Opposer's mark and, thus, will likely be
mistaken to be the mark, or related to, or a derivative or variation of, Opposer's mark;

15. The goods covered by respondent-applicant's application fall under Class 30, the same Class under
which Opposer's goods enumerated in its earlier issued registrations;

16. The test of dominancy is now explicitly incorporated into law in Section 155 .1 of the IP Code which
defines infringement as the colorable imitation of a registered mark or a dominant feature thereof, and is
provided for by jurisprudence;

17. As a corporation also engaged in the food business, Respondent-applicant knew and/or ought to know
that Opposer and its predecessors-in-interest have been using the mark "PAPA" and the variations thereof for
the last fifty-two (52) years while its sister company is engaged in the business of manufacturing and
distributing "lechon sauce" and other table sauces for the last forty-one (41) years;

18. The approval of the subject application will violate Opposer's right to the exclusive use of its
registered mark "PAPA" and the variations thereof per Section 138 of the IP Code;

19. The approval of the subject application has caused and will continue to cause great and irreparable
damage and injury to Opposer;

20. Respondent-applicant filed the subject application fraudulently and in bad faith; and

21. Respondent-applicant is not entitled to register the subject mark in its favor. 8

In its verified opposition before the IPO, petitioner contended that "PAPA BOY & DEVICE" is confusingly
similar with its "PAPA" marks inasmuch as the former incorporates the term "PAP A," which is the dominant
feature of petitioner's "PAPA" marks. Petitioner averred that respondent's use of "PAPA BOY & DEVICE" mark
for its lechon sauce product, if allowed, would likely lead the consuming public to believe that said lechon
sauce product originates from or is authorized by petitioner, and that the "PAPA BOY & DEVICE" mark is a
variation or derivative of petitioner's "PAPA" marks. Petitioner argued that this was especially true considering
that petitioner's ketchup product and respondent's lechon sauce product are related articles that fall under the
same Class 30.9

Petitioner alleged that the registration of respondent's challenged mark was also likely to damage the
petitioner, considering that its former sister company, Southeast Asia Food, Inc., and the latter's predecessors-
in-interest, had been major manufacturers and distributors of lechon and other table sauces since 1965, such
as products employing the registered "Mang Tomas" mark.

In its Verified Answer, respondent argued that there is no likelihood of confusion between petitioner's
family of "PAPA" trademarks and respondent's "PAPA BOY & DEVICE" trademark. Respondent raised
affirmative defenses and we quote the relevant ones below:

3. Opposer cites several of its following marks in support of its opposition to the application but an
examination of said marks [reveals] that these have already expired and/or that no confusing similarity exists x
xx;

4. Assuming that the mark "PAPA KETSARAP" had been timely renewed on August 23, 2005 for "banana
sauce" under Class 30, the same is not a hindrance to the successful registration of the mark "PAPA BOY &
DEVICE": Jurisprudence provides that a certificate of registration confers upon the trademark owner the
exclusive right to use its own symbol only to those goods specified in the certificate subject to the conditions
and limitations stated therein;

5. As a result, Opposer's right to use the mark "PAPAKETSARAP" is limited to the products covered by its
certificate of registration which is Class 30 for banana sauce;

6. Contrary to Opposer's belief, the dominant features of Respondent-applicant's mark "PAPA BOY &
DEVICE" are the words "PAPA BOY" and the representation of a smiling hog-like character gesturing the
thumbs-up sign and wearing a traditional Filipino hat and scarf while the dominant feature of Opposer's mark
"PAPA KETSARAP" are the words "Papa" and "Ketsarap", not the word "Papa"; and the word "Ketsarap " is
more prominently printed and displayed in the foreground than the word "Papa" for which reasons opposer's
reference to the Dominancy Test fails;

7. Opposer's allegation that the registration of Respondent-applicant's mark "PAPA BOY & DEVICE" will
damage and prejudice the mark "MANG TOMAS" is irrelevant considering that Opposer's basis for filing this
opposition is the alleged confusing similarity between Respondent-applicant's mark and Opposer's mark "PAPA
KETSARAP", not the mark "MANG TOMAS";

8. Respondent-applicant's mark "PAPA BOY & DEVICE" is neither identical nor confusingly similar to
Opposer's mark "PAPA KETSARAP": Respondent-applicant's mark "PAPABOY & DEVICE" is an arbitrary mark
which differs in overall sound, spelling, meaning, style, configuration, presentation, and appearance from
Opposer's mark "PAPA KETSARAP";

9. The dissimilarities between the marks are so distinct, thus, confusion is very unlikely: While Opposer's
mark is a plain word mark, Respondent-applicant's mark "PAPA BOY & DEVICE" is much more intricate and
distinctive such as Opposer's mark not having the words "Lechon Sauce" printed inside a blue ribbon-like
device which is illustrated below the words "PAPA BOY", Opposer's mark not having a prominent smiling hog-
like character gesturing a thumbs-up sign and wearing a Filipino hat and scarf stands beside the words "PAPA
BOY", and Opposer's mark not having the words "Barrio Fiesta" albeit conspicuously displayed above the mark,
all which leave no doubt in the consumer's mind on the product that he is purchasing;

10. Aside from the fact that Respondent-applicant's mark "PAPA BOY & DEVICE" is distinct and different in
appearance, spelling, sound, meaning, and style from Opposer's mark "PAPA KETSARAP", the difference in the
goods covered by both marks is obvious: Since the goods covered by Respondent-applicant's mark is unrelated
and non-competing to those covered by Opposer's mark, the doctrine allowing the registrations of marks
covering unrelated and non-competing goods as enunciated by the Supreme Court is therefore applicable in
this case;

11. Respondent-applicant's mark cannot be confusingly similar to Opposer's mark considering that the
products covered by these marks are different: While Respondent-applicant's mark "PAPA BOY & DEVICE"
covers lechon sauce under Class 30, Opposer's mark "PAPA KETSARAP" covers banana sauce;

12. If a consumer is in the market for banana sauce, he will not buy lechon sauce and vice-versa and as a
result, the margin of error in the acquisition of one from the other is simply remote;

13. Respondent-applicant is the exclusive owner of the mark "PAPA BOY & DEVICE" for lechon sauce
under Class 30: The words "PAPA BOY" is a combination of the nickname of Bonifacio Ongpauco who is one of
Respondent-applicant's incorporators and founders" BOY"- and the word "PAPA" as Bonifacio Ongpauco's
mother, Sixta P. Evangelista, had been fondly known as "Mama Chit", making Respondent-applicant the prior
adopter, user, and applicant of the mark "PAPA BOY & DEVICE" in the Philippines;

14. To protect its ownership over the mark "PAPA BOY & DEVICE" considering that it is the first to adopt
and use said mark, Respondent-applicant applied for its registration under Application Serial No. 4-2002-
002757 for Class 30, and said application was found registrable by the Examiner as. a consequence of which
the same was recommended for allowance after undergoing a thorough process of examination, which
recommendation was then approved by the Director of the Bureau of Trademarks (BOT);

15. Respondent-applicant's mark "PAPA BOY & DEVICE" has been commercially used in the Philippines;

16. Respondent-applicant's mark "PAPA BOY & DEVICE" has been promoted and advertised for a
considerable duration of time and over wide geographical areas: Respondent-applicant has invested
tremendous amount of resources in the promotion of its mark "PAPA BOY & DEVICE" through various media
including print publications and promotional materials;

17. The widespread local commercial use of the subject mark by Respondent-applicant to distinguish and
identify its various high-quality consumer products has earned Respondent-applicant a well-deserved business
reputation and goodwill;

18. Respondent-applicant's mark is distinctive and capable of identifying its goods and distinguishing them
from those offered for sale by others in the market including Opposer's goods for which reason no confusion
will result because Respondent-applicant's mark is for lechon sauce while Opposer's mark is for banana sauce;
and

19. The presence of a common prefix "PAPA" in the marks of both parties does not render said marks
identical or confusingly similar: Opposer cannot exclusively appropriate said prefix considering that other marks
such as "Papa Heinz Pizza", "Papa Heinz Sausage", "Papa Beaver", "Papa Pop", "Pizza Papa John's & Design",
"Papadoods", and "Papa in Wine and Device" are valid and active.10

Petitioner's mark and its variations appear as follows:

1. "PAPA" under Registration No. 32416 for Class 29 goods;11

2. The mark "PAPA" as it appeared upon re-registration of Certificate No. 32416, under Application No. 4-
2005-010788 for Classes 29 and 30 goods;12
3. "PAPA LABEL DESIGN" under Registration No. 4-2006-012364· 13 and

4. "PAPA KETSARAP" under Certificate of Registration No. 34681, for banana sauce (Class 30). 14

PROCEEDINGS BEFORE THE INTELLECTUAL PROPERTY OFFICE

The case was referred to mediation but the parties failed to arrive at an amicable settlement. The case
was thus set for preliminary conference. Subsequently, the IPO-BLA directed the parties to file their
respective position papers and draft decisions.

