LAW ON TRADEMARK– INTELLECTUAL PROPERTY LAW
COMMERCIAL LAW REVIEW 2021 becoming increasingly aware of the need to protect their goodwill and
Fourth Year – Second Semester
Contents
1. Zuneca Pharmaceutical v. Natrapharm, Inc., G.R. No. 211850, [September 8,
2020]) ..............................................................................................................1
2. Societe Des Produits Nestle, S.A. vs. Court of Appeals and CFC Corporation,
G.R. No. 112012, 4 April 2001 ...................................................................... 16
3. Fredco Manufacturing Corporation vs. President and Fellows of Harvard
College, GR No. 185917, 1 June 2011.......................................................... 16
4. Republic Gas Corporation (REGASCO), et. al. vs. Petron Corporation, et. al.,
G.R. No. 194062, 17 June 2013 ................................................................... 21
5. Birkenstock Orthopaedie Gmbh and Co. Kg vs. Philippine Shoe Expo
Marketing Corporation, G.R. No. 194307, 20 November 2013 .................... 24
6. Shang Properties Realty Corp. v. St. Francis Development Corp., G.R. No.
190706, 21 July 2014 ................................................................................... 24
7. ABS-CBN Corp. v. Gozon, G.R. No. 195956, 11 March 2015 ................... 27
8. Taiwan Kolin Corp. v. Kolin Electronics Co., G.R. No. 209843, 25 March 2015
...................................................................................................................... 27
9. UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corp., G.R. No. 198889,
20 January 2016........................................................................................... 31
10. Seri Somboonsakdikul v. Orlane S.A., G.R. No. 188996, 1 February 201745
11. W Land Holding, Inc. v. Starwood Hotels and Resorts Worldwide, Inc., G.R.
No. 222366, 4 December 2017 .................................................................... 45
12. Kensonic, Inc. v. Uni-Line Multii-Resources, Inc. (Phil.), G.R. Nos. 211820-21
& 211834-35, 6 June 2018 ........................................................................... 49
13. Citigroup, Inc. v. Citystate Savings Bank, Inc., G.R. No. 205409, 13 June
2018.............................................................................................................. 53
14. ABS-CBN Publishing, Inc. v. Director of the Bureau of Trademarks, G.R. No.
217916, 20 June 2018.................................................................................. 59
15. San Miguel Pure Foods Co., Inc. v. Foodsphere, Inc., G.R. Nos. 217781 &
217788, 20 June 2018.................................................................................. 59
16. Asia Pacific Resources International Holdings, Ltd. V. Paperone, Inc., G.R.
Nos. 213365-66, 10 December 2018 ........................................................... 63
1. Zuneca Pharmaceutical v. Natrapharm, Inc., G.R. No. 211850, [September
8, 2020])
EN BANC
[G.R. No. 211850. September 8, 2020.]
ZUNECA PHARMACEUTICAL, AKRAM ARAIN
AND/OR VENUS ARAIN, M.D., AND STYLE OF
ZUNECA
PHARMACEUTICAL, petitioners, vs. NATRAPHARM,
INC., respondent.
DECISION
CAGUIOA, J p:
Businesses generally thrive or perish depending on their
reputation among customers. Logically, consumers gravitate towards
products and services they believe are of a certain quality and provide
perceived benefits. Thus, entrepreneurs and businesses actively seek to
set apart their reputation and goodwill from every other enterprise with
the goal of being the top-of-mind choice for the consumers. As signs
differentiating the wares or services offered by enterprises, trademarks
serve this purpose of making the products and services of each business
uniquely memorable. Trademarks have several functions: they indicate
the origin or ownership of the articles or services in which they are used;
they guarantee that the articles or services come up to a certain standard
of quality; and they advertise the articles and services they
symbolize. 1 Indeed, the goodwill of a business, as symbolized and
distinguished by its trademarks, helps ensure that the enterprise stands
out, stays afloat, and possibly flourish amidst the sea of commercial
activity where the consumers' continued patronage is a lifebuoy that may
determine life or death.
Faced with this intrinsic need to survive, enterprises are
their brands. The State, too, is interested in the protection of the
intellectual property of enterprises and individuals who have exerted
effort and money to create beneficial products and services. 2 In line with
this, and considering the extent to which intellectual property rights
impact on the viability of businesses, a common controversy in the field
of intellectual property law is to whom these rights pertain.
In this case of first impression, this is precisely the issue at
hand. This case concerns trademarks which are used for different types
of medicines but are admitted by both parties to be confusingly similar.
Exacerbating this controversy on the issue of ownership, however, are
conflicting interpretations on the rules on the acquisition of ownership
over trademarks, muddled by jurisprudential precedents which applied
principles inconsistent with the current law. Thus, in resolving this issue,
the Court needed to examine and ascertain the meaning and intent
behind the rules that affect trademark ownership.
Facts
This is a Petition for Review on Certiorari 3 (Petition) under
Rule 45 with Prayer for Temporary Restraining Order (TRO) and/or
Preliminary Injunction filed by petitioners Zuneca Pharmaceutical, Akram
Arain and/or Venus Arain, M.D., and Style of Zuneca Pharmaceutical
(collectively, Zuneca) assailing the Decision 4 dated October 3, 2013 and
Resolution 5 dated March 19, 2014 of the Court of Appeals (CA) in CA-
G.R. CV No. 99787. The CA denied Zuneca's appeal and affirmed the
Decision 6 dated December 2, 2011 of the Regional Trial Court of Quezon
City, Branch 93 (RTC) in Civil Case No. Q-07-61561, which found Zuneca
liable for trademark infringement under Sections 155 to
155.2 7 of Republic Act No. (R.A.) 8293, 8 also known as the Intellectual
Property Code of the Philippines (IP Code), and awarded damages in
favor of respondent Natrapharm, Inc. (Natrapharm).
Petitioner Zuneca Pharmaceutical has been engaged in the
importation, marketing, and sale of various kinds of medicines and drugs
in the Philippines since 1999. 9 It imports generic drugs from Pakistan
and markets them in the Philippines using different brand
names. 10 Among the products it has been selling is a drug
called carbamazepine under the brand name "ZYNAPS," which is an anti-
convulsant used to control all types of seizure disorders of varied causes
like epilepsy. 11 Petitioner Venus S. Arain, M.D. (Dr. Arain) was the
proprietor of Zuneca Pharmaceutical before Zuneca, Inc. was
incorporated. 12 Akram Arain, meanwhile, is the husband of Dr. Arain,
who later on became the President of Zuneca, Inc. 13
Natrapharm, on the other hand, is a domestic corporation
engaged in the business of manufacturing, marketing, and distribution of
pharmaceutical products for human relief. 14 One of the products being
manufactured and sold by Natrapharm is citicoline under the trademark
"ZYNAPSE," which is indicated for the treatment of cerebrovascular
disease or stroke. 15 The trademark "ZYNAPSE" was registered with the
Intellectual Property Office of the Philippines (IPO) on September 24,
2007 16 and is covered by Certificate of Trademark Registration No. 4-
2007-005596. 17
On November 29, 2007, Natrapharm filed with the RTC a
Complaint against Zuneca for Injunction, Trademark Infringement,
Damages and Destruction with Prayer for TRO and/or Preliminary
Injunction, alleging that Zuneca's "ZYNAPS" is confusingly similar to its
registered trademark "ZYNAPSE" and the resulting likelihood of
confusion is dangerous because the marks cover medical drugs intended
for different types of illnesses. 18 Consequently, Natrapharm sought to
enjoin Zuneca from using "ZYNAPS" or other variations thereof, in
addition to its demand for Zuneca's payment of Two Million Pesos
(P2,000,000.00) in damages; Five Million Pesos (P5,000,000.00) in
exemplary damages; and Three Hundred Thousand Pesos (P300,000.00)
as attorney's fees, expenses of litigation, and costs of suit. 19 Further, it
prayed that all infringing goods, labels, signs, etc. of Zuneca be
impounded and destroyed without compensation. 20
In its Answer (With Compulsory Counterclaim and Prayer for
Preliminary Injunction), Zuneca claimed that it has been
selling carbamazepine under the mark "ZYNAPS" since 2004 after
securing a Certificate of Product Registration on April 15, 2003 from the
Bureau of Food and Drugs (BFAD, now Food and Drug
Administration). 21 It alleged that it was impossible for Natrapharm not
to have known the existence of "ZYNAPS" before the latter's registration
of "ZYNAPSE" because Natrapharm had promoted its products, such as
"Zobrixol" and "Zcure," in the same publications where Zuneca had
advertised "ZYNAPS." 22 Further, Zuneca pointed out that both
Page 1 of 65 | IPL | LAW ON TRADEMARK
Natrapharm and Zuneca had advertised their respective products in
identical conventions. 23 Despite its knowledge of prior use by Zuneca of
"ZYNAPS," Natrapharm had allegedly fraudulently appropriated the
"ZYNAPSE" mark by registering the same with the IPO. 24 As the prior
user, Zuneca argued that it is the owner of "ZYNAPS" and the continued
use by Natrapharm of "ZYNAPSE" causes it grave and irreparable
damage. 25
On the basis of such arguments, Zuneca insisted that it is
Natrapharm which should be liable for damages. 26 On this score,
Zuneca prayed that its counterclaims against Natrapharm be granted by
the RTC, 27 namely, the cancellation of Natrapharm's "ZYNAPSE"
registration; the prohibition of Natrapharm from manufacturing,
advertising, selling, and distributing "ZYNAPSE" products; the destruction
of "ZYNAPSE" products and labels; the payment of Two Million Pesos
(P2,000,000.00), or double such amount, in the discretion of the court, as
damages for fraudulent registration; and the payment of Five Million
Pesos (P5,000,000.00) as moral damages, Two Million Pesos
(P2,000,000.00) as exemplary damages, Three Hundred Thousand Pesos
(P300,000.00) as attorney's fees, and Fifty Thousand Pesos (P50,000.00)
as costs of suit. 28
Subsequently, after a summary hearing, the prayer for TRO
was denied. 29 The preliminary injunction and counter preliminary
injunction prayed for by the parties were likewise rejected. 30
As summarized by the CA, the following evidence were
presented during the trial:
First to testify on the part of Natrapharm
was Cristina Luna Ravelo who is the vice president
for marketing of Natrapharm. According to her, she
was the one who conceptualized the name
"ZYNAPSE"[,] taking it from "Synapse" which was a
publication she sponsored when she was the
product manager of [the Philippine] Neurological
Association. Further[,] "Synapse" is a neurological
term referring to the junction between 2 nerves
where nerve signals are transmitted, hence
appropriate for a medicine for stroke. Afterward[s],
the witness verified using the research tool IMS-
PPI, which lists the pharmaceutical products
marketed in the Philippines, any other
cerebroprotective products (CO4A) that [are]
confusingly similar with "ZYNAPSE." Finding none
in the list covering the period of the fourth quarter
of 2004 up to the first quarter of 2007, the witness
proceeded with the registration of "ZYNAPSE" with
the IPO. After the IPO issued a [certificate of
trademark registration], the BFAD, in turn, released
a Certificate of Product Listing for "ZYNAPSE." The
witness likewise revealed that she was informed in
late September 2007 of the existence of "ZYNAPS"
after a sales personnel had informed her of such
drug being sold in Visayas and Mindanao. After
learning this, the witness brought the matter to Dr.
Arain, but no resolution was agreed upon by the
parties due to a difference in opinion.
On cross-examination, the witness
averred that she did not check with drugstores and
other publications for similar brand names as
"ZYNAPSE," as she only relied with [the] IMS[-PPI].
Further, the witness explained that the formulation
of the drug "ZYNAPSE" is owned by Patriot
Pharmaceutical [(Patriot)] and this formulation is
marketed by Natrapharm through the brand name
"ZYNAPSE."
On re-direct, the witness clarified that
she did not conduct any field survey to find if there
[we]re similar brand names as "ZYNAPSE," because
of the difficulty posed by inquiring from each [of
the 3,000 to 4,000 drug stores] nationwide. In
addition, it was x x x Natrapharm's strategy to
remain quiet about [its] product.
Next to testify was Jeffrey Silang, the
Analyst Programmer of Natrapharm. His function
[was] to create a system and generate reports for
accounting, inventory and sales for Natrapharm.
The witness stated that Patriot is a mere supplier
of Natrapharm and that Natrapharm has other
suppliers. The witness then identified a sales report
which indicate[d] that WMMC Hospital bought
several quantities of "ZYNAPSE" products from
Natrapharm. Also included in said report [was] an
entry "non-psyche Patriot" which represent[ed] its
supplier.
On cross-examination, the witness
reiterated that Patriot supplies the raw materials to
Natrapharm. Natrapharm, in turn, repackage[s]
these materials to bear the brand "ZYNAPSE." The
witness also admitted that he d[id] not know
exactly why "ZYNAPSE" is qualified as non-psyche,
as he is a mere Information Technology expert.
Last to testify was Atty. Caesar J.
Poblador who identified his Judicial Affidavit dated
[November 4, 2009] which contain[ed] the several
invoices charged by his law firm to Natrapharm in
consideration of the law firm's legal service.
On the part of [Zuneca], Dr. Arain took
the stand and identified her Supplemental Affidavit
dated [February 12, 2010]. On said Affidavit, it [was]
stated that Dr. Arain established Zuneca
[Pharmaceutical] in 1999. Subsequently, [Zuneca,
Inc.] was incorporated on [January 8, 2008] and [it]
took over the business of Zuneca Pharmaceutical.
Verily, among the products that Zuneca sells is
[carbamazepine] with the brand name "ZYNAPS" for
which Zuneca applied for a Certificate of Product
Registration (CPR) from BFAD. On [April 15, 2003],
Zuneca was able to obtain a CPR over its
[carbamazepine] product valid for five (5) years
which was [then] renewed for another five (5) years
or until [April 15, 2013]. Zuneca then started
importing [carbamazepine] "ZYNAPS" in December
2003 and began promoting, marketing and selling
them in 2004. In order to promote "ZYNAPS,"
Zuneca advertised it through paid publications
such as the (1) Philippine Pharmaceutical Directory
or PPD; (2) PPD's Better Pharmacy; and (3) PPD's
Philippine Pharmaceutical Directory Review (PPDr).
Apparently, said publications also cover[ed] the
different products of Natrapharm and its affiliate
[Patriot]. Allegedly, the two companies
(Natrapharm and Patriot) participated as partners
in a medical symposi[um] on [October 22 to 23,
2009].
When asked why she did not register her
trademark with the IPO, x x x [Dr.] Arain answered
that she could not find the time because of the
illness of her father.
On cross-examination, Dr. Arain testified
that she remained as an adviser of Zuneca, Inc.,
after its incorporation. She then told her husband,
who became the President of Zuneca, Inc. and the
vice president about the dispute with Natrapharm.
Further, the witness admitted that she did not
secure an advertising page for "ZYNAPS" in the
[PPD].
Last to testify was Emmanuel Latin, the
president of Medicomm Pacific (Medicomm). The
witness attested that Medicomm is engaged in the
publication of lists of drugs which it gives to
doctors as reference in the preparation of
prescriptions for their patients. The witness then
enumerated their publications as PPD, PPDr, and
PPD's Better Pharmacy which the company
publishes annually and distributes to doctors for
free. According to the witness, several years ago,
Medicomm invited pharmaceutical companies to
list with its publications for free. Thereafter, the
said pharmaceutical companies started advertising
with Medicomm for a fee which then became the
source of revenues for Medicomm. The witness
also affirmed that Zuneca, Natrapharm and Patriot
Page 2 of 65 | IPL | LAW ON TRADEMARK
 are advertisers of PPD. However, the witness
admitted that "ZYNAPSE" [was] not listed in the
PPD. 31
The RTC Ruling
After trial, the RTC issued its Decision 32 dated December 2,
2011, the dispositive portion of which states:
WHEREFORE, in view of the foregoing,
judgment is hereby rendered in favor of
[Natrapharm] and against [Zuneca].
[Zuneca], jointly and severally, [is] hereby
directed to pay [Natrapharm] the following
amounts, to wit:
One Million Pesos
(P1,000,000.00) as damages;
One Million Pesos
(P1,000,000.00) as exemplary
damages;
Two Hundred Thousand
Pesos (P200,000.00) as
attorney's fees; and the
Costs.
[Zuneca is] further enjoined from
henceforth using ["ZYNAPS"] or any other variations
thereto which are confusingly similar to
[Natrapharm's "ZYNAPSE."]
It is likewise ordered that all infringing
goods, labels, signs, prints, packages, wrappers,
receptacles and advertisements in possession of
[Zuneca], bearing the registered mark or any
reproduction, counterfeit, copy or colourable
imitation thereof, all plates, molds, matrices and
other means of making the same, implements,
machines and other items related to the conduct,
and predominantly used, by [Zuneca] in such
infringing activities, be disposed of outside the
channels of commerce or destroyed, without
compensation.
The counterclaim of [Zuneca] is
DISMISSED for lack of merit.
SO ORDERED. 33
The RTC ruled that the first filer in good faith defeats a first
user in good faith who did not file any application for
registration. 34 Hence, Natrapharm, as the first registrant, had trademark
rights over "ZYNAPSE" and it may prevent others, including Zuneca, from
registering an identical or confusingly similar mark. 35 Moreover, the
RTC ruled that there was insufficient evidence that Natrapharm had
registered the mark "ZYNAPSE" in bad faith. 36 The fact that "ZYNAPS"
and Natrapharm's other brands were listed in the Philippine
Pharmaceutical Directory (PPD) was not sufficient to show bad faith
since Zuneca's own witness admitted to not having complete knowledge
of the drugs listed in the PPD. 37 Natrapharm should also therefore be
accorded the benefit of the doubt that it did not have complete
knowledge of the other brand names listed in the PPD. 38 Further,
following the use of the dominancy test, the RTC likewise observed that
"ZYNAPS" was confusingly similar to "ZYNAPSE." 39 To protect the
public from the disastrous effects of erroneous prescription and
mistaken dispensation, the confusion between the two drugs must be
eliminated. 40
The CA Ruling
Aggrieved, Zuneca appealed the RTC's Decision to the CA,
raising the following issues: (1) whether the RTC erred in ruling that the
first-to-file trademark registrant in good faith defeats the right of the prior
user in good faith, hence, Natrapharm has the right to prevent Zuneca
from using or registering the trademark "ZYNAPS" or marks similar or
identical thereto; (2) whether the RTC erred in finding that Natrapharm
was in good faith when it registered the trademark "ZYNAPSE"
for citicoline; (3) whether the RTC erred in ruling that Zuneca is liable for
trademark infringement and therefore liable for damages and attorney's
fees and should be enjoined from the use of the trademark "ZYNAPS"
and marks similar thereto, and that Zuneca's goods and materials in
connection with the trademark "ZYNAPS" must be disposed outside the
channels of trade or destroyed without compensation; and (4) whether
the RTC erred in dismissing Zuneca's counterclaims for lack of merit. 41
In a Decision 42 dated October 3, 2013, the CA denied
Zuneca's appeal for lack of merit, the dispositive portion of which states:
WHEREFORE, premises considered, the
instant Appeal is DENIED for lack of merit, and the
assailed decision rendered by the Regional Trial
Court of Quezon City, Branch 93 dated [December
2, 2011] is AFFIRMED.
SO ORDERED. 43
In affirming the RTC, the CA stated that registration, not prior
use, is the mode of acquiring ownership of a trademark. 44 The mark
must be registered in order to acquire ownership and the failure to do so
renders the non-registering user susceptible to a charge of
infringement. 45 Moreover, those who intend to register their mark need
not look at the other marks used by other persons but must confine only
their search to the marks found in the database of the IPO. 46 If there are
no similar or identical marks, the mark should be registered as a matter
of course. 47 Hence, as the registered owner of the trademark
"ZYNAPSE," Natrapharm has every right to prevent all other parties from
using identical or similar marks in their business, as provided in the IP
Code. 48 Further, only the registered owner of the trademark may file a
civil action against the infringer and seek injunction and damages. 49
On the issue of good faith, the CA affirmed the findings of the
RTC that Natrapharm had no knowledge of the existence of "ZYNAPS"
prior to the registration of "ZYNAPSE." 50 The CA also found that the
testimony of Natrapharm's witness Cristina Luna Ravelo 51 (Ravelo)
showed that Natrapharm was able to register "ZYNAPSE" after it was
cleared using the databases of the IPO and the BFAD. 52 The CA ruled
that good faith is presumed and it was incumbent on Zuneca to show
that Natrapharm was in bad faith when it registered "ZYNAPSE," which
Zuneca failed to show. 53 The CA stated that it was not enough that
Zuneca and Natrapharm had exhibited in the same convention two years
prior to the registration of "ZYNAPSE" and ruled that it was unlikely that
the participants would remember each and every medicine or drug
exhibited during said convention. 54 Besides, Zuneca failed to show that
the people who had attended the convention on behalf of Natrapharm
were also the ones who were responsible for the creation of "ZYNAPSE"
or that they were still connected to Natrapharm at the time the
"ZYNAPSE" mark was registered with the IPO in 2007. 55
In a Resolution 56 dated March 19, 2014, the CA denied
Zuneca's motion for reconsideration.
Hence, Zuneca filed the instant Petition.
In compliance with the Court's Resolution 57 dated June 2,
2014, Natrapharm filed its Comment. 58 Zuneca thereafter filed its
Reply 59 to Natrapharm's Comment. In a Resolution 60 dated June 6,
2016, the Court required each party to file their respective Memoranda. In
compliance with this, Natrapharm filed its Memorandum 61 dated
September 6, 2016 and Zuneca filed its Memorandum 62 dated
September 16, 2016.
The Issues
As stated by Zuneca, the issues for the Court's resolution are
as follows:
I
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING
THE RTC'S RULING THAT THE FIRST-TO-FILE
TRADEMARK REGISTRANT IN GOOD FAITH
DEFEATS THE RIGHT OF THE PRIOR USER IN
GOOD FAITH, HENCE, [NATRAPHARM] HAS THE
RIGHT TO PREVENT [ZUNECA] FROM
USING/REGISTERING THE TRADEMARK "ZYNAPS"
OR [MARKS] SIMILAR [OR] IDENTICAL THERETO.
II
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING
THE RTC'S FINDING THAT [NATRAPHARM] WAS IN
GOOD FAITH WHEN IT REGISTERED THE
TRADEMARK "ZYNAPSE" FOR [CITICOLINE].
III
Page 3 of 65 | IPL | LAW ON TRADEMARK
 WHETHER OR NOT THE [CA] ERRED IN AFFIRMING
THE RTC'S RULING THAT [ZUNECA IS] LIABLE FOR
TRADEMARK INFRINGEMENT AND [IS] THUS
LIABLE FOR DAMAGES AND ATTORNEY'S FEES
AND [IS] ENJOINED FROM THE USE OF THE
TRADEMARK "ZYNAPS" AND MARKS SIMILAR
THERETO; AND THAT ALL [OF ZUNECA'S] GOODS
AND MATERIALS IN CONNECTION WITH THE
TRADEMARK "ZYNAPS" MUST BE DISPOSED
OUTSIDE THE CHANNELS OF TRADE OR
DESTROYED WITHOUT COMPENSATION.
IV
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING
THE RTC'S DISMISSAL OF [ZUNECA'S]
COUNTERCLAIMS FOR LACK OF MERIT.
V agricultor ó industrial de otra clase, que individual ó
WHETHER OR NOT THE [CA] ERRED IN RULING
THAT [ZUNECA], FOR FAILURE TO REGISTER
"ZYNAPS" AND FOR FAILURE TO OPPOSE
[NATRAPHARM'S] APPLICATION FOR "ZYNAPSE"[,
IS] BARRED BY LACHES AND [IS] DEEMED TO
HAVE ABANDONED [ITS] TRADEMARK. 63
It bears stressing at this juncture that the confusing similarity
of the "ZYNAPS" and "ZYNAPSE" marks was admitted by both
parties. 64 The resolution of this controversy necessitates determining
who has the right to prevent the other party from using its confusingly
similar mark. Thus, the following questions must be answered: (1) How
is ownership over a trademark acquired? (2) Assuming that both parties
owned their respective marks, do the rights of the first-to-file registrant
Natrapharm defeat the rights of the prior user Zuneca, i.e., may
Natrapharm prevent Zuneca from using its mark? (3) If so, should
Zuneca be held liable for trademark infringement?
The Court's Ruling
Under the law, the owner of the mark shall have the exclusive
right to prevent all third parties not having the owner's consent from
using identical or similar marks for identical or similar goods or services
where such use would result in a likelihood of confusion. 65
Further, in Prosource International, Inc. v. Horphag Research
Management SA, 66 the Court held that, to establish trademark
infringement, the following elements must be proven: (1) the trademark
being infringed is registered in the IPO; (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)
it is without the consent of the trademark owner or the assignee
thereof. 67
Thus, to determine the prevailing party in this controversy and
the existence of trademark infringement, the Court first has to rule on the
issue of acquisition of ownership of marks by both parties.
I. How trademark ownership is
acquired
The RTC and the CA both ruled that, having been the first to
register in good faith, Natrapharm is the owner of the trademark
"ZYNAPSE" and it has the right to prevent others, including Zuneca, from
registering and/or using a confusingly similar mark.
Zuneca, however, contends that, as the first user, it had
already owned the "ZYNAPS" mark prior to Natrapharm's registration and,
invoking Berris Agricultural Co., Inc. v. Abyadang 68 (Berris) and E.Y.
Industrial Sales, Inc., et al. v. Shen Dar Electricity and Machinery Co.,
Ltd. 69 (E.Y. Industrial Sales, Inc.), its rights prevail over the rights of
Natrapharm, the first registrant of a confusingly similar mark.
The Court holds that Zuneca's argument has no merit
because: (i) the language of the IP Code provisions clearly conveys the
rule that ownership of a mark is acquired through registration; (ii) the
intention of the lawmakers was to abandon the rule that ownership of a
mark is acquired through use; and (iii) the rule on ownership used
in Berris and E.Y. Industrial Sales, Inc. is inconsistent with the IP
Code regime of acquiring ownership through registration.
i. Under the IP Code, ownership of a
mark is acquired through registration
Special laws have historically determined and provided for the
acquisition of ownership over marks, and a survey thereof shows that
ownership of marks is acquired either through registration or use.
Spanish Royal Decree of October 26, 1888
As early as the Spanish regime, trademarks were already
protected in the Philippines. The Real Decreto de 26 de octubre de
1888 70 or the Spanish Royal Decree of October 26, 1888 provided for
the concession and use of Philippine trademarks as follows:
Art. 4. Todo fabricante, comerciante,
colectivamente desee usar alguna marca para
distinguir los productos de una fábrica, los objetos
de comercio, las primeras materias agrícolas ú
otras cualesquiera, ó la ganadería, y lo mismo los
que deseen conservar la propiedad de dibujos y
modelos industriales, tendrán que solicitar el
certificado de propiedad con arreglo á las
prescripciones de este decreto.
El que carezca de dicho certifcado, no
podrá usar marcas ó distintivo alguno para los
productos de su industria, ni evitar que otros
empleen sus estampaciones ó dibujos industriales.
xxx xxx xxx
Art. 21. El derecho á la propiedad de las
marcas, dibujos, y modelos industriales que esta
disposición reconoce, se adquirirá por el certificado
y el cumplimiento de las demás disposiciones que
la misma determina.
Based on the above provisions, one who wished to own and
use a trademark had to request for a certificate of ownership in
accordance with the royal decree. The use of unregistered trademarks
was prohibited. In other words, because trademarks could not be used
without first securing the necessary certificate, the ownership of
trademarks under the Spanish Royal Decree of October 26, 1888 was
acquired only by means of registration.
Act No. 666
The manner of acquiring ownership over trademarks changed
during the American period. In 1903, Act No. 666 71 was enacted, which
provided that the ownership of a mark was acquired through actual use
thereof. The pertinent provisions of said law are reproduced below:
SECTION 2. Anyone who produces or
deals in merchandise of any kind by actual use
thereof in trade may appropriate to his exclusive
use a trade-mark, not so appropriated by another,
to designate the origin or ownership
thereof: Provided, That a designation or part of a
designation which relates only to the name, quality,
or description of the merchandise or geographical
place of its production or origin cannot be the
subject of a trade-mark.
SECTION 3. The ownership or
possession of a trade-mark, heretofore or
hereafter appropriated, as in the foregoing section
provided, shall be recognized and protected in the
same manner and to the same extent, as are other
property rights known to the law. To this end any
person entitled to the exclusive use of a trade-mark
to designate the origin or ownership of goods he
has made or deals in may recover damages in a
civil action from any person who has sold goods of
a similar kind, bearing such trade-mark, and the
measure of the damages suffered, at the option of
the complaining party, shall be either the
reasonable profit which the complaining party
would have made had the defendant not sold the
goods with the trade-mark aforesaid, or the profit
Page 4 of 65 | IPL | LAW ON TRADEMARK
 which the defendant actually made out of the sale
of the goods with the trade-mark, and in cases
where actual intent to mislead the public or to
defraud the owner of the trade-mark shall be
shown, in the discretion of the court, the damages
may be doubled. The complaining party, upon
proper showing, may have a preliminary injunction,
restraining the defendant temporarily from use of
the trade-mark pending the hearing, to be granted
or dissolved in the manner provided in the Code of
Civil Procedure, and such injunction upon final
hearing, if the complainant's property in the trade-
mark and the defendant's violation thereof shall be
fully established, in these Islands, nor shall it be
necessary to show that the trade-mark shall be
made perpetual, and this injunction shall be part of
the judgment for damages to be rendered in the
same cause as above provided.
SECTION 4. In order to justify recovery
for violation of trade-mark rights in the preceding
sections defined, it shall not be necessary to show
that the trade-marks have been registered under
the royal decree of eighteen hundred and eight-
eight, providing for registration of trade-marks in
the Philippine Islands, in force during the Spanish
sovereignty in these Islands, nor shall it be
necessary to show that the trade mark has been
registered under this Act. It shall be sufficient to
invoke protection of his property in a trade-mark if
the party complaining shall prove that he has used
the trade-mark claimed by him upon his goods a
sufficient length of time so that the use of the
trade-mark by another would be an injury to him
and calculated to deceive the public into the belief
that the goods of that other were the goods
manufactured or dealt in by the complaining party.
(Emphasis and underscoring supplied)
R.A. 166
On June 20, 1947, R.A. 166 72 (Trademark Law) was enacted
and approved. It is worth noting that the Trademark Law, as clarified
through its subsequent amendment, explicitly stated that actual use was
a prerequisite for the ownership of marks.
Section 4 of the Trademark Law stated that the owner of the
mark had the right to register the same. Despite not categorically
defining who the owner of the mark was, the same section also provided
that one could not register a mark that was previously used and not
abandoned by another. Consequently, prior use and non-abandonment
determined the ownership of the mark because it effectively barred
someone else from registering the mark and representing himself 73 to
be the owner thereof. In other words, the only person who was entitled to
register the mark, and therefore be considered as the owner thereof, was
the person who first used and who did not abandon the mark, viz.:
SECTION 4. Registration of Trade-marks,
Trade-names and Service-marks. — 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, 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 purchases[.]
(Emphasis and underscoring
supplied)
Civil Code
When the Civil Code took effect in 1950, it included the rule
that the owner of the trademark was the person, corporation, or firm
registering the same, but said rule was made subject to the provisions of
special laws. Hence, the manner of acquiring ownership was still through
actual use because the special law in effect at that time was
the Trademark Law, viz.:
CHAPTER 3
TRADEMARKS AND TRADENAMES
ART. 520. A trademark or tradename
duly registered in the proper government bureau or
office is owned by and pertains to the person,
corporation, or firm registering the same, subject to
the provisions of special laws. (Emphasis supplied)
Amendment to the Trademark Law
In 1951, the Trademark Law was amended by R.A.
638, 74 which added Section 2-A, among others. As previously
mentioned, this amendment explicitly provided that ownership over a
mark was acquired through actual use, viz.:
Sec. 2-A. Ownership of trade-marks,
trade-names and service-marks; how acquired. —
Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any
lawful business, or who renders any lawful service
in commerce, by actual use thereof in manufacture
or trade, in business, and in the service rendered,
may appropriate to his exclusive use a trade-mark,
a trade-name, or a service-mark not so
appropriated by another, to distinguish his
merchandise, business or service from the
merchandise, business or services of others. The
ownership or possession of a trade-mark, trade-
name, service-mark, heretofore or hereafter
appropriated, as in this section provided, shall be
recognized and protected in the same manner and
to the same extent as are other property rights
known to the law. (Emphasis and underscoring
supplied)
IP Code
Forty-seven years later, upon the effectivity of the IP Code on
January 1, 1998, the manner of acquiring ownership of trademarks
reverted to registration. This is expressed in Section 122 of the IP
Code, viz.:
SECTION 122. How Marks are Acquired.
— The rights in a mark shall be acquired through
registration made validly in accordance with the
provisions of this law. (Sec. 2-A, R.A. No. 166a)
(Emphasis and underscoring supplied)
Related to this, Section 123.1 (d) of the IP Code expresses the
first-to-file rule as follows:
SECTION 123. Registrability. — 123.1. A
mark cannot be registered if it:
xxx xxx xxx
(d) Is identical with a
registered mark belonging to
a different
proprietor or a mark with an
earlier filing or priority date,
in respect of:
(i) The same
goods or services,
or
(ii) Closely related
goods or services,
or
(iii) If it nearly
resembles such a
mark as to be
Page 5 of 65 | IPL | LAW ON TRADEMARK
 likely to deceive or the Philippines or a mark or trade-
cause confusion[.] name previously used in the
(Emphasis and Philippines by another and not
underscoring abandoned, as to be likely, when
supplied) applied to or used in connection with
the goods, business or services of
To clarify, while it is the fact of registration which confers
the applicant, to cause confusion or
ownership of the mark and enables the owner thereof to exercise the
mistake or to deceive purchasers; or
rights expressed in Section 147 75 of the IP Code, the first-to-file rule
nevertheless prioritizes the first filer of the trademark application and xxx xxx xxx (Emphasis supplied)
operates to prevent any subsequent applicants from registering marks
described under Section 123.1 (d) of the IP Code.
Reading together Sections 122 and 123.1 (d) of the IP Code,
Subparagraph (d) of the above provision of the Trademark
therefore, a registered mark or a mark with an earlier filing or priority date
Law was amended in the IP Code to, among others, remove the phrase
generally bars the future registration of — and the future acquisition of
"previously used in the Philippines by another and not abandoned ." Under
rights in — an identical or a confusingly similar mark, in respect of the
the Trademark Law, as amended, the first user of the mark had the
same or closely-related goods or services, if the resemblance will likely
right 81 to file a cancellation case against an identical or confusingly
deceive or cause confusion.
mark registered in good faith by another person. However, with the
The current rule under the IP Code is thus in stark contrast to omission in the IP Code provision of the phrase "previously used in the
the rule on acquisition of ownership under the Trademark Law, as Philippines by another and not abandoned," said right of the first user is
amended. To recall, the Trademark Law, as amended, provided that prior no longer available. In effect, based on the language of the provisions of
use and non-abandonment of a mark by one person barred the future the IP Code, even if the mark was previously used and not abandoned by
registration of an identical or a confusingly similar mark by a different another person, a good faith applicant may still register the same and
proprietor when confusion or deception was likely. 76 It also stated that thus become the owner thereof, and the prior user cannot ask for the
one acquired ownership over a mark by actual use. 77 cancellation of the latter's registration. If the lawmakers had wanted to
retain the regime of acquiring ownership through use, this phrase should
Once the IP Code took effect, however, the general rule on have been retained in order to avoid conflicts in ownership. The removal
ownership was changed and repealed. 78 At present, as expressed in the of such a right unequivocally shows the intent of the lawmakers to
language of the provisions of the IP Code, prior use no longer determines abandon the regime of ownership under the Trademark Law, as
the acquisition of ownership of a mark in light of the adoption of the rule amended.
that ownership of a mark is acquired through registration made validly in
accordance with the provisions of the IP Code. 79 Accordingly, the On this point, our esteemed colleagues Associate Justices
trademark provisions of the IP Code use the term "owner" in relation to Leonen and Lazaro-Javier have expressed their doubts regarding the
registrations. 80 This fact is also apparent when comparing the abandonment of the ownership regime under the Trademark Law, as
provisions of the Trademark Law, as amended, and the IP Code, viz.: amended, because of the continued requirement of actual use under
the IP Code and because of the prima facie nature of a certificate of
registration. 82 In particular, Sections 124.2 83 and 145 84 of the IP
Trademark Law, as amended IP Code
Code provide that the applicant/registrant is required to file a Declaration
of Actual Use on specified periods, while Section 138 85 provides that a
Sec. 4. Registration of trade-marks, SECTION 123. Registrability. — 123.1. certificate of registration of a mark shall be prima facie evidence of the
trade-names and service-marks on A mark cannot be registered if it: validity of the registration, the registrant's ownership of the mark, and of
the principal register. — There is the registrant's exclusive right to use the same in connection with the
hereby established a register of (a) Consists of immoral, deceptive or goods or services and those that are related thereto specified in the
trade-mark, trade-names and service- scandalous matter, or matter which certificate.
marks which shall be known as the may disparage or falsely suggest a
principal register. The owner of a connection with persons, living or Certainly, while the IP Code and the Rules 86 of the IPO
trade-mark, a trade-name or service- dead, institutions, beliefs, or national mandate that the applicant/registrant must prove continued actual use
mark used to distinguish his goods, symbols, or bring them into contempt of the mark, it is the considered view of the Court that this does not imply
business or services from the goods, or disrepute; that actual use is still a recognized mode of acquisition of ownership
business or services of others shall under the IP Code. Rather, these must be understood as provisions that
(b) Consists of the flag or coat of require actual use of the mark in order for the registered owner of a mark
have the right to register the same on arms or other insignia of the
the principal register, unless it: to maintain 87 his ownership.
Philippines or any of its political
(a) Consists of or comprises subdivisions, or of any foreign nation, In the same vein, the prima facie nature of the certificate of
immoral, deceptive or scandalous or any simulation thereof; registration 88 is not indicative of the fact that prior use is still a
matter; or matter which may recognized mode of acquiring ownership under the IP Code. Rather, it is
(c) Consists of a name, portrait or meant to recognize the instances when the certificate of registration is
disparage or falsely suggest a signature identifying a particular living
connection with persons, living or not reflective of ownership of the holder thereof, such as when: [1] the
individual except by his written first registrant has acquired ownership of the mark through registration
dead, institutions, beliefs, or national consent, or the name, signature, or
symbols, or bring them into but subsequently lost the same due to non-use 89 or
portrait of a deceased President of abandonment 90 (e.g., failure to file the Declaration of Actual Use); 91 [2]
contempt or disrepute; the Philippines, during the life of his the registration was done in bad faith; 92 [3] the mark itself becomes
(b) Consists of or comprises the flag widow, if any, except by written generic; 93 [4] the mark was registered contrary to the IP Code (e.g.,
or coat of arms or other insignia of consent of the widow; when a generic mark was successfully registered for some reason); 94 or
the Philippines or any of its political (d) Is identical with a registered mark [5] the registered mark is being used by, or with the permission of, the
subdivisions, or of any foreign nation, belonging to a different proprietor or registrant so as to misrepresent the source of the goods or services on
or any simulation thereof; a mark with an earlier filing or priority or in connection with which the mark is used. 95
(c) Consists of or comprises a name, date, in respect of: ii. Legislative intent to abandon the
portrait, or signature identifying a (i) The same goods or services, or rule that ownership of a mark is
particular living individual except by acquired through use
his written consent, or the name, (ii) Closely related goods or services,
signature, or portrait of a deceased or The lawmakers' intention to change the system of acquiring
President of the Philippines, during rights over a mark is even more evident in the sponsorship speech of the
the life of his widow, if any, except by (iii) If it nearly resembles such a mark late Senator Raul Roco for the IP Code. The shift to a new system was
the written consent of the widow; as to be likely to deceive or brought about by the country's adherence to treaties, and Senator Roco
cause confusion; specifically stated that the bill abandons the rule that ownership of a
(d) Consists of or comprises a mark mark is acquired through use, thus:
or trade-name which so resembles a xxx xxx xxx (Sec. 4, R.A. No. 166a)
mark or trade-name registered in (Emphasis supplied) Part III of the Code is the new law on
trademarks.

