G.R. No.

183404 : October 13, 2010 IN VIEW OF THE FOREGOING, the Motion for Reconsideration filed by the Respondent-Applicant is
hereby DENIED FOR LACK OF MERIT. Consequently, Decision No. 2006-24 dated April 28, 2006
STANDS.
BERRIS AGRICULTURAL CO., INC., Petitioner, v. NORVY ABYADANG, Respondent.cralaw

Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be
DECISION
forwarded to the Bureau of Trademarks for appropriate action in accordance with this Resolution.

NACHURA, J.:
SO ORDERED.8chanroblesvirtuallawlibrary

This petition for review1cra1aw on certiorari under Rule 45 of the Rules of Court seeks the reversal
Aggrieved, Abyadang filed an appeal on August 22, 2006 with the Office of the Director General,
of the Decision dated April 14, 20082cra1aw and the Resolution dated June 18, 20083cra1aw of the
Intellectual Property Philippines (IPPDG), docketed as Appeal No. 14-06-13.
Court of Appeals (CA) in CA-G.R. SP No. 99928.

With the filing of the parties respective memoranda, Director General Adrian S. Cristobal, Jr. of the
The antecedents
IPPDG rendered a decision dated July 20, 2007,9cra1aw ruling as follows

On January 16, 2004, respondent Norvy A. Abyadang (Abyadang), proprietor of NS Northern

Wherefore, premises considered[,] the appeal is hereby DENIED. Accordingly, the appealed Decision
Organic Fertilizer, with address at No. 43 Lower QM, Baguio City, filed with the Intellectual Property
of the Director is hereby AFFIRMED.
Office (IPO) a trademark application for the mark "NS D-10 PLUS" for use in connection with
Fungicide (Class 5) with active ingredient 80% Mancozeb. The application, under Application Serial
No. 4-2004-00450, was given due course and was published in the IPO e-Gazette for opposition on Let a copy of this Decision as well as the trademark application and records be furnished and
July 28, 2005. returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the
Directors of the Bureau of Trademarks, the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the Documentation, Information and Technology
On August 17, 2005, petitioner Berris Agricultural Co., Inc. (Berris), with business address in
Transfer Bureau be furnished a copy of this Decision for information, guidance, and records
Barangay Masiit, Calauan, Laguna, filed with the IPO Bureau of Legal Affairs (IPO-BLA) a Verified
purposes.
Notice of Opposition4cra1aw against the mark under application allegedly because "NS D-10 PLUS"
is similar and/or confusingly similar to its registered trademark "D-10 80 WP," also used for
Fungicide (Class 5) with active ingredient 80% Mancozeb. The opposition was docketed as IPC No. SO ORDERED.10chanroblesvirtuallawlibrary
14-2005-00099.
Undeterred, Abyadang filed a petition for review11cra1aw before the CA.
After an exchange of pleadings, on April 28, 2006, Director Estrellita Beltran-Abelardo (Director
Abelardo) of the IPO-BLA issued Decision No. 2006-245cra1aw (BLA decision), the dispositive
In its Decision dated April 14, 2008, the CA reversed the IPPDG decision. It held
portion of which reads

In sum, the petition should be granted due to the following reasons: 1) petitioners mark "NS D-10
WHEREFORE, viewed in the light of all the foregoing, this Bureau finds and so holds that
PLUS" is not confusingly similar with respondents trademark "D-10 80 WP"; 2) respondent failed to
Respondent-Applicants mark "NS D-10 PLUS" is confusingly similar to the Opposers mark and as
establish its ownership of the mark "D-10 80 WP" and 3) respondents trademark registration for
such, the opposition is hereby SUSTAINED. Consequently, trademark application bearing Serial No.
"D-10 80 WP" may be cancelled in the present case to avoid multiplicity of suits.
4-2004-00450 for the mark "NS D-10 PLUS" filed on January 16, 2004 by Norvy A. Ab[yada]ng
covering the goods fungicide under Class 5 of the International Classification of goods is, as it is
hereby, REJECTED. WHEREFORE, the petition is GRANTED. The decision dated July 20, 2007 of the IPO Director General
in Appeal No. 14-06-13 (IPC No. 14-2005-00099) is REVERSED and SET ASIDE, and a new one is
entered giving due course to petitioners application for registration of the mark "NS D-10 PLUS,"
Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be
and canceling respondents trademark registration for "D-10 80 WP."
forwarded to the Administrative, Financial and Human Resources Development Services Bureau
(AFHRDSB) for appropriate action in accordance with this Order with a copy to be furnished the
Bureau of Trademark (BOT) for information and to update its records. SO ORDERED.12chanroblesvirtuallawlibrary

SO ORDERED.6chanroblesvirtuallawlibrary Berris filed a Motion for Reconsideration, but in its June 18, 2008 Resolution, the CA denied the
motion for lack of merit. Hence, this petition anchored on the following arguments
Abyadang filed a motion for reconsideration, and Berris, in turn, filed its opposition to the motion.
I. The Honorable Court of Appeals finding that there exists no confusing similarity between
Petitioners and respondents marks is based on misapprehension of facts, surmise and conjecture
On August 2, 2006, Director Abelardo issued Resolution No. 2006-09(D)7cra1aw (BLA resolution),
and not in accord with the Intellectual Property Code and applicable Decisions of this Honorable
denying the motion for reconsideration and disposing as follows
Court [Supreme Court].
II. The Honorable Court of Appeals Decision reversing and setting aside the technical findings of the
Intellectual Property Office even without a finding or, at the very least, an allegation of grave abuse
of discretion on the part of said agency is not in accord with law and earlier pronouncements of this
Honorable Court [Supreme Court].
III. The Honorable Court of Appeals Decision ordering the cancellation of herein Petitioners duly
registered and validly existing trademark in the absence of a properly filed Petition for Cancellation
before the Intellectual Property Office is not in accord with the Intellectual Property Code and
applicable Decisions of this Honorable Court [Supreme Court]. 13chanroblesvirtuallawlibrary
The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No.
829314cra1aw(Intellectual Property Code of the Philippines), specifically Sections 121 to 170
thereof. It took effect on January 1, 1998. Prior to its effectivity, the applicable law was R.A. No.
166,15cra1aw as amended.
Interestingly, R.A. No. 8293 did not expressly repeal in its entirety R.A. No. 166, but merely provided
in Section 239.116cra1aw that Acts and parts of Acts inconsistent with it were repealed. In other
words, only in the instances where a substantial and irreconcilable conflict is found between the
provisions of R.A. No. 8293 and of R.A. No. 166 would the provisions of the latter be deemed
repealed.
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.17cra1aw 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. 18chanroblesvirtuallawlibrary
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.19cra1aw 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 12220cra1aw 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 registrants ownership of the mark, and of the registrants exclusive
right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate.21cra1aw 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. 22cra1aw 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.23cra1aw 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.24chanroblesvirtuallawlibrary
The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does
not suffice. One may make advertisements, issue circulars, distribute price lists on certain goods, but
these alone will not inure to the claim of ownership of the mark until the goods bearing the mark
are sold to the public in the market. Accordingly, receipts, sales invoices, and testimonies of
witnesses as customers, or orders of buyers, best prove the actual use of a mark in trade and
commerce during a certain period of time.25chanroblesvirtuallawlibrary
In the instant case, both parties have submitted proof to support their claim of ownership of their
respective trademarks.
Culled from the records, Berris, as oppositor to Abyadangs application for registration of his
trademark, presented the following evidence: (1) its trademark application dated November 29,
200226cra1aw with Application No. 4-2002-0010272; (2) its IPO certificate of registration dated
October 25, 2004,27cra1aw with Registration No. 4-2002-010272 and July 8, 2004 as the date of
registration; (3) a photocopy of its packaging28cra1aw bearing the mark "D-10 80 WP"; (4)
photocopies of its sales invoices and official receipts;29cra1aw and (5) its notarized DAU dated April
23, 2003,30cra1aw stating that the mark was first used on June 20, 2002, and indicating that, as
proof of actual use, copies of official receipts or sales invoices of goods using the mark were
attached as Annex "B."
On the other hand, Abyadangs proofs consisted of the following: (1) a photocopy of the
packaging31cra1aw for his marketed fungicide bearing mark "NS D-10 PLUS"; (2) Abyadangs
Affidavit dated February 14, 2006,32cra1aw stating among others that the mark "NS D-10 PLUS" was
his own creation derived from: N for Norvy, his name; S for Soledad, his wifes name; D the first
letter for December, his birth month; 10 for October, the 10th month of the year, the month of his
business name registration; and PLUS to connote superior quality; that when he applied for
registration, there was nobody applying for a mark similar to "NS D-10 PLUS"; that he did not know
of the existence of Berris or any of its products; that "D-10" could not have been associated with
Berris because the latter never engaged in any commercial activity to sell "D-10 80 WP" fungicide in
the local market; and that he could not have copied Berris mark because he registered his packaging
with the Fertilizer and Pesticide Authority (FPA) ahead of Berris; (3) Certification dated December
19, 200533cra1aw issued by the FPA, stating that "NS D-10 PLUS" is owned and distributed by NS
Northern Organic Fertilizer, registered with the FPA since May 26, 2003, and had been in the market
since July 30, 2003; (4) Certification dated October 11, 200534cra1aw issued by the FPA, stating that,
per monitoring among dealers in Region I and in the Cordillera Administrative Region registered
with its office, the Regional Officer neither encountered the fungicide with mark "D-10 80 WP" nor
did the FPA provincial officers from the same area receive any report as to the presence or sale of
Berris product; (5) Certification dated March 14, 200635cra1aw issued by the FPA, certifying that all
pesticides must be registered with the said office pursuant to Section 936cra1aw of Presidential
Decree (P.D.) No. 114437cra1aw and Section 1, Article II of FPA Rules and Regulations No. 1, Series
of 1977; (6) Certification dated March 16, 200638cra1awissued by the FPA, certifying that the
pesticide "D-10 80 WP" was registered by Berris on November 12, 2004; and (7) receipts from
Sunrise Farm Supply39cra1aw in La Trinidad, Benguet of the sale of Abyadangs goods referred to as
"D-10" and "D-10+."
Based on their proffered pieces of evidence, both Berris and Abyadang claim to be the prior user of
their respective marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark "D-10 80 WP" since June 20, 2002, even
before it filed for its registration with the IPO on November 29, 2002, as shown by its DAU which
was under oath and notarized, bearing the stamp of the Bureau of Trademarks of the IPO on April
25, 2003,40cra1aw and which stated that it had an attachment as Annex "B" sales invoices and
official receipts of goods bearing the mark. Indeed, the DAU, being a notarized document, especially
when received in due course by the IPO, is evidence of the facts it stated and has the presumption of
regularity, entitled to full faith and credit upon its face. Thus, the burden of proof to overcome the
presumption of authenticity and due execution lies on the party contesting it, and the rebutting
evidence should be clear, strong, and convincing as to preclude all controversy as to the falsity of the
certificate.41cra1aw What is more, the DAU is buttressed by the Certification dated April 21,
200642cra1aw issued by the Bureau of Trademarks that Berris mark is still valid and existing.
Hence, we cannot subscribe to the contention of Abyadang that Berris DAU is fraudulent based only
on his assumption that Berris could not have legally used the mark in the sale of its goods way back
in June 2002 because it registered the product with the FPA only on November 12, 2004. As
correctly held by the IPPDG in its decision on Abyadangs appeal, the question of whether or not
Berris violated P.D. No. 1144, because it sold its product without prior registration with the FPA, is a
distinct and separate matter from the jurisdiction and concern of the IPO. Thus, even a
determination of violation by Berris of P.D. No. 1144 would not controvert the fact that it did submit
evidence that it had used the mark "D-10 80 WP" earlier than its FPA registration in 2004.
Furthermore, even the FPA Certification dated October 11, 2005, stating that the office had neither
encountered nor received reports about the sale of the fungicide "D-10 80 WP" within Region I and
the Cordillera Administrative Region, could not negate the fact that Berris was selling its product
using that mark in 2002, especially considering that it first traded its goods in Calauan, Laguna,
where its business office is located, as stated in the DAU.
Therefore, Berris, as prior user and prior registrant, is the owner of the mark "D-10 80 WP." As such,
Berris has in its favor the rights conferred by Section 147 of R.A. No. 8293, which provides
Sec. 147. Rights Conferred.
147.1. The owner of a registered mark shall have the exclusive right to prevent all third parties not
having the owners consent from using in the course of trade identical or similar signs or containers
for goods or services which are identical or similar to those in respect of which the trademark is
registered where such use would result in a likelihood of confusion. In case of the use of an identical
sign for identical goods or services, a likelihood of confusion shall be presumed.
147.2. The exclusive right of the owner of a well-known mark defined in Subsection 123.1(e) which
is registered in the Philippines, shall extend to goods and services which are not similar to those in
respect of which the mark is registered: Provided, That use of that 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.
Now, we confront the question, "Is Abyadangs mark NS D-10 PLUS confusingly similar to that of
Berris D-10 80 WP such that the latter can rightfully prevent the IPO registration of the former?"
We answer in the affirmative.
According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is identical with a
registered mark belonging to a different proprietor with an earlier filing or priority date, with
respect to: (1) the same goods or services; (2) closely related goods or services; or (3) near
resemblance of such mark as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion, jurisprudence has developed teststhe
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.43chanroblesvirtuallawlibrary
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as
applied to the products, including the labels and packaging, in determining confusing similarity. The
discerning eye of the observer must focus not only on the predominant words but also on the other
features appearing on both labels so that the observer may draw conclusion on whether one is
confusingly similar to the other.44chanroblesvirtuallawlibrary
Comparing Berris mark "D-10 80 WP" with Abyadangs mark "NS D-10 PLUS," as appearing on their
respective packages, one cannot but notice that both have a common component which is "D-10."
On Berris package, the "D-10" is written with a bigger font than the "80 WP." Admittedly, the "D-10"
is the dominant feature of the mark. The "D-10," being at the beginning of the mark, is what is most
remembered of it. Although, it appears in Berris certificate of registration in the same font size as
the "80 WP," its dominancy in the "D-10 80 WP" mark stands since the difference in the form does
not alter its distinctive character.45chanroblesvirtuallawlibrary
Applying the Dominancy Test, it cannot be gainsaid that Abyadangs "NS D-10 PLUS" is similar to
Berris "D-10 80 WP," that confusion or mistake is more likely to occur. Undeniably, both marks
pertain to the same type of goods fungicide with 80% Mancozeb as an active ingredient and used for
the same group of fruits, crops, vegetables, and ornamental plants, using the same dosage and
manner of application. They also belong to the same classification of goods under R.A. No. 8293.
Both depictions of "D-10," as found in both marks, are similar in size, such that this portion is what
catches the eye of the purchaser. Undeniably, the likelihood of confusion is present.
This likelihood of confusion and mistake is made more manifest when the Holistic Test is applied,
taking into consideration the packaging, for both use the same type of material (foil type) and have
identical color schemes (red, green, and white); and the marks are both predominantly red in color,
with the same phrase "BROAD SPECTRUM FUNGICIDE" written underneath.
Considering these striking similarities, predominantly the "D-10," the buyers of both products,
mainly farmers, may be misled into thinking that "NS D-10 PLUS" could be an upgraded formulation
of the "D-10 80 WP."
Moreover, notwithstanding the finding of the IPPDG that the "D-10" is a fanciful component of the
trademark, created for the sole purpose of functioning as a trademark, and does not give the name,
quality, or description of the product for which it is used, nor does it describe the place of origin,
such that the degree of exclusiveness given to the mark is closely restricted, 46cra1aw and
considering its challenge by Abyadang with respect to the meaning he has given to it, what remains
is the fact that Berris is the owner of the mark "D-10 80 WP," inclusive of its dominant feature "D-
10," as established by its prior use, and prior registration with the IPO. Therefore, Berris properly
opposed and the IPO correctly rejected Abyadangs application for registration of the mark "NS D-10
PLUS."
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.47cra1aw 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.48chanroblesvirtuallawlibrary

Inasmuch as the ownership of the mark "D-10 80 WP" fittingly belongs to Berris, and because the
same should not have been cancelled by the CA, we consider it proper not to belabor anymore the
issue of whether cancellation of a registered mark may be done absent a petition for cancellation.

WHEREFORE, the petition is GRANTED. The assailed Decision dated April 14, 2008 and Resolution
dated June 18, 2008 of the Court of Appeals in CA-G.R. SP No. 99928 are REVERSED and SET ASIDE.
Accordingly, the Decision No. 2006-24 dated April 28, 2006 and the Resolution No. 2006-09(D)
dated August 2, 2006 in IPC No. 14-2005-00099, and the Decision dated July 20, 2007 in Appeal No.
14-06-13 are REINSTATED. Costs against respondent.

SO ORDERED.
 [G.R. NO. 159938 : March 31, 2006]
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES, INC.,
MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK PHILIPPINES PROPERTIES,
INC., Petitioners, v. DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
DECISION
GARCIA, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioners Shangri-La International
Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the Decision dated May 15,
20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its Resolution2 of September 15,
2003 which effectively affirmed with modification an earlier decision of the Regional Trial Court
(RTC) of Quezon City in Civil Case No. Q-91-8476, an action for infringement and damages, thereat
commenced by respondent Developers Group of Companies, Inc. (DGCI) against the herein
petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI claims
ownership of said mark and logo in the Philippines on the strength of its prior use thereof within the
country. As DGCI stresses at every turn, it filed on October 18, 1982 with the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4 of Republic Act (RA)
No. 166,3 as amended, an application for registration covering the subject mark and logo. On May 31,
1983, the BPTTT issued in favor of DGCI the corresponding certificate of registration therefor, i.e.,
Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S" logo in its
restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels and
hotel-related transactions since 1969. As far back as 1962, it adopted the name "Shangri-La" as part
of the corporate names of all companies organized under the aegis of the Kuok Group of Companies
(the Kuok Group). The Kuok Group has used the name "Shangri-La" in all Shangri-La hotels and
hotel-related establishments around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the "Shangri-La" mark and
"S" logo, the Kuok Group had incorporated in Hong Kong and Singapore, among other places, several
companies that form part of the Shangri-La International Hotel Management Ltd. Group of
Companies. EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc.
were incorporated in the Philippines beginning 1987 to own and operate the two (2) hotels put up
by the Kuok Group in Mandaluyong and Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies adopted and
used the distinctive lettering of the name "Shangri-La" as part of their trade names.
From the records, it appears that Shangri-La Hotel Singapore commissioned a Singaporean design
artist, a certain Mr. William Lee, to conceptualize and design the logo of the Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the following
explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean architectural structures as well as
keep to the legendary Shangri-la theme with the mountains on top being reflected on waters below
and the connecting centre [sic] line serving as the horizon. This logo, which is a bold, striking
definitive design, embodies both modernity and sophistication in balance and thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used consistently
and continuously by all Shangri-La hotels and companies in their paraphernalia, such as
stationeries, envelopes, business forms, menus, displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact registered, the
"Shangri-La" mark and "S" logo in the patent offices in different countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter Partes Case No.
3145, praying for the cancellation of the registration of the "Shangri-La" mark and "S" logo issued to
respondent DGCI on the ground that the same were illegally and fraudulently obtained and
appropriated for the latter's restaurant business. They also filed in the same office Inter Partes Case
No. 3529, praying for the registration of the same mark and logo in their own names.
Until 1987 or 1988, the petitioners did not operate any establishment in the Philippines, albeit they
advertised their hotels abroad since 1972 in numerous business, news, and/or travel magazines
widely circulated around the world, all readily available in Philippine magazines and newsstands.
They, too, maintained reservations and booking agents in airline companies, hotel organizations,
tour operators, tour promotion organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI filed a complaint for
Infringement and Damages with the RTC of Quezon City against the herein petitioners SLIHM,
Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok Philippine Properties,
Inc., docketed as Civil Case No. Q-91-8476 and eventually raffled to Branch 99 of said court. The
complaint with prayer for injunctive relief and damages alleged that DGCI has, for the last eight (8)
years, been the prior exclusive user in the Philippines of the mark and logo in question and the
registered owner thereof for its restaurant and allied services. As DGCI alleged in its complaint,
SLIHM, et al., in promoting and advertising their hotel and other allied projects then under
construction in the country, had been using a mark and logo confusingly similar, if not identical,
with its mark and "S" logo. Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo,
from using the "Shangri-La" mark and "S" logo in their hotels in the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and illegally using
the "Shangri-La" mark and "S" logo, adding that the legal and beneficial ownership thereof pertained
to SLIHM and that the Kuok Group and its related companies had been using this mark and logo
since March 1962 for all their corporate names and affairs. In this regard, they point to the Paris
Convention for the Protection of Industrial Property as affording security and protection to SLIHM's
exclusive right to said mark and logo. They further claimed having used, since late 1975, the
internationally-known and specially-designed "Shangri-La" mark and "S" logo for all the hotels in
their hotel chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of Preliminary
Injunction enjoining the petitioners from using the subject mark and logo. The preliminary
injunction issue ultimately reached the Court in G.R. No. 104583 entitled Developers Group of
Companies, Inc. v. Court of Appeals, et al. In a decision4 dated March 8, 1993, the Court nullified the
writ of preliminary injunction issued by the trial court and directed it to proceed with the main case
and decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion to suspend proceedings on
account of the pendency before the BPTTT of Inter Partes Case No. 3145 for the cancellation of
DGCI's certificate of registration. For its part, respondent DGCI filed a similar motion in that case,
invoking in this respect the pendency of its infringement case before the trial court. The parties'
respective motions to suspend proceedings also reached the Court via their respective petitions in
G.R. No. 114802, entitled Developers Group of Companies, Inc. v. Court of Appeals, et al. and G.R. No.
111580, entitled Shangri-La International Hotel Management LTD., et al. v. Court of Appeals, et al.,
which were accordingly consolidated.
In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to the core issue of
whether, despite the petitioners' institution of Inter Partes Case No. 3145 before the BPTTT, herein
respondent DGCI "can file a subsequent action for infringement with the regular courts of justice in
connection with the same registered mark," ruled in the affirmative, but nonetheless ordered the
BPTTT to suspend further proceedings in said inter partes case and to await the final outcome of the
main case.
Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's lone witness
was Ramon Syhunliong, President and Chairman of DGCI's Board of Directors. Among other things,
this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading and restaurant businesses
but only the restaurant business bears the name "Shangri-La" and uses the same and the "S-logo" as
service marks. The restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly
known as the "Carvajal Restaurant" until December 1982, when respondent took over said
restaurant business.
2. He had traveled widely around Asia prior to 1982, and admitted knowing the Shangri-La Hotel in
Hong Kong as early as August 1982.
3. The "S-logo" was one of two (2) designs given to him in December 1982, scribbled on a piece of
paper by a jeepney signboard artist with an office somewhere in Balintawak. The unnamed artist
supposedly produced the two designs after about two or three days from the time he (Syhunliong)
gave the idea of the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist supposedly created the "Shangri-
La" and "S" designs, DGCI was incorporated with the primary purpose of "owning or operating, or
both, of hotels and restaurants".
5. On October 18, 1982, again prior to the alleged creation date of the mark and logo, DGCI filed an
application for trademark registration of the mark "SHANGRI-LA FINEST CHINESE CUISINE & S.
Logo" with the BPTTT. On said date, respondent DGCI amended its Articles of Incorporation to
reflect the name of its restaurant, known and operating under the style and name of "SHANGRI-LA
FINEST CHINESE CUISINE." Respondent DGCI obtained Certificate of Registration No. 31904 for the
"Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more particularly petitioner SLIHM's,
use of the mark and logo in dispute constitutes an infringement of DGCI's right thereto, came out
with its decision6 on March 8, 1996 rendering judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against [SLIHM, et al.]
- were made through travel agents not owned, controlled or managed by the Kuok Group.
a) Upholding the validity of the registration of the service mark "Shangri-la" and "S-Logo" in the
name of [respondent];
b) Declaring [petitioners'] use of said mark and logo as infringement of [respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees, assignees and other persons
acting under their authority and with their permission, to permanently cease and desist from using
and/or continuing to use said mark and logo, or any copy, reproduction or colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel and allied projects and services or
in any other manner whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any premises, objects, materials and
paraphernalia used by them and/or destroy any and all prints, signs, advertisements or other
materials bearing said mark and logo in their possession and/or under their control;
andcralawlibrary
e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in the amounts of
P2,000,000.00 as actual and compensatory damages, P500,000.00 as attorney's fee and expenses of
litigation.
Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and
Technology Transfer for his information and appropriate action in accordance with the provisions
of Section 25, Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their recourse was docketed as CA G.R.
SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of May 15, 2003, 7 affirmed that of
the lower court with the modification of deleting the award of attorney's fees. The appellate court
predicated its affirmatory action on the strength or interplay of the following premises:
1. Albeit the Kuok Group used the mark and logo since 1962, the evidence presented shows that the
bulk use of the tradename was abroad and not in the Philippines (until 1987). Since the Kuok Group
does not have proof of actual use in commerce in the Philippines (in accordance with Section 2 of
R.A. No. 166), it cannot claim ownership of the mark and logo in accordance with the holding in
Kabushi Kaisha Isetan v. IAC8, as reiterated in Philip Morris, Inc. v. Court of Appeals.9
2. On the other hand, respondent has a right to the mark and logo by virtue of its prior use in the
Philippines and the issuance of Certificate of Registration No. 31904.
3. The use of the mark or logo in commerce through the bookings made by travel agencies is
unavailing since the Kuok Group did not establish any branch or regional office in the Philippines. As
it were, the Kuok Group was not engaged in commerce in the Philippines inasmuch as the bookings
4. While the Paris Convention protects internationally known marks, R.A. No. 166 still requires use
in commerce in the Philippines. Accordingly, and on the premise that international agreements,
such as Paris Convention, must yield to a municipal law, the question on the exclusive right over the
mark and logo would still depend on actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the CA in its equally
assailed Resolution of September 15, 2003.10
As formulated by the petitioners, the issues upon which this case hinges are:
1. Whether the CA erred in finding that respondent had the right to file an application for
registration of the "Shangri-La" mark and "S" logo although respondent never had any prior actual
commercial use thereof;
2. Whether the CA erred in finding that respondent's supposed use of the identical "Shangri-La"
mark and "S" logo of the petitioners was not evident bad faith and can actually ripen into ownership,
much less registration;
3. Whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark
and "S" logo in their operations;
4. Whether the CA erred in refusing to consider that petitioners are entitled to protection under
both R.A. No. 166, the old trademark law, and the Paris Convention for the Protection of Industrial
Property;
5. Whether the CA erred in holding that SLIHM did not have the right to legally own the "Shangri-La"
mark and "S" logo by virtue of and despite their ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes actionable
infringement;
7. Whether the CA erred in awarding damages in favor of respondent despite the absence of any
evidence to support the same, and in failing to award relief in favor of the petitioners;
andcralawlibrary
8. Whether petitioners should be prohibited from continuing their use of the mark and logo in
question.
There are two preliminary issues, however, that respondent DGCI calls our attention to, namely:
1. Whether the certification against forum-shopping submitted on behalf of the petitioners is
sufficient;
2. Whether the issues posed by petitioners are purely factual in nature hence improper for
resolution in the instant Petition for Review on Certiorari .
DGCI claims that the present Petition for Review should be dismissed outright for certain
procedural defects, to wit: an insufficient certification against forum shopping and raising pure
questions of fact. On both counts, we find the instant petition formally and substantially sound.
In its Comment, respondent alleged that the certification against forum shopping signed by Atty. Lee
Benjamin Z. Lerma on behalf and as counsel of the petitioners was insufficient, and that he was not
duly authorized to execute such document. Respondent further alleged that since petitioner SLIHM
is a foreign entity based in Hong Kong, the Director's Certificate executed by Mr. Madhu Rama
Chandra Rao, embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and
execute the certification against forum shopping, should contain the authentication by a consular
officer of the Philippines in Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the certification on non-forum
shopping may be signed, for and in behalf of a corporation, by a specifically authorized lawyer who
has personal knowledge of the facts required to be disclosed in such document. The reason for this
is that a corporation can only exercise its powers through its board of directors and/or its duly
authorized officers and agents. Physical acts, like the signing of documents, can be performed only
by natural persons duly authorized for the purpose.12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against forum
shopping does not require any consular certification if the petitioner is a foreign entity. Nonetheless,
to banish any lingering doubt, petitioner SLIHM furnished this Court with a consular certification
dated October 29, 2003 authenticating the Director's Certificate authorizing Atty. Lerma to execute
the certification against forum shopping, together with petitioners' manifestation of February 9,
2004.
Respondent also attacks the present petition as one that raises pure questions of fact. It points out
that in a Petition for Review under Rule 45 of the Rules of Court, the questions that may properly be
inquired into are strictly circumscribed by the express limitation that "the petition shall raise only
questions of law which must be distinctly set forth."13 We do not, however, find that the issues
involved in this petition consist purely of questions of fact. These issues will be dealt with as we go
through the questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application for registration
of the "Shangri-La" mark and "S" logo because it did not have prior actual commercial use thereof.
To respondent, such an argument raises a question of fact that was already resolved by the RTC and
concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and registrant of the subject
mark and logo in the Philippines. Taken in proper context, the trial court's finding on "prior use" can
only be interpreted to mean that respondent used the subject mark and logo in the country before
the petitioners did. It cannot be construed as being a factual finding that there was prior use of the
mark and logo before registration.
Secondly, the question raised is not purely factual in nature. In the context of this case, it involves
resolving whether a certificate of registration of a mark, and the presumption of regularity in the
performance of official functions in the issuance thereof, are sufficient to establish prior actual use
by the registrant. It further entails answering the question of whether prior actual use is required
before there may be a valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up
to December 31, 1997, hence, the law in force at the time of respondent's application for
registration of trademark, the root of ownership of a trademark is actual use in commerce. Section 2
of said law requires that before a trademark can be registered, it must have been actually used in
commerce and service for not less than two months in the Philippines prior to the filing of an
application for its registration.
Registration, without more, does not confer upon the registrant an absolute right to the registered scope of a Petition for Review, there are, however, noted exceptions thereto. Among these
mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of exceptions are:
the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name
by another can overcome the presumptive ownership of the registrant and may very well entitle the
1. When the inference made is manifestly mistaken, absurd or impossible; 24
former to be declared owner in an appropriate case.14

2. When there is grave abuse of discretion;25

Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v.
Macagba,15 are:
3. When the judgment is based on a misapprehension of facts; 26
1. Registration in the Principal Register gives rise to a presumption of the validity of the
registration, the registrant's ownership of the mark, and his right to the exclusive use thereof. x x x 4. When the findings of fact are conflicting;27 and

2. Registration in the Principal Register is limited to the actual owner of the trademark and 5. When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not
proceedings therein pass on the issue of ownership, which may be contested through opposition disputed by the respondent.28
or interference proceedings, or, after registration, in a petition for cancellation. xxx
And these are naming but a few of the recognized exceptions to the rule.
[Emphasis supplied]ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The CA itself, in its Decision of May 15, 2003, found that the respondent's president and chairman of
Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption the board, Ramon Syhunliong, had been a guest at the petitioners' hotel before he caused the
and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark and logo, and surmised that he must have copied the idea there:
registration of the mark without actual use thereof, the former prevails over the latter. For a rule
widely accepted and firmly entrenched, because it has come down through the years, is that actual
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of
use in commerce or business is a pre-requisite to the acquisition of the right of ownership. 16
[petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that he was a visitor of
[petitioners'] hotel abroad at one time (September 27, 1982) establishes [petitioners'] allegation
While the present law on trademarks17 has dispensed with the requirement of prior actual use at that he got the idea there.29
the time of registration, the law in force at the time of registration must be applied, and thereunder
it was held that as a condition precedent to registration of trademark, trade name or service mark,
Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have
the same must have been in actual use in the Philippines before the filing of the application for
been copied, the CA tries to make it appear that the adoption of the same mark and logo could have
registration.18Trademark is a creation of use and therefore actual use is a pre-requisite to exclusive
been coincidental:
ownership and its registration with the Philippine Patent Office is a mere administrative
confirmation of the existence of such right.19
The word or name "Shangri-la" and the S-logo, are not uncommon. The word "Shangri-la" refers to a
(a) remote beautiful imaginary place where life approaches perfection or (b) imaginary mountain
By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of
land depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a well-
the trademark being applied for, he has no right to apply for registration of the same. Registration
read and popular novel written in 1976. It is not impossible that the parties, inspired by the novel,
merely creates a prima faciepresumption of the validity of the registration, of the registrant's
both adopted the mark for their business to conjure [a] place of beauty and pleasure.
ownership of the trademark and of the exclusive right to the use thereof.20 Such presumption, just
like the presumptive regularity in the performance of official functions, is rebuttable and must give
way to evidence to the contrary. The S-logo is, likewise, not unusual. The devise looks like a modified Old English print. 30

Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist
allegedly commissioned to create the mark and logo submitted his designs only in December
1982.21 This was two-and-a-half months after the filing of the respondent's trademark application
on October 18, 1982 with the BPTTT. It was also only in December 1982 when the respondent's
restaurant was opened for business.22 Respondent cannot now claim before the Court that the
certificate of registration itself is proof that the two-month prior use requirement was complied
with, what with the fact that its very own witness testified otherwise in the trial court. And because
at the time (October 18, 1982) the respondent filed its application for trademark registration of the
"Shangri-La" mark and "S" logo, respondent was not using these in the Philippines commercially, the
registration is void.
Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo was in
evident bad faith and cannot therefore ripen into ownership, much less registration. While the
respondent is correct in saying that a finding of bad faith is factual, not legal, 23 hence beyond the
To jump from a recognition of the fact that the mark and logo must have been copied to a
rationalization for the possibility that both the petitioners and the respondent coincidentally chose
the same name and logo is not only contradictory, but also manifestly mistaken or absurd.
Furthermore, the "S" logo appears nothing like the "Old English" print that the CA makes it out to be,
but is obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that
the parties would come up with the exact same lettering for the word "Shangri-La" and the exact
same logo to boot. As correctly observed by the petitioners, to which we are in full accord:
x x x When a trademark copycat adopts the word portion of another's trademark as his own, there
may still be some doubt that the adoption is intentional. But if he copies not only the word but also
the word's exact font and lettering style and in addition, he copies also the logo portion of the
trademark, the slightest doubt vanishes. It is then replaced by the certainty that the adoption was
deliberate, malicious and in bad faith.31
It is truly difficult to understand why, of the millions of terms and combination of letters and
designs available, the respondent had to choose exactly the same mark and logo as that of the
petitioners, if there was no intent to take advantage of the goodwill of petitioners' mark and logo. 32
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.33 Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that
a second user may not merely take advantage of the goodwill established by the true owner.
This point is further bolstered by the fact that under either Section 17 of R.A. No. 166, or Section 151
of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time limit is fixed for the cancellation
of marks registered or used in bad faith.34 This is precisely why petitioners had filed an inter partes
case before the BPTTT for the cancellation of respondent's registration, the proceedings on which
were suspended pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in
nature, namely, whether the CA erred in overlooking petitioners' widespread prior use of the
"Shangri-La" mark and "S" logo in their operations. The question, however, is not whether there had
been widespread prior use, which would have been factual, but whether that prior use entitles the
petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in
nature.
It has already been established in the two courts below, and admitted by the respondent's president
himself, that petitioners had prior widespread use of the mark and logo abroad:
There is, to be sure, an impressive mass of proof that petitioner SLIHM and its related companies
abroad used the name and logo for one purpose or another x x x. 35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the mark and logo
but held that such use did not confer to them ownership or exclusive right to use them in the
Philippines."36To petitioners' mind, it was error for the CA to rule that their worldwide use of the
mark and logo in dispute could not have conferred upon them any right thereto. Again, this is a legal
question which is well worth delving into.
R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are registrable. - Trademarks, trade names and service marks owned by persons,
corporations, partnerships or associations domiciled in the Philippines and by persons,
corporations, partnerships or associations domiciled in any foreign country may be registered in
accordance with the provisions of this Act: Provided, That said trademarks trade names, or service
marks are actually in use in commerce and services not less than two months in the
Philippines before the time the applications for registration are filed: And provided, further, That
the country of which the applicant for registration is a citizen grants by law substantially similar
privileges to citizens of the Philippines, and such fact is officially certified, with a certified true copy
of the foreign law translated into the English language, by the government of the foreign country to
the Government of the Republic of the Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks; how acquired. - Anyone
who lawfully produces or deals in merchandise of any kind or who engages in any lawful business,
or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in
business, and in the service rendered, may appropriate to his exclusive use a trademark, a trade
name, or a service mark not so appropriated by another, to distinguish his merchandise, business
or service from the merchandise, business or services of others. The ownership or possession of a
trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section
provided, shall be recognized and protected in the same manner and to the same extent as are other
property rights known to this law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the
said trade name and "S" logo in the Philippines. Hence, consistent with its finding that the bulk of the
petitioners' evidence shows that the alleged use of the Shangri-La trade name was done abroad and
not in the Philippines, it is understandable for that court to rule in respondent's favor.
Unfortunately, however, what the CA failed to perceive is that there is a crucial difference between
the aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides for what
is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two
distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and must have
actually used the mark in commerce in the Philippines for 2 months prior to the application for
registration. Since "ownership" of the trademark is required for registration, Section 2-A of the same
law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear
that actual use in commerce is also the test of ownership but the provision went further by saying
that the mark must not have been so appropriated by another. Additionally, it is significant to note
that Section 2-A does not require that the actual use of a trademark must be within the Philippines.
Hence, under R.A. No. 166, as amended, one may be an owner of a mark due to actual use thereof
but not yet have the right to register such ownership here due to failure to use it within the
Philippines for two months.
While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant, neither
did respondent DGCI, since the latter also failed to fulfill the 2-month actual use requirement. What
is worse, DGCI was not even the owner of the mark. For it to have been the owner, the mark must
not have been already appropriated (i.e., used) by someone else. At the time of respondent DGCI's
registration of the mark, the same was already being used by the petitioners, albeit abroad, of which
DGCI's president was fully aware.
It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo
as a mere corporate name or as the name of their hotels, instead of using them as a trademark or
service mark, then such name and logo are not trademarks. The two concepts of corporate name or
business name and trademark or service mark, are not mutually exclusive. It is common, indeed
likely, that the name of a corporation or business is also a trade name, trademark or service mark.
Section 38 of R.A. No. 166 defines the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction of this Act, unless the contrary
is plainly apparent from the context - The term "trade name" includes individual names and
surnames, firm names, trade names, devices or words used by manufacturers, industrialists,
merchants, agriculturists, and others to identify their business, vocations or occupations; the names
or titles lawfully adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other organizations engaged in trade or
commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to identify his goods and
distinguish them from those manufactured, sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising of services to identify the
services of one person and distinguish them from the services of others and includes without
limitation the marks, names, symbols, titles, designations, slogans, character names, and
distinctive features of radio or other advertising. [Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can be considered as having used
the "Shangri-La" name and "S" logo as a tradename and service mark.

The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows the firm
resolve of the Philippines to observe and follow the Paris Convention by incorporating the relevant
portions of the Convention such that persons who may question a mark (that is, oppose registration,
petition for the cancellation thereof, sue for unfair competition) include persons whose
internationally well-known mark, whether or not registered, is

identical with or confusingly similar to or constitutes a translation of a mark that is sought to be

registered or is actually registered.37

However, while the Philippines was already a signatory to the Paris Convention, the IPC only took
effect on January 1, 1988, and in the absence of a retroactivity clause, R.A. No. 166 still
applies.38 Under the prevailing law and jurisprudence at the time, the CA had not erred in ruling
that:

The Paris Convention mandates that protection should be afforded to internationally known marks
as signatory to the Paris Convention, without regard as to whether the foreign corporation is
registered, licensed or doing business in the Philippines. It goes without saying that the same runs
afoul to Republic Act No. 166, which requires the actual use in commerce in the Philippines of the
subject mark or devise. The apparent conflict between the two (2) was settled by the Supreme Court
in this wise -

"Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirement of actual use in the Philippines must subordinate an international
agreement inasmuch as the apparent clash is being decided by a municipal tribunal (Mortensen v.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93; Paras, International
Law and World Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made
part of the law of the land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not superior, to national legislative
enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16)." 39 [Emphasis
supplied]

Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless,
with the double infirmity of lack of two-month prior use, as well as bad faith in the respondent's
registration of the mark, it is evident that the petitioners cannot be guilty of infringement. It would
be a great injustice to adjudge the petitioners guilty of infringing a mark when they are actually the
originator and creator thereof.

Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the
enforcement of their rights as part of the Kuok Group of Companies and as official repository,
manager and operator of the subject mark and logo. Besides, R.A. No. 166 did not require the party
seeking relief to be the owner of the mark but "any person who believes that he is or will be
damaged by the registration of a mark or trade name."40

WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals dated May 15, 2003 and September 15, 2003, respectively, and the Decision of the Regional
Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE. Accordingly, the complaint
for infringement in Civil Case No. Q-91-8476 is ordered DISMISSED.

SO ORDERED.
 G.R. No. 185830, June 05, 2013
ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE PHILIPPINES), INC., Petitioner, v. RENAUIL
COINTREAU & CIE AND LE CORDON BLEU INT'L., B.V., Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in.this petition for review on certiorari1 is the December 23, 2008 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 104672 which· affirmed in toto the Intellectual Property Office (IPO)
Director General's April 21, 2008 Decision3 that declared respondent Renaud Cointreau & Cie
(Cointreau) as the true and lawful owner of the mark "LE CORDON BLEU & DEVICE" and thus, is
entitled to register the same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the
(now defunct) Bureau of Patents, Trademarks, and Technology Transfer (BPTTT) of the Department
of Trade and Industry a trademark application for the mark "LE CORDON BLEU & DEVICE".for goods
falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International Classification of Goods and
Services for the Purposes of Registrations of Marks ("Nice Classification") (subject mark). The
application was filed pursuant to Section 37 of Republic Act No. 166, as amended (R.A. No. 166), on
the basis of Home Registration No. 1,390,912, issued on November 25, 1986 in France. Bearing
Serial No. 72264, such application was published for opposition in the March-April 1993 issue of the
BPTTT Gazette and released for circulation on May 31, 1993.4
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition to the subject
application, averring that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE
MANILLE," which it has been using since 1948 in cooking and other culinary activities, including in
its restaurant business; and (b) it has earned immense and invaluable goodwill such that
Cointreau’s use of the subject mark will actually create confusion, mistake, and deception to the
buying public as to the origin and sponsorship of the goods, and cause great and irreparable injury
and damage to Ecole’s business reputation and goodwill as a senior user of the same. 5
On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the
subject mark. It averred that: (a) it has filed applications for the subject mark’s registration in
various jurisdictions, including the Philippines; (b) Le Cordon Bleu is a culinary school of worldwide
acclaim which was established in Paris, France in 1895; (c) Le Cordon Bleu was the first cooking
school to have set the standard for the teaching of classical French cuisine and pastry making;
and (d) it has trained students from more than eighty (80) nationalities, including Ecole’s directress,
Ms. Lourdes L. Dayrit. Thus, Cointreau concluded that Ecole’s claim of being the exclusive owner of
the subject mark is a fraudulent misrepresentation.6
During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos.
60631 and 54352 for the marks "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895 &
DEVICE" for goods and services under classes 21 and 41 of the Nice Classification, respectively. 7
The Ruling of the Bureau of Legal Affairs
In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecole’s
opposition to the subject mark, necessarily resulting in the rejection of Cointreau’s
application.9 While noting the certificates of registration obtained from other countries and other
pertinent materials showing the use of the subject mark outside the Philippines, the BLA did not
find such evidence sufficient to establish Cointreau’s claim of prior use of the same in the
Philippines. It emphasized that the adoption and use of trademark must be in commerce in the
Philippines and not abroad. It then concluded that Cointreau has not established any proprietary
right entitled to protection in the Philippine jurisdiction because the law on trademarks rests upon
the doctrine of nationality or territoriality.10
On the other hand, the BLA found that the subject mark, which was the predecessor of the mark "LE
CORDON BLEU MANILLE" has been known and used in the Philippines since 1948 and registered
under the name "ECOLE DE CUISINE MANILLE (THE CORDON BLEU OF THE PHILIPPINES), INC." on
May 9, 1980.11
Aggrieved, Cointreau filed an appeal with the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General reversed and set aside the BLA’s
decision, thus, granting Cointreau’s appeal and allowing the registration of the subject mark.12 He
held that while Section 2 of R.A. No. 166 requires actual use of the subject mark in commerce in the
Philippines for at least two (2) months before the filing date of the application, only the owner
thereof has the right to register the same, explaining that the user of a mark in the Philippines is
not ipso facto its owner. Moreover, Section 2-A of the same law does not require actual use in the
Philippines to be able to acquire ownership of a mark.13
In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he
considered Cointreau’s undisputed use of such mark since 1895 for its culinary school in Paris,
France (in which petitioner’s own directress, Ms. Lourdes L. Dayrit, had trained in 1977). Contrarily,
he found that while Ecole may have prior use of the subject mark in the Philippines since 1948, it
failed to explain how it came up with such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject mark, rendering it beyond the mantle of
protection of Section 4(d)14 of R.A. No. 166.15
Finding the IPO Director General’s reversal of the BLA’s Decision unacceptable, Ecole filed a Petition
for Review16 dated June 7, 2008 with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO Director General’s Decision in
toto.17It declared Cointreau as the true and actual owner of the subject mark with a right to register
the same in the Philippines under Section 37 of R.A. No. 166, having registered such mark in its
country of origin on November 25, 1986.18
The CA likewise held that Cointreau’s right to register the subject mark cannot be barred by Ecole’s
prior use thereof as early as 1948 for its culinary school "LE CORDON BLEU MANILLE" in the
Philippines because its appropriation of the mark was done in bad faith. Further, Ecole had no
certificate of registration that would put Cointreau on notice that the former had appropriated or
has been using the subject mark. In fact, its application for trademark registration for the same
which was just filed on February 24, 1992 is still pending with the IPO. 19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Court’s resolution is whether the CA was correct in upholding the IPO
Director General’s ruling that Cointreau is the true and lawful owner of the subject mark and thus,
entitled to have the same registered under its name.
At this point, it should be noted that the instant case shall be resolved under the provisions of the
old Trademark Law, R.A. No. 166, which was the law in force at the time of Cointreau’s application
for registration of the subject mark.
The Court’s Ruling
The petition is without merit.
In the petition, Ecole argues that it is the rightful owner of the subject mark, considering that it was
the first entity that used the same in the Philippines. Hence, it is the one entitled to its registration
and not Cointreau.
Petitioner’s argument is untenable.
Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the owner thereof
and must have actually used the mark in commerce in the Philippines for two (2) months prior to
the application for registration. Section 2-A21 of the same law sets out to define how one goes about
acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the
test of ownership but the provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that Section 2-A does not require that
the actual use of a trademark must be within the Philippines. Thus, as correctly mentioned by the
CA, under R.A. No. 166, one may be an owner of a mark due to its actual use but may not yet have
the right to register such ownership here due to the owner’s failure to use the same in the
Philippines for two (2) months prior to registration. 22
Nevertheless, foreign marks which are not registered are still accorded protection against
infringement and/or unfair competition. At this point, it is worthy to emphasize that the Philippines
and France, Cointreau’s country of origin, are both signatories to the Paris Convention for the
Protection of Industrial Property (Paris Convention).23 Articles 6bis and 8 of the Paris Convention
state:cralavvonlinelawlibrary
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of
an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark
which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to be well known in that
country as being already the mark of a person entitled to the benefits of this Convention and
used for identical or similar goods. These provisions shall also apply when the essential part
of the mark constitutes a reproduction of any such well- known mark or an imitation liable to
create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the obligation of filing or
registration, whether or not it forms part of a trademark. (Emphasis and underscoring supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to
wit:cralavvonlinelawlibrary
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.
xxxx
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.
xxxx
In view of the foregoing obligations under the Paris Convention, the Philippines is obligated to
assure nationals of the signatory-countries that they are afforded an effective protection against
violation of their intellectual property rights in the Philippines in the same way that their own
countries are obligated to accord similar protection to Philippine nationals. 24 "Thus, under
Philippine law, a trade name of a national of a State that is a party to the Paris Convention, whether
or not the trade name forms part of a trademark, is protected "without the obligation of filing or
registration.’"25
In the instant case, it is undisputed that Cointreau has been using the subject mark in France since
1895, prior to Ecole’s averred first use of the same in the Philippines in 1948, of which the latter
was fully aware thereof. In fact, Ecole’s present directress, Ms. Lourdes L. Dayrit (and even its
foundress, Pat Limjuco Dayrit), had trained in Cointreau’s Le Cordon Bleu culinary school in Paris,
France. Cointreau was likewise the first registrant of the said mark under various classes, both
abroad and in the Philippines, having secured Home Registration No. 1,390,912 dated November 25,
1986 from its country of origin, as well as several trademark registrations in the Philippines.26
On the other hand, Ecole has no certificate of registration over the subject mark but only a pending
application covering services limited to Class 41 of the Nice Classification, referring to the operation
of a culinary school. Its application was filed only on February 24, 1992, or after Cointreau filed its
trademark application for goods and services falling under different classes in 1990. Under the
foregoing circumstances, even if Ecole was the first to use the mark in the Philippines, it cannot be
said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the same was already being
used by Cointreau, albeit abroad, of which Ecole’s directress was fully aware, being an alumna of the
latter’s culinary school in Paris, France. Hence, Ecole cannot claim any tinge of ownership
whatsoever over the subject mark as Cointreau is the true and lawful owner thereof. As such, the
IPO Director General and the CA were correct in declaring Cointreau as the true and lawful owner of
the subject mark and as such, is entitled to have the same registered under its name.
In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines, as amended, has already dispensed with the
requirement of prior actual use at the time of registration. 27 Thus, there is more reason to allow the
registration of the subject mark under the name of Cointreau as its true and lawful owner.
As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the
goods (or services) to which it is affixed; to secure to him, who has been instrumental in bringing
into the market a superior article of merchandise, the fruit of his industry and skill; to assure the
public that they are procuring the genuine article; to prevent fraud and imposition; and to protect
the manufacturer against substitution and sale of an inferior and different article as his
product."28 As such, courts will protect trade names or marks, although not registered or properly
selected as trademarks, on the broad ground of enforcing justice and protecting one in the fruits of
his toil.29
WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 104672 is hereby AFFIRMED in toto.
SO ORDERED.
Abercrombie & Fitch Co. v. Hunting World, Inc.
537 F.2d 4 (2d Cir. 1976)

RULE:
Four different categories of terms have been identified with respect to trademark protection.
Arrayed in an ascending order which roughly reflects their eligibility to trademark status and the
degree of protection accorded, these classes are (1) generic, (2) descriptive, (3) suggestive, and (4)
arbitrary or fanciful. The lines of demarcation, however, are not always bright. Moreover, the
difficulties are compounded because a term that is in one category for a particular product may be
in quite a different one for another, because a term may shift from one category to another in light of
differences in usage through time, because a term may have one meaning to one group of users and
a different one to others, and because the same term may be put to different uses with respect to a
single product.

FACTS:
For many years plaintiff used the mark "Safari" on articles of clothing sold by it in its sporting goods
stores. Plaintiff filed an action for trademark infringement against defendant, which according to the
plaintiff, had engaged in the retail marketing of sporting apparel, some identified by use of "Safari"
alone or by expressions such as "Minisafari" and "Safariland." The District Court for the Southern
District of New York dismissed the complaint and canceled all of plaintiff's trademark registrations
for "Safari."

ISSUE:
Did the District Court err in dismissing plaintiff’s trademark infringement complaint against
defendant?

ANSWER:
No.

CONCLUSION:
The Court ruled that although plaintiff for many years had used the mark "Safari" on articles of
clothing sold, defendant established its rights to use similar derivations of the term in selling its own
line of sporting apparel. Specifically, the Court held that: (1) "Safari" had become a generic term and
"Minisafari" could be used for a smaller brim hat; (2) "Safari" had not, however, become a generic
term for boots or shoes; it was either suggestive or merely descriptive and was a valid trademark
even if merely descriptive because it had become incontestable under the Lanham Act; but (3) in
light of the justified finding that "Camel Safari," "Hippo Safari" and "Safari Chukka" were devoted by
defendant to a purely descriptive use on its boots, defendant had a defense against a charge of
infringement on the basis of fair use.
Zatarains, Inc. v. Oak Grove Smokehouse, Inc.
698 F.2d 786 (5th Cir. 1983)

RULE:
A descriptive term identifies a characteristic or quality of an article or service, such as its color,
odor, function, dimensions, or ingredients. Descriptive terms ordinarily are not protectable as
trademarks, § 2(e)(1) of the Lanham Act, 15 U.S.C.S. § 1052(e)(1); they may become valid marks,
however, by acquiring a secondary meaning in the minds of the consuming public. §§ 1052(e)(1)
and (f). The distinction has important practical consequences, however; while a descriptive term
may be elevated to trademark status with proof of secondary meaning, a generic term may never
achieve trademark protection. A suggestive term suggests, rather than describes, some particular
characteristic of the goods or services to which it applies and requires the consumer to exercise the
imagination in order to draw a conclusion as to the nature of the goods and services. A suggestive
mark is protected without the necessity for proof of secondary meaning. Arbitrary or fanciful terms
bear no relationship to the products or services to which they are applied. Like suggestive terms,
arbitrary and fanciful marks are protectable without proof of secondary meaning.

FACTS:
Zatarain’s (Plaintiff) manufactured and distributed food products. It registered the terms “Fish-Fri”
and “Chick-Fri” as trademarks for its batter mixes used to fry foods. Oak Grove Smokehouse, Inc.
(Defendant) began marketing a “fish fry” and a “chicken fry” in packages similar to those used by
Plaintiff. Plaintiff brought suit for trademark infringement and unfair competition under the
Lanham Act. The district court held that Zatarain’s (Plaintiff) trademark “Fish-Fri” was a descriptive
term with an established secondary meaning, but held that the alleged infringers had a fair use
defense to any asserted infringement of the term and that the registration of the term “Chick-Fri”
should be canceled because it was a descriptive term that lacked any secondary meaning. Plaintiff
appealed, claiming that its trademark “Fish-Fri” was a suggestive term that was automatically
protected upon registration and therefore not subject to the “fair use” defense.

ISSUE:
Are descriptive terms protected by trademark without a showing of secondary meaning in the
minds of the public?

ANSWER:
No.

CONCLUSION:
Descriptive terms are not protected by trademark without a showing of secondary meaning in the
minds of the public. The district court was correct in applying the four prevailing tests of
descriptiveness: 1) the dictionary definition, 2) the imagination test; usefulness of the term to
competitors, and 4) actual use of the term by other merchants, in finding that “Fish-Fri”was a
descriptive term identifying a function of the product being sold. Proof of secondary meaning is an
issue only with respect to descriptive marks, and the burden of proof rests at all times with the
plaintiff to establish such a meaning. The district court found that Plaintiff’s evidence established a
secondary meaning for the term in the New Orleans area. However, Plaintiff has no legal claim to an
exclusive right in the original, descriptive sense of the term. Therefore, Defendant is still free to use
the words “fish fry” in the ordinary, descriptive sense, so long as such use will not tend to confuse
customers as to the source of the goods. The record contains plenty of evidence to support the
district court’s determination that Oak grove’s (Defendant) use of the term was fair and in good
faith. Affirmed.
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.:
Assailed in this petition for review on certiorari1 is the Decision2 dated December 18, 2009 of the
Court of Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with modification the
Decision3 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 (d) ordered petitioners to
jointly and severally pay respondent St. Francis Square Development Corporation (respondent) a
fine in the amount of ₱200,000.00.
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 PartesCase
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 thatincludes 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 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
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 ofthe mark "ST. FRANCIS" because the same is geographically descriptive ofthe 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 locatedalong the streets bearing the name "St. Francis,"
particularly, St. FrancisAvenue 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 Decision9 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, opiningthat 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 Avenueand 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 Decision12 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 Decision14 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 Casewas appealed by either party and,
thus, is deemed to have lapsed into finality.
The IPO Director-General Ruling
In a Decision16 dated September 3, 2008, then IPO Director-General Adrian S. Cristobal, Jr.
affirmedthe rulings of the BLA that: (a) petitioners cannot register the mark "THEST. 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 DirectorGeneral reversed the BLA’s findingthat
petitioners committed unfair competition through their use of the mark "THE ST. FRANCIS
TOWERS," thus dismissing such charge. He foundthat 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 servicesbelieving 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 sameto the CA.
In contrast, records do not show that either party appealed the IPO Director-General’s ruling on the
issue ofthe registrability of the mark "THE ST. FRANCIS TOWERS" (the bone of contention in the St.
Francis Towers IP Case). As such, said pronouncement isalso deemed to have lapsed into finality.
The CA Ruling
In a Decision19 dated December 18, 2009, the CA found petitioners guilty of unfair competition not
only withrespect to their use of the mark "THE ST. FRANCIS TOWERS" but alsoof the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." Accordingly, itordered 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 ₱200,000.00.
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 muchentitled 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, adequateprotection must still begiven 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 PartesCases 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 manufacturesor 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 inthe same manner as other property rights."
Section 168.2proceeds 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 x x x."
Without limiting its generality, Section 168.3goes on to specify examples of acts which are
considered as constitutive of unfair competition, viz.:
168.3. In particular, and without in any way limiting the scope of protection against unfair
competition, the following shall be deemed guilty of unfair competition:
(a) Any person who is selling his goods and gives them the general appearance of goods
of another manufacturer or dealer, either as to the goods themselves or in the wrapping
of the packages in which they are contained, or the devices or words thereon, or in any
other feature of their appearance, which would be likely to influence purchasers to
believe that the goods offered are those of a manufacturer or dealer, other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such appearance as
shall deceive the public and defraud another of his legitimate trade, or any subsequent
vendor ofsuch goods or any agent of any vendor engaged in selling such goods with a like
purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the service of another
who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods,
business or services of another.
Finally, Section 168.4 dwells on a matter of procedure by stating that the "[t]he remedies provided
by Sections 156,22157,23 and 16124 shall apply mutatis mutandis."
The statutory attribution of the unfair competition concept is wellsupplemented by jurisprudential
pronouncements. In the recent case 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 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.’ 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. [In other words], the defendant gives his goods the general appearance of the
goods of his competitor with the intention of deceiving the publicthat the goods are those of his
competitor."26The "true test" of unfair competition has thus been "whether the acts of the defendant
have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases
under the ordinary conditions of theparticular trade to which the controversy relates." Based on the
foregoing, it is therefore essential to prove the existence of fraud, or the intent to deceive, actual or
probable,27 determined through a judicious scrutiny of the factual circumstances attendant to a
particular case.28
Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair competition.
The CA’scontrary conclusion was faultily premised on its impression that respondenthad the right
to the exclusive use of the mark "ST. FRANCIS," for which the latter had purportedly established
considerable goodwill. What the CA appears to have disregarded or been mistaken in its
disquisition, however, is the geographicallydescriptive nature of the mark "ST. FRANCIS" which thus
bars its exclusive appropriability, unless 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
inthe ‘public domain’ in the sense that every seller should have the right to inform customers of the
geographical origin of his goods. A ‘geographically descriptive term’ is any noun or adjective that
designates geographical location and would tend to be regarded by buyers as descriptive of the
geographic location of origin of the goods or services. A geographically descriptive term can indicate
any geographic location on earth, such as continents, nations, regions, states, cities, streets and
addresses, areas of cities, rivers, and any other location referred to by a recognized name. In order
to determine whether or not the geographic term in question is descriptively used, the following
question is relevant: (1) Is the mark the name of the place or region from which the goods actually
come? If the answer is yes, then the geographic term is probably used in a descriptive sense, and
secondary meaning is required for protection."30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., 31 it was held that secondary
meaningis established when a descriptive mark no longer causes the public to associate the goods
with a particular place, but to associate the goods with a particular source.In other words, it is not
enough that a geographically-descriptive mark partakes of the name of a place known generally to
the public to be denied registration as it is also necessary to show that the public would make a
goods/place association – that is, to believe that the goods for which the mark is sought to be
registered originatein that place.1âwphi1 To hold sucha belief, it is necessary, of course, that the
purchasers perceive the mark as a place name, from which the question of obscurity or remoteness
then comes to the fore.32The more a geographical 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
deemed as geographically descriptive. However, where there is no genuine issue that the
geographical significance of a term is its primary significanceand where the geographical place is
neither obscure nor remote, a public association of the goods with the place may ordinarily be
presumed from the fact that the applicant’s own goods come from the geographical place named in
the mark.33
Under Section 123.234 of the IP Code, specific requirements have to be met in order to conclude that
a geographically-descriptive mark has acquired secondary meaning, to wit: (a) the secondary
meaning must have arisen as a result of substantial commercial use of a mark in the Philippines; (b)
such use must result in the distinctiveness of the mark insofar as the goods or theproducts are
concerned; and (c) proof of substantially exclusive and continuous commercial use in the
Philippines for five (5) years beforethe date on which the claim of distinctiveness is made. Unless
secondary meaning has been established, a geographically-descriptive mark, dueto its general
public domain classification, is perceptibly disqualified from trademark registration. Section
123.1(j) of the IP Code states this rule as follows:
SEC. 123. Registrability. –
123.1 A mark cannot be registered if it:
xxxx
(j) Consists exclusively of signs orof 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; (Emphasis supplied) x x x
x
Cognizant of the foregoing, the Court disagrees with the CA that petitioners committed unfair
competition due to the mistaken notion that petitioner had established goodwill for the mark "ST.
FRANCIS" precisely because said circumstance, by and of itself, does not equateto fraud under the
parameters of Section 168 of the IP Code as above-cited. In fact, the records are bereft of any
showing thatpetitioners gave their goods/services 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 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 toprove 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 thatthere
was substantial commercial use of the same recognizedall 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 source35 – 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 besaid 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 DirectorGeneral: 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 goods 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.