The IPO-BLA rendered a Decision on March 26, 2008 sustaining petitioner's Opposition and rejecting
respondent's application for "PAPA BOY & DEVICE." The fallo  of said decision reads as follows:

WHEREFORE, the VERIFIED NOTICE OF OPPOSITION filed by UFC Philippines, Inc. is, as it is hereby,
SUSTAINED. Consequently, Application Serial No. 4-2002-002757 for the mark "PAPA BOY & DEVICE" for
lechon sauce under Class 30 filed on April 04, 2002 by Barrio Fiesta Manufacturing Corporation, is, as it is
hereby, REJECTED.

Let the file wrapper of PAPA BOY & Device subject matter of this case be forwarded to the Bureau of
Trademarks (BOT) for appropriate action in accordance with this Decision. 15

Respondent filed an appeal before the IPO Director General, who found it unmeritorious, and disposed of
the case in the following manner:

WHEREFORE, the instant appeal is hereby DISMISSED. 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 also 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."16

DECISION OF THE COURT OF APPEALS

Respondent then filed a petition with the Court of Appeals, questioning the above decision of the IPO
Director General that affirmed the decision of the IPO Bureau of Legal Affairs Director, which disallowed
respondent's application for trademark registration. Respondent's arguments before the Court of Appeals
are quoted below:

A.

REGISTRATION NOS. 32416 AND 42005010788 ISSUED FOR THE "PAPA" MARK AND REGISTRATION
NOS. SR-6282 AND 42006012364 ISSUED FOR THE TRADEMARK "PAPA BANANA CATSUP LABEL/PAPA
LABEL DESIGN" SHOULD NOT BE USED AS BASIS IN DETERMINING THE EXISTENCE OF CONFUSING
SIMILARITY.

B.

THERE IS NO CONFUSING SIMILARITY BETWEEN PETITIONER-APPLICANT'S "PAPA BOY & DEVICE" AND
RESPONDENT'S "PAPA KETSARAP" MARK.

C.

PETITIONER-APPLICANT IS ENTITLED TO THE REGISTRATION OF THE MARK "PAPA BOY & DEVICE."

D.

THE OPPOSITION STATES NO CAUSE OF ACTION, AND HENCE, SHOULD BE DENIED OUTRIGHT.17

As regards the first ground, the Court of Appeals held:

Records show that respondent UFC has Certificates of Registration for the trademarks PAPA, PAPA
BANANA CATSUP label and PAPA KETSARAP. A closer look at the respective Certificate[ s] of Registration
of the aforementioned marks, however, reveals that at the time the trademark application of petitioner
was published in the IPO e-Gazette on September 8, 2006, the duration of the trademark registration of
respondent over the marks PAPA and PAPA BANANA CATSUP have already expired. On the other
hand, the mark PAPA KETSARAP was timely renewed by respondent as shown by the
Certificate of Renewal of Registration issued on September 1, 2006 by the Director of the
Bureau of Trademarks.

Under R.A. No. 8293, as amended by R.A. No. 9150, the duration of a trademark registration is 10 years,
renewable for periods of 10 years each renewal. The request for renewal must be made within 6 months
before or after the expiration of the registration. Respondent's PAPA mark was not renewed within the
period provided for under RA No. 8293. Its registered term ended on August 11, 2003 but was reapplied
for registration only on April 4, 2005. Meanwhile, the mark PAPA BANANA CATSUP was registered by
respondent only in the Supplemental Register, hence, was not provided any protection. x x x. It is noted
that the PAPA BANANA CATSUP label was applied for registration on November 15, 2006, over three years
after the expiration of its registration in the Supplemental Register of the Philippine Patent Office on
August 11, 2003. Thus, while petitioner has a point that the marks PAPA and PAPA BANANA
CATSUP have already expired and the latter having been afforded no protection at all and
should not be juxtaposed with petitioner's trademark, respondent can still use the marks
PAPA KETSARAP and PAPA BANANA CATSUP, it appearing that the Intellectual Property
Office issued a Certificate of Registration No. 4-2006-012364 for the latter on April 30, 2007,
to bar the registration of petitioner's "PAPA BOY & DEVICE" mark.18 (Emphases supplied,
citations omitted.)

Anent the second ground, the Court of Appeals ruled in the following manner:

After taking into account the aforementioned doctrines and the factual circumstances of the
case at bar, this Court, after considering the trademarks involved as a whole, is of the view
that petitioner's trademark "PAP A BOY & DEVICE" is not confusingly similar to respondent's
"PAPA KETSARAP" and "PAPA BANANA CATSUP" trademark. Petitioner's trademark is "PAPA BOY"
as a whole as opposed to respondent's "PAPA". Although on its label the word "PAPA" is prominent, the
trademark should be taken as a whole and not piecemeal. The difference between the two marks are
conspicuous and noticeable. While respondent's products are both labeled as banana sauces, that of
petitioner Barrio Fiesta is labeled as lechon sauce.

Moreover, it appears on the label of petitioner's product that the said lechon sauce is manufactured by
Barrio Fiesta thus, clearly informing the public [of] the identity of _the manufacturer of the lechon sauce.
As claimed by respondent, its products have been in commercial use for decades. It is safe to assume
then that the consumers are already aware that "PAPA KETSARAP" and "PAPA BANANA CATSUP" are
products of UFC and not of petitioner or the other way around. In addition, as correctly pointed out by
petitioner, if a consumer is in the market for banana sauce, he will not buy lechon sauce and vice-versa
because aside from the fact that the labels of both parties' products contain the kind of sauce they are
marketing, the color of the products is visibly different. An ordinary consumer is familiar with the fact that
the color of a banana sauce is red while a lechon sauce is dark brown. There can be no deception as both
products are marketed in bottles making the distinction visible to the eye of the consumer and the
likelihood of acquiring a wrong sauce, remote. Even if the products are placed side by side, the
dissimilarities between the two marks are conspicuous, noticeable and substantial enough to matter
especially in the light of the following variables that must be factored in.

Lastly, respondent avers that the word "PAPA" was coined after the surname of the person who first
created and made use of the mark. Admittedly, while "PAPA" is a surname, it is more widely known as a
term of endearment for one's father. Respondent cannot, therefore, claim exclusive ownership over and
singular use of [the] term. Petitioner was able to explain that it adopted the word "PAPA" in parallel to the
nickname of the founder of Barrio fiesta which is "MAMA CHIT". "PAPA BOY" was derived from the
nickname of one of the incorporators of herein petitioner, a certain Bonifacio Ongpauco, son of Mama
Chit.19 (Emphasis ours, citation omitted.)

THEORY OF PETITIONER

Thus, petitioner came to this Court, seeking the reversal of the questioned decision and resolution of the
Court of Appeals, and the reinstatement of the decision of the IPO Director General affirming the decision
of the IPO-BLA. Petitioner raises the following grounds:

I.

The court a quo  erred in applying the "holistic test" to determine whether there is confusing similarity
between the contending marks, and in reversing the IPO-BLA and the Director General's application of the
"dominancy test."

II.

The court a quo  erred in holding that there is no likelihood of confusion between the contending marks
given that the "PAPA BOY & DEVICE" mark is used on lechon sauce, as opposed to ketchup products.

III.

The court a quo  erred in holding that Petitioner cannot claim exclusive ownership and use of the "PAP A"
mark for its sauce products because "PAPA" is supposedly a common term of endearment for one's
father.20
Under the first ground, petitioner submitted the following arguments:

1. The findings of administrative agencies, if supported by substantial evidence, are binding upon the
courts.21

Petitioner alleges that the Court of Appeals should have respected the ruling of the IPO Director General,
which was consistent with the ruling of the IPO-BLA and supported by substantial evidence, instead of
substituting its findings of fact for those of the Director General and the IPO-BLA.