Page 6 of 65 | IPL | LAW ON TRADEMARK

 On September 27, 1965, Mr. President,
the Philippines adhered to the Lisbon Act of
the Paris Convention for the Protection of Industrial
Property [(Paris Convention)]. This obliged the
country to introduce a system of registration of
marks of nationals of member-countries of the
Paris Convention which is based not on use in the
Philippines but on foreign registration. This
procedure is defective in several aspects: first, it
provides to a foreign applicant a procedure which
is less cumbersome compared to what is required
of local applicants who need to establish prior use
as a condition for filing a trademark; and second, it
is incompatible with the "based on use" principle
which is followed in the present Trademark Law.
Furthermore, Mr. President, our
adherence to the Paris Convention binds us to
protect well-known marks. Unfortunately, the
provisions of 6bis of the Paris Convention on this
matter are couched in broad terms which are not
defined in the Convention. This has given rise to
litigation between local businessmen using the
mark and foreigners who own the well-known
marks. The conflicting court decisions on this issue
aggravate the situation and they are a compendium
of contradictory cases.
The proposed [IP] Code seeks to correct
these defects and provides solutions to these
problems and make a consistency in ruling for
future purposes.
To comply with [the Agreement on
Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement)] 96 and other
international commitments, this bill no longer
requires prior use of the mark as a requirement for
filing a trademark application. It also abandons the
rule that ownership of a mark is acquired through
use by now requiring registration of the mark in
the Intellectual Property Office. Unlike the present
law, it establishes one procedure for the
registration of marks. This feature will facilitate the
registration of marks.
Senate Bill No. 1719 also no longer
requires use or registration in the Philippines for
the protection of well-known marks. If the mark is
registered, such registration can prohibit its use by
another in connection with goods or services which
are not similar to those with respect to which the
registration is applied for. This resolves many of
the questions that have remained unanswered by
present law and jurisprudence. 97 (Emphasis and
underscoring supplied)
The legislative intent to abandon the rule that ownership is
acquired through use and to adopt the rule that ownership is acquired
through registration is therefore crystal clear. On this score, Justice
Leonen prudently cautions against deriving legislative intent from these
deliberations, especially since they are limited to the opinions of those
present, and neither consider the opinions of those who did not or were
not able to speak, nor do they account for changing
circumstances. 98 While this may be true, the Court is of the considered
view that this does not mean that its interpretation of the statute based
on such deliberations is inaccurate or wrong, especially in this case
because, at the risk of belaboring the point, the provisions of the IP
Code and the legislative deliberations are consistent in showing that the
regime of ownership under the Trademark Law, as amended, has been
abandoned.
iii. Rule on ownership based on prior
use in Berris and E.Y. Industrial
Sales, Inc. inconsistent with the IP
Code regime of ownership through
registration
As mentioned, Zuneca argues that as the prior user,
following Berris and E.Y. Industrial Sales, Inc., it had already owned the
"ZYNAPS" mark prior to Natrapharm's registration of its confusingly
similar mark, thus, its rights prevail over the rights of Natrapharm.
As will be further explained, however, a closer look at the
cases cited by Zuneca reveals that the rule on ownership used in
resolving these cases is inconsistent with the rule on acquisition of
ownership through registration under the IP Code.
In Berris, Norvy Abyadang (Abyadang) filed a trademark
application for "NS D-10 PLUS" in 2004. This was opposed by Berris
Agricultural Co., Inc. (Berris, Inc.) on the ground that it was confusingly
similar to its registered mark, "D-10 80 WP," which was applied for in
2002 and eventually registered in 2004. The marks were indeed found to
be confusingly similar. However, in ruling that Berris, Inc. was the rightful
owner of the mark, the Court did not just decide based on the fact that
Berris, Inc. filed the application and registered the mark prior to
Abyadang. Instead, it also contained the following discussion with the
conclusion that actual use was required to own a mark:
The basic law on trademark,
infringement, and unfair competition is [the IP
Code], specifically Sections 121 to 170 thereof. It
took effect on January 1, 1998. Prior to its
effectivity, the applicable law was [the Trademark
Law], as amended.
Interestingly, [the IP Code] did not
expressly repeal in its entirety [the Trademark Law,
as amended], but merely provided in Section 239.1
that [a]cts and parts of [a]cts inconsistent with it
were repealed. In other words, only in the instances
where a substantial and irreconcilable conflict is
found between the provisions of [the IP Code] and
of [the Trademark Law, as amended] would the
provisions of the latter be deemed repealed.
[The IP Code] 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, [the Trademark Law,
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 by another. A
trademark, being a special property, is afforded
protection by law. But for one to enjoy this legal
protection, x x x 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
[the IP Code] 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. [The IP Code],
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
Page 7 of 65 | IPL | LAW ON TRADEMARK
 nullity of the registration or of non-use of the mark, xxx xxx xxx
except when excused. Moreover, the presumption
may likewise be defeated by evidence of prior use (d) Is identical with
by another person, i.e., it will controvert a claim of a registered mark belonging
legal appropriation or of ownership based on to a different proprietor or a
registration by a subsequent user. This is because mark with an earlier filing or
a trademark is a creation of use and belongs to priority date, in respect of:
one who first used it in trade or (i) The same
commerce. 99 (Citations omitted; emphasis and goods or services,
underscoring supplied) or
In Berris, despite the fact that Berris, Inc. was eventually (ii) Closely related
decided to be the owner of the mark consistent with the rule on goods or services,
ownership under the IP Code, the Court mistakenly gave undue weight to or
the fact of prior use. 100 To be sure, it was unnecessary to also anchor
Berris, Inc.'s ownership of the mark on the fact that it was the prior user (iii) If it nearly
as this was inconsistent with the express provisions of the IP Code and resembles such a
the legislative intent behind the law. Stated differently, the Court's mark as to be
decision in Berris was correct based on the fact that Berris, Inc. was the likely to deceive or
first to file the application and register the mark. cause confusion. x
xx
Significantly, in giving weight to the fact of prior use, the Court
cited 101 the author Ruben E. Agpalo who had, in turn, cited Under this provision, the registration of a
jurisprudence decided under the Trademark Law, as amended. As a mark is prevented with the filing of an earlier
result, the rule that prior use was determinative of ownership was also application for registration. This must not,
used to resolve the issue of ownership in Berris. As stated, however, this however, be interpreted to mean that ownership
is contrary to the IP Code. should be based upon an earlier filing date. While
[the IP Code] removed the previous requirement of
To repeat, after the IP Code became effective starting 1998, proof of actual use prior to the filing of an
use was no longer required in order to acquire or perfect ownership of application for registration of a mark, proof of
the mark. In this regard, the Court now rectifies the inaccurate statement prior and continuous use is necessary to establish
in Berris that "[t]he ownership of a trademark is acquired by its ownership of a mark. Such ownership constitutes
registration and its actual use." 102 The rectified statement should thus sufficient evidence to oppose the registration of a
read: "Under the IP Code, the ownership of a trademark is acquired by its mark.
registration." Any pronouncement in Berris inconsistent herewith should
be harmonized accordingly. To clarify, while subsequent use of the mark Sec. 134 of the IP Code provides that
and proof thereof are required to prevent the removal or cancellation of a "any person who believes that he would be
registered mark or the refusal of a pending application under the IP damaged by the registration of a mark x x x" may
Code, 103 this should not be taken to mean that actual use and proof file an opposition to the application. The term "any
thereof are necessary before one can own the mark or exercise the rights person" encompasses the true owner of the mark —
of a trademark owner. 104 the prior and continuous user.
Likewise, the rule on acquiring ownership discussed in E.Y. Notably, the Court has ruled that the
Industrial Sales, Inc. is inconsistent with the current rule under the IP prior and continuous use of a mark may even
Code. In said case, E.Y. Industrial Sales, Inc. (EYIS) imported air overcome the presumptive ownership of the
compressors from Shen Dar from 1997 to 2004. In 1997, during the registrant and be held as the owner of the mark.
effectivity of the Trademark Law, as amended, Shen Dar filed a As aptly stated by the Court in [Shangri-la]:
trademark application for "VESPA, Chinese Characters and Device" for
use on air compressors and welding machines. Subsequently, in 1999, or Registration,
already during the effectivity of the IP Code, EYIS filed a trademark without more, does not
application for "VESPA" for use on air compressors. On January 18, 2004, confer upon the registrant an
the IPO issued the certificate of registration for "VESPA" in favor of EYIS. absolute right to the
Subsequently, on February 8, 2007, the certificate of registration for registered mark. The
"VESPA, Chinese Characters and Device" was issued in favor of Shen Dar. certificate of registration is
merely a prima facie proof
Claiming to be the owner of the mark, Shen Dar filed a petition that the registrant is the
to cancel EYIS's certificate of registration. The Bureau of Legal Affairs owner of the registered mark
(BLA) and the Director General of the IPO both ruled that EYIS was the or trade name. Evidence of
owner of the mark and likewise directed the cancellation of Shen Dar's prior and continuous use of
certificate of registration. the mark or trade name by
another can overcome the
Once the case reached the Court, the dispute was resolved in presumptive ownership of the
favor of EYIS. The ponencia cited Section 123.1 (d), the first-to-file rule registrant and may very well
adopted by the IP Code, and likewise included the following discussion entitle the former to be
in Shangri-la International Hotel Management, Ltd. v. Developers Group declared owner in an
of Companies, Inc., 105 (Shangri-la) in concluding that the prior user EYIS appropriate case.
was the owner of the mark, viz.:
xxx xxx xxx
In any event, given the length of time
already invested by the parties in the instant case, Ownership of a
this Court must write finis to the instant mark or trade name may be
controversy by determining, once and for all, the acquired not necessarily by
true owner of the mark "VESPA" based on the registration but by adoption
evidence presented. and use in trade or
commerce. As between
[The IP Code] espouses the "first-to-file" actual use of a mark without
rule as stated under Sec. 123.1 (d) which states: registration, and registration
Section of the mark without actual
123. Registrability. — 123.1. A use thereof, the former
mark cannot be registered if prevails over the latter. For a
it: rule widely accepted and
firmly entrenched, because it

Page 8 of 65 | IPL | LAW ON TRADEMARK

 has come down through the In light of the foregoing, Zuneca thus erred in
years, is that actual use in using Berris and E.Y. Industrial Sales, Inc. as bases for its argument that
commerce or business is a the prior user is the owner of the mark and its rights prevail over the
pre-requisite to the rights of the first-to-file registrant. To emphasize, for marks that are first
acquisition of the right of used and/or registered after the effectivity of the IP Code, ownership is
ownership. no longer dependent on the fact of prior use in light of the adoption of the
first-to-file rule and the rule that ownership is acquired through
xxx xxx xxx registration.
By itself, II. Bad faith and good faith in
registration is not a mode of trademark registration and use
acquiring ownership. When
the applicant is not the owner In a bid to invalidate Natrapharm's rights as first registrant,
of the trademark being Zuneca further argues that Natrapharm had registered the mark
applied for, he has no right to fraudulently and in bad faith. 108
apply for registration of the
same. Registration merely The existence of bad faith in trademark registrations may be a
creates a prima ground for its cancellation at any time by filing a petition for cancellation
facie presumption of the under Section 151 (b) of the IP Code, viz.:
validity of the registration, of SECTION 151. Cancellation. — 151.1. A
the registrant's ownership of petition to cancel a registration of a mark under
the trademark and of the this Act may be filed with the Bureau of Legal
exclusive right to the use Affairs by any person who believes that he is or will
thereof. Such presumption, be damaged by the registration of a mark under
just like the presumptive this Act as follows:
regularity in the performance
of official functions, is (a) Within five (5) years from the date of
rebuttable and must give way the registration of the mark under this Act.
to evidence to the
contrary. 106 (Citations (b) At any time, if the registered mark
omitted and emphasis becomes the generic name for the goods or
supplied) services or a portion thereof, for which it is
registered, or has been abandoned, or its
However, a careful reading of Shangri-la will unmistakably registration was obtained fraudulently or contrary
show that, despite having been promulgated in 2006, the applicable law to the provisions of this Act, or if the registered
of the case was the Trademark Law, as amended, considering the mark is being used by, or with the permission of,
following excerpts: the registrant so as to misrepresent the source of
the goods or services on or in connection with
While the present law on trademarks has which the mark is used. If the registered mark
dispensed with the requirement of prior actual use becomes the generic name for less than all of the
at the time of registration, the law in force at the goods or services for which it is registered, a
time of registration[, i.e., the Trademark Law, as petition to cancel the registration for only those
amended,] must be applied, and thereunder it was goods or services may be filed. A registered mark
held that as a condition precedent to registration of shall not be deemed to be the generic name of
trademark, trade name or service mark, the same goods or services solely because such mark is also
must have been in actual use in the Philippines used as a name of or to identify a unique product or
before the filing of the application for registration. service. The primary significance of the registered
Trademark is a creation of use and therefore actual mark to the relevant public rather than purchaser
use is a pre-requisite to exclusive ownership and its motivation shall be the test for determining
registration with the Philippine Patent Office is a whether the registered mark has become the
mere administrative confirmation of the existence generic name of goods or services on or in
of such right. connection with which it has been used. (n)
xxx xxx xxx (c) At any time, if the registered owner of
However, while the Philippines was the mark without legitimate reason fails to use the
already a signatory to the Paris Convention, the [IP mark within the Philippines, or to cause it to be
Code] only took effect on January 1, 19[9]8, and in used in the Philippines by virtue of a license during
the absence of a retroactivity clause, an uninterrupted period of three (3) years or longer.
[the Trademark Law, as amended] still applies. x x (Emphasis supplied)
x 107 (Emphasis and underscoring supplied) Notably, this ground for cancelling marks was already present
It is worth noting that in E.Y. Industrial Sales, Inc., the Court under the Trademark Law, as amended. The table below shows how the
upheld the factual finding that the first actual use by EYIS was earlier language in the IP Code provision mirrors the provision under
than Shen Dar's. The earliest dates of use by both parties therein the Trademark Law, as amended:
were during the effectivity of the Trademark Law, as amended. It is also
important to reiterate that EYIS had applied and registered the mark Trademark Law, as amended IP Code
under the IP Code, while Shen Dar had applied for the mark under
the Trademark Law, as amended, and its registration was obtained after
CHAPTER IV SECTION 151. Cancellation. —
the effectivity of the IP Code.
151.1. A petition to cancel a
To be sure, the rule used to resolve the issue of ownership registration of a mark under this Act
in E.Y. Industrial Sales, Inc. and Shangri-la should not be made to apply in Cancellation of Registration may be filed with the Bureau of Legal
a situation involving marks which are both used and/or registered after Affairs by any person who believes
the effectivity of the IP Code. In the case at bar, both "ZYNAPS" and that he is or will be damaged by the
"ZYNAPSE" have been used and/or registered after the IP Code became registration of a mark under this Act
SECTION 17. Grounds for as follows:
effective. Clearly, the use or citation of Trademark Law jurisprudence to
Cancellation. — Any person, who
resolve the question on acquisition of ownership of marks in the case at
believes that he is or will be xxx xxx xxx
bar or in cases involving marks registered or first used under the IP
damaged by the registration of a
Code will be irrelevant and inappropriate. (b) At any time, if the registered mark
mark or trade-name, may, upon the
payment of the prescribed fee, apply becomes the generic name for the
goods or services, or a portion thereof,

Page 9 of 65 | IPL | LAW ON TRADEMARK

to cancel said registration upon any for which it is registered, or has been caused the registration of the mark and logo, and
of the following grounds: abandoned, or its registration was surmised that he must have copied the idea
obtained fraudulently or contrary to there[.]
the provisions of this Act, or if the
xxx xxx xxx
(a) That the registered mark or trade- registered mark is being used by, or
name becomes the common with the permission of, the registrant To jump from a recognition of the fact
descriptive name of an article so as to misrepresent the source of that the mark and logo must have been copied to a
or substance on which the the goods or services on or in rationalization for the possibility that both the
patent has expired; connection with which the mark is petitioners and the respondent coincidentally
used. If the registered mark becomes chose the same name and logo is not only
(b) That it has been abandoned; the generic name for less than all of contradictory, but also manifestly mistaken or
the goods or services for which it is absurd. Furthermore, the "S" logo appears nothing
(c) That the registration was registered, a petition to cancel the like the "Old English" print that the CA makes it out
obtained fraudulently or registration for only those goods or to be, but is obviously a symbol with oriental or
contrary to the provisions of services may be filed. A registered Asian overtones. At any rate, it is ludicrous to
section four, Chapter II mark shall not be deemed to be the believe that the parties would come up with the
hereof; generic name of goods or services exact same lettering for the word "Shangri-La" and
(d) That the registered mark or trade- solely because such mark is also used the exact same logo to boot. As correctly observed
name has been assigned, and as a name of or to identify a unique by the petitioners, to which we are in full accord:
is being used by, or with the product or service. The primary
significance of the registered mark to x x x When a trademark
permission of, the assignee so
the relevant public rather than copycat adopts the word
as to misrepresent the source
purchaser motivation shall be the test portion of another's
of the goods, business or
for determining whether the registered trademark as his own, there
services in connection with
mark has become the generic name of may still be some doubt that
which the mark or trade-name
goods or services on or in connection the adoption is intentional.
is used; or
with which it has been used. But if he copies not only the
(e) That cancellation is authorized by (Emphasis and underscoring supplied) word but also the word's
other provisions of this Act. exact font and lettering style
(Emphasis and underscoring and in addition, he copies
supplied) also the logo portion of the
trademark, the slightest
doubt vanishes. It is then
replaced by the certainty that
Resultantly — unlike the rule on acquisition of ownership — the the adoption was deliberate,
pronouncements of the Court relative to registrations obtained in bad malicious and in bad faith.
faith under the Trademark Law, as amended, still subsist even after the
It is truly difficult to understand why, of
effectivity of the IP Code. Thus, the following cases where the Court
the millions of terms and combination of letters
defined bad faith and fraud, although decided under the regime of
and designs available, the respondent had to
the Trademark Law, as amended, are still applicable.
choose exactly the same mark and logo as that of
The concepts of bad faith and fraud were defined in Mustang- the petitioners, if there was no intent to take
Bekleidungswerke GmbH + Co. KG v. Hung Chiu Ming, 109 a case advantage of the goodwill of petitioners' mark and
decided by the Office of the Director General of the IPO under logo.
the Trademark Law, as amended, viz.:
One who has imitated the trademark of
What constitutes fraud or bad faith in another cannot bring an action for infringement,
trademark registration? Bad faith means that the particularly against the true owner of the mark,
applicant or registrant has knowledge of prior because he would be coming to court with unclean
creation, use and/or registration by another of an hands. Priority is of no avail to the bad faith
identical or similar trademark. In other words, it is plaintiff. Good faith is required in order to ensure
copying and using somebody else's trademark. that a second user may not merely take advantage
Fraud, on the other hand, may be committed by of the goodwill established by the true
making false claims in connection with the owner. 112 (Emphasis supplied)
trademark application and registration, particularly,
Pagasa Industrial Corporation v. Court of
on the issues of origin, ownership, and use of the
Appeals 113 likewise supports the definition of bad faith as prior
trademark in question, among other things. 110
knowledge. In said case, the Court found that Pagasa registered the
The concept of fraud contemplated above is not a mere "YKK" mark in bad faith because it had previously known that there was
inaccurate claim as to the origin, ownership, and use of the trademark. In another person using the mark. Hence, the Court affirmed the
civil law, the concept of fraud has been defined as the deliberate cancellation of the mark as decided by the Director of Patents and the
intention to cause damage or prejudice. 111 The same principle applies CA:
in the context of trademark registrations: fraud is intentionally making
Pagasa appealed to the [CA] which in its
false claims to take advantage of another's goodwill thereby causing
decision dated February 6, 1980 affirmed the
damage or prejudice to another. Indeed, the concepts of bad faith and
cancellation. It found that prior to 1968 Pagasa
fraud go hand-in-hand in this context. There is no distinction between the
knew that Yoshida was the registered owner and
concepts of bad faith and fraud in trademark registrations because the
user of the YKK trademark which is an acronym of
existence of one necessarily presupposes the existence of the other.
its corporate name.
Shangri-la supports the definition of bad faith in trademark
Tadao Yoshida, the president of
registrations as knowledge by the registrant of prior creation, use, and/or
Yoshida, and Tsutomu Isaka, the export manager,
registration by another of an identical or similar trademark. In said case,
visited in 1960 (1965) Pagasa's factory which was
since respondent Developers Group of Companies, Inc.'s (DGI) president
manufacturing zippers under the Royal brand.
was a previous guest at one of petitioner's hotels, it was found that DGI
Anacleto Chi, Pagasa's president, visited in turn
was in bad faith when it appropriated and registered the "SHANGRI-LA"
Yoshida's factory in Toyoma, Japan.
mark and the "S" logo, viz.:
The Appellate Court concluded
The CA itself, in its Decision of May 15,
that Pagasa's knowledge that Yoshida was using
2003, found that the respondent's president and
the YKK trademark precludes the application of the
chairman of the board, Ramon Syhunliong, had
equitable principle of laches, estoppel and
been a guest at the petitioners' hotel before he

Page 10 of 65 | IPL | LAW ON TRADEMARK

 acquiescence. It noted that Pagasa acted in bad More importantly, however, there is also jurisprudential basis
faith. As observed by Yoshida's counsel, Pagasa's to declare these trademark registrations done in bad faith as void. In the
registration of YKK as its own trademark was an case of Shangri-La International Hotel Management, Ltd. v. Developers
act of ingratitude. Group of Companies, Inc. 117 (Shangri-la Resolution), the Court
classified the respondent's registration as void due to the existence of
xxx xxx xxx bad faith and because it failed to comply 118 with the provisions of
Pagasa cannot rely on equity because the Trademark Law, as amended.
he who comes into equity must come with clean While the Court in the Shangri-la Resolution declared the
hands. Equity refuses to lend its aid in any manner trademark registration as void based on two grounds, i.e., the presence
to one seeking its active interposition who has of bad faith and the fact that the mark was registered contrary to
been guilty of unlawful or inequitable conduct in the provisions of the law, either one of these grounds may be used as
matter with relation to which he seeks relief (30 sufficient basis for the courts or the IPO to declare trademark
C.J.S. 1009). registrations as void.
"Registration is sufficient prima A perusal of the above cancellation provisions in the IP
facie proof that all acts necessary to entitle the Code and the Trademark Law, as amended, would reveal that these two
mark to registration were duly performed." (87 grounds differ from the others in the sense that, unlike the other grounds
C.J.S. 421). Obviously, Yoshida's prior registration for cancellation, they both exist prior to the registration. That is, one can
is superior and must prevail. 114 (Emphasis and have a registration in bad faith only if he applied for the registration of
underscoring supplied) the mark despite knowing that someone else has created, used, or
Birkenstock Orthopaedie GmbH and Co. KG v. Phil. Shoe Expo registered that mark. In the same vein, an unregistrable mark which was
Marketing Corp. 115 also involved a finding that a party was in bad faith mistakenly allowed to be registered was already inherently unregistrable
because it had known of the existence and use by another person of the even prior to its registration. 119 Accordingly, because these
mark before said party appropriated and registered the same, viz.: marks should not have been registered in the first place, the presence of
either of these grounds renders them void. Thus, even if these marks
In view of the foregoing subsequently became registered, the registrations do not confer upon
circumstances, the Court finds the petitioner to be their owners the rights under Section 147.1 120 of the IP Code because
the true and lawful owner of the mark the marks were registered contrary to the provisions of the same
"BIRKENSTOCK" and entitled to its registration, law. 121
and that respondent was in bad faith in having it
registered in its name. In this regard, the Court To emphasize, the presence of bad faith alone renders void
quotes with approval the words of the IPO Director the trademark registrations. Accordingly, it follows as a matter of
General, viz.: consequence that a mark registered in bad faith shall be cancelled by the
IPO or the courts, as the case may be, after the appropriate proceedings.
The facts and
evidence fail to show that This concept of bad faith, however, does not only exist in
[respondent] was in good registrations. To the mind of the Court, the definition of bad faith as
faith in using and in knowledge of prior creation, use and/or registration by another of an
registering the mark identical or similar trademark is also applicable in the use of trademarks
BIRKENSTOCK. without the benefit of registration. Accordingly, such bad faith use is also
BIRKENSTOCK, obviously of appropriately punished in the IP Code as can be seen in its unfair
German origin, is a highly competition provisions. 122
distinct and arbitrary mark. It It is apparent, therefore, that the law intends to deter
is very remote that two registrations and use of trademarks in bad faith.
persons did coin the same or
identical marks. To come up Concurrent with these aims, the law also protects prior
with a highly distinct and registration and prior use of trademarks in good faith.
uncommon mark previously
appropriated by another, for Being the first-to-file registrant in good faith allows the
use in the same line of registrant to acquire all the rights in a mark. This can be seen in Section
business, and without any 122 vis-à-vis the cancellation provision in Section 155.1 of the IP Code.
plausible explanation, is Reading these two provisions together, it is clear that when there are no
incredible. The field from grounds for cancellation — especially the registration being obtained in
which a person may select a bad faith or contrary to the provisions of the IP Code, which render the
trademark is practically registration void — the first-to-file registrant acquires all the rights in a
unlimited. As in all other mark, thus:
cases of colorable imitations, SECTION 122. How Marks are Acquired.
the unanswered riddle is why, — The rights in a mark shall be acquired through
of the millions of terms and registration made validly in accordance with the
combinations of letters and provisions of this law. (Sec. 2-A, R.A. No. 166a)
designs available,
[respondent] had to come up xxx xxx xxx
with a mark identical or so
closely similar to the SECTION 151. Cancellation. — 151.1. A
[petitioner's] if there was no petition to cancel a registration of a mark under
intent to take advantage of this Act may be filed with the Bureau of Legal
the goodwill generated by the Affairs by any person who believes that he is or will
[petitioner's] mark. Being on be damaged by the registration of a mark under
the same line of business, it this Act as follows:
is highly probable that the (a) Within five (5) years from the date of
[respondent] knew of the the registration of the mark
existence of BIRKENSTOCK under this Act.
and its use by the [petitioner],
before [respondent] (b) At any time, if the registered mark
appropriated the same mark becomes the generic name for
and had it registered in its the goods or services, or a
name. 116 (Emphasis portion thereof, for which it is
supplied) registered, or has been
abandoned, or its registration