SO ORDERED.
 G.R. No. 184850 : October 20, 2010
E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners, v. SHEN DAR ELECTRICITY AND
MACHINERY CO., LTD., Respondent.cralaw
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21,
2008 Decision1cra1aw and the October 6, 2008 Resolution2cra1aw rendered by the Court of Appeals
(CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y. Industrial
Sales, Inc. and Engracio Yap.
The assailed decision reversed the Decision dated May 25, 20073cra1aw issued by the Director
General of the Intellectual Property Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO
Director General upheld Certificate of Registration (COR) No. 4-1999-005393 issued by the IPO for
the trademark "VESPA" in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the
cancellation of COR No. 4-1997-121492, also for the trademark "VESPA," issued in favor of
respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of the IPO
Director General, in effect, affirmed the Decision dated May 29, 20064cra1aw issued by the Director
of the Bureau of Legal Affairs (BLA) of the IPO.
The Facts
EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors
and other industrial tools and equipment.5cra1aw Petitioner Engracio Yap is the Chairman of the
Board of Directors of EYIS.6chanroblesvirtuallawlibrary
Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air
compressors.7chanroblesvirtuallawlibrary
Both companies claimed to have the right to register the trademark "VESPA" for air compressors.
From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the
Sales Contract dated April 20, 2002,8cra1aw for example, Shen Dar would supply EYIS in one (1)
year with 24 to 30 units of 40-ft. containers worth of air compressors identified in the
Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In the
corresponding Bill of Ladings, the items were described merely as air compressors. 9cra1aw There is
no documentary evidence to show that such air compressors were marked "VESPA."
On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with the IPO for
the mark "VESPA, Chinese Characters and Device" for use on air compressors and welding
machines.10chanroblesvirtuallawlibrary
On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for the mark
"VESPA," for use on air compressors.11cra1aw On January 18, 2004, the IPO issued COR No. 4-1999-
005393 in favor of EYIS.12cra1aw Thereafter, on February 8, 2007, Shen Dar was also issued COR
No. 4-1997-121492.13chanroblesvirtuallawlibrary
In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS COR with the
BLA.14cra1aw In the Petition, Shen Dar primarily argued that the issuance of the COR in favor of
EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA) 8293, otherwise
known as the Intellectual Property Code (IP Code), having first filed an application for the mark.
Shen Dar further alleged that EYIS was a mere distributor of air compressors bearing the mark
"VESPA" which it imported from Shen Dar. Shen Dar also argued that it had prior and exclusive right
to the use and registration of the mark "VESPA" in the Philippines under the provisions of the Paris
Convention.15chanroblesvirtuallawlibrary
In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the mark "VESPA"
being the sole assembler and fabricator of air compressors since the early 1990s. They further
alleged that the air compressors that Shen Dar allegedly supplied them bore the mark "SD" for Shen
Dar and not "VESPA." Moreover, EYIS argued that Shen Dar, not being the owner of the mark, could
not seek protection from the provisions of the Paris Convention or the IP
Code.16chanroblesvirtuallawlibrary
Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS and
against Shen Dar, the dispositive portion of which reads:chanroblesvirtualawlibrary
WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED.
Consequently, Certificate of Registration No. 4-1999-[005393] for the mark "VESPA" granted in the
name of E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby upheld.
Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative,
Financial and Human Resource Development Services Bureau for issuance and appropriate action in
accordance with this DECISION and a copy thereof furnished to the Bureau of Trademarks for
information and update of its records.
SO ORDERED.17chanroblesvirtuallawlibrary
Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In the appeal,
Shen Dar raised the following issues:chanroblesvirtualawlibrary
1. Whether the BLA Director erred in ruling that Shen Dar failed to present evidence;
2. Whether the registration of EYIS application was proper considering that Shen Dar was the first
to file an application for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is the true owner of the
mark.18chanroblesvirtuallawlibrary
Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the COR issued in
favor of EYIS while cancelling the COR of Shen Dar, the dispositive portion of which
reads:chanroblesvirtualawlibrary
WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No. 4-1999-
005393 for the mark VESPA for air compressor issued in favor of Appellee is hereby upheld.
Consequently, Certificate of Registration No. 4-1997-121492 for the mark VESPA, Chinese
Characters & Device for goods air compressor and spot welding machine issued in favor of
Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case 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, the Administrative, Financial and Human Resources Development Services
Bureau, and the Documentation, Information and Technology Transfer Bureau be furnished a copy
of this Decision for information, guidance, and records purposes. 19chanroblesvirtuallawlibrary
Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised
the following issues:chanroblesvirtualawlibrary
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling Shen Dars COR No. 4-1997-121492 without
a petition for cancellation; and
6. Whether Shen Dar sustained damages.20chanroblesvirtuallawlibrary
In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar.
The dispositive portion states:chanroblesvirtualawlibrary
WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision of
the Director General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED and
SET ASIDE. In lieu thereof, a new one is entered: a) ordering the cancellation of Certificate of
Registration No. 4-1999-005393 issued on January 19, 2004 for the trademark VESPA in favor of
E.Y. Industrial Sales, Inc.; b) ordering the restoration of the validity of Certificate of Registration No.
4-1997-121492 for the trademark VESPA in favor of Shen Dar Electricity and Machinery Co., Ltd. No
pronouncement as to costs.
SO ORDERED.21chanroblesvirtuallawlibrary
In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer its
evidence before the BLA, such evidence was properly attached to the Petition for Cancellation. As
such, Shen Dars evidence may be properly considered. The CA also enunciated that the IPO failed to
properly apply the provisions of Sec. 123.1(d) of RA 8293, which prohibits the registration of a
trademark in favor of a party when there is an earlier filed application for the same mark. The CA
further ruled that Shen Dar should be considered to have prior use of the mark based on the
statements made by the parties in their respective Declarations of Actual Use. The CA added that
EYIS is a mere importer of the air compressors with the mark "VESPA" as may be gleaned from its
receipts which indicated that EYIS is an importer, wholesaler and retailer, and therefore, cannot be
considered an owner of the mark.22chanroblesvirtuallawlibrary
EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed
resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:chanroblesvirtualawlibrary
A. Whether the Director General of the IPO correctly upheld the rights of Petitioners over the
trademark VESPA.
B. Whether the Director General of the IPO can, under the circumstances, order the cancellation of
Respondents certificate of registration for VESPA, which has been fraudulently obtained and
erroneously issued.
C. Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the IPO,
which affirm the rights of Petitioner EYIS over the trademark VESPA and when such findings are
supported by the evidence on record.
D. Whether this Honorable Court may review questions of fact considering that the findings of the
Court of Appeals and the IPO are in conflict and the conclusions of the appellee court are
contradicted by the evidence on record.23chanroblesvirtuallawlibrary
The Ruling of the Court
The appeal is meritorious.
First Issue:chanroblesvirtualawlibrary
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court
is not a trier of facts. However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission, 24cra1aw the Court ruled
that:chanroblesvirtualawlibrary
We are very much aware that the rule to the effect that this Court is not a trier of facts admits of
exceptions. As we have stated in Insular Life Assurance Company, Ltd. vs.
CA:chanroblesvirtualawlibrary
[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a
trier of facts and does not normally undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of facts of the CA are
conclusive and binding on the Court. However, the Court had recognized several exceptions to this
rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2)
when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave
abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the
findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond
the issues of the case, or its findings are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would justify a
different conclusion. (Emphasis supplied.)
In the instant case, the records will show that the IPO and the CA made differing conclusions on the
issue of ownership based on the evidence presented by the parties. Hence, this issue may be the
subject of this Courts review.
Second Issue:
Whether evidence presented before the BLA must be formally offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support
of its allegations as required under Office Order No. 79, Series of 2005, Amendments to the
Regulations on Inter Partes Proceedings, having failed to formally offer its evidence during the
proceedings before it. The BLA ruled:chanroblesvirtualawlibrary
At the outset, we note petitioners failure to adduce any evidence in support of its allegations in the
Petition for Cancellation. Petitioner did not file nor submit its marked evidence as required in this
Bureaus Order No. 2006-157 dated 25 January 2006 in compliance with Office Order No. 79, Series
of 2005, Amendments to the Regulations on Inter Partes Proceedings. 25cra1aw x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series of 2005,
which states:chanroblesvirtualawlibrary
Section 2.4. In all cases, failure to file the documentary evidences in accordance with Sections 7 and
8 of the rules on summary proceedings shall be construed as a waiver on the part of the parties. In
such a case, the original petition, opposition, answer and the supporting documents therein shall
constitute the entire evidence for the parties subject to applicable rules.
The CA concluded that Shen Dar needed not formally offer its evidence but merely needed to attach
its evidence to its position paper with the proper markings,26cra1aw which it did in this case.
The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall establish the
procedure for the application for the registration of a trademark, as well as the opposition to
it:chanroblesvirtualawlibrary
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following
functions:chanroblesvirtualawlibrary
xxxx
10.3. The Director General may by Regulations establish the procedure to govern the
implementation of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005 amending the regulations on
Inter Partes Proceedings, Sec. 12.1 of which provides:chanroblesvirtualawlibrary
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and
the documents submitted, shall constitute the entire evidence for the petitioner or opposer. The
verified answer, rejoinder if any, and the duly marked affidavits and documents submitted shall
constitute the evidence for the respondent. Affidavits, documents and other evidence not submitted
and duly marked in accordance with the preceding sections shall not be admitted as evidence.
The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which, in turn,
provide:chanroblesvirtualawlibrary
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the affidavits of witnesses and originals of the
documents and other requirements, shall be filed with the Bureau, provided, that in case of public
documents, certified copies shall be allowed in lieu of the originals. The Bureau shall check if the
petition or opposition is in due form as provided in the Regulations particularly Rule 3, Section 3;
Rule 4, Section 2; Rule 5, Section 3; Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3 and
4. For petition for cancellation of layout design (topography) of integrated circuits, Rule 3, Section 3
applies as to the form and requirements. The affidavits, documents and other evidence shall be
marked consecutively as "Exhibits" beginning with the letter "A".
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall issue
an order for the respondent to file an answer together with the affidavits of witnesses and originals
of documents, and at the same time shall notify all parties required to be notified in the IP Code and
these Regulations, provided, that in case of public documents, certified true copies may be
submitted in lieu of the originals. The affidavits and documents shall be marked consecutively as
"Exhibits" beginning with the number "1".
Section 9. Petition or Opposition and Answer must be verified Subject to Rules 7 and 8 of these
regulations, the petition or opposition and the answer must be verified. Otherwise, the same shall
not be considered as having been filed.
In other words, as long as the petition is verified and the pieces of evidence consisting of the
affidavits of the witnesses and the original of other documentary evidence are attached to the
petition and properly marked in accordance with Secs. 7.1 and 8.1 abovementioned, these shall be
considered as the evidence of the petitioner. There is no requirement under the abovementioned
rules that the evidence of the parties must be formally offered to the BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the Regulations on Inter
Partes Proceedings, the BLA is not bound by technical rules of procedure. The evidence attached to
the petition may, therefore, be properly considered in the resolution of the case.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact that the instant case was for the
cancellation of the COR issued in favor of EYIS, the interests of justice dictate, and in view of its
findings, that the COR of Shen Dar must be cancelled. The Director General
explained:chanroblesvirtualawlibrary
Accordingly, while the instant case involves a petition to cancel the registration of the Appellees
trademark VESPA, the interest of justice requires that Certificate of Registration No. 4-1997-121492
be cancelled. While the normal course of proceedings should have been the filing of a petition for
cancellation of Certificate of Registration No. 4-1997-121492, that would involve critical facts and
issues that have already been resolved in this case. To allow the Applicant to still maintain in the
Trademark Registry Certificate of Registration No. 4-1997-121492 would nullify the exclusive rights
of Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the
trademark registration system.27chanroblesvirtuallawlibrary
Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for
cancellation as required under Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:chanroblesvirtualawlibrary
Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases.The rules
of procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The
Rules of Court may be applied suppletorily. The Bureau shall not be bound by strict technical rules
of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of
proceedings which is consistent with the requirements of fair play and conducive to the just, speedy
and inexpensive disposition of cases, and which will give the Bureau the greatest possibility to focus
on the contentious issues before it. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies
are not bound by technical rules of procedure. Such principle, however, is tempered by fundamental
evidentiary rules, including due process. Thus, we ruled in Aya-ay, Sr. v. Arpaphil Shipping
Corp.:28chanroblesvirtuallawlibrary
That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of
procedure in the adjudication of cases does not mean that the basic rules on proving allegations
should be entirely dispensed with. A party alleging a critical fact must still support his allegation
with substantial evidence. Any decision based on unsubstantiated allegation cannot stand as it will
offend due process.
x x x The liberality of procedure in administrative actions is subject to limitations imposed by basic
requirements of due process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in
administrative procedure "does not go so far as to justify orders without a basis in evidence having
rational probative value." More specifically, as held in Uichico v. NLRC:chanroblesvirtualawlibrary
It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical
rules of procedure in the adjudication of cases. However, this procedural rule should not be
construed as a license to disregard certain fundamental evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining Company v.
Dumapis:29chanroblesvirtuallawlibrary
While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the
technical rules of procedure in the adjudication of cases, this procedural rule should not be
construed as a license to disregard certain fundamental evidentiary rules. The evidence presented
must at least have a modicum of admissibility for it to have probative value. Not only must there be
some evidence to support a finding or conclusion, but the evidence must be substantial. Substantial
evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. Thus, even though technical rules of evidence are not
strictly complied with before the LA and the NLRC, their decision must be based on evidence that
must, at the very least, be substantial.
The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not
preclude the cancellation of Shen Dars COR. It must be emphasized that, during the hearing for the
cancellation of EYIS COR before the BLA, Shen Dar tried to establish that it, not EYIS, was the true
owner of the mark "VESPA" and, thus, entitled to have it registered. Shen Dar had more than
sufficient opportunity to present its evidence and argue its case, and it did. It was given its day in
court and its right to due process was respected. The IPO Director Generals disregard of the
procedure for the cancellation of a registered mark was a valid exercise of his discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual findings of the BLA that Shen Dar and not
EYIS is the prior user and, therefore, true owner of the mark. In arguing its position, petitioners cite
numerous rulings of this Court where it was enunciated that the factual findings of administrative
bodies are given great weight if not conclusive upon the courts when supported by substantial
evidence.
We agree with petitioners that the general rule in this jurisdiction is that the factual findings of
administrative bodies deserve utmost respect when supported by evidence. However, such general
rule is subject to exceptions.
In Fuentes v. Court of Appeals,30cra1aw the Court established the rule of conclusiveness of factual
findings of the CA as follows:chanroblesvirtualawlibrary
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from
the Court of Appeals x x x is limited to the review and revision of errors of law allegedly committed
by the appellate court, as its findings of fact are deemed conclusive. As such this Court is not duty-
bound to analyze and weigh all over again the evidence already considered in the proceedings
below. This rule, however, is not without exceptions." The findings of fact of the Court of Appeals,
which are as a general rule deemed conclusive, may admit of review by this
Court:chanroblesvirtualawlibrary
(1) when the factual findings of the Court of Appeals and the trial court are contradictory;
(2) when the findings are grounded entirely on speculation, surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken,
absurd, or impossible;
(4) when there is grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings, goes beyond the issues of the case, and such
findings are contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;
(7) when the Court of Appeals fails to notice certain relevant facts which, if properly considered, will
justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which they
are based; and
(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but
such findings are contradicted by the evidence on record. (Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals,31cra1aw this Court applied the above principle to factual
findings of quasi-judicial bodies, to wit:chanroblesvirtualawlibrary
Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court
of Appeals, enumerated inFuentes vs. Court of Appeals, can also be applied to those of quasi-judicial
bodies x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO
Director General which it opined, when correctly appreciated, would alter the result of the case. An
examination of the IPO Decisions, however, would show that no such evidence was overlooked.
First, as to the date of first use of the mark by the parties, the CA stated:chanroblesvirtualawlibrary
To begin with, when respondents-appellees filed its application for registration of the VESPA
trademark on July 28, 1999, they stated under oath, as found in their DECLARATION OF ACTUAL
USE, that their first use of the mark was on December 22, 1998. On the other hand, [Shen Dar] in its
application dated June 09, 1997 stated, likewise under oath in their DECLARATION OF ACTUAL USE,
that its first use of the mark was in June 1996. This cannot be made any clearer. [Shen Dar] was not
only the first to file an application for registration but likewise first to use said registrable
mark.32chanroblesvirtuallawlibrary
Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the statements of
the parties in their respective Declarations of Actual Use. Such conclusion is premature at best.
While a Declaration of Actual Use is a notarized document, hence, a public document, it is not
conclusive as to the fact of first use of a mark. The declaration must be accompanied by proof of
actual use as of the date claimed. In a declaration of actual use, the applicant must, therefore,
present evidence of such actual use.
The BLA ruled on the same issue, as follows:chanroblesvirtualawlibrary
More importantly, the private respondents prior adoption and continuous use of the mark VESPA on
air compressors is bolstered by numerous documentary evidence consisting of sales invoices issued
in the name of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375). Sales Invoice No. 12075 dated
March 27, 1995 antedates petitioners date of first use on January 1, 1997 indicated in its trademark
application filed on June 9, 1997 as well as the date of first use in June of 1996 as indicated in the
Declaration of Actual Use submitted on December 3, 2001 (Exhibit 385). The use by respondent
registrant in the concept of owner is shown by commercial documents, sales invoices
unambiguously describing the goods as "VESPA" air compressors. Private respondents have sold the
air compressors bearing the "VESPA" to various locations in the Philippines, as far as Mindanao and
the Visayas since the early 1990s. We carefully inspected the evidence consisting of three hundred
seventy-one (371) invoices and shipment documents which show that VESPA air compressors were
sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga
City, Cagayan de Oro City, Davao City, to name a few. There is no doubt that it is through private
respondents efforts that the mark "VESPA" used on air compressors has gained business goodwill
and reputation in the Philippines for which it has validly acquired trademark rights. Respondent E.Y.
Industrials right has been preserved until the passage of RA 8293 which entitles it to register the
same.33chanroblesvirtuallawlibrary
Comparatively, the BLAs findings were founded upon the evidence presented by the parties. An
example of such evidence is Invoice No. 12075 dated March 29, 199534cra1aw where EYIS sold four
units of VESPA air compressors to Veteran Paint Trade Center. Shen Dar failed to rebut such
evidence. The truth, as supported by the evidence on record, is that EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and
the proof submitted was appropriately considered by the BLA, ruling as
follows:chanroblesvirtualawlibrary
On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA" on the
concept of an owner as early as 1991. Although Respondent E.Y. indicated in its trademark
application that its first use was in December 22, 1998, it was able to prove by clear and positive
evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966, the High Court
clarified: Where an applicant for registration of a trademark states under oath the date of his
earliest use, and later on he wishes to carry back his first date of use to an earlier date, he then takes
on the greater burden of presenting "clear and convincing evidence" of adoption and use as of that
earlier date. (B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.) 35chanroblesvirtuallawlibrary
The CA further found that EYIS is not a manufacturer of air compressors but merely imports and
sells them as a wholesaler and retailer. The CA reasoned:chanroblesvirtualawlibrary
Conversely, a careful perusal of appellees own submitted receipts shows that it is not manufacturer
but an importer, wholesaler and retailer. This fact is corroborated by the testimony of a former
employee of appellees. Admittedly too, appellees are importing air compressors from [Shen Dar]
from 1997 to 2004. These matters, lend credence to [Shen Dars] claim that the letters SD followed
by a number inscribed in the air compressor is only to describe its type, manufacturer business
name and capacity. The VESPA mark is in the sticker which is attached to the air compressors. The
ruling of the Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs. General Milling
Corporation et al., is quite enlightening, thus We quote:chanroblesvirtualawlibrary
"The term owner does not include the importer of the goods bearing the trademark, trade name,
service mark, or other mark of ownership, unless such importer is actually the owner thereof in the
country from which the goods are imported. Thus, this Court, has on several occasions ruled that
where the applicants alleged ownership is not shown in any notarial document and the applicant
appears to be merely an importer or distributor of the merchandise covered by said trademark, its
application cannot be granted."36chanroblesvirtuallawlibrary
This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an
importer, wholesaler and retailer does not preclude its being a manufacturer. Sec. 237 of the
National Internal Revenue Code states:chanroblesvirtualawlibrary
Section 237. Issuance of Receipts or Sales or Commercial Invoices.All persons subject to an internal In any event, given the length of time already invested by the parties in the instant case, this Court
revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at must write finis to the instant controversy by determining, once and for all, the true owner of the
Twenty-five pesos (P25.00) or more, issue duly registered receipts or sale or commercial invoices, mark "VESPA" based on the evidence presented.
prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of
merchandise or nature of service: Provided, however, That where the receipt is issued to cover
RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which
payment made as rentals, commissions, compensation or fees, receipts or invoices shall be issued
states:chanroblesvirtualawlibrary
which shall show the name, business style, if any, and address of the purchaser, customer or client.

Section 123. Registrability. - 123.1. A mark cannot be registered if it:chanroblesvirtualawlibrary

The original of each receipt or invoice shall be issued to the purchaser, customer or client at the
time the transaction is effected, who, if engaged in business or in the exercise of profession, shall
keep and preserve the same in his place of business for a period of three (3) years from the close of xxxx
the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and
preserved by the issuer, also in his place of business, for a like period.
(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:chanroblesvirtualawlibrary
The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax
from compliance with the provisions of this Section. (Emphasis supplied.)
(i) The same goods or services, or

Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of Internal
(ii) Closely related goods or services, or
Revenue defined a Sales Invoice and identified its required information as
follows:chanroblesvirtualawlibrary
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion. (Emphasis
supplied.)
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold or services rendered and the
prices charged therefor used in the ordinary course of business evidencing sale and transfer or
agreement to sell or transfer of goods and services. It contains the same information found in the Under this provision, the registration of a mark is prevented with the filing of an earlier application
Official Receipt. for registration. This must not, however, be interpreted to mean that ownership should be based
upon an earlier filing date. While RA 8293 removed the previous requirement of proof of actual use
prior to the filing of an application for registration of a mark, proof of prior and continuous use is
Official Receipt (OR) is a receipt issued for the payment of services rendered or goods sold. It
necessary to establish ownership of a mark. Such ownership constitutes sufficient evidence to
contains the following information:chanroblesvirtualawlibrary
oppose the registration of a mark.

a. Business name and address;

Sec. 134 of the IP Code provides that "any person who believes that he would be damaged by the
registration of a mark x x x" may file an opposition to the application. The term "any person"
b. Taxpayer Identification Number; encompasses the true owner of the markthe prior and continuous user.

c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and date of issuance of
receipts.
There is no requirement that a sales invoice should accurately state the nature of all the businesses
of the seller. There is no legal ground to state that EYIS "declaration" in its sales invoices that it is an
importer, wholesaler and retailer is restrictive and would preclude its being a manufacturer.
From the above findings, there was no justifiable reason for the CA to disregard the factual findings
of the IPO. The rulings of the IPO Director General and the BLA Director were supported by clear
and convincing evidence. The facts cited by the CA and Shen Dar do not justify a different conclusion
from that of the IPO. Hence, the findings of the BLA Director and the IPO Director General must be
deemed as conclusive on the CA.
Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the
presumptive ownership of the registrant and be held as the owner of the mark. As aptly stated by
the Court in Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies,
Inc.:37chanroblesvirtuallawlibrary
Registration, without more, does not confer upon the registrant an absolute right to the registered
mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of
the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name
by another can overcome the presumptive ownership of the registrant and may very well entitle the
former to be declared owner in an appropriate case.
xxxx

Fifth Issue: Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption
and use in trade or commerce. As between actual use of a mark without registration, and
registration of the mark without actual use thereof, the former prevails over the latter. For a rule
Whether EYIS is the true owner of the mark "VESPA"
widely accepted and firmly entrenched, because it has come down through the years, is that actual
use in commerce or business is a pre-requisite to the acquisition of the right of ownership.
xxxx Dar" or "SD" air compressor. (Exhibit "386") In its position paper, [Shen Dar] merely mentions of
Bill of Lading constituting respondent as consignee in 1993 but never submitted the same for
consideration of this Bureau. The document is also not signed by [Shen Dar]. The agreement was not
By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of
even drafted in the letterhead of either [Shen Dar] nor [sic] respondent registrant. Our only
the trademark being applied for, he has no right to apply for registration of the same. Registration
conclusion is that [Shen Dar] was not able to prove to be the owner of the VESPA mark by
merely creates a prima facie presumption of the validity of the registration, of the registrants
appropriation. Neither was it able to prove actual commercial use in the Philippines of the mark
ownership of the trademark and of the exclusive right to the use thereof. Such presumption, just like
VESPA prior to its filing of a trademark application in 9 June 1997.39chanroblesvirtuallawlibrary
the presumptive regularity in the performance of official functions, is rebuttable and must give way
to evidence to the contrary.
As such, EYIS must be considered as the prior and continuous user of the mark "VESPA" and its true
owner. Hence, EYIS is entitled to the registration of the mark in its name.
Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS
is the prior user of the mark. The exhaustive discussion on the matter made by the BLA sufficiently
addresses the issue:chanroblesvirtualawlibrary WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and October 6,
2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The Decision dated
May 25, 2007 issued by the IPO Director General in Inter Partes Case No. 14-2004-00084 and the
Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in buying,
Decision dated May 29, 2006 of the BLA Director of the IPO are hereby REINSTATED.
importing, selling, industrial machineries and tools, manufacturing, among others since its
incorporation in 1988. (Exhibit "1"). Indeed private respondents have submitted photographs
(Exhibit "376", "377", "378", "379") showing an assembly line of its manufacturing or assembly No costs.
process.
SO ORDERED.
More importantly, the private respondents prior adoption and continuous use of the mark "VESPA"
on air compressors is bolstered by numerous documentary evidence consisting of sales invoices
issued in the name of respondent EY Industrial and Bills of Lading. (Exhibits "4" to "375"). Sales
Invoice No. 12075 dated March 27, 1995 antedates petitioners date of first use in January 1, 1997
indicated in its trademark application filed in June 9, 1997 as well as the date of first use in June of
1996 as indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit "385").
The use by respondent-registrant in the concept of owner is shown by commercial documents, sales
invoices unambiguously describing the goods as "VESPA" air compressors. Private respondents
have sold the air compressors bearing the "VESPA" to various locations in the Philippines, as far as
Mindanao and the Visayas since the early 1990s. We carefully inspected the evidence consisting of
three hundred seventy one (371) invoices and shipment documents which show that "VESPA" air
compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete
City, Zamboanga City, Cagayan de Oro City, Davao City to name a few. There is no doubt that it is
through private respondents efforts that the mark "VESPA" used on air compressors has gained
business goodwill and reputation in the Philippines for which it has validly acquired trademark
rights. Respondent EY Industrials right has been preserved until the passage of RA 8293 which
entitles it to register the same. x x x38chanroblesvirtuallawlibrary

On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More
importantly, Shen Dar failed to present sufficient evidence to prove its own prior use of the mark
"VESPA." We cite with approval the ruling of the BLA:chanroblesvirtualawlibrary

[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air
compressors. The thrust of [Shen Dars] argument is that respondent E.Y. Industrial Sales, Inc. is a
mere distributor of the "VESPA" air compressors. We disagree.

This conclusion is belied by the evidence. We have gone over each and every document attached as
Annexes "A", "A" 1-48 which consist of Bill of Lading and Packing Weight List. Not one of these
documents referred to a "VESPA" air compressor. Instead, it simply describes the goods plainly as
air compressors which is type "SD" and not "VESPA". More importantly, the earliest date reflected
on the Bill of Lading was on May 5, 1997. (Annex "A"-1). [Shen Dar] also attached as Annex "B" a
purported Sales Contract with respondent EY Industrial Sales dated April 20, 2002. Surprisingly,
nowhere in the document does it state that respondent EY Industrial agreed to sell "VESPA" air
compressors. The document only mentions air compressors which if genuine merely bolsters
respondent Engracio Yaps contention that [Shen Dar] approached them if it could sell the "Shen
 G.R. No. 112012 - April 4, 2001
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES, INC., petitioners, v.COURT OF
APPEALS and CFC CORPORATION., respondents.
YNARES-SANTIAGO, J.:
This is a petition for review assailing the Decision of the Court of Appeals in CA-G.R. SP No.
24101,1reversing and setting aside the decision of the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT),2 which denied private respondent's application for registration of
the trade-mark, FLAVOR MASTER.
On January 18, 1984, private respondent CFC Corporation filed with the BPTTT an application for
the registration of the trademark "FLAVOR MASTER" for instant coffee, under Serial No. 52994. The
application, as a matter of due course, was published in the July 18, 1988 issue of the BPTTT's
Official Gazette.
Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under Swiss laws and
domiciled in Switzerland, filed an unverified Notice of Opposition, 3 claiming that the trademark of
private respondent's product is "confusingly similar to its trademarks for coffee and coffee extracts,
to wit: MASTER ROAST and MASTER BLEND."
Likewise, a verified Notice of Opposition was filed by Nestle Philippines, Inc., a Philippine
corporation and a licensee of Societe Des Produits Nestle S.A., against CFC's application for
registration of the trademark FLAVOR MASTER.4 Nestle claimed that the use, if any, by CFC of the
trademark FLAVOR MASTER and its registration would likely cause confusion in the trade; or
deceive purchasers and would falsely suggest to the purchasing public a connection in the business
of Nestle, as the dominant word present in the three (3) trademarks is "MASTER"; or that the goods
of CFC might be mistaken as having originated from the latter.
Were We to take even a lackadaisical glance at the overall appearance of the contending marks, the
physical discrepancies between appellant CFC's and appellee's respective logos are so ostensible
that the casual purchaser cannot likely mistake one for the other. Appellant CFC's label (Exhibit "4")
is predominantly a blend of dark and lighter shade of orange where the words "FLAVOR MASTER",
"FLAVOR" appearing on top of "MASTER", shaded in mocha with thin white inner and outer sidings
per letter and identically lettered except for the slightly protruding bottom curve of the letter "S"
adjoining the bottom tip of the letter "A" in the word "MASTER", are printed across the top of a
simmering red coffee cup. Underneath "FLAVOR MASTER" appears "Premium Instant Coffee"
printed in white, slim and slanted letters. Appellees' "MASTER ROAST" label (Exhibit "7"), however,
is almost double the width of appellant CFC's. At the top is printed in brown color the word
"NESCAFE" against a white backdrop. Occupying the center is a square-shaped configuration shaded
with dark brown and picturing a heap of coffee beans, where the word "MASTER" is inscribed in the
middle. "MASTER" in appellees' label is printed in taller capital letters, with the letter "M" further
capitalized. The letters are shaded with red and bounded with thin gold-colored inner and outer
sidings. Just above the word "MASTER" is a red window like portrait of what appears to be a coffee
shrub clad in gold. Below the "MASTER" appears the word "ROAST" impressed in smaller, white
print. And further below are the inscriptions in white: "A selection of prime Arabica and Robusta
coffee." With regard to appellees' "MASTER BLEND" label (Exhibit "6") of which only a xeroxed copy
is submitted, the letters are bolder and taller as compared to appellant CFC's and the word
"MASTER" appears on top of the word "BLEND" and below it are the words "100% pure instant
coffee" printed in small letters.
From the foregoing description, while the contending marks depict the same product, the glaring
dissimilarities in their presentation far outweigh and dispel any aspect of similitude. To borrow the
words of the Supreme Court in American Cyanamid Co. v. Director of Patents (76 SCRA 568),
appellant CFC's and appellees' labels are entirely different in size, background, colors, contents and
pictorial arrangement; in short, the general appearances of the labels bearing the respective
trademarks are so distinct from each other that appellees cannot assert that the dominant features,
if any, of its trademarks were used or appropriated in appellant CFC's own. The distinctions are so
well-defined so as to foreclose any probability or likelihood of confusion or deception on the part of
the normally intelligent buyer when he or she encounters both coffee products at the grocery shelf.
The answer therefore to the query is a clear-cut NO.6

In answer to the two oppositions, CFC argued that its trademark, FLAVOR MASTER, is not
Petitioners are now before this Court on the following assignment of errors:
confusingly similar with the former's trademarks, MASTER ROAST and MASTER BLEND, alleging
that, "except for the word MASTER (which cannot be exclusively appropriated by any person for
being a descriptive or generic name), the other words that are used respectively with said word in 1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND SETTING ASIDE THE DECISION (NO.
the three trademarks are very different from each other - in meaning, spelling, pronunciation, and 90-47) OF THE DIRECTOR OF THE BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
sound". CFC further argued that its trademark, FLAVOR MASTER, "is clearly very different from any TRANSFER (BPTTT) DATED DECEMBER 27, 1990.
of Nestle's alleged trademarks MASTER ROAST and MASTER BLEND, especially when the marks are
viewed in their entirety, by considering their pictorial representations, color schemes and the
2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT CFC'S TRADE DRESS IS BEYOND
letters of their respective labels."
THE SCOPE OF THE PROSCRIPTION LAID DOWN BY JURISPRUDENCE AND THE TRADEMARK LAW.

In its Decision No. 90-47 dated December 27, 1990, the BPTTT denied CFC's application for
3. RESPONDENT COURT ERRED IN HOLDING THAT THE TOTALITY RULE, RATHER THAN THE
registration.5 CFC elevated the matter to the Court of Appeals, where it was docketed as CA-G.R. SP
TEST OF DOMINANCY, APPLIES TO THE CASE.
No. 24101.

4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE APPLIED IN THE CASES OF
The Court of Appeals defined the issue thus: "Does appellant CFC's trade dress bear a striking
BRISTOL MYERS V. DIRECTOR OF PATENTS, ET AL. (17 SCRA 128), MEAD JOHNSON & CO. V. NVJ
resemblance with appellee's trademarks as to create in the purchasing public's mind the mistaken
VAN DORF LTD., (7 SCRA 768) AND AMERICAN CYANAMID CO. V. DIRECTOR OF PATENTS (76
impression that both coffee products come from one and the same source?"
SCRA 568).