2. The dominancy test should have been applied to determine if there is confusing similarity between the
competing marks.22

Petitioner points out that the Director General and the IPO-BLA found that the dominant feature of the
competing marks is the word "PAP A" and the minor additions to respondent's "PAPA BOY & DEVICE"
mark do not negate likelihood of confusion caused by the latter's use of the dominant word "PAPA."
Petitioner claims that even compared solely to petitioner's "PAPA KETSARAP" mark (Registration No.
34681), which is conceded to have been timely renewed and to have never expired, respondent's "PAPA
BOY & DEVICE" would still create the likelihood of confusion.23

According to petitioner, the Court of Appeals based its decision on Mead Johnson & Co. v. N.V.J. Van
Dorp, Ltd.,24 a case decided almost five decades ago, long before Republic Act No. 8293 or the 1998
Intellectual Property Code was enforced. Thus, the Court of Appeals erroneously applied the holistic test
since given the nature of the products bearing the competing marks, the dominancy test should have
been applied.

Petitioner claims that "[k]etchup and lechon sauce are common and inexpensive household products that
are sold in groceries and regularly encountered by the ordinary or common purchaser who is not expected
to examine, scrutinize, and compare the details of the competing marks." 25

Petitioner distinguishes this case from Mead Johnson  and claims that the ordinary purchaser of ketchup or
lechon sauce is not likely to closely scrutinize each mark as a whole, for the latter is "undiscemingly rash"
and usually in a hurry, and cannot be expected to take note of the smiling hog-like character or the blue
ribbon-like device with the words "Lechon Sauce." Petitioner argues that under the Intellectual Property
Code, it is not necessary for one to colorably imitate the competing trademark as a whole. It is sufficient
that one imitates a "dominant feature" of the mark to constitute trademark infringement.

Petitioner asserts that as the IPO-BLA and the Director General observed that the ordinary purchaser is
most likely to notice the words "PAPA BOY," which, in turn, may lead him to believe that there is a
connection between respondent's lechon sauce and petitioner's ketchup products.

Under the second ground, petitioner argues that the Court of Appeals seemed to be unmindful that two
kinds of confusion may arise from the use of similar or colorable imitation marks,  i.e.,  confusion of goods
(product confusion) and confusion of business (source or origin confusion). Petitioner claims that it is
reasonable to assume that it may expand its business to producing lechon sauce, inasmuch as it already
produces food sauce products and its Articles of Incorporation authorizes it to do so.

Petitioner alleges that the IPO-BLA recognized that confusion of business may arise from respondent's use
of its "PAPA BOY & DEVICE" mark for lechon sauce products, and that the Director-General agreed with
the IPO-BLA's findings on this issue.

Petitioner asserts that ketchup and lechon sauce are undeniably related goods; that they belong to the
same class, i.e.,  Class 30 of the Nice Classifications; that they serve practically the same purpose, i.e.,  to
spice up dishes; and that they are sold in similar bottles in the same shelves in grocery stores. Petitioner
argues that the Court of Appeals had absolutely no basis for stating that a person who is out to buy
ketchup is not likely to buy lechon sauce by mistake, as this analysis allegedly only applies to "product
confusion" and does not consider confusion of business. Petitioner alleges that "[t]here equally is
actionable confusion when a buyer purchases Respondent's 'PAPA BOY' lechon sauce believing that the
said product is related to or associated with the famous 'PAPA KETSUP' makers." Petitioner further alleges
that "it is reasonable and likely for a consumer to believe that Respondent's 'PAPA BOY' lechon sauce
originated from or is otherwise connected with Petitioner's line of sauces" and that this is "the precise evil
that recognition of confusion of business seeks to prevent." 26

Petitioner avers that "PAPA" is a well-known mark and that it has been in commercial use as early as 1954
on banana ketchup and similar goods. The "PAPA" mark is also registered as a trademark and in
commercial use in other parts of the world such as the United States of America and the Middle East.
Petitioner claims that "[b ]eing a trademark that is registered and well-known both locally and
internationally, Petitioner's 'PAPA' marks cannot be appropriated by another person or entity not only with
respect to goods similar to those with respect to which it is registered, but also with respect to goods
which are not similar to those for which the 'PAPA' marks are registered." 27

Under the third ground, petitioner claims that the fact that the word "PAPA" is a known term of
endearment for fathers does not preclude it from being used as a mark to identify goods. Petitioner claims
that their mark falls under a type of mark known as "arbitrary or fanciful marks," which are "marks that
bear no logical relation to the actual characteristics of the products they represent," are "highly distinctive
and valid," and "are entitled to the greatest protection."28

Petitioner claims that the mark "PAPA" falls under this class of arbitrary marks, even if "PAPA" is also a
common term of endearment for one's father. Petitioner states that there is no logical connection
between one's father and food sauces, such as ketchup; thus, with respect to ketchup, food sauces, and
their related products, and for the purpose of identifying its products, petitioner claims exclusive
ownership of the term "PAPA" as an arbitrary mark.

Petitioner alleges that if respondent "has a good faith and proud desire to unmistakably and distinctly
identify its lechon sauce product out in the market, it should have coined a mark that departs from and is
distinguished from those of its competitors." Petitioner claims that respondent, with full knowledge of the
fame and the decades-long commercial use of petitioner's "PAPA" marks, opted for "PAPA BOY &
DEVICE," which obviously is just a "colorable imitation." 29

THEORY OF RESPONDENT

In its Comment,30 respondent claims that petitioner's marks have either expired and/or "that no
confusing similarity exists between them and respondent's "PAPA BOY & DEVICE' mark." Respondent
alleges that under Section 15 of Republic Act No. 166, a renewal application should be filed within six
months before the expiration of the period or within three months after such expiration. Respondent avers
that the expiration of the 20-year term for the "PAPA" mark under Registration No. 32416 issued on
August 11, 1983 was August 11, 2003. The sixth month before August 11, 2003 was February 11, 2003
and the third month after August 11, 2003 was November 11, 2003. Respondent claims that the
application that petitioner filed on October 28, 2005 was almost two years late. Thus, it was not a renewal
application, but could only be considered a new application under the new Trademark Law, with the filing
date reckoned on October 28, 2005. The registrability of the mark under the new application was
examined again, and any certificate issued for the registration of "PAPA" could not have been a renewal
certificate.

As for petitioner's other mark "PAPA BANANA CATSUP LABEL," respondent claims that its 20-year term
also expired on August 11, 2003 and that petitioner only filed its application for the new "PAPA LABEL
DESIGN" on November 15, 2006. Having been filed three years beyond the renewal application deadline,
petitioner was not able to renew its application on time, and cannot claim a "continuous existence of its
rights over the 'PAPA BANANA CATSUP LABEL."' Respondent claims that the two marks are different from
each other and that the registration of one is independent of the other. Respondent concludes that the
certificate of registration issued for "PAPA LABEL DESIGN" is "not and will never be a renewal
certificate."31

Respondent also avers as follows:

1.3. With regard to the two new registrations of petitioner namely: "PAPA" (Reg. No. 4-2005-010788) and
"PAPA LABEL DESIGN" (Reg. No. 4-2006-012364), these were filed on October 28, 2005 and November
15, 2006, respectively, under the Intellectual Property Code (RA 8293), which follows the "first to file"
rule, and were obviously filed later than respondent's "PAPA BOY & DEVICE" mark filed on April 4, 2002.
These new marks filed much later than the opposed "PAPA BOY & DEVICE" mark cannot, therefore, be
used as basis for the opposition and should in fact, be denied outrightly.

xxxx

A search of the Online Trademark Database of Intellectual Property Office (IPO) will show that only
Registration No. 34681 issued for "PAPA KETSARAP" was properly renewed on August 23, 2005. xx x
Clearly, the registrations of "PAPA" and "PAPA BANANA CATSUP LABEL" marks under registration nos.
32416 and SR-6282 respectively, have already expired when Petitioner filed its opposition proceeding
against Respondent's trademark on December 11, 2006. Having expired, and therefore, no longer legally
existing, the "PAPA" and "PAPA BANANA CATSUP LABEL" marks CANNOT BAR the registration of
respondent's mark. To allow petitioner's expired marks to prevent respondent's distinct "PAPA BOY &
DEVICE" mark from being registered would be the ultimate absurdity.32

Respondent posits that the Court of Appeals did not err in reversing the decisions of the administrative
agencies, alleging that "[while] it is true that the general rule is that the factual findings of administrative
bodies deserve utmost respect when supported by evidence, the same is subject to exceptions," 33 and
that the Court of Appeals had justifiable reasons to disregard the factual finding of the IPO. Here, the
Court of Appeals wisely identified certain material facts that were overlooked by the IPO-BLA and the IPO
Director General which it opined, when correctly appreciated, would alter the result of the case.