Page 11 of 65 | IPL | LAW ON TRADEMARK

 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 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. (n)
(c) At any time, if the registered owner of
the mark without legitimate
reason fails to use the mark
within the 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)
In the same vein, prior users in good faith are also protected in
the sense that they will not be made liable for trademark infringement
even if they are using a mark that was subsequently registered by
another person. This is expressed in Section 159.1 of the IP Code, which
reads:
SECTION 159. Limitations to Actions for
Infringement. — Notwithstanding any other
provision of this Act, the remedies given to the
owner of a right infringed under this Act shall be
limited as follows:
159.1. Notwithstanding the provisions of
Section 155 hereof, a registered mark shall have no
effect against any person who, in good faith, before
the filing date or the priority date, was using the
mark for the purposes of his business or
enterprise: Provided, That his right may only be
transferred or assigned together with his enterprise
or business or with that part of his enterprise or
business in which the mark is used. (Underscoring
supplied)
III. The resolution of the
controversy
At this point, it is important to highlight that the following facts
were no longer questioned by both parties: (a) Natrapharm is the
registrant of the "ZYNAPSE" mark which was registered with the IPO on
September 24, 2007; 123 (b) Zuneca has been using the "ZYNAPS" brand
as early as 2004; 124 and (c) "ZYNAPSE" and "ZYNAPS" are confusingly
similar 125 and both are used for medicines.
In light of these settled facts, it is clear that Natrapharm is the
first-to-file registrant of "ZYNAPSE." Zuneca, on the other hand, is a prior
user in good faith of a confusingly similar mark, "ZYNAPS." What remains
contentious is Natrapharm's good or bad faith as Zuneca contends that
the mark was registered in bad faith by Natrapharm. Indeed, if Zuneca's
contention turns out to be true, Natrapharm would not be the owner of
"ZYNAPSE" and it would not have the right under Section 147.1 of the IP
Code to prevent other entities, including Zuneca, from using confusingly
similar marks for identical or similar goods or services. Further,
Natrapharm's infringement case would fail because its "ZYNAPSE"
registration would then be voided.
To be sure, the finding of good faith or bad faith is a matter of
factual determination. Considering that a petition for review
on certiorari under Rule 45 should only raise questions of law, it is
improper to put into issue at this juncture the existence of bad faith in
Natrapharm's registration.
Further, it is a well-recognized rule that the factual findings of
the RTC, its calibration of the testimonies of the witnesses, and its
assessment of their probative weight are given high respect, if not
conclusive effect, unless cogent facts and circumstances of substance,
which if considered, would alter the outcome of the case, were ignored,
misconstrued or misinterpreted. 126
Assuming, however, that the Court should still review this
factual issue, it finds no reason to depart from the findings of facts of the
RTC, which findings were affirmed by the CA. In fact, the Court also
conducted a review of the testimonies and evidence presented by the
parties and finds that the RTC and the CA were correct in their factual
findings.
The RTC ruled that there was no sufficient evidence to
convince it that Natrapharm had acquired the registration in bad
faith. 127 The RTC ruled as follows:
Apparently claiming an exception to the
first-to-register rule, the defendants [Zuneca] insist
that the plaintiff [Natrapharm] knew of the
existence of ["ZYNAPS"] at the time the plaintiff
filed its application for registration. The defendants
support this position by presenting a copy of the
Philippine Pharmaceutical Directory (PPD) where
["ZYNAPS"] is listed on the same page as the other
brand names of the plaintiff.
However, defendant Arain admitted on
cross[-]examination that even if ["ZYNAPS"] was
listed in the PPD, this does not give her complete
knowledge of the brand names of the other
pharmaceuticals also listed in the same Directory.
[Consistent] with this admission, plaintiff should
also be accorded the benefit of the doubt that it
could not have complete knowledge of the other
brand names listed in the PPD.
Likewise, the defendants claim that in
some medical conventions where Patriot, the sister
company of the plaintiff, attended, the ["ZYNAPS"]
product of the defendants was advertised and
displayed.
It was, however, clearly shown that
Patriot is not the same company as the plaintiff. It
could not be safely concluded that [the plaintiff]
knew of ["ZYNAPS"] through Patriot.
In both arguments, this Court finds no
sufficient evidence to convince it that there was
bad faith in the registration made by the
plaintiff. 128
The CA thereafter upheld the finding of the RTC that
Natrapharm was not aware of the existence of "ZYNAPS" prior to the
registration of "ZYNAPSE." 129 The CA quoted and affirmed the
foregoing findings of the RTC.
The CA added that Natrapharm's good faith was established
through the testimony of Natrapharm's witness, Ravelo, whose testimony
essentially contained the following points: (a) Natrapharm had used the
BFAD and IPO databases and the Philippine Pharmaceutical Index (PPI)
— a research tool accepted by the Philippine pharmaceutical industry
which contains pharmaceutical products marketed in the Philippines — in
determining whether "ZYNAPSE" was confusingly similar to an existing
brand name in the market; 130 (b) only Ravelo, Mr. Gasgonia,
Natrapharm's Chief Operations Officer, and Mrs. Agnes Casiding,
Natrapharm's Regulatory Manager, knew about the launch of the new
product; 131 (c) she had based the name "ZYNAPSE" from an internal
newsletter in the Philippine Neurological Association as well as from the
Page 12 of 65 | IPL | LAW ON TRADEMARK
neurological term "synapse" — the junction between two nerves where
they transmit nerve signals — which relates to the neurological problem
of stroke; 132 (d) she had checked the PPI as far back as fourth quarter
of 2004 and found that there was no confusingly similar name; 133 and
(e) she had then submitted the name to Natrapharm's trademark lawyers
who had it registered with the IPO 134 and then with the BFAD. 135
The CA thus concluded that Zuneca failed to prove that
Natrapharm had registered "ZYNAPSE" in bad faith, viz.:
This Court would also like to add that
even if both Zuneca and Natrapharm have
interacted with each other through a convention, it
does not automatically mean that Natrapharm
already acted in bad faith in registering "ZYNAPSE."
First, just like the PPD, it is highly unlikely that the
participants would remember each and every
medicine or drug exhibited during said convention.
Secondly, the convention happened two (2) years
prior to the registration of "ZYNAPSE" and it is not
proven that those who attended the convention on
the part of Natrapharm were the same people who
were responsible for the creation of "ZYNAPSE" or
that they were still connected with Natrapharm in
2007. As a rule, good faith is always presumed,
and upon him who alleges bad faith on the part of
a possessor rests the burden of proof. The
appellants, however, miserably failed to carry that
burden. 136 (Emphasis supplied)
The Court affirms the factual findings of the lower courts.
Since Zuneca is making the allegations of bad faith, it was incumbent on
Zuneca to overcome the evidence that Natrapharm was the owner of the
mark "ZYNAPSE" and to show that Natrapharm had registered
"ZYNAPSE" in bad faith. However, Zuneca failed to show that the
registration was made fraudulently or in bad faith. In contrast,
Natrapharm was able to convince the lower courts, as it likewise
convinces this Court, that it had acted in good faith when it came up with
the name "ZYNAPSE" and that it had no knowledge of Zuneca's use of
"ZYNAPS" after it had checked the PPI, BFAD, and IPO databases.
Zuneca's evidence clearly falls short of establishing that
Natrapharm had knowledge of the prior creation or use by Zuneca of the
"ZYNAPS" mark. Zuneca's evidence only tends to prove that there was a
possibility that someone from Natrapharm might have known of
Zuneca's use of "ZYNAPS" because Natrapharm and Zuneca attended
the same conferences and that Zuneca had listed "ZYNAPS" in the PPD
publication.
Such possibility is not, however, sufficient to prove bad faith,
especially when weighed against Natrapharm's evidence and explanation
on how it coined "ZYNAPSE" and the steps it took to ensure that there
were no other marks that were confusingly similar to it. Not only was
Natrapharm able to explain the origin of the name, it was also able to
show that it had checked the IMS-PPI, IPO, and BFAD databases and
found that there was no brand name which was confusingly similar to
"ZYNAPSE."
Since Natrapharm was not shown to have been in bad faith, it
is thus considered to have acquired all the rights of a trademark owner
under the IP Code upon the registration of the "ZYNAPSE" mark.
Consequently, Zuneca's counterclaims against Natrapharm
were correctly dismissed by the lower courts. To be sure, Zuneca did not
have any right to prevent third parties, including Natrapharm, from using
marks confusingly similar to its unregistered "ZYNAPS" mark because it
is not an "owner of a registered mark" contemplated in Section 147.1 of
the IP Code.
In any event, while Natrapharm is the owner of the "ZYNAPSE"
mark, this does not, however, automatically mean that its complaint
against Zuneca for injunction, trademark infringement, damages, and
destruction with prayer for TRO and/or preliminary injunction should be
granted. The application of Section 159.1 of the IP Code in the case at
bar results in Zuneca's exemption from liability for trademark
infringement.
On the interpretation of Section 159.1 of the IP Code,
Natrapharm argues that the limitation to actions for infringement under
this section means that only acts prior to the filing and/or claim of
priority of the registered mark are exempted. The good faith prior user's
use of the mark subsequent to the filing and/or registration date is,
however, no longer exempted and makes the prior user liable for
infringement. 137 This echoes the CA which held that:
Moreover, the supremacy of the prior
registrant over the prior user is further elucidated in
Section 159.1 of the same law x x x.
xxx xxx xxx
Based on [said] provision, it is manifest
that the prior-registrant (sic) cannot run after the
prior-user (sic) for any usage before the
registration, but not after, as indicated by the
helping verb "was" in the phrase "was using the
mark for the purposes of his business or
enterprise." 138 (Emphasis supplied)
The Court believes, and so holds, that the above interpretation
is erroneous.
If Section 159.1 of the IP Code is only meant to exempt from
an action for infringement the use in good faith prior to the filing or
priority date of the subsequently registered mark, then this entire
provision would be rendered useless and a mere surplusage. Stated
otherwise, there is no point in adding Section 159.1 of the IP Code as an
exception under "Limitations to Actions for Infringement" because it
merely repeats the general rule that, after the mark has been registered,
the registrant may file an infringement case against third parties using an
identical or confusingly similar mark in commerce without its consent,
when such use results in a likelihood of confusion. 139 Even without
Section 159.1 of the IP Code, a third party's prior use of an unregistered
mark, if said mark subsequently becomes registered by another, could
not be considered as trademark infringement because there was no
trademark registration — a requirement for a trademark infringement
action to prosper — when the third party was using its mark.
More importantly, the proviso of Section 159.1 of the IP
Code states: "[t]hat [the good faith prior user's] right may only be
transferred or assigned together with his enterprise or business or with
that part of his enterprise or business in which the mark is used." To
adhere to the theories of the CA and Natrapharm that the prior user's use
of the identical or confusingly similar mark subsequent to the filing or
registration date of the registered mark should be considered as
trademark infringement renders this proviso useless and nugatory and
logically subjects the possible transferee or assignee to inevitable
liability for trademark infringement. The lawmakers could not have
intended this absurd outcome.
Read as a whole, Section 159.1 of the IP Code clearly
contemplates that a prior user in good faith may continue to use its
mark even after the registration of the mark by the first-to-file registrant
in good faith, subject to the condition that any transfer or assignment of
the mark by the prior user in good faith should be made together with the
enterprise or business or with that part of his enterprise or business in
which the mark is used. The mark cannot be transferred independently of
the enterprise and business using it.
From the provision itself, it can be gleaned that while the law
recognizes the right of the prior user in good faith to the continuous use
of its mark for its enterprise or business, it also respects the rights of the
registered owner of the mark by preventing any future use by the
transferee or assignee that is not in conformity with Section 159.1 of
the IP Code. Notably, only the manner of use by the prior user in good
faith — that is, the use of its mark tied to its current enterprise or
business — is categorically mentioned as an exception to an action for
infringement by the trademark owner. The proviso in Section 159.1 of
the IP Code ensures that, despite the transfer or assignment of its mark,
the future use by the assignee or transferee will not go beyond the
specific confines of such exception. Without the proviso, the prior user in
good faith would have the free hand to transfer or assign the "protected
use" of its mark for any purpose to a third person who may subsequently
use the same in a manner unduly curtailing the rights of the trademark
owner. Indeed, this unilateral expansion of the exception by a third
person could not have been intended, and is guarded against, by the
legislature through the foregoing proviso.
In any event, the application of Section 159.1 of the IP
Code necessarily results in at least two entities — the unregistered prior
user in good faith or their assignee or transferee, on one hand; and the
first-to-file registrant in good faith on the other — concurrently using
identical or confusingly similar marks in the market, even if there is
likelihood of confusion. While this situation may not be ideal, as eruditely
Page 13 of 65 | IPL | LAW ON TRADEMARK
explained in the Concurring Opinion of Justice Perlas-Bernabe, the Court
is constrained to apply Section 159.1 of the IP Code as written.
To recall, the RTC imposed on Zuneca the following penalties
in light of its finding that Zuneca had committed trademark infringement,
which penalties were later affirmed by the CA:
Defendants, jointly and severally, are
hereby directed to pay the plaintiff the following
amounts, to wit:
One Million Pesos
(P1,000,000.00) as damages;
One Million Pesos
(P1,000,000.00) as exemplary
damages;
Two Hundred Thousand
Pesos (P200,000.00) as
attorney's fees;
and the Costs.
Defendants are further enjoined from
henceforth using Zynaps or any other variations
thereto which are confusingly similar to the
plaintiff's Zynapse.
It is likewise ordered that all infringing
goods, labels, signs, prints, packages, wrappers,
receptacles, and advertisements in possession of
the defendants, bearing the registered mark or any
reproduction, counterfeit, copy, or colourable
imitation thereof, all plates, molds, matrices and
other means of making the same, implements,
machines, and other items related to the conduct,
and predominantly used, by the defendants in such
infringing activities, be disposed of outside the
channels of commerce or destroyed, without
compensation.
The counterclaim of the defendants is
DISMISSED for lack of merit. 140
Because Zuneca is not liable for trademark infringement under
Section 159.1 of the IP Code, the Court finds that there is no basis for the
above imposition of penalties.
The penalties ordered by the lower courts — that is, the
payment of damages, injunction, and destruction of goods of Zuneca —
are based on Sections 156 and 157 of the IP Code, which provide:
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 157. Power of Court to
Order Infringing Material Destroyed. — 157.1 In any
action arising under this Act, in which a violation of
any right of the owner of the registered mark is
established, the court may order that goods found
to be infringing be, without compensation of any
sort, disposed of outside the channels of
commerce in such a manner as to avoid any harm
caused to the right holder, or destroyed; and all
labels, signs, prints, packages, wrappers,
receptacles and advertisements in the possession
of the defendant, bearing the registered mark or
trade name or any reproduction, counterfeit, copy
or colorable imitation thereof, all plates, molds,
matrices and other means of making the same,
shall be delivered up and destroyed. (Emphasis
supplied)
A plain reading of the above provisions reveals that that these
remedies may only be ordered by the court if there was a finding that a
party had committed infringement. Here, because of the application of
Section 159.1 of the IP Code, Zuneca is not liable for trademark
infringement. Consequently, it follows that the award of damages,
issuance of an injunction, and the disposition and/or destruction of
allegedly infringing goods could not be ordered by the court.
Indeed, directing the foregoing remedies despite a finding of
the existence of a prior user in good faith would render useless Section
159.1 of the IP Code, which allows the continued use and, in certain
situations, the transfer or assignment of its mark by the prior user in
good faith after the registration by the first-to-file registrant. To reiterate,
Section 159.1 of the IP Code contemplates a situation where the prior
user in good faith and the first-to-file registrant in good faith concurrently
use identical or confusingly similar marks in the market, even if there is
likelihood of confusion.
While Section 147.1 141 of the IP Code provides that the
owner of a registered mark shall have the exclusive right to prevent third
parties' use of identical or similar marks for identical or similar goods
where such use would result in a likelihood of confusion, this provision
should be interpreted in harmony with Section 159.1 of the IP Code,
especially the latter's proviso which allows the transfer or assignment of
the mark together with the enterprise or business of the prior user in
good faith or with that part of his enterprise or business in which the
mark is used. The lawmakers intended for the rights of the owner of the
registered mark in Section 147.1 to be subject to the rights of a prior user
in good faith contemplated under Section 159.1. Essentially, therefore,
Section 159.1 is an exception to the rights of the trademark owner in
Section 147.1 of the IP Code.
Bearing in mind the current ownership regime based on
registration under the IP Code which likewise protects and respects the
rights of prior users in good faith, it is thus reasonable to infer that the
new system of acquiring ownership effectively protects potential
entrants in the market. Consistent with the expressed State
policy 142 under the law, the system under the IP Code encourages
potential market entrants who may lack resources to venture into
business with the assurance that their intellectual property rights are
protected and may be enforced under the law, especially if they register
their marks.
By having a uniform, easily-verifiable system of acquiring
ownership, potential entrepreneurs have the guarantee that once they
avail in good faith of the relatively inexpensive procedure of registration
with the IPO, they already have the upper-hand against someone who
could make a claim of ownership based on a supposed "prior use" — an
issue that may entail expensive and extensive litigation effectively
favoring those who have more resources. As explained, due to the
change in the language of Section 123.1 of the IP Code, the registered
owners in good faith who dutifully maintain their registrations generally
do not have to worry that their rights over the registered mark may one
day be subject to a cancellation proceeding by someone with claims of
prior actual use. This uniform system of ownership also gives a sense of
stability to potential foreign entrepreneurs wanting to offer their products
and services in the Philippines because, if they register their marks in
good faith and diligently maintain said marks, they no longer have to
worry about their ownership over the mark being attacked by someone
appearing out of the blue claiming to be a local prior user of the mark all
along. Such sense of stability given by the current system of acquiring
trademark ownership is in consonance with the expressed State policy
that describes an effective intellectual and industrial property system as
one that "attracts foreign investments." 143
Page 14 of 65 | IPL | LAW ON TRADEMARK
 In the same vein, those who do not have the resources to
apply for trademark registrations are protected from infringement cases
and may exercise certain rights under the law, albeit their rights under
the IP Code are more limited compared to the owners of the mark.
Lastly, as additional rationale for initiating the complaint for
trademark infringement against Zuneca and presumably to prevent the
coexistence of the subject marks in the market, Natrapharm points out
the dire consequence of the possibility of medical switching in the case
at bar, especially since "ZYNAPSE" and "ZYNAPS" are admitted to be
confusingly similar. 144 Allegedly, if a stroke patient who is supposed to
take citicoline ("ZYNAPSE") mistakenly
ingests carbamazepine ("ZYNAPS"), said patient will not only be not
cured of stroke but also be exposed to the risk of suffering Stevens-
Johnson syndrome, a side effect of carbamazepine, which is a serious
systemic body-wide allergic reaction with a characteristic rash which
attacks and disfigures the skin and mucous membrane. 145
While there is no issue as to the likelihood of confusion
between "ZYNAPSE" and "ZYNAPS," the Court believes that the evil of
medical switching will likely not arise, considering that the law requires
the generic names of drugs to be written in prescriptions.
R.A. 6675 146 (Generics Act of 1988), as amended by R.A.
9502 147 or the Universally Accessible Cheaper and Quality Medicines
Act of 2008, reads:
SEC. 6. Who Shall Use Generic
Terminology. — (a) All government health agencies
and their personnel as well as other government
agencies shall use generic terminology or generic
names in all transactions related to purchasing,
prescribing, dispensing and administering of drugs
and medicines.
(b) All medical, dental and veterinary
practitioners, including private practitioners, shall
write prescriptions using the generic name. The
brand name may be included if so desired.
(Emphasis supplied)
Pertinently, the said law also provides for the appropriate
penalties for failure to comply with these requirements. Section 12 of
the Generics Act of 1988, as amended, reads:
SEC. 12. Penalty. — (A) Any person who
shall violate Section 6(a) or 6(b) of this Act shall
suffer the penalty graduated hereunder, viz.:
(a) for the first conviction, he shall suffer
the penalty of reprimand which shall be officially
recorded in the appropriate books of the
Professional Regulation Commission.
(b) for the second conviction, the penalty
of fine in the amount of not less than Ten thousand
pesos (Php10,000.00) but not exceeding Twenty-
five thousand pesos (Php25,000.00), at the
discretion of the court.
(c) for the third conviction, the penalty of
fine in the amount of not less than Twenty-five
thousand pesos (Php25,000.00) but not exceeding
Fifty thousand pesos (Php50,000.00) and
suspension of his license to practice his profession
for sixty (60) days at the discretion of the court.
(d) for the fourth and subsequent
convictions, the penalty of fine of not less than One
hundred thousand pesos (Php100,000.00) and
suspension of his license to practice his profession
for one (1) year or longer at the discretion of the
court.
xxx xxx xxx
(C) The Secretary of Health shall have
the authority to impose administrative sanctions
such as suspension or cancellation of license to
operate or recommend suspension of license to
practice profession to the Professional Regulation
Commission as the case may be for the violation of
this Act.
The administrative sanctions that shall
be imposed by the Secretary of the Department of
Health shall be in a graduated manner in
accordance with Section 12.A.
An administrative case may be instituted
independently from the criminal case: Provided,
That, the dismissal of the criminal case or the
withdrawal of the same shall in no instance be a
ground for the dismissal of the administrative case.
Still, even as the Generics Act of 1988, as amended, provides
protection to the consumers — and despite the Court's recognition of the
respective rights under the IP Code of the first registrant in good faith
and the prior user in good faith — the Court is nonetheless mindful of
potential switching of medicines. As amply elaborated by Justice
Gesmundo in his Concurring Opinion, the issue on likelihood of confusion
on medicines may pose a significant threat to public health, hence, there
is a need to improve our intellectual property laws and the government's
manner of regulation of drug names to prevent the concurrent use in the
market of confusingly similar names for medicines.
To further reduce therefore, if not totally eliminate, the
likelihood of switching in this case, the Court hereby orders the parties to
prominently state on the packaging of their respective products, in plain
language understandable by people with no medical background or
training, the medical conditions that their respective drugs are supposed
to treat or alleviate and a warning indicating what "ZYNAPS"
is not supposed to treat and what "ZYNAPSE" is not supposed to treat,
given the likelihood of confusion between the two.
As well, by this Decision, the Court furnishes the Food and
Drug Administration a copy of this decision, and accordingly directs it to
monitor the continuing compliance by the parties of the above directives.
WHEREFORE, premises considered, the petition is PARTLY
GRANTED and the Court hereby declares petitioners ZUNECA
PHARMACEUTICAL AND/OR AKRAM ARAIN AND/OR VENUS ARAIN,
M.D., AND STYLE OF ZUNECA PHARMACEUTICAL as the prior users in
good faith of the "ZYNAPS" mark and accordingly protected under
Section 159.1 of the Intellectual Property Code of the Philippines.
The assailed Decision and Resolution of the Court of Appeals
in CA-G.R. CV No. 99787, which affirmed the Decision of the Regional
Trial Court of Quezon City, Branch 93 dated December 2, 2011,
are AFFIRMED insofar as they declared respondent NATRAPHARM,
INC. as the lawful registrant of the "ZYNAPSE" mark under
the Intellectual Property Code of the Philippines, and are SET
ASIDE insofar as they hold petitioners liable for trademark infringement
and damages, directed the destruction of petitioners' goods, and
enjoined petitioners from using "ZYNAPS." Petitioners' application for the
issuance of a Temporary Restraining Order and/or Preliminary Injunction
is DENIED.
ZUNECA PHARMACEUTICAL AND/OR AKRAM ARAIN
AND/OR VENUS ARAIN, M.D., AND STYLE OF ZUNECA
PHARMACEUTICAL and NATRAPHARM, INC. are likewise ORDERED to:
(1) indicate on their respective packaging, in plain language
understandable by people with no medical background or training, the
medical conditions that their respective drugs are supposed to treat or
alleviate and a warning indicating what "ZYNAPS" is not supposed to
treat and what "ZYNAPSE" is not supposed to treat; and (2) submit to the
Court a written report showing compliance with this directive within thirty
(30) days from receipt of this Decision.
Let a copy of this Decision be furnished the Food and Drug
Administration which is, by this Decision, directed to monitor the parties'
continuing compliance with the above directives.
Let copies of this Decision likewise be forwarded to the
Senate President, the Speaker of the House of Representatives, and the
Intellectual Property Office, for their information and guidance.
SO ORDERED.
Peralta, C.J., J.C. Reyes, Jr., Carandang, Inting, Zalameda,
Lopez, Delos Santos and Gaerlan, JJ., concur.
Perlas-Bernabe, J., please see separate concurring opinion.
Leonen, J., with respect, I dissent, see separate opinion.
Gesmundo, J., with separate concurring opinion.
Page 15 of 65 | IPL | LAW ON TRADEMARK
 Hernando, * J., took no part. 12. Ecuador
13. Egypt
Lazaro-Javier, J., please see dissenting opinion. 14. Finland
Baltazar-Padilla, ** J., is on leave. 15. France
16. Great Britain
17. Germany
2. Societe Des Produits Nestle, S.A. vs. Court of Appeals and CFC 18. Greece DCcTHa
Corporation, G.R. No. 112012, 4 April 2001 19. Hong Kong
x 20. India
3. Fredco Manufacturing Corporation vs. President and Fellows of Harvard 21. Indonesia
College, GR No. 185917, 1 June 2011 22. Ireland
23. Israel
SECOND DIVISION 24. Italy
[G.R. No. 185917. June 1, 2011.] 25. Japan
FREDCO MANUFACTURING 26. South Korea
CORPORATION, petitioner, vs. PRESIDENT AND 27. Malaysia
FELLOWS OF HARVARD COLLEGE (HARVARD 28. Mexico
UNIVERSITY), respondents. 29. New Zealand
DECISION 30. Norway
CARPIO, J p: 31. Peru
32. Philippines
The Case 33. Poland
34. Portugal
Before the Court is a petition for review 1 assailing the 24 35. Russia
October 2008 Decision 2 and 8 January 2009 Resolution 3 of the Court of 36. South Africa
Appeals in CA-G.R. SP No. 103394. 37. Switzerland
38. Singapore
The Antecedent Facts 39. Slovak Republic
On 10 August 2005, petitioner Fredco Manufacturing 40. Spain
Corporation (Fredco), a corporation organized and existing under the 41. Sweden
laws of the Philippines, filed a Petition for Cancellation of Registration 42. Taiwan
No. 56561 before the Bureau of Legal Affairs of the Intellectual Property 43. Thailand
Office (IPO) against respondents President and Fellows of Harvard 44. Turkey TaCSAD
College (Harvard University), a corporation organized and existing under 45. United Arab Emirates
the laws of Massachusetts, United States of America. The case was 46. Uruguay
docketed as Inter Partes Case No. 14-2005-00094. 47. United States of America
48. Venezuela
Fredco alleged that Registration No. 56561 was issued to 49. Zimbabwe
Harvard University on 25 November 1993 for the mark "Harvard Veritas 50. European Community 5
Shield Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts,
The name and mark "Harvard" was adopted in 1639 as the name of
hats and flying discs under Classes 16, 18, 21, 25 and 28 of the Nice
Harvard College 6 of Cambridge, Massachusetts, U.S.A. The name and
International Classification of Goods and Services. Fredco alleged that
mark "Harvard" was allegedly used in commerce as early as 1872.
the mark "Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and
Harvard University is over 350 years old and is a highly regarded
slacks was first used in the Philippines on 2 January 1982 by New York
institution of higher learning in the United States and throughout the
Garments Manufacturing & Export Co., Inc. (New York Garments), a
world. Harvard University promotes, uses, and advertises its name
domestic corporation and Fredco's predecessor-in-interest. On 24
"Harvard" through various publications, services, and products in foreign
January 1985, New York Garments filed for trademark registration of the
countries, including the Philippines. Harvard University further alleged
mark "Harvard" for goods under Class 25. The application matured into a
that the name and the mark have been rated as one of the most famous
registration and a Certificate of Registration was issued on 12 December
brands in the world, valued between US$750,000,000 and
1988, with a 20-year term subject to renewal at the end of the term. The
US$1,000,000,000.
registration was later assigned to Romeo Chuateco, a member of the
family that owned New York Garments. CEASaT Harvard University alleged that in March 2002, it discovered,
through its international trademark watch program, Fredco's website
Fredco alleged that it was formed and registered with the
www.harvard-usa.com. The website advertises and promotes the brand
Securities and Exchange Commission on 9 November 1995 and had
name "Harvard Jeans USA" without Harvard University's consent. The
since then handled the manufacture, promotion and marketing of
website's main page shows an oblong logo bearing the mark "Harvard
"Harvard" clothing articles. Fredco alleged that at the time of issuance of
Jeans USA®," "Established 1936," and "Cambridge, Massachusetts." On
Registration No. 56561 to Harvard. University, New York Garments had
20 April 2004, Harvard University filed an administrative complaint
already registered the mark "Harvard" for goods under Class 25. Fredco
against Fredco before the IPO for trademark infringement and/or unfair
alleged that the registration was cancelled on 30 July 1998 when New
competition with damages.
York Garments inadvertently failed to file an affidavit of use/non-use on
the fifth anniversary of the registration but the right to the mark "Harvard" Harvard University alleged that its valid and existing
remained with its predecessor New York Garments and now with Fredco. certificates of trademark registration in the Philippines are:
Harvard University, on the other hand, alleged that it is the 1. Trademark Registration No. 56561 issued on 25
lawful owner of the name and mark "Harvard" in numerous countries November 1993 for "Harvard Veritas Shield
worldwide, including the Philippines. Among the countries where Harvard Design" for goods and services in Classes
University has registered its name and mark "Harvard" are: 16, 18, 21, 25 and 28 (decals, tote bags,
serving trays, sweatshirts, t-shirts, hats and
1. Argentina
flying discs) of the Nice International
2. Benelux 4
Classification of Goods and Services;
3. Brazil
4. Canada 2. Trademark Registration No. 57526 issued on 24
5. Chile March 1994 for "Harvard Veritas Shield
6. China P.R. Symbol" for services in Class 41;
7. Colombia Trademark Registration No. 56539 issued
8. Costa Rica on 25 November 1998 for "Harvard" for
9. Cyprus services in Class 41; and
10. Czech Republic
11. Denmark

Page 16 of 65 | IPL | LAW ON TRADEMARK

 3. Trademark Registration No. 66677 issued on 8
December 1998 for "Harvard Graphics" for
goods in Class 9. Harvard University further
alleged that it filed the requisite affidavits
of use for the mark "Harvard Veritas Shield
Symbol" with the IPO.
Further, on 7 May 2003 Harvard University filed Trademark
Application No. 4-2003-04090 for "Harvard Medical International & Shield
Design" for services in Classes 41 and 44. In 1989, Harvard University
established the Harvard Trademark Licensing Program, operated by the
Office for Technology and Trademark Licensing, to oversee and manage
the worldwide licensing of the "Harvard" name and trademarks for
various goods and services. Harvard University stated that it never
authorized or licensed any person to use its name and mark "Harvard" in
connection with any goods or services in the Philippines. DcaSIH
In a Decision 7 dated 22 December 2006, Director Estrellita
Beltran-Abelardo of the Bureau of Legal Affairs, IPO cancelled Harvard
University's registration of the mark "Harvard" under Class 25, as follows:
WHEREFORE, premises considered, the
Petition for Cancellation is hereby GRANTED.
Consequently, Trademark Registration Number 56561
for the trademark "HARVARD VE RI TAS 'SHIELD'
SYMBOL" issued on November 25, 1993 to
PRESIDENT AND FELLOWS OF HARVARD COLLEGE
(HARVARD UNIVERSITY) should be CANCELLED only
with respect to goods falling under Class 25. On the
other hand, considering that the goods of Respondent-
Registrant falling under Classes 16, 18, 21 and 28 are
not confusingly similar with the Petitioner's goods, the
Respondent-Registrant has acquired vested right over
the same and therefore, should not be cancelled.
Let the filewrapper of the Trademark
Registration No. 56561 issued on November 25, 1993
for the trademark "HARVARD VE RI TAS 'SHIELD'
SYMBOL", subject matter of this case together with a
copy of this Decision be forwarded to the Bureau of
Trademarks (BOT) for appropriate action.
SO ORDERED. 8
Harvard University filed an appeal before the Office of the
Director General of the IPO. In a Decision 9 dated 21 April 2008, the
Office of the Director General, IPO reversed the decision of the Bureau of
Legal Affairs, IPO.
The Director General ruled that more than the use of the
trademark in the Philippines, the applicant must be the owner of the mark
sought to be registered. The Director General ruled that the right to
register a trademark is based on ownership and when the applicant is not
the owner, he has no right to register the mark. The Director General
noted that the mark covered by Harvard University's Registration No.
56561 is not only the word "Harvard" but also the logo, emblem or symbol
of Harvard University. The Director General ruled that Fredco failed to
explain how its predecessor New York Garments came up with the mark
"Harvard." In addition, there was no evidence that Fredco or New York
Garments was licensed or authorized by Harvard University to use its
name in commerce or for any other use.
The dispositive portion of the decision of the Office of the
Director General, IPO reads:
WHEREFORE, premises considered, the
instant appeal is GRANTED. The appealed decision is
hereby REVERSED and SET ASIDE. Let a copy of this
Decision as well as the trademark application and
records be furnished and returned to the Director of
Bureau of Legal Affairs for appropriate action. Further,
let also the Directors of the Bureau of Trademarks and
the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the
Documentation, Information and Technology Transfer
Bureau be furnished a copy of this Decision for
information, guidance, and records purposes. aIcETS
SO ORDERED. 10
Fredco filed a petition for review before the Court of Appeals
assailing the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the
decision of the Office of the Director General of the IPO.
The Court of Appeals adopted the findings of the Office of the
Director General and ruled that the latter correctly set aside the
cancellation by the Director of the Bureau of Legal Affairs of Harvard
University's trademark registration under Class 25. The Court of Appeals
ruled that Harvard University was able to substantiate that it appropriated
and used the marks "Harvard" and "Harvard Veritas Shield Symbol" in
Class 25 way ahead of Fredco and its predecessor New York Garments.
The Court of Appeals also ruled that the records failed to disclose any
explanation for Fredco's use of the name and mark "Harvard" and the
words "USA," "Established 1936," and "Cambridge, Massachusetts" within
an oblong device, "US Legend" and "Europe's No. 1 Brand." Citing Shangri-
La International Hotel Management, Ltd. v Developers Group of
Companies, Inc., 11 the Court of Appeals ruled:
One who has imitated the trademark of
another cannot bring an action for infringement,
particularly against the true owner of the mark,
because he would be coming to court with unclean
hands. Priority is of no avail to the bad faith plaintiff.
Good faith is required in order to ensure that a second
user may not merely take advantage of the goodwill
established by the true owner. 12
The dispositive portion of the decision of the Court of Appeals
reads:
WHEREFORE, premises considered, the
petition for review is DENIED. The Decision dated April
21, 2008 of the Director General of the IPO in Appeal
No. 14-07-09 Inter Partes Case No. 14-2005-00094 is
hereby AFFIRMED.
SO ORDERED. 13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of
Appeals denied the motion for lack of merit.
Hence, this petition before the Court. CaAcSE
The Issue
The issue in this case is whether the Court of Appeals
committed a reversible error in affirming the decision of the Office of the
Director General of the IPO.
The Ruling of this Court
The petition has no merit.
There is no dispute that the mark "Harvard" used by Fredco is
the same as the mark "Harvard" in the "Harvard Veritas Shield Symbol" of
Harvard University. It is also not disputed that Harvard University was
named Harvard College in 1639 and that then, as now, Harvard University
is located in Cambridge, Massachusetts, U.S.A. It is also unrefuted that
Harvard University has been using the mark "Harvard" in commerce since
1872. It is also established that Harvard University has been using the
marks "Harvard" and "Harvard Veritas Shield Symbol" for Class 25 goods
in the United States since 1953. Further, there is no dispute that Harvard
University has registered the name and mark "Harvard" in at least 50
countries.
On the other hand, Fredco's predecessor-in-interest, New York
Garments, started using the mark "Harvard" in the Philippines only in
1982. New York Garments filed an application with the Philippine Patent
Office in 1985 to register the mark "Harvard," which application was
approved in 1988. Fredco insists that the date of actual use in the
Philippines should prevail on the issue of who has the better right to
register the marks.
Under Section 2 of Republic Act No. 166, 14 as amended (R.A.
No. 166), before a trademark can be registered, it must have been
actually used in commerce for not less than two months in the
Philippines prior to the filing of an application for its registration. While
Harvard University had actual prior use of its marks abroad for a long
time, it did not have actual prior use in the Philippines of the mark
"Harvard Veritas Shield Symbol" before its application for registration of
the mark "Harvard" with the then Philippine Patents Office. However,
Page 17 of 65 | IPL | LAW ON TRADEMARK
Harvard University's registration of the name "Harvard" is based on home
registration which is allowed under Section 37 of R.A. No. 166. 15 As
pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark
law (R.A. 166) requires for the registration of
trademark that the applicant thereof must prove that
the same has been actually in use in commerce or
services for not less than two (2) months in the
Philippines before the application for registration is
filed, where the trademark sought to be registered has
already been registered in a foreign country that is a
member of the Paris Convention, the requirement of
proof of use in the commerce in the Philippines for the
said period is not necessary. An applicant for
registration based on home certificate of registration
need not even have used the mark or trade name in
this country. 16
Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco
alleged that Harvard University's registration "is based on 'home
registration' for the mark 'Harvard Veritas Shield' for Class 25." 17 HESIcT
In any event, under Section 239.2 of Republic Act No.
8293 (R.A. No. 8293), 18 "[m]arks registered under Republic Act No.
166 shall remain in force but shall be deemed to have been granted
under this Act . . .," which does not require actual prior use of the mark in
the Philippines. Since the mark "Harvard Veritas Shield Symbol" is now
deemed granted under R.A. No. 8293, any alleged defect arising from the
absence of actual prior use in the Philippines has been cured by Section
239.2. 19 In addition, Fredco's registration was already cancelled on 30
July 1998 when it failed to file the required affidavit of use/non-use for
the fifth anniversary of the mark's registration. Hence, at the time of
Fredco's filing of the Petition for Cancellation before the Bureau of Legal
Affairs of the IPO, Fredco was no longer the registrant or presumptive
owner of the mark "Harvard."
There are two compelling reasons why Fredco's petition must
fail.
First, Fredco's registration of the mark "Harvard" and its
identification of origin as "Cambridge, Massachusetts" falsely suggest
that Fredco or its goods are connected with Harvard University, which
uses the same mark "Harvard" and is also located in Cambridge,
Massachusetts. This can easily be gleaned from the following oblong
logo of Fredco that it attaches to its clothing line:
Fredco's registration of the mark "Harvard" should not have
been allowed because Section 4 (a) of R.A. No. 166 prohibits the
registration of a mark "which may disparage or falsely suggest a
connection with persons, living or dead, institutions, beliefs . . . ." Section
4 (a) of R.A. No. 166 provides:
Section 4. Registration of trade-marks,
trade-names and service-marks on the principal
register. — There is hereby established a register of
trade-mark, trade-names and service-marks which
shall be known as the principal register. The owner of
a trade-mark, a trade-name or service-mark used to
distinguish his goods, business or services from the
goods, business or services of others shall have the
right to register the same on the principal register,
unless it:
(a) Consists of or comprises immoral,
deceptive or scandalous manner, or matter which may
disparage or falsely suggest a connection
with persons, living or dead, institutions, beliefs, or
national symbols, or bring them into contempt or
disrepute;
(b) . . . (emphasis supplied)
Fredco's use of the mark "Harvard," coupled with its claimed origin in
Cambridge, Massachusetts, obviously suggests a false connection with
Harvard University. On this ground alone, Fredco's registration of the
mark "Harvard" should have been disallowed. EcDATH
Indisputably, Fredco does not have any affiliation or
connection with Harvard University, or even with Cambridge,
Massachusetts. Fredco or its predecessor New York Garments was not
established in 1936, or in the U.S.A. as indicated by Fredco in its oblong
logo. Fredco offered no explanation to the Court of Appeals or to the IPO
why it used the mark "Harvard" on its oblong logo with the words
"Cambridge, Massachusetts," "Established in 1936," and "USA." Fredco
now claims before this Court that it used these words "to evoke a
'lifestyle' or suggest a 'desirable aura' of petitioner's clothing lines."
Fredco's belated justification merely confirms that it sought to connect
or associate its products with Harvard University, riding on the prestige
and popularity of Harvard University, and thus appropriating part of
Harvard University's goodwill without the latter's consent.
Section 4 (a) of R.A. No. 166 is identical to Section 2 (a) of the
Lanham Act, 20 the trademark law of the United States. These provisions
are intended to protect the right of publicity of famous individuals and
institutions from commercial exploitation of their goodwill by
others. 21 What Fredco has done in using the mark "Harvard" and the
words "Cambridge, Massachusetts," "USA" to evoke a "desirable aura" to
its products is precisely to exploit commercially the goodwill of Harvard
University without the latter's consent. This is a clear violation of Section
4 (a) of R.A. No. 166. Under Section 17 (c) 22 of R.A. No. 166, such
violation is a ground for cancellation of Fredco's registration of the mark
"Harvard" because the registration was obtained in violation of Section 4
of R.A. No. 166. acHTIC
Second, the Philippines and the United States of America are
both signatories to the Paris Convention for the Protection of Industrial
Property (Paris Convention). The Philippines became a signatory to the
Paris Convention on 27 September 1965. Articles 6bis and 8 of the Paris
Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake
either administratively if their legislation so permits, or
at the request of an interested party, to refuse or to
cancel the registration and to prohibit the use of a
trademark which constitutes a reproduction, imitation
or translation, liable to create confusion or a mark
considered by the competent authority of the country
as being already the mark of a person entitled to the
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.
ARTICLE 8
A trade name shall be protected in all the
countries of the Union without the obligation of filing
or registration, whether or not it forms part of a
trademark. (Emphasis supplied)
Thus, this Court has ruled that the Philippines is obligated to assure
nationals of countries of the Paris Convention that they are afforded an
effective protection against violation of their intellectual property rights in
the Philippines in the same way that their own countries are obligated to
accord similar protection to Philippine nationals. 23
Article 8 of the Paris Convention has been incorporated in
Section 37 of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. —
Persons who are nationals of, domiciled in, or have
a bona fide or effective business or commercial
establishment in any foreign country, which is a party
to any international convention or treaty relating to
marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party,
shall be entitled to the benefits and subject to the
provisions of this Act to the extent and under the
conditions essential to give effect to any such
convention and treaties so long as the Philippines
shall continue to be a party thereto, except as
provided in the following paragraphs of this section.
xxx xxx xxx
Page 18 of 65 | IPL | LAW ON TRADEMARK
 Trade-names of persons described in the
first paragraph of this section shall be protected
without the obligation of filing or registration whether
or not they form parts of marks. 24 DcSACE
xxx xxx xxx (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a State that is a
party to the Paris Convention, whether or not the trade name forms part
of a trademark, is protected "without the obligation of filing or
registration."
"Harvard" is the trade name of the world famous Harvard
University, and it is also a trademark of Harvard University. Under Article
8 of the Paris Convention, as well as Section 37 of R.A. No. 166, Harvard
University is entitled to protection in the Philippines of its trade name
"Harvard" even without registration of such trade name in the Philippines.
This means that no educational entity in the Philippines can use the trade
name "Harvard" without the consent of Harvard University. Likewise, no
entity in the Philippines can claim, expressly or impliedly through the use
of the name and mark "Harvard," that its products or services are
authorized, approved, or licensed by, or sourced from, Harvard University
without the latter's consent.
Article 6bis of the Paris Convention has been administratively
implemented in the Philippines through two directives of the then
Ministry (now Department) of Trade, which directives were upheld by this
Court in several cases. 25 On 20 November 1980, then Minister of Trade
Secretary Luis Villafuerte issued a Memorandum directing the Director of
Patents to reject, pursuant to the Paris Convention, all pending
applications for Philippine registration of signature and other world-
famous trademarks by applicants other than their original
owners. 26 The Memorandum states:
Pursuant to the Paris Convention for the
Protection of Industrial Property to which the
Philippines is a signatory, you are hereby directed to
reject all pending applications for Philippine
registration of signature and other world-famous
trademarks by applicants other than its original
owners or users.
The conflicting claims over internationally
known trademarks involve such name brands as
Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin
Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin
and Ted Lapidus.
It is further directed that, in cases where
warranted, Philippine registrants of such trademarks
should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and
other legal action by the trademarks' foreign or local
owners or original users.
You are also required to submit to the
undersigned a progress report on the matter.
For immediate compliance. 27
In a Memorandum dated 25 October 1983, then Minister of
Trade and Industry Roberto Ongpin affirmed the earlier Memorandum of
Minister Villafuerte. Minister Ongpin directed the Director of Patents to
implement measures necessary to comply with the Philippines'
obligations under the Paris Convention, thus: EScaIT
1. Whether the trademark under
consideration is well-known in the Philippines or is a
mark already belonging to a person entitled to the
benefits of the CONVENTION, this should be
established, pursuant to Philippine Patent Office
procedures in inter partes and ex parte cases,
according to any of the following criteria or any
combination thereof:
(a) a declaration by the Minister of Trade
and Industry that the trademark being considered is
already well-known in the Philippines such that
permission for its use by other than its original owner
will constitute a reproduction, imitation, translation or
other infringement;
(b) that the trademark is used in commerce
internationally, supported by proof that goods bearing
the trademark are sold on an international scale,
advertisements, the establishment of factories, sales
offices, distributorships, and the like, in different
countries, including volume or other measure of
international trade and commerce;
(c) that the trademark is duly registered in
the industrial property office(s) of another country or
countries, taking into consideration the dates of such
registration;
(d) that the trademark has been long
established and obtained goodwill and general
international consumer recognition as belonging to
one owner or source;
(e) that the trademark actually belongs to a
party claiming ownership and has the right to
registration under the provisions of the aforestated
PARIS CONVENTION.
2. The word trademark, as used in this
MEMORANDUM, shall include tradenames, service
marks, logos, signs, emblems, insignia or other
similar devices used for identification and
recognition by consumers.
3. The Philippine Patent Office shall refuse
all applications for, or cancel the registration of,
trademarks which constitute a reproduction,
translation or imitation of a trademark owned by a
person, natural or corporate, who is a citizen of a
country signatory to the PARIS CONVENTION FOR
THE PROTECTION OF INDUSTRIAL PROPERTY.
xxx xxx xxx 28 (Emphasis supplied)
In Mirpuri, the Court ruled that the essential requirement under
Article 6bis of the Paris Convention is that the trademark to be protected
must be "well-known" in the country where protection is sought. 29 The
Court declared that the power to determine whether a trademark is well-
known lies in the competent authority of the country of registration or
use. 30 The Court then stated that the competent authority would either
be the registering authority if it has the power to decide this, or the courts
of the country in question if the issue comes before the
courts. 31 caEIDA
To be protected under the two directives of the Ministry of
Trade, an internationally well-known mark need not be registered or used
in the Philippines. 32 All that is required is that the mark is well-known
internationally and in the Philippines for identical or similar goods,
whether or not the mark is registered or used in the Philippines. The
Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.: 33
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
Page 19 of 65 | IPL | LAW ON TRADEMARK
 (iii) that the mark is well known by the
public at large in the Member State. 34 (Italics in the
original decision; boldface supplied)
Indeed, Section 123.1 (e) of R.A. No. 8293 now categorically
states that "a mark which is considered by the competent authority of the
Philippines to be well-known internationally and in the Philippines,
whether or not it is registered here," cannot be registered by another in
the Philippines. Section 123.1 (e) does not require that the well-known
mark be used in commerce in the Philippines but only that it be well-
known in the Philippines. Moreover, Rule 102 of the Rules and
Regulations on Trademarks, Service Marks, Trade Names and Marked or
Stamped Containers, which implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a
mark is well-known. In determining whether a mark is
well-known, the following criteria or any combination
thereof may be taken into account: CSTHca
(a) the duration, extent and geographical
area of any use of the mark, in particular, the duration,
extent and geographical area of any promotion of the
mark, including advertising or publicity and the
presentation, at fairs or exhibitions, of the goods
and/or services to which the mark applies;
(b) the market share, in the Philippines and
in other countries, of the goods and/or services to
which the mark applies;
(c) the degree of the inherent or acquired
distinction of the mark;
(d) the quality-image or reputation acquired
by the mark;
(e) the extent to which the mark has been
registered in the world;
(f) the exclusivity of registration attained by
the mark in the world;
(g) the extent to which the mark has been
used in the world;
(h) the exclusivity of use attained by the
mark in the world;
(i) the commercial value attributed to the
mark in the world;
(j) the record of successful protection of
the rights in the mark;
(k) the outcome of litigations dealing with
the issue of whether the mark is a well-known mark;
and
(l) the presence or absence of identical or
similar marks validly registered for or used on
identical or similar goods or services and owned by
persons other than the person claiming that his mark
is a well-known mark. (Emphasis supplied)
Since "any combination" of the foregoing criteria is sufficient to
determine that a mark is well-known, it is clearly not necessary that the
mark be used in commerce in the Philippines. Thus, while under the
territoriality principle a mark must be used in commerce in the
Philippines to be entitled to protection, internationally well-known marks
are the exceptions to this rule.
In the assailed Decision of the Office of the Director General
dated 21 April 2008, the Director General found that:
Traced to its roots or origin, HARVARD is
not an ordinary word. It refers to no other than
Harvard University, a recognized and respected
institution of higher learning located in Cambridge,
Massachusetts, U.S.A. Initially referred to simply as
"the new college," the institution was named "Harvard
College" on 13 March 1639, after its first principal
donor, a young clergyman named John Harvard. A
graduate of Emmanuel College, Cambridge in England,
John Harvard bequeathed about four hundred books
in his will to form the basis of the college library
collection, along with half his personal wealth worth
several hundred pounds. The earliest known official
reference to Harvard as a "university" rather than
"college" occurred in the new Massachusetts
Constitution of 1780. IcTaAH
Records also show that the first use of the
name HARVARD was in 1638 for educational services,
policy courses of instructions and training at the
university level. It has a Charter. Its first commercial
use of the name or mark HARVARD for Class 25 was
on 31 December 1953 covered by UPTON Reg. No.
2,119,339 and 2,101,295. Assuming in arguendo, that
the Appellate may have used the mark HARVARD in
the Philippines ahead of the Appellant, it still cannot
be denied that the Appellant's use thereof was
decades, even centuries, ahead of the Appellee's.
More importantly, the name HARVARD was the name
of a person whose deeds were considered to be a
cornerstone of the university. The Appellant's logos,
emblems or symbols are owned by Harvard University.
The name HARVARD and the logos, emblems or
symbols are endemic and cannot be separated from
the institution. 35
Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is
the oldest and one of the foremost educational
institutions in the United States, it being established in
1636. It is located primarily in Cambridge,
Massachusetts and was named after John Harvard, a
puritan minister who left to the college his books and
half of his estate.
The mark "Harvard College" was first used
in commerce in the United States in 1638 for
educational services, specifically, providing courses of
instruction and training at the university level (Class
41). Its application for registration with the United
States Patent and Trademark Office was filed on
September 20, 2000 and it was registered on October
16, 2001. The marks "Harvard" and "Harvard Ve ri tas
'Shield' Symbol" were first used in commerce in the
United States on December 31, 1953 for athletic
uniforms, boxer shorts, briefs, caps, coats, leather
coats, sports coats, gym shorts, infant jackets, leather
jackets, night shirts, shirts, socks, sweat pants,
sweatshirts, sweaters and underwear (Class 25). The
applications for registration with the USPTO were filed
on September 9, 1996, the mark "Harvard" was
registered on December 9, 1997 and the mark
"Harvard Ve ri tas 'Shield' Symbol" was registered on
September 30, 1997. 36
We also note that in a Decision 37 dated 18 December 2008
involving a separate case between Harvard University and Streetward
International, Inc., 38 the Bureau of Legal Affairs of the IPO ruled that the
mark "Harvard" is a "well-known mark." This Decision, which cites among
others the numerous trademark registrations of Harvard University in
various countries, has become final and executory. SCEDAI
There is no question then, and this Court so declares, that
"Harvard" is a well-known name and mark not only in the United States
but also internationally, including the Philippines. The mark "Harvard" is
rated as one of the most famous marks in the world. It has been
registered in at least 50 countries. It has been used and promoted
extensively in numerous publications worldwide. It has established a
considerable goodwill worldwide since the founding of Harvard
University more than 350 years ago. It is easily recognizable as the trade
name and mark of Harvard University of Cambridge, Massachusetts,
U.S.A., internationally known as one of the leading educational
institutions in the world. As such, even before Harvard University applied
for registration of the mark "Harvard" in the Philippines, the mark was
already protected under Article 6bis and Article 8 of the Paris Convention.
Again, even without applying the Paris Convention, Harvard University
can invoke Section 4 (a) of R.A. No. 166 which prohibits the registration
of a mark "which may disparage or falsely suggest a connection
with persons, living or dead, institutions, beliefs . . . ."
Page 20 of 65 | IPL | LAW ON TRADEMARK
 WHEREFORE, we DENY the petition. We AFFIRM the 24
October 2008 Decision and 8 January 2009 Resolution of the Court of
Appeals in CA-G.R. SP No. 103394.
SO ORDERED.
Nachura, Peralta, Abad and Mendoza, JJ., concur.
||| (Fredco Manufacturing Corp. v. President and Fellows of Hardvard College,
G.R. No. 185917, [June 1, 2011], 665 PHIL 374-399)
4. Republic Gas Corporation (REGASCO), et. al. vs. Petron Corporation, et. al.,
G.R. No. 194062, 17 June 2013
THIRD DIVISION
[G.R. No. 194062. June 17, 2013.]
REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI
ANTONETTE N. TY, ORLANDO REYES, FERRER
SUAZO and ALVIN U. TY, petitioners, vs. PETRON
CORPORATION, PILIPINAS SHELL PETROLEUM
CORPORATION, and SHELL INTERNATIONAL
PETROLEUM COMPANY LIMITED, respondents.
DECISION
PERALTA, J p:
This resolves the Petition for Review on Certiorari under Rule 45 of
the Rules of Court filed by petitioners seeking the reversal of the
Decision 1 dated July 2, 2010, and Resolution 2 dated October 11, 2010 of the
Court of Appeals (CA) in CA-G.R. SP No. 106385.
Stripped of non-essentials, the facts of the case, as summarized by
the CA, are as follows:
Petitioners Petron Corporation ("Petron" for
brevity) and Pilipinas Shell Petroleum Corporation
("Shell" for brevity) are two of the largest bulk
suppliers and producers of LPG in the Philippines.
Petron is the registered owner in the Philippines of the
trademarks GASUL and GASUL cylinders used for its
LPG products. It is the sole entity in the Philippines
authorized to allow 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 LPG 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"). cHATSI
LPG Dealers Associations, such as the
Shellane Dealers Association, Inc., Petron Gasul
Dealers Association, Inc. and Totalgaz Dealers
Association, received reports that certain entities were
engaged in the unauthorized 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). TIaEDC
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:
"xxx xxx xxx.
"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. SHADcT
6. For several days in the month
of February 2004, the other NBI operatives
and I conducted surveillance and
investigation on respondents' REGASCO
LPG 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.
xxx xxx xxx.
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 test-buy operation. Both the
Page 21 of 65 | IPL | LAW ON TRADEMARK
 confidential assets and I brought with us
four (4) empty LPG cylinders branded as
Shellane and Gasul. . . . in order to have a
successful test buy, we decided to "ride-on"
our purchases with the purchase of Gasul
and Shellane LPG by J & S, one of
REGASCO's regular customers.
9. We proceeded to the location
of respondents' REGASCO LPG 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. ETIDaH
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. . . . .
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.
. . . ."
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. cSCTID
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: TAIEcS
". . ., 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. . . .
." 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: IHTaCE
WHEREFORE, in view of the foregoing
premises, the petition filed in this case is
hereby GRANTED. The assailed Resolution dated
Page 22 of 65 | IPL | LAW ON TRADEMARK
 September 18, 2008 of the Department of Justice in Section 155 of R.A. No. 8293 identifies the acts constituting
I.S. No. 2005-055 is hereby REVERSED and SET trademark infringement as follows:
ASIDE.
Section 155. Remedies; Infringement. —
SO ORDERED. 4 Any person who shall, without the consent of the
owner of the registered mark:
Petitioners then filed a motion for reconsideration. However, the
same was denied by the CA in a Resolution dated October 11, 2010. 155.1 Use in commerce any
reproduction, counterfeit,
Accordingly, petitioners filed the instant Petition for Review copy or colorable imitation of
on Certiorari raising the following issues for our resolution: a registered mark of the
same container or a
Whether the Petition for Certiorari filed by dominant feature thereof in
RESPONDENTS should have been denied outright. connection with the sale,
offering for sale, distribution,
Whether sufficient evidence was presented to
advertising of any goods or
prove that the crimes of Trademark Infringement
services including other
and Unfair Competition as defined and penalized in
preparatory steps necessary
Section 155 and Section 168 in relation to Section
to carry out the sale of any
170 of Republic Act No. 8293 (The Intellectual
goods or services on or in
Property Code of the Philippines) had been
connection with which such
committed.
use is likely to cause
Whether probable cause exists to hold INDIVIDUAL confusion, or to cause
PETITIONERS liable for the offense charged. 5 mistake, or to deceive; or