As stated above, the Court of Appeals, in the assailed decision dated September 23, 1993, reversed
The petition is impressed with merit.
Decision No. 90-47 of the BPTTT and ordered the Director of Patents to approve CFC's application.
The Court of Appeals ruled:
A trademark has been generally defined as "any word, name, symbol or device adopted and used by
a manufacturer or merchant to identify his goods and distinguish them from those manufactured
and sold by others."7
A manufacturer's trademark is entitled to protection. As Mr. Justice Frankfurter observed in the case
of Mishawaka Mfg. Co. v. Kresge Co.:8
The protection of trade-marks is the law's recognition of the psychological function of symbols. If it
is true that we live by symbols, it is no less true that we purchase goods by them. A trade-mark is a
merchandising short-cut which induces a purchaser to select what he wants, or what he has been
led to believe he wants. The owner of a mark exploits this human propensity by making every effort
to impregnate the atmosphere of the market with the drawing power of a congenial symbol.
Whatever the means employed, the aim is the same --- to convey through the mark, in the minds of
potential customers, the desirability of the commodity upon which it appears. Once this is attained,
the trade-mark owner has something of value. If another poaches upon the commercial magnetism
of the symbol he has created, the owner can obtain legal redress.
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as amended, which was in force at the
time, provides thus:
Registration of trade-marks, trade-names and service-marks on the principal register. - There is
hereby established a register of trade-marks, trade-names and service marks which shall be known
as the principal register. The owner of a trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or services of others shall have
the right to register the same on the principal register, unless it:
xxx-xxx-xxx
(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name
registered in the Philippines or a mark or trade-name previously used in the Philippines by another
and not abandoned, as to be likely, when applied to or used in connection with the goods, business
or services of the applicant, to cause confusion or mistake or to deceive purchasers;
xxx-xxx-xxx
(Emphasis supplied)
The law prescribes a more stringent standard in that there should not only be confusing similarity
but that it should not likely cause confusion or mistake or deceive purchasers.
Hence, the question in this case is whether there is a likelihood that the trademark FLAVOR
MASTER may cause confusion or mistake or may deceive purchasers that said product is the same
or is manufactured by the same company. In other words, the issue is whether the trademark
FLAVOR MASTER is a colorable imitation of the trademarks MASTER ROAST and MASTER BLEND.
Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive
ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser giving
such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be
the other.9 In determining if colorable imitation exists, jurisprudence has developed two kinds of
tests - the Dominancy Test and the Holistic Test.10 The test of dominancy focuses on the similarity of
the prevalent features of the competing trademarks which might cause confusion or deception and
thus constitute infringement. On the other side of the spectrum, the holistic test mandates that the
entirety of the marks in question must be considered in determining confusing similarity.11
In the case at bar, the Court of Appeals held that:
The determination of whether two trademarks are indeed confusingly similar must be taken from
the viewpoint of the ordinary purchasers who are, in general, undiscerningly rash in buying the
more common and less expensive household products like coffee, and are therefore less inclined to
closely examine specific details of similarities and dissimilarities between competing products. The
Supreme Court in Del Monte Corporation v. CA, 181 SCRA 410, held that:
"The question is not whether the two articles are distinguishable by their labels when set side by
side but whether the general confusion made by the article upon the eye of the casual purchaser
who is unsuspicious and off his guard, is such as to likely result in his confounding it with the
original. As observed in several cases, the general impression of the ordinary purchaser, buying
under the normally prevalent conditions in trade and giving the attention such purchasers usually
give in buying that class of goods, is the touchstone."
From this perspective, the test of similarity is to consider the two marks in their entirety, as they
appear in the respective labels, in relation to the goods to which they are attached (Bristol Myers
Company v. Director of Patents, et al., 17 SCRA 128, citing Mead Johnson & Co. v. NVJ Van Dorp, Ltd., et
al., 7 SCRA 768). The mark must be considered as a whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a totality, not usually to any part of it (Del Monte Corp. v.
CA, supra), as what appellees would want it to be when they essentially argue that much of the
confusion springs from appellant CFC's use of the word "MASTER" which appellees claim to be the
dominant feature of their own trademarks that captivates the prospective consumers. Be it further
emphasized that the discerning eye of the observer must focus not only on the predominant words
but also on the other features appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other (Mead Johnson & Co. v. NVJ Van Dorp, Ltd., supra).12
The Court of Appeals applied some judicial precedents which are not on all fours with this case. It
must be emphasized that in infringement or trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable imitation of another,
no set rules can be deduced. Each case must be decided on its own merits. 13 In Esso Standard, Inc. v.
Court of Appeals,14 we ruled that the likelihood of confusion is a relative concept; to be determined
only according to the particular, and sometimes peculiar, circumstances of each case. In trademark
cases, even more than in any other litigation, precedent must be studied in light of the facts of the
particular case. The wisdom of the likelihood of confusion test lies in its recognition that each
trademark infringement case presents its own unique set of facts. Indeed, the complexities
attendant to an accurate assessment of likelihood of confusion require that the entire panoply of
elements constituting the relevant factual landscape be comprehensively examined. 15
The Court of Appeals' application of the case of Del Monte Corporation v. Court of Appeals16 is,
therefore, misplaced. In Del Monte, the issue was about the alleged similarity of Del Monte's logo
with that of Sunshine Sauce Manufacturing Industries. Both corporations market the catsup product
which is an inexpensive and common household item.
Since Del Monte alleged that Sunshine's logo was confusingly similar to or was a colorable imitation
of the former's logo, there was a need to go into the details of the two logos as well as the shapes of
the labels or marks, the brands printed on the labels, the words or lettering on the labels or marks
and the shapes and colors of the labels or marks. The same criteria, however, cannot be applied in
the instant petition as the facts and circumstances herein are peculiarly different from those in
the Del Monte case.
In the same manner, the Court of Appeals erred in applying the totality rule as defined in the cases
of Bristol Myers v. Director of Patents;17 Mead Johnson & Co. v. NVJ Van Dorf Ltd.;18 and American
Cyanamid Co. v. Director of Patents.19 The totality rule states that "the test is not simply to take their
words and compare the spelling and pronunciation of said words. In determining whether two
trademarks are confusingly similar, the two marks in their entirety as they appear in the respective
labels must be considered in relation to the goods to which they are attached; the discerning eye of
the observer must focus not only on the predominant words but also on the other features
appearing on both labels."20
As this Court has often declared, each case must be studied according to the peculiar circumstances
of each case. That is the reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point.
In the above cases cited by the Court of Appeals to justify the application of the totality or holistic
test to this instant case, the factual circumstances are substantially different. In the Bristol
Myerscase, this Court held that although both BIOFERIN and BUFFERIN are primarily used for the
relief of pains such as headaches and colds, and their names are practically the same in spelling and
pronunciation, both labels have strikingly different backgrounds and surroundings. In addition, one
is dispensable only upon doctor's prescription, while the other may be purchased over-the-counter.
In the Mead Johnson case, the differences between ALACTA and ALASKA are glaring and striking to
the eye. Also, ALACTA refers to "Pharmaceutical Preparations which Supply Nutritional Needs,"
falling under Class 6 of the official classification of Medicines and Pharmaceutical Preparations to be
used as prescribed by physicians. On the other hand, ALASKA refers to "Foods and Ingredients of
Foods" falling under Class 47, and does not require medical prescription.
In the American Cyanamid case, the word SULMET is distinguishable from the word SULMETINE, as
the former is derived from a combination of the syllables "SUL" which is derived from sulfa and
"MET" from methyl, both of which are chemical compounds present in the article manufactured by
the contending parties. This Court held that the addition of the syllable "INE" in respondent's label is
sufficient to distinguish respondent's product or trademark from that of petitioner. Also, both
products are for medicinal veterinary use and the buyer will be more wary of the nature of the
product he is buying. In any case, both products are not identical as SULMET's label indicates that it
is used in a drinking water solution while that of SULMETINE indicates that they are tablets.
It cannot also be said that the products in the above cases can be bought off the shelf except,
perhaps, for ALASKA. The said products are not the usual "common and inexpensive" household
items which an "undiscerningly rash" buyer would unthinkingly buy.In the case at bar, other than
the fact that both Nestle's and CFC's products are inexpensive and common household items, the
similarity ends there. What is being questioned here is the use by CFC of the trademark MASTER. In
view of the difficulty of applying jurisprudential precedents to trademark cases due to the
peculiarity of each case, judicial fora should not readily apply a certain test or standard just because
of seeming similarities. As this Court has pointed above, there could be more telling differences than
similarities as to make a jurisprudential precedent inapplicable.
Nestle points out that the dominancy test should have been applied to determine whether there is a
confusing similarity between CFC's FLAVOR MASTER and Nestle's MASTER ROAST and MASTER
BLEND.
We agree.
As the Court of Appeals itself has stated, "[t]he determination of whether two trademarks are
indeed confusingly similar must be taken from the viewpoint of the ordinary purchasers who are, in
general, undiscerningly rash in buying the more common and less expensive household products
like coffee, and are therefore less inclined to closely examine specific details of similarities and
dissimilarities between competing products."21
The basis for the Court of Appeals' application of the totality or holistic test is the "ordinary
purchaser" buying the product under "normally prevalent conditions in trade" and the attention
such products normally elicit from said ordinary purchaser. An ordinary purchaser or buyer does
not usually make such scrutiny nor does he usually have the time to do so. The average shopper is
usually in a hurry and does not inspect every product on the shelf as if he were browsing in a
library.22
The Court of Appeals held that the test to be applied should be the totality or holistic test reasoning,
since what is of paramount consideration is the ordinary purchaser who is, in general,
undiscerningly rash in buying the more common and less expensive household products like coffee,
and is therefore less inclined to closely examine specific details of similarities and dissimilarities
between competing products.
This Court cannot agree with the above reasoning. If the ordinary purchaser is "undiscerningly
rash" in buying such common and inexpensive household products as instant coffee, and would
therefore be "less inclined to closely examine specific details of similarities and dissimilarities"
between the two competing products, then it would be less likely for the ordinary purchaser to
notice that CFC's trademark FLAVOR MASTER carries the colors orange and mocha while that of
Nestle's uses red and brown. The application of the totality or holistic test is improper since the
ordinary purchaser would not be inclined to notice the specific features, similarities or
dissimilarities, considering that the product is an inexpensive and common household item.
It must be emphasized that the products bearing the trademarks in question are "inexpensive and
common" household items bought off the shelf by "undiscerningly rash" purchasers. As such, if the
ordinary purchaser is "undiscerningly rash", then he would not have the time nor the inclination to
make a keen and perceptive examination of the physical discrepancies in the trademarks of the
products in order to exercise his choice.
While this Court agrees with the Court of Appeals' detailed enumeration of differences between the
respective trademarks of the two coffee products, this Court cannot agree that totality test is the one
applicable in this case. Rather, this Court believes that the dominancy test is more suitable to this
case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the law on
trademarks and unfair competition that confusing similarity is to be determined on the basis of
visual, aural, connotative comparisons and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the marketplace.23 The totality or holistic test
only relies on visual comparison between two trademarks whereas the dominancy test relies not
only on the visual but also on the aural and connotative comparisons and overall impressions
between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held
that:
From the evidence at hand, it is sufficiently established that the word MASTER is the dominant
feature of opposer's mark. The word MASTER is printed across the middle portion of the label in
bold letters almost twice the size of the printed word ROAST. Further, the word MASTER has always
been given emphasis in the TV and radio commercials and other advertisements made in promoting
the product. This can be gleaned from the fact that Robert Jaworski and Atty. Ric Puno Jr.., the
personalities engaged to promote the product, are given the titles Master of the Game and Master of In the art of coffee-making, nothing equals Master Roast, the coffee masterpiece from Nescafe, the
the Talk Show, respectively. In due time, because of these advertising schemes the mind of the world's coffee masters. A unique combination of the best coffee beans - Arabica for superior taste
buying public had come to learn to associate the word MASTER with the opposer's goods. and aroma, Robusta for strength and body. Truly distinctive and rich in flavor.

x x x. It is the observation of this Office that much of the dominance which the word MASTER has Master Roast. Coffee perfection worthy of masters like Ric Puno Jr. 29
acquired through Opposer's advertising schemes is carried over when the same is incorporated into
respondent-applicant's trademark FLAVOR MASTER. Thus, when one looks at the label bearing the
The term "MASTER", therefore, has acquired a certain connotation to mean the coffee products
trademark FLAVOR MASTER (Exh. 4) one's attention is easily attracted to the word MASTER, rather
MASTER ROAST and MASTER BLEND produced by Nestle. As such, the use by CFC of the term
than to the dissimilarities that exist. Therefore, the possibility of confusion as to the goods which
"MASTER" in the trademark for its coffee product FLAVOR MASTER is likely to cause confusion or
bear the competing marks or as to the origins thereof is not farfetched. x x x. 24
mistake or even to deceive the ordinary purchasers.

In addition, the word "MASTER" is neither a generic nor a descriptive term. As such, said term can
In closing, it may not be amiss to quote the case of American Chicle Co. v. Topps Chewing Gum,
not be invalidated as a trademark and, therefore, may be legally protected. Generic terms25 are those
Inc.,30 to wit:
which constitute "the common descriptive name of an article or substance," or comprise the "genus
of which the particular product is a species," or are "commonly used as the name or description of a
kind of goods," or "imply reference to every member of a genus and the exclusion of individuating Why it should have chosen a mark that had long been employed by [plaintiff] and had become
characters," or "refer to the basic nature of the wares or services provided rather than to the more known to the trade instead of adopting some other means of identifying its goods is hard to see
idiosyncratic characteristics of a particular product," and are not legally protectable. On the other unless there was a deliberate purpose to obtain some advantage from the trade that [plaintiff] had
hand, a term is descriptive26 and therefore invalid as a trademark if, as understood in its normal and built up. Indeed, it is generally true that, as soon as we see that a second comer in a market has, for
natural sense, it "forthwith conveys the characteristics, functions, qualities or ingredients of a no reason that he can assign, plagiarized the "make-up" of an earlier comer, we need no more; . . .
product to one who has never seen it and does not know what it is," or "if it forthwith conveys an [W]e feel bound to compel him to exercise his ingenuity in quarters further afield.
immediate idea of the ingredients, qualities or characteristics of the goods," or if it clearly denotes
what goods or services are provided in such a way that the consumer does not have to exercise
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. SP No. 24101
powers of perception or imagination.
is REVERSED and SET ASIDE and the decision of the Bureau of Patents, Trademarks and Technology
Transfer in Inter Partes Cases Nos. 3200 and 3202 is REINSTATED.
Rather, the term "MASTER" is a suggestive term brought about by the advertising scheme of Nestle.
Suggestive terms27 are those which, in the phraseology of one court, require "imagination, thought
SO ORDERED.
and perception to reach a conclusion as to the nature of the goods." Such terms, "which subtly
connote something about the product," are eligible for protection in the absence of secondary
meaning. While suggestive marks are capable of shedding "some light" upon certain characteristics
of the goods or services in dispute, they nevertheless involve "an element of incongruity,"
"figurativeness," or " imaginative effort on the part of the observer."

This is evident from the advertising scheme adopted by Nestle in promoting its coffee products. In
this case, Nestle has, over time, promoted its products as "coffee perfection worthy of masters like
Robert Jaworski and Ric Puno Jr."

In associating its coffee products with the term "MASTER" and thereby impressing them with the
attributes of said term, Nestle advertised its products thus:

Robert Jaworski. Living Legend. A true hard court hero. Fast on his feet. Sure in every shot he makes.
A master strategist. In one word, unmatched.

MASTER ROAST. Equally unmatched. Rich and deeply satisfying. Made from a unique combination
of the best coffee beans - Arabica for superior taste and aroma, Robusta for strength and body. A
masterpiece only NESCAFE, the world's coffee masters, can create.

MASTER ROAST. Coffee perfection worthy of masters like Robert Jaworski.28

In the art of conversation, Ric Puno Jr. is master. Witty. Well-informed. Confident.
 G.R. No. 100098 December 29, 1995
EMERALD GARMENT MANUFACTURING CORPORATION, Petitioner, v. HON. COURT OF
APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER and H.D. LEE
COMPANY, INC., Respondents.
KAPUNAN, J.:
In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald
Garment Manufacturing Corporation seeks to annul the decision of the Court of Appeals dated 29
November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly similar
to that of private respondent and the resolution dated 17 May 1991 denying petitioner's motion for
reconsideration.chanroblesvirtualawlibrarychanrobles virtual law library
The record reveals the following antecedent facts:chanrobles virtual law library
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation organized under
the laws of Delaware, U.S.A., filed with the Bureau of Patents, Trademarks & Technology Transfer
(BPTTT) a Petition for Cancellation of Registration No. SR 5054 (Supplemental Register) for the
trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets, jogging suits,
dresses, shorts, shirts and lingerie under Class 25, issued on 27 October 1980 in the name of
petitioner Emerald Garment Manufacturing Corporation, a domestic corporation organized and
existing under Philippine laws. The petition was docketed as Inter Partes Case No. 1558. 1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the Paris
Convention for the Protection of Industrial Property, averred that petitioner's trademark "so closely
resembled its own trademark, 'LEE' as previously registered and used in the Philippines, and not
abandoned, as to be likely, when applied to or used in connection with petitioner's goods, to cause
confusion, mistake and deception on the part of the purchasing public as to the origin of the
goods." 2
In its answer dated 23 March 1982, petitioner contended that its trademark was entirely and
unmistakably different from that of private respondent and that its certificate of registration was
legally and validly granted. 3
On 20 February 1984, petitioner caused the publication of its application for registration of the
trademark "STYLISTIC MR. LEE" in the Principal Register." 4
On 27 July 1984, private respondent filed a notice of opposition to petitioner's application for
registration also on grounds that petitioner's trademark was confusingly similar to its "LEE"
trademark. 5The case was docketed as Inter Partes Case No.
1860.chanroblesvirtualawlibrarychanrobles virtual law library
On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15 May 1985,
issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on grounds that a common
question of law was involved. 6
On 19 July 1988, the Director of Patents rendered a decision granting private respondent's petition
for cancellation and opposition to registration.chanroblesvirtualawlibrarychanrobles virtual law
library
The Director of Patents found private respondent to be the prior registrant of the trademark "LEE"
in the Philippines and that it had been using said mark in the Philippines. 7
Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's trademark
was confusingly similar to private respondent's mark because "it is the word 'Lee' which draws the
attention of the buyer and leads him to conclude that the goods originated from the same
manufacturer. It is undeniably the dominant feature of the mark." 8
On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it filed with
the BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the Director of Patents on
grounds that the same would cause it great and irreparable damage and injury. Private respondent
submitted its opposition on 22 August 1988. 9
On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's motion to stay
execution subject to the following terms and conditions:
1. That under this resolution, Respondent-Registrant is authorized only to dispose of its current
stock using the mark "STYLISTIC MR. LEE";chanrobles virtual law library
2. That Respondent-Registrant is strictly prohibited from further production, regardless of mode
and source, of the mark in question (STYLISTIC MR. LEE) in addition to its current stock;chanrobles
virtual law library
3. That this relief Order shall automatically cease upon resolution of the Appeal by the Court of
Appeals and, if the Respondent's appeal loses, all goods bearing the mark "STYLISTIC MR. LEE" shall
be removed from the market, otherwise such goods shall be seized in accordance with the
law.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED. 10chanrobles virtual law library
On 29 November 1990, the Court of Appeals promulgated its decision affirming the decision of the
Director of Patents dated 19 July 1988 in all respects. 11
In said decision the Court of Appeals expounded, thus:
xxx xxx xxxchanrobles virtual law library
Whether or not a trademark causes confusion and is likely to deceive the public is a question of fact
which is to be resolved by applying the "test of dominancy", meaning, if the competing trademark
contains the main or essential or dominant features of another by reason of which confusion and
deception are likely to result, then infringement takes place; that duplication or imitation is not
necessary, a similarity in the dominant features of the trademark would be
sufficient.chanroblesvirtualawlibrarychanrobles virtual law library
The word "LEE" is the most prominent and distinctive feature of the appellant's trademark and all of
the appellee's "LEE" trademarks. It is the mark which draws the attention of the buyer and leads
him to conclude that the goods originated from the same manufacturer. While it is true that there
are other words such as "STYLISTIC", printed in the appellant's label, such word is printed in such
small letters over the word "LEE" that it is not conspicuous enough to draw the attention of
ordinary buyers whereas the word "LEE" is printed across the label in big, bold letters and of the
same color, style, type and size of lettering as that of the trademark of the appellee. The alleged
difference is too insubstantial to be noticeable. Even granting arguendo that the word "STYLISTIC" is
conspicuous enough to draw attention, the goods may easily be mistaken for just another variation
or line of garments under the ap appelle's "LEE" trademarks in view of the fact that the appellee has
registered trademarks which use other words in addition to the principal mark "LEE" such as "LEE
RIDERS", "LEESURES" and "LEE LEENS". The likelihood of confusion is further made more probable
by the fact that both parties are engaged in the same line of business. It is well to reiterate that the
determinative factor in ascertaining whether or not the marks are confusingly similar to each other
is not whether the challenged mark would actually cause confusion or deception of the purchasers
but whether the use of such mark would likely cause confusion or mistake on the part of the buying
public.
xxx xxx xxxchanrobles virtual law library
The appellee has sufficiently established its right to prior use and registration of the trademark
"LEE" in the Philippines and is thus entitled to protection from any infringement upon the same. It is
thus axiomatic that one who has identified a peculiar symbol or mark with his goods thereby
acquires a property right in such symbol or mark, and if another infringes the trademark, he thereby
invokes this property right.chanroblesvirtualawlibrarychanrobles virtual law library
The merchandise or goods being sold by the parties are not that expensive as alleged to be by the
appellant and are quite ordinary commodities purchased by the average person and at times, by the
ignorant and the unlettered. Ordinary purchasers will not as a rule examine the small letterings
printed on the label but will simply be guided by the presence of the striking mark "LEE". Whatever
difference there may be will pale in insignificance in the face of an evident similarity in the
dominant features and overall appearance of the labels of the parties. 12
xxx xxx xxx
On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned
decision of the Court of Appeals.chanroblesvirtualawlibrarychanrobles virtual law library
Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and unrelated
arguments and defenses not previously raised in the proceedings below such as laches and a claim
that private respondent appropriated the style and appearance of petitioner's trademark when it
registered its "LEE" mark under Registration No. 44220.13
On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for
reconsideration and ruled thus:
xxx xxx xxxchanrobles virtual law library
A defense not raised in the trial court cannot be raised on appeal for the first time. An issue raised
for the first time on appeal and not raised timely in the proceedings in the lower court is barred by
estoppel.chanroblesvirtualawlibrarychanrobles virtual law library
The object of requiring the parties to present all questions and issues to the lower court before they
can be presented to this Court is to have the lower court rule upon them, so that this Court on
appeal may determine whether or not such ruling was erroneous. The purpose is also in furtherance
of justice to require the party to first present the question he contends for in the lower court so that
the other party may not be taken by surprise and may present evidence to properly meet the issues
raised.chanroblesvirtualawlibrarychanrobles virtual law library
Moreover, for a question to be raised on appeal, the same must also be within the issues raised by
the parties in their pleadings. Consequently, when a party deliberately adopts a certain theory, and
the case is tried and decided based upon such theory presented in the court below, he will not be
permitted to change his theory on appeal. To permit him to do so would be unfair to the adverse
party. A question raised for the first time on appeal, there having opportunity to raise them in the
court of origin constitutes a change of theory which is not permissible on
appeal.chanroblesvirtualawlibrarychanrobles virtual law library
In the instant case, appellant's main defense pleaded in its answer dated March 23, 1982 was that
there was "no confusing similarity between the competing trademark involved. On appeal, the
appellant raised a single issue, to wit:
The only issue involved in this case is whether or not respondent-registrant's trademark
"STYLISTIC MR. LEE" is confusingly similar with the petitioner's trademarks "LEE or LEERIDERS,
LEE-LEENS and LEE-SURES."
Appellant's main argument in this motion for reconsideration on the other hand is that the appellee
is estopped by laches from asserting its right to its trademark. Appellant claims although belatedly
that appellee went to court with "unclean hands" by changing the appearance of its trademark to
make it identical to the appellant's trademark.chanroblesvirtualawlibrarychanrobles virtual law
library
Neither defenses were raised by the appellant in the proceedings before the Bureau of Patents.
Appellant cannot raise them now for the first time on appeal, let alone on a mere motion for
reconsideration of the decision of this Court dismissing the appellant's
appeal.chanroblesvirtualawlibrarychanrobles virtual law library
While there may be instances and situations justifying relaxation of this rule, the circumstance of
the instant case, equity would be better served by applying the settled rule it appearing that
appellant has not given any reason at all as to why the defenses raised in its motion for
reconsideration was not invoked earlier.14
xxx xxx xxx
Twice rebuffed, petitioner presents its case before this Court on the following assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT CAUSED THE
ISSUANCE OF A FOURTH "LEE" TRADEMARK IMITATING THAT OF THE PETITIONER'S ON MAY 5,
1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF PATENT'S DECISION DATED JULY
19, 1988.chanroblesvirtualawlibrarychanrobles virtual law library
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF ESTOPPEL BY LACHES
MUST BE RAISED IN THE PROCEEDINGS BEFORE THE BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER.chanroblesvirtualawlibrarychanrobles virtual law library
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE RESPONDENT'S PRIOR
REGISTRATION OF ITS TRADEMARK AND DISREGARDED THE FACT THAT PRIVATE RESPONDENT
HAD FAILED TO PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR REGISTRATION. 15chanrobles virtual law
library
In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONER'S TRADEMARK
SYTLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE RESPONDENT'S TRADEMARK
LEE OR LEE-RIDER, LEE-LEENS AND LEE-SURES.chanroblesvirtualawlibrarychanrobles virtual law
library
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT IS THE PRIOR USER
AND ITS TRADEMARK IS DIFFERENT FROM THAT OF THE PRIVATE
RESPONDENT.chanroblesvirtualawlibrarychanrobles virtual law library
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE RESPONDENT'S
AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA FACIE EVIDENCE OF GOOD
FAITH.chanroblesvirtualawlibrarychanrobles virtual law library
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE CONFUSED WITH PRIVATE
RESPONDENT'S LEE TRADEMARK. 16chanrobles virtual law library
Petitioner contends that private respondent is estopped from instituting an action for infringement
before the BPTTT under the equitable principle of laches pursuant to Sec. 9-A of R.A. No. 166,
otherwise known as the Law on Trade-marks, Trade-names and Unfair Competition:
Sec. 9-A. Equitable principles to govern proceedings. - In opposition proceedings and in all other
inter partes proceedings in the patent office under this act, equitable principles of laches, estoppel,
and acquiescence, where applicable, may be considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May 1975, yet, it
was only on 18 September 1981 that private respondent filed a petition for cancellation of
petitioner's certificate of registration for the said trademark. Similarly, private respondent's notice
of opposition to petitioner's application for registration in the principal register was belatedly filed
on 27 July 1984. 17
Private respondent counters by maintaining that petitioner was barred from raising new issues on
appeal, the only contention in the proceedings below being the presence or absence of confusing
similarity between the two trademarks in question. 18
We reject petitioner's contention.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A. No.
166) provides that "marks and tradenames for the supplemental register shall not be published for
or be subject to opposition, but shall be published on registration in the Official Gazette." 19 The
reckoning point, therefore, should not be 1 May 1975, the date of alleged use by petitioner of its
assailed trademark but 27 October 1980, 20the date the certificate of registration SR No. 5054 was
published in the Official Gazette and issued to petitioner.chanroblesvirtualawlibrarychanrobles
virtual law library
It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered "officially" put on notice that petitioner has appropriated or is using
said mark, which, after all, is the function and purpose of registration in the supplemental
register.21 The record is bereft of evidence that private respondent was aware of petitioner's
trademark before the date of said publication and issuance. Hence, when private respondent
instituted cancellation proceedings on 18 September 1981, less than a year had
passed.chanroblesvirtualawlibrarychanrobles virtual law library
Corollarily, private respondent could hardly be accused of inexcusable delay in filing its notice of
opposition to petitioner's application for registration in the principal register since said application
was published only on 20 February 1984. 22 From the time of publication to the time of filing the
opposition on 27 July 1984 barely five (5) months had elapsed. To be barred from bringing suit on
grounds of estoppel and laches, the delay must be
lengthy. 23
More crucial is the issue of confusing similarity between the two trademarks. Petitioner vehemently
contends that its trademark "STYLISTIC MR. LEE" is entirely different from and not confusingly
similar to private respondent's "LEE" trademark.chanroblesvirtualawlibrarychanrobles virtual law
library
Private respondent maintains otherwise. It asserts that petitioner's trademark tends to mislead and
confuse the public and thus constitutes an infringement of its own mark, since the dominant feature
therein is the word "LEE."chanrobles virtual law library
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
Sec. 22. Infringement, what constitutes. - Any person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitable any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with such
goods, business or services; shall be liable to a civil action by the registrant for any or all of the
remedies herein provided.
Practical application, however, of the aforesaid provision is easier said than done. In the history of
trademark cases in the Philippines, particularly in ascertaining whether one trademark is
confusingly similar to or is a colorable imitation of another, no set rules can be deduced. Each case
must be decided on its own merits.chanroblesvirtualawlibrarychanrobles virtual law library
In Esso Standard Eastern, Inc. v. Court of Appeals, 24 we held:
. . . But likelihood of confusion is a relative concept; to be determined only according to the
particular, and sometimes peculiar, circumstances of each case. It is unquestionably true that, as
stated in Coburn vs. Puritan Mills, Inc.: "In trademark cases, even more than in other litigation,
precedent must be studied in the light of the facts of the particular case."
xxx xxx xxx
Likewise, it has been observed that:
In determining whether a particular name or mark is a "colorable imitation" of another, no all-
embracing rule seems possible in view of the great number of factors which must necessarily be
considered in resolving this question of fact, such as the class of product or business to which the
article belongs; the product's quality, quantity, or size, including its wrapper or container; the
dominant color, style, size, form, meaning of letters, words, designs and emblems used; the nature of
the package, wrapper or container; the character of the product's purchasers; location of the
business; the likelihood of deception or the mark or name's tendency to confuse;
etc. 25chanrobles virtual law library
Proceeding to the task at hand, the essential element of infringement is colorable imitation. This
term has been defined as "such a close or ingenious imitation as to be calculated to deceive ordinary
purchasers, or such resemblance of the infringing mark to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives, and to cause him to purchase the one
supposing it to be the other." 26
Colorable imitation does not mean such similitude as amounts to identity. Nor does it require that
all the details be literally copied. Colorable imitation refers to such similarity in form, content,
words, sound, meaning, special arrangement, or general appearance of the trademark or tradename
with that of the other mark or tradename in their over-all presentation or in their essential,
substantive and distinctive parts as would likely mislead or confuse persons in the ordinary course
of purchasing the genuine article. 27chanrobles virtual law library
In determining whether colorable imitation exists, jurisprudence has developed two kinds of tests -
the Dominancy Test applied in Asia Brewery, Inc. v. Court of Appeals 28and other cases 29and the
Holistic Test developed in Del Monte Corporation v. Court of Appeals 30 and its proponent cases. 31
As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception and thus constitutes infringement.
xxx xxx xxxchanrobles virtual law library
. . . If the competing trademark contains the main or essential or dominant features of another, and
confusion and deception is likely to result, infringement takes place. Duplication or imitation is not
necessary; nor it is necessary that the infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. v. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs.
Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of trademarks is whether
the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . .) 32
xxx xxx xxx
On the other side of the spectrum, the holistic test mandates that the entirety of the marks in
question must be considered in determining confusing similarity.
xxx xxx xxxchanrobles virtual law library
In determining whether the trademarks are confusingly similar, a comparison of the words is not
the only determinant factor. The trademarks in their entirety as they appear in their respective
labels or hang tags must also be considered in relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion whether one is
confusingly similar to the other. 33
xxx xxx xxx
Applying the foregoing tenets to the present controversy and taking into account the factual
circumstances of this case, we considered the trademarks involved as a whole and rule that
petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's "LEE"
trademark.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word "LEE" is
prominent, the trademark should be considered as a whole and not piecemeal. The dissimilarities
between the two marks become conspicuous, noticeable and substantial enough to matter
especially in the light of the following variables that must be factored
in.chanroblesvirtualawlibrarychanrobles virtual law library
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not
your ordinary household items like catsup, soysauce or soap which are of minimal cost. Maong
pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be more cautious
and discriminating in and would prefer to mull over his purchase. Confusion and deception, then, is
less likely. In Del Monte Corporation v. Court of Appeals, 34we noted that:
. . . Among these, what essentially determines the attitudes of the purchaser, specifically his
inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box of candies
will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary
buyer does not exercise as much prudence in buying an article for which he pays a few centavos as
he does in purchasing a more valuable thing. Expensive and valuable items are normally bought
only after deliberate, comparative and analytical investigation. But mass products, low priced
articles in wide use, and matters of everyday purchase requiring frequent replacement are bought
by the casual consumer without great
care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not
ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is,
therefore, more or less knowledgeable and familiar with his preference and will not easily be
distracted.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
The definition laid down in Dy Buncio v. Tan Tiao Bok 35is 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."chanrobles virtual law library
There is no cause for the Court of Appeal's apprehension that petitioner's products might be
mistaken as "another variation or line of garments under private respondent's 'LEE'
trademark". 36 As one would readily observe, private respondent's variation follows a standard
format "LEERIDERS," "LEESURES" and "LEELEENS." It is, therefore, improbable that the public
would immediately and naturally conclude that petitioner's "STYLISTIC MR. LEE" is but another
variation under private respondent's "LEE" mark.chanroblesvirtualawlibrarychanrobles virtual law
library
As we have previously intimated the issue of confusing similarity between trademarks is resolved
by considering the distinct characteristics of each case. In the present controversy, taking into
account these unique factors, we conclude that the similarities in the trademarks in question are not
sufficient as to likely cause deception and confusion tantamount to
infringement.chanroblesvirtualawlibrarychanrobles virtual law library
Another way of resolving the conflict is to consider the marks involved from the point of view of
what marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly paragraph 4 (e):
CHAPTER II-A.- The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)chanrobles virtual law library
Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal register. - There is
hereby established a register of trade-marks, trade-names and service-marks which shall be known
as the principal register. The owner of a trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or services of others shall have
the right to register the same on the principal register, unless it:
xxx xxx xxxchanrobles virtual law library
(e) Consists of a mark or trade-name which, when applied to or used in connection with the goods,
business or services of the applicant is merely descriptive or deceptively misdescriptive of them, or
when applied to or used in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them, or is primarily merely a
surname; (Emphasis ours.)
xxx xxx xxx
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership
over and singular use of said term.
. . . It has been held that a personal name or surname may not be monopolized as a trademark or
tradename as against others of the same name or surname. For in the absence of contract, fraud, or
estoppel, any man may use his name or surname in all legitimate ways. Thus, "Wellington" is a
surname, and its first user has no cause of action against the junior user of "Wellington" as it is
incapable of exclusive appropriation. 37chanrobles virtual law library
In addition to the foregoing, we are constrained to agree with petitioner's contention that private
respondent failed to prove prior actual commercial use of its "LEE" trademark in the Philippines
before filing its application for registration with the BPTTT and hence, has not acquired ownership
over said mark.chanroblesvirtualawlibrarychanrobles virtual law library
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No.
166) which explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.chanroblesvirtualawlibrarychanrobles virtual
law library
Sec. 2. What are registrable. - Trade-marks, trade-names, and service marks owned by persons,
corporations, partnerships or associations domiciled in the Philippines and by persons,
corporations, partnerships, or associations domiciled in any foreign country may be registered in
accordance with the provisions of this act: Provided, That said trade-marks, trade-names, or service
marks are actually in use in commerce and services not less than two months in the Philippines before
the time the applications for registration are filed: And Provided, further, That the country of which
the applicant for registration is a citizen grants by law substantially similar privileges to citizens of
the Philippines, and such fact is officially certified, with a certified true copy of the foreign law
translated into the English language, by the government of the foreign country to the Government of
the Republic of the Philippines. (As amended.) (Emphasis ours.)chanrobles virtual law library
Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how acquired. - Anyone who
lawfully produces or deals in merchandise of any kind or who engages in lawful business, or who
renders any lawful service in commerce, by actual use hereof in manufacture or trade, in business, and
in the service rendered; may appropriate to his exclusive use a trade-mark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his merchandise, business or services
from others. The ownership or possession of trade-mark, trade-name, service-mark, heretofore or
hereafter appropriated, as in this section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights to the law. (As amended.) (Emphasis
ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38relied upon
by private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) 39 were sufficiently
expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of Appeals: 40
xxx xxx xxxchanrobles virtual law library
Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirement of actual use in the Philippines must subordinate an international agreement inasmuch
as the apparent clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain,
High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras, International Law and World
Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made part of the law
of the land does not by any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national legislative enactments.
xxx xxx xxxchanrobles virtual law library
In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of
lack of business activity in the Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the Philippines in line with
Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a
foreign corporation not licensed to do business in the Philippines files a complaint for infringement,
the entity need not be actually using its trademark in commerce in the Philippines. Such a foreign
corporation may have the personality to file a suit for infringement but it may not necessarily be
entitled to protection due to absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several registration
certificates for its various trademarks "LEE," "LEERIDERS," and "LEESURES" in both the
supplemental and principal registers, as early as 1969 to 1973. 41However, registration alone will
not suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 42 we
declared:
 xxx xxx xxxchanrobles virtual law library vouchers representing various advertising expenses in the Philippines for "LEE" products. 48It is
well to note that these expenses were incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it
entered into a licensing agreement with private respondent on 11 May 1981. 49
A rule widely accepted and firmly entrenched because it has come down through the years is that
actual use in commerce or business is a prerequisite in the acquisition of the right of ownership
over a trademark. On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans
and other garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as evidenced by
appropriate sales invoices to various stores and retailers. 50
xxx xxx xxxchanrobles virtual law library

It would seem quite clear that adoption alone of a trademark would not give exclusive right thereto.
Such right "grows out of their actual use." Adoption is not use. One may make advertisements, issue
circulars, give out price lists on certain goods; but these alone would not give exclusive right of use.
For trademark is a creation of use. The underlying reason for all these is that purchasers have come
to understand the mark as indicating the origin of the wares. Flowing from this is the trader's right
to protection in the trade he has built up and the goodwill he has accumulated from use of the
trademark. Registration of a trademark, of course, has value: it is an administrative act declaratory
of a pre-existing right.Registration does not, however, perfect a trademark right. (Emphasis ours.)
xxx xxx xxx
To augment its arguments that it was, not only the prior registrant, but also the prior user, private
respondent invokes Sec. 20 of the Trademark Law, thus:
Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber Corp. v. Universal
Rubber Products, Inc., 52 respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior to its
registration. There is no dispute that respondent corporation was the first registrant, yet it failed to
fully substantiate its claim that it used in trade or business in the Philippines the subject mark; it did
not present proof to invest it with exclusive, continuous adoption of the trademark which should
consist among others, of considerable sales since its first use. The invoices submitted by respondent
which were dated way back in 1957 show that the zippers sent to the Philippines were to be used as
"samples" and "of no commercial value." The evidence for respondent must be clear, definite and
free from inconsistencies. "Samples" are not for sale and therefore, the fact of exporting them to the
Philippines cannot be considered to be equivalent to the "use" contemplated by law. Respondent did
not expect income from such "samples." There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the Philippines.