Respondent alleges that the IPO-BLA erroneously considered petitioner's marks "PAPA" and "PAPA
BANANA CATSUP LABEL" when it applied the dominancy test in determining whether petitioner's marks
are confusingly similar to those of respondent's mark "PAPA BOY & DEVICE."

Respondent avers that the IPO-BLA absurdly took emphasis on the mark "PAPA" to arrive at its decision
and did not take into consideration that petitioner's mark was already expired when respondent applied
for the registration of its "PAPA BOY & DEVICE" mark. Respondent compares its "PAPA BOY & DEVICE"
with the only mark that respondent allegedly has, "PAPA KETSARAP," and found no confusing similarity
between the two.

We quote below respondent's discussion of its application of the dominancy test to the marks in question:

Applying the Dominancy test, as correctly emphasized by the Court of Appeals, the dominant feature in
respondent's mark is "PAPA BOY" and not "PAPA". It can be gleaned from respondent's mark that the
word "PAPA" was written in the same font, style and color as the word "BOY". There is also the presence
of a "smiling hog-like character" which is positioned very prominently, both in size and location in said
mark, at glance (sic)  even more dominant than the word "PAPA BOY".

xxxx

On the other hand, the dominant feature in petitioner's mark is "KETSARAP", not "PAPA". Even an
ordinary examiner could observe that the word "KETSARAP" in petitioner's mark is more prominently
printed than the word "PAPA".

xxxx

In a dominancy test, the prominent feature of the competing trademarks must be similar to cause
confusion or deception. x x x.34

Verily, respondent's dominant feature "PAPA BOY" and the smiling hog-like character and petitioner's
dominant feature "KETSARAP", being the word written in a larger font, are neither confusing nor
deceiving to the public. In fact, the differences between their dominant marks are very noticeable and
conspicuous to every purchaser.

Furthermore, the Supreme Court in Societe des Produits Nestle, SA. v. Dy  [ 641 Phil. 345], applied the
dominancy test by taking into account the aural effects of the words and letters contained in the marks in
determining the issue of confusing similarity. Obviously, petitioners' "PAPA KETSARAP" mark does not in
any way sounds (sic)  like respondent's "PAPA BOY" mark. The common prefix "PAPA" does not render the
marks aurally the same. As discussed above, the dominant feature in petitioner's mark is "KETSARAP" and
the dominant feature in respondent's mark is "PAPA BOY". Thus, the words "KETSARAP" and "PAP A BOY"
in petitioner's and respondent's respective marks are obviously different in sound, making "PAPA BOY &
DEVICE" even more distinct from petitioner's "PAPA KETSARAP" mark. 35

Using the holistic test, respondent further discusses the differences in the marks in this wise:

Even the use of the holistic test x x x takes into consideration the entirety of the marks in question [to] be
considered in resolving confusing similarity. The differences are again very obvious. Respondent's mark
has (1) the word "lechon sauce" printed inside a blue ribbon-like device which is illustrated below the
word "PAPA BOY"; (2) a prominent smiling hog-like character gesturing a thumbs-up sign and wearing a
Filipino hat and scarf stands beside the word "PAPA BOY"; and the word "BARRIO FIESTA" conspicuously
displayed above the said trademark which leaves no doubt in the consumer's mind on the product that he
or she is purchasing. On the other hand, petitioner's mark is the word "PAPA" enclosed by a cloud on top
of the word "KETSARAP' enclosed by a geometrical figure.

xxxx

In the instant case, the respective marks are obviously different in color scheme, logo, spelling, sound,
meaning and connotation. Thus, yet again, under the holistic test there can be no confusion or deception
between these marks.

It also bears stressing that petitioner's "PAPA KETSARAP" mark covers "banana catsup" while
respondent's "PAPA BOY & DEVICE" covers "lechon sauce'', thereby obliterating any confusion of products
of both marks as they travel different channels of trade. If a consumer is in the market for banana catsup,
he or she will not buy lechon sauce and vice-versa. As a result, the margin of error in the acquisition of
one for the other is simply remote. Lechon sauce which is liver sauce is distinct from catsup extracted/
made from banana fruit. The flavor and taste of a lechon sauce are far from those of a banana catsup.
Lechon sauce is sauce for "lechon" while banana catsup is apparently catsup made from banana. 36

Respondent also contends that "PAPA BOY & DEVICE" mark is not confusingly similar to petitioner's
trademark "PAPA KETSARAP" in terms of appearance, sound, spelling and meaning. The difference in
nature, usage, taste and appearance of products decreases the possibility of deception among buyers. 37

Respondent alleges that since petitioner merely included banana catsup as its product in its certificate, it
cannot claim any further right to the mark "PAPA KETSARAP" on products other than banana catsup.
Respondent also alleges that petitioner cannot raise "international notoriety of the mark" for the first time
on appeal and that there is no proof that petitioner's mark is internationally well-known. 38

Furthermore, respondent argues that petitioner cannot claim exclusive ownership over the use of the
word "PAPA," a term of endearment for one's father. Respondent points out that there are several other
valid and active marks owned by third parties which use the word "PAPA," even in classes of goods similar
to those of petitioner's. Respondent avers that petitioner's claim that its "PAPA" mark is an arbitrary mark
is belatedly raised in the instant petition, and cannot be allowed because the "PAPA KETSARAP" mark
would immediately bring the consuming public to thinking that the product involved is catsup and the
description of said catsup is "masarap"  (delicious) and due to the logical relation of the petitioner's mark
to the actual product, it being descriptive or generic, it is far from being arbitrary or fanciful. 39

Lastly, respondent claims that the Court of Appeals correctly ruled that respondent's product cannot be
confused as originating from the petitioner. Since it clearly appears in the product label of the respondent
that it is manufactured by Barrio Fiesta, the public is dutifully informed of the identity of the lechon sauce
manufacturer. The Court of Appeals further took into account the fact that petitioner's products have been
in commercial use for decades.40

Petitioner, in its Reply41 to respondent's Comment, contends that respondent cannot invoke a prior filing
date for the "PAPA BOY" mark as against Petitioner's "PAPA" and "PAPA BANANA CATSUP LABEL" marks,
because the latter marks were still registered when respondent applied for registration of its "PAPA BOY"
mark. Thus, the IPO-BLA and Director General correctly considered them in deciding whether the "PAPA
BOY" mark should be registered, using the "first to file" rule under Section 123.l(d) of Republic Act No.
8293, or the Intellectual Property Code (IP Code).

Petitioner reiterates its argument that the Court of Appeals erred in applying the holistic test and that the
proper test under the circumstances is the dominancy test, which was correctly applied by the IPO-BLA
and the Director General.42

THIS COURT'S RULING

The petition has merit.

We find that the Court of Appeals erred in applying the holistic test and in reversing and setting aside the
decision of the IPO-BLA and that of the IPO Director General, both of which rejected respondent's
application for the mark "PAPA BOY & DEVICE."

In Dermaline, Inc. v. Myra Pharmaceuticals, Inc., 43 we defined 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 by
others." We held that a trademark is "an intellectual property deserving protection by law."

The rights of the trademark owner are found in the Intellectual Property Code, which provides:

Section 147. Rights Conferred.  - 147.1. The owner of a registered mark shall have the exclusive right
to prevent all third parties not having the owner's consent from using in the course of trade identical or
similar signs or containers for goods or services which are identical or similar to those in respect of which
the trademark is registered where such use would result in a likelihood of confusion. In case of the use of
an identical sign for identical goods or services, a likelihood of confusion shall be presumed.

Section 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.