Let us discuss the issues in seriatim. 155.2 Reproduce, counterfeit,

copy or colorably imitate a
Anent the first issue, the general rule is that a motion for registered mark or a
reconsideration is a condition sine qua non before a certiorari petition may lie, dominant feature thereof and
its purpose being to grant an opportunity for the court a quo to correct any apply such reproduction,
error attributed to it by re-examination of the legal and factual circumstances counterfeit, copy or colorable
of the case. 6 imitation to labels, signs,
prints, packages, wrappers,
However, this rule is not absolute as jurisprudence has laid down receptacles or
several recognized exceptions permitting a resort to the special civil action advertisements intended to
for certiorari without first filing a motion for reconsideration, viz.: DCESaI be used in commerce upon or
in connection with the sale,
(a) Where the order is a patent nullity, as where the offering for sale, distribution,
court a quo has no jurisdiction; or advertising of goods or
services on or in connection
(b) Where the questions raised in with which such use is likely
the certiorari proceedings have been duly to cause confusion, or to
raised and passed upon by the lower court, cause mistake, or to deceive,
or are the same as those raised and shall be liable in a civil action
passed upon in the lower court. for infringement by the
registrant for the remedies
(c) Where there is an urgent necessity for the
hereinafter set forth:
resolution of the question and any further
Provided, That the
delay would prejudice the interests of the
infringement takes place at
Government or of the petitioner or the
the moment any of the acts
subject matter of the petition is perishable;
stated in Subsection 155.1 or
(d) Where, under the circumstances, a motion for this subsection are
reconsideration would be useless; committed regardless of
whether there is actual sale
(e) Where petitioner was deprived of due process and of goods or services using
there is extreme urgency for relief; the infringing
material. 8 cDCEIA
(f) Where, in a criminal case, relief from an order of
arrest is urgent and the granting of such From the foregoing provision, the Court in a very similar case, made
relief by the trial court is improbable; it categorically clear that the mere unauthorized use of a container bearing a
registered trademark in connection with the sale, distribution or advertising of
(g) Where the proceedings in the lower court are a goods or services which is likely to cause confusion, mistake or deception
nullity for lack of due process; among the buyers or consumers can be considered as trademark
infringement. 9
(h) Where the proceeding was ex parte or in which the
petitioner had no opportunity to object; and, Here, petitioners have actually committed trademark infringement
when they refilled, without the respondents' consent, the LPG containers
(i) Where the issue raised is one purely of law or bearing the registered marks of the respondents. As noted by respondents,
public interest is involved. 7 petitioners' acts will inevitably confuse the consuming public, since they have
no way of knowing that the gas contained in the LPG tanks bearing
In the present case, the filing of a motion for reconsideration may respondents' marks is in reality not the latter's LPG product after the same had
already be dispensed with considering that the questions raised in this petition been illegally refilled. The public will then be led to believe that petitioners are
are the same as those that have already been squarely argued and passed authorized refillers and distributors of respondents' LPG products, considering
upon by the Secretary of Justice in her assailed resolution. AcICHD that they are accepting empty containers of respondents and refilling them for
resale.
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 As to the charge of unfair competition, Section 168.3, in relation to
crimes of trademark infringement and unfair competition as defined and Section 170, of R.A. No. 8293 describes the acts constituting unfair
penalized under Sections 155 and 168, in relation to Section 170 of Republic competition as follows:
Act (R.A.) No. 8293.

Page 23 of 65 | IPL | LAW ON TRADEMARK

 Section 168. Unfair Competition, Rights,
Regulations and Remedies. — . . . .
168.3 In particular, and without in any way limiting
the scope of protection against unfair competition,
the following shall be deemed guilty of unfair
competition: EcICDT
(a) Any person, who is selling his goods
and gives them the general
appearance of goods of another
manufacturer or dealer, either as
to the goods themselves or in
the wrapping of the packages in
which they are contained, or the
devices or words thereon, or in
any other feature of their
appearance, which would be
likely to 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;
xxx xxx xxx
Section 170. Penalties. — Independent of
the civil and administrative sanctions imposed by law,
a criminal penalty of imprisonment from two (2) years
to five (5) years and a fine ranging from Fifty
thousand pesos (P50,000) to Two hundred thousand
pesos (P200,000), shall be imposed on any person
who is found guilty of committing any of the acts
mentioned in Section 155, Section 168 and
Subsection 169.1.
From jurisprudence, unfair competition has been 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. HSacEI
What's more, the CA correctly pointed out that there is a showing
that the consumers may be misled into believing that the LPGs contained in
the cylinders bearing the marks "GASUL" and "SHELLANE" are those goods or
products of the petitioners when, in fact, they are not. Obviously, the mere use
of those LPG cylinders bearing the trademarks "GASUL" and "SHELLANE" will
give the LPGs sold by REGASCO the general appearance of the products of the
petitioners.
In sum, this Court 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. 12 Petitioners, 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 AHCcET
WHEREFORE, premises considered, the petition is
hereby DENIED and the Decision dated July 2, 2010 and Resolution dated
October 11, 2010 of the Court of Appeals in CA-G.R. SP No. 106385
are AFFIRMED.
SO ORDERED.
Velasco, Jr., Abad, Mendoza and Leonen, JJ., concur.
5. Birkenstock Orthopaedie Gmbh and Co. Kg vs. Philippine Shoe Expo
Marketing Corporation, G.R. No. 194307, 20 November 2013
x
6. Shang Properties Realty Corp. v. St. Francis Development Corp., G.R. No.
190706, 21 July 2014
SECOND DIVISION
[G.R. No. 190706. July 21, 2014.]
SHANG PROPERTIES REALTY CORPORATION
(formerly THE SHANG GRAND TOWER
CORPORATION) and SHANG PROPERTIES, INC.
(formerly EDSA PROPERTIES HOLDINGS,
INC.), petitioners, vs. ST. FRANCIS DEVELOPMENT
CORPORATION, respondent.
DECISION
PERLAS-BERNABE, J p:
Assailed in this petition for review on certiorari 1 is the
Decision 2 dated December 18, 2009 of the Court of Appeals (CA) in CA-G.R.
SP No. 105425 which affirmed with modification the Decision 3 dated
September 3, 2008 of the Intellectual Property Office (IPO) Director-General.
The CA: (a) affirmed the denial of the application for registration of the mark
"ST. FRANCIS TOWERS" filed by petitioners Shang Properties Realty
Corporation and Shang Properties, Inc. (petitioners); (b) found petitioners to
have committed unfair competition for using the marks "THE ST. FRANCIS
TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"; (c) ordered petitioners
to cease and desist from using "ST. FRANCIS" singly or as part of a composite
mark; and (c) ordered petitioners to jointly and severally pay respondent St.
Francis Square Development Corporation (respondent) a fine in the amount of
P200,000.00.
The Facts
Respondent — a domestic corporation engaged in the real estate
business and the developer of the St. Francis Square Commercial Center, built
sometime in 1992, located at Ortigas Center, Mandaluyong City, Metro Manila
(Ortigas Center) 4 — filed separate complaints against petitioners before the
IPO-Bureau of Legal Affairs (BLA), namely: (a) an intellectual property violation
case for unfair competition, false or fraudulent declaration, and damages
arising from petitioners' use and filing of applications for the registration of the
marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA
PLACE," docketed as IPV Case No. 10-2005-00030 (IPV Case); and (b) an inter
partes case opposing the petitioners' application for registration of the mark
"THE ST. FRANCIS TOWERS" for use relative to the latter's business,
particularly the construction of permanent buildings or structures for
residential and office purposes, docketed as Inter Partes Case No. 14-2006-
00098 (St. Francis Towers IP Case); and (c) an inter partes case opposing the
petitioners' application for registration of the mark "THE ST. FRANCIS
SHANGRI-LA PLACE," docketed as IPC No. 14-2007-00218 (St. Francis
Shangri-La IP Case). 5
In its complaints, respondent alleged that it has used the mark "ST.
FRANCIS" to identify its numerous property development projects located at
Ortigas Center, such as the aforementioned St. Francis Square Commercial
Center, a shopping mall called the "St. Francis Square," and a mixed-use realty
project plan that includes the St. Francis Towers. Respondent added that as a
result of its continuous use of the mark "ST. FRANCIS" in its real estate
business, it has gained substantial goodwill with the public that consumers
and traders closely identify the said mark with its property development
projects. Accordingly, respondent claimed that petitioners could not have the
Page 24 of 65 | IPL | LAW ON TRADEMARK
mark "THE ST. FRANCIS TOWERS" registered in their names, and that
petitioners' use of the marks "THE ST. FRANCIS TOWERS" and "THE ST.
FRANCIS SHANGRI-LA PLACE" in their own real estate development projects
constitutes unfair competition as well as false or fraudulent
declaration. 6 CSIcTa
Petitioners denied committing unfair competition and false or
fraudulent declaration, maintaining that they could register the mark "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" under their
names. They contended that respondent is barred from claiming ownership
and exclusive use of the mark "ST. FRANCIS" because the same is
geographically descriptive of the goods or services for which it is intended to
be used. 7 This is because respondent's as well as petitioners' real estate
development projects are located along the streets bearing the name "St.
Francis," particularly, St. Francis Avenue and St. Francis Street (now known as
Bank Drive), 8 both within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision 9 in the IPV
Case, and found that petitioners committed acts of unfair competition against
respondent by its use of the mark "THE ST. FRANCIS TOWERS" but not with its
use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It, however, refused
to award damages in the latter's favor, considering that there was no evidence
presented to substantiate the amount of damages it suffered due to the
former's acts. The BLA found that "ST. FRANCIS," being a name of a Catholic
saint, may be considered as an arbitrary mark capable of registration when
used in real estate development projects as the name has no direct connection
or significance when used in association with real estate. The BLA neither
deemed "ST. FRANCIS" as a geographically descriptive mark, opining that
there is no specific lifestyle, aura, quality or characteristic that the real estate
projects possess except for the fact that they are located along St. Francis
Avenue and St. Francis Street (now known as Bank Drive), Ortigas Center. In
this light, the BLA found that while respondent's use of the mark "ST.
FRANCIS" has not attained exclusivity considering that there are other real
estate development projects bearing the name "St. Francis" in other
areas, 10 it must nevertheless be pointed out that respondent has been known
to be the only real estate firm to transact business using such name within the
Ortigas Center vicinity. Accordingly, the BLA considered respondent to have
gained goodwill and reputation for its mark, which therefore entitles it to
protection against the use by other persons, at least, to those doing business
within the Ortigas Center. 11
Meanwhile, on March 28, 2007, the BLA rendered a Decision 12 in
the St. Francis Towers IP Case, denying petitioners' application for registration
of the mark "THE ST. FRANCIS TOWERS". Excluding the word "TOWERS" in
view of petitioners' disclaimer thereof, the BLA ruled that petitioners cannot
register the mark "THE ST. FRANCIS" since it is confusingly similar to
respondent's "ST. FRANCIS" marks which are registered with the Department
of Trade and Industry (DTI). It held that respondent had a better right over the
use of the mark "ST. FRANCIS" because of the latter's appropriation and
continuous usage thereof for a long period of time. 13
A little over a year after, or on March 31, 2008, the BLA then
rendered a Decision 14 in the St. Francis Shangri-La IP Case, allowing
petitioners' application for registration of the mark "THE ST. FRANCIS
SHANGRI-LA PLACE." It found that respondent cannot preclude petitioners
from using the mark "ST. FRANCIS" as the records show that the former's use
thereof had not been attended with exclusivity. More importantly, it found that
petitioners had adequately appended the word "Shangri-La" to its composite
mark to distinguish it from that of respondent, in which case, the former had
removed any likelihood of confusion that may arise from the
contemporaneous use by both parties of the mark "ST. FRANCIS".
Both parties appealed the decision in the IPV Case, while
petitioners appealed the decision in the St. Francis Towers IP Case. Due to the
identity of the parties and issues involved, the IPO Director-General ordered the
consolidation of the separate appeals. 15 Records are, however, bereft of any
showing that the decision in the St. Francis Shangri-La IP Case was appealed
by either party and, thus, is deemed to have lapsed into finality. SITCEA
The IPO Director-General Ruling
In a Decision 16 dated September 3, 2008, then IPO Director-
General Adrian S. Cristobal, Jr. affirmed the rulings of the BLA that: ( a)
petitioners cannot register the mark "THE ST. FRANCIS TOWERS"; and (b)
petitioners are not guilty of unfair competition in its use of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." However, the IPO Director-General reversed
the BLA's finding that petitioners committed unfair competition through their
use of the mark "THE ST. FRANCIS TOWERS," thus dismissing such charge. He
found that respondent could not be entitled to the exclusive use of the mark
"ST. FRANCIS," even at least to the locality where it conducts its business,
because it is a geographically descriptive mark, considering that it was
petitioners' as well as respondent's intention to use the mark "ST. FRANCIS" in
order to identify, or at least associate, their real estate development
projects/businesses with the place or location where they are
situated/conducted, particularly, St. Francis Avenue and St. Francis Street
(now known as Bank Drive), Ortigas Center. He further opined that
respondent's registration of the name "ST. FRANCIS" with the DTI is irrelevant
since what should be controlling are the trademark registrations with the IPO
itself. 17 Also, the IPO Director-General held that since the parties are both
engaged in the real estate business, it would be "hard to imagine that a
prospective buyer will be enticed to buy, rent or purchase [petitioners'] goods
or services believing that this is owned by [respondent] simply because of the
name 'ST. FRANCIS'. The prospective buyer would necessarily discuss things
with the representatives of [petitioners] and would readily know that this does
not belong to [respondent]". 18
Disagreeing solely with the IPO Director-General's ruling on the
issue of unfair competition (the bone of contention in the IPV Case),
respondent elevated the same to the CA.
In contrast, records do not show that either party appealed the IPO
Director-General's ruling on the issue of the registrability of the mark "THE ST.
FRANCIS TOWERS" (the bone of contention in the St. Francis Towers IP Case).
As such, said pronouncement is also deemed to have lapsed into finality.
The CA Ruling
In a Decision 19 dated December 18, 2009, the CA found petitioners
guilty of unfair competition not only with respect to their use of the mark "THE
ST. FRANCIS TOWERS" but also of the mark "THE ST. FRANCIS SHANGRI-LA
PLACE". Accordingly, it ordered petitioners to cease and desist from using "ST.
FRANCIS" singly or as part of a composite mark, as well as to jointly and
severally pay respondent a fine in the amount of P200,000.00.
The CA did not adhere to the IPO Director-General's finding that the
mark "ST. FRANCIS" is geographically descriptive, and ruled that respondent —
which has exclusively and continuously used the mark "ST. FRANCIS" for more
than a decade, and, hence, gained substantial goodwill and reputation thereby
— is very much entitled to be protected against the indiscriminate usage by
other companies of the trademark/name it has so painstakingly tried to
establish and maintain. Further, the CA stated that even on the assumption
that "ST. FRANCIS" was indeed a geographically descriptive mark, adequate
protection must still be given to respondent pursuant to the Doctrine of
Secondary Meaning. 20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter Partes Cases having lapsed into
finality, the sole issue thus left for the Court's resolution is whether or not
petitioners are guilty of unfair competition in using the marks "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE".
The Court's Ruling
The petition is meritorious.
Section 168 of Republic Act No. 8293, 21 otherwise known as the
"Intellectual Property Code of the Philippines" (IP Code), provides for the rules
and regulations on unfair competition.
To begin, Section 168.1 qualifies who is entitled to protection
against unfair competition. It states that "[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". cHSTEA
Section 168.2 proceeds to the core of the provision, describing
forthwith who may be found guilty of and subject to an action of unfair
competition — that is, "[a]ny person who shall employ deception or any other
means contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, or his business, or services for
those of the one having established such goodwill, or who shall commit any
acts calculated to produce said result . . . ."
Without limiting its generality, Section 168.3 goes on to specify
examples of acts which are considered as constitutive of unfair
competition, viz.:
Page 25 of 65 | IPL | LAW ON TRADEMARK
 168.3. In particular, and without in any way limiting considerable goodwill. What the CA appears to have disregarded or been
the scope of protection against unfair competition, mistaken in its disquisition, however, is the geographically-descriptive nature
the following shall be deemed guilty of unfair of the mark "ST. FRANCIS" which thus bars its exclusive appropriability, unless
competition: a secondary meaning is acquired. As deftly explained in the U.S. case of Great
Southern Bank v. First Southern Bank: 29 "[d]escriptive geographical terms are
(a) Any person who is selling in the 'public domain' in the sense that every seller should have the right to
his goods and gives them the inform customers of the geographical origin of his goods. A 'geographically
general appearance of goods descriptive term' is any noun or adjective that designates geographical
of another manufacturer or location and would tend to be regarded by buyers as descriptive of the
dealer, either as to the goods geographic location of origin of the goods or services. A geographically
themselves or in the descriptive term can indicate any geographic location on earth, such as
wrapping of the packages in continents, nations, regions, states, cities, streets and addresses, areas of
which they are contained, or cities, rivers, and any other location referred to by a recognized name. In order
the devices or words thereon, to determine whether or not the geographic term in question is descriptively
or in any other feature of their used, the following question is relevant: (1) Is the mark the name of the place
appearance, which would be or region from which the goods actually come? If the answer is yes, then the
likely to influence purchasers geographic term is probably used in a descriptive sense, and secondary
to believe that the goods meaning is required for protection". 30
offered are those of a
manufacturer or dealer, other In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes,
than the actual manufacturer Inc., 31 it was held that secondary meaning is established when a descriptive
or dealer, or who otherwise mark no longer causes the public to associate the goods with a particular
clothes the goods with such place, but to associate the goods with a particular source. In other words, it is
appearance as shall deceive not enough that a geographically-descriptive mark partakes of the name of a
the public and defraud place known generally to the public to be denied registration as it is also
another of his legitimate necessary to show that the public would make a goods/place association —
trade, or any subsequent that is, to believe that the goods for which the mark is sought to be registered
vendor of such goods or any originate in that place. To hold such a belief, it is necessary, of course, that the
agent of any vendor engaged purchasers perceive the mark as a place name, from which the question of
in selling such goods with a obscurity or remoteness then comes to the fore. 32 The more a geographical
like purpose; area is obscure and remote, it becomes less likely that the public shall have a
goods/place association with such area and thus, the mark may not be
(b) Any person who by any deemed as geographically descriptive. However, where there is no genuine
artifice, or device, or who issue that the geographical significance of a term is its primary
employs any other means significance and where the geographical place is neither obscure nor
calculated to induce the false remote, a public association of the goods with the place may ordinarily be
belief that such person is presumed from the fact that the applicant's own goods come from the
offering the service of geographical place named in the mark. 33
another who has identified
such services in the mind of Under Section 123.2 34 of the IP Code, specific requirements have
the public; or to be met in order to conclude that a geographically-descriptive mark has
acquired secondary meaning, to wit: (a) the secondary meaning must have
(c) Any person who shall arisen as a result of substantial commercial use of a mark in the Philippines;
make any false statement in (b) such use must result in the distinctiveness of the mark insofar as the
the course of trade or who goods or the products are concerned; and (c) proof of substantially exclusive
shall commit any other act and continuous commercial use in the Philippines for five (5) years before
contrary to good faith of a the date on which the claim of distinctiveness is made. Unless secondary
nature calculated to discredit meaning has been established, a geographically-descriptive mark, due to its
the goods, business or general public domain classification, is perceptibly disqualified from
services of another. trademark registration. Section 123.1 (j) of the IP Code states this rule as
follows:
Finally, Section 168.4 dwells on a matter of procedure by stating
that the "[t]he remedies provided by Sections 156, 22 157, 23 and 161 24 shall SEC. 123. Registrability. —
apply mutatis mutandis."
123.1 A mark cannot be registered if it:
The statutory attribution of the unfair competition concept is well-
supplemented by jurisprudential pronouncements. In the recent case xxx xxx xxx
of Republic Gas Corporation v. Petron Corporation, 25 the Court has echoed
the classic definition of the term which is "'the passing off (or palming off) or (j) Consists exclusively of
attempting to pass off upon the public of the goods or business of one person signs or of indications that
as the goods or business of another with the end and probable effect of may serve in trade to
deceiving the public'. Passing off (or palming off) takes place where the designate the kind, quality,
defendant, by imitative devices on the general appearance of the goods, quantity, intended purpose,
misleads prospective purchasers into buying his merchandise under the value, geographical origin,
impression that they are buying that of his competitors. [In other words], the time or production of the
defendant gives his goods the general appearance of the goods of his goods or rendering of the
competitor with the intention of deceiving the public that the goods are those services, or other
of his competitor." 26 The "true test" of unfair competition has thus been characteristics of the goods
"whether the acts of the defendant have the intent of deceiving or are or services; (Emphasis
calculated to deceive the ordinary buyer making his purchases under the supplied) HcSETI
ordinary conditions of the particular trade to which the controversy relates".
Based on the foregoing, it is therefore essential to prove the existence of fraud, xxx xxx xxx
or the intent to deceive, actual or probable, 27 determined through a judicious
Cognizant of the foregoing, the Court disagrees with the CA that
scrutiny of the factual circumstances attendant to a particular
petitioners committed unfair competition due to the mistaken notion that
case. 28 TAcCDI
petitioner had established goodwill for the mark "ST. FRANCIS" precisely
Here, the Court finds the element of fraud to be wanting; hence, because said circumstance, by and of itself, does not equate to fraud under
there can be no unfair competition. The CA's contrary conclusion was faultily the parameters of Section 168 of the IP Code as above-cited. In fact, the
premised on its impression that respondent had the right to the exclusive use records are bereft of any showing that petitioners gave their goods/services
of the mark "ST. FRANCIS," for which the latter had purportedly established the general appearance that it was respondent which was offering the same to
the public. Neither did petitioners employ any means to induce the public