Sec. 20. Certificate of registration prima facie evidence of validity. - A certificate of registration of a xxx xxx xxxchanrobles virtual law library
mark or tradename shall be a prima facie evidence of the validity of the registration, the registrant's
ownership of the mark or trade-name, and of the registrant's exclusive right to use the same in
The sales invoices provide the best proof that there were actual sales of petitioner's product in the
connection with the goods, business or services specified in the certificate, subject to any conditions
country and that there was actual use for a protracted period of petitioner's trademark or part
and limitations stated therein.
thereof through these sales.

The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of
For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use
validity, ownership and exclusive use, is qualified. A registration certificate serves merely as prima
of its own mark and for failure to establish confusing similarity between said trademarks, private
facie evidence. It is not conclusive but can and may be rebutted by controverting
respondent's action for infringement must necessarily fail.chanroblesvirtualawlibrarychanrobles
evidence.chanroblesvirtualawlibrarychanrobles virtual law library
virtual law library

Moreover, the aforequoted provision applies only to registrations in the principal

WHEREFORE, premises considered, the questioned decision and resolution are hereby REVERSED
register. 43 Registrations in the supplemental register do not enjoy a similar privilege. A
and SET ASIDE.chanroblesvirtualawlibrarychanrobles virtual law library
supplemental register was created precisely for the registration of marks which are not registrable
on the principal register due to some defects. 44
SO ORDERED.
The determination as to who is the prior user of the trademark is a question of fact and it is this
Court's working principle not to disturb the findings of the Director of Patents on this issue in the
absence of any showing of grave abuse of discretion. The findings of facts of the Director of Patents
are conclusive upon the Supreme Court provided they are supported by substantial evidence. 45

In the case at bench, however, we reverse the findings of the Director of Patents and the Court of
Appeals. After a meticulous study of the records, we observe that the Director of Patents and the
Court of Appeals relied mainly on the registration certificates as proof of use by private respondent
of the trademark "LEE" which, as we have previously discussed are not sufficient. We cannot give
credence to private respondent's claim that its "LEE" mark first reached the Philippines in the
1960's through local sales by the Post Exchanges of the U.S. Military Bases in the Philippines 46based
as it was solely on the self-serving statements of Mr. Edward Poste, General Manager of Lee (Phils.),
Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private
respondent. 47Similarly, we give little weight to the numerous
G.R. No. L-63796-97 May 2, 1984
LA CHEMISE LACOSTE, S. A., petitioner,
vs.
HON. OSCAR C. FERNANDEZ, Presiding Judge of Branch XLIX, Regional Trial Court, National
Capital Judicial Region, Manila and GOBINDRAM HEMANDAS, respondents.
G.R. No. L-65659 May 2l, 1984
GOBINDRAM HEMANDAS SUJANANI, petitioner,
vs.
HON. ROBERTO V. ONGPIN, in his capacity as Minister of Trade and Industry, and HON. CESAR
SAN DIEGO, in his capacity as Director of Patents, respondents.
Castillo, Laman, Tan & Pantaleon for petitioners in 63796-97.
Ramon C. Fernandez for private respondent in 63796-97 and petitioner in 65659.
GUTIERREZ, JR., J.:
It is among this Court's concerns that the Philippines should not acquire an unbecoming reputation
among the manufacturing and trading centers of the world as a haven for intellectual pirates
imitating and illegally profiting from trademarks and tradenames which have established
themselves in international or foreign trade.
Before this Court is a petition for certiorari with preliminary injunction filed by La Chemise Lacoste,
S.A., a well known European manufacturer of clothings and sporting apparels sold in the
international market and bearing the trademarks "LACOSTE" "CHEMISE LACOSTE", "CROCODILE
DEVICE" and a composite mark consisting of the word "LACOSTE" and a representation of a
crocodile/alligator. The petitioner asks us to set aside as null and void, the order of judge Oscar C.
Fernandez, of Branch XLIX, Regional Trial Court, National Capital Judicial Region, granting the
motion to quash the search warrants previously issued by him and ordering the return of the seized
items.
The facts are not seriously disputed. The petitioner is a foreign corporation, organized and existing
under the laws of France and not doing business in the Philippines, It is undeniable from the records
that it is the actual owner of the abovementioned trademarks used on clothings and other goods
specifically sporting apparels sold in many parts of the world and which have been marketed in the
Philippines since 1964, The main basis of the private respondent's case is its claim of alleged prior
registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was issued Reg. No. SR-2225
(SR stands for Supplemental Register) for the trademark "CHEMISE LACOSTE & CROCODILE
DEVICE" by the Philippine Patent Office for use on T-shirts, sportswear and other garment products
of the company. Two years later, it applied for the registration of the same trademark under the
Principal Register. The Patent Office eventually issued an order dated March 3, 1977 which states
that:
xxx xxx xxx
... Considering that the mark was already registered in the Supplemental
Register in favor of herein applicant, the Office has no other recourse but to
allow the application, however, Reg. No. SR-2225 is now being contested in a
Petition for Cancellation docketed as IPC No. 1046, still registrant is presumed
to be the owner of the mark until after the registration is declared cancelled.
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights, title, and
interest in the trademark "CHEMISE LACOSTE & DEVICE".
On November 21, 1980, the petitioner filed its application for registration of the trademark
"Crocodile Device" (Application Serial No. 43242) and "Lacoste" (Application Serial No. 43241).The
former was approved for publication while the latter was opposed by Games and Garments in Inter
Partes Case No. 1658. In 1982, the petitioner filed a Petition for the Cancellation of Reg. No. SR-2225
docketed as Inter Partes Case No. 1689. Both cases have now been considered by this Court
in Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National Bureau of Investigation (NBI) a letter-
complaint alleging therein the acts of unfair competition being committed by Hemandas and
requesting their assistance in his apprehension and prosecution. The NBI conducted an
investigation and subsequently filed with the respondent court two applications for the issuance of
search warrants which would authorize the search of the premises used and occupied by the
Lacoste Sports Center and Games and Garments both owned and operated by Hemandas.
The respondent court issued Search Warrant Nos. 83-128 and 83-129 for violation of Article 189 of
the Revised Penal Code, "it appearing to the satisfaction of the judge after examining under oath
applicant and his witnesses that there are good and sufficient reasons to believe that Gobindram
Hemandas ... has in his control and possession in his premises the ... properties subject of the
offense," (Rollo, pp. 67 and 69) The NBI agents executed the two search warrants and as a result of
the search found and seized various goods and articles described in the warrants.
Hemandas filed a motion to quash the search warrants alleging that the trademark used by him was
different from petitioner's trademark and that pending the resolution of IPC No. 1658 before the
Patent Office, any criminal or civil action on the same subject matter and between the same parties
would be premature.
The petitioner filed its opposition to the motion arguing that the motion to quash was fatally
defective as it cited no valid ground for the quashal of the search warrants and that the grounds
alleged in the motion were absolutely without merit. The State Prosecutor likewise filed his
opposition on the grounds that the goods seized were instrument of a crime and necessary for the
resolution of the case on preliminary investigation and that the release of the said goods would be
fatal to the case of the People should prosecution follow in court.
The respondent court was, however, convinced that there was no probable cause to justify the
issuance of the search warrants. Thus, in its order dated March 22, 1983, the search warrants were
recalled and set aside and the NBI agents or officers in custody of the seized items were ordered to
return the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following issues:
Did respondent judge act with grave abuse of discretion amounting to lack of
jurisdiction,
 (i) in reversing the finding of probable cause which he himself had made in
issuing the search warrants, upon allegations which are matters of defense and
as such can be raised and resolved only upon trial on the merits; and
(ii) in finding that the issuance of the search warrants is premature in the face
of the fact that (a) Lacoste's registration of the subject trademarks is still
pending with the Patent Office with opposition from Hemandas; and (b) the
subject trademarks had been earlier registered by Hemandas in his name in
the Supplemental Register of the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the following issues:
I
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE COURTS.
II
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO
LACK OF JURISDICTION IN ISSUING THE ORDER DATED APRIL 22, 1983.
Hemandas argues in his comment on the petition for certiorari that the petitioner being a foreign
corporation failed to allege essential facts bearing upon its capacity to sue before Philippine courts.
He states that not only is the petitioner not doing business in the Philippines but it also is not
licensed to do business in the Philippines. He also cites the case of Leviton Industries v. Salvador (114
SCRA 420) to support his contention The Leviton case, however, involved a complaint for unfair
competition under Section 21-A of Republic Act No. 166 which provides:
Sec. 21 — A. Any foreign corporation or juristic person to which a mark or
tradename has been registered or assigned under this Act may bring an action
hereunder for infringement, for unfair competition, or false designation of
origin and false description, whether or not it has been licensed to do business
in the Philippines under Act numbered Fourteen Hundred and Fifty-Nine, as
amended, otherwise known as the Corporation Law, at the time it brings the
complaint; Provided, That the country of which the said foreign corporation or
juristic person is a citizen, or in which it is domiciled, by treaty, convention or
law, grants a similar privilege to corporate or juristic persons of the
Philippines.
We held that it was not enough for Leviton, a foreign corporation organized and existing under the
laws of the State of New York, United States of America, to merely allege that it is a foreign
corporation. It averred in Paragraph 2 of its complaint that its action was being filed under the
provisions of Section 21-A of Republic Act No. 166, as amended. Compliance with the requirements
imposed by the abovecited provision was necessary because Section 21-A of Republic Act No. 166
having explicitly laid down certain conditions in a specific proviso, the same must be expressly
averred before a successful prosecution may ensue. It is therefore, necessary for the foreign
corporation to comply with these requirements or aver why it should be exempted from them, if
such was the case. The foreign corporation may have the right to sue before Philippine courts, but
our rules on pleadings require that the qualifying circumstances necessary for the assertion of such
right should first be affirmatively pleaded.
In contradistinction, the present case involves a complaint for violation of Article 189 of the Revised
Penal Code. The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton argument, Hemandas argued in his brief
that the petitioner was doing business in the Philippines but was not licensed to do so. To support
this argument, he states that the applicable ruling is the case of Mentholatum Co., Inc. v. Mangaliman:
(72 Phil. 524) where Mentholatum Co. Inc., a foreign corporation and Philippine-American Drug Co.,
the former's exclusive distributing agent in the Philippines filed a complaint for infringement of
trademark and unfair competition against the Mangalimans.
The argument has no merit. The Mentholatum case is distinct from and inapplicable to the case at
bar. Philippine American Drug Co., Inc., was admittedly selling products of its principal
Mentholatum Co., Inc., in the latter's name or for the latter's account. Thus, this Court held that
"whatever transactions the Philippine-American Drug Co., Inc. had executed in view of the law, the
Mentholatum Co., Inc., did it itself. And, the Mentholatum Co., Inc., being a foreign doing business in
the Philippines without the license required by Section 68 of the Corporation Law, it may not
prosecute this action for violation of trademark and unfair competition."
In the present case, however, the petitioner is a foreign corporation not doing business in the
Philippines. The marketing of its products in the Philippines is done through an exclusive
distributor, Rustan Commercial Corporation The latter is an independent entity which buys and
then markets not only products of the petitioner but also many other products bearing equally well-
known and established trademarks and tradenames. in other words, Rustan is not a mere agent or
conduit of the petitioner.
The rules and regulations promulgated by the Board of Investments pursuant to its rule-making
power under Presidential Decree No. 1789, otherwise known as the Omnibus Investment Code,
support a finding that the petitioner is not doing business in the Philippines. Rule I, Sec. 1 (g) of said
rules and regulations defines "doing business" as one" which includes, inter alia:
(1) ... A foreign firm which does business through middlemen acting on their
own names, such as indentors, commercial brokers or commission merchants,
shall not be deemed doing business in the Philippines. But such indentors,
commercial brokers or commission merchants shall be the ones deemed to be
doing business in the Philippines.
(2) Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an independent
status, i.e., it transacts business in its name and for its account, and not in the
name or for the account of a principal Thus, where a foreign firm is
represented by a person or local company which does not act in its name but in
the name of the foreign firm the latter is doing business in the Philippines.
xxx xxx xxx
Applying the above provisions to the facts of this case, we find and conclude that the petitioner is
not doing business in the Philippines. Rustan is actually a middleman acting and transacting
business in its own name and or its own account and not in the name or for the account of the
petitioner.
But even assuming the truth of the private respondent's allegation that the petitioner failed to allege
material facts in its petition relative to capacity to sue, the petitioner may still maintain the present
suit against respondent Hemandas. As early as 1927, this Court was, and it still is, of the view that a
foreign corporation not doing business in the Philippines needs no license to sue before Philippine would become, therefore, of not much significance in the main case. We cannot snow a possible
courts for infringement of trademark and unfair competition. Thus, in Western Equipment and violator of our criminal statutes to escape prosecution upon a far-fetched contention that the
Supply Co. v. Reyes (51 Phil. 115), this Court held that a foreign corporation which has never done aggrieved party or victim of a crime has no standing to sue.
any business in the Philippines and which is unlicensed and unregistered to do business here, but is
widely and favorably known in the Philippines through the use therein of its products bearing its
In upholding the right of the petitioner to maintain the present suit before our courts for unfair
corporate and tradename, has a legal right to maintain an action in the Philippines to restrain the
competition or infringement of trademarks of a foreign corporation, we are moreover recognizing
residents and inhabitants thereof from organizing a corporation therein bearing the same name as
our duties and the rights of foreign states under the Paris Convention for the Protection of Industrial
the foreign corporation, when it appears that they have personal knowledge of the existence of such
Property to which the Philippines and France are parties. We are simply interpreting and enforcing
a foreign corporation, and it is apparent that the purpose of the proposed domestic corporation is to
a solemn international commitment of the Philippines embodied in a multilateral treaty to which we
deal and trade in the same goods as those of the foreign corporation.
are a party and which we entered into because it is in our national interest to do so.

We further held:
The Paris Convention provides in part that:

xxx xxx xxx

ARTICLE 1

... That company is not here seeking to enforce any legal or control rights
(1) The countries to which the present Convention applies constitute
arising from, or growing out of, any business which it has transacted in the
themselves into a Union for the protection of industrial property.
Philippine Islands. The sole purpose of the action:

(2) The protection of industrial property is concerned with patents, utility

Is to protect its reputation, its corporate name, its goodwill, whenever that
models, industrial designs, trademarks service marks, trade names, and
reputation, corporate name or goodwill have, through the natural development
indications of source or appellations of origin, and the repression of unfair
of its trade, established themselves.' And it contends that its rights to the use of
competition.
its corporate and trade name:

xxx xxx xxx

Is a property right, a right in rem, which it may assert and protect against all
the world, in any of the courts of the world-even in jurisdictions where it does
not transact business-just the same as it may protect its tangible property, real ARTICLE 2
or personal, against trespass, or conversion. Citing sec. 10, Nims on Unfair
Competition and TradeMarks and cases cited; secs. 21-22, Hopkins on
(2) Nationals of each of the countries of the Union shall as regards the
TradeMarks, Trade Names and Unfair Competition and cases cited.' That point
protection of industrial property, enjoy in all the other countries of the Union
is sustained by the authorities, and is well stated in Hanover Star Mining Co. v.
the advantages that their respective laws now grant, or may hereafter grant, to
Allen and Wheeler Co. (208 Fed., 513). in which the syllabus says:
nationals, without prejudice to the rights specially provided by the present
Convention. Consequently, they shall have the same protection as the latter,
Since it is the trade and not the mark that is to be protected, a trade-mark and the same legal remedy against any infringement of their rights, provided
acknowledges no territorial boundaries of municipalities or states or nations, they observe the conditions and formalities imposed upon nationals.
but extends to every market where the trader's goods have become known and
Identified by the use of the mark.
xxx xxx xxx

Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent setting.
ARTICLE 6
Our jurisprudence is replete with cases illustrating instances when foreign corporations not doing
business in the Philippines may nonetheless sue in our courts. In East Board Navigation Ltd, v.
Ysmael and Co., Inc. (102 Phil. 1), we recognized a right of foreign corporation to sue on isolated (1) The countries of the Union undertake, either administratively if their
transactions. In General Garments Corp. v. Director of Patents (41 SCRA 50), we sustained the right of legislation so permits, or at the request of an interested party, to refuse or to
Puritan Sportswear Corp., a foreign corporation not licensed to do and not doing business in the cancel the registration and to prohibit the use of a trademark which constitutes
Philippines, to file a petition for cancellation of a trademark before the Patent Office. a reproduction, imitation or translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to
be well-known in that country as being already the mark of a person entitled to
More important is the nature of the case which led to this petition. What preceded this petition
the benefits of the present Convention and used for Identical or similar goods.
for certiorari was a letter complaint filed before the NBI charging Hemandas with a criminal offense,
These provisions shall also apply when the essential part of the mark
i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after the completion of
constitutes a reproduction of any such well-known mark or an imitation liable
the preliminary investigation being conducted by the Special Prosecutor the information shall be in
to create confusion therewith.
the name of the People of the Philippines and no longer the petitioner which is only an aggrieved
party since a criminal offense is essentially an act against the State. It is the latter which is
principally the injured party although there is a private right violated. Petitioner's capacity to sue xxx xxx xxx
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.
xxx xxx xxx
ARTICLE 10bis
(1) The countries of the Union are bound to assure to persons entitled to the
benefits of the Union effective protection against unfair competition.
xxx xxx xxx
ARTICLE 10ter
(1) The countries of the Union undertake to assure to nationals of the other
countries of the Union appropriate legal remedies to repress effectively all the
acts referred to in Articles 9, 10 and l0bis.
(2) They undertake, further, to provide measures to permit syndicates and
associations which represent the industrialists, producers or traders
concerned and the existence of which is not contrary to the laws of their
countries, to take action in the Courts or before the administrative authorities,
with a view to the repression of the acts referred to in Articles 9, 10 and 10bis,
in so far as the law of the country in which protection is claimed allows such
action by the syndicates and associations of that country.
xxx xxx xxx
ARTICLE 17
Every country party to this Convention undertakes to adopt, in accordance
with its constitution, the measures necessary to ensure the application of this
Convention.
It is understood that at the time an instrument of ratification or accession is
deposited on behalf of a country; such country will be in a position under its
domestic law to give effect to the provisions of this Convention. (61 O.G. 8010)
xxx xxx xxx
In Vanity Fair Mills, Inc. v. T Eaton Co. (234 F. 2d 633) the United States Circuit Court of Appeals had
occasion to comment on the extraterritorial application of the Paris Convention It said that:
[11] The International Convention is essentially a compact between the
various member countries to accord in their own countries to citizens of the
other contracting parties trademark and other rights comparable to those
accorded their own citizens by their domestic law. The underlying principle is
that foreign nationals should be given the same treatment in each of the
member countries as that country makes available to its own citizens. In
addition, the Convention sought to create uniformity in certain respects by
obligating each member nation 'to assure to nationals of countries of the Union
an effective protection against unfair competition.'
[12] The Convention is not premised upon the Idea that the trade-mark and
related laws of each member nation shall be given extra-territorial application,
but on exactly the converse principle that each nation's law shall have only
territorial application. Thus a foreign national of a member nation using his
trademark in commerce in the United States is accorded extensive protection
here against infringement and other types of unfair competition by virtue of
United States membership in the Convention. But that protection has its source
in, and is subject to the limitations of, American law, not the law of the foreign
national's own country. ...
By the same token, the petitioner should be given the same treatment in the Philippines as we make
available to our own citizens. We are obligated to assure to nationals of "countries of the Union" an
effective protection against unfair competition in the same way that they are obligated to similarly
protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20, 1980 issued a memorandum
addressed to the Director of the Patents Office directing the latter:
xxx xxx xxx
... 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, Gloria 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.
The memorandum is a clear manifestation of our avowed adherence to a policy of cooperation and
amity with all nations. It is not, as wrongly alleged by the private respondent, a personal policy of
Minister Luis Villafuerte which expires once he leaves the Ministry of Trade. For a treaty or
convention is not a mere moral obligation to be enforced or not at the whims of an incumbent head
of a Ministry. It creates a legally binding obligation on the parties founded on the generally accepted
principle of international law of pacta sunt servanda which has been adopted as part of the law of
our land. (Constitution, Art. II, Sec. 3). The memorandum reminds the Director of Patents of his legal
duty to obey both law and treaty. It must also be obeyed.
Hemandas further contends that the respondent court did not commit grave abuse of discretion in
issuing the questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion to quash the search warrants reveals Hemandas relied heavily below and before us on the argument that it is the holder of a certificate of
the fact that they are not appropriate for quashing a warrant. They are matters of defense which registration of the trademark "CHEMISE LACOSTE & CROCODILE DEVICE". Significantly, such
should be ventilated during the trial on the merits of the case. For instance, on the basis of the facts registration is only in the Supplemental Register.
before the Judge, we fail to understand how he could treat a bare allegation that the respondent's
trademark is different from the petitioner's trademark as a sufficient basis to grant the motion to
A certificate of registration in the Supplemental Register is not prima facie evidence of the validity of
quash. We will treat the issue of prejudicial question later. Granting that respondent Hemandas was
registration, of the registrant's exclusive right to use the same in connection with the goods,
only trying to show the absence of probable cause, we, nonetheless, hold the arguments to be
business, or services specified in the certificate. Such a certificate of registration cannot be filed,
untenable.
with effect, with the Bureau of Customs in order to exclude from the Philippines, foreign goods
bearing infringement marks or trade names (Rule 124, Revised Rules of Practice Before the Phil. Pat.
As a mandatory requirement for the issuance of a valid search warrant, the Constitution requires in Off. in Trademark Cases; Martin, Philippine Commercial Laws, 1981, Vol. 2, pp. 513-515).
no uncertain terms the determination of probable cause by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce (Constitution, Art. IV, Sec. 3).
Section 19-A of Republic Act 166 as amended not only provides for the keeping of the supplemental
Probable cause has traditionally meant such facts and circumstances antecedent to the issuance of
register in addition to the principal register but specifically directs that:
the warrant that are in themselves sufficient to induce a cautious man to rely upon them and act in
pursuance thereof (People v. Sy Juco, 64 Phil. 667).
xxx xxx xxx
This concept of probable cause was amplified and modified by our ruling in Stonehill v. Diokno, (20
SCRA 383) that probable cause "presupposes the introduction of competent proof that the party The certificates of registration for marks and trade names registered on the
against whom it is sought has performed particular acts, or committed specific omissions, violating supplemental register shall be conspicuously different from certificates issued
a given provision of our criminal laws." for marks and trade names on the principal register.

The question of whether or not probable cause exists is one which must be decided in the light of xxx xxx xxx
the conditions obtaining in given situations (Central Bank v. Morfe, 20 SCRA 507). We agree that
there is no general formula or fixed rule for the determination of the existence of probable cause
The reason is explained by a leading commentator on Philippine Commercial Laws:
since, as we have recognized in Luna v. Plaza (26 SCRA 310), the existence depends to a large degree
upon the finding or opinion of the judge conducting the examination. However, the findings of the
judge should not disregard the facts before him nor run counter to the clear dictates of reason. More The registration of a mark upon the supplemental register is not, as in the case
so it is plain that our country's ability to abide by international commitments is at stake. of the principal register, prima facie evidence of (1) the validity of registration;
(2) registrant's ownership of the mark; and (3) registrant's exclusive right to
use the mark. It is not subject to opposition, although it may be cancelled after
The records show that the NBI agents at the hearing of the application for the warrants before
its issuance. Neither may it be the subject of interference proceedings.
respondent court presented three witnesses under oath, sworn statements, and various exhibits in
Registration on the supplemental register is not constructive notice of
the form of clothing apparels manufactured by Hemandas but carrying the trademark Lacoste. The
registrant's claim of ownership. A supplemental register is provided for the
respondent court personally interrogated Ramon Esguerra, Samuel Fiji, and Mamerto Espatero by
registration of marks which are not registrable on the principal register
means of searching questions. After hearing the testimonies and examining the documentary
because of some defects (conversely, defects which make a mark unregistrable
evidence, the respondent court was convinced that there were good and sufficient reasons for the
on the principal register, yet do not bar them from the supplemental register.)
issuance of the warrant. And it then issued the warrant.
(Agbayani, II Commercial Laws of the Philippines, 1978, p. 514, citing Uy Hong
Mo v. Titay & Co., et al., Dec. No. 254 of Director of Patents, Apr. 30, 1963);
The respondent court, therefore, complied with the constitutional and statutory requirements for
the issuance of a valid search warrant. At that point in time, it was fully convinced that there existed
Registration in the Supplemental Register, therefore, serves as notice that the registrant is using or
probable cause. But after hearing the motion to quash and the oppositions thereto, the respondent
has appropriated the trademark. By the very fact that the trademark cannot as yet be entered in the
court executed a complete turnabout and declared that there was no probable cause to justify its
Principal Register, all who deal with it should be on guard that there are certain defects, some
earlier issuance of the warrants.
obstacles which the user must Still overcome before he can claim legal ownership of the mark or ask
the courts to vindicate his claims of an exclusive right to the use of the same. It would be deceptive
True, the lower court should be given the opportunity to correct its errors, if there be any, but the for a party with nothing more than a registration in the Supplemental Register to posture before
rectification must, as earlier stated be based on sound and valid grounds. In this case, there was no courts of justice as if the registration is in the Principal Register.
compelling justification for the about face. The allegation that vital facts were deliberately
suppressed or concealed by the petitioner should have been assessed more carefully because the
The reliance of the private respondent on the last sentence of the Patent office action on application
object of the quashal was the return of items already seized and easily examined by the court. The
Serial No. 30954 that "registrant is presumed to be the owner of the mark until after the registration
items were alleged to be fake and quite obviously would be needed as evidence in the criminal
is declared cancelled" is, therefore, misplaced and grounded on shaky foundation, The supposed
prosecution. Moreover, an application for a search warrant is heard ex parte. It is neither a trial nor
presumption not only runs counter to the precept embodied in Rule 124 of the Revised Rules of
a part of the trial. Action on these applications must be expedited for time is of the essence. Great
Practice before the Philippine Patent Office in Trademark Cases but considering all the facts
reliance has to be accorded by the judge to the testimonies under oath of the complainant and the
ventilated before us in the four interrelated petitions involving the petitioner and the respondent, it
witnesses. The allegation of Hemandas that the applicant withheld information from the respondent
is devoid of factual basis. And even in cases where presumption and precept may factually be
court was clearly no basis to order the return of the seized items.
reconciled, we have held that the presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R.
No. L10612, May 30, 1958, Unreported). One may be declared an unfair competitor even if his
competing trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil. 928; La
Yebana Co. v. Chua Seco & Co., 14 Phil. 534).
By the same token, the argument that the application was premature in view of the pending case
before the Patent Office is likewise without legal basis.
The proceedings pending before the Patent Office involving IPC Co. 1658 do not partake of the
nature of a prejudicial question which must first be definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
A petition for the suspension of the criminal action based upon the pendency
of a pre-judicial question in a civil case, may only be presented by any party
before or during the trial of the criminal action.
The case which suspends the criminal prosecution must be a civil case which is determinative of the
innocence or, subject to the availability of other defenses, the guilt of the accused. The pending case
before the Patent Office is an administrative proceeding and not a civil case. The decision of the
Patent Office cannot be finally determinative of the private respondent's innocence of the charges
against him.
In Flordelis v. Castillo (58 SCRA 301), we held that:
As clearly delineated in the aforecited provisions of the new Civil Code and the
Rules of Court, and as uniformly applied in numerous decisions of this Court,
(Berbari v. Concepcion, 40 Phil. 837 (1920); Aleria v. Mendoza, 83 Phil. 427
(1949); People v. Aragon, 94 Phil. 357 (1954); Brito-Sy v. Malate Taxicab &
Garage, Inc., 102 Phil 482 (1957); Mendiola v. Macadael, 1 SCRA 593; Benitez v.
Concepcion, 2 SCRA 178; Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia,
22 SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA 271) the doctrine of
prejudicial question was held inapplicable because no criminal case but merely
an administrative case and a civil suit were involved. The Court, however, held
that, in view of the peculiar circumstances of that case, the respondents' suit
for damages in the lower court was premature as it was filed during the
pendency of an administrative case against the respondents before the
POLCOM. 'The possibility cannot be overlooked,' said the Court, 'that the
POLCOM may hand down a decision adverse to the respondents, in which case
the damage suit will become unfounded and baseless for wanting in cause of
action.') the doctrine of pre-judicial question comes into play generally in a
situation where a civil action and a criminal action both penned and there
exists in the former an issue which must be preemptively resolved before the
criminal action may proceed, because howsoever the issue raised in the civil
action is resolved would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case.
In the present case, no civil action pends nor has any been instituted. What was pending was an
administrative case before the Patent Office.
Even assuming that there could be an administrative proceeding with exceptional or special
circumstances which render a criminal prosecution premature pending the promulgation of the
administrative decision, no such peculiar circumstances are present in this case.
Moreover, we take note of the action taken by the Patents Office and the Minister of Trade and
affirmed by the Intermediate Appellate Court in the case of La Chemise Lacoste S. A. v. Ram
Sadhwani (AC-G.R. No. SP-13356, June 17, 1983).
The same November 20, 1980 memorandum of the Minister of Trade discussed in this decision was
involved in the appellate court's decision. The Minister as the "implementing authority" under
Article 6bis of the Paris Convention for the protection of Industrial Property instructed the Director
of Patents to reject applications for Philippine registration of signature and other world famous
trademarks by applicants other than its original owners or users. The brand "Lacoste" was
specifically cited together with Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci,
Christian Dior, Oscar dela Renta, Calvin Klein, Givenchy, Ralph Laurence, Geoffrey Beene, Lanvin,
and Ted Lapidus. The Director of Patents was likewise ordered to require Philippine registrants of
such trademarks to surrender their certificates of registration. Compliance by the Director of
Patents was challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v. Sadhwani decision which we cite
with approval sustained the power of the Minister of Trade to issue the implementing memorandum
and, after going over the evidence in the records, affirmed the decision of the Director of Patents
declaring La Chemise Lacoste &A. the owner of the disputed trademark and crocodile or alligator
device. The Intermediate Appellate Court speaking through Mr. Justice Vicente V. Mendoza stated:
In the case at bar, the Minister of Trade, as 'the competent authority of the
country of registration,' has found that among other well-known trademarks
'Lacoste' is the subject of conflicting claims. For this reason, applications for its
registration must be rejected or refused, pursuant to the treaty obligation of
the Philippines.
Apart from this finding, the annexes to the opposition, which La Chemise
Lacoste S.A. filed in the Patent Office, show that it is the owner of the
trademark 'Lacoste' and the device consisting of a representation of a crocodile
or alligator by the prior adoption and use of such mark and device on clothing,
sports apparel and the like. La Chemise Lacoste S.A, obtained registration of
these mark and device and was in fact issued renewal certificates by the
French National Industry Property Office.
xxx xxx xxx
Indeed, due process is a rule of reason. In the case at bar the order of the
Patent Office is based not only on the undisputed fact of ownership of the
trademark by the appellee but on a prior determination by the Minister of
Trade, as the competent authority under the Paris Convention, that the
trademark and device sought to be registered by the appellant are well-known
marks which the Philippines, as party to the Convention, is bound to protect in
favor of its owners. it would be to exalt form over substance to say that under
the circumstances, due process requires that a hearing should be held before
the application is acted upon.
The appellant cites section 9 of Republic Act No. 166, which requires notice
and hearing whenever an opposition to the registration of a trademark is
made. This provision does not apply, however, to situations covered by the
Paris Convention, where the appropriate authorities have determined that a
well-known trademark is already that of another person. In such cases, the
countries signatories to the Convention are obliged to refuse or to cancel the
registration of the mark by any other person or authority. In this case, it is not
 disputed that the trademark Lacoste is such a well-known mark that a hearing, In Hemandas & Co. v. Intermediate Appellate Court, et al. (G.R. No. 63504) the petitioner asked for the
such as that provided in Republic Act No. 166, would be superfluous. following relief:

The issue of due process was raised and fully discussed in the appellate court's decision. The court IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a) that the
ruled that due process was not violated. Resolutions of the respondent Court of January 3, 1983 and February 24, 1983
be nullified; and that the Decision of the same respondent Court of June 30,
1983 be declared to be the law on the matter; (b) that the Director of Patents
In the light of the foregoing it is quite plain that the prejudicial question argument is without merit.
be directed to issue the corresponding registration certificate in the Principal
Register; and (c) granting upon the petitioner such other legal and equitable
We have carefully gone over the records of all the cases filed in this Court and find more than remedies as are justified by the premises.
enough evidence to sustain a finding that the petitioner is the owner of the trademarks "LACOSTE",
"CHEMISE LACOSTE", the crocodile or alligator device, and the composite mark of LACOSTE and the
On December 5, 1983, we issued the following resolution:
representation of the crocodile or alligator. Any pretensions of the private respondent that he is the
owner are absolutely without basis. Any further ventilation of the issue of ownership before the
Patent Office will be a superfluity and a dilatory tactic. Considering the allegations contained, issues raised and the arguments
adduced in the petition for review, the respondent's comment thereon, and
petitioner's reply to said comment, the Court Resolved to DENY the petition for
The issue of whether or not the trademark used by the private respondent is different from the
lack of merit.
petitioner's trade mark is a matter of defense and will be better resolved in the criminal
proceedings before a court of justice instead of raising it as a preliminary matter in an
administrative proceeding. The Court further Resolved to CALL the attention of the Philippine Patent
Office to the pendency in this Court of G.R. No. 563796-97 entitled 'La Chemise
Lacoste, S.A. v. Hon. Oscar C. Fernandez and Gobindram Hemandas' which was
The purpose of the law protecting a trademark cannot be overemphasized. They are to point out
given due course on June 14, 1983 and to the fact that G.R. No. 63928-29
distinctly the origin or ownership of the article to which it is affixed, to secure to him, who has been
entitled 'Gobindram Hemandas v. La Chemise Lacoste, S.A., et al.' filed on May
instrumental in bringing into market a superior article of merchandise, the fruit of his industry and
9, 1983 was dismissed for lack of merit on September 12, 1983. Both petitions
skill, and to prevent fraud and imposition (Etepha v. Director of Patents, 16 SCRA 495).
involve the same dispute over the use of the trademark 'Chemise Lacoste'.