The guideline for courts in determining likelihood of confusion is found in A.M. No. 10-3-10-SC, or the
Rules of Procedure for Intellectual Property Rights Cases, Rule 18, which provides:

RULE 18
Evidence in Trademark Infringement and Unfair Competition Cases

SECTION 1. Certificate of Registration.  - A certificate of registration of a mark shall be prima

facie  evidence of:

a) the validity of the registration;

b) the registrant's ownership of the mark; and

c) 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.

xxxx

SECTION 3. Presumption of Likelihood of Confusion.  - Likelihood of confusion shall be presumed in case

an identical sign or mark is used for identical goods or services.

SECTION 4. Likelihood of Confusion in Other Cases.  - In determining whether one trademark is

confusingly similar to or is a colorable imitation of another, the court must consider 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. Visual, aural, connotative
comparisons and overall impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace must be taken into account. Where there are both similarities and
differences in the marks, these must be weighed against one another to see which predominates.

In determining likelihood of confusion between marks used on non-identical goods or services, several
factors may be taken into account, such as, but not limited to:

a) the strength of plaintiffs mark;

b) the degree of similarity between the plaintiffs and the defendant's marks;

c) the proximity of the products or services;

d) the likelihood that the plaintiff will bridge the gap;

e) evidence of actual confusion;

f) the defendant's good faith in adopting the mark;

g) the quality of defendant's product or service; and/or

h) the sophistication of the buyers.

"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.

SECTION 5. Determination of Similar and Dissimilar Goods or Services.  - Goods or services may not be
considered as being similar or dissimilar to each other on the ground that, in any registration or
publication by the Office, they appear in different classes of the Nice Classification.

In this case, the findings of fact of the highly technical agency, the Intellectual Property Office, which has
the expertise in this field, should have been given great weight by the Court of Appeals. As we held
in Berris Agricultural Co., Inc. v. Abyadang44:

R.A. No. 8293 defines a "mark" as 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. It also
defines a "collective mark" as any visible sign designated as such in the application for registration and
capable of distinguishing the origin or any other common characteristic, including the quality of goods or
services of different enterprises which use the sign under the control of the registered owner of the
collective mark.

On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name, symbol, emblem,
sign, or device, or any combination thereof, adopted and used by a manufacturer or merchant on his
goods to identify and distinguish them from those manufactured, sold, or dealt by another. A trademark,
being a special property, is afforded protection by law. But for one to enjoy this legal protection, legal
protection ownership of the trademark should rightly be established.

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. Section 122 of R.A.. No. 8293 provides
that the rights in a mark shall be acquired by means of its valid registration with the IPO. A certificate 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 specified in the certificate. R.A.
No. 8293, however, requires the applicant for registration or the registrant to file a declaration of actual
use (DAU) of the mark, with evidence to that effect, within three (3) years from the filing of the
application for registration; otherwise, the application shall be refused or the mark shall be removed from
the register. 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 proof of the nullity of the registration or of non-
use of the mark, except when excused. Moreover, the presumption may likewise be defeated 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 first used it in trade or commerce.

The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does not
suffice. One may make advertisements, issue circulars, distribute price lists on certain goods, but these
alone will not inure to the claim of ownership of the mark until the goods bearing the mark are sold to the
public in the market. Accordingly, receipts, sales invoices, and testimonies of witnesses as customers, or
orders of buyers, best prove the actual use of a mark in trade and commerce during a certain period of
time.

xxxx

Verily, 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.  On this
matter of particular concern, administrative agencies, such as the IPO, by reason of their
special knowledge and expertise over matters falling under their jurisdiction, are in a better
position to pass judgment thereon. Thus, their findings of fact in that regard are generally
accorded great respect, if not finality by the courts, as long as they are supported by
substantial evidence, even if such evidence might not be overwhelming or even
preponderant. It is not the task of the appellate court to weigh once more the evidence
submitted before the administrative body and to substitute its own judgment for that of the
administrative agency in respect to sufficiency of evidence. (Emphasis added, citations omitted.)

In trademark controversies, each case must be scrutinized according to its peculiar circumstances, such
that jurisprudential precedents should only be made to apply if they are specifically in point. 45 The cases
discussed below are mentioned only for purposes of lifting the applicable doctrines, laws, and concepts,
but not for their factual circumstances, because of the uniqueness of each case in controversies such as
this one.

There are two tests used in jurisprudence to determine likelihood of confusion, namely the dominancy test
used by the IPO, and the holistic test adopted by the Court of Appeals. In Skechers, U.S.A., Inc. v. Inter
Pacific Industrial Trading Corp.,46 we held:

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.

xxxx

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.

Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by
respondent in its Strong rubber shoes infringes on the mark already registered by petitioner with the IPO.
While it is undisputed that petitioner's stylized "S" is within an oval design, to this Court's mind, the
dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S" which catches the
eye of the purchaser. Thus, even if respondent did not use an oval design, the mere fact that it used the
same stylized "S", the same being the dominant feature of petitioner's trademark, already constitutes
infringement under the Dominancy Test.

This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be
considered as highly identifiable to the products of petitioner alone. The CA even supported its conclusion
by stating that the letter "S" has been used in so many existing trademarks, the most popular of which is
the trademark "S" enclosed by an inverted triangle, which the CA says is identifiable to Superman. Such
reasoning, however, misses the entire point, which is that respondent had used a stylized "S," which is
the same stylized "S" which petitioner has a registered trademark for. The letter "S" used in the Superman
logo, on the other hand, has a block-like tip on the upper portion and a round elongated tip on the lower
portion. Accordingly, the comparison made by the CA of the letter "S" used in the Superman trademark
with petitioner's stylized "S" is not appropriate to the case at bar.

Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the
font and the size of the lettering, the stylized "S" utilized by respondent is the very same stylized "S" used
by petitioner; a stylized "S" which is unique and distinguishes petitioner's trademark. Indubitably, the
likelihood of confusion is present as purchasers will associate the respondent's use of the stylized "S" as
having been authorized by petitioner or that respondent's product is connected with petitioner's business.

xxxx

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.xx x.

Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test,
ruled that there was no colorable imitation, when it cannot be any more clear and apparent to this Court
that there is colorable imitation. The dissimilarities between the shoes are too trifling and frivolous that it
is indubitable that respondent's products will cause confusion and mistake in the eyes of the public.
Respondent's shoes may not be an exact replica of petitioner's shoes, but the features and overall design
are so similar and alike that confusion is highly likely.

xxxx

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

Modem 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). xx x.

Indeed, the registered trademark owner may use its mark on the same or similar products, in different
segments of the market, and at different price levels depending on variations of the products for specific
segments of the market. 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. 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. 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. (Citations omitted.)

The Court discussed the concept of confusion of business in the case of Societe Des Produits Nestle, S.A.
v. Dy, Jr.,47 as quoted below:

Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement.
There are two types of confusion in trademark infringement: confusion of goods and confusion of
business. In Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft,  the Court
distinguished the two types of confusion:

Callman notes two types of confusion. The first is the confusion of goods  "in which event the ordinarily
prudent purchaser would be induced to purchase one product in the belief that he was purchasing the
other." In which case, "defendant's goods are then bought as the plaintiff's, and the poorer quality of the
former reflects 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."

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.

xxxx

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,  the Court held:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another,
no set rules can be deduced because each case must be decided on its merits. In such cases, even more
than in any other litigation, precedent must be studied in the light of the facts of the particular case. That
is the reason why in trademark cases, jurisprudential precedents should be applied only to a case if they
are specifically in point.

In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In
recent cases with similar factual milieus, the Court has consistently applied the dominancy test. x x x.

xxxx

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.

xxxx

Applying the dominancy test to the instant case, the Court finds that herein petitioner's "MCDONALD'S"
and respondent's "MACJOY" marks are confusingly similar with each other that an ordinary purchaser can
conclude an association or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as
dominant features. x x x.

For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and aurally catches the attention
of the consuming public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds,"
"Mac Fries," "Mc Spaghetti," "McDo," "Big Mac" and the rest of the MCDONALD'S marks which all use the
prefixes Mc and/or Mac.

Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably,
the respondent's trademark application for the "MACJOY & DEVICE" trademark covers goods under
Classes 29 and 30 of the International Classification of Goods, namely, fried chicken, chicken barbeque,
burgers, fries, spaghetti, etc. Likewise, the petitioner's trademark registration for the MCDONALD'S marks
in the Philippines covers goods which are similar if not identical to those covered by the respondent's
application.