Page 26 of 65 | IPL | LAW ON TRADEMARK

towards a false belief that it was offering respondent's goods/services. Nor
did petitioners make any false statement or commit acts tending to discredit
the goods/services offered by respondent. Accordingly, the element of fraud
which is the core of unfair competition had not been established.
Besides, respondent was not able to prove its compliance with the
requirements stated in Section 123.2 of the IP Code to be able to conclude
that it acquired a secondary meaning — and, thereby, an exclusive right — to
the "ST. FRANCIS" mark, which is, as the IPO Director-General correctly pointed
out, geographically-descriptive of the location in which its realty developments
have been built, i.e., St. Francis Avenue and St. Francis Street (now known as
"Bank Drive"). Verily, records would reveal that while it is true that respondent
had been using the mark "ST. FRANCIS" since 1992, its use thereof has been
merely confined to its realty projects within the Ortigas Center, as specifically
mentioned. As its use of the mark is clearly limited to a certain locality, it
cannot be said that there was substantial commercial use of the same
recognized all throughout the country. Neither is there any showing of a
mental recognition in buyers' and potential buyers' minds that products
connected with the mark "ST. FRANCIS" are associated with the same
source 35 — that is, the enterprise of respondent. Thus, absent any showing
that there exists a clear goods/service-association between the realty projects
located in the aforesaid area and herein respondent as the developer thereof,
the latter cannot be said to have acquired a secondary meaning as to its use of
the "ST. FRANCIS" mark.
In fact, even on the assumption that secondary meaning had been
acquired, said finding only accords respondents protectional qualification
under Section 168.1 of the IP Code as above quoted. Again, this does not
automatically trigger the concurrence of the fraud element required under
Section 168.2 of the IP Code, as exemplified by the acts mentioned in Section
168.3 of the same. Ultimately, as earlier stated, there can be no unfair
competition without this element. In this respect, considering too the notoriety
of the Shangri-La brand in the real estate industry which dilutes petitioners'
propensity to merely ride on respondent's goodwill, the more reasonable
conclusion is that the former's use of the marks "THE ST. FRANCIS TOWERS"
and "THE ST. FRANCIS SHANGRI-LA PLACE" was meant only to identify, or at
least associate, their real estate project/s with its geographical location. As
aptly observed by the IPO Director-General: 36
In the case at hand, the parties are business
competitors engaged in real estate or property
development, providing goods and services directly
connected thereto. The "goods" or "products" or
"services" are real estate and the goods and the
services attached to it or directly related to it, like sale
or lease of condominium units, offices, and
commercial spaces, such as restaurants, and other
businesses. For these kinds of foods or services
there can be no description of its geographical origin
as precise and accurate as that of the name of the
place where they are situated. (Emphasis and
underscoring supplied)
Hence, for all the reasons above-discussed, the Court hereby grants
the instant petition, and, thus, exonerates petitioners from the charge of unfair
competition in the IPV Case. As the decisions in the Inter Partes Cases were
not appealed, the registrability issues resolved therein are hereby deemed to
have attained finality and, therefore, are now executory.
WHEREFORE, the petition is GRANTED. The Decision dated
December 18, 2009 of the Court of Appeals in CA-G.R. SP No. 105425 is
hereby REVERSED and SET ASIDE. Accordingly, the Decision dated September
3, 2008 of the Intellectual Property Office-Director General
is REINSTATED. CHaDIT
SO ORDERED.
Carpio, Brion, Peralta * and Perez, JJ., concur.
||| (Shang Properties Realty Corp. v. St. Francis Development Corp., G.R. No.
190706, [July 21, 2014])
7. ABS-CBN Corp. v. Gozon, G.R. No. 195956, 11 March 2015
x
8. Taiwan Kolin Corp. v. Kolin Electronics Co., G.R. No. 209843, 25 March
2015
THIRD DIVISION
[G.R. No. 209843. March 25, 2015.]
TAIWAN KOLIN CORPORATION, LTD., petitioner, vs.
KOLIN ELECTRONICS CO., INC., respondent.
DECISION
VELASCO, JR., J p:
Nature of the Case
Before the Court is a petition for review under Rule 45 of the Rules
of Court interposed by petitioner Taiwan Kolin Corporation, Ltd. (Taiwan Kolin),
assailing the April 30, 2013 Decision 1 of the Court of Appeals (CA) in CA-G.R.
SP No. 122565 and its subsequent November 6, 2013 Resolution. 2 The
assailed issuances effectively denied petitioner's trademark application for the
use of "KOLIN" on its television and DVD players.
The Facts
On February 29, 1996, Taiwan Kolin filed with the Intellectual
Property Office (IPO), then Bureau of Patents, Trademarks, and Technology
Transfer, a trademark application, docketed as Application No. 4-1996-106310,
for the use of "KOLIN" on a combination of goods, including colored
televisions, refrigerators, window-type and split-type air conditioners, electric
fans and water dispensers. Said goods allegedly fall under Classes 9, 11, and
21 of the Nice Classification (NCL).
Application No. 4-1996-106310 would eventually be considered
abandoned for Taiwan Kolin's failure to respond to IPO's Paper No. 5 requiring
it to elect one class of good for its coverage. However, the same application
was subsequently revived through Application Serial No. 4-2002-
011002, 3 with petitioner electing Class 9 as the subject of its application,
particularly: television sets, cassette recorder, VCD Amplifiers, camcorders and
other audio/video electronic equipment, flat iron, vacuum cleaners, cordless
handsets, videophones, facsimile machines, teleprinters, cellular phones and
automatic goods vending machine. The application would in time be duly
published. 4
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin
Electronics) opposed petitioner's revived application, docketed as Inter Partes
Case No. 14-2006-00096. As argued, the mark Taiwan Kolin seeks to register
is identical, if not confusingly similar, with its "KOLIN" mark registered on
November 23, 2003, covering the following products under Class 9 of the NCL:
automatic voltage regulator, converter, recharger, stereo booster, AC-DC
regulated power supply, step-down transformer, and PA amplified AC-DC. 5
To digress a bit, Kolin Electronics' "KOLIN" registration was, as it
turns out, the subject of a prior legal dispute between the parties in Inter
Partes Case No. 14-1998-00050 before the IPO. In the said case, Kolin
Electronics' own application was opposed by Taiwan Kolin, being, as Taiwan
Kolin claimed, the prior registrant and user of the "KOLIN" trademark, having
registered the same in Taipei, Taiwan on December 1, 1988. The Bureau of
Legal Affairs of the IPO (BLA-IPO), however, did not accord priority right to
Taiwan Kolin's Taipei registration absent evidence to prove that it has already
used the said mark in the Philippines as early as 1988. On appeal, the IPO
Director General affirmed the BLA-IPO's Decision. Taiwan Kolin elevated the
case to the CA, but without injunctive relief, Kolin Electronics was able to
register the "KOLIN" trademark on November 23, 2003 for its
products. 6 Subsequently, the CA, on July 31, 2006, affirmed 7 the Decision of
the Director General.
In answer to respondent's opposition in Inter Partes Case No. 14-
2006-00096, petitioner argued that it should be accorded the benefits of a
foreign-registered mark under Secs. 3. and 131.1 of Republic Act No. 8293,
otherwise known as the Intellectual Property Code of the Philippines (IP
Code); 8 that it has already registered the "KOLIN" mark in the People's
Republic of China, Malaysia and Vietnam, all of which are parties to the Paris
Convention for the Protection of Industrial Property (Paris Convention) and the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS);
and that benefits accorded to a well-known mark should be accorded to
petitioner. 9
Ruling of the BLA-IPO
By Decision 10 dated August 16, 2007, the BLA-IPO denied
petitioner's application disposing as follows:
In view of all the foregoing, the instant
Opposition is as, it is hereby SUSTAINED. Accordingly,
application bearing Serial No. 4-1996-106310 for the
Page 27 of 65 | IPL | LAW ON TRADEMARK
 mark "KOLIN" filed in the name of TAIWAN KOLIN.,
LTD. on February 29, 1996 for goods falling under
Class 09 of the International Classification of Goods
such as cassette recorder, VCD, woofer, amplifiers,
camcorders and other audio/video electronic
equipment, flat iron, vacuum cleaners, cordless
handsets, videophones, facsimile machines,
teleprinters, cellular phones, automatic goods vending
machines and other electronic equipment is
hereby REJECTED. HETDAC
Let the file wrapper of "KOLIN", subject of
this case be forwarded to the Bureau of Trademarks
(BOT) for appropriate action in accordance with this
Decision.
SO ORDERED.
Citing Sec. 123 (d) of the IP Code, 11 the BLA-IPO held that a mark
cannot be registered if it is identical with a registered mark belonging to a
different proprietor in respect of the same or closely-related goods.
Accordingly, respondent, as the registered owner of the mark "KOLIN" for
goods falling under Class 9 of the NCL, should then be protected against
anyone who impinges on its right, including petitioner who seeks to register an
identical mark to be used on goods also belonging to Class 9 of the
NCL. 12 The BLA-IPO also noted that there was proof of actual confusion in
the form of consumers writing numerous e-mails to respondent asking for
information, service, and complaints about petitioner's products. 13
Petitioner moved for reconsideration but the same was denied on
January 26, 2009 for lack of merit. 14 Thus, petitioner appealed the above
Decision to the Office of the Director General of the IPO.
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a
Decision 15 reversing that of the BLA-IPO in the following wise:
Wherefore, premises considered, the
appeal is hereby GRANTED. The Appellant's
Trademark Application No. 4-1996-106310 is hereby
GIVEN DUE COURSE subject to the use limitation or
restriction for the goods "television and DVD player".
Let a copy of this Decision as well as the trademark
application and records be furnished and returned to
the Director of the Bureau of Legal Affairs for
appropriate action. Further, let the Director of the
Bureau of Trademarks and the library of the
Documentation, Information and Technology Transfer
Bureau be furnished a copy of this Decision for
information, guidance, and records purposes.
SO ORDERED.
In so ruling, the IPO Director General ratiocinated that product
classification alone cannot serve as the decisive factor in the resolution of
whether or not the goods are related and that emphasis should be on the
similarity of the products involved and not on the arbitrary classification or
general description of their properties or characteristics. As held, the mere fact
that one person has adopted and used a particular trademark for his goods
does not prevent the adoption and use of the same trademark by others on
articles of a different description. 16
Aggrieved, respondent elevated the case to the CA.
Ruling of the Court of Appeals
In its assailed Decision, the CA found for Kolin Electronics, on the
strength of the following premises: (a) the mark sought to be registered by
Taiwan Kolin is confusingly similar to the one already registered in favor of
Kolin Electronics; (b) there are no other designs, special shape or easily
identifiable earmarks that would differentiate the products of both competing
companies; 17 and (c) the intertwined use of television sets with amplifier,
booster and voltage regulator bolstered the fact that televisions can be
considered as within the normal expansion of Kolin Electronics, 18 and is
thereby deemed covered by its trademark as explicitly protected under Sec.
138 19 of the IP Code. 20 Resultantly, the CA granted respondent's appeal
thusly:
WHEREFORE, the appeal is GRANTED. The
November 23, 2011 Decision of the Director General
of the Intellectual Property Office in Inter Partes Case
No. 14-2006-0096 is REVERSED and SET ASIDE. The
September 17, 2007 Decision of the Bureau of Legal
Affairs of the same office is REINSTATED.
SO ORDERED.
Petitioner moved for reconsideration only to be denied by the CA
through its equally assailed November 6, 2013 Resolution. Hence, the instant
recourse.
The Issue
The primordial issue to be resolved boils down to whether or not
petitioner is entitled to its trademark registration of "KOLIN" over its specific
goods of television sets and DVD players. Petitioner postulates, in the main,
that its goods are not closely related to those of Kolin Electronics. On the other
hand, respondent hinges its case on the CA's findings that its and petitioner's
products are closely-related. Thus, granting petitioner's application for
trademark registration, according to respondent, would cause confusion as to
the public.
The Court's Ruling
The petition is impressed with merit.
Identical marks may be registered for
products from the same classification
To bolster its opposition against petitioner's application to register
trademark "KOLIN," respondent maintains that the element of mark identity
argues against approval of such application, quoting the BLA IPO's ruling in
this regard: 21 IcSEAH
Indubitably, Respondent-Applicant's [herein
petitioner] mark is identical to the registered mark of
herein Opposer [herein respondent] and the identical
mark is used on goods belonging to Class 9 to which
Opposer's goods are also classified. On this point
alone, Respondent-Applicant's application should
already be denied.
The argument is specious.
The parties admit that their respective sets of goods belong to
Class 9 of the NCL, which includes the following: 22
Class 9
Scientific, nautical, surveying,
photographic, cinematographic, optical, weighing,
measuring, signalling, checking (supervision), life-
saving and teaching apparatus and instruments;
apparatus and instruments for conducting, switching,
transforming, accumulating, regulating or controlling
electricity; apparatus for recording, transmission or
reproduction of sound or images; magnetic data
carriers, recording discs; compact discs, DVDs and
other digital recording media; mechanisms for coin-
operated apparatus; cash registers, calculating
machines, data processing equipment, computers;
computer software; fire-extinguishing apparatus.
But mere uniformity in categorization, by itself, does not
automatically preclude the registration of what appears to be an identical
mark, if that be the case. In fact, this Court, in a long line of cases, has held
that such circumstance does not necessarily result in any trademark
infringement. The survey of jurisprudence cited in Mighty Corporation v. E. & J
Gallo Winery 23 is enlightening on this point:
(a) in Acoje Mining Co., Inc. vs. Director of
Patents, 24 we ordered the approval of
Acoje Mining's application for registration
of the trademark LOTUS for its soy sauce
even though Philippine Refining Company
had prior registration and use of such
identical mark for its edible oil which, like
soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and
Director of Patents, 25 we upheld the
Patent Director's registration of the same
trademark CAMIA for Ng Sam's ham under
Class 47, despite Philippine Refining
Page 28 of 65 | IPL | LAW ON TRADEMARK
 Company's prior trademark registration and
actual use of such mark on its lard, butter,
cooking oil (all of which belonged to Class
47), abrasive detergents, polishing
materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of
Appeals and Santos Lim Bun Liong, 26 we
dismissed Hickok's petition to cancel
private respondent's HICKOK trademark
registration for its Marikina shoes as
against petitioner's earlier registration of
the same trademark for handkerchiefs,
briefs, belts and wallets.
Verily, whether or not the products covered by the trademark sought
to be registered by Taiwan Kolin, on the one hand, and those covered by the
prior issued certificate of registration in favor of Kolin Electronics, on the other,
fall under the same categories in the NCL is not the sole and decisive factor in
determining a possible violation of Kolin Electronics' intellectual property right
should petitioner's application be granted. It is hornbook doctrine, as held in
the above-cited cases, that emphasis should be on the similarity of the
products involved and not on the arbitrary classification or general description
of their properties or characteristics. The mere fact that one person has
adopted and used a trademark on his goods would not, without more, prevent
the adoption and use of the same trademark by others on unrelated articles of
a different kind. 27
The CA erred in denying petitioner's
registration application
Respondent next parlays the idea of relation between products as a
factor militating against petitioner's application. Citing Esso Standard Eastern,
Inc. v. Court of Appeals, 28 respondent argues that the goods covered by
petitioner's application and those covered by its registration are actually
related belonging as they do to the same class or have the same physical
characteristics with reference to their form, composition, texture, or quality, or
if they serve the same purpose. Respondent likewise draws parallelisms
between the present controversy and the following cases: 29
(a) In Arce & Sons, Inc. vs. Selecta Biscuit
Company, 30 biscuits were held related to
milk because they were both food
products;
(b) In Chua Che vs. Phil. Patents Office, 31 soap and
perfume, lipstick and nail polish are held to
be similarly related because they are
common household items;
(c) In Ang vs. Teodoro, 32 the trademark "Ang Tibay"
for shoes and slippers was disallowed to
be used for shirts and pants because they
belong to the same general class of goods;
and
(d) In Khe vs. Lever Bros. Co., 33 soap and pomade,
although non-competitive, were held to be
similar or belong to the same class, since
both are toilet articles.
Respondent avers that Kolin Electronics' and Taiwan Kolin's
products are closely-related not only because both fall under Class 9 of the
NCL, but mainly because they both relate to electronic products, instruments,
apparatus, or appliances. 34 Pushing the point, respondent would argue that
Taiwan Kolin and Kolin Electronics' goods are inherently similar in that they are
all plugged into electric sockets and perform a useful
function. 35 Furthermore, respondent echoes the appellate court's
ratiocination in denying petitioner's application, viz.: 36 HTASIa
Significantly, Kolin Electronics' goods
(automatic voltage regulator; converter; recharger;
stereo booster; AC-DC regulated power supply; step-
down transformer; and PA amplified AC-DC) and
Taiwan Kolin's television sets and DVD players are
both classified under class 9 of the NICE agreement.
At first glance, it is also evident that all these goods
are generally described as electrical devices. . . . [T]he
goods of both Kolin Electronics and Taiwan Kolin will
inevitably be introduced to the public as "KOLIN"
products and will be offered for sale in the same
channels of trade. Contrary to Taiwan Kolin's claim,
power supply as well as audio and stereo equipment
like booster and amplifier are not only sold in
hardware and electrical shops. These products are
commonly found in appliance stores alongside
television sets and DVD players. With the present
trend in today's entertainment of having a home
theater system, it is not unlikely to see a stereo
booster, amplifier and automatic voltage regulator
displayed together with the television sets and DVD
players. With the intertwined use of these products
bearing the identical "KOLIN" mark, the ordinary
intelligent consumer would likely assume that they are
produced by the same manufacturer.
In sum, the intertwined use, the same
classification of the products as class 9 under the
NICE Agreement, and the fact that they generally flow
through the same channel of trade clearly establish
that Taiwan Kolin's television sets and DVD players
are closely related to Kolin Electronics' goods. As
correctly pointed out by the BLA-IPO, allowing Taiwan
Kolin's registration would only confuse consumers as
to the origin of the products they intend to purchase.
Accordingly, protection should be afforded to Kolin
Electronics, as the registered owner of the "KOLIN"
trademark. 37 (emphasis added)
The CA's approach and reasoning to arrive at the assailed holding
that the approval of petitioner's application is likely to cause confusion or
deceive fail to persuade.
a. The products covered by
petitioner's application and
respondent's registration are
unrelated
A certificate of trademark registration confers upon the trademark
owner the exclusive right to sue those who have adopted a similar mark not
only in connection with the goods or services specified in the certificate, but
also with those that are related thereto. 38 TIDcEH
In resolving one of the pivotal issues in this case — whether or not
the products of the parties involved are related — the doctrine in Mighty
Corporation is authoritative. There, the Court held that the goods should be
tested against several factors before arriving at a sound conclusion on the
question of relatedness. Among these are:
(a) the business (and its location) to which the goods
belong;
(b) the class of product to which the goods belong;
(c) the product's quality, quantity, or size, including the
nature of the package, wrapper or
container;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or
essential characteristics with reference to
their form, composition, texture or quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate
consumption, that is, day-to-day household
items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually
purchased; and
(j) the channels of trade through which the goods
flow, how they are distributed, marketed,
displayed and sold. 39
As mentioned, the classification of the products under the NCL is
merely part and parcel of the factors to be considered in ascertaining whether
the goods are related. It is not sufficient to state that the goods involved herein
are electronic products under Class 9 in order to establish relatedness
Page 29 of 65 | IPL | LAW ON TRADEMARK
between the goods, for this only accounts for one of many considerations
enumerated in Mighty Corporation. In this case, credence is accorded to
petitioner's assertions that: 40
a. Taiwan Kolin's goods are classified as home
appliances as opposed to Kolin Electronics'
goods which are power supply and audio
equipment accessories;
b. Taiwan Kolin's television sets and DVD players
perform distinct function and purpose from
Kolin Electronics' power supply and audio
equipment; and
c. Taiwan Kolin sells and distributes its various home
appliance products on wholesale and to
accredited dealers, whereas Kolin
Electronics' goods are sold and flow
through electrical and hardware stores.
Clearly then, it was erroneous for respondent to assume over the
CA to conclude that all electronic products are related and that the coverage of
one electronic product necessarily precludes the registration of a similar mark
over another. In this digital age wherein electronic products have not only
diversified by leaps and bounds, and are geared towards interoperability, it is
difficult to assert readily, as respondent simplistically did, that all devices that
require plugging into sockets are necessarily related goods.
It bears to stress at this point that the list of products included in
Class 9 41 can be sub-categorized into five (5) classifications, namely: (1)
apparatus and instruments for scientific or research purposes, (2) information
technology and audiovisual equipment, (3) apparatus and devices for
controlling the distribution and use of electricity, (4) optical apparatus and
instruments, and (5) safety equipment. 42 From this sub-classification, it
becomes apparent that petitioner's products, i.e., televisions and DVD players,
belong to audiovisual equipment, while that of respondent, consisting of
automatic voltage regulator, converter, recharger, stereo booster, AC-DC
regulated power supply, step-down transformer, and PA amplified AC-DC,
generally fall under devices for controlling the distribution and use of
electricity.
b. The ordinarily intelligent
buyer is not likely to be
confused
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no rigid set rules can plausible be
formulated. Each case must be decided on its merits, with due regard to the
goods or services involved, the usual purchaser's character and attitude,
among others. In such cases, even more than in any other litigation, precedent
must be studied in the light of the facts of a particular case. That is the reason
why in trademark cases, jurisprudential precedents should be applied only to a
case if they are specifically in point. 43
For a clearer perspective and as matter of record, the following
image on the left 44 is the trademark applied for by petitioner, while the image
juxtaposed to its right 45 is the trademark registered by respondent:
While both competing marks refer to the word "KOLIN" written in
upper case letters and in bold font, the Court at once notes the distinct visual
and aural differences between them: Kolin Electronics' mark is italicized and
colored black while that of Taiwan Kolin is white in pantone red color
background. The differing features between the two, though they may appear
minimal, are sufficient to distinguish one brand from the other.
It cannot be stressed enough that the products involved in the case
at bar are, generally speaking, various kinds of electronic products. These are
not ordinary consumable household items, like catsup, soy sauce or soap
which are of minimal cost. 46 The products of the contending parties are
relatively luxury items not easily considered affordable. Accordingly, the casual
buyer is predisposed to be more cautious and discriminating in and would
prefer to mull over his purchase. Confusion and deception, then, is less
likely. 47 As further elucidated in Del Monte Corporation v. Court of
Appeals: 48
. . . Among these, what essentially
determines the attitudes of the purchaser, 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 . . . . (emphasis added)
Respondent has made much reliance on Arce & Sons, Chua Che,
Ang, and Khe, oblivious that they involved common household items — i.e.,
biscuits and milk, cosmetics, clothes, and toilet articles, respectively —
whereas the extant case involves luxury items not regularly and inexpensively
purchased by the consuming public. In accord with common empirical
experience, the useful lives of televisions and DVD players last for about five
(5) years, minimum, making replacement purchases very infrequent. The same
goes true with converters and regulators that are seldom replaced despite the
acquisition of new equipment to be plugged onto it. In addition, the amount the
buyer would be parting with cannot be deemed minimal considering that the
price of televisions or DVD players can exceed today's monthly minimum
wage. In light of these circumstances, it is then expected that the ordinary
intelligent buyer would be more discerning when it comes to deciding which
electronic product they are going to purchase, and it is this standard which this
Court applies herein in determining the likelihood of confusion should
petitioner's application be granted. TaCIDS
To be sure, the extant case is reminiscent of Emerald Garment
Manufacturing Corporation v. Court of Appeals, 49 wherein the opposing
trademarks are that of Emerald Garment Manufacturing Corporation's
"Stylistic Mr. Lee" and H.D. Lee's "LEE." In the said case, the appellate court
affirmed the decision of the Director of Patents denying Emerald Garment's
application for registration due to confusing similarity with H.D. Lee's
trademark. This Court, however, was of a different beat and ruled that there is
no confusing similarity between the marks, given that the products covered by
the trademark, i.e., jeans, were, at that time, considered pricey, typically
purchased by intelligent buyers familiar with the products and are more
circumspect, and, therefore, would not easily be deceived. As held:
Finally, in line with the foregoing
discussions, more credit should be given to the
"ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the
"completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product
involved.
The definition laid down in Dy Buncio v. Tan
Tiao Bok 50 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." 51 (emphasis added)
Consistent with the above ruling, this Court finds that the
differences between the two marks, subtle as they may be, are sufficient to
prevent any confusion that may ensue should petitioner's trademark
application be granted. As held in Esso Standard Eastern, Inc.: 52
Respondent court correctly ruled that
considering the general appearances of each mark as
a whole, the possibility of any confusion is unlikely. A
comparison of the labels of the samples of the goods
submitted by the parties shows a great many
differences on the trademarks used. As pointed out by
Page 30 of 65 | IPL | LAW ON TRADEMARK
 respondent court in its appealed decision, "(A) witness
for the plaintiff, Mr. Buhay, admitted that the color of
the 'ESSO' used by the plaintiff for the oval design
where the blue word ESSO is contained is the distinct
and unique kind of blue. In his answer to the trial
court's question, Mr. Buhay informed the court that
the plaintiff never used its trademark on any product
where the combination of colors is similar to the label
of the Esso cigarettes," and "Another witness for the
plaintiff, Mr. Tengco, testified that generally, the
plaintiff's trademark comes all in either red, white,
blue or any combination of the three colors. It is to be
pointed out that not even a shade of these colors
appears on the trademark of the appellant's cigarette.
The only color that the appellant uses in its trademark
is green."
Even the lower court, which ruled initially
for petitioner, found that a "noticeable difference
between the brand ESSO being used by the
defendants and the trademark ESSO of the plaintiff is
that the former has a rectangular background, while in
that of the plaintiff the word ESSO is enclosed in an
oval background."
All told, We are convinced that petitioner's trademark registration
not only covers unrelated good, but is also incapable of deceiving the ordinary
intelligent buyer. The ordinary purchaser must be thought of as having, and
credited with, at least a modicum of intelligence to be able to see the
differences between the two trademarks in question. 53
Questions of fact may still be entertained
On a final note, the policy according factual findings of courts a
quo great respect, if not finality, is not binding where they have overlooked,
misapprehended, or misapplied any fact or circumstance of weight and
substance. 54 So it must be here; the nature of the products involved
materially affects the outcome of the instant case. A reversal of the appellate
court's Decision is then in order.
WHEREFORE, in view of the foregoing, the petition is
hereby GRANTED. The Decision and the Resolution of the Court of Appeals in
CA-G.R. SP No. 122565, dated April 30, 2013 and November 6, 2013,
respectively, are hereby REVERSED and SET ASIDE. Accordingly, the Decision
of the Intellectual Property Office Director General in Inter Partes Case No. 14-
2006-00096, dated November 23, 2011, is hereby REINSTATED. DCcHAa
9. UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corp., G.R. No.
198889, 20 January 2016
FIRST DIVISION
[G.R. No. 198889. January 20, 2016.]
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 p:
For our disposition is a petition for review on certiorari under
Rule 45 seeking to annul and set aside the June 23, 2011 Decision 1 and
the October 4, 2011 Resolution 2 of the Court of Appeals in CA-G.R. SP
No. 107570, which reversed and set aside the March 26,
2008 Decision 3 of the Bureau of Legal Affairs of the Intellectual Property
Office (IPO-BLA) and the January 29, 2009 Decision 4 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 "PAPA" for about twenty-seven
(27) years, Neri Papa subsequently
assigned the mark "PAPA" to Hernan D.
Reyes who, on September 17, 1981, filed an
application to register said mark "PAPA" for
use on banana catsup, chili sauce, achara,
banana chips, and instant ube
powder; CAIHTE
3. On August 14, 1983, Hernan 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. Hernan 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, Hernan 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
"PAPA Label Design";
9. The mark "PAPA 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
"PAPA" 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
Page 31 of 65 | IPL | LAW ON TRADEMARK
 manufacturers and distributors of lechon In its Verified Answer, respondent
sauce and other table sauces since 1965 argued that there is no likelihood of confusion
under its registered mark "Mang Tomas"; between petitioner's family of "PAPA" trademarks
and respondent's "PAPA BOY & DEVICE" trademark.
14. Respondent-applicant's mark "PAPA BOY &
Respondent raised affirmative defenses and we
DEVICE" which nearly resembles Opposer's
quote the relevant ones below:
mark "PAPA" and the variations thereof will
impress upon the gullible or unsuspecting 3. Opposer cites
public that it is the same or related to several of its following marks
Opposer as to source because its in support of its opposition to
dominant part is the same as Opposer's the application but an
mark and, thus, will likely be mistaken to be examination of said marks
the mark, or related to, or a derivative or [reveals] that these have
variation of, Opposer's mark; already expired and/or that
no confusing similarity exists
15. The goods covered by respondent-applicant's
. . .;
application fall under Class 30, the same
Class under which Opposer's goods 4. Assuming that
enumerated in its earlier issued the mark "PAPA KETSARAP"
registrations; had been timely renewed on
16. The test of dominancy is now explicitly August 23, 2005 for "banana
incorporated into law in Section 155.1 of sauce" under Class 30, the
the IP Code which defines infringement as same is not a hindrance to
the colorable imitation of a registered mark the successful registration of
or a dominant feature thereof, and is the mark "PAPA BOY &
provided for by jurisprudence; DEVICE": Jurisprudence
provides that a certificate of
17. As a corporation also engaged in the food registration confers upon the
business, Respondent-applicant knew trademark owner the
and/or ought to know that Opposer and its exclusive right to use its own
predecessors-in-interest have been using symbol only to those goods
the mark "PAPA" and the variations thereof specified in the certificate
for the last fifty-two (52) years while its subject to the conditions and
sister company is engaged in the business limitations stated therein;
of manufacturing and distributing "lechon
sauce" and other table sauces for the last 5. As a result,
forty-one (41) years; Opposer's right to use the
mark "PAPAKETSARAP" is
18. The approval of the subject application will violate limited to the products
Opposer's right to the exclusive use of its covered by its certificate of
registered mark "PAPA" and the variations registration which is Class 30
thereof per Section 138 of the IP Code; for banana sauce;
19. The approval of the subject application has 6. Contrary to
caused and will continue to cause great Opposer's belief, the
and irreparable damage and injury to dominant features of
Opposer; Respondent-applicant's mark
20. Respondent-applicant filed the subject application "PAPA BOY & DEVICE" are the
fraudulently and in bad faith; and words "PAPA BOY" and the
representation of a smiling
21. Respondent-applicant is not entitled to register the hog-like character gesturing
subject mark in its favor. 8 the thumbs-up sign and
wearing a traditional Filipino
In its verified opposition before the IPO,
hat and scarf while the
petitioner contended that "PAPA BOY & DEVICE" is
dominant feature of
confusingly similar with its "PAPA" marks
Opposer's mark "PAPA
inasmuch as the former incorporates the term
KETSARAP" are the words
"PAPA," which is the dominant feature of
"Papa" and "Ketsarap", not the
petitioner's "PAPA" marks. Petitioner averred that
word "Papa"; and the word
respondent's use of "PAPA BOY & DEVICE" mark for
"Ketsarap" is more
its lechon sauce product, if allowed, would likely
prominently printed and
lead the consuming public to believe that said
displayed in the foreground
lechon sauce product originates from or is
than the word "Papa" for
authorized by petitioner, and that the "PAPA BOY &
which reasons opposer's
DEVICE" mark is a variation or derivative of
reference to the Dominancy
petitioner's "PAPA" marks. Petitioner argued that
Test fails;
this was especially true considering that
petitioner's ketchup product and respondent's 7. Opposer's
lechon sauce product are related articles that fall allegation that the
under the same Class 30. 9 registration of Respondent-
applicant's mark "PAPA BOY
Petitioner alleged that the registration of
& DEVICE" will damage and
respondent's challenged mark was also likely to
prejudice the mark "MANG
damage the petitioner, considering that its former
TOMAS" is irrelevant
sister company, Southeast Asia Food, Inc., and the
considering that Opposer's
latter's predecessors-in-interest, had been major
basis for filing this opposition
manufacturers and distributors of lechon and other
is the alleged confusing
table sauces since 1965, such as products
similarity between
employing the registered "Mang Tomas"
Respondent-applicant's mark
mark. DETACa
and Opposer's mark "PAPA

Page 32 of 65 | IPL | LAW ON TRADEMARK

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 "PAPA BOY & DEVICE"
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; aDSIHc
14. To protect its
ownership over the mark
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
Page 33 of 65 | IPL | LAW ON TRADEMARK
 consumer products has WHEREFORE, the instant appeal is
earned Respondent-applicant hereby DISMISSED. Let a copy of this Decision as
a well-deserved business well as the trademark application and records be
reputation and goodwill; furnished and returned to the Director of the Bureau
of Legal Affairs for appropriate action. Further, let
18. Respondent- also the Director of the Bureau of Trademarks and
applicant's mark is distinctive the library of the Documentation, Information and
and capable of identifying its Technology Transfer Bureau be furnished a copy of
goods and distinguishing this Decision for information, guidance, and records
them from those offered for purposes." 16
sale by others in the market
including Opposer's goods for DECISION OF THE COURT OF
which reason no confusion APPEALS
will result because
Respondent-applicant's mark Respondent then filed a petition with the Court of Appeals,
is for lechon sauce while questioning the above decision of the IPO Director General that affirmed
Opposer's mark is for banana the decision of the IPO Bureau of Legal Affairs Director, which disallowed
sauce; and respondent's application for trademark registration. Respondent's
arguments before the Court of Appeals are quoted below:
19. The presence
of a common prefix "PAPA" in A.
the marks of both parties REGISTRATION NOS. 32416 AND 42005010788
does not render said marks ISSUED FOR THE "PAPA" MARK AND
identical or confusingly REGISTRATION NOS. SR-6282 AND 42006012364
similar: Opposer cannot ISSUED FOR THE TRADEMARK "PAPA BANANA
exclusively appropriate said CATSUP LABEL/PAPA LABEL DESIGN" SHOULD
prefix considering that other NOT BE USED AS BASIS IN DETERMINING THE
marks such as "Papa Heinz EXISTENCE OF CONFUSING SIMILARITY.
Pizza", "Papa Heinz Sausage",
"Papa Beaver", "Papa Pop", B.
"Pizza Papa John's & Design",
"Papadoods", and "Papa in THERE IS NO CONFUSING SIMILARITY BETWEEN
Wine and Device" are valid PETITIONER-APPLICANT'S "PAPA BOY & DEVICE"
and active. 10 AND RESPONDENT'S "PAPA KETSARAP" MARK.

Petitioner's mark and its variations C.

appear as follows: PETITIONER-APPLICANT IS ENTITLED TO THE
1. "PAPA" under Registration No. 32416 for REGISTRATION OF THE MARK "PAPA BOY &
Class 29 goods; 11 DEVICE."

2. The mark "PAPA" as it appeared upon re- D.

registration of Certificate No.
THE OPPOSITION STATES NO CAUSE OF ACTION,
32416, under Application No. 4-
AND HENCE, SHOULD BE DENIED OUTRIGHT. 17
2005-010788 for Classes 29 and
30 goods; 12 As regards the first ground, the Court of Appeals held:
3. "PAPA LABEL DESIGN" under Records show that respondent UFC has
Registration No. 4-2006- Certificates of Registration for the trademarks
012364; 13 and PAPA, PAPA BANANA CATSUP label and PAPA
4. "PAPA KETSARAP" under Certificate of KETSARAP. A closer look at the respective
Registration No. 34681, for Certificate[s] of Registration of the aforementioned
banana sauce (Class 30). 14 marks, however, reveals that at the time the
trademark application of petitioner was published
PROCEEDINGS BEFORE THE in the IPO e-Gazette on September 8, 2006, the
INTELLECTUAL PROPERTY duration of the trademark registration of
OFFICE respondent over the marks PAPA and PAPA
BANANA CATSUP have already expired. On the
The case was referred to mediation but the parties failed to other hand, the mark PAPA KETSARAP was timely
arrive at an amicable settlement. The case was thus set for preliminary renewed by respondent as shown by the
conference. Subsequently, the IPO-BLA directed the parties to file their Certificate of Renewal of Registration issued on
respective position papers and draft decisions. September 1, 2006 by the Director of the Bureau of
The IPO-BLA rendered a Decision on March 26, 2008 Trademarks.
sustaining petitioner's Opposition and rejecting respondent's application Under R.A. No. 8293, as amended by
for "PAPA BOY & DEVICE." The fallo of said decision reads as follows: R.A. No. 9150, the duration of a trademark
WHEREFORE, the VERIFIED NOTICE OF registration is 10 years, renewable for periods of 10
OPPOSITION filed by UFC Philippines, Inc. is, as it is years each renewal. The request for renewal must
hereby, SUSTAINED. Consequently, Application be made within 6 months before or after the
Serial No. 4-2002-002757 for the mark "PAPA BOY expiration of the registration. Respondent's PAPA
& DEVICE" for lechon sauce under Class 30 filed on mark was not renewed within the period provided
April 04, 2002 by Barrio Fiesta Manufacturing for under RA No. 8293. Its registered term ended on
Corporation, is, as it is hereby, REJECTED. August 11, 2003 but was reapplied for registration
only on April 4, 2005. Meanwhile, the mark PAPA
Let the file wrapper of PAPA BOY & BANANA CATSUP was registered by respondent
Device subject matter of this case be forwarded to only in the Supplemental Register, hence, was not
the Bureau of Trademarks (BOT) for appropriate provided any protection. . . . . It is noted that the
action in accordance with this Decision. 15 PAPA BANANA CATSUP label was applied for
registration on November 15, 2006, over three
Respondent filed an appeal before the IPO Director General, years after the expiration of its registration in the
who found it unmeritorious, and disposed of the case in the following Supplemental Register of the Philippine Patent
manner: Office on August 11, 2003. Thus, while petitioner

Page 34 of 65 | IPL | LAW ON TRADEMARK

 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.) TIADCc
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 "PAPA 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
"PAPA" 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
"PAPA" 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 AIDSTE
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
"undiscerningly 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.
Page 35 of 65 | IPL | LAW ON TRADEMARK
 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 AaCTcI
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.
xxx xxx xxx
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. . . . 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
Page 36 of 65 | IPL | LAW ON TRADEMARK
 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".
xxx xxx xxx
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".
xxx xxx xxx
In a dominancy test, the prominent
feature of the competing trademarks must be
similar to cause confusion or deception. . . . . 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, S.A. 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 "PAPA 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 . . . 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.
xxx xxx xxx
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 SDHTEC
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 Reply 41 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 123.1 (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
Page 37 of 65 | IPL | LAW ON TRADEMARK
 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. AScHCD
xxx xxx xxx
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 plaintiff's mark;
b) the degree of similarity between the plaintiff's 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. Abyadang: 44
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
Page 38 of 65 | IPL | LAW ON TRADEMARK
 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.
xxx xxx xxx
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.) AcICHD
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.
xxx xxx xxx
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.
xxx xxx xxx
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. . . . .
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. TAIaHE
xxx xxx xxx
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:
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
Page 39 of 65 | IPL | LAW ON TRADEMARK
 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). . . . .
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.
xxx xxx xxx
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. . . . .
xxx xxx xxx
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: cDHAES
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
Page 40 of 65 | IPL | LAW ON TRADEMARK
 milieu as here, the Court has the dominant features of the
consistently used and applied registered mark, disregarding
the dominancy test in minor differences. Courts will
determining confusing consider more the aural and
similarity or likelihood of visual impressions created by
confusion between the marks in the public mind,
competing trademarks. giving little weight to factors
like prices, quality, sales
xxx xxx xxx outlets and market segments.
Applying the Thus, in the 1954
dominancy test to the instant case of Co Tiong Sa v.
case, the Court finds that Director of Patents, the Court
herein petitioner's ruled:
"MCDONALD'S" and
respondent's "MACJOY" . . . It has been consistently
marks are confusingly similar held that the question of
with each other that an infringement of a trademark
ordinary purchaser can is to be determined by the
conclude an association or test of dominancy. Similarity
relation between the marks. in size, form and color, while
relevant, is not conclusive. If
To begin with, both the competing trademark
marks use the corporate "M" contains the main or
design logo and the prefixes essential or dominant
"Mc" and/or "Mac" as features of another, and
dominant features. . . . . confusion and deception is
For sure, it is the likely to result, infringement
prefix "Mc," and abbreviation takes place. Duplication or
of "Mac," which visually and imitation is not necessary;
aurally catches the attention nor is it necessary that the
of the consuming public. infringing label should
Verily, the word "MACJOY" suggest an effort to imitate.
attracts attention the same (G. Heilman Brewing Co. vs.
way as did "McDonalds," Independent Brewing Co., 191
"Mac Fries," "Mc Spaghetti," F., 489, 495, citing Eagle
"McDo," "Big Mac" and the White Lead Co. vs. Pflugh
rest of the MCDONALD'S (CC) 180 Fed. 579). The
marks which all use the question at issue in cases of
prefixes Mc and/or Mac. infringement of trademarks is
whether the use of the marks
Besides and most involved would be likely to
importantly, both trademarks cause confusion or mistakes
are used in the sale of in the mind of the public or
fastfood products. deceive purchasers. (Auburn
Indisputably, the respondent's Rubber Corporation vs.
trademark application for the Honover Rubber Co., 107 F.
"MACJOY & DEVICE" 2d 588; . . .)
trademark covers goods
under Classes 29 and 30 of xxx xxx xxx
the International The test of
Classification of Goods, dominancy is now explicitly
namely, fried chicken, chicken incorporated into law in
barbeque, burgers, fries, Section 155.1 of
spaghetti, etc. Likewise, the the Intellectual Property
petitioner's trademark Code which defines
registration for the infringement as the
MCDONALD'S marks in the "colorable imitation of a
Philippines covers goods registered mark . . . or
which are similar if not a dominant feature thereof."
identical to those covered by
the respondent's application. Applying the
dominancy test, the Court
In McDonald's Corporation v. L.C. Big finds that respondents' use of
Mak Burger, Inc., the Court applied the dominancy the "Big Mak" mark results in
test in holding that "BIG MAK" is confusingly similar likelihood of confusion. First,
to "BIG MAC." The Court held: "Big Mak" sounds exactly the
This Court . . . has same as "Big Mac." Second,
relied on the dominancy test the first word in "Big Mak" is
rather than the holistic test. exactly the same as the first
The dominancy test word in "Big Mac." Third, the
considers the dominant first two letters in "Mak" are
features in the competing the same as the first two
marks in determining whether letters in "Mac." Fourth, the
they are confusingly similar. last letter "Mak" while a "k"
Under the dominancy test, sounds the same as "c" when
courts give greater weight to the word "Mak" is
the similarity of the pronounced. Fifth, in Filipino,
appearance of the product the letter "k" replaces "c" in
arising from the adoption of

Page 41 of 65 | IPL | LAW ON TRADEMARK

 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. ASEcHI
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:
xxx xxx xxx
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. . . .
. quote:
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.
xxx xxx xxx
. . . . However, as the registered owner
of the "NAN" mark, Nestle should be free to use its
mark on similar products, in different segments of
the market, and at different price levels.
In McDonald's Corporation v. L.C. Big Mak Burger,
Inc., the Court held that the scope of protection
afforded to registered trademark owners extends
to market areas that are the normal expansion of
business:
xxx xxx xxx
Even respondent's use of the "Big Mak"
mark on non-hamburger food products cannot
excuse their infringement of petitioners' registered
mark, otherwise registered marks will lose their
protection under the law.
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).
(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
The Dominancy Test focuses on the
similarity of the prevalent features of the
competing trademarks that might cause confusion
Page 42 of 65 | IPL | LAW ON TRADEMARK
or deception. It is applied when the trademark Indeed, the registered trademark owner
sought to be registered contains the main, may use its mark on the same or similar products,
essential and dominant features of the earlier in different segments of the market, and at
registered trademark, and confusion or deception is different price levels depending on variations of the
likely to result. Duplication or imitation is not even products for specific segments of the market. The
required; neither is it necessary that the label of the Court is cognizant that the registered trademark
applied mark for registration should suggest an owner enjoys protection in product and market
effort to imitate. The important issue is whether the areas that are the normal potential expansion of his
use of the marks involved would likely cause business. Thus, we have held —
confusion or mistake in the mind of or deceive the
ordinary purchaser, or one who is accustomed to Modern law
buy, and therefore to some extent familiar with, the recognizes that the
goods in question. Given greater consideration are protection to which the owner
the aural and visual impressions created by the of a trademark is entitled is
marks in the public mind, giving little weight to not limited to guarding his
factors like prices, quality, sales outlets, and market goods or business
segments. The test of dominancy is now explicitly from actual market
incorporated into law in Section 155.1 of R.A. No. competition with identical or
8293 which provides — similar products of the
parties, but extends to all
155.1. Use in cases in which the use by a
commerce any reproduction, junior appropriator of a trade-
counterfeit, copy, or colorable mark or trade-name is likely
imitation of a registered mark to lead to a confusion of
or the same container or source, as where prospective
a dominant feature thereof in purchasers would be misled
connection with the sale, into thinking that the
offering for sale, distribution, complaining party has
advertising of any goods or extended his business into
services including other the field (see 148 ALR 56 et
preparatory steps necessary seq; 53 Am Jur. 576) or is
to carry out the sale of any in any way connected with
goods or services on or in the activities of the
connection with which such infringer, or when it forestalls
use is likely to cause the normal potential
confusion, or to cause expansion of his business (v.
mistake, or to deceive . . . 148 ALR 77, 84; 52 Am. Jur.
. ITAaHc 576, 577).
xxx xxx xxx Thus, the public may mistakenly think
that Dermaline is connected to or associated with
Relative to the question on confusion of Myra, such that, considering the current
marks and trade names, jurisprudence has noted proliferation of health and beauty products in the
two (2) types of confusion, viz.: (1) confusion of market, the purchasers would likely be misled that
goods (product confusion), where the ordinarily Myra has already expanded its business through
prudent purchaser would be induced to purchase Dermaline from merely carrying pharmaceutical
one product in the belief that he was purchasing topical applications for the skin to health and
the other; and (2) confusion of business (source or beauty services.
origin confusion), where, although the goods of the
parties are different, the product, the mark of which Verily, when one applies for the
registration is applied for by one party, is such as registration of a trademark or label which is almost
might reasonably be assumed to originate with the the same or that very closely resembles one
registrant of an earlier product, and the public already used and registered by another, the
would then be deceived either into that belief or application should be rejected and dismissed
into the belief that there is some connection outright, even without any opposition on the part of
between the two parties, though inexistent. the owner and user of a previously registered label
or trademark. This is intended not only to avoid
xxx xxx xxx confusion on the part of the public, but also to
We agree with the findings of the IPO. protect an already used and registered trademark
As correctly applied by the IPO in this case, while and an established goodwill. (Citations omitted.)
there are no set rules that can be deduced as what Section 123.1 (d) of the IP Code provides:
constitutes a dominant feature with respect to
trademarks applied for registration; usually, what A mark cannot be registered if it:
are taken into account are signs, color, design,
peculiar shape or name, or some special, easily xxx xxx xxx
remembered earmarks of the brand that readily (d) Is identical with a registered mark
attracts and catches the attention of the ordinary belonging to a different
consumer. proprietor or a mark with an
xxx xxx xxx earlier filing or priority date, in
respect of:
Further, Dermaline's stance that its
i. The same goods or services, or
product belongs to a separate and different
classification from Myra's products with the ii. Closely related goods or services, or
registered trademark does not eradicate the
possibility of mistake on the part of the purchasing iii. If it nearly resembles such a mark as to
public to associate the former with the latter, be likely to deceive or cause
especially considering that both classifications confusion[.]
pertain to treatments for the skin. A scrutiny of petitioner's and respondent's respective marks
would show that the IPO-BLA and the IPO Director General correctly