The legislature has enacted laws to regulate the use of trademarks and provide for the protection
The second case of Gobindram Hemandas vs. La Chemise Lacoste, S.A., et al. (G.R. No. 63928-29)
thereof. Modern trade and commerce demands that depredations on legitimate trade marks of non-
prayed for the following:
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, I. On the petition for issuance of writ of preliminary injunction, an order be
or deception as to the goods they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; General issued after due hearing:
Garments Corporation v. Director of Patents, 41 SCRA 50).
l. Enjoining and restraining respondents Company, attorneys-in-fact, and
The law on trademarks and tradenames is based on the principle of business integrity and common Estanislao Granados from further proceedings in the unfair competition
justice' This law, both in letter and spirit, is laid upon the premise that, while it encourages fair trade charges pending with the Ministry of Justice filed against petitioner;
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, deceipt, trickery or unfair
2. Enjoining and restraining respondents Company and its attorneys-in-fact
methods of any sort. This necessarily precludes the trading by one dealer upon the good name and
from causing undue publication in newspapers of general circulation on their
reputation built up by another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338).
unwarranted claim that petitioner's products are FAKE pending proceedings
hereof; and
The records show that the goodwill and reputation of the petitioner's products bearing the
trademark LACOSTE date back even before 1964 when LACOSTE clothing apparels were first
3. Enjoining and restraining respondents Company and its attorneys-in-fact
marketed in the Philippines. To allow Hemandas to continue using the trademark Lacoste for the
from sending further threatening letters to petitioner's customers unjustly
simple reason that he was the first registrant in the Supplemental Register of a trademark used in
stating that petitioner's products they are dealing in are FAKE and threatening
international commerce and not belonging to him is to render nugatory the very essence of the law
them with confiscation and seizure thereof.
on trademarks and tradenames.

II. On the main petition, judgment be rendered:

We now proceed to the consideration of the petition in Gobindram Hemandas Suianani u. Hon.
Roberto V Ongpin, et al. (G.R. No. 65659).
l. Awarding and granting the issuance of the Writ of Prohibition, prohibiting,
stopping, and restraining respondents from further committing the acts
Actually, three other petitions involving the same trademark and device have been filed with this
complained of;
Court.
 2. Awarding and granting the issuance of the Writ of Mandamus, ordering and
compelling respondents National Bureau of Investigation, its aforenamed
agents, and State Prosecutor Estanislao Granados to immediately comply with
the Order of the Regional Trial Court, National Capital Judicial Region, Branch
XLIX, Manila, dated April 22, 1983, which directs the immediate return of the
seized items under Search Warrants Nos. 83-128 and 83-129;
3. Making permanent any writ of injunction that may have been previously
issued by this Honorable Court in the petition at bar: and
4. Awarding such other and further relief as may be just and equitable in the
premises.
As earlier stated, this petition was dismissed for lack of merit on September 12, 1983. Acting on a
motion for reconsideration, the Court on November 23, 1983 resolved to deny the motion for lack of
merit and declared the denial to be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
In this last petition, the petitioner prays for the setting aside as null and void and for the prohibiting
of the enforcement of the following memorandum of respondent Minister Roberto Ongpin:
MEMORANDUM:
FOR: THE DIRECTOR OF PATENTS
Philippine Patent Office
xxx xxx xxx
Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-making and
adjudicatory powers of the Minister of Trade and Industry and provides inter alia, that 'such rule-
making and adjudicatory powers should be revitalized in order that the Minister of Trade and
Industry can ...apply more swift and effective solutions and remedies to old and new problems ...
such as the infringement of internationally-known tradenames and trademarks ...'and in view of the
decision of the Intermediate Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM
SADWHANI [AC-G.R. Sp. No. 13359 (17) June 1983] which affirms the validity of the MEMORANDUM
of then Minister Luis R. Villafuerte dated 20 November 1980 confirming our obligations under the
PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY to which the Republic of
the Philippines is a signatory, you are hereby directed to implement measures necessary to effect
compliance with our obligations under said convention in general, and, more specifically, to honor
our commitment under Section 6 bis thereof, as follows:
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.
4. The Philippine Patent Office shall give due course to the Opposition in cases
already or hereafter filed against the registration of trademarks entitled to
protection of Section 6 bis of said PARIS CONVENTION as outlined above, by
remanding applications filed by one not entitled to such protection for final
disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other
world famous trademarks filed by applicants other than their original owners
or users shall be rejected forthwith. Where such applicants have already
obtained registration contrary to the abovementioned PARIS CONVENTION
and/or Philippine Law, they shall be directed to surrender their Certificates of
Registration to the Philippine Patent Office for immediate cancellation
proceedings.
6. Consistent with the foregoing, you are hereby directed to expedite the
hearing and to decide without delay the following cases pending before your
Office:
1. INTER PARTES CASE NO. 1689-Petition filed by La Chemise Lacoste, S.A. for
the cancellation of Certificate of Registration No. SR-2225 issued to Gobindram
Hemandas, assignee of Hemandas and Company;
 2. INTER PARTES CASE NO. 1658-Opposition filed by Games and Garments Co.
against the registration of the trademark Lacoste sought by La Chemise
Lacoste, S.A.;

3. INTER PARTES CASE NO. 1786-Opposition filed by La Chemise Lacoste, S.A.

against the registration of trademark Crocodile Device and Skiva sought by one
Wilson Chua.

Considering our discussions in G.R. Nos. 63796-97, we find the petition in G.R. No. 65659 to be
patently without merit and accordingly deny it due course.

In complying with the order to decide without delay the cases specified in the memorandum, the
Director of Patents shall limit himself to the ascertainment of facts in issues not resolved by this
decision and apply the law as expounded by this Court to those facts.

One final point. It is essential that we stress our concern at the seeming inability of law enforcement
officials to stem the tide of fake and counterfeit consumer items flooding the Philippine market or
exported abroad from our country. The greater victim is not so much the manufacturer whose
product is being faked but the Filipino consuming public and in the case of exportations, our image
abroad. No less than the President, in issuing Executive Order No. 913 dated October 7, 1983 to
strengthen the powers of the Minister of Trade and Industry for the protection of consumers, stated
that, among other acts, the dumping of substandard, imitated, hazardous, and cheap goods, the
infringement of internationally known tradenames and trademarks, and the unfair trade practices
of business firms has reached such proportions as to constitute economic sabotage. We buy a
kitchen appliance, a household tool, perfume, face powder, other toilet articles, watches, brandy or
whisky, and items of clothing like jeans, T-shirts, neck, ties, etc. — the list is quite length — and pay
good money relying on the brand name as guarantee of its quality and genuine nature only to
explode in bitter frustration and genuine nature on helpless anger because the purchased item turns
out to be a shoddy imitation, albeit a clever looking counterfeit, of the quality product. Judges all
over the country are well advised to remember that court processes should not be used as
instruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the hands of
the law as it seeks to protect the Filipino consuming public and frustrate executive and
administrative implementation of solemn commitments pursuant to international conventions and
treaties.

WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED. The order dated April 22,
1983 of the respondent regional trial court is REVERSED and SET ASIDE. Our Temporary
Restraining Order dated April 29, 1983 is ma(i.e. PERMANENT. The petition in G.R. NO. 65659 is
DENIED due course for lack of merit. Our Temporary Restraining Order dated December 5, 1983 is
LIFTED and SET ASIDE, effective immediately.

SO ORDERED.

G.R. No. 179127 December 24, 2008
IN-N-OUT BURGER, INC., petitioner,
vs.
SEHWANI, INCORPORATED AND/OR BENITA’S FRITES, INC., respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the
Decision1dated 18 July 2006 rendered by the Court of Appeals in CA-G.R. SP No. 92785, which
reversed the Decision2 dated 23 December 2005 of the Director General of the Intellectual Property
Office (IPO) in Appeal No. 10-05-01. The Court of Appeals, in its assailed Decision, decreed that the
IPO Director of Legal Affairs and the IPO Director General do not have jurisdiction over cases
involving unfair competition.
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California,
United States (US) of America, which is a signatory to the Convention of Paris on Protection of
Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never engaged in
business in the Philippines. 3
Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the
Philippines.4
On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of
Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-N-OUT Burger & Arrow Design." Petitioner
later found out, through the Official Action Papers issued by the IPO on 31 May 2000, that
respondent Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N
OUT (the inside of the letter "O" formed like a star)."5 By virtue of a licensing agreement, Benita
Frites, Inc. was able to use the registered mark of respondent Sehwani, Incorporated.
Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an
administrative complaint against respondents for unfair competition and cancellation of trademark
registration. Petitioner averred in its complaint that it is the owner of the trade name IN-N-OUT and
the following trademarks: (1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-
OUT Burger Logo." These trademarks are registered with the Trademark Office of the US and in
various parts of the world, are internationally well-known, and have become distinctive of its
business and goods through its long and exclusive commercial use.6 Petitioner pointed out that its
internationally well-known trademarks and the mark of the respondents are all registered for the
restaurant business and are clearly identical and confusingly similar. Petitioner claimed that
respondents are making it appear that their goods and services are those of the petitioner, thus,
misleading ordinary and unsuspecting consumers that they are purchasing petitioner’s products. 7
Following the filing of its complaint, petitioner sent on 18 October 2000 a demand letter directing
respondent Sehwani, Incorporated to cease and desist from claiming ownership of the mark "IN-N-
OUT" and to voluntarily cancel its trademark registration. In a letter-reply dated 23 October 2000,
respondents refused to accede to petitioner’ demand, but expressed willingness to surrender the
registration of respondent Sehwani, Incorporated of the "IN N OUT" trademark for a fair and
reasonable consideration. 8
Petitioner was able to register the mark "Double Double" on 4 July 2002, based on their application
filed on 2 June 1997.9 It alleged that respondents also used this mark, as well as the menu color
scheme. Petitioners also averred that respondent Benita’s receipts bore the phrase, "representing
IN-N-OUT Burger."10 It should be noted that that although respondent Sehwahi, Incorporated
registered a mark which appeared as "IN N OUT (the inside of the letter "O" formed like a star),"
respondents used the mark "IN-N-OUT."11
To counter petitioner’s complaint, respondents filed before the BLA-IPO an Answer with
Counterclaim. Respondents asserted therein that they had been using the mark "IN N OUT" in the
Philippines since 15 October 1982. On 15 November 1991, respondent Sehwani, Incorporated filed
with the then Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for
the registration of the mark "IN N OUT (the inside of the letter "O" formed like a star)." Upon
approval of its application, a certificate of registration of the said mark was issued in the name of
respondent Sehwani, Incorporated on 17 December 1993. On 30 August 2000, respondents
Sehwani, Incorporated and Benita Frites, Inc. entered into a Licensing Agreement, wherein the
former entitled the latter to use its registered mark, "IN N OUT." Respondents asserted that
respondent Sehwani, Incorporated, being the registered owner of the mark "IN N OUT," should be
accorded the presumption of a valid registration of its mark with the exclusive right to use the same.
Respondents argued that none of the grounds provided under the Intellectual Property Code for the
cancellation of a certificate of registration are present in this case. Additionally, respondents
maintained that petitioner had no legal capacity to sue as it had never operated in the Philippines. 12
Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo, rendered a Decision
dated 22 December 2003,13 in favor of petitioner. According to said Decision, petitioner had the
legal capacity to sue in the Philippines, since its country of origin or domicile was a member of and a
signatory to the Convention of Paris on Protection of Industrial Property. And although petitioner
had never done business in the Philippines, it was widely known in this country through the use
herein of products bearing its corporate and trade name. Petitioner’s marks are internationally
well-known, given the world-wide registration of the mark "IN-N-OUT," and its numerous
advertisements in various publications and in the Internet. Moreover, the IPO had already declared
in a previous inter partes case that "In-N-Out Burger and Arrow Design" was an internationally
well-known mark. Given these circumstances, the IPO Director for Legal Affairs pronounced in her
Decision that petitioner had the right to use its tradename and mark "IN-N-OUT" in the Philippines
to the exclusion of others, including the respondents. However, respondents used the mark "IN N
OUT" in good faith and were not guilty of unfair competition, since respondent Sehwani,
Incorporated did not evince any intent to ride upon petitioner’s goodwill by copying the mark "IN-
N-OUT Burger" exactly. The inside of the letter "O" in the mark used by respondents formed a star.
In addition, the simple act of respondent Sehwani, Incorporated of inquiring into the existence of a
pending application for registration of the "IN-N-OUT" mark was not deemed fraudulent. The
dispositive part of the Decision of the IPO Director for Legal Affairs reads:
With the foregoing disquisition, Certificate of Registration No. 56666 dated 17 December
1993 for the mark "IN-N-OUT" (the inside of the letter "O" formed like a star) issued in
favor of Sehwani, Incorporated is hereby CANCELLED. Consequently, respondents
Sehwani, Inc. and Benita’s Frites are hereby ordered to permanently cease and desist
from using the mark "IN-N-OUT" and "IN-N-OUT BURGER LOGO" on its goods and in its
business. With regards the mark "Double-Double," considering that as earlier discussed,
the mark has been approved by this Office for publication and that as shown by evidence,
Complainant is the owner of the said mark, Respondents are so hereby ordered to
permanently cease and desist from using the mark Double-Double. NO COSTS. 14
Both parties filed their respective Motions for Reconsideration of the aforementioned Decision.
Respondents’ Motion for Reconsideration15 and petitioner’s Motion for Partial
Reconsideration16 were denied by the IPO Director for Legal Affairs in Resolution No. 2004-
1817 dated 28 October 2004 and Resolution No. 2005-05 dated 25 April 2005,18 respectively.
Subsequent events would give rise to two cases before this Court, G.R. No. 171053 and G.R. No.
179127, the case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of Resolution No. 2004-18 dated 28 October 2004
denying their Motion for Reconsideration. Thus, on 18 November 2004, respondents filed an Appeal
Memorandum with IPO Director General Emma Francisco (Director General Francisco). However, in
an Order dated 7 December 2004, the appeal was dismissed by the IPO Director General for being
filed beyond the 15-day reglementary period to appeal.
Respondents appealed to the Court of Appeals via a Petition for Review under Rule 43 of the Rules
of Court, filed on 20 December 2004 and docketed as CA-G.R. SP No. 88004, challenging the
dismissal of their appeal by the IPO Director General, which effectively affirmed the Decision dated
22 December 2003 of the IPO Director for Legal Affairs ordering the cancellation of the registration
of the disputed trademark in the name of respondent Sehwani, Incorporated and enjoining
respondents from using the same. In particular, respondents based their Petition on the following
grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING APPEAL NO.
14-2004-00004 ON A MERE TECHNICALITY
THE BUREAU OF LEGAL AFFAIR’S (SIC) DECISION AND RESOLUTION (1) CANCELLING
RESPONDENT’S CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT," AND (2)
ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM USING THE
SUBJECT MARK ON ITS GOODS AND BUSINESS ARE CONTRARY TO LAW AND/OR IS NOT
SUPPORTED BY EVIDENCE.
Respondents thus prayed:
WHEREFORE, petitioners respectfully pray that this Honorable Court give due course to
this petition, and thereafter order the Office of the Director General of the Intellectual
Property Office to reinstate and give due course to [respondent]’s Appeal No. 14-2004-
00004.
Other reliefs, just and equitable under the premises, are likewise prayed for.
On 21 October 2005, the Court of Appeals rendered a Decision denying respondents’ Petition in CA-
G.R SP No. 88004 and affirming the Order dated 7 December 2004 of the IPO Director General. The
appellate court confirmed that respondents’ appeal before the IPO Director General was filed out of
time and that it was only proper to cancel the registration of the disputed trademark in the name of
respondent Sehwani, Incorporated and to permanently enjoin respondents from using the same.
Effectively, the 22 December 2003 Decision of IPO Director of Legal Affairs was likewise affirmed.
On 10 November 2005, respondents moved for the reconsideration of the said Decision. On 16
January 2006, the Court of Appeals denied their motion for reconsideration.
Dismayed with the outcome of their petition before the Court of Appeals, respondents raised the
matter to the Supreme Court in a Petition for Review under Rule 45 of the Rules of Court, filed on 30
January 2006, bearing the title Sehwani, Incorporated v. In-N-Out Burger and docketed as G.R. No.
171053.19
This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007, 20 finding that herein
respondents failed to file their Appeal Memorandum before the IPO Director General within the
period prescribed by law and, consequently, they lost their right to appeal. The Court further
affirmed the Decision dated 22 December 2003 of the IPO Director of Legal Affairs holding that
herein petitioner had the legal capacity to sue for the protection of its trademarks, even though it
was not doing business in the Philippines, and ordering the cancellation of the registration obtained
by herein respondent Sehwani, Incorporated of the internationally well-known marks of petitioner,
and directing respondents to stop using the said marks. Respondents filed a Motion for
Reconsideration of the Decision of this Court in G.R. No. 171053, but it was denied with finality in a
Resolution dated 21 January 2008.
G.R. No. 179127
Upon the denial of its Partial Motion for Reconsideration of the Decision dated 22 December 2003 of
the IPO Director for Legal Affairs, petitioner was able to file a timely appeal before the IPO Director
General on 27 May 2005.
During the pendency of petitioner’s appeal before the IPO Director General, the Court of Appeals
already rendered on 21 October 2005 its Decision dismissing respondents’ Petition in CA-G.R. SP
No. 88004.
In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr. found petitioner’s
appeal meritorious and modified the Decision dated 22 December 2003 of the IPO Director of Legal
Affairs. The IPO Director General declared that respondents were guilty of unfair competition.
Despite respondents’ claims that they had been using the mark since 1982, they only started
constructing their restaurant sometime in 2000, after petitioner had already demanded that they
desist from claiming ownership of the mark "IN-N-OUT." Moreover, the sole distinction of the mark
registered in the name of respondent Sehwani, Incorporated, from those of the petitioner was the
star inside the letter "O," a minor difference which still deceived purchasers. Respondents were not
even actually using the star in their mark because it was allegedly difficult to print. The IPO Director
General expressed his disbelief over the respondents’ reasoning for the non-use of the star symbol.
The IPO Director General also considered respondents’ use of petitioner’s registered mark "Double-
Double" as a sign of bad faith and an intent to mislead the public. Thus, the IPO Director General
ruled that petitioner was entitled to an award for the actual damages it suffered by reason of
respondents’ acts of unfair competition, exemplary damages, and attorney’s fees. 21 The fallo of the
Decision reads:
WHEREFORE, premises considered, the [herein respondents] are held guilty of unfair
competition. Accordingly, Decision No. 2003-02 dated 22 December 2003 is hereby
MODIFIED as follows:
[Herein Respondents] are hereby ordered to jointly and severally pay [herein petitioner]:
1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED
SEVENTY FOUR AND 28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND PESOS
(P500,000.00);
 3. Attorney’s fees and expenses of litigation in the amount of FIVE HUNDRED
THOUSAND PESOS (P500,000.00).
All products of [herein respondents] including the labels, signs, prints, packages,
wrappers, receptacles and materials used by them in committing unfair competition
should be without compensation of any sort be seized and disposed of outside the
channels of commerce.
Let a copy of this Decision be furnished the Director of Bureau of Legal Affairs for
appropriate action, and the records be returned to her for proper disposition. Further, let
a copy of this Decision be furnished the Documentation, Information and Technology
Transfer Bureau for their information and records purposes. 22
Aggrieved, respondents were thus constrained to file on 11 January 2006 before the Court of
Appeals another Petition for Review under Rule 43 of the Rules of Court, docketed as CA-G.R. SP No.
92785. Respondents based their second Petition before the appellate court on the following
grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING PETITIONERS
LIABLE FOR UNFAIR COMPETITION AND IN ORDERING THEM TO PAY DAMAGES AND
ATTORNEY’S FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE BUREAU
OF LEGAL AFFAIR’S DECISION (1) CANCELLING PETITIONER’S CERTIFICATE OF
REGISTRATION FOR THE MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO
PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT MARK ON ITS GOODS
AND BUSINESS
Respondents assailed before the appellate court the foregoing 23 December 2005 Decision of the
IPO Director General, alleging that their use of the disputed mark was not tainted with fraudulent
intent; hence, they should not be held liable for damages. They argued that petitioner had never
entered into any transaction involving its goods and services in the Philippines and, therefore, could
not claim that its goods and services had already been identified in the mind of the public.
Respondents added that the disputed mark was not well-known. Finally, they maintained that
petitioner’s complaint was already barred by laches.23
At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the following prayer:
WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:
(a) upon the filing of this petition, issue a temporary restraining order enjoining the IPO
and [petitioner], their agents, successors and assigns, from executing, enforcing and
implementing the IPO Director General’s Decision dated 23 December 2005, which
modified the Decision No. 2003-02 dated 22 December 2003 of the BLA, until further
orders from this Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner], their agents, successors and
assigns, from executing, enforcing and implementing the Decision dated 23 December
2005 of the Director General of the IPO in IPV No. 10-2001-00004 and to maintain the
status quo ante pending the resolution of the merits of this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision dated 23 December 2005 of the Director
General of the IPO in IPV No. 10-2001-00004 finding the [respondents] guilty
of unfair competition and awarding damages and attorney’s fees to the
respondent
(ii) in lieu thereof, affirm Decision No. 2003-02 of the BLA dated 22 December
2003 and Resolution No. 2005-05 of the BLA dated 25 April 2005, insofar as it
finds [respondents] not guilty of unfair competition and hence not liable to the
[petitioner] for damages and attorney’s fees;
(iii) reverse Decision No. 2003-02 of the BLA dated 22 December 2003, and
Resolution No. 2005-05 of the BLA dated 25 April 2005, insofar as it upheld
[petitioner]’s legal capacity to sue; that [petitioner]’s trademarks are well-
known; and that respondent has the exclusive right to use the same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may deemed just or equitable. 24
On 18 July 2006, the Court of Appeals promulgated a Decision25 in CA-G.R. SP No. 92785 reversing
the Decision dated 23 December 2005 of the IPO Director General.
The Court of Appeals, in its Decision, initially addressed petitioner’s assertion that respondents had
committed forum shopping by the institution of CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785. It
ruled that respondents were not guilty of forum shopping, distinguishing between the respondents’
two Petitions. The subject of Respondents’ Petition in CA-G.R SP No. 88004 was the 7 December
2004 Decision of the IPO Director General dismissing respondents’ appeal of the 22 December 2003
Decision of the IPO Director of Legal Affairs. Respondents questioned therein the cancellation of the
trademark registration of respondent Sehwani, Incorporated and the order permanently enjoining
respondents from using the disputed trademark. Respondents’ Petition in CA-G.R. SP No. 92785
sought the review of the 23 December 2005 Decision of the IPO Director General partially modifying
the 22 December 2003 Decision of the IPO Director of Legal Affairs. Respondents raised different
issues in their second petition before the appellate court, mainly concerning the finding of the IPO
Director General that respondents were guilty of unfair competition and the awarding of actual and
exemplary damages, as well as attorney’s fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on jurisdictional grounds not
raised by the parties. The appellate court declared that Section 163 of the Intellectual Property Code
specifically confers upon the regular courts, and not the BLA-IPO, sole jurisdiction to hear and
decide cases involving provisions of the Intellectual Property Code, particularly trademarks.
Consequently, the IPO Director General had no jurisdiction to rule in its Decision dated 23
December 2005 on supposed violations of these provisions of the Intellectual Property Code.
In the end, the Court of Appeals decreed:
WHEREFORE, the Petition is GRANTED. The Decision dated 23 December 2005 rendered
by the Director General of the Intellectual Property Office of the Philippines in Appeal No.
10-05-01 is REVERSED and SET ASIDE. Insofar as they pertain to acts governed by
Article 168 of R.A. 8293 and other sections enumerated in Section 163 of the same Code,
respondent’s claims in its Complaint docketed as IPV No. 10-2001-00004 are
hereby DISMISSED.26
The Court of Appeals, in a Resolution dated 31 July 2007, 27 denied petitioner’s Motion for
Reconsideration of its aforementioned Decision.
Hence, the present Petition, where petitioner raises the following issues:
I sign the Verification/Certification on behalf of petitioner because the notary public Rachel A. Blake
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISIONDATED 18 JULY 2006 AND RESOLUTION DATED 31 JULY 2007
DECLARING THAT THE IPO HAS NO JURISDICTION OVER ADMINISTRATIVE
COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISIONDATED 18 JULY 2006 AND RESOLUTION DATED 31 JULY 2007
DECLARING THAT SEHWANI AND BENITA ARE NOT GUILTY OF: (A) SUBMITTING A
PATENTLY FALSE CERTIFICATION OF NON-FORUM SHOPPING; AND (B) FORUM
SHOPPING PROPER.28
As previously narrated herein, on 15 October 2007, during the pendency of the present Petition, this
Court already promulgated its Decision29 in G.R. No. 171053 on 15 October 2007, which affirmed the
IPO Director General’s dismissal of respondents’ appeal for being filed beyond the reglementary
period, and left the 22 December 2003 Decision of the IPO Director for Legal Affairs, canceling the
trademark registration of respondent Sehwani, Incorporated and enjoining respondents from using
the disputed marks.
Before discussing the merits of this case, this Court must first rule on the procedural flaws that each
party has attributed to the other.
Formal Defects of the Petition
Respondents contend that the Verification/Certification executed by Atty. Edmund Jason Barranda
of Villaraza and Angangco, which petitioner attached to the present Petition, is defective and should
result in the dismissal of the said Petition.
Respondents point out that the Secretary’s Certificate executed by Arnold M. Wensinger on 20
August 2007, stating that petitioner had authorized the lawyers of Villaraza and Angangco to
represent it in the present Petition and to sign the Verification and Certification against Forum
Shopping, among other acts, was not properly notarized. The jurat of the aforementioned
Secretary’s Certificate reads:
Subscribed and sworn to me this 20th day of August 2007 in Irving California.
Rachel A. Blake (Sgd.)
Notary Public30
Respondents aver that the said Secretary’s Certificate cannot properly authorize Atty. Barranda to
failed to state that: (1) petitioner’s Corporate Secretary, Mr. Wensinger, was known to her; (2) he
was the same person who acknowledged the instrument; and (3) he acknowledged the same to be
his free act and deed, as required under Section 2 of Act No. 2103 and Landingin v. Republic of the
Philippines.31
Respondents likewise impugn the validity of the notarial certificate of Atty. Aldrich Fitz B. Uy, on
Atty. Baranda’s Verification/Certification attached to the instant Petition, noting the absence of (1)
the serial number of the commission of the notary public; (2) the office address of the notary public;
(3) the roll of attorneys’ number and the IBP membership number; and (4) a statement that the
Verification/Certification was notarized within the notary public’s territorial jurisdiction, as
required under the 2004 Rules on Notarial Practice. 32
Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not applicable to the
present case. The requirements enumerated therein refer to documents which require an
acknowledgement, and not a mere jurat.
A jurat is that part of an affidavit in which the notary certifies that before him/her, the document
was subscribed and sworn to by the executor. Ordinarily, the language of the jurat should avow that
the document was subscribed and sworn to before the notary public. In contrast, an
acknowledgment is the act of one who has executed a deed in going before some competent officer
or court and declaring it to be his act or deed. It involves an extra step undertaken whereby the
signor actually declares to the notary that the executor of a document has attested to the notary that
the same is his/her own free act and deed.33 A Secretary’s Certificate, as that executed by petitioner
in favor of the lawyers of the Angangco and Villaraza law office, only requires a jurat.34
Even assuming that the Secretary’s Certificate was flawed, Atty. Barranda may still sign the
Verification attached to the Petition at bar. A pleading is verified by an affidavit that the affiant has
read the pleading and that the allegations therein are true and correct of his personal knowledge or
based on authentic records. 35 The party itself need not sign the verification. A party’s
representative, lawyer or any other person who personally knows the truth of the facts alleged in
the pleading may sign the verification.36 Atty. Barranda, as petitioner’s counsel, was in the position
to verify the truth and correctness of the allegations of the present Petition. Hence, the Verification
signed by Atty. Barranda substantially complies with the formal requirements for such.
Moreover, the Court deems it proper not to focus on the supposed technical infirmities of Atty.
Baranda’s Verification. It must be borne in mind that the purpose of requiring a verification is to
secure an assurance that the allegations of the petition has been made in good faith; or are true and
correct, not merely speculative. This requirement is simply a condition affecting the form of
pleadings, and non-compliance therewith does not necessarily render it fatally defective. Indeed,
verification is only a formal, not a jurisdictional requirement. In the interest of substantial justice,
strict observance of procedural rules may be dispensed with for compelling reasons. 37The vital
issues raised in the instant Petition on the jurisdiction of the IPO Director for Legal Affairs and the
IPO Director General over trademark cases justify the liberal application of the rules, so that the
Court may give the said Petition due course and resolve the same on the merits.
This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and Aldrich Fitz B. Uy, were
less than careful with their jurats or notarial certificates. Parties and their counsel should take care
not to abuse the Court’s zeal to resolve cases on their merits. Notaries public in the Philippines are December 2004, the IPO Director General had not yet rendered its Decision dated 23 December
reminded to exert utmost care and effort in complying with the 2004 Rules on Notarial Practice. 2005 wherein it ruled that respondents were guilty thereof and awarded damages to petitioner.
Parties and their counsel are further charged with the responsibility of ensuring that documents
notarized abroad be in their proper form before presenting said documents before Philippine
In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for unfair competition, it
courts.
is only predictable, although not necessarily legally tenable, for respondents to reassert their right
to register, own, and use the disputed mark. Respondents again raise the issue of who has the better
Forum Shopping right to the disputed mark, because their defense from the award of damages for unfair competition
depends on the resolution of said issue in their favor. While this reasoning may be legally unsound,
this Court cannot readily presume bad faith on the part of respondents in filing their Petition in CA-
Petitioner next avers that respondents are guilty of forum shopping in filing the Petition in CA-G.R.
G.R. SP No. 92785; or hold that respondents breached the rule on forum shopping by the mere filing
SP No. 92785, following their earlier filing of the Petition in CA-G.R SP No. 88004. Petitioner also
of the second petition before the Court of Appeals.
asserts that respondents were guilty of submitting to the Court of Appeals a patently false
Certification of Non-forum Shopping in CA-G.R. SP No. 92785, when they failed to mention therein
the pendency of CA-G.R SP No. 88004. True, respondents should have referred to CA-G.R. SP No. 88004 in the Certification of Non-Forum
Shopping, which they attached to their Petition in CA-G.R. SP No. 92785. Nonetheless, the factual
background of this case and the importance of resolving the jurisdictional and substantive issues
Forum shopping is the institution of two or more actions or proceedings grounded on the same
raised herein, justify the relaxation of another procedural rule. Although the submission of a
cause on the supposition that one or the other court would make a favorable disposition. It is an act
certificate against forum shopping is deemed obligatory, it is not jurisdictional. 42 Hence, in this case
of malpractice and is prohibited and condemned as trifling with courts and abusing their processes.
in which such a certification was in fact submitted, only it was defective, the Court may still refuse to
In determining whether or not there is forum shopping, what is important is the vexation caused the
dismiss and, instead, give due course to the Petition in light of attendant exceptional circumstances.
courts and parties-litigants by a party who asks different courts and/or administrative bodies to
rule on the same or related causes and/or grant the same or substantially the same reliefs and in the
process creates the possibility of conflicting decisions being rendered by the different bodies upon The parties and their counsel, however, are once again warned against taking procedural rules
the same issues.38 lightly. It will do them well to remember that the Courts have taken a stricter stance against the
disregard of procedural rules, especially in connection with the submission of the certificate against
forum shopping, and it will not hesitate to dismiss a Petition for non-compliance therewith in the
Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2)
absence of justifiable circumstances.
rights or causes of action and reliefs prayed for, and (3) the identity of the two preceding particulars
is such that any judgment rendered in the other action, will, regardless of which party is successful,
amount to res judicata in the action under consideration.39 The Jurisdiction of the IPO