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 x x x has relied on the dominancy test rather than the holistic test. The dominancy test
considers the dominant features in the competing marks in determining whether they are confusingly
similar. Under the dominancy test, courts give greater weight to the similarity of the appearance of the
product arising from the adoption of the dominant features of the registered mark, disregarding minor
differences. Courts will consider more the aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales outlets and market segments.

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

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

xxxx

The test of dominancy is now explicitly incorporated into law in Section 155.l of the Intellectual Property
Code which defines infringement as the "colorable imitation of a registered mark x x x or a  dominant
feature  thereof."

Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in
likelihood of confusion. First, "Big Mak" sounds exactly the same as "Big Mac." Second, the first word in
"Big Mak" is exactly the same as the first word in "Big Mac." Third, the first two letters in "Mak" are the
same as the first two letters in "Mac." Fourth, the last letter "Mak" while a "k" sounds the same as "c"
when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."

In Societe Des Produits Nestle, SA. v. Court of Appeals,  the Court applied the dominancy test in holding
that "FLAVOR MASTER" is confusingly similar to "MASTER ROAST" and "MASTER BLEND." The Court held:

While this Court agrees with the Court of Appeals' detailed enumeration of differences between the
respective trademarks of the two coffee products, this Court cannot agree that totality test is the one
applicable in this case. Rather, this Court believes that the dominancy test is more suitable to this case in
light of its peculiar factual milieu.

Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and
unfair competition that confusing similarity is to be determined on the basis of visual, aural, connotative
comparisons and overall impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace. The totality or holistic test only relies on visual comparison between two
trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.

For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:

xxxx

The scope of protection afforded to registered trademark owners is not limited to protection
from. infringers with identical goods. 1âwphi1 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 specified in the
certificate. x x x.

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

xxxx

x x x. 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:

xxxx

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.

The registered trademark owner may use his mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The Court has recognized that the registered
trademark owner enjoys protection in product and market areas that are the normal
potential expansion of his business.  Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective purchasers would be misled into thinking
that the complaining party has extended his business into the field (see 148 ALR 56 et 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 Arn. Jur. 576, 577). (Emphases supplied,
citations omitted.)

Again, this Court discussed the dominancy test and confusion of business in Dermaline, Inc. v. Myra
Pharmaceuticals, Inc.,48 and we quote:

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion or deception. It is applied when the trademark sought to be registered contains the
main, essential and dominant features of the earlier registered trademark, and confusion or deception is
likely to result. Duplication or imitation is not even required; neither is it necessary that the label of the
applied mark for registration should suggest an effort to imitate. The important issue is whether the use
of the marks involved would likely cause confusion or mistake in the mind of or deceive the ordinary
purchaser, or one who is accustomed to buy, and therefore to some extent familiar with, the goods in
question. Given greater consideration are 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. The test
of dominancy is now explicitly incorporated into law in Section 155.l of R.A. No. 8293 which provides-

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 xx x.

xxxx
 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.

xxxx

We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are no set
rules that can be deduced as what constitutes a dominant feature with respect to trademarks applied for
registration; usually, what a

THIRD DIVISION

[ G.R. No. 188996, February 01, 2017 ]

SERI SOMBOONSAKDIKUL, PETITIONER, VS. ORLANE S.A., RESPONDENT.

DECISION
JARDELEZA, J.:

Assailed in this petition is the Decision [1] of the Court of Appeals (CA) in CA-G.R. SP No. 105229 dated July 14, 2009
which affirmed the decision of the Director General of the Intellectual Property Office (IPO) denying the application for the
mark "LOLANE."

Facts

On September 23, 2003, petitioner Seri Somboonsakdikul (petitioner) filed an application for registration [2] of the mark
LOLANE with the IPO for goods [3] classified under Class 3 (personal care products) of the International Classification of
Goods and Services for the Purposes of the Registration of Marks (International Classification of Goods). [4] Orlane S.A.
(respondent) filed an opposition to petitioner's application, on the ground that the mark LOLANE was similar to ORLANE in
presentation, general appearance and pronunciation, and thus would amount to an infringement of its mark. [5] Respondent
alleged that: (1) it was the rightful owner of the ORLANE mark which was first used in 1948; (2) the mark was earlier
registered in the Philippines on July 26, 1967 under Registration No. 129961 for the following goods: [6]
x x x perfumes, toilet water, face powders, lotions, essential oils, cosmetics, lotions for the hair, dentrifices, eyebrow
pencils, make-up creams, cosmetics & toilet preparations under Registration No. 12996. [7]
and (3) on September 5, 2003, it filed another application for use of the trademark on its additional products:
x x x toilet waters; revitalizing waters, perfumes, deodorants and body deodorants, anti-perspiration toiletries; men
and women perfume products for face care and body care; face, eye, lips, nail, hand make-up products and make-up
removal products, towels impregnated with cosmetic lotions; tanning and instant tanning sunproducts, sunprotection
products, (not for medical use), after suncosmetic products; cosmetic products; slimming cosmetic aids; toiletries; lotions,
shampoos and hair care products; shave and after shave products, shaving and hair removing products; essential oils;
toothpastes; toiletry, cosmetic and shaving kits for travel, filled or fitted vanity-cases[.] [8]
Respondent adds that by promotion, worldwide registration, widespread and high standard use, the mark had
acquired distinction, goodwill, superior quality image and reputation and was now well-known. [9] Imputing bad faith on the
petitioner, respondent claimed that LOLANE's first usage was only on August 19, 2003. [10]

In his answer,[11] petitioner denied that the LOLANE mark was confusingly similar to the mark ORLANE. He averred that he
was the lawful owner of the mark LOLANE which he has used for various personal care products sold worldwide. He
alleged that the first worldwide use of the mark was in Vietnam on July 4, 1995. Petitioner also alleged that he had
continuously marketed and advertised Class 3 products bearing LOLANE mark in the Philippines and in different parts of
the world and that as a result, the public had come to associate the mark with him as provider of quality personal care
products.[12]

Petitioner maintained that the marks were distinct and not confusingly similar either under the dominancy test or the
holistic test. The mark ORLANE was in plain block upper case letters while the n;1ark LOLANE was printed in stylized word
with the second letter L and the letter A co joined. Furthermore, the similarity in one syllable would not automatically
result in confusion even if used in the same class of goods since his products always appear with Thai characters while
those of ORLANE always had the name Paris on it. The two marks are also pronounced differently. Also, even if the two
marks contained the word LANE it would not make them confusingly similar since the IPO had previously allowed the co-
existence of trademarks containing the syllable "joy" or "book" and that he also had existing registrations and pending
applications for registration in other countries.[13]

The Bureau of Legal Affairs (BLA) rejected petitioner's application in a Decision [14] dated February 27, 2007, finding that
respondent's application was filed, and its mark registered, much earlier. [15] The BLA ruled that there was likelihood of
confusion based on the following observations: (1) ORLANE and LOLANE both consisted of six letters with the same last
four letters - LANE; (2) both were used as label for similar products; (3) both marks were in two syllables and that there
was only a slight difference in the first syllable; and (4) both marks had the same last syllable so that if these marks were
read aloud, a sound of strong similarity would be produced and such would likely deceive or cause confusion to the public
as to the two trademarks.[16]

Petitioner filed a motion for reconsideration but this was denied by the Director of the BLA on May 7, 2007. [17] The BLA
ruled that the law did not require the marks to be so identical as to produce actual error or mistake as the likelihood of
confusion was enough. The BLA also found that the dominant feature in both marks was the word LANE; and that the
marks had a strong visual and aural resemblance that could cause confusion to the buying public. This resemblance was
amplified by the relatedness of the goods.[18]

On appeal, the Director General of the IPO affirmed the Decision of the BLA Director. Despite the difference in the first
syllable, there was a strong visual and aural resemblance since the marks had the same last four letters,  i.e., LANE, and
such word is pronounced in this jurisdiction as in "pedestrian lane." [19] Also, the mark ORLANE is a fanciful mark invented
by the owner for the sole purpose of functioning as a trademark and is highly distinctive. Thus, the fact that two or more
entities would accidentally adopt an identical or similar fanciful mark was too good to be true especially when they dealt
with the same goods or services. [20] The Director General also noted that foreign judgments invoked by petitioner for the
grant of its application are not judicial precedents. [21]