Page 43 of 65 | IPL | LAW ON TRADEMARK

found the word "PAPA" as the dominant feature of petitioner's mark
"PAPA KETSARAP." Contrary to respondent's contention, "KETSARAP"
cannot be the dominant feature of the mark as it is merely descriptive of
the product. Furthermore, it is the "PAPA" mark that has been in
commercial use for decades and has established awareness and
goodwill among consumers. CHTAIc
We likewise agree with the IPO-BLA that the word "PAPA" is
also the dominant feature of respondent's "PAPA BOY & DEVICE" mark
subject of the application, such that "the word 'PAPA' is written on top of
and before the other words such that it is the first word/figure that
catches the eyes." 49 Furthermore, as the IPO Director General put it, the
part of respondent's mark which appears prominently to the eyes and
ears is the phrase "PAPA BOY" and that is what a purchaser of
respondent's product would immediately recall, not the smiling hog.
We quote the relevant portion of the IPO-BLA decision on this
point below:
A careful examination of Opposer's and
Respondent-applicant's respective marks shows
that the word "PAPA" is the dominant feature: In
Opposer's marks, the word "PAPA" is either the
mark by itself or the predominant word considering
its stylized font and the conspicuous placement of
the word "PAPA" before the other words. In
Respondent-applicant's mark, the word "PAPA" is
written on top of and before the other words such
that it is the first word figure that catches the eyes.
The visual and aural impressions created by such
dominant word "PAPA" at the least is that the
respective goods of the parties originated from the
other, or that one party has permitted or has been
given license to the other to use the word "PAPA"
for the other party's product, or that there is a
relation/connection between the two parties when,
in fact, there is none. This is especially true
considering that the products of both parties
belong to the same class and are closely related:
Catsup and lechon sauce or liver sauce are both
gravy-like condiments used to spice up dishes.
Thus, confusion of goods and of business may
likely result.
Under the Dominancy Test, the dominant
features of the competing marks are considered in
determining whether these competing marks are
confusingly similar. Greater weight is given to the
similarity of the appearance of the products arising
from the adoption of the dominant features of the
registered mark, disregarding minor differences.
The visual, aural, connotative, and overall
comparisons and impressions engendered by the
marks in controversy as they are encountered in
the realities of the marketplace are the main
considerations (McDonald's Corporation, et al. v.
L.C. Big Mak Burger, Inc., et al., G.R. No. 143993,
August 18, 2004; Societe Des Produits Nestle, S.A.,
et al. v. Court of Appeals, et al., G.R. No. 112012,
April 4, 2001). 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. (Lim Hoa v.
Director of Patents, 100 Phil. 214 [1956]); Co Tiong
Sa v. Director of Patents, et al., G.R. No. L-5378,
May 24, 1954). Duplication or imitation is not
necessary; nor is it necessary that the infringing
label should suggest an effort to imitate (Lim Hoa
v. Director of Patents, supra, and Co Liong Sa v.
Director of Patents, supra). Actual confusion is not
required: Only likelihood of confusion on the part of
the buying public is necessary so as to render two
marks confusingly similar so as to deny the
registration of the junior mark (Sterling Products
International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 137 Phil. 838 [1969]).
As to the first issue of whether PAPA
BOY is confusingly similar to Opposer's PAPA
mark, this Bureau rules in the affirmative.
The records bear the following:
1. Registration No. 32416 issued for the mark
"PAPA" under Class 29 goods was deemed expired
as of February 11, 2004 (Exhibit "A" attached to the
VERIFIED NOTICE OF OPPOSITION). Application
Serial No. 4-2005-010788 was filed on October 28,
2005 for the same mark "PAPA" for Class 30 goods
and Registration No. 42005010788 was issued on
March 19, 2007;
2. Opposer was issued for the mark "PAPA
BANANA CATSUP LABEL" on August 11, 1983
Registration No. SR-6282 for Class 30 goods in the
Supplemental Register, which registration expired
in 2003. Application Serial No. 4-2006-012364 was
filed for the mark "PAPA LABEL DESIGN" for Class
30 goods on November 15, 2006, and Registration
No. 42006012364 was issued on April 30, 2007;
and
3. Lastly, Registration No. 34681 for the mark
"PAPA KETSARAP" for Class 30 goods was issued
on August 23, 1985 and was renewed on August
23, 2005.
Though Respondent-applicant was first
to file the subject application on April 04, 2002 vis-
a-vis the mark "PAPA" the filing date of which is
reckoned on October 28, 2005, and the mark "PAPA
LABEL DESIGN" the filing date of which is reckoned
on November 15, 2006, Opposer was able to secure
a registration for the mark "PAPA KETSARAP" on
August 23, 1985 considering that Opposer was the
prior registrant and that its renewal application
timely filed on August 23, 2005.
xxx xxx xxx
Pursuant to [Section 123.1(d) of the IP
Code], the application for registration of the subject
mark cannot be allowed considering that Opposer
was earlier registrant of the marks PAPA and PAPA
KETSARAP which registrations were timely
renewed upon its expiration. Respondent-
applicant's mark "PAPA BOY & DEVICE" is
confusingly similar to Opposer's mark "PAPA
KETSARAP" and is applied to goods that are related
to Opposer's goods, but Opposer's mark "PAPA
KETSARAP" was registered on August 23, 1985 per
Certificate of Registration No. 34681, which
registration was renewed for a period of 10 years
counted from August 23, 2005 per Certificate of
Renewal of Registration No. 34681 issued on
August 23, 2005. To repeat, Opposer has already
registered a mark which Respondent-applicant's
mark nearly resembles as to likely deceive or cause
confusion as to origin and which is applied to
goods to which respondent-applicant's goods
under Class 30 are closely related.
Section 138 of the IP Code provides that
a certificate 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. 50 EATCcI
We agree that respondent's mark cannot be registered.
Respondent's mark is related to a product, lechon sauce, an everyday all-
purpose condiment and sauce, that is not subjected to great scrutiny and
care by the casual purchaser, who knows from regular visits to the
grocery store under what aisle to find it, in which bottle it is contained,
and approximately how much it costs. Since petitioner's product, catsup,
is also a household product found on the same grocery aisle, in similar
packaging, the public could think that petitioner had expanded its product
mix to include lechon sauce, and that the "PAPA BOY" lechon sauce is
now part of the "PAPA" family of sauces, which is not unlikely
considering the nature of business that petitioner is in. Thus, if allowed
registration, confusion of business may set in, and petitioner's hard-
Page 44 of 65 | IPL | LAW ON TRADEMARK
 earned goodwill may be associated to the newer product introduced by
respondent, all because of the use of the dominant feature of petitioner's
mark on respondent's mark, which is the word "PAPA." The words "Barrio
Fiesta" are not included in the mark, and although printed on the label of
respondent's lechon sauce packaging, still do not remove the impression
that "PAPA BOY" is a product owned by the manufacturer of "PAPA"
catsup, by virtue of the use of the dominant feature. It is possible that
petitioner could expand its business to include lechon sauce, and that
would be well within petitioner's rights, but the existence of a "PAPA BOY"
lechon sauce would already eliminate this possibility and deprive
petitioner of its rights as an owner of a valid mark included in
the Intellectual Property Code.
The Court of Appeals likewise erred in finding that "PAPA,"
being a common term of endearment for one's father, is a word over
which petitioner could not claim exclusive use and ownership. The
Merriam-Webster dictionary defines "Papa" simply as "a person's father."
True, a person's father has no logical connection with catsup products,
and that precisely makes "PAPA" as an arbitrary mark capable of being
registered, as it is distinctive, coming from a family name that started the
brand several decades ago. What was registered was not the word
"Papa" as defined in the dictionary, but the word "Papa" as the last name
of the original owner of the brand. In fact, being part of several of
petitioner's marks, there is no question that the IPO has found "PAPA" to
be a registrable mark.
Respondent had an infinite field of words and combinations of
words to choose from to coin a mark for its lechon sauce. While its claim
as to the origin of the term "PAPA BOY" is plausible, it is not a strong
enough claim to overrule the rights of the owner of an existing and valid
mark. Furthermore, this Court cannot equitably allow respondent to profit
by the name and reputation carefully built by petitioner without running
afoul of the basic demands of fair play. 51
WHEREFORE, we hereby GRANT the petition. We SET
ASIDE the June 23, 2011 Decision and the October 4, 2011 Resolution of
the Court of Appeals in CA-G.R. SP No. 107570, and REINSTATE the
March 26, 2008 Decision of the Bureau of Legal Affairs of the Intellectual
Property Office (IPO-BLA) and the January 29, 2009 Decision of the
Director General of the IPO.
SO ORDERED.
Sereno, C.J., Bersamin, Perlas-Bernabe and Jardeleza,
JJ., concur.
||| (UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corp., G.R. No. 198889,
[January 20, 2016], 778 PHIL 763-807)
10. Seri Somboonsakdikul v. Orlane S.A., G.R. No. 188996, 1 February 2017
x
11. W Land Holding, Inc. v. Starwood Hotels and Resorts Worldwide, Inc., G.R.
No. 222366, 4 December 2017
SECOND DIVISION
[G.R. No. 222366. December 4, 2017.]
W LAND HOLDING, INC., petitioner, vs. STARWOOD
HOTELS AND RESORTS WORLDWIDE,
INC., respondent.
DECISION
PERLAS-BERNABE, J p:
Assailed in this petition for review on certiorari 1 are the
Decision 2 dated June 22, 2015 and the Resolution 3 dated 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 43 6 and
44 7 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
Decision 14 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 Decision 28 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 appealed 31 to the IPO DG.
The IPO DG Ruling
In a Decision 32 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 205 36 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 review 39 under Rule 43
of the Rules of Court before the CA.
Page 45 of 65 | IPL | LAW ON TRADEMARK
 The CA Ruling
In a Decision 40 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 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." 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 proprio 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. CAIHTE
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.
Page 46 of 65 | IPL | LAW ON TRADEMARK
 (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. DETACa
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.
(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
Page 47 of 65 | IPL | LAW ON TRADEMARK
 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 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.
(c) At any time, if the registered owner of
the mark without legitimate
reason fails to use the
mark within the 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 number 75 for Philippine consumers to call for information or
other concerns. The website further uses the English language 76 —
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, café 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. aDSIHc
Page 48 of 65 | IPL | LAW ON TRADEMARK
 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.
Peralta, Caguioa and Reyes, Jr., JJ., concur.
Jardeleza, * J., is on leave.
||| (W Land Holding, Inc. v. Starwood Hotels and Resorts Worldwide, Inc., G.R.
No. 222366, [December 4, 2017])
12. Kensonic, Inc. v. Uni-Line Multii-Resources, Inc. (Phil.), G.R. Nos.
211820-21 & 211834-35, 6 June 2018
THIRD DIVISION
[G.R. Nos. 211820-21. June 6, 2018.]
KENSONIC, INC., petitioner, vs. UNI-LINE MULTI-
RESOURCES, INC., (PHIL.), respondent.
[G.R. Nos. 211834-35. June 6, 2018.]
UNI-LINE MULTI-RESOURCES, INC., petitioner, vs.
KENSONIC, INC., respondent.
DECISION
BERSAMIN, J p:
The case concerns the cancellation of the registration of the
trademark SAKURA for the goods of Uni-Line Multi Resources, Inc.
(Phils.) (Uni-Line) being sought by Kensonic, Inc. (Kensonic) on the
ground that the latter had prior use and registration of the SAKURA mark.
The Case
Under consideration are the consolidated appeals urging the
review and reversal of the decision promulgated on July 30, 2013 1 and
the amended decision promulgated on March 19, 2014, 2 whereby the
Court of Appeals (CA) affirmed the decision rendered on June 11, 2012
by the Director General of the Intellectual Property Office (IPO) upholding
the cancellation of the application of Uni-Line for the registration of the
SAKURA mark for goods falling under Class 09 of the Nice International
Classification of Goods (Nice Classification), and allowing the
registration of Uni-Line's SAKURA mark registration for goods falling
under Class 07 and Class 11 of the Nice Classification. 3
Antecedents
The CA summarized the following factual and procedural
antecedents, viz.:
On June 15, 1999, Uni-Line filed an
application for the registration of the mark
"SAKURA" for amplifier, speaker, cassette, cassette
disk, video cassette disk, car stereo, television,
digital video disk, mini component, tape deck,
compact disk charger, VHS, and tape rewinder
falling under Class 9 of the Nice International
Classification of Goods. Kensonic opposed Uni-
Line's application which was docketed as IPC No.
14-2004-00160 (IPC 1). The Director of the Bureau
of Legal Affairs (BLA) rendered Decision No. 2005-
01 dated November 29, 2005 finding that Kensonic
was the first to adopt and use the mark SAKURA
since 1994 and thus rejecting Uni-Line's
application. On January 19, 2006, said Decision
became final and executory.
While IPC Case 1 was pending, Uni-Line
filed an application and was issued a certificate of
registration for the mark "SAKURA & FLOWER
DESIGN" for use on recordable compact disk (CD-
R) computer, computer parts and accessories
falling under Class 9. On September 7, 2006,
Kensonic filed a petition for cancellation docketed
as IPC No. 14-2006-00183 (IPC 2) of Uni-Line's
registration. In Decision No. 08-113 dated August 7,
2008, the BLA Director held that Uni-Line's goods
are related to Kensonic's goods and that the latter
was the first user of the mark SAKURA used on
products under Class 9. The BLA Director thus
cancelled Uni-Line's certificate of registration. Uni-
Line moved for reconsideration of the BLA
Director's Decision which is pending resolution to
date.
On June 6, 2002, Uni-Line filed an
application for the registration of the trademark
SAKURA for use on the following:
Goods Nice Classification
Washing machines, high pressure washers, vacuum Class 07
cleaners, floor polishers, blender, electric mixer,
electrical juicer
Television sets, stereo components, DVD/VCD Class 09
players, voltage regulators, portable generators,
switch breakers, fuse
Refrigerators, air conditioners, oven toaster, turbo Class 11
broiler, rice cooker, microwave oven, coffee maker,
sandwich/waffle maker, electric stove, electric fan,
hot & cold water dispenser, airpot, electric griller and
electric hot pot
Uni-Line's application was thereafter
published, and there being no opposition thereto,
Certificate of Registration No. 4-2002-004572 for
the mark SAKURA effective March 18, 2006 was
issued.
On September 7, 2006, Kensonic filed
with the BLA a Petition for Cancellation of Uni-
Line's Certificate of Registration alleging that in
October 1994, it introduced the marketing of
SAKURA products in the Philippines and that it
owned said SAKURA products and was the first to
use, introduce and distribute said products.
Kensonic also alleged that in IPC 1, it opposed Uni-
Line's application to register SAKURA and was
already sustained by the Director General, which
Decision is now final and executory. Kensonic
further alleged that it is the owner of a copyright for
SAKURA and that since 1994, has maintained and
established a good name and goodwill over the
SAKURA products.
Kensonic filed its Supplemental Petition
for Cancellation and its Reply to Uni-Line's Answer.
Uni-Line filed its Rejoinder thereto. 4
Decision of the
Bureau of Legal Affairs (BLA), IPO
After due proceedings, the BLA issued Decision No. 2008-149
dated August 11, 2008, 5 whereby it ruled in favor of Kensonic and
against Uni-Line, and directed the cancellation of Registration No. 4-
2002-004572 of the latter's SAKURA mark. It observed that an
examination of the SAKURA mark of Kensonic and that of Uni-Line
revealed that the marks were confusingly similar with each other; that the
goods sought to be covered by the SAKURA registration of Uni-Line were
related to the goods of Kensonic, thereby necessitating the cancellation
of the registration of Uni-Line's mark; and that considering that Kensonic
had used the SAKURA mark as early as 1994 in Class 09 goods (namely:
amplifiers, speakers, cassette disks, video cassette disks, car stereos,
televisions, digital video disks, mini components, tape decks, compact
disk chargers, VHS and tape rewinders), Kensonic had acquired
ownership of the SAKURA mark, and should be legally protected thereon.
The dispositive portion reads:
WHEREFORE, premises considered, the
Verified Petition for Cancellation is
hereby GRANTED. Accordingly, Certificate of
Page 49 of 65 | IPL | LAW ON TRADEMARK
 Registration No. 4-2002-004572 issued on 18
March 2006 for the trademark "SAKURA" in the
name of Uni-Line Multi Resources, Inc. Phils., is
hereby ordered CANCELLED.
Let the file wrapper of this case be
forwarded to the Bureau of Trademark (BOT) for
appropriate action in accordance with this
Decision.
SO ORDERED. 6
Decision of the Director General, IPO
On appeal, 7 the Director General of the IPO modified the
decision of the BLR by upholding Uni-Line's registration of the SAKURA
mark as to goods classified as Class 07 and Class 11, thereby effectively
reversing the BLR, but affirmed the BLR as regards the treatment of the
SAKURA mark that covered the goods falling under Class 09. The
Director General clarified that the marks of Uni-Line and Kensonic were
similar if not identical; that considering that Inter Partes Case No. 14-
2004-00160 (IPC 1) already effectively ruled that the products registered
by Uni-Line were goods related to those covered by the registration of
Kensonic, the registration of Uni-Line insofar as those products sought to
be registered under Class 09 were concerned (i.e., television sets, stereo
components, DVD/VCD players, voltage regulators, portable generators,
switch breakers, fuse) was correctly cancelled; that the registration of
products of Uni-Line falling under Class 07 and Class 11 should not be
cancelled because the products were different from the goods registered
under Class 09 in the name of Kensonic; that there should be evidence
showing how the continued registration of the SAKURA mark of Uni-Line
would cause damage to Kensonic; and that the goods covered by the
SAKURA registration of Uni-Line and the SAKURA registration of
Kensonic should be distinguished because:
In addition, the ordinary purchaser must
be thought of, as having, and credited with, at least
a modicum of intelligence. It does not defy
common sense to assert that a purchaser would be
cognizant of the product he is buying. 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.
In this instance, the products of the
Appellants under Classes 7 and 11 are home
appliances which are not the ordinary everyday
goods the public buys and consumes. These
products are not inexpensive items and a
purchaser would ordinarily examine carefully the
features and characteristics of the same. It is,
therefore, farfetched that the purchasing public
would be misled or be deceived as to the source or
origin of the products. Furthermore, there is nothing
in the records that indicate any plans by the
Appellee to enter into business transactions or to
the manufacture and distribution of goods similar
to the products of the Appellants under Classes 7
and 11." 8
The Director General of the IPO decreed as follows:
Wherefore, premises considered, the
appeal is hereby dismissed in so far as the
cancellation of the Appellant's Cert. of Reg. No. 4-
2002-004572 for goods enumerated and falling
under Class 9 is concerned. However, the appeal is
hereby granted in so far as the cancellation of Cert.
of Reg. No. 4-2002-004572 for goods enumerated
and falling under Classes 7 and 11 is concerned.
Accordingly, Cert. of Reg. No. 4-2002-
004572 issued in favor of the Appellant for the
mark SAKURA is hereby amended. The registration
of goods enumerated under Class 9, namely
television sets, stereo components, DVD/VCD
players, voltage regulators, portable generators,
switch breakers, fuse is hereby cancelled.
Let a copy of this Decision as well as the
records of this case 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
Documentation, Information and Technology
Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records
purposes.
SO ORDERED. 9
Judgment of the CA
Both parties appealed to the CA, which promulgated its
decision on July 30, 2013 dismissing the appeal of Kensonic (C.A.-G.R.
SP No. 125420) and granting Uni-Line's appeals (C.A.-G.R. SP No.
125424). The CA upheld Kensonic's ownership of the SAKURA mark
based on its showing of its use of the mark since 1994, but ruled that
despite the identical marks of Kensonic and Uni-Line, Kensonic's goods
under Class 09 were different from or unrelated to Uni-Line's goods under
Class 07 and Class 11. It observed that the protection of the law
regarding the SAKURA mark could only extend to television sets, stereo
components, DVD and VCD players but not to Uni-Line's voltage
regulators, portable generators, switch breakers and fuses due to such
goods being unrelated to Kensonic's goods; that Kensonic's registration
only covered electronic audio-video products, not electrical home
appliances; and that the similarity of the marks would not confuse the
public because the products were different and unrelated. It ruled:
WHEREFORE, the Petition filed by
Kensonic, Inc., in C.A.-G.R. SP No. 125420
is DENIED and the Petition filed by Uni-Line Multi
Resources, Inc. (Phils.) is GRANTED.
Accordingly, the Decision dated June 11,
2012 of Director General Ricardo R. Blancaflor of
the Intellectual Property Office is MODIFIED such
that Uni-Line's Appeal insofar as the cancellation of
its Certificate of Registration No. 4-2002-004572
for goods enumerated and falling under Class 9
is GRANTED but DELETING therefrom the goods
television sets, stereo components, DVD players
and VCD players. The Decision dated June 11, 2012
of the Director General is hereby UPHELD insofar
as it granted Uni-Line's Appeal on the cancellation
of its Certificate of Registration No. 4-2002-004572
for goods enumerated and falling under Class 7
and Class 11.
SO ORDERED. 10
Kensonic sought partial reconsideration, submitting that
voltage regulators, portable generators, switch breakers and fuse were
closely related to its products; that maintaining the two SAKURA marks
would cause confusion as to the source of the goods; and that Uni-Line's
goods falling under Class 07 and Class 11 were closely related to its
goods falling under Class 09.
In the assailed amended decision promulgated on March 19,
2014, 11 the CA sided with Kensonic, and reverted to the ruling by the
Director General of IPO cancelling the registration of the SAKURA mark
covering all the goods of Uni-Line falling under Class 09 on the basis that
all the goods belonged to the general class of goods. The CA decreed:
WHEREFORE, the Motion for Partial
Reconsideration filed by Kensonic, Inc.
is PARTIALLY GRANTED. Uni-Line is prohibited
from using the mark SAKURA for goods falling
under Class 9, but is allowed to use the mark
SAKURA for goods falling under Classes 7 and 11.
Thus, the DENIAL of Uni-Line's Appeal insofar as
the cancellation of its Certificate of Registration
No. 4-2002-004572 for goods enumerated and
falling under Class 9 is UPHELD. The Decision
Page 50 of 65 | IPL | LAW ON TRADEMARK
 dated June 11, 2012 of the Director General
is AFFIRMED in toto.
SO ORDERED. 12
Issues
Hence, this appeal by both parties.
Kensonic (G.R. Nos. 211820-21) insists that the CA erred in
not considering that Uni-Line's goods under Class 07 and Class 11 were
related to its goods falling under Class 09; and that all the agencies
below were unanimous in declaring that the marks were identical, and, as
such, the use of the SAKURA marks would lead to confusion about the
source of the goods.
Uni-Line (G.R. Nos. 211834-35) contends that the SAKURA
mark could not be appropriated because it simply referred to cherry
blossom in Japanese and was thus a generic name that was not
copyrightable; that it was grave error for the IPO and the CA to rule that
Kensonic owned the mark; and that voltage regulators, portable
generators, switch breakers and fuse were unrelated to Kensonic's
products because Uni-Line's products were not electronic.
The following issues are, therefore, to be resolved:
(1) Is the SAKURA mark capable of appropriation?
(2) Are Kensonic's goods falling under Class 09 related to Uni-
Line's goods falling under Class 07 and Class 11?;
and
or service. In Asia Brewery, Inc. v. Court of Appeals, 15 the Court ruled
that there was no infringement of San Miguel Brewery's Pale Pilsen
trademark because Pale Pilsen could not be appropriated. The Court
explained:
The fact that the words pale pilsen are
part of ABI's trademark does not constitute an
infringement of SMC's trademark: SAN MIGUEL
PALE PILSEN, for "pale pilsen" are generic words
descriptive of the color ("pale"), of a type of beer
("pilsen"), which is a light bohemian beer with a
strong hops flavor that originated in the City of
Pilsen in Czechoslovakia and became famous in
the Middle Ages. (Webster's Third New
International Dictionary of the English Language,
Unabridged. Edited by Philip Babcock Gove.
Springfield, Mass.: G & C Merriam Co., c) 1976,
page 1716.) "Pilsen" is a "primarily geographically
descriptive word," (Sec. 4, subpar. [e] Republic Act
No. 166, as inserted by Sec. 2 of R.A. No. 638)
hence, non-registerable and not appropriable by any
beer manufacturer. The Trademark Law provides:
"Sec. 4. . . . The owner of
trade-mark, trade-name or
service-mark used to
distinguish his goods,
business or services from the
goods, business or services
of others shall have the right
to register the same [on the
principal register], unless it:

(3) Are Uni-Line's goods falling under Class 9, namely: voltage xxx xxx xxx
regulators, portable generators, switch breakers "(e) Consists of a mark or
and fuses, related to Kensonic's goods falling under trade-name which, when
Class 9? applied to or used in
connection with the goods,
business or services of the
Ruling of the Court applicant is merely
descriptive or deceptively
misdescriptive of them, or
The appeal of Kensonic in G.R. Nos. 211820-21 is dismissed when applied to or used in
but the petition in G.R. Nos. 211834-35 is partially granted. connection with the goods,
business or services of the
applicant is primarily
geographically descriptive or
I. deceptively misdescriptive of
them, or is primarily merely a
surname." (Emphasis
supplied.)
The SAKURA mark can be appropriated
The words "pale pilsen" may not be
appropriated by SMC for its exclusive use even if
Uni-Line's opposition to Kensonic's ownership of the SAKURA they are part of its registered trademark: SAN
mark insists that the SAKURA mark is not copyrightable for being MIGUEL PALE PILSEN, any more than such
generic. Such insistence is unacceptable. descriptive words as "evaporated milk," "tomato
ketchup," "cheddar cheese," "corn flakes" and
To be noted is that the controversy revolves around the "cooking oil" may be appropriated by any single
SAKURA mark which is not a copyright. The distinction is significant. A manufacturer of these food products, for no other
mark is any visible sign capable of distinguishing the goods (trademark) reason than that he was the first to use them in his
or services (service mark) of an enterprise, and includes a stamped or registered trademark. In Masso Hermanos, S.A. vs.
marked container of goods. 13 In contrast, a copyright is the right to Director of Patents, 94 Phil. 136, 139 (1953), it was
literary property as recognized and sanctioned by positive law; it is an held that a dealer in shoes cannot register "Leather
intangible, incorporeal right granted by statute to the author or originator Shoes" as his trademark because that would be
of certain literary or artistic productions, whereby he or she is invested, merely descriptive and it would be unjust to deprive
for a specific period, with the sole and exclusive privilege of multiplying other dealers in leather shoes of the right to use the
copies of the same and publishing and selling them. 14 Obviously, the same words with reference to their merchandise.
SAKURA mark is not an artistic or literary work but a sign used to No one may appropriate generic or descriptive
distinguish the goods or services of one enterprise from those of words. They belong to the public domain (Ong Ai
another. Gui vs. Director of Patents, 96 Phil. 673, 676
An examination of the pertinent laws also reveals that Uni-Line [1955]):
mistakenly argues that the SAKURA mark was not capable of registration "A word or a combination of
for being generic. words which is merely
Section 123 (h) of the Intellectual Property Code prohibits the descriptive of an article of
registration of a trademark that consists exclusively of signs that are trade, or of its composition,
generic for the goods or services that they seek to identify. It is clear characteristics, or qualities,
from the law itself, therefore, that what is prohibited is not having a cannot be appropriated and
generic mark but having such generic mark being identifiable to the good protected as a trademark to

Page 51 of 65 | IPL | LAW ON TRADEMARK

 the exclusion of its use by consideration of questions of law. Section 1, Rule 45 of the Rules of
others . . . inasmuch as all Court specifically so provides:
persons have an equal right
to produce and vend similar Section 1. Filing of petition with
articles, they also have the Supreme Court. — A party desiring to appeal
right to describe them by certiorari from a judgment or final order or
properly and to use any resolution of the Court of Appeals,
appropriate language or the Sandiganbayan, the Court of Tax Appeals, the
words for that purpose, Regional Trial Court or other courts whenever
and no person can authorized by law, may file with the Supreme Court
appropriate to himself a verified petition for review on certiorari. The
exclusively any word or petition may include an application for a writ of
expression, properly preliminary injunction or other provisional remedies
descriptive of the article, its and shall raise only questions of law which must be
qualities, ingredients or distinctly set forth. The petitioner may seek the
characteristics, and thus limit same provisional remedies by verified motion filed
other persons in the use of in the same action or proceeding at any time during
language appropriate to the its pendency.
description of their The distinction between a question of law and a question of
manufactures, the right to the fact is well defined. According to Tongonan Holdings and Development
use of such language being Corporation v. Escaño, Jr.: 17
common to all. This rule
excluding descriptive terms A question of law arises when there is
has also been held to apply to doubt as to what the law is on a certain state of
trade-names. As to whether facts, while there is a question of fact when the
words employed fall within doubt arises as to the truth or falsity of the alleged
this prohibition, it is said that facts. For a question to be one of law, the same
the true test is not whether must not involve an examination of the probative
they are exhaustively value of the evidence presented by the litigants or
descriptive of the article any of them. The resolution of the issue must rest
designated, but whether in solely on what the law provides on the given set of
themselves, and as they are circumstances. Once it is clear that the issue
commonly used by those who invites a review of the evidence presented, the
understand their meaning, question posed is one of fact. Thus, the test of
they are reasonably indicative whether a question is one of law or of fact is not
and descriptive of the thing the appellation given to such question by the party
intended. If they are thus raising the same; rather, it is whether the appellate
descriptive, and not arbitrary, court can determine the issue raised without
they cannot be appropriated reviewing or evaluating the evidence, in which case,
from general use and become it is a question of law; otherwise it is a question of
the exclusive property of fact.
anyone. (52 Am. Jur. 542-
543.) It is timely to remind, too, that the Court is not a trier of facts.
Hence, the factual findings of the quasi-judicial body like the IPO,
". . . Others may use the same especially when affirmed by the CA, are binding on the
or similar descriptive word in Court. 18 Jurisprudence has laid down certain exceptions to the rule of
connection with their own bindingness, 19 but, alas, Uni-Line did not discharge its burden to show
wares, provided they take how its urging for a review of the factual findings came within any of the
proper steps to prevent the exceptions.
public being deceived.
(Richmond Remedies Co. vs.
Dr. Miles Medical Co., 16 E.
[2d] 598.) II.

". . . A descriptive word may

be admittedly distinctive,
especially if the user is the
first creator of the article. It
will, however, be denied
protection, not because it
lacks distinctiveness, but
rather because others are
equally entitled to its use. (2
Callman, Unfair Competition
and Trademarks, pp. 869-
870.)"
This, however, is not the situation herein. Although SAKURA
refers to the Japanese flowering cherry 16 and is, therefore, of a generic
nature, such mark did not identify Kensonic's goods unlike the mark
in Asia Brewery, Inc. v. Court of Appeals. Kensonic's DVD or VCD players
and other products could not be identified with cherry blossoms. Hence,
the mark can be appropriated.
Kensonic's prior use of the mark since 1994 made it the owner
of the mark, and its ownership cannot anymore be challenged at this
stage of the proceedings. Seeking the review of Kensonic's ownership
would entail the examination of facts already settled by the lower
tribunals. Uni-Line's challenge to the ownership of the SAKURA mark
should stop here because the Court cannot act on a factual matter in this
appeal by petition for review on certiorari, which is limited to the
Uni-Line's goods classified under Class 07
and Class 11 were not related to Kensonic's
goods registered under Class 09
The CA did not err in allowing the registration of Uni-Line's
products falling under Class 07 and Class 11, for, indeed, those products
— as found by the lower tribunals — were unrelated to the goods of
Kensonic registered under Class 09.
Still, Kensonic contends that the goods of Uni-Line classified
under Class 07 and Class 11 were covered by the prohibition from
registration for being within the normal potential expansion of Kensonic.
The contention is unwarranted.
The prohibition under Section 123 of the Intellectual Property
Code extends to goods that are related to the registered goods, not to
goods that the registrant may produce in the future. To allow the
expansion of coverage is to prevent future registrants of goods from
securing a trademark on the basis of mere possibilities and conjectures
that may or may not occur at all. Surely, the right to a trademark should
not be made to depend on mere possibilities and conjectures.