After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785, it The Court now proceeds to resolve an important issue which arose from the Court of Appeals
would at first seem that respondents are guilty of forum shopping. Decision dated 18 July 2006 in CA-G.R. SP No. 92785. In the afore-stated Decision, the Court of
Appeals adjudged that the IPO Director for Legal Affairs and the IPO Director General had no
jurisdiction over the administrative proceedings below to rule on issue of unfair competition,
There is no question that both Petitions involved identical parties, and raised at least one similar
because Section 163 of the Intellectual Property Code confers jurisdiction over particular provisions
ground for which they sought the same relief. Among the grounds stated by the respondents for
in the law on trademarks on regular courts exclusively. According to the said provision:
their Petition in CA-G.R SP No. 88004 was that "[T]he Bureau of Legal Affair’s (sic) Decision and
Resolution (1) canceling [herein respondent Sehwani, Incorporated]’s certificate of registration for
the mark ‘IN-N-OUT’ and (2) ordering [herein respondents] to permanently cease and desist from Section 163. Jurisdiction of Court.–All actions under Sections 150, 155, 164, and 166 to
using the subject mark on its goods and business are contrary to law and/or is (sic) not supported 169 shall be brought before the proper courts with appropriate jurisdiction under
by evidence."40 The same ground was again invoked by respondents in their Petition in CA-G.R. SP existing laws.
No. 92785, rephrased as follows: "The IPO Director General committed grave error in affirming the
Bureau of Legal Affair’s (sic) Decision (1) canceling [herein respondent Sehwani, Incorporated]’s
The provisions referred to in Section 163 are: Section 150 on License Contracts; Section 155 on
certificate of registration for the mark "IN-N-OUT," and (2) ordering [herein respondents] to
Remedies on Infringement; Section 164 on Notice of Filing Suit Given to the Director; Section 166 on
permanently cease and desist from using the subject mark on its goods and business."41 Both
Goods Bearing Infringing Marks or Trade Names; Section 167 on Collective Marks; Section 168 on
Petitions, in effect, seek the reversal of the 22 December 2003 Decision of the IPO Director of Legal
Unfair Competition, Rights, Regulation and Remedies; and Section 169 on False Designations of
Affairs. Undoubtedly, a judgment in either one of these Petitions affirming or reversing the said
Origin, False Description or Representation.
Decision of the IPO Director of Legal Affairs based on the merits thereof would bar the Court of
Appeals from making a contrary ruling in the other Petition, under the principle of res judicata.
The Court disagrees with the Court of Appeals.
Upon a closer scrutiny of the two Petitions, however, the Court takes notice of one issue which
respondents did not raise in CA-G.R. SP No. 88004, but can be found in CA-G.R. SP No. 92785, i.e., Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of
whether respondents are liable for unfair competition. Hence, respondents seek additional reliefs in Legal Affairs, thus:
CA-G.R. SP No. 92785, seeking the reversal of the finding of the IPO Director General that they are
guilty of unfair competition, and the nullification of the award of damages in favor of petitioner
Section 10. The Bureau of Legal Affairs.–The Bureau of Legal Affairs shall have the
resulting from said finding. Undoubtedly, respondents could not have raised the issue of unfair
following functions:
competition in CA-G.R. SP No. 88004 because at the time they filed their Petition therein on 28
10.1 Hear and decide opposition to the application for registration of
marks; cancellation of trademarks; subject to the provisions of Section 64, cancellation
of patents and utility models, and industrial designs; and petitions for compulsory
licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for violations of
laws involving intellectual property rights; Provided, That its jurisdiction is limited
to complaints where the total damages claimed are not less than Two hundred
thousand pesos (P200,000): Provided, futher, That availment of the provisional
remedies may be granted in accordance with the Rules of Court. The Director of
Legal Affairs shall have the power to hold and punish for contempt all those who
disregard orders or writs issued in the course of the proceedings.
(b) After formal investigation, the Director for Legal Affairs may impose one (1) or more
of the following administrative penalties:
(i) The issuance of a cease and desist order which shall specify the acts that the
respondent shall cease and desist from and shall require him to submit a
compliance report within a reasonable time which shall be fixed in the order;
(ii) The acceptance of a voluntary assurance of compliance or discontinuance
as may be imposed. Such voluntary assurance may include one or more of the
following:
(1) An assurance to comply with the provisions of the intellectual
property law violated;
(2) An assurance to refrain from engaging in unlawful and unfair
acts and practices subject of the formal investigation
(3) An assurance to recall, replace, repair, or refund the money
value of defective goods distributed in commerce; and
(4) An assurance to reimburse the complainant the expenses and
costs incurred in prosecuting the case in the Bureau of Legal Affairs.
The Director of Legal Affairs may also require the respondent to
submit periodic compliance reports and file a bond to guarantee
compliance of his undertaking.
(iii) The condemnation or seizure of products which are subject of the offense.
The goods seized hereunder shall be disposed of in such manner as may be
deemed appropriate by the Director of Legal Affairs, such as by sale, donation
to distressed local governments or to charitable or relief institutions,
exportation, recycling into other goods, or any combination thereof, under
such guidelines as he may provide;
(iv) The forfeiture of paraphernalia and all real and personal properties which
have been used in the commission of the offense;
(v) The imposition of administrative fines in such amount as deemed
reasonable by the Director of Legal Affairs, which shall in no case be less than
Five thousand pesos (P5,000) nor more than One hundred fifty thousand pesos
(P150,000). In addition, an additional fine of not more than One thousand
pesos (P1,000) shall be imposed for each day of continuing violation;
(vi) The cancellation of any permit, license, authority, or registration
which may have been granted by the Office, or the suspension of the validity
thereof for such period of time as the Director of Legal Affairs may deem
reasonable which shall not exceed one (1) year;
(vii) The withholding of any permit, license, authority, or registration which is
being secured by the respondent from the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions.
10.3 The Director General may by Regulations establish the procedure to govern the
implementation of this Section.43 (Emphasis provided.)
Unquestionably, petitioner’s complaint, which seeks the cancellation of the disputed mark in the
name of respondent Sehwani, Incorporated, and damages for violation of petitioner’s intellectual
property rights, falls within the jurisdiction of the IPO Director of Legal Affairs.
The Intellectual Property Code also expressly recognizes the appellate jurisdiction of the IPO
Director General over the decisions of the IPO Director of Legal Affairs, to wit:
Section 7. The Director General and Deputies Director General. 7.1 Fuctions.–The Director
General shall exercise the following powers and functions:
xxxx
b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of
Legal Affairs, the Director of Patents, the Director of Trademarks, and the Director of
Documentation, Information and Technology Transfer Bureau. The decisions of the
Director General in the exercise of his appellate jurisdiction in respect of the decisions of
the Director of Patents, and the Director of Trademarks shall be appealable to the Court
of Appeals in accordance with the Rules of Court; and those in respect of the decisions of
the Director of Documentation, Information and Technology Transfer Bureau shall be
appealable to the Secretary of Trade and Industry;
The Court of Appeals erroneously reasoned that Section 10(a) of the Intellectual Property Code,
conferring upon the BLA-IPO jurisdiction over administrative complaints for violations of
intellectual property rights, is a general provision, over which the specific provision of Section 163
of the same Code, found under Part III thereof particularly governing trademarks, service marks,
and tradenames, must prevail. Proceeding therefrom, the Court of Appeals incorrectly concluded
that all actions involving trademarks, including charges of unfair competition, are under the
exclusive jurisdiction of civil courts.
Such interpretation is not supported by the provisions of the Intellectual Property Code. While
Section 163 thereof vests in civil courts jurisdiction over cases of unfair competition, nothing in the
said section states that the regular courts have sole jurisdiction over unfair competition cases, to the
exclusion of administrative bodies. On the contrary, Sections 160 and 170, which are also found
under Part III of the Intellectual Property Code, recognize the concurrent jurisdiction of civil courts
and the IPO over unfair competition cases. These two provisions read:
Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark
Enforcement Action.–Any foreign national or juridical person who meets the
requirements of Section 3 of this Act and does not engage in business in the Philippines
may bring a civil or administrative action hereunder for opposition, cancellation,
infringement, unfair competition, or false designation of origin and false description,
whether or not it is licensed to do business in the Philippines under existing laws.
xxxx
Section 170. Penalties.–Independent of the civil and administrative sanctions imposed
by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine
ranging from Fifty thousand pesos (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, Section168, and Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide the
petitioner’s administrative case against respondents and the IPO Director General had exclusive
jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.
Unfair Competition
The Court will no longer touch on the issue of the validity or propriety of the 22 December 2003
Decision of the IPO Director of Legal Affairs which: (1) directed the cancellation of the certificate of
registration of respondent Sehwani, Incorporated for the mark "IN-N-OUT" and (2) ordered
respondents to permanently cease and desist from using the disputed mark on its goods and
business. Such an issue has already been settled by this Court in its final and executory Decision
dated 15 October 2007 in G.R. No. 171053, Sehwani, Incorporated v. In-N-Out Burger,44ultimately
affirming the foregoing judgment of the IPO Director of Legal Affairs. That petitioner has the
superior right to own and use the "IN-N-OUT" trademarks vis-à-vis respondents is a finding which
this Court may no longer disturb under the doctrine of conclusiveness of judgment. In
conclusiveness of judgment, any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which judgment is rendered
on the merits is conclusively settled by the judgment therein and cannot again be litigated between
the parties and their privies whether or not the claims, demands, purposes, or subject matters of the
two actions are the same.45
Thus, the only remaining issue for this Court to resolve is whether the IPO Director General
correctly found respondents guilty of unfair competition for which he awarded damages to
petitioner.
The essential elements of an action for unfair competition are (1) confusing similarity in the general
appearance of the goods and (2) intent to deceive the public and defraud a competitor. The
confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. The intent to deceive and defraud
may be inferred from the similarity of the appearance of the goods as offered for sale to the public.
Actual fraudulent intent need not be shown.46
In his Decision dated 23 December 2005, the IPO Director General ably explains the basis for his
finding of the existence of unfair competition in this case, viz:
The evidence on record shows that the [herein respondents] were not using their
registered trademark but that of the [petitioner]. [Respondent] SEHWANI, INC. was
issued a Certificate of Registration for IN N OUT (with the Inside of the Letter "O" Formed
like a Star) for restaurant business in 1993. The restaurant opened only in 2000 but
under the name IN-N-OUT BURGER. Apparently, the [respondents] started constructing
the restaurant only after the [petitioner] demanded that the latter desist from claiming
ownership of the mark IN-N-OUT and voluntarily cancel their trademark registration.
Moreover, [respondents] are also using [petitioner’s] registered mark Double-Double for
use on hamburger products. In fact, the burger wrappers and the French fries receptacles
the [respondents] are using do not bear the mark registered by the [respondent], but the
[petitioner’s] IN-N-OUT Burger’s name and trademark IN-N-OUT with Arrow design.
There is no evidence that the [respondents] were authorized by the [petitioner] to use
the latter’s marks in the business. [Respondents’] explanation that they are not using
their own registered trademark due to the difficulty in printing the "star" does not justify
the unauthorized use of the [petitioner’s] trademark instead.
Further, [respondents] are giving their products the general appearance that would likely
influence purchasers to believe that these products are those of the [petitioner]. The
intention to deceive may be inferred from the similarity of the goods as packed and
offered for sale, and, thus, action will lie to restrain such unfair competition. x x x.
xxxx
[Respondents’] use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent
to deceive purchasers. Exhibit "GG," which shows the business establishment of
[respondents] illustrates the imitation of [petitioner’s] corporate name IN-N-OUT and
signage IN-N-OUT BURGER. Even the Director noticed it and held:
"We also note that In-N-Out Burger is likewise, [petitioner’s] corporate name.
It has used the "IN-N-OUT" Burger name in its restaurant business in Baldwin
Park, California in the United States of America since 1948. Thus it has the
exclusive right to use the tradenems "In-N-Out" Burger in the Philippines and
the respondents’ are unlawfully using and appropriating the same."
The Office cannot give credence to the [respondent’s] claim of good faith and that they
have openly and continuously used the subject mark since 1982 and is (sic) in the process
of expanding its business. They contend that assuming that there is value in the foreign
registrations presented as evidence by the [petitioner], the purported exclusive right to
the use of the subject mark based on such foreign registrations is not essential to a right
of action for unfair competition. [Respondents] also claim that actual or probable
deception and confusion on the part of customers by reason of respondents’ practices
must always appear, and in the present case, the BLA has found none. This Office finds the
arguments untenable.
In contrast, the [respondents] have the burden of evidence to prove that they do not have
fraudulent intent in using the mark IN-N-OUT. To prove their good faith, [respondents]
could have easily offered evidence of use of their registered trademark, which they
claimed to be using as early as 1982, but did not.
 [Respondents] also failed to explain why they are using the marks of [petitioner] countervailing evidence. Considering moreover the reputation of petitioner’s counsel, the actual
particularly DOUBLE DOUBLE, and the mark IN-N-OUT Burger and Arrow Design. Even in attorney’s fees paid by petitioner would far exceed the amount that was awarded to it.52
their listing of menus, [respondents] used [Appellants’] marks of DOUBLE DOUBLE and
IN-N-OUT Burger and Arrow Design. In addition, in the wrappers and receptacles being
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of the Court
used by the [respondents] which also contained the marks of the [petitioner], there is no
of Appeals in CA-G.R. SP No. 92785, promulgated on 18 July 2006, is REVERSED. The Decision of the
notice in such wrappers and receptacles that the hamburger and French fries are
IPO Director General, dated 23 December 2005, is hereby REINSTATED IN PART, with the
products of the [respondents]. Furthermore, the receipts issued by the [respondents]
modification that the amount of exemplary damages awarded be reduced to P250,000.00.
even indicate "representing IN-N-OUT." These acts cannot be considered acts in good
faith. 47
SO ORDERED.
Administrative proceedings are governed by the "substantial evidence rule." A finding of guilt in an
administrative case would have to be sustained for as long as it is supported by substantial evidence
that the respondent has committed acts stated in the complaint or formal charge. As defined,
substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to
support a conclusion.48 As recounted by the IPO Director General in his decision, there is more than
enough substantial evidence to support his finding that respondents are guilty of unfair
competition.

With such finding, the award of damages in favor of petitioner is but proper. This is in accordance
with Section 168.4 of the Intellectual Property Code, which provides that the remedies under
Sections 156, 157 and 161 for infringement shall apply mutatis mutandis to unfair competition. The
remedies provided under Section 156 include the right to damages, to be computed in the following
manner:

Section 156. Actions, and Damages and Injunction for Infringement.–156.1 The owner of
a registered mark may recover damages from any person who infringes his rights, and
the measure of the damages suffered shall be either the reasonable 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.

In the present case, the Court deems it just and fair that the IPO Director General computed the
damages due to petitioner by applying the reasonable percentage of 30% to the respondents’ gross
sales, and then doubling the amount thereof on account of respondents’ actual intent to mislead the
public or defraud the petitioner,49 thus, arriving at the amount of actual damages of P212,574.28.

Taking into account the deliberate intent of respondents to engage in unfair competition, it is only
proper that petitioner be awarded exemplary damages. Article 2229 of the Civil Code provides that
such damages may be imposed by way of example or correction for the public good, such as the
enhancement of the protection accorded to intellectual property and the prevention of similar acts
of unfair competition. However, exemplary damages are not meant to enrich one party or to
impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially
deleterious action.50 While there is no hard and fast rule in determining the fair amount of
exemplary damages, the award of exemplary damages should be commensurate with the actual loss
or injury suffered.51 Thus, exemplary damages of P500,000.00 should be reduced to P250,000.00
which more closely approximates the actual damages awarded.

In accordance with Article 2208(1) of the Civil Code, attorney’s fees may likewise be awarded to
petitioner since exemplary damages are awarded to it. Petitioner was compelled to protect its rights
over the disputed mark. The amount of P500,000.00 is more than reasonable, given the fact that the
case has dragged on for more than seven years, despite the respondent’s failure to present
G.R. No. 111580 June 21, 2001 Hence, the instant petition, docketed as G.R. No. 111580, based on the following grounds:

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD., SHANGRI-LA PROPERTIES, INC., THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND
MAKATI SHANGRI-LA HOTEL AND RESORT, INC. and KUOK PHILIPPINE PROPERTIES, INC., COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT:
petitioners,
vs.
I. THE INFRINGEMENT CASE SHOULD BE DISMISSED OR AT LEAST SUSPENDED; AND
THE COURT OF APPEALS, HON. FELIX M. DE GUZMAN, as Judge, RTC of Quezon City, Branch 99
and DEVELOPERS GROUP OF COMPANIES, INC., respondents.
II. THE HONORABLE PRESIDING JUDGE SHOULD INHIBIT HIMSELF FROM TRYING THE
INFRINGEMENT CASE.9
----------------------------------------

Meanwhile, on October 28, 1991, the Developers Group filed in Inter Partes Case No. 3145 an Urgent
G.R. No. 114802 June 21, 2001
Motion to Suspend Proceedings, invoking the pendency of the infringement case it filed before the
Regional Trial Court of Quezon City.10 On January 10, 1992, the BPTTT, through Director Ignacio S.
DEVELOPERS GROUP OF COMPANIES, INC., petitioner, Sapalo, issued an Order denying the Motion.11 A Motion for Reconsideration was filed which was,
vs. however, denied in a Resolution dated February 11, 1992.12
THE COURT OF APPEALS, HON. IGNACIO S. SAPALO, in his capacity as Director, Bureau of
Patents, Trademarks and Technology Transfer, and SHANGRI-LA INTERNATIONAL HOTEL
From the denial by the BPTTT of its Urgent Motion to Suspend Proceedings and Motion for
MANAGEMENT, LTD.,respondents.
Reconsideration, the Developers Group filed with the Court of Appeals a petition for certiorari,
mandamus and prohibition, docketed as CA-G.R. SP No. 27742.13 On March 29, 1994, the Court of
YNARES-SANTIAGO, J.: Appeals dismissed the petition for lack of merit.14

On June 21, 1988, the Shangri-La International Hotel Management, Ltd., Shangri-La Properties, Inc., A petition for review was thereafter filed, docketed as G.R. No. 114802, raising the issue of:
Makati Shangri-La Hotel and Resort, Inc. and Kuok Philippine Properties, Inc. (hereinafter
collectively referred as the "Shangri-La Group"), filed with the Bureau of Patents, Trademarks and
WHETHER OR NOT, GIVEN THE ESTABLISHED FACTS AND CIRCUMSTANCES ON
Technology Transfer (BPTTT) a petition, docketed as Inter Partes Case No. 3145, praying for the
RECORD AND THE LAW AND JURISPRUDENCE APPLICABLE TO THE MATTER, THE
cancellation of the registration of the "Shangri-La" mark and "S" device/logo issued to the
RESPONDENT COURT ERRED IN HOLDING THAT, INASMUCH AS BOTH THE CIVIL
Developers Group of Companies, Inc., on the ground that the same was illegally and fraudulently
ACTION AND THE ADMINISTRATIVE PROCEEDINGS HERE INVOLVED MAY CO-EXIST
obtained and appropriated for the latter's restaurant business. The Shangri-La Group alleged that it
AND THE LAW DOES NOT PROVIDE FOR ANY PREFERENCE BY ONE OVER THE OTHER,
is the legal and beneficial owners of the subject mark and logo; that it has been using the said mark
THE RESPONDENT DIRECTOR HAD JURISDICTION TO RULE AS HE DID AND HAD NOT
and logo for its corporate affairs and business since March 1962 and caused the same to be specially
INCURRED ANY GRAVE ABUSE OF DISCRETION CORRECTIBLE BY THE EXTRAORDINARY
designed for their international hotels in 1975, much earlier than the alleged first use thereof by the
REMEDIES OF CERTIORARI, PROHIBITION AND MANDAMUS.15
Developers Group in 1982.

Likewise, the Shangri-La Group filed with the BPTTT its own application for registration of the
subject mark and logo. The Developers Group filed an opposition to the application, which was
docketed as Inter Partes Case No. 3529.
Almost three (3) years later, or on April 15, 1991, the Developers Group instituted with the Regional
Trial Court of Quezon City, Branch 99, a complaint for infringement and damages with prayer for
injunction, docketed as Civil Case No. Q-91-8476, against the Shangri-La Group.
On January 8, 1992, the Shangri-La Group moved for the suspension of the proceedings in the
infringement case on account of the pendency of the administrative proceedings before the
BPTTT.1 This was denied by the trial court in a Resolution issued on January 16, 1992. 2 The Shangri-
La Group filed a Motion for Reconsideration.3 Soon thereafter, it also filed a Motion to Inhibit against
Presiding Judge Felix M. de Guzman.4 On July 1, 1992, the trial court denied both motions. 5
The Shangri-La Group filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R.
SP No. 29006.6 On February 15, 1993, the Court of Appeals rendered its decision dismissing the
petition for certiorari.7 The Shangri-La Group filed a Motion for Reconsideration, which was denied
on the ground that the same presented no new matter that warranted consideration.8
On February 2, 1998, G.R. Nos. 111580 and 114802 were ordered consolidated.
The core issue is simply whether, despite the institution of an Inter Partes case for cancellation of a
mark with the BPTTT (now the Bureau of Legal Affairs, Intellectual Property Office) by one party,
the adverse party can file a subsequent action for infringement with the regular courts of justice in
connection with the same registered mark.
We rule in the affirmative.
Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual Property Code,
provides, as follows –
Section 151.2. Notwithstanding the foregoing provisions, the court or the administrative
agency vested with jurisdiction to hear and adjudicate any action to enforce the rights to
a registered mark shall likewise exercise jurisdiction to determine whether the
registration of said mark may be cancelled in accordance with this Act. The filing of a suit
to enforce the registered mark with the proper court or agency shall exclude any other
court or agency from assuming jurisdiction over a subsequently filed petition to cancel
the same mark. On the other hand, the earlier filing of petition to cancel the mark with
 the Bureau of Legal Affairs shall not constitute a prejudicial question that must be
resolved before an action to enforce the rights to same registered mark may be
decided. (Emphasis provided)
Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings, provides to wit –
Section 7. Effect of filing of a suit before the Bureau or with the proper court. - The filing of
a suit to enforce the registered mark with the proper court or Bureau shall exclude any
other court or agency from assuming jurisdiction over a subsequently filed petition to
cancel the same mark. On the other hand, the earlier filing of petition to cancel the
mark with the Bureau shall not constitute a prejudicial question that must be
resolved before an action to enforce the rights to same registered mark may be
decided. (Emphasis provided)
Hence, as applied in the case at bar, the earlier institution of an Inter Partes case by the Shangri-La
Group for the cancellation of the "Shangri-La" mark and "S" device/logo with the BPTTT cannot
effectively bar the subsequent filing of an infringement case by registrant Developers Group. The
law and the rules are explicit.
lower court, in its sound discretion, may suspend the action pending outcome of the
cancellation proceedings" before the BPTTT.
However, while the instant Petitions have been pending with this Court, the infringement court
rendered a Decision, dated March 8, 1996, in Civil Case No. Q-91-8476,19 the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Developers Group of
Companies, Inc. and against defendants Shangri-La International Hotel Management, Ltd.,
Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc., and Kuok Philippine
Properties, Inc. –
a) Upholding the validity of the registration of the service mark "Shangri-La" and "S-
Logo" in the name of plaintiff;
b) Declaring defendants' use of said mark and logo as an infringement of plaintiff's right
thereto;

c) Ordering defendants, their representatives, agents, licensees, assignees and other

The rationale is plain: Certificate of Registration No. 31904, upon which the infringement case is
persons acting under their authority and with their permission, to permanently cease and
based, remains valid and subsisting for as long as it has not been cancelled by the Bureau or by an
desist from using and/or continuing to use said mark and logo, or any copy, reproduction
infringement court. As such, Developers Group's Certificate of Registration in the principal register
or colorable imitation thereof, in the promotion, advertisement, rendition of their hotel
continues as "prima facie evidence of the validity of the registration, the registrant's ownership of
and allied projects and services or in any other manner whatsoever;
the mark or trade-name, and of the registrant's exclusive right to use the same in connection with
the goods, business or services specified in the certificate."16 Since the certificate still subsists,
Developers Group may thus file a corresponding infringement suit and recover damages from any d) Ordering defendants to remove said mark and logo from any premises, objects,
person who infringes upon the former's rights.17 materials and paraphernalia used by them and/or destroy any and all prints, signs,
advertisements or other materials bearing said mark and logo in their possession and/or
under their control; and
Furthermore, the issue raised before the BPTTT is quite different from that raised in the trial court.
The issue raised before the BPTTT was whether the mark registered by Developers Group is subject
to cancellation, as the Shangri-La Group claims prior ownership of the disputed mark. On the other e) Ordering defendants, jointly and severally, to indemnify plaintiff in the amounts of
hand, the issue raised before the trial court was whether the Shangri-La Group infringed upon the P2,000,000.00 as actual and compensatory damages, P500,000.00 as attorney's fees and
rights of Developers Group within the contemplation of Section 22 of Republic Act 166. expenses of litigation.

The case of Conrad and Company, Inc. v. Court of Appeals18 is in point. We held: Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and
Technology Transfer, for his information and appropriate action in accordance with the
provisions of Section 25, Republic Act No. 166.
We cannot see any error in the above disquisition. It might be mentioned that while an
application for the administrative cancellation of a registered trademark on any of the
grounds enumerated in Section 17 of Republic Act No. 166, as amended, otherwise Costs against defendants.
known as the Trade-Mark Law, falls under the exclusive cognizance of BPTTT (Sec. 19,
Trade-Mark Law), an action, however, for infringement or unfair competition, as well as
SO ORDERED.20
the remedy of injunction and relief for damages, is explicitly and unquestionably within
the competence and jurisdiction of ordinary courts.
The said Decision is now on appeal with respondent Court of Appeals. 21
xxx xxx xxx
Following both law and the jurisprudence enunciated in Conrad and Company, Inc. v. Court of
Appeals,22 the infringement case can and should proceed independently from the cancellation case
Surely, an application with BPTTT for an administrative cancellation of a registered trade
with the Bureau so as to afford the owner of certificates of registration redress and injunctive writs.
mark cannot per se have the effect of restraining or preventing the courts from the
In the same light, so must the cancellation case with the BPTTT (now the Bureau of Legal Affairs,
exercise of their lawfully conferred jurisdiction. A contrary rule would unduly expand the
Intellectual Property Office) continue independently from the infringement case so as to determine
doctrine of primary jurisdiction which, simply expressed, would merely behoove regular
whether a registered mark may ultimately be cancelled. However, the Regional Trial Court, in
courts, in controversies involving specialized disputes, to defer to the findings or
granting redress in favor of Developers Group, went further and upheld the validity and preference
resolutions of administrative tribunals on certain technical matters. This rule, evidently,
of the latter's registration over that of the Shangri-La Group.
did not escape the appellate court for it likewise decreed that for "good cause shown, the
There can be no denying that the infringement court may validly pass upon the right of registration.
Section 161 of Republic Act No. 8293 provides to wit –

SEC. 161. Authority to Determine Right to Registration – In any action involving a