Thus, petitioner filed a petition for review [22] before the CA arguing that there is no confusing similarity between the two
marks. Petitioner maintained that LANE is not the dominant feature of the mark and that the dominancy test did not apply
since the trademarks are only plain word marks and the dominancy test presupposes that the marks involved are
composite marks.[23] Petitioner pointed out that the IPO had previously allowed the mark GIN LANE under Registration No.
4-2004-006914 which also involved products under Class 3. [24] While petitioner admitted that foreign judgments are not
judicial precedents, he argued that the IPO failed to recognize relevant foreign judgments, i.e., the Australian Registrar of
Trademarks and the IPO of Singapore which ruled that there was no confusing similarity between the marks LOLANE and
ORLANE.[25] Lastly, the Director General should have deferred to the findings of the Trademark Examiner who made a
substantive examination of the application for trademark registration, and who is an expert in the field and is in the best
position to determine whether there already exists a registered mark or mark for registration. Since petitioner's application
for registration of the mark LOLANE proceeded to allowance and publication without any adverse citation of a prior
confusingly similar mark, this meant that the Trademark Examiner was of the view that LOLANE was not confusingly
similar to ORLANE.[26]

The CA Ruling

The CA denied the petition and held that there exists colorable imitation of respondent's mark by LOLANE. [27]

The CA accorded due respect to the Decision of the Director General and ruled that there was substantial evidence to
support the IPO's findings of fact. Applying the dominancy test, the CA ruled that LOLANE's mark is confusingly or
deceptively similar to ORLANE. There are predominantly striking similarities in the two marks including LANE, with only a
slight difference in the first letters, thus the two marks would likely cause confusion to the eyes of the public. The
similarity is highlighted when the two marks are pronounced considering that both are one word consisting of two
syllables. The CA ruled that when pronounced, the two .marks produce similar sounds. [28] The CA did not heed petitioner's
contention that since the mark ORLANE is of French origin, the same is pronounced as "OR LAN." Filipinos would invariably
pronounce it as "OR-LEYN."[29] The CA also noted that the trademark ORLANE is a fanciful name and petitioner was not
able to explain why he chose the word LOLANE as trademark for his personal care products. Thus, the only logical
conclusion is that he would want to benefit from the established reputation and goodwill of the ORLANE mark. [30]

The CA rejected petitioner's assertion that his products' cheaper price and low-income market eliminates the likelihood of
confusion. Low-income groups, and even those who usually purchased ORLANE products despite the higher cost, may be
led to believe that LOLANE products are low-end personal care products also marketed by respondent. [31]

The CA upheld the applicability of the dominancy test in this case. According to the CA, the dominancy test is already
recognized and incorporated in Section 155.1 of Republic Act No. 8293 (RA 8293), otherwise known as the Intellectual
Property Code of the Philippines. [32] Citing McDonald's Corporation v. MacJoy Fastfood Corporation ,[33]the CA ruled that the
dominancy test is also preferred over the holistic test. This is because the latter relies only on the visual comparison
between two trademarks, whereas the dominancy test relies not only on the visual, but also on their aural and connotative
comparisons, and their overall impressions created. [34] Nonetheless, the CA stated that there is nothing in this jurisdiction
dictating that the dominancy test is applicable for composite marks. [35]

The CA was not swayed by the alleged favorable judgment by the IPO in the GIN LANE application, ruling that in
trademark cases, jurisprudential precedents should be applied only to a case if they are specifically in point. [36] It also did
not consider the ruling of the IPOs in Australia, South Africa, Thailand and Singapore which found no confusing similarity
between the marks LOLANE and ORLANE, stating that foreign judgments do not constitute judicial precedent in this
jurisdiction.[37]

Finally, the CA did not give merit to petitioner's contention that the Director General should have deferred to the findings
of the Trademark Examiner. According to the CA, the proceedings before the Trademark Examiner are  ex-parte,[38] and his
findings are merely prima facie. Whatever his decision may be is still subject to review and/or appeal. [39]

The Petition[40]
Petitioner maintains that the CA erred in its interpretation of the dominancy test, when it ruled that the dominant feature
of the contending marks is the suffix "LANE." [41] The CA failed to consider that in determining the dominant portion of a
mark, significant weight must be given to whether the buyer would be more likely to remember and use one part of a
mark as indicating the origin of the goods.[42] Thus, that part which will likely make the most impression on the ordinary
viewer will be treated as the dominant portion of conflicting marks and given greater weight in the comparison. [43]

Petitioner argues that both LOLANE and ORLANE are plain word marks which are devoid of features that will likely make
the most impression on the ordinary viewer. If at all, the very word marks themselves, LOLANE and ORLANE are each to
be regarded as dominant features. [44] Moreover, the suffix LANE is a weak mark, being "in common use by many other
sellers in the market."[45] Thus, LANE is also used in the marks SHELLANE and GIN LANE, the latter covering goods under
Class 3. Moreover, the two marks are aurally different since respondent's products originate from France and is read as
"OR-LAN" and not "OR-LEYN."[46]

Petitioner also claims that the CA completely disregarded the holistic test, thus ignoring the dissimilarity of context
between LOLANE and ORLANE. Assuming that the two marks produce similar sounds when pronounced, the differences in
marks in their entirety as they appear in their respective product labels should still be the controlling factor in determining
confusing similarity.[47]

Besides, there has been no explicit declaration abandoning the holistic test. [48] Thus, petitioner urges us to go beyond the
similarities in spelling and instead consider how the marks appear in their respective labels, the dissimilarities in the size
and shape of the containers, their color, words appearing thereon and the general appearance, [49] hence: (1) the
commonality of the marks ORLANE and LOLANE starts from and ends with the four-letter similarity-LANE and nothing else;
[50]
 (2) ORLANE uses "safe" or conventional colors while LOLANE uses loud or psychedelic colors and designs with Thai
characters;[51] and (3) ORLANE uses the term "Paris," indicating the source of origin of its products. [52]

Petitioner likewise claims that consumers will be more careful in their choice because the goods in question are directly
related to personal hygiene and have direct effects on their well-being, health and safety. [53] Moreover, with the huge price
difference between ORLANE and LOLANE products, relevant purchasers are less likely to be confused. [54]

Finally, petitioner notes that respondent has neither validly proven nor presented sufficient evidence that the mark
ORLANE is in actual commercial use in the Philippines. Respondent failed to allege in any of its pleadings submitted to the
IPO's BLA and the IPO Director General the names of local outlets that products bearing the mark ORLANE are being
marketed or sold to the general consuming public.[55]

Respondent's Comment[56]

Respondent reiterates the decisions of the CA and the IPO. [57] It maintains that ORLANE is entitled to protection under RA
8293 since it is registered with the IPO with proof of actual use. [58] Respondent posits that it has established in the
world[59] and in the Philippines an image and reputation for manufacturing and selling quality beauty products. Its products
have been sold in the market for 61 years and have been used in the Philippines since 1972. [60] Thus, to allow petitioner's
application would unduly prejudice respondent's right over its registered trademark. [61] Lastly, respondent argues that
decisions of administrative agencies such as the IPO shall not be disturbed by the courts, absent any showing that the
former have acted without or in excess of their jurisdiction, or with grave abuse of discretion. [62]

Issue

We resolve the issue of whether there is confusing similarity between ORLANE and LOLANE which would bar the
registration of LOLANE before the IPO.

Our Ruling

We find that the CA erred when it affirmed the Decision of the IPO.

While it is an established rule in administrative law that the courts of justice should respect the findings of fact of
administrative agencies, the courts may not be bound by such findings of fact when there is absolutely no evidence in
support thereof or such evidence is clearly, manifestly and patently insubstantial; and when there is a clear showing that
the administrative agency acted arbitrarily or with grave abuse of discretion or in a capricious and whimsical manner, such
that its action may amount to an excess or lack of jurisdiction. [63] Moreover, when there is a showing that the findings or
conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in disregard of the evidence on record,
they may be reviewed by the courts.[64] Such is the case here.

There is no colorable imitation between the marks LOLANE and ORLANE which would lead to any likelihood of confusion to
the ordinary purchasers.