Page 52 of 65 | IPL | LAW ON TRADEMARK

 In Mighty Corporation v. E. & J. Gallo Winery, 20 the Court has
identified the different factors by which to determine whether or not
goods are related to each other for purposes of registration:
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. They may
also be those which, being entirely unrelated,
cannot be assumed to have a common source;
hence, there is no confusion of business, even
though similar marks are used. Thus, there is no
trademark infringement if the public does not
expect the plaintiff to make or sell the same class
of goods as those made or sold by the defendant.
In resolving whether goods are related,
several factors come into play:
(a) the business (and its location) to which
the goods belong
(b) the class of product to which the goods
belong
(c) the product's quality, quantity, or size,
including the nature of the
package, wrapper or container
(d) the nature and cost of the articles
(e) the descriptive properties, physical
attributes or essential
characteristics with reference to
their form, composition, texture
or quality
(f) the purpose of the goods
(g) whether the article is bought for
immediate consumption, that is,
day-to-day household items
(h) the fields of manufacture
(i) the conditions under which the article is
usually purchased and
(j) the channels of trade through which the
goods flow, how they are
distributed, marketed, displayed
and sold. (Citations omitted)
An examinations of the foregoing factors reveals that the
goods of Uni-Line were not related to the goods of Kensonic by virtue of
their differences in class, the descriptive attributes, the purposes and the
conditions of the goods.
III.
The goods of Kensonic were also
unrelated to the goods of Uni-Line
although both belonged to Class 9
Uni-Line posits that its goods under Class 9 were unrelated to
the goods of Kensonic; and that the CA's holding of the goods being
related by virtue of their belonging to the same class was unacceptable.
In Taiwan Kolin Corporation, Ltd. v. Kolin Electronics, Co.,
Inc., 21 the Court has opined that the mere fact that goods belonged to
the same class does not necessarily mean that they are related; and that
the factors listed in Mighty Corporation v. E. & J. Gallo Winery should be
taken into consideration, to wit:
As mentioned, the classification of the
products under the NCL is merely part and parcel of
the factors to be considered in ascertaining
whether they goods are related. It is not sufficient
to state that the goods involved herein are
electronic products under Class 9 in order to
establish relatedness between the goods, for this
only accounts for one of many considerations
enumerated in Mighty Corporation. x x x
Clearly then, it was erroneous for
respondent to assume over the CA to conclude that
all electronic products are related and that the
coverage of one electronic product necessarily
precludes the registration of a similar mark over
another. In this digital age wherein electronic
products have not only diversified by leaps and
bounds, and are geared towards interoperability, it
is difficult to assert readily, as respondent
simplistically did, that all devices that require
plugging into sockets are necessarily related
goods.
It bears to stress at this point that the
list of products included in Class 9 can be sub-
categorized into five (5) classifications, namely: (1)
apparatus and instruments for scientific or
research purposes, (2) information technology and
audiovisual equipment, (3) apparatus and devices
for controlling the distribution and use of electricity,
(4) optical apparatus and instruments, and (5)
safety equipment. From this sub-classification, it
becomes apparent that petitioner's products, i.e.,
televisions and DVD players, belong to audiovisual
equipment, while that of respondent, consisting of
automatic voltage regulator, converter, recharger
stereo booster, AC-DC regulated power supply,
step-down transformer, and PA amplified AC-DC,
generally fall under devices for controlling the
distribution and use of electricity.
Based on the foregoing pronouncement in Taiwan Kolin
Corporation, Ltd. v. Kolin Electronics, Co., Inc. , there are other sub-
classifications present even if the goods are classified under Class 09.
For one, Kensonic's goods belonged to the information technology and
audiovisual equipment sub-class, but Uni-Line's goods pertained to the
apparatus and devices for controlling the distribution of electricity sub-
class. Also, the Class 09 goods of Kensonic were final products but Uni-
Line's Class 09 products were spare parts. In view of these distinctions,
the Court agrees with Uni-Line that its Class 09 goods were unrelated to
the Class 09 goods of Kensonic.
WHEREFORE, the Court DENIES the petition for review
on certiorari in G.R. Nos. 211820-21; PARTIALLY GRANTS the petition for
review on certiorari in G.R. Nos. 211834-35; REVERSES and SETS
ASIDE the amended decision promulgated on March 19,
2014; PARTIALLY REINSTATES the decision promulgated on July 30,
2013 insofar as it allowed the registration by Uni-Line Multi-Resources,
Inc. under the SAKURA mark of its voltage regulators, portable
generators, switch breakers and fuses; and ORDERS Kensonic, Inc. to pay
the costs of suit.
SO ORDERED.
Velasco, Jr., Leonen, Martires and Gesmundo, JJ., concur.
||| (Kensonic, Inc. v. Uni-Line Multi-Resources, Inc. (Phil.), G.R. Nos. 211820-21
& 211834-35, [June 6, 2018])
13. Citigroup, Inc. v. Citystate Savings Bank, Inc., G.R. No. 205409, 13 June
2018
THIRD DIVISION
[G.R. No. 205409. June 13, 2018.]
CITIGROUP, INC., petitioner, vs. CITYSTATE SAVINGS
BANK, INC., respondent.
DECISION
LEONEN, J p:
This resolves a Petition for Review on Certiorari 1 assailing the
August 29, 2012 Decision 2 and the January 15, 2013 Resolution 3 of the
Court of Appeals in CA-G.R. SP No. 109679. DETACa
The facts which led to the controversy before this Court, as
summarized by the Court of Appeals, are as follows:
Page 53 of 65 | IPL | LAW ON TRADEMARK
 Petitioner Citigroup, Inc. is a corporation
duly organized under the laws of the State of
Delaware engaged in banking and financial
services. In the late 1970s, Citibank N.A., a wholly-
owned subsidiary of petitioner, installed its first
automated teller machines in over a hundred New
York City branches. In 1984, Citibank N.A.,
Philippine Branch, began the development of its
domestic Automated Teller Machine (ATM)
network, and started operating ATMs and issuing
ATM cards in the Philippines. Citibank N.A.,
Philippine Branch then joined Bancnet, Inc.
("Bancnet") in 1990, the first year Bancnet
commenced operations. To date, Citibank N.A.,
Philippine Branch has six branches and 22 ATMs in
the Philippines.
In 2005, Citibank Savings, Inc. became
an indirect wholly-owned subsidiary of Citibank,
N.A. As a pre-existing thrift bank, it offered ATM
services in the Philippines in 1995 and joined
Bancnet in 2005. Citibank Savings, Inc. now has 36
branches and 27 ATMs in the Philippines.
Combining the branches and ATMs of
Citibank N.A., Philippine Branch and Citibank
Savings, Inc., there are a total of 42 branches and
29 ATMs in the Philippines marketed and identified
to the public under the CITI family of marks.
The ATM cards issued by Citibank N.A.,
Philippine Branch and Citibank Savings, Inc. are
labelled "CITICARD." The trademark CITICARD is
owned by Citibank N.A. and is registered in the
[Intellectual Property Office] of the Philippines on
27 September 1995 under Registration Number
34731.
In addition, petitioner or Citibank N.A., a
wholly-owned subsidiary of petitioner, owns the
following other trademarks currently registered
with the Philippine [Intellectual Property Office], to
wit: "CITI and arc design," "CITIBANK," "CITIBANK
PAYLINK," "CITIBANK SPEEDCOLLECT,"
"CITIBANKING," "CITICARD," "CITICORP,"
"CITIFINANCIAL," "CITIGOLD," "CITIGROUP,"
"CITIPHONE BANKING," and "CITISERVICE."
On the other hand, sometime in the mid-
nineties, a group of Filipinos and Singaporean
companies formed a consortium to establish
respondent Citystate Savings Bank, Inc. The
consortium included established Singaporean
companies, specifically Citystate Insurance Group
and Citystate Management Group Holdings Pte.
Ltd.
Respondent's registered mark has in its
name affixed a lion's head, which is likened to the
national symbol of Singapore, the Merlion. On 08
August 1997, respondent opened its initial branch
in Makati City. From then on, it endeavored to
expand its branch network. At present it has 19
branches in key cities and municipalities including
3 branches in the province of Bulacan and 1 in
Cebu City. Respondent had also established off site
ATMs in key locations in the Philippines as one of
its banking products and services.
In line with this, respondent filed an
application for registration with the [Intellectual
Property Office] on 21 June 2005 of the trademark
"CITY CASH WITH GOLDEN LION'S HEAD" for its
ATM service, under Application Serial No.
42005005673. 4
After respondent Citystate Savings Bank, Inc. (Citystate)
applied for registration of its trademark "CITY CASH WITH GOLDEN
LION'S HEAD" with the Intellectual Property Office, Citigroup, Inc.
(Citigroup) filed an opposition to Citystate's application. Citigroup
claimed that the "CITY CASH WITH GOLDEN LION'S HEAD" mark is
confusingly similar to its own "CITI" marks. 5 After an exchange of
pleadings, the Director of the Bureau of Legal Affairs of the Intellectual
Property Office rendered a Decision 6 dated November 20, 2008. The
Intellectual Property Office concluded that the dominant features of the
marks were the words "CITI" and "CITY," which were almost the same in
all aspects. It further ratiocinated that Citigroup had the better right over
the mark, considering that its "CITI" and "CITI"-related marks have been
registered with the Intellectual Property Office, as well as with the United
States Patent and Trademark Office, covering "financial services" under
Class 36 of the International Classification of Goods. 7 Thus, applying
the dominancy test and considering that Citystate's dominant feature of
the applicant's mark was identical or confusingly similar to a registered
trademark, the Intellectual Property Office ruled that approving it would
be contrary to Section 138 of the Intellectual Property Code and
Citigroup's exclusive right to use its marks. aDSIHc
This was appealed to the Office of the Director General of the
Intellectual Property Office. In a Decision 8 dated July 3, 2009, Director
General Adrian S. Cristobal, Jr. (Director General Cristobal) reversed the
November 20, 2008 Decision of the Director of the Bureau of Legal
Affairs and gave due course to Citystate's trademark application. He
made a visual comparison of the parties' respective marks and
considered the golden lion head device to be the prominent or dominant
feature of Citystate's mark, and not the word "CITY." Thus, Citystate's
mark did not resemble Citigroup's mark such that deception or confusion
was likely. Director General Cristobal found plausible Citystate's
explanation for choosing "CITYSTATE," i.e., that its name was based on
the country of Singapore, which was referred to as "city-state," and that
the golden lion head device was similar to the national symbol of
Singapore, the merlion. 9 He appreciated that availing of the products
and services related to the parties' marks would entail very detailed
procedures, like sales representatives explaining the products and clients
filling up and submitting application forms, such that customers would
necessarily be well informed and not confused. 10
Thus, Citigroup filed a Petition for Review 11 before the Court
of Appeals, which dismissed the petition. The Court of Appeals found
that Director General Cristobal did not act with grave abuse of discretion
in ruling that the parties' trademarks were not confusingly similar, and in
giving due course to Citystate's trademark application. 12 It found that
Citystate's mark was not confusingly or deceptively similar to Citigroup's
marks:
[Citystate's] trademark is the entire "CITY
CASH WITH GOLDEN LION'S HEAD." Although the
words "CITY CASH" are prominent, the entirety of
the trademark must be considered, and focus
should not be made solely on the phonetic
similarity of the words "CITY" and "CITI."
The dissimilarities between the two
marks are noticeable and substantial. [Citystate's]
mark, "CITY CASH WITH GOLDEN LION'S HEAD,"
has an insignia of a golden lion's head at the left
side of the words "CITY CASH," while [Citigroup's]
"CITI" mark usually has an arc between the two I's.
A further scrutiny of the other "CITI" marks of
[Citigroup] would show that their font type, font
size, and color schemes of the said "CITI" marks
vary for each product or service. Most of the time,
[Citigroup's] "CITI" mark is joined with another term
to form a single word, with each product or service
having different font types and color schemes. On
the contrary, the trademark of [Citystate] consists
of the words "CITY CASH," with a golden lion's head
emblem on the left side. It is, therefore, improbable
that the public would immediately and naturally
conclude that [Citystate's] "CITY CASH WITH
GOLDEN LION'S HEAD" is but another variation
under [Citigroup's] "CITI" marks.
Verily, the variations in the appearance
of the "CITI" marks by [Citigroup], when conjoined
with other words, would dissolve the alleged
similarity between them and the trademark of
[Citystate]. These dissimilarities, and the insignia of
a golden lion's head before the words "CITY CASH"
in the mark of [Citystate] would sufficiently
acquaint and apprise the public that [Citystate's]
trademark "CITY CASH WITH GOLDEN LION'S
HEAD" is not connected with the "CITI" marks of
[Citigroup].
Page 54 of 65 | IPL | LAW ON TRADEMARK
 Moreover, more credit should be given consumer' but is the
to the "ordinary purchaser." Cast in this particular 'ordinarily intelligent buyer'
controversy, the ordinary purchaser is not the considering the type of
"completely unwary consumer" but is the "ordinarily product involved.
intelligent buyer" considering the type of product
involved. It bears to emphasize that the mark "CITY The definition laid
CASH WITH GOLDEN LION'S HEAD" is a mark of down in Dy Buncio v. Tan
[Citystate] for its ATM services which it offers to Tiao Bok is better suited to
the public. It cannot be gainsaid that an ATM the present case. There, the
service is not an ordinary product which could be 'ordinary purchaser' was
obtained at any store without the public noticing its defined as one 'accustomed
association with the banking institution that to buy, and therefore to some
provides said service. Naturally, the customer must extent familiar with, the
first open an account with a bank before it could goods in question. The test of
avail of its ATM service. Moreover, the name of the fraudulent simulation is to be
banking institution is written and posted either found in the likelihood of the
inside or outside the ATM booth, not to mention the deception of some persons in
fact that the name of the bank that operates the some measure acquainted
ATM is constantly flashed at the screen of the ATM with an established design
itself. With this, the public would accordingly be and desirous of purchasing
apprised that [Citystate's] "CITY CASH" is an ATM the commodity with which
service of [Citystate], and not that of that design has been
[Citigroup's]. 13 (Citation omitted) associated. The test is not
found in the deception, or the
Thus, the Court of Appeals quoted Director General Cristobal: possibility of deception, of
the person who knows
In evaluating the relevance of the prefix nothing about the design
"CITI," due attention should be given not only to the which has been counterfeited,
other features of the competing marks but also to and who must be indifferent
the attendant circumstances of the case. between that and the other.
Otherwise, a blind adherence to [Citigroup's] claim The simulation, in order to be
over the prefix CITI is tantamount to handing it a objectionable, must be such
monopoly of all marks with such prefix or with a as appears likely to mislead
prefix that sounds alike but with a different spelling the ordinary intelligent buyer
like the word "city." Accordingly, the kind of who has a need to supply and
products and services involved should likewise be is familiar with the article that
scrutinized. ETHIDa he seeks to purchase." 14
xxx xxx xxx Citigroup filed a Motion for Reconsideration, 15 which the
Thus, this Court finds no cogent reason Court of Appeals denied in its January 15, 2013 Resolution. 16
to believe [Citigroup's] contention that consumers Thus, Citigroup filed a Petition for Review 17 against Citystate
may confuse the products and services covered by before this Court. After respondent filed its Comment/Opposition 18 and
the competing trademarks as coming from the petitioner filed its Reply, 19 respondent filed its Memorandum. 20
same source of origin. The fear that the consumer
may mistake the products as to the source or Petitioner claims that the Court of Appeals erred in finding
origin, or that the consumers seeking its products that there was no confusing similarity between the trademark that
and services will be redirected or diverted to respondent applied for and petitioner's own trademarks. 21 It avers
[Citystate], is unfounded. The products or services that Emerald Manufacturing Company v. Court of Appeals 22 is not
involved are not the ordinary everyday products applicable to this case. 23 Contrary to the Court of Appeals' finding, the
that one can just pick up in a supermarket or arc design is not an integral part of petitioner's "CITI" family of marks. 24
grocery stores (sic). These products generally
require sales representatives explaining to their Petitioner asserts that when the dominancy test is applied to
prospective customers the features of and the Court of Appeals' findings of fact, the necessary result is a finding of
entitlements thereto. Availing the products and confusing similarity. 25 It points out that the Court of Appeals found that
services involved follows certain procedures that "CITY CASH" is the dominant feature of respondent's applied trademark.
ordinarily and routinely gives the prospective However, because the word "CASH" was disclaimed in respondent's
customers or clients opportunity to know exactly trademark application, only "CITY" may be considered the dominant part
with whom they are dealing with (sic). The of the mark. "'CITY' . . . appears nearly identical to 'CITI.'" 26
procedures usually include the clients filling-up and Further, petitioner argues that the Court of Appeals did not
submitting a pro-forma application form and other understand the services offered in relation to respondent's mark when it
documentary requirements, which means that the said that the mark is to be applied only in relation to respondent's ATMs
person is wel[l]-informed and thus, cannot be and within the bank premises. It insists that in actuality, the mark could
misled into believing that the product or service is be used outside the bank premises, such as in radio, newspapers, and
that of [Citystate] when in fact it is different from the internet, where there would not necessarily be a "GOLDEN LION'S
[Citigroup's]. HEAD" symbol to disambiguate the mark from any of petitioner's marks.
The likelihood of confusion between two It argues that the Court of Appeals should have appreciated the
marks should be taken from the viewpoint of the difference between basic financial services on one hand, which include
prospective buyer. In Emerald Garment ATM services, and sophisticated financial services on the other hand. It
Manufacturing Corp. vs. Court of Appeals, et al., the avers that customers do not select ATM services after cautious
Supreme Court ruled that: evaluation, and that ATM services are marketed to ordinary consumers.
Thus, petitioner claims that the Court of Appeals erred when it concluded
"Finally, in line with that customers are intelligent purchasers, and failed to consider ordinary
the foregoing discussions, purchasers who have not yet used the financial services of petitioner and
more credit should be given respondent. 27 cSEDTC
to the 'ordinary purchaser.'
Cast in this particular It further holds that it is not claiming a monopoly of all marks
controversy, the ordinary prefixed by words sounding like "city." It stresses that it opposes only
purchaser is not the marks which are registered under class 36 used in products directly
'completely unwary related and in competition with its "CITI" family of marks, sold under the
same business channels, and sold to the same group of consumers. 28

Page 55 of 65 | IPL | LAW ON TRADEMARK

 Respondent argues that its mark is not confusingly similar to
petitioner's 29 and that petitioner's fears are purely speculative. 30 It
claims that the phonetic similarity between "CITY" and "CITI" is not
sufficient to deny its registration, asserting that this Court has ruled
that idem sonans alone is insufficient basis for a determination of the
existence of confusing similarity. As for petitioner's arguments on
possible confusion due to advertising, respondent states that
advertisement aims to inform the public of a certain entity's product and
that not mentioning a supplier's trade name in its advertisement defeats
the purpose of advertisement. It disputes petitioner's claims on ATM
services and the kind of caution exercised prior to obtaining an ATM
card, asserting that before customers may avail of ATM services, they
have to open an account with the bank offering them. 31
This Court denies the Petition.
The sole issue for this Court's resolution is whether or not the
Court of Appeals committed an error of law in finding that there exists no
confusing similarity between petitioner Citigroup, Inc.'s and respondent
Citystate Savings Bank, Inc.'s marks.
In La Chemise Lacoste, S.A. v. Fernandez, 32 this Court
explained why trademarks are protected in the market:
The purpose of the law protecting a
trademark cannot be overemphasized. They are to
point out distinctly the origin or ownership of the
article to which it is affixed, to secure to him, who
has been instrumental in bringing into market a
superior article of merchandise, the fruit of his
industry and skill, and to prevent fraud and
imposition (Etepha v. Director of Patents, 16 SCRA
495).
The legislature has enacted laws to
regulate the use of trademarks and provide for the
protection thereof. Modern trade and commerce
demands that depredations on legitimate trade
marks of non-nationals including those who have
not shown prior registration thereof should not be
countenanced. The law against such depredations
is not only for the protection of the owner of the
trademark but also, and more importantly, for the
protection of purchasers from confusion, mistake,
or deception as to the goods they are buying. (Asari
Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; General
Garments Corporation v. Director of Patents, 41
SCRA 50).
The law on trademarks and tradenames
is based on the principle of business integrity and
common justice. This law, both in letter and spirit,
is laid upon the premise that, while it encourages
fair trade in every way and aims to foster, and not
to hamper, competition, no one, especially a trader,
is justified in damaging or jeopardizing another's
business by fraud, deceit, trickery or unfair
methods of any sort. This necessarily precludes the
trading by one dealer upon the good name and
reputation built up by another (Baltimore v. Moses,
182 Md 229, 34 A (2d) 338). 33
In Mirpuri v. Court of Appeals, 34 this Court traced the
historical development of trademark law:
A "trademark" is defined under R.A. 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 from those manufactured, sold or dealt in by
others." This definition has been simplified in
R.A. No. 8293, the Intellectual Property Code of the
Philippines, which defines a "trademark" as "any
visible sign capable of distinguishing goods." In
Philippine jurisprudence, the function of a
trademark is to point out distinctly the origin or
ownership of the goods to which it is affixed; to
secure to him, who has been instrumental in
bringing into the market a superior article of
merchandise, the fruit of his industry and skill; to
assure the public that they are procuring the
genuine article; to prevent fraud and imposition;
and to protect the manufacturer against
substitution and sale of an inferior and different
article as his product.
Modern authorities on trademark law
view trademarks as performing three distinct
functions: (1) they indicate origin or ownership of
the articles to which they are attached; (2) they
guarantee that those articles come up to a certain
standard of quality; and (3) they advertise the
articles they symbolize.
Symbols have been used to identify the
ownership or origin of articles for several centuries.
As early as 5,000 B.C., markings on pottery have
been found by archaeologists. Cave drawings in
southwestern Europe show bison with symbols on
their flanks. Archaeological discoveries of ancient
Greek and Roman inscriptions on sculptural works,
paintings, vases, precious stones, glassworks,
bricks, etc. reveal some features which are thought
to be marks or symbols. These marks were affixed
by the creator or maker of the article, or by public
authorities as indicators for the payment of tax, for
disclosing state monopoly, or devices for the
settlement of accounts between an entrepreneur
and his workmen. SDAaTC
In the Middle Ages, the use of many
kinds of marks on a variety of goods was
commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain
trades. There were the baker's mark on bread,
bottlemaker's marks, smith's marks, tanner's
marks, watermarks on paper, etc. Every guild had
its own mark and every master belonging to it had a
special mark of his own. The marks were not
trademarks but police marks compulsorily imposed
by the sovereign to let the public know that the
goods were not "foreign" goods smuggled into an
area where the guild had a monopoly, as well as to
aid in tracing defective work or poor craftsmanship
to the artisan. For a similar reason, merchants also
used merchants' marks. Merchants dealt in goods
acquired from many sources and the marks
enabled them to identify and reclaim their goods
upon recovery after shipwreck or piracy.
With constant use, the mark acquired
popularity and became voluntarily adopted. It was
not intended to create or continue monopoly but to
give the customer an index or guarantee of quality.
It was in the late 18th century when the industrial
revolution gave rise to mass production and
distribution of consumer goods that the mark
became an important instrumentality of trade and
commerce. By this time, trademarks did not merely
identify the goods; they also indicated the goods to
be of satisfactory quality, and thereby stimulated
further purchases by the consuming public.
Eventually, they came to symbolize the goodwill
and business reputation of the owner of the
product and became a property right protected by
law. The common law developed the doctrine of
trademarks and tradenames "to prevent a person
from palming off his goods as another's, from
getting another's business or injuring his reputation
by unfair means, and, from defrauding the public."
Subsequently, England and the United States
enacted national legislation on trademarks as part
of the law regulating unfair trade. It became the
right of the trademark owner to exclude others
from the use of his mark, or of a confusingly similar
mark where confusion resulted in diversion of trade
or financial injury. At the same time, the trademark
served as a warning against the imitation or faking
of products to prevent the imposition of fraud upon
the public.
Page 56 of 65 | IPL | LAW ON TRADEMARK
 Today, the trademark is not merely a
symbol of origin and goodwill; it is often the most
effective agent for the actual creation and
protection of goodwill. It imprints upon the public
mind an anonymous and impersonal guaranty of
satisfaction, creating a desire for further
satisfaction. In other words, the mark actually sells
the goods. The mark has become the "silent
salesman," the conduit through which direct
contact between the trademark owner and the
consumer is assured. It has invaded popular culture
in ways never anticipated that it has become a
more convincing selling point than even the quality
of the article to which it refers. 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. 35 (Citations omitted)
There is also an underlying economic justification for the
protection of trademarks: an effective trademark system helps bridge the
information gap between producers and consumers, and thus, lowers the
costs incurred by consumers in searching for and deciding what
products to purchase. As summarized in a report of the World Intellectual
Property Organization:
Economic research has shown that
brands play an important role in bridging so-called
asymmetries of information between producers
and consumers. In many modern markets, product
offerings differ across a wide range of quality
characteristics. Consumers, in turn, cannot always
discern these characteristics at the moment of
purchase; they spend time and money researching
different offerings before deciding which product to
buy. Brand reputation helps consumers to reduce
these search costs. It enables them to draw on
their past experience and other information about
products — such as advertisements and third party
consumer reviews. However, the reputation
mechanism only works if consumers are confident
that they will purchase what they intend to
purchase. The trademark system provides the legal
framework underpinning this confidence. It does so
by granting exclusive rights to names, signs and
other identifiers in commerce. In addition, by
employing trademarks, producers and sellers
create concise identifiers for specific goods and
services, thereby improving communication about
those goods and services. 36
Recognizing the significance, and to further the effectivity of
our trademark system, 37 our legislators proscribed the registration of
marks under certain circumstances:
Section 123. Registrability. — 123.1. A mark cannot
be registered if it:
(a) Consists of immoral, deceptive or
scandalous matter, or matter which may disparage
or falsely suggest a connection with persons, living
or dead, institutions, beliefs, or national symbols, or
bring them into contempt or disrepute;
(b) Consists of the flag or coat of arms
or other insignia of the Philippines or any of its
political subdivisions, or of any foreign nation, or
any simulation thereof; acEHCD
(c) Consists of a name, portrait or
signature identifying a particular living individual
except by his written consent, or the name,
signature, or portrait of a deceased President of the
Philippines, during the life of his widow, if any,
except by written consent of the widow;
(d) Is identical with a registered mark
belonging to a different proprietor or a mark with an
earlier filing or priority date, in respect of:
(i) The same
goods or services, or
(ii) Closely related
goods or services, or
(iii) If it nearly
resembles such a mark as to
be likely to deceive or cause
confusion;
(e) 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 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;
(f) Is identical with, or confusingly
similar to, or constitutes a translation of a mark
considered well-known in accordance with the
preceding paragraph, which is registered in the
Philippines with respect to goods or services which
are not similar to those with respect to which
registration is applied for: Provided, That use of the
mark in relation to those goods or services would
indicate a connection between those goods or
services, and the owner of the registered
mark: Provided, further, That the interests of the
owner of the registered mark are likely to be
damaged by such use;
(g) Is likely to mislead the public,
particularly as to the nature, quality, characteristics
or geographical origin of the goods or services;
(h) Consists exclusively of signs that are
generic for the goods or services that they seek to
identify;
(i) Consists exclusively of signs or of
indications that have become customary or usual
to designate the goods or services in everyday
language or in bona fide and established trade
practice;
(j) Consists exclusively of signs or of
indications that may serve in trade to designate the
kind, quality, quantity, intended purpose, value,
geographical origin, time or production of the
goods or rendering of the services, or other
characteristics of the goods or services;
(k) Consists of shapes that may be
necessitated by technical factors or by the nature
of the goods themselves or factors that affect their
intrinsic value;
(l) Consists of color alone, unless
defined by a given form; or
(m) Is contrary to public order or
morality.
Page 57 of 65 | IPL | LAW ON TRADEMARK
 Based on this proscription, petitioner insists that respondent's
mark cannot be registered because it is confusingly similar to its own set
of marks. Thus, granting the petition rests solely on the question of
likelihood of confusion between petitioner's and respondent's respective
marks.
There is no objective test for determining whether the
confusion is likely. Likelihood of confusion must be determined
according to the particular circumstances of each case. 38 To aid in
determining the similarity and likelihood of confusion between marks, our
jurisprudence has developed two (2) tests: the dominancy test and the
holistic test. This Court explained these tests in Coffee Partners, Inc. v.
San Francisco Coffee & Roastery, Inc.: 39
The dominancy test focuses on the similarity of the
prevalent features of the competing trademarks
that might cause confusion and deception, thus
constituting infringement. If the competing
trademark contains the main, essential, and
dominant features of another, and confusion or
deception is likely to result, infringement occurs.
Exact duplication or imitation is not required. The
question is whether the use of the marks involved
is likely to cause confusion or mistake in the mind
of the public or to deceive consumers.
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. The
discerning eye of the observer must focus not only
on the predominant words but also on the other
features appearing on both marks in order that the
observer may draw his conclusion whether one is
confusingly similar to the other. 40 (Citations
omitted) SDHTEC
With these guidelines in mind, this Court considered "the main,
essential, and dominant features" of the marks in this case, as well as the
contexts in which the marks are to be used. This Court finds that the use
of the "CITY CASH WITH GOLDEN LION'S HEAD" mark will not result in
the likelihood of confusion in the minds of customers.
A visual comparison of the marks reveals no likelihood of
confusion.
Respondent's mark is:
This Court agrees with the observation of Director General
Cristobal that the most noticeable part of this mark is the golden lion's
head device, 41 and finds that after noticing the image of the lion's head,
the words "CITY" and "CASH" are equally prominent.
On the other hand, petitioner's marks, as noted by the Court of
Appeals, often include the red arc device:
Petitioner's other registered marks which do not contain the
red arc device include the following:
Examining these marks, this Court finds that petitioner's
marks can best be described as consisting of the prefix "CITI" added to
other words.
Applying the dominancy test, this Court sees that the
prevalent feature of respondent's mark, the golden lion's head device, is
not present at all in any of petitioner's marks. The only similar feature
between respondent's mark and petitioner's collection of marks is the
word "CITY" in the former, and the "CITI" prefix found in the latter. This
Court agrees with the findings of the Court of Appeals that this similarity
alone is not enough to create a likelihood of confusion.
The dis[s]imilarities between the two
marks are noticeable and substantial.
Respondent's mark, "CITY CASH WITH GOLDEN
LION'S HEAD," has an insignia of a golden lion's
head at the left side of the words "CITY CASH,"
while petitioner's "CITI" mark usually has an arc
between the two I's. A further scrutiny of the other
"CITI" marks of petitioner would show that their
font type, font size, and color schemes of the said
"CITI" marks vary for each product or service. Most
of the time, petitioner's "CITI" mark is joined with
another term to form a single word, with each
product or service having different font types and
color schemes. On the contrary, the trademark of
respondent consists of the words "CITY CASH,"
with a golden lion's head emblem on the left side. It
is, therefore, improbable that the public would
immediately and naturally conclude that
respondent's "CITY CASH WITH GOLDEN LION'S
HEAD" is but another variation under petitioner's
"CITI" marks.
Verily, the variations in the appearance
of the "CITI" marks by petitioner, when conjoined
with other words, would dissolve the alleged
similarity between them and the trademark of
respondent. These dissimilarities, and the insignia
of a golden lion's head before the words "CITY
CASH" in the mark of the respondent would
sufficiently acquaint and apprise the public that
respondent's trademark "CITY CASH WITH
GOLDEN LION'S HEAD" is not connected with the
"CITI" marks of petitioner. 42
This Court also agrees with the Court of Appeals that the
context where respondent's mark is to be used, namely, for its ATM
services, which could only be secured at respondent's premises and not
in an open market of ATM services, further diminishes the possibility of
confusion on the part of prospective customers. Thus, this Court quotes
with approval the Court of Appeals, which made reference to Emerald
Manufacturing:
Moreover, 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. It bears to emphasize that the mark "CITY
CASH WITH GOLDEN LION'S HEAD" is a mark of
respondent for its ATM services which it offers to
the public. It cannot be gainsaid that an ATM
service is not an ordinary product which could be
obtained at any store without the public noticing its
association with the banking institution that
provides said service. Naturally, the customer must
first open an account with a bank before it could
avail of its ATM service. Moreover, the name of the
banking institution is written and posted either
inside or outside the ATM booth, not to mention the
fact that the name of the bank that operates the
ATM is constantly flashed at the screen of the ATM
itself. With this, the public would accordingly be
apprised that respondent's "CITY CASH" is an ATM
service of the respondent bank, and not of the
petitioner's. 43
Petitioner argues that Emerald Manufacturing is
distinguishable from this case, insisting that ATM services are more akin
Page 58 of 65 | IPL | LAW ON TRADEMARK
to ordinary household items than they are akin to brand name jeans, in
terms of how their customers choose their providers: AScHCD
73. The Emerald Manufacturing case
involved the marks "Lee" and "Stylistic Mr. Lee," and
the Supreme Court focused on the nature of the
products as "not the ordinary household items,"
pointing to the fact that, "the average Filipino
consumer generally buys his jeans by brand. He
does not ask the sales clerk for his generic jeans
but for, say a Levis, Guess, Wrangler or even an
Armani."
74. In contrast, when an ordinary
consumer of ATM services wishes to withdraw
cash, more often than not he will simply locate the
nearest ATM, without reference to brand as long as
the ATM accepts his card. When dealing with banks
that belong to an ATM network such as Bancnet,
which both parties do, the cards are almost
universally and interchangeably accepted. 44
This scenario is unclear, and thus, unconvincing and
insufficient to support a finding of error on the part of the Court of
Appeals. Petitioner hypothesizes that there could be some confusion
because ATM users "simply locate the nearest ATM, without reference to
brand as long as the ATM accepts [their] card." 45 This Court is at a loss
to see how this supports petitioner's claims that ATM users locate the
nearest ATMs and use them without reference to brand as long as the
ATM accepts their cards. If petitioner's speculation is true, then bank
branding is wholly irrelevant after the ATM service has been secured.
This Court is hard pressed to accept this assumption. In any case, this
Court simply cannot agree that a bank or ATM service is more akin to
ordinary household items than it is to brand name jeans.
More relevant than the scenario discussed by petitioner is the
stage when a bank is trying to attract customers to avail of its services.
Petitioner points out that in advertisements, such as in radio,
newspapers, and the internet, which are shown beyond the bank
premises, there may be no golden lion's head device to disambiguate
"CITY CASH" from any of petitioner's own marks and services. 46 This
Court finds this unconvincing. ATM services, like other bank services, are
generally not marketed as independent products. Indeed, as pointed out
by petitioner itself, ATM cards accompany the basic deposit product in
most banks. 47 They are generally adjunct to the main deposit service
provided by a bank. Since ATM services must be secured and contracted
for at the offering bank's premises, any marketing campaign for an ATM
service must focus first and foremost on the offering bank. Hence, any
effective internet and newspaper advertisement for respondent would
include and emphasize the golden lion's head device. Indeed, a radio
advertisement would not have it. It should not be forgotten, however, that
a mark is a question of visuals, by statutory definition. 48 Thus, the
similarity between the sounds of "CITI" and "CITY" in a radio
advertisement alone neither is sufficient for this Court to conclude that
there is a likelihood that a customer would be confused nor can operate
to bar respondent from registering its mark. This Court notes that any
confusion that may arise from using "CITY CASH" in a radio
advertisement would be the same confusion that might arise from using
respondent's own trade name. Aurally, respondent's very trade name,
which is not questioned, could be mistaken as "CITISTATE SAVINGS
BANK," and all of petitioner's fears of possible confusion would be just as
likely.
This Court agrees with Director General Cristobal's recognition
of respondent's history and of "Citystate" as part of its name. 49 Upon
consideration, it notes that it may have been more aligned with the
purpose of trademark protection for respondent to have chosen the
trademark "CITYSTATE CASH" instead of "CITY CASH" to create a
stronger association between its trade name and the service provided.
Nonetheless, there is no law requiring that trademarks match the
offeror's trade name precisely to be registrable. The only relevant issue is
the likelihood of confusion.
This Court also recognizes that there could be other situations
involving a combination of the word "city" and another word that could
result in confusion among customers. However, it is not convinced that
this is one of those situations.
Thus, having examined the particularities of this case, this
Court affirms the Court of Appeals' finding that Director General Cristobal
of the Intellectual Property Office did not commit any grave abuse of
discretion in allowing the registration of respondent's trademark.
WHEREFORE, the petition is DENIED. The Court of Appeals
August 29, 2012 Decision and January 15, 2013 Resolution in CA-G.R. SP
No. 109679 are AFFIRMED.
SO ORDERED.
Velasco, Jr., Bersamin, Martires and Gesmundo, JJ., concur.
||| (Citigroup, Inc. v. Citystate Savings Bank, Inc., G.R. No. 205409, [June 13,
2018])
14. ABS-CBN Publishing, Inc. v. Director of the Bureau of Trademarks, G.R.
No. 217916, 20 June 2018
x
15. San Miguel Pure Foods Co., Inc. v. Foodsphere, Inc., G.R. Nos. 217781 &
217788, 20 June 2018
SECOND DIVISION
[G.R. No. 217781. June 20, 2018.]
SAN MIGUEL PURE FOODS COMPANY,
INC., petitioner, vs. FOODSPHERE, INC., respondent.
[G.R. No. 217788. June 20, 2018.]
FOODSPHERE, INC., petitioner, vs. SAN MIGUEL PURE
FOODS COMPANY, INC., respondent.
DECISION
PERALTA, J p:
Before the Court are the consolidated cases of G.R.
No. 217781 and G.R. No. 217788. On the one hand, San Miguel Pure
Foods Company, Inc. (SMPFCI) in G.R. No. 217781, filed a Petition for
Review on Certiorari under Rule 45 of the Rules of Court, questioning the
Resolution 1 dated April 8, 2015 of the Court of Appeals (CA), Former
Fourteenth Division, in CA-G.R. SP No. 131945, but only insofar as the
same resolved to delete from the body of its Decision 2 dated September
24, 2014 the award of exemplary damages. On the other hand, in G.R. No.
217788, Foodsphere, Inc., via a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, seeks to reverse and set aside the same
September 24, 2014 Decision and April 8, 2015 Resolution of the CA
declaring it guilty of unfair competition and holding it liable for damages.
The antecedent facts are as follows:
The parties herein are both engaged in the business of the
manufacture, sale, and distribution of food products, with SMPFCI
owning the trademark "PUREFOODS FIESTA HAM" while Foodsphere, Inc.
products (Foodsphere) bear the "CDO" brand. On November 4, 2010,
SMPFCI filed a Complaint 3 for trademark infringement and unfair
competition with prayer for preliminary injunction and temporary
restraining order against Foodsphere before the Bureau of Legal
Affairs (BLA) of the Intellectual Property Office (IPO) pursuant to
Sections 155 and 168 of Republic Act (R.A.) No. 8293, otherwise known
as the Intellectual Property Code (IP Code), for using, in commerce, a
colorable imitation of its registered trademark in connection with the
sale, offering for sale, and advertising of goods that are confusingly
similar to that of its registered trademark. 4
In its complaint, SMPFCI alleged that its "FIESTA" ham, first
introduced in 1980, has been sold in countless supermarkets in the
country with an average annual sales of P10,791,537.25 and is, therefore,
a popular fixture in dining tables during the Christmas season. Its
registered "FIESTA" mark has acquired goodwill to mean sumptuous ham
of great taste, superior quality, and food safety, and its trade dress
"FIESTA" combined with a figure of a partly sliced ham served on a plate
with fruits on the side had likewise earned goodwill. Notwithstanding
such tremendous goodwill already earned by its mark, SMPFCI continues
to invest considerable resources to promote the FIESTA ham, amounting
to no less than P3,678,407.95. 5
Sometime in 2006, however, Foodsphere introduced its
"PISTA" ham and aggressively promoted it in 2007, claiming the same to
be the real premium ham. In 2008, SMPFCI launched its "Dapat ganito ka-
espesyal" campaign, utilizing the promotional material showing a picture
of a whole meat ham served on a plate with fresh fruits on the side. The
ham is being sliced with a knife and the other portion, held in place by a
serving fork. But in the same year, Foodsphere launched its "Christmas
Ham with Taste" campaign featuring a similar picture. Moreover, in 2009,
Foodsphere launched its "Make Christmas even more special" campaign,
directly copying SMPFCI's "Dapat ganito ka-espesyal" campaign. Also in
2009, Foodsphere introduced its paper ham bag which looked
Page 59 of 65 | IPL | LAW ON TRADEMARK
significantly similar to SMPFCI's own paper ham bag and its trade dress
and its use of the word "PISTA" in its packages were confusingly similar
to SMPFCI's "FIESTA" mark. 6
Thus, according to SMPFCI, the striking similarities between
the marks and products of Foodsphere with those of SMPFCI warrant its
claim of trademark infringement on the ground of likelihood of confusion
as to origin, and being the owner of "FIESTA," it has the right to prevent
Foodsphere from the unauthorized use of a deceptively similar mark. The
word "PISTA" in Foodsphere's mark means "fiesta," "feast," or "festival"
and connotes the same meaning or commercial impression to the buying
public of SMPFCI's "FIESTA" trademark. Moreover, "FIESTA" and "PISTA"
are similarly pronounced, have the same number of syllables, share
common consonants and vowels, and have the same general
appearance in their respective product packages. In addition, the
"FIESTA" and "PISTA" marks are used in the same product which are
distributed and marketed in the same channels of trade under similar
conditions, and even placed in the same freezer and/or displayed in the
same section of supermarkets. Foodsphere's use, therefore, of the
"PISTA" mark will mislead the public into believing that its goods
originated from, or are licensed or sponsored by SMPFCI, or that
Foodsphere is associated with SMPFCI, or its affiliate. The use of the
"PISTA" trademark would not only result in likelihood of confusion, but in
actual confusion. 7
Apart from trademark infringement, SMPFCI further alleged
that Foodsphere is likewise guilty of unfair competition. This is because
there is confusing similarity in the general appearance of the goods of
the parties and intent on the part of Foodsphere, to deceive the public
and defraud SMPFCI. According to SMPFCI, there is confusing similarity
because the display panel of both products have a picture of a partly
sliced ham served on a plate of fruits, while the back panel features other
ham varieties offered, both "FIESTA" and "PISTA" are printed in white bold
stylized font, and the product packaging for both "FIESTA" and "PISTA"
consists of box-typed paper bags made of cardboard materials with cut-
out holes on the middle top portion for use as handles and predominantly
red in color with a background design of Christmas balls, stars,
snowflakes, and ornate scroll. Moreover, Foodsphere's intent to deceive
the public is seen from its continued use of the word "PISTA" for its ham
products and its adoption of packaging with a strong resemblance of
SMPFCI's "FIESTA" ham packaging. For SMPFCI, this is deliberately
carried out for the purpose of capitalizing on the valuable goodwill of its
trademark and causing not only confusion of goods but also confusion
as to the source of the ham product. Consequently, SMPFCI claimed to
have failed to realize income of at least P27,668,538.38 and P899,294.77
per month in estimated actual damages representing foregone income in
sales. Thus, it is entitled to actual damages and attorney's fees. 8
For its part, Foodsphere denied the charges of trademark
infringement and countered that the marks "PISTA" and "PUREFOODS
FIESTA HAM" are not confusingly similar and are, in fact, visually and
aurally distinct from each other. This is because PISTA is always used in
conjunction with its house mark "CDO" and that "PUREFOODS FIESTA
HAM" bears the housemark "PUREFOODS," rendering confusion
impossible. Moreover, Foodsphere maintained that SMPFCI does not
have a monopoly on the mark "FIESTA" for the IPO database shows that
there are two (2) other registrations for "FIESTA," namely "FIESTA
TROPICALE" and "HAPPY FIESTA." Also, there are other products in
supermarkets that bear the mark "FIESTA" such as "ARO FIESTA HAM,"
"ROYAL FIESTA," and "PUREGOLD FIESTA HAM," but SMPFCI has done
nothing against those manufacturers, making it guilty of estoppel in pais,
and is, therefore, estopped from claiming that the use of other
manufacturers of the mark "FIESTA" will result in confusion and/or
damage to itself. Even assuming that the marks are confusingly similar,
Foodsphere asserted that it is SMPFCI who is guilty of infringement vis-à-
vis its registered trademark "HOLIDAY," a translation and word bearing
the same meaning as "FIESTA." Foodsphere has been using its
"HOLIDAY" trademark since 1970 and had registered the same in 1986,
while SMPFCI registered its "FIESTA" trademark only in 2007. In fact,
Foodsphere noted that it has been using "PISTA" since 2006 which is
earlier than SMPFCI's filing for registration of "FIESTA" in 2007. In
addition, Foodsphere asseverated that SMPFCI cannot appropriate for
itself images of traditional utensils and garnishing of ham in its
advertisements. Confusion between the marks, moreover, is rendered
impossible because the products are sold in booths manned by different
"promodisers." Also, hams are expensive products and their purchasers
are well-informed not only as to their features but also as to the
manufacturers thereof. 9
Furthermore, Foodsphere similarly denied the allegation that it
is guilty of unfair competition or passing off its product as that of
SMPFCI. As mentioned, the "PISTA" and "FIESTA" labels are substantially
different in the manner of presentation, carrying their respective house
marks. Moreover, its paper ham bags are labeled with their respective
house marks and are given to consumers only after purchase, hence,
they do not factor in when the choice of ham is being made. Also,
Foodsphere claims to have been using the red color for its boxes and it
was SMPFCI, by its own admission, that switched colors from green to
red in 2009 for its own ham bags. 10
On July 17, 2012, the BLA, through its Director, rendered its
Decision 11 dismissing SMPFCI's complaint for lack of merit. First, the
BLA held that there could be no trademark infringement because
Foodsphere began using the "PISTA" mark in 2006 and even filed a
trademark application therefor in the same year, while SMPFCI's
application for trademark registration for "FIESTA" was filed and
approved only in 2007. SMPFCI, thus, had no cause of action. Second,
SMPFCI's complaint was filed beyond the four (4)-year prescriptive
period prescribed under the Rules and Regulations on Administrative
Complaints for Violation of Law Involving Intellectual Property
Rights. Third, the BLA found the testimonies and surveys adduced in
evidence by SMPFCI to be self-serving. Fourth, comparing the competing
marks would not lead to confusion, much less deception of the
public. Finally, the BLA ruled that SMPFCI failed to convincingly prove the
presence of the elements of unfair competition. 12
On September 10, 2013, however, the Office of the Director
General partially granted SMPFCI's appeal, affirming the BLA's ruling on
the absence of trademark infringement but finding Foodsphere liable for
unfair competition. 13 The Director General held that one can see the
obvious differences in the marks of the parties. SMPFCI's mark is a
composite mark where its house mark, namely "PUREFOODS," is clearly
indicated and is followed by the phrase "FIESTA HAM" written in stylized
font whereas Foodsphere's mark is the word "PISTA" written also in
stylized font. Applying the 'Dominancy Test' and the 'Holistic Test' show
that Foodsphere cannot be held liable for trademark infringement due to
the fact that the marks are not visually or aurally similar and that the
glaring differences in the presentation of these marks will prevent any
likely confusion, mistake, or deception to the purchasing public.
Moreover, "PISTA" was duly registered in the IPO, strengthening the
position that "PISTA" is not an infringement of "PUREFOODS FIESTA
HAM" for a certificate 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. 14 On the other hand,
the Director General found Foodsphere to be guilty of unfair competition
for it gave its "PISTA" ham the general appearance that would likely
influence purchasers to believe that it is similar with SMPFCI's "FIESTA"
ham. Moreover, its intention to deceive is inferred from the similarity of
the goods as packed and offered for sale. Thus, the Director General
ordered Foodsphere to pay nominal damages in the amount of
P100,000.00 and attorney's fees in the amount of P300,000.00 and to
cease and desist from using the labels, signs, prints, packages, wrappers,
receptacles, and materials used in committing unfair competition, as well
as the seizure and disposal thereof. 15
Both SMPFCI and Foodsphere filed their appeals before the
CA via Petitions for Review dated October 8, 2013 16 and October 29,
2013, 17 respectively. SMPFCI sought a reconsideration of the Director
General's finding that Foodsphere is not guilty of trademark infringement
while Foodsphere faulted said Director General for declaring it guilty of
unfair competition.
On March 6, 2014, the CA, Eleventh Division, denied SMPFCI's
petition and affirmed the ruling of the Director General on the absence of
trademark infringement. According to the appellate court, Foodsphere
was merely exercising, in good faith, its right to use its duly registered
trademark "PISTA" in the lawful pursuit of its business. 18 Thereafter, in a
Decision dated September 24, 2014, the CA Fourteenth Division likewise
denied Foodsphere's petition, affirming the Director General's finding that
Foodsphere was guilty of unfair competition. The CA held that the
elements thereof are present herein. Consequently, it ordered
Foodsphere to pay SMPFCI nominal and exemplary damages as well as
attorney' fees. 19 In a Resolution dated April 8, 2015, however, the CA
clarified its September 24, 2014 Decision and resolved to delete the
award of exemplary damages for SMPFCI never prayed for the same. 20
In a Resolution 21 dated June 13, 2016, the Court, in G.R. No.
215475, denied SMPFCI's Petition for Review on Certiorari for failure to
sufficiently show that the CA, in its Decision and Resolution, dated March
6, 2014 and November 13, 2014, respectively, finding that Foodsphere is
not liable for trademark infringement, and committed any reversible error
in the challenged decision and resolution as to warrant the exercise of
Page 60 of 65 | IPL | LAW ON TRADEMARK
the Court's discretionary appellate jurisdiction. The Court also found that
the issues raised by SMPFCI are factual in nature.
Meanwhile, on June 8, 2015, both SMPFCI and Foodsphere
filed the instant Petitions for Review on Certiorari docketed as G.R.
Nos. 217781 and 217788, respectively. In G.R. No. 217781, SMPFCI
invoked the following argument:
I.
THE HONORABLE COURT OF APPEALS ERRED IN
RESOLVING THAT THE AWARD OF EXEMPLARY
DAMAGES BE DELETED FROM THE BODY OF ITS
DECISION DATED 24 SEPTEMBER 2014 WHEN
SMPFCI'S ENTITLEMENT THERETO IS CLEARLY
SUPPORTED NOT ONLY BY PLEADINGS AND
EVIDENCE ON RECORD, BUT ALSO BY THE
HONORABLE COURT OF APPEALS' OWN
RATIOCINATIONS FOUND IN THE BODY OF ITS
DECISION.
Conversely, G.R. No. 217788, Foodsphere raised the following
argument:
I.
THE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN EXCESS OF OR
AMOUNTING TO LACK OF JURISDICTION WHEN IT
ISSUED THE ASSAILED DECISION AND
RESOLUTION BEING NOT IN ACCORDANCE WITH
LAW OR WITH APPLICABLE DECISIONS OF THE
HONORABLE COURT WHEN IT DECLARED THAT
FOODSPHERE WAS GUILTY OF UNFAIR
COMPETITION.
In G.R. No. 217781, SMPFCI clarifies that it assails the April 8,
2015 Resolution of the CA, not on its finding that Foodsphere was guilty
of unfair competition, but only insofar as it deleted its award of
exemplary damages in its September 24, 2014 Decision. According to
SMPFCI, it was a mere mistake that the said Decision failed to state the
amount of exemplary damages and that its dispositive portion failed to
award said exemplary damages, merely stating that "the petition is
DENIED, and the Decision x x x of the Director General is
AFFIRMED." 22 SMPFCI asserts that where there is a conflict between
the dispositive portion and the body of the decision, the dispositive
portion controls. But where the inevitable conclusion from the body of
the decision is so clear as to show that there was a mistake in the
dispositive portion, the body of the decision will prevail. 23 Here, when
the CA held that "as for exemplary damages, the award thereof was
warranted," it is beyond cavil that SMPFCI is entitled thereto.
Moreover, SMPFCI maintains that the CA ruling that it never
prayed for exemplary damages in the proceedings, its prayer for
damages being limited only to actual damages and attorney's fees, is
utterly false for it specifically prayed for the same in several pleadings it
filed before the BLA and the Office of the Director General. Even
assuming that it indeed failed to pray for exemplary damages, SMPFCI
alleges that it was still erroneous for the CA to delete the award of the
same. It is well settled that a court may grant relief to a party, even if said
party did not pray for it in his pleadings for a prayer for "other remedies
just and equitable under the premises" is broad enough to justify the
extension of a remedy different from that requested. Thus, in view of the
foregoing, coupled with the factual circumstances of the case leading to
the conclusion that Foodsphere is guilty of unfair competition, SMPFCI
essentially prays that the Court: (1) issue a permanent injunction against
Foodsphere to prevent it from infringing the rights of SMPFCI by seizing
all products violative of SMPFCI's IP rights and by forfeiting all properties
used in the infringing acts; (2) order Foodsphere to pay SMPFCI the
amount of P27,668,538.38, representing lost income of SMPFCI,
P899,294.77 per month in estimated actual damages, or moderate or
temperate damages; (3) order Foodsphere to pay attorney's fees in the
amount of P300,000.00; and (4) order Foodsphere to pay exemplary
damages in the amount of P300,000.00. 24
In G.R. No. 217788, Foodsphere denied the allegations of
unfair competition, denying SMPFCI's claim that the confusing similarity
between the respective packaging of the parties' products began in 2009
when Foodsphere changed its packaging from a paper box to a paper
ham bag, significantly similar to SMPFCI's paper ham bag. According to
Foodsphere, while the packages were both in the form of bags, their
respective trademarks were boldly printed thereon. Moreover, even prior
to SMPFCI's use of the questioned ham bags in 2009, Foodsphere had
already been adopting the image of partly-sliced hams laced with fruits
and red color on its packages. 25 In addition, Foodsphere alleged that
any similarity in the general appearance of the packaging does not, by
itself, constitute unfair competition. This is because first, packaging is
not the exclusive ownership of SMPFCI which does not have a patent or
trademark protection therefor. Second, the mere fact of being the first
user does not bestow vested right to use the packaging to the exclusion
of everyone else. Third, the circumstance that the manufacturer has
printed its name all over the packaging negates fraudulent intent to palm
off its goods as another's product. Fourth, SMPFCI cannot claim that it
has exclusive right or monopoly to use the colors red and green in its
packaging or the image of partly sliced hams. Fifth, similarity in the
packaging does not necessarily constitute "confusing" similarity. Sixth,
the circumstances under which the competing products are sold negates
the likelihood of confusion for consumers are more discerning on the
Christmas ham they will purchase, which is not any ordinary, low priced
product. Seventh, SMPFCI failed to prove likelihood of confusion or intent
to deceive on the part of Foodsphere. Finally, Foodsphere maintained
that there was no basis for the CA to award nominal damages and
attorney's fees in view of the absence of any violation of SMPFCI's
right. 26
The petitions are devoid of merit.
With respect to G.R. No. 217781, the Court finds no reason to
reverse the April 8, 2015 Resolution of the CA insofar as it resolved to
delete from the body of its September 24, 2014 Decision the award of
exemplary damages. SMPFCI said so itself, when there is a conflict
between the dispositive portion or fallo of a decision and the opinion of
the court contained in the text or body of the judgment, the former
prevails over the latter. This rule rests on the theory that the fallo is the
final order, while the opinion in the body is merely a statement ordering
nothing. Thus, an order of execution is based on the disposition, not on
the body, of the Decision. 27 Contrary to SMPFCI's assertion, moreover,
the Court finds inapplicable the exception to the foregoing rule which
states that the body of the decision will prevail in instances where the
inevitable conclusion from the body of the decision is so clear as to show
that there was a mistake in the dispositive portion.
A cursory perusal of the challenged September 24, 2014
Decision reveals that the mistake lies not in the fallo or dispositive
portion but in the body thereof, the pertinent portions of which provide:
Having been found guilty of unfair
competition, Foodsphere was correctly ordered to
pay nominal damages of P100,000.00. Under
Article 2221 of the Civil Code, nominal damages
are recoverable in order to vindicate or recognize
the rights of the plaintiff which have been violated
or invaded by the defendant. x x x
As for SMPFCI's claim for lost profit or
unrealized income of more than P27 Million, its
failure to properly substantiate the same left the
Office of the Director General without any basis to
award it.
As for exemplary damages, the award
thereof was warranted on the strength of In-N-
Out Burger, Inc. v. Sehwani, for correction or
example for public good, such as the enhancement
of the protection accorded to intellectual property
and the prevention of similar acts of unfair
competition. The award of attorney's fees must
likewise be upheld as SMPFCI was compelled to
engage the services of counsel to protect its
rights. 28
As can be gleaned from above, the intention of the CA was
merely to affirm the findings of the Director General insofar as the award
of damages was concerned. This was shown in its statements such as
"Foodsphere was correctly ordered to pay nominal damages," "its failure
to properly substantiate the same left the Office of the Director General
without any basis to award it," "as for exemplary damages, the award
thereof was warranted," and "the award of attorney's fees must likewise
be upheld." This was also shown when the CA clearly disposed as
follows: "ACCORDINGLY, the petition is DENIED, and the Decision dated
September 10, 2013 of the Office of the Director General,
AFFIRMED." 29 It can, therefore, be derived, from the wording of the CA
Decision, that it merely intended to adopt the resolution of the Director
General on the award of damages. Consequently, since nowhere in the
Page 61 of 65 | IPL | LAW ON TRADEMARK
affirmed Decision did the Director General award exemplary damages to or in any other feature of their
SMPFCI, for what was awarded was only nominal damages and appearance, which would be
attorney's fees, it follows then that the CA likewise did not intend on likely to influence purchasers
awarding the same to SMPFCI. Thus, what controls herein is the fallo. to believe that the goods
offered are those of a
Besides, it bears stressing that SMPFCI failed to prove its manufacturer or dealer, other
entitlement to exemplary damages. Article 2233 of the Civil than the actual manufacturer
Code provides that exemplary damages cannot be recovered as a matter or dealer, or who otherwise
of right; the court will decide whether or not they should be adjudicated clothes the goods with such
while Article 2234 thereof provides that while the amount of the appearance as shall deceive
exemplary damages need not be proven, the plaintiff must show that he the public and defraud
is entitled to moral, temperate or compensatory damages before the another of his legitimate
court may consider the question of whether or not exemplary damages trade, or any subsequent
should be awarded. vendor of such goods or any
Thus, the Court has held, time and again, that exemplary agent of any vendor engaged
damages may be awarded for as long as the following requisites are in selling such goods with a
present: (1) they may be imposed, by way of example, only in addition, like purpose;
among others, to compensatory damages, only after the claimant's right (b) Any person
to them has been established, and cannot be recovered as a matter of who by any artifice, or device,
right, their determination depending upon the amount of compensatory or who employs any other
damages that may be awarded to the claimant; (2) the claimant must means calculated to induce
first establish his right to moral, temperate, liquidated or compensatory the false belief that such
damages; and (3) the act must be accompanied by bad faith or done in a person is offering the
wanton, fraudulent, oppressive or malevolent manner. 30 services of another who has
Here, SMPFCI particularly failed to prove its right to moral, identified such services in the
temperate, liquidated or compensatory damages. In its complaint, mind of the public; or
SMPFCI prayed that Foodsphere be ordered to pay P27,668,538.38 (c) Any person
representing income it would have made if not for the infringement and who shall make any false
P899,294.77 per month in estimated actual damages, representing statement in the course of
foregone income in sales for the continuous use of the "PISTA" mark in trade or who shall commit
connection with the selling, offering for sale and distribution of its ham any other act contrary to
product during the pendency of the case. 31 But as the Director General good faith of a nature
aptly found, SMPFCI neither adduced sufficient evidence to prove its calculated to discredit the
claim of foregone income or sales nor presented evidence to show the goods, business or services
profit or sales. Thus, in view of such failure to prove its right to of another.
compensatory damages, as well as to moral and temperate damages,
the CA correctly resolved to delete from the body of its September 24, 168.4. The remedies provided by
2014 Decision the award of exemplary damages. Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29, R.A. No. 166a)
As regards G.R. No. 217788, the Court likewise affirms the
ruling of the CA, which in turn, affirmed the findings of the Director Time and again, the Court has held that unfair competition
General. consists of 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
Section 168 of the IP Code provides that: business of another with the end and probable effect of deceiving the
Section 168. Unfair Competition, Rights, public. Passing off (or palming off) takes place where the defendant, by
Regulation and Remedies. — 168.1. A person who imitative devices on the general appearance of the goods, misleads
has identified in the mind of the public the goods prospective purchasers into buying his merchandise under the
he manufactures or deals in, his business or impression that they are buying that of his competitors. In other words,
services from those of others, whether or not a the defendant gives his goods the general appearance of the goods of
registered mark is employed, has a property right in his competitor with the intention of deceiving the public that the goods
the goodwill of the said goods, business or services are those of his competitor. 32 The "true test," therefore, of unfair
so identified, which will be protected in the same competition has thus been "whether the acts of the defendant have the
manner as other property rights. intent of deceiving or are calculated to deceive the ordinary buyer making
his purchases under the ordinary conditions of the particular trade to
168.2. Any person who shall employ which the controversy relates." 33
deception or any other means contrary to good
faith by which he shall pass off the goods Thus, the essential elements of an action for unfair
manufactured by him or in which he deals, or his competition are: (1) confusing similarity in the general appearance of the
business, or services for those of the one having goods; and (2) intent to deceive the public and defraud a competitor. The
established such goodwill, or who shall commit any confusing similarity may or may not result from similarity in the marks,
acts calculated to produce said result, shall be but may result from other external factors in the packaging or
guilty of unfair competition, and shall be subject to presentation of the goods. The intent to deceive and defraud may be
an action therefor. inferred from the similarity of the appearance of the goods as offered for
sale to the public. Actual fraudulent intent need not be shown. 34
168.3. In particular, and without in any
way limiting the scope of protection against unfair In the instant case, the Court finds no error with the findings of
competition, the following shall be deemed guilty of the CA and Director General insofar as the presence of the foregoing
unfair competition: elements is concerned. First of all, there exists a substantial and
confusing similarity in the packaging of Foodsphere's product with that
(a) Any person, of SMPFCI, which, as the records reveal, was change by Foodsphere from
who is selling his goods and a paper box to a paper ham bag that is significantly similar to SMPFCI's
gives them the general paper ham bag. As duly noted by the Director General and the CA, both
appearance of goods of packages use paper ham bags as the container for the hams, both paper
another manufacturer or ham bags use the color as the main colors, and both have the layout
dealer, either as to the goods design appearing on the bags consisting of a partly sliced ham and fruits
themselves or in the on the front and other ham varieties offered at the back. Thus,
wrapping of the packages in Foodsphere's packaging in its entirety, and not merely its "PISTA" mark
which they are contained, or thereon, renders the general appearance thereof confusingly similar with
the devices or words thereon, the packaging of SMPFCI's ham, that would likely influence purchasers to

Page 62 of 65 | IPL | LAW ON TRADEMARK

 believe that these products are similar, if not the same, as those of
SMPFCI.
Second of all, Foodsphere's intent to deceive the public, to
defraud its competitor, and to ride on the goodwill of SMPFCI's products
is evidenced by the fact that not only did Foodsphere switch from its old
box packaging to the same paper ham bag packaging as that used by
SMPFCI, it also used the same layout design printed on the same. As the
Director General observed, why, of the millions of terms and
combinations of letters, designs, and packaging available, Foodsphere
had to choose those so closely similar to SMPFCI's if there was no intent
to pass off upon the public the ham of SMPFCI as its own with the end
and probable effect of deceiving the public.
At this juncture, it is worthy to note that unfair competition is
always a question of fact. There is no inflexible rule that can be laid down
as to what will constitute the same, each case being, in the measure, a
law unto itself. Thus, the question to be determined is whether or not, as
a matter of fact, the name or mark used by the defendant has previously
come to indicate and designate plaintiff's goods, or, to state it in another
way, whether defendant, as a matter of fact, is, by his conduct, passing
off defendant's goods as plaintiff's goods or his business as plaintiff's
business. 35 As such, the Court is of the opinion that the case records
readily supports the findings of fact made by the Director General as to
Foodsphere's commission of unfair competition. Settled is the rule that
factual findings of administrative agencies are generally accorded
respect and even finality by this Court, if such findings are supported by
substantial evidence, as it is presumed that these agencies have the
knowledge and expertise over matters under their jurisdiction, 36 more
so when these findings are affirmed by the Court of Appeals. 37
WHEREFORE, premises considered, the instant petitions in
G.R. Nos. 217781 and 217788 are DENIED. The assailed Decision dated
September 24, 2014 and Resolution dated April 8, 2015 of the Court of
Appeals in CA-G.R. SP No. 131945 are hereby AFFIRMED.
SO ORDERED.
Carpio, Perlas-Bernabe, Caguioa and Reyes, Jr., JJ., concur
||| (San Miguel Pure Foods Co., Inc. v. Foodsphere, Inc., G.R. Nos. 217781 &
217788, [June 20, 2018])
16. Asia Pacific Resources International Holdings, Ltd. V. Paperone, Inc., G.R.
Nos. 213365-66, 10 December 2018
THIRD DIVISION
[G.R. Nos. 213365-66. December 10, 2018.]
ASIA PACIFIC RESOURCES INTERNATIONAL
HOLDINGS, LTD., petitioner, vs. PAPERONE,
INC., respondent.
DECISION
GESMUNDO, J p:
Before the Court is a Petition for Review on Certiorari 1 under
Rule 45 of the Rules of Court, assailing the November 28, 2013
Decision 2 and the July 9, 2014 Resolution 3 of the Court of
Appeals (CA) in CA-G.R. SP Nos. 122288 and 122535. The CA reversed
and set aside the November 10, 2011 Decision 4 of the Intellectual
Property Office (IPO) Director General, finding Paperone,
Inc. (respondent) liable for unfair competition.
The Facts
The dispute in this case arose from a complaint for unfair
competition, trademark infringement, and damages filed against
respondent by Asia Pacific Resources International Holdings,
Ltd. (petitioner).
Petitioner is engaged in the production, marketing, and sale of
pulp and premium wood free paper. 5 It alleged that it is the owner of a
well-known trademark, PAPER ONE, with Certificate of Registration No. 4-
1999-01957 issued on September 5, 2003. 6 The said trademark enjoyed
legal protection in different countries worldwide and enjoyed goodwill
and high reputation because of aggressive marketing and promotion.
Petitioner claimed that the use of PAPERONE in respondent's corporate
name without its prior consent and authority was done in bad faith and
designed to unfairly ride on its good name and to take advantage of its
goodwill. It was calculated to mislead the public into believing that
respondent's business and/or products were manufactured, licensed or
sponsored by petitioner. It was also alleged that respondent had
presumptive, if not actual knowledge, of petitioner's rights to the
trademark PAPER ONE, even prior to respondent's application for
registration of its corporate name before the Securities and Exchange
Commission (SEC). 7
Respondent, on its part, averred that it had no obligation to
secure prior consent or authority from petitioner to adopt and use its
corporate name. The Department of Trade and Industry (DTI) and the
SEC had allowed it to use Paperone, Inc., thereby negating any violation
on petitioner's alleged prior rights. Respondent was registered with the
SEC, having been organized and existing since March 30, 2001. Its
business name was likewise registered with the DTI. Respondent also
denied any awareness of the existence of petitioner and/or the
registration of PAPER ONE, as the latter is a foreign corporation not
doing business in the Philippines. While the business of respondent dealt
with paper conversion such as manufacture of table napkins, notebooks
and intermediate/collegiate writing pads, it did not use its corporate
name PAPERONE on any of its products. Further, its products had been
widely sold in the Philippines even before petitioner could claim any
business transaction in the country. The public could not have possibly
been deceived into believing that any relation or sponsorship existed
between the parties, considering these circumstances. 8 HESIcT
In its decision, 9 the Bureau of Legal Affairs (BLA) Director,
Intellectual Property Office, found respondent liable for unfair
competition. It ordered respondent to cease and desist from using
PAPERONE in its corporate name, and to pay petitioner P300,000.00, as
temperate damages; P200,000.00, as exemplary damages; and
P100,000.00, as attorney's fees. It ruled that petitioner was the first to
use PAPER ONE in 1999 which had become a symbol of goodwill of its
paper business. Respondent's use of PAPERONE in its corporate name
was to benefit from the established goodwill of petitioner. There was,
however, no trademark infringement since PAPER ONE was registered in
the Philippines only in 2003. 10
On appeal to the IPO Director General, the BLA decision was
affirmed with modification insofar as the increase in the award of
attorney's fees to P300,000.00. 11
The CA Ruling
Both parties appealed to the CA. Petitioner maintained that it
was entitled to actual damages amounting to P46,032,569.72 due to
unfair competition employed by respondent. Respondent claimed that it
was not liable for unfair competition.
In its decision, the CA reversed and set aside the IPO Director
General's decision. It held that there was no confusing similarity in the
general appearance of the goods of both parties. Petitioner failed to
establish through substantial evidence that respondent intended to
deceive the public or to defraud petitioner. Thus, the essential elements
of unfair competition were not present. 12
ISSUES
In the petition before us, petitioner raises various issues for
our resolution. However, given the facts of this case, we find that the only
issues to be resolved are:
I.
WHETHER RESPONDENT IS LIABLE FOR UNFAIR
COMPETITION, and
II.
WHETHER PETITIONER IS ENTITLED TO ACTUAL
DAMAGES.
OUR RULING
Page 63 of 65 | IPL | LAW ON TRADEMARK
 The core of the controversy is the adoption of "PAPERONE" in
the trade name of respondent, which petitioner claims it has prior right to,
since it was the first to use it as its trademark for its paper products.
Petitioner claims that respondent committed unfair competition by
adopting PAPERONE in its trade name. It is noteworthy that the issue of
trademark infringement is not the subject of the appeal before us. It can easily be observed that both have the same spelling and
are pronounced the same. Although respondent has a different logo, it
The relevant provisions of the Intellectual Property was always used together with its trade name. It bears to emphasize
Code 13 provide: that, initially, respondent's trade name had separate words that read
"Paper One, Inc." under its original Articles of Incorporation. This was
SECTION 168. Unfair Competition, later on revised to make it one word, and now reads "Paperone, Inc." 19
Rights, Regulation and Remedies. —
At first glance, respondent may be correct that there would be
168.1. A person who has identified in the no confusion as to the presentation or packaging of its products since it
mind of the public the goods he manufactures or is not using its corporate name as a trademark of its goods/products.
deals in, his business or services from those of There is an apparent dissimilarity of presentation of the trademark
others, whether or not a registered mark is PAPER ONE and the trade name and logo of Paperone, Inc. Nevertheless,
employed, has a property right in the goodwill of a careful scrutiny of the mark shows that the use of PAPERONE by
the said goods, business or services so identified, respondent would likely cause confusion or deceive the ordinary
which will be protected in the same manner as purchaser, exercising ordinary care, into believing that the goods bearing
other property rights. the mark are products of one and the same enterprise.
168.2. Any person who shall employ Relative to the issue on confusion of marks and trade names,
deception or any other means contrary to good jurisprudence has noted two types of confusion, viz.: (1) confusion of
faith by which he shall pass off the goods goods (product confusion), where the ordinarily prudent purchaser would
manufactured by him or in which he deals, or his be induced to purchase one product in the belief that he was purchasing
business, or services for those of the one having the other; and (2) confusion of business (source or origin confusion),
established such goodwill, or who shall commit any where, although the goods of the parties are different, the product, the
acts calculated to produce said result, shall be mark of which registration is applied for by one party, is such as might
guilty of unfair competition, and shall be subject to reasonably be assumed to originate with the registrant of an earlier
an action therefor. product; and the public would then be deceived either into that belief or
168.3. In particular, and without in any into the belief that there is some connection between the two parties,
way limiting the scope of protection against unfair though inexistent. 20 Thus, while there is confusion of goods when the
competition, the following shall be deemed guilty of products are competing, confusion of business exists when the products
unfair competition: are non-competing but related enough to produce confusion of
affiliation. 21 cDHAES
(a) Any person,
who is selling his goods and This case falls under the second type of confusion. Although
gives them the general we see a noticeable difference on how the trade name of respondent is
appearance of goods of being used in its products as compared to the trademark of petitioner,
another manufacturer or there could likely be confusion as to the origin of the products. Thus, a
dealer, either as to the goods consumer might conclude that PAPER ONE products are manufactured
themselves or in the by or are products of Paperone, Inc. Additionally, although respondent
wrapping of the packages in claims that its products are not the same as petitioner's, the goods of the
which they are contained, or parties are obviously related as they are both kinds of paper products.
the devices or words thereon, The BLA Director aptly ruled that "[t]o permit respondent to
or in any other feature of their continue using the same or identical Paperone in its corporate name
appearance, which would be although not [used] as label for its paper products, but the same line of
likely to influence purchasers business, that of manufacturing goods such as PAPER PRODUCTS,
to believe that the goods therefore their co-existence would result in confusion as to source of
offered are those of a goods and diversion of sales to [r]espondent knowing that purchasers
manufacturer or dealer, other are getting products from [petitioner] APRIL with the use of the corporate
than the actual manufacturer name Paper One, Inc. or Paperone, Inc. by herein [r]espondent." 22
or dealer, or who, otherwise,
clothes the goods with such The matter of prior right over PAPERONE, again, is a matter of
appearance as shall deceive factual determination; therefore, we give credence to the findings of the
the public and defraud IPO, who has the expertise in this matter, being supported by substantial
another of his legitimate evidence. The Court has consistently recognized the specialized
trade, or any subsequent functions of the administrative agencies — in this case, the IPO. Berris
vendor of such goods or any Agricultural Co., Inc. v. Abyadang 23 states, thus:
agent of any vendor engaged
in selling such goods with a The determination of priority of use of a
like purpose. mark is a question of fact. Adoption of the mark
alone does not suffice. One may make
The essential elements of an action for unfair competition are: advertisements, issue circulars, distribute price
(1) confusing similarity in the general appearance of the goods, and (2) lists on certain goods, but these alone will not inure
intent to deceive the public and defraud a competitor. 14 Unfair to the claim of ownership of the mark until the
competition is always a question of fact. 15 At this point, it bears to goods bearing the mark are sold to the public in the
stress that findings of fact of the highly technical agency — the IPO — market. Accordingly, receipts, sales invoices, and
which has the expertise in this field, should have been given great weight testimonies of witnesses as customers, or orders
by the Court of Appeals. 16 TAIaHE of buyers, best prove the actual use of a mark in
trade and commerce during a certain period of
a) Confusing similarity time.
As to the first element, the confusing similarity may or may
not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. 17 Likelihood of xxx xxx xxx
confusion of goods or business is a relative concept, to be determined
only according to peculiar circumstances of each case. 18
The marks under scrutiny in this case are hereby reproduced Verily, the protection of trademarks as
for easy reference: intellectual property is intended not only to

Page 64 of 65 | IPL | LAW ON TRADEMARK

 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. 24 (Emphasis supplied)
The BLA Director found, as affirmed by the IPO Director
General, that it was petitioner who has priority rights over PAPER ONE,
thus:
One essential factor that has led this
Office to tilt the scales of justice in favor of
Complainant is the latter's establishment of prior
use of the word PaperOne for paper products in the
Philippines. Records will show that there was prior
use and adoption by Complainant of the word
"PaperOne." PaperOne was filed for trademark
registration on 22 March 1999 (Exhibit "D",
Complainant) in the name of Complainant Asia
Pacific Resources International Holdings, Ltd. and
matured into registration on 10 February 2003.
Respondent's corporate or trade name is Paper
One, Inc. which existed and was duly registered
with the Securities and Exchange Commission on
31 March 2001 (Exhibit "11", Respondent). If
anyone files a suit and can prove priority of
adoption, he can assert his right to the exclusive
use of a corporate name with freedom from
infringement by similarity (Philips Export B.V., et al.
vs. CA, G.R. No. 96161). Respondent was
incorporated in March 2001 by virtue of SEC
Registration No. A200104788 (Exhibit "11",
Complainant) and was registered two (2) years
thereafter as business name with the Department
of Trade and Industry under DTI Business Name
Registration No. 00068456 (Exhibit "13",
Respondent). Complainant Asia Pacific Resources
International Holdings, Ltd., APRIL for brevity,
presented evidence of its use of the label PaperOne
on paper products in the Philippines earlier than the
date of its trademark application in 1999 when its
marketing and promotion agent JND International
Corporation ("JND" for brevity) licensed one of its
clients, National Paper Products & Printing
Corporation ("NAPPCO" for brevity) to import, sell
and distribute Complainant's APRIL paper products
in 1998 (par. 3, Exhibit "AA", Complainant). To
support this declaration are documents evidencing
transactions of NAPPCO with Complainant APRIL
with the earliest documented transaction on 22
January 1999 (Exhibit "G", Complainant) bearing
[I]nvoice [N]o. LCA9812133. ASEcHI
[The] fact of earlier use was not
disputed by the Respondent. In point of fact,
Respondent already knew of Complainant's APRIL
existence prior to Respondent's incorporation as
Paper One, Inc. in 2001. Most of the incorporators
of National Paper Products & Printing Corporation
or NAPPCO for brevity (Exhibits "H" and "H-A" to
"H-H", Complainant) which in late 1990s
transacted with Complainant APRIL through
Invoice No. LCA9812133 dated 22 January 1999,
the earliest invoice noted (Exhibit "G",
Complainant) are likewise incorporators of Paper
One, Inc. (Exhibit "11", Respondent) namely Tan
Tian Siong, Chong Ping Tat, Thelma J. Uy,
Conchita Francisco, Sy Siong Sun, to name a few.
Also, NAPPCO, through Complainant's marketing
and promotion agent JND International
Corporation, or JND for brevity (Exhibit "AA",
Complainant) expressed interest in a letter dated
19 January 2000 to work with JND and APRIL, as
its exclusive distributor and we quote "to become
your exclusive distributor of 'Paper One' Multi
Purpose Copy Paper" (Exhibit "AA-1-d",
Complainant). Worth mentioning at this point is the
jurisprudence pronounced in the case of Converse
Rubber Corporation vs. Universal Rubber Products,
Inc. and Tiburcio S. Evalle (G.R. No. L-27906, Jan.
18, 1987) where the court said:
Knowing therefore that the
word "CONVERSE"' belongs to
and is being used by
petitioner, and is in fact the
dominant word in petitioner's
corporate name, respondent
has no right to appropriate
the same for use on its
products which are similar to
those being produced by
petitioner. 25 (Emphasis
supplied)
b) intent to deceive the public and defraud a competitor
The element of intent to deceive and to defraud may be
inferred from the similarity of the appearance of the goods 26 as offered
for sale to the public. 27 Contrary to the ruling of the CA, actual
fraudulent intent need not be shown. 28 Factual circumstances were
established showing that respondent adopted PAPERONE in its trade
name even with the prior knowledge of the existence of PAPER ONE as a
trademark of petitioner. As in all other cases of colorable imitations, the
unanswered riddle is why, of the millions of terms and combinations of
letters available, respondent had to choose those so closely similar to
another's trademark if there was no intent to take advantage of the
goodwill generated by the other mark. 29
With regard to the issue on damages, we likewise agree with
the IPO that the actual damages prayed for cannot be granted because
petitioner has not presented sufficient evidence to prove the amount
claimed and the basis to measure actual damages.
WHEREFORE, the petition is GRANTED. The November 28,
2013 Decision and the July 9, 2014 Resolution of the Court of Appeals in
CA G.R. SP Nos. 122288 and 122535 are REVERSED and SET ASIDE.
Accordingly, the November 10, 2011 Decision of the Intellectual Property
Office Director General finding respondent liable for unfair competition is
hereby REINSTATED. ITAaHc
SO ORDERED.
Peralta, J.C. Reyes, Jr. and Hernando, JJ., concur.
Leonen, J., see separate concurring opinion.
||| (Asia Pacific Resources International Holdings, Ltd. v. Paperone, Inc., G.R.
Nos. 213365-66, [December 10, 2018])
Page 65 of 65 | IPL | LAW ON TRADEMARK