A trademark is defined under Section 121.1 of RA 8293 as any visible sign capable of distinguishing the goods. It is
susceptible to registration if it is crafted fancifully or arbitrarily and is capable of identifying and distinguishing the goods of
one manufacturer or seller from those of another. [65] Thus, the mark must be distinctive.[66] The registrability of a
trademark is governed by Section 123 of RA 8293. Section 123.1 provides:
Section 123. Registrability. -

123.1. A mark cannot be registered if it:

 xxx

Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority
d.
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;

Is identical with, or confusingly similar to, or constitutes a translation of 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, as being already the mark of a person other than the applicant for registration, and used for identical
e.
or similar goods or services: Provided, That in determining whether a mark is well-known, account shall be taken of
the knowledge of the relevant sector of the public, rather than of the public at large, including knowledge in the
Philippines which has been obtained as a result of the promotion of the mark;
xxx
In Mighty Corporation v. E. & J. Gallo Winery ,[67] we laid down the requirements for a finding of likelihood of
confusion, thus:
There are two types of confusion in trademark infringement. The first is "confusion of goods" when an otherwise
prudent purchaser is induced to purchase one product in the belief that he is purchasing another, in which case
defendant's goods are then bought as the plaintiffs and its poor quality reflects badly on the plaintiffs reputation. The
other is "confusion of business" wherein the goods of the parties are different but the 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.

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.
(Citations omitted, emphasis supplied.)[68]
While Mighty Corporation enumerates four requirements, the most essential requirement, to our mind, for the
determination of likelihood of confusion is the existence of resemblance between the trademarks,  i.e., colorable imitation.
Absent any finding of its existence, there can be no likelihood of confusion. Thus we held:
Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable imitation" which has
been defined as "such similarity in form, content, words, sound, meaning, special arrangement or general appearance of
the trademark or trade name 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." (Citations omitted.) [69]
We had the same view in Emerald Garment Manufacturing Corporation v. Court of Appeals,[70] where we stated:
Proceeding to the task at hand, 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 does not mean such similitude as amounts to identity. Nor does it require that all the details be literally
copied. x x x (Citation omitted, emphasis supplied.) [71]
In determining colorable imitation, we have used either the dominancy test or the holistic or totality test. The
dominancy test considers 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. More consideration is given on the aural and
visual impressions created by the marks on the buyers of goods, giving little weight to factors like process, quality, sales
outlets, and market segments. [72] On the other hand, the holistic test considers the entirety of the marks as applied to the
products, including the 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.[73]

The CA's use of the dominancy test is in accord with our more recent ruling in UFC Philippines, Inc.  (now merged with
Nutria-Asia, Inc. as the surviving entity) v. Barrio Fiesta Manufacturing Corporation .[74] In UFC Philippines, Inc., we relied
on our declarations in McDonald's Corporation v. L.C. Big Mak Burger, Inc.,[75] Co Tiong Sa v. Director of Patents,
[76]
 and Societe Des Produits Nestle, S.A. v. Court of Appeals [77] that the dominancy test is more in line with the basic rule
in trademarks that confusing similarity is determined by the aural, visual and connotative and overall impressions created
by the marks. Thus, based on the dominancy test, we ruled that there is no confusing similarity between "PAPA BOY &
DEVICE" mark, and "PAPA KETSARAP" and "PAPA BANANA CATSUP."

While there are no set rules as what constitutes a dominant feature with respect to trademarks applied for registration,
usually, what are taken into account are signs, color, design, peculiar shape or name, or some special, easily remembered
earmarks of the brand that readily attracts and catches the attention of the ordinary consumer. [78] In UFC Philippines, Inc.,
what we considered as the dominant feature of the mark is the first word/figure that catches the eyes or that part which
appears prominently to the eyes and ears.[79]
However, while we agree with the CA's use of the dominancy test, we arrive at a different conclusion. Based on the
distinct visual and aural differences between LOLANE and ORLANE, we find that there is no confusing similarity between
the two marks.

The suffix LANE is not the dominant feature of petitioner's mark. Neither can it be considered as the dominant feature of
ORLANE which would make the two marks confusingly similar.

First, an examination of the appearance of the marks would show that there are noticeable differences in the way they are
written or printed as shown below:[80]

(see image)

As correctly argued by petitioner in his answer before the BLA, there are visual differences between LOLANE and ORLANE
since the mark ORLANE is in plain block upper case letters while the mark LOLANE was rendered in stylized word with the
second letter L and the letter A co-joined.[81]

Second, as to the aural aspect of the marks, LOLANE and ORLANE do not sound alike. Etepha v. Director of Patents, et al.
[82]
 finds application in this case. In Etepha, we ruled that there is no confusing similarity between PERTUSSIN and
ATUSSIN. The Court considered among other factors the aural differences between the two marks as follows:
5. As we take up Pertussin and Atussin once again, we cannot escape notice of the fact that the two words do not
sound alike-when pronounced. There is not much phonetic similarity between the two. The Solicitor General well-
observed that in Pertussin the pronunciation of the prefix "Per", whether correct or incorrect, includes a
combination of three letters P, e and r; whereas, in Atussin the whole starts with the single letter A added
to suffix "tussin". Appeals to the ear are dissimilar. And this, because in a word combination, the part that comes
first is the most pronounced. An expositor of the applicable rule here is the decision in the Syrocol-Cheracol controversy.
There, the ruling is that trademark Syrocol (a cough medicine preparation) is not confusedly similar to
trademark Cheracol (also a cough medicine preparation). Reason: the two words "do not look or sound enough alike to
justify a holding of trademark infringement", and the "only similarity is in the last syllable, and that is not uncommon in
names given drug compounds". (Citation omitted, emphasis supplied.) [83]
Similar to Etepha, appeals to the ear in pronouncing ORLANE and LOLANE are dissimilar. The first syllables of each
mark, i.e., OR and LO do not sound alike, while the proper pronunciation of the last syllable LANE-"LEYN" for LOLANE and
"LAN" for ORLANE, being of French origin, also differ. We take exception to the generalizing statement of the Director
General, which was affirmed by the CA, that Filipinos would invariably pronounce ORLANE as "ORLEYN." This is another
finding of fact which has no basis, and thus, justifies our reversal of the decisions of the IPO Director General and the CA.
While there is possible aural similarity when certain sectors of the market would pronounce ORLANE as "ORLEYN," it is not
also impossible that some would also be aware of the proper pronunciation-especially since, as respondent claims, its
trademark ORLANE has been sold in the market for more than 60 years and in the Philippines, for more than 40 years. [84]

Respondent failed to show proof that the suffix LANE has registered in the mind of consumers that such suffix is
exclusively or even predominantly associated with ORLANE products. Notably and as correctly argued by petitioner, the
IPO previously allowed the registration of the mark GIN LANE for goods also falling under Class 3,  i.e., perfume, cologne,
skin care preparations, hair care preparations and toiletries. [85]

We are mindful that in the earlier cases of Mighty Corporation and Emerald, despite a finding that there is no colorable
imitation, we still discussed the nature of the goods using the trademark and whether the goods are identical, similar,
competing or related. We need not belabor a similar discussion here considering that the essential element ih determining
likelihood of confusion, i.e., colorable imitation by LOLANE of the mark ORLANE, is absent in this case. Resemblance
between the marks is a separate requirement from, and must not be confused with, the requirement of a similarity of the
goods to which the trademarks are attached. In Great White Shark Enterprises, Inc v. Caralde, Jr.,[86] after we ruled that
there was no confusing similarity between Great White Shark's "GREG NORMAN LOGO" and Caralde's "SHARK & LOGO"
mark due to the visual and aural dissimilarities between the two marks, we deemed it unnecessary to resolve whether
Great White Shark's mark has gained recognition as a well-known mark.

Finding that LOLANE is not a colorable imitation of ORLANE due to distinct visual and aural differences using the
dominancy test, we no longer find it necessary to discuss the contentions of the petitioner as to the appearance of the
marks together with the packaging, nature of the goods represented by the marks and the price difference, as well as the
applicability of foreign judgments. We rule that the mark LOLANE is entitled to registration.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated July 14, 2009
is REVERSEDand SET ASIDE. Petitioner's application of the mark LOLANE for goods classified under Class 3 of the
International Classification of Goods is GRANTED.

SO ORDERED.