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

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

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

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

SO ORDERED.
G.R. No. 169440 November 23, 2011
GEMMA ONG A.K.A. Maria Teresa Gemma Catacutan, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
D E C I S I O NLEONARDO-DE CASTRO, J.:
Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of Court, to set aside
and reverse the June 16, 2005 Decision1 of the Court of Appeals in CA-G.R. CR No. 28308, which
affirmed the September 23, 2003 Decision2 of the Regional Trial Court (RTC) of Manila, Branch 24 in
Criminal Case No. 00-184454.
On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma) was
charged before the RTC for Infringement under Section 155 in relation to Section 170 of Republic
Act No. 8293 or the Intellectual Property Code. The accusatory portion of the Information reads:
That sometime in September 25, 1998 and prior thereto at Sta. Cruz, Manila and within the
jurisdiction of this Honorable Court, the above-named accused did then and there, knowingly,
maliciously, unlawfully and feloniously engage in the distribution, sale, [and] offering for sale of
counterfeit Marlboro cigarettes which had caused confusion, deceiving the public that such
cigarettes [were] Marlboro cigarettes and those of the Telengtan Brothers and Sons, Inc., doing
business under the style of La Suerte Cigar and Cigarettes Factory, the exclusive manufacturer of
Marlboro Cigarette in the Philippines and that of Philip Morris Products, Inc. (PMP7) the registered
owner and proprietor of the MARLBORO trademark together with the devices, including the
famous-Root Device, to their damage and prejudice, without the accused seeking their permit or
authority to manufacture and distribute the same.3
On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a warrant of arrest
against Gemma, but lifted4 and set aside5 the same after Gemma voluntarily surrendered on August
4, 2000, and filed a cash bond for ₱ 12,000.00.
Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000. 6 After the pre-trial
conference on February 13, 2001,7 trial on the merits ensued.
The prosecution called to the witness stand the following: Roger Sherman Slagle, the Director of
Operations of Philip Morris Malaysia, and Philip Morris Philippines, Inc.’s (PMPI) product/brand
security expert, to testify that according to his examination, the products they seized at the subject
premises were counterfeit cigarettes;8 as well as Jesse Lara, who, as then Senior Investigator III at
the Intellectual Property Rights (IPR) Unit of the Economic Intelligence and Investigation Bureau
(EIIB), Department of Finance, led the investigating team, to testify on the events that led to the
arrest of Gemma.9 The prosecution also presented the billing accountant of Quasha Ancheta Peña &
Nolasco Law Office (Quasha Law Office), Juliet Flores, to show that PMPI, being one of Quasha Law
Office’s clients, paid the amount of $4,069.12 for legal services rendered.10 The last witness for the
prosecution was Atty. Alonzo Q. Ancheta, a senior law partner at Quasha Law Office, who testified
that as the duly appointed Attorney-in-Fact of PMPI, he was in charge of the EIIB search operation in
the subject premises. Atty. Ancheta said that while he was not personally present during the
implementation of the search warrant, he sent Atty. Leonardo Salvador, who constantly reported
the developments to him.11
The facts, as succinctly summarized by the Court of Appeals, are as follows:
On September 10, 1998, Jesse S. Lara, then Senior Investigator III at the Intellectual Property Rights
(IPR) Unit of the Economic Intelligence and Investigation Bureau (EIIB), Department of Finance,
received reliable information that counterfeit "Marlboro" cigarettes were being distributed and sold
by two (2) Chinese nationals, Johnny Sia and Jessie Concepcion, in the areas of Tondo, Binondo, Sta.
Cruz and Quiapo, Manila. A mission team formed by EIIB, including Lara, conducted surveillance
operation to verify the report. EIIB agents Leonardo Villanueva and Jigo Madrigal did a "test-buy" on
the different sari-sari stores of Manila located in Quiapo, Tondo, Sta. Cruz and Blumentritt areas and
took samples of "Marlboro" cigarettes sold therein. During the surveillance, the container van
delivering the "Marlboro" packed in black plastic bags was seen parked at 1677 Bulacan corner
Hizon Streets, Sta. Cruz, Manila [(the subject premises)]. Upon inquiry from the Barangay Chairman,
they also learned that the place is owned by a certain Mr. Jackson Ong.
The EIIB team coordinated with officers of Philip Morris, Inc., owner of the trademark Marlboro
Label in the Philippines duly registered with the Philippine Patents Office and subsequently with the
Intellectual Property Office (IPO) since 1956. Initial examination made by Philip Morris, Inc. on
those random sample purchases revealed that the cigarettes were indeed fake products
unauthorized by the company. With official indorsement by the EIIB, Senior Investigator Lara filed
an application for search warrant before the Regional Trial Court of Dasmariñas, Cavite, Branch 90.
On September 24, 1998, Executive Judge Dolores L. Español issued a search warrant after finding
probable cause to believe that Mr. Jackson Ong has in his possession/control in the premises located
at 1675-1677 Bulacan St. cor. M. Hizon St., Sta. Cruz, Manila, the following properties:
"Substantial number of fake locally made and imported fake cigarettes bearing the Marlboro brand,
together with the corresponding labels, cartons, boxes and other packaging as well as receipts,
invoices and other documents relative to the purchase, sale, and distribution of the aforesaid fake
Marlboro cigarettes."
On September 25, 1998, the EIIB team led by Senior Investigator Lara implemented the search
warrant, together with SPO2 Rommel P. Sese of the Western Police District (WPD) as representative
of the Philippine National Police (PNP), Barangay Chairman Ernesto Traje, Sr., Barangay Kagawad
Vivian V. Rallonza and Atty. Leonardo P. Salvador who was sent by [Quasha Peña & Nolasco Law
Office,] the law firm engaged by Philip Morris, Inc. They proceeded to the subject premises but
Jackson Ong, the alleged owner, was not there. It was accused, who is supposedly either the spouse
or common-law wife of Jackson Ong, who entertained them. At first, accused refused to allow them
entry into the premises but eventually the team was able to search the premises and found
Marlboro cigarettes stocked in several boxes containing fifty (50) reams inside each box which were
packed in black plastic sacks like in "balikbayan boxes." The "Inventory" and "Certification In the
Conduct of Search" were duly accomplished and signed by the members of the EIIB and the other
representatives present during the actual search (SPO2 Sese, Jess Lara, Traje, Sr., Henry Mariano,
Isidro Burgos and Atty. Salvador). Accused signed her name in the said documents as "Gemma Ong,"
as the Owner/Representative, while a certain employee, Girlie Cantillo, also signed as witness.
On September 28, 1998, a Return of Search Warrant was submitted by the EIIB to the issuing court
stating that the articles seized pursuant to the warrant were stored in the premises of the EIIB and
requesting that EIIB be granted temporary custody of the goods. Acting on the Urgent Motion To
Transfer Custody of Confiscated Articles filed by Philip Morris Products, Inc. (PMPI) of Virginia,
U.S.A., Executive Judge Dolores L. Español ordered the custody of the seized goods transferred from
EIIB to PMPI c/o Quasha Ancheta Peña and Nolasco Law Office, the Attorney-in-Fact of PMPI. Judge
Español subsequently also issued an order dated October 15, 1998 authorizing PMPI to secure and
take out samples of the unauthorized products from the confiscated cartons/boxes of Marlboro
cigarettes which are stored at Four Winds Phils. Inc. warehouse located at No. 2241 Pasong Tamo
Extension, Makati City under the direct and personal control and supervision of Sheriff IV Tomas C.
Azurin. PMPI had earlier sought such order from the court for the purpose of laboratory analysis
and scientific testing of the samples from the confiscated cigarettes.
On the basis of the results of the examination conducted by PMPI on the samples obtained from the Ranged against the positive and forthright declaration of the prosecution witnesses, the mere
confiscated boxes of cigarettes bearing the Marlboro brand, which confirmed the same to be uncorroborated and self-serving denials of the accused cannot stand. (People vs. Hortaleza, 258
unauthorized products and not genuine Marlboro cigarettes, the EIIB filed a case for Violation of SCRA 201)
Sections 155 and 168 in relation to Section 170 of Republic Act No. 8293 against Jackson Ong who is
not an authorized distributor of Marlboro products in the Philippines.12
We note in disbelief that it was only in the hearing of November 26, 2001, that accused’[s] former
lawyer manifested that accused is known as Gemma Catacutan never as Gemma Ong (tsn, November
After the prosecution rested its case, the defense filed a Demurrer to Evidence, 13 which the RTC 26, 2001, p. 3) and as admitted by her, she never revealed her true identity when arrested, when she
denied on March 26, 2003.14 The defense moved for a reconsideration of this order but the same posted her bail bond and even during her arraignment.
was denied on April 22, 2003.15
She could have protested at the time of her arrest that they were arresting the wrong person but
Gemma, as the lone witness for the defense, then took the witness stand. She said that she is this she did not do. She proceeded to post a bond for her provisional liberty, hired a lawyer to
married to Co Yok Piao, a Chinese national, but she still uses her maiden name Catacutan. 16 She defend her but failed to divulge the very information that could have led to an early dismissal of the
denied that she is the Gemma Ong accused in this case. She testified that she was arrested on August case, if true.
4, 2000, without the arresting officers asking for her name. She said that when she pleaded to be
released, she was instructed to post a cash bond, which she did in the amount of ₱ 12,000.00.
Her pretensions of ignorance as to the proper stage of when to explain (tsn, May 26, 2003), p. 13 can
Gemma averred that when she posted her bond and signed her certificate of arraignment, she did so
hardly be given credit. A dentist by profession, it is utterly incredible that she remained meek all
under her real name Maria Teresa Gemma Catacutan, as opposed to the signatures in the Inventory
through-out her arrest and the posting of her bail bond.21
and Certification in the Conduct of Search (search documents), which she denied signing. She
claimed that she was not able to bring up her defense of mistaken identity early on as she did not
know when the proper time to raise it was. She avowed that she was not interrogated by the police The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale and
prior to her arrest, despite the two-year gap between it and the search of the subject premises. She manufacture of Marlboro cigarettes, the address of her business "Fascinate Trading" is registered as
alleged that she did not know Jackson Ong and that the prosecution witnesses, whom she first saw 1677 Bulacan Street, Sta. Cruz, Manila, the same property raided by the EIIB that contained the
during her trial, couldn’t even point to her as the person present during the raid when they testified counterfeit cigarettes.22
in court. Gemma further asseverated that while she could not remember where she was on
September 25, 1998, she was sure that she was not at the subject premises on that date. Gemma
Aggrieved, Gemma appealed the RTC’s decision to the Court of Appeals based on the following
presented her Identification Card issued by the Professional Regulation Commission (PRC) to show
grounds:
that she is a dentist by profession, although she claimed that she is a businessperson in practice. She
said that she used to buy and sell gear fabrics, t-shirts, truck materials, and real estate17 under the
business name "Fascinate Trading" based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased I
operations in February 1998.18 Gemma denied ever having engaged in the manufacture and sale of
any kind of cigarettes and claimed that she could not even distinguish between a fake and a genuine
THE LOWER COURT GRIEVOUSLY ERRED IN CONVICTING DR. MARIA TERESA GEMMA
Marlboro cigarette.19
CATACUTAN GUILTY OF THE CRIME OF VIOLATION OF THE INTELLECTUAL PROPERTY
RIGHTS LAW DESPITE UTTER LACK OF EVIDENCE.
On September 30, 2003, the RTC convicted Gemma of the crime as charged. The dispositive portion
of its Decision reads:
II

Accordingly, this Court finds accused Gemma Catacutan guilty beyond reasonable doubt of violation
THE LOWER COURT IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN ON THE
of Section 155 in relation to Section 170 of Republic Act No. 8293 and hereby sentences her to suffer
BASIS OF SURMISE (sic), CONJECTURES AND GUESSWORK COMMITTED GRAVE
the penalty of imprisonment of two (2) years and to pay a fine of Fifty Thousand (₱ 50,000.00)
VIOLENCE AGAINST THE CONSTITUTIONAL PRESUMPTION OF INNOCENCE.
Pesos.

III
Accused is further directed to indemnify private complainant the sum of US$4,069.12 or its peso
equivalent, as actual damages.
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN CONVICTING THE
ACCUSED-APPELLANT WHO HAD NOT BEEN POSITIVELY IDENTIFIED AND PINPOINTED
The records of the case as against Jackson Ong is hereby ordered archived pending his arrest.
AS MANUFACTURER NOR (sic) DISTRIBUTOR OF FAKE MARLBORO PRODUCT.

With costs against accused Gemma Catacutan.20

IV

In resolving the case, the RTC narrowed down the issue to whether Gemma Catacutan was the same
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN NOT GIVING THE
accused identified as Gemma Ong. The RTC answered this in the affirmative as it found Gemma’s
SLIGHTEST CREDENCE TO THE UNCONTRADICTED, UNREFUTED AND CANDID
defense of mistaken identity as untenable, especially since she claimed to be a professional. The RTC
TESTIMONY OF THE ACCUSED-APPELLANT, BUT INSTEAD, CONVICTED HER ON [T]HE
explained:
BASIS OF EXTRAPOLATED EVIDENCE NOT BORNE BY THE RECORDS.
 V D.

THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN CONVICTING THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF THE PROSECUTION
ACCUSED-APPELLANT DESPITE THE UTTER AND PATHETIC LACK OF EVIDENCE TO WITNESSES WHICH DID NOT MENTION PETITIONER’S PRESENCE AT THE TIME AND PLACE OF
SUSTAIN THE PROSECUTION’S LAME, SHALLOW AND UNCONFOUNDED THEORY OF THE SEARCH CANNOT TAKE PRECEDENCE OVER THEIR CONTRARY TESTIMONIES IN COURT
GUILT.23 THAT SHE WAS PRESENT AND IN FACT THE OCCUPANT AND OWNER OF THE PREMISES FROM
WHICH SHE INITIALLY BLOCKED THEIR ENTRY INTO.
The Court of Appeals found Gemma’s appeal to be unmeritorious. It said that Gemma was positively
identified by the prosecution witnesses as the woman who entertained them during the search of E.
the subject premises on September 25, 1998, and the woman who signed the Certification in the
Conduct of Search and Inventory. The Court of Appeals agreed with the RTC’s rejection of Gemma’s
THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS THE VERY SAME
defense of mistaken identity, as she should have raised it at the earliest opportunity, which was at
PERSON WHO WAS CAUGHT IN POSSESSION AND CONTROL OF THE PREMISES WHERE THE
the time of her arrest, the posting of her bail bond, or during her arraignment. The Court of Appeals
COUNTERFEIT ARTICLES WERE SEIZED BECAUSE SHE ALLEGEDLY NEVER PROTESTED BEING
held that the amendment of the prosecution witnesses’ affidavits was explained during the hearing,
WRONGFULLY ACCUSED AT THE TIME OF HER ARREST ON 4 AUGUST 2000, WHEN SHE POSTED
and although the original affidavits were the ones marked during the pre-trial, the amended ones
HER CASH BOND AND WHEN SHE EVEN SIGNED HER NAME AS MA. TERESA GEMMA CATACUTAN
provided the basis for the filing of the Information against Gemma and her co-accused Jackson Ong.
IN THE WAIVER, UNDERTAKING AND CERTIFICATE OR ARRAIGNMENT, ALL IN THE NAME OF THE
The Court of Appeals also noted that the March 20, 2000 Resolution of the State Prosecutor
ACCUSED AS "GEMMA ONG, a.k.a. MA. THERESA CATACUTAN."
specifically mentioned that the search warrant was served on Gemma Ong. The Court of Appeals
then proclaimed that in the hierarchy of evidence, the testimony of the witness in court commands
greater weight than his written affidavit.24 F.

The Court of Appeals affirmed the conviction of Gemma for trademark infringement under Section
155 of Republic Act No. 8293, as the counterfeit goods seized by the EIIB were not only found in her
possession and control, but also in the building registered under her business, Fascinate Trading.
The Court of Appeals said that the prosecution had satisfactorily proven Gemma’s commission of the
offense since the unauthorized use of the trademark Marlboro, owned by PMPI, was clearly
intended to deceive the public as to the origin of the cigarettes being distributed and sold, or
intended to be distributed and sold. The Court of Appeals further sustained the penalty and
damages imposed by the RTC for being in accord with the law and facts.25
Gemma is now before this Court with the following assignment of errors:
A.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION
WITNESSES IDENTIFYING PETITIONER AS PRESENT AT THE TIME AND PLACE WHEN THE
SEARCH AND SEIZURE TOOK PLACE.
B.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION
WITNESSES THAT THEY SAW PETITIONER SIGN HER NAME AS "GEMMA ONG" AS
OWNER/CLAIMANT/REPRESENTATIVE (OF THE ARTICLES SEIZED) ON THE SEARCH WARRANT
(EXH. "A"), CERTIFICATION IN THE CONDUCT OF SEARCH (EXH. "B") AND INVENTORY OF THE
S[E]IZED ARTICLES AT THE TIME OF THE SEARCH (EXH. "D").
THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR FAILURE OF THE
PROSECUTION TO PROVE THE GUILT OF THE ACCUSED-APPELLANT BEYOND REASONABLE
DOUBT.26
Gemma argues that if it were true that she was in the subject premises when it was raided on
September 25, 1998, then her name and presence would have been mentioned in the respective
affidavits of Slagle and Atty. Ancheta; and the EIIB agents who conducted the search would have
confronted, investigated, or arrested her. Gemma insists that the fact that her name was only
mentioned for the first time in the amended affidavits yields to the conclusion that she was not in
the subject premises when it was searched and that the testimonies of the prosecution witnesses
were perjured.27
Gemma further claims that the courts below were wrong in finding that she never protested that she
was mistakenly identified. She claims that she was arrested without the benefit of a preliminary
investigation and all she wanted to do at that point was to "get out [of] the clutches of overzealous
and eager beaver policemen who were exuberant in arresting an innocent party like"28 her. Gemma
also explains that her non-protest during her arraignment was upon the advice of her former
lawyer, who said that he would correct it in the proper time during the trial.
Respondent People of the Philippines, in its comment, 29 avers that there are only two issues to be
resolved in this case, to wit:
1. THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES QUESTIONS OF FACT
WHICH ARE NOT PROPER FOR REVIEW UNDER RULE 45 OF THE REVISED RULES OF
COURT.

C.
2. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONER’S CONVICTION
FOR VIOLATION OF SECTION 155 IN RELATION TO SECTION 170 OF R.A. 8293
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER’S SIGNATURE IN EXHIBITS (INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES).30
"A", "B" AND "C" ARE NOT HERS BUT WERE FORGED, BEING COMPLETELY AND PATENTLY
DISSIMILAR TO HER TRUE AND REAL SIGNATURE AS SHOWN IN HER OFFICIAL I.D AS
Respondent claims that a perusal of the issues in Gemma’s petition readily discloses that only
PROFESSIONAL DENTIST.
questions of fact have been raised, which are not reviewable in an appeal by
certiorari.31 Respondent asseverates that Gemma’s conviction was warranted as the prosecution be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
had sufficiently established her presence during the search of the subject premises where she Provided, That the infringement takes place at the moment any of the acts stated in Subsection
signed the search documents as "Gemma Ong." Moreover, the respondent avers, Gemma failed to 155.1 or this subsection are committed regardless of whether there is actual sale of goods or
timely protest her arrest and raise her claim that she is not Gemma Ong.32 services using the infringing material. (Sec. 22, R.A. No 166a)

Issues Section 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a
criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty
thousand pesos (₱ 50,000) to Two hundred thousand pesos (₱ 200,000), shall be imposed on any
A study of the pleadings filed before this Court shows that the only issues to be resolved are the
person who is found guilty of committing any of the acts mentioned in Section 155, Section 168 and
following:
Subsection 169.1. (Arts. 188 and 189, Revised Penal Code.) (Emphases supplied.)

1. Whether or not accused-appellant’s petition for review on certiorari under Rule 45 of

A "mark" is any visible sign capable of distinguishing the goods (trademark) or services (service
the Rules of Court is fatally defective as it raises questions of fact; and
mark) of an enterprise and shall include a stamped or marked container of goods.37

2. Whether or not Gemma’s guilt was proven beyond reasonable doubt in light of her
In McDonald’s Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., 38 this
alleged mistaken identity.
Court held:

This Court’s Ruling

Procedural Issue
As this case reached this Court via Rule 45 of the Rules of Court, the basic rule is that factual
questions are beyond the province of this Court, because only questions of law may be raised in a
petition for review.33 However, in exceptional cases, this Court has taken cognizance of questions of
fact in order to resolve legal issues, such as when there was palpable error or a grave
misapprehension of facts by the lower court.34 In Armed Forces of the Philippines Mutual Benefit
Association, Inc. v. Court of Appeals,35 we said that although submission of issues of fact in an appeal
by certiorari taken to this Court is ordinarily proscribed, this Court nonetheless retains the option in
the exercise of its sound discretion, taking into account the attendant circumstances, either to
decide the case or refer it to the proper court for determination. 36 Since the determination of the
identity of Gemma is the very issue affecting her guilt or innocence, this Court chooses to take
cognizance of this case in the interest of proper administration of justice.
Gemma is guilty of violating Section 155 in relation to Section 170 of Republic Act No. 8293
To establish trademark infringement, the following elements must be shown: (1) the validity of
plaintiff’s mark; (2) the plaintiff’s ownership of the mark; and (3) the use of the mark or its
colorable imitation by the alleged infringer results in "likelihood of confusion." Of these, it is the
element of likelihood of confusion that is the gravamen of trademark infringement.
A mark is valid if it is distinctive and not barred from registration. Once registered, not only the
mark’s validity, but also the registrant’s ownership of the mark is prima facie presumed. 39
The prosecution was able to establish that the trademark "Marlboro" was not only valid for being
neither generic nor descriptive, it was also exclusively owned by PMPI, as evidenced by the
certificates of registration issued by the Intellectual Property Office of the Department of Trade and
Industry.40
Anent the element of confusion, both the RTC and the Court of Appeals have correctly held that the
counterfeit cigarettes seized from Gemma’s possession were intended to confuse and deceive the
public as to the origin of the cigarettes intended to be sold, as they not only bore PMPI’s mark, but
they were also packaged almost exactly as PMPI’s products.41

Gemma was charged and convicted of violating Section 155 in relation to Section 170 of Republic
Regarding the Claim of Mistaken Identity
Act No. 8293, or the Intellectual Property Code of the Philippines.

Despite all these findings, Gemma has posited only a single defense, from the RTC all the way up to
Section 155. Remedies; Infringement. - Any person who shall, without the consent of the owner of
this Court: that she is not the Gemma Ong named and accused in this case. She bases this claim on
the registered mark:
the alleged discrepancies in the prosecution witnesses’ original affidavits vis-à-vis the amended
ones, which discrepancies, according to her, strongly suggest her innocence.
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered
mark or the same container or a dominant feature thereof in connection with the sale, offering for
This Court has time and again held that between an affidavit executed outside the court, and a
sale, distribution, advertising of any goods or services including other preparatory steps necessary
testimony given in open court, the latter almost always prevails.
to carry out the sale of any goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive; or
Discrepancies between a sworn statement and testimony in court do not outrightly justify the
acquittal of an accused. Such discrepancies do not necessarily discredit the witness since ex parte
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature
affidavits are often incomplete. They do not purport to contain a complete compendium of the
thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
details of the event narrated by the affiant. Thus, our rulings generally consider sworn statements
packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in
taken out of court to be inferior to in court testimony. x x x. 42
connection with the sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall
A reading of the original affidavits43 executed by Slagle and Atty. Ancheta, readily reveals that they Bad faith is never presumed while good faith is always presumed and the chapter on Human
concentrated on the facts and events leading up to the search and seizure of the contraband Relations of the Civil Code directs every person, inter alia, to observe good faith, which springs from
materials from the subject premises. They not only failed to mention Gemma Ong’s presence there, the fountain of good conscience. Therefore, he who claims bad faith must prove it. For one to be in
but they also failed to mention the other witnesses’ names and presence there as well. Although this bad faith, the same must be "evident." x x x.46
might appear to be a mistake on the part of a known and established law firm like the Quasha Law
Office, the firm immediately sought to rectify this by having the affidavits of Slagle, Atty. Ancheta,
The prosecution witnesses, contrary to Gemma’s claim, had positively identified her as the person
and Lara amended.
who initially refused the search team entrance, then later acquiesced to the search operations.
Slagle explained that even though he mentioned Gemma only in his amended affidavit, he was sure
If it were true that Gemma was not at the subject premises at all on September 25, 1998, then she that she was at the subject premises on the day that they searched it:
should have grabbed every chance to correct this notion and expose this mistake before she was
arrested. She could have brought up her defense of mistaken identity or absence at the raid in the
Testimony of Roger Sherman Slagle
preliminary investigation conducted prior to the issuance of her warrant of arrest; but instead, she
chose to ignore her subpoena and disregard the preliminary investigation. Even then, Gemma had
the opportunity to raise the fact that she was not Gemma Ong; not only during her arrest, but also ATTY. MAGLINAO:
during the posting of the cash bond for her bail, and more importantly, during her arraignment,
when she was asked if she understood the charges against her. Gemma also knew that the
Q In this amended affidavit you mentioned the name, Gemma Catacutan as one of the accused?
Information was filed against her on the basis of the amended affidavits, thus, she could have filed a
motion to quash the information before she entered her plea, or asked that a reinvestigation be
conducted. However, all these Gemma failed to do. We agree with the RTC that it is highly unlikely A Yes sir.
that a person of her stature and educational attainment would be so meek and timid that she failed
to protest against her being wrongly identified, accused, arrested, and potentially imprisoned. If
Q Can you tell the court how you were able to include the name of Gemma Catacutan in your
what she says were true, she would not have agreed to post bail or to be arraigned without at the
amended affidavit, when in fact it did not appear in the first affidavit?
very least, bringing up the fact that she was not the Gemma Ong the police officers were looking for.
In addition, her own lawyer, Atty. Maglinao, brought up the fact that she was not Gemma Ong, only
for the purpose of correcting the Information, and not to contest it, to wit: A When we arrived she was there and she was very nervous and upset.

WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR CONTINUATION OF DIRECT xxxx
EXAMINATION BY:
A It is very clear to me when I arrived there that she was somehow involved. 47 (Emphases ours.)
ATTY. ERESE:
Lara on the other hand, even pointed to her and thus positively identified her to be the one who had
With the kind permission of the hon. court. signed the search documents,48 as the owner of the subject premises, to wit:

COURT: Proceed. Testimony of Jesse Lara

ATTY. MAGLINAO: ATTY. FREZ

I would just want to be on record that my client, Gemma Catacutan has never been known as Q : Mr. Witness, do you know this person who wrote the name Gemma Ong?
Gemma Ong because her real name is Gemma Catacutan.
A : Yes, sir, Gemma Ong is the owner of the premises when we served the search warrant and also,
COURT: Do you have any objection to the amendment of the information? she was the one who refused us to gain entry during the service of the search warrant.

ATTY. MAGLINAO: Q : Were you able to gain entry at the premises?

No, your Honor. May we request to correct the information from Gemma Ong to Gemma Catacutan. 44 A : Yes, sir.

Gemma further accuses the prosecution witnesses of falsely testifying and of perjuring themselves Q : So, as regard to the person whom you identify as the one who refused you to gain entry, would
just so they can satisfy a big client like PMPI by showing that somebody had been arrested for you be able to identify this person?
counterfeiting its cigarettes. The crimes Gemma is imputing on these witnesses are serious crimes,
and in the absence of concrete and convincing evidence, this Court could not believe her mere
A : Yes, sir, that lady in pink is Mrs. Gemma Ong.
allegations that imply that these people would destroy someone’s life just so they can please a client,
more so over mere cigarettes. In Principio v. Hon. Barrientos, 45 we said:
(As witness is pointing to the accused Gemma Ong).
Q : Mr. Witness, why do you say that the person whom you pointed to us is the one who wrote the
name Mrs. Gemma Ong?
WITNESS
Because when we served the search warrant she signed it in our presence and that is her own
signature.
xxxx
ATTY. FREZ
Q : So, Mr. Witness, in this Inventory, we made some markings during the pre-trial conference and I
see here above the signature (Owner/Representative), there exist a handwritten name which reads
GEMMA ONG and above it, there exist a signature, are you familiar with this person which appears
to be Gemma Ong?
A : Yes, sir, Gemma Ong signed that in my presence.
Q : Your Honor, during the pre-trial conference, it was previously marked as Exhibit "D-1". Mr.
Witness, I also see here a Verification but there also exist an entry below the name and I quote
"Owner/Claimant/Representative", there appears a handwritten name Gemma Ong and a signature
above it, are you familiar with this person which appears to be Gemma Ong?
A : Yes, sir, Gemma Ong signed that in my presence.
xxxx
Q : Mr. Witness, in this document which is the certification in the Conduct of Search and I have here
above the entry (Owner/Representative), a handwritten name which reads Gemma Ong and there
exist a signature above the handwritten name, can you identify the signature?
A : Yes, sir, this was signed by Gemma Ong in my presence.49 (Emphases ours.)
Lara further attested to the fact that the search warrant was served on Gemma, who later on
entertained the search team:
ATTY. FREZ
Mr. Witness, the person to whom you served the search warrant is identified as Mrs. Gemma Ong, do
you know her relationship with the accused Jackson Ong?
ATTY. FERNANDEZ
Objection, your honor, the witness would be incompetent . . .
COURT
May answer.
(The stenographer read back the question).
WITNESS
I am not familiar with the relationship of Mrs. Gemma Ong with Jackson Ong because during the
service of the search warrant, Mrs. Gemma Ong was there together with two employees and when I
asked where was Jackson Ong, she was the one who entertained us.
ATTY. FREZ
So, the search warrant was served against Gemma Ong?
WITNESS
Yes, Sir.50
Positive identification of a culprit is of great weight in determining whether an accused is guilty or
not.51 Gemma, in claiming the defense of mistaken identity, is in reality denying her involvement in
the crime. This Court has held that the defense of denial is insipid and weak as it is easy to fabricate
and difficult to prove; thus, it cannot take precedence over the positive testimony of the offended
party.52 The defense of denial is unavailing when placed astride the undisputed fact that there was
positive identification of the accused.53
While Gemma claims she does not know Jackson Ong, the subject premises where the counterfeit
cigarettes were seized was registered under her admitted business "Fascinate Trading."54 Aside
from the bare allegation that she had stopped operations in the subject premises as early as
February 1998, she has neither proven nor shown any evidence that she had relinquished control of
the building after that date. Gemma’s allegation that she did not sign the search documents, and that
the signatures therein did not match the signature on her PRC identification card, must also be
struck down as she has not shown proof that her PRC signature is the only way she has ever signed
her name. She could have, at the very least, gotten a handwriting expert to testify on her behalf that
there is no way that the signatures in the search documents and the signature on her PRC
identification card could have been written by one and the same person; instead, she relied on the
flimsy contention that the two signatures were, on their face, different.1awp++i1
Gemma’s defense consists of her claim of mistaken identity, her denial of her involvement in the
crime, and her accusation against the prosecution witnesses of allegedly giving false testimonies and
committing perjury. These are all weak, unproven, and unfounded claims, and will not stand against
the strong evidence against her.
WHEREFORE, this Court DENIES the Petition. The June 16, 2005 Decision of the Court of Appeals in
CA-G.R. CR No. 28308 is AFFIRMED.
SO ORDERED.
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS
AYCARDO, ARACELI AYCARDO, and GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999 of the Court of
Appeals2 finding respondent L.C. Big Mak Burger, Inc. not liable for trademark infringement and
unfair competition and ordering petitioners to pay respondents P1,900,000 in damages, and of its
Resolution dated 11 July 2000 denying reconsideration. The Court of Appeals' Decision reversed the
5 September 1994 Decision3 of the Regional Trial Court of Makati, Branch 137, finding respondent
L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation organized under the laws of
Delaware, United States. McDonald's operates, by itself or through its franchisees, a global chain of
fast-food restaurants. McDonald's4 owns a family of marks5 including the "Big Mac" mark for its
"double-decker hamburger sandwich."6McDonald's registered this trademark with the United States
Trademark Registry on 16 October 1979.7 Based on this Home Registration, McDonald's applied
for the registration of the same mark in the Principal Register of the then Philippine Bureau of
Patents, Trademarks and Technology ("PBPTT"), now the Intellectual Property Office
("IPO"). Pending approval of its application, McDonald's introduced its "Big Mac" hamburger
sandwiches in the Philippine market in September 1981. On 18 July 1985, the PBPTT allowed
registration of the "Big Mac" mark in the Principal Register based on its Home Registration in the
United States.
Like its other marks, McDonald's displays the "Big Mac" mark in items 8 and paraphernalia9 in its
restaurants, and in its outdoor and indoor signages. From 1982 to 1990, McDonald's spent P10.5
million in advertisement for "Big Mac" hamburger sandwiches alone. 10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic corporation, is
McDonald's Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a domestic corporation which
operates fast-food outlets and snack vans in Metro Manila and nearby provinces.12 Respondent
corporation's menu includes hamburger sandwiches and other food items. 13 Respondents Francis B.
Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto
("private respondents") are the incorporators, stockholders and directors of respondent
corporation.14
On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big
Mak" mark for its hamburger sandwiches. McDonald's opposed respondent corporation's
application on the ground that "Big Mak" was a colorable imitation of its registered "Big Mac" mark
for the same food products. McDonald's also informed respondent Francis Dy ("respondent Dy"),
the chairman of the Board of Directors of respondent corporation, of its exclusive right to the "Big
Mac" mark and requested him to desist from using the "Big Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990 sued respondents in the
Regional Trial Court of Makati, Branch 137 ("RTC"), for trademark infringement and unfair
competition. In its Order of 11 July 1990, the RTC issued a temporary restraining order ("TRO")
against respondents enjoining them from using the "Big Mak" mark in the operation of their
business in the National Capital Region.15 On 16 August 1990, the RTC issued a writ of preliminary
injunction replacing the TRO.16
In their Answer, respondents admitted that they have been using the name "Big Mak Burger" for
their fast-food business. Respondents claimed, however, that McDonald's does not have an exclusive
right to the "Big Mac" mark or to any other similar mark. Respondents point out that the Isaiyas
Group of Corporations ("Isaiyas Group") registered the same mark for hamburger sandwiches with
the PBPTT on 31 March 1979. One Rodolfo Topacio ("Topacio") similarly registered the same mark
on 24 June 1983, prior to McDonald's registration on 18 July 1985. Alternatively, respondents
claimed that they are not liable for trademark infringement or for unfair competition, as the "Big
Mak" mark they sought to register does not constitute a colorable imitation of the "Big Mac" mark.
Respondents asserted that they did not fraudulently pass off their hamburger sandwiches as those
of petitioners' Big Mac hamburgers.17 Respondents sought damages in their counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's is not the exclusive owner of
the "Big Mac" mark. Petitioners asserted that while the Isaiyas Group and Topacio did register the
"Big Mac" mark ahead of McDonald's, the Isaiyas Group did so only in the Supplemental Register of
the PBPTT and such registration does not provide any protection. McDonald's disclosed that it
had acquired Topacio's rights to his registration in a Deed of Assignment dated 18 May 1981. 18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision") finding respondent corporation
liable for trademark infringement and unfair competition. However, the RTC dismissed the
complaint against private respondents and the counterclaim against petitioners for lack of merit
and insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for plaintiff McDonald's, and
as such, it is entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names "B[ig] M[ac]" and "B[ig] M[ak]" as
appearing in the respective signages, wrappers and containers of the food products of the
parties. But infringement goes beyond the physical features of the questioned name and
the original name. There are still other factors to be considered.
xxxx
 Significantly, the contending parties are both in the business of fast-food chains and
restaurants. An average person who is hungry and wants to eat a hamburger sandwich
may not be discriminating enough to look for a McDonald's restaurant and buy a "B[ig]
M[ac]" hamburger. Once he sees a stall selling hamburger sandwich, in all likelihood, he
will dip into his pocket and order a "B[ig] M[ak]" hamburger sandwich. Plaintiff
McDonald's fast-food chain has attained wide popularity and acceptance by the
consuming public so much so that its air-conditioned food outlets and restaurants will
perhaps not be mistaken by many to be the same as defendant corporation's mobile
snack vans located along busy streets or highways. But the thing is that what is being sold
by both contending parties is a food item – a hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused or deceived into thinking that the
"B[ig] M[ak]" hamburger sandwich he bought is a food-product of plaintiff McDonald's, or
a subsidiary or allied outlet thereof. Surely, defendant corporation has its own secret
ingredients to make its hamburger sandwiches as palatable and as tasty as the other
brands in the market, considering the keen competition among mushrooming hamburger
stands and multinational fast-food chains and restaurants. Hence, the trademark "B[ig]
M[ac]" has been infringed by defendant corporation when it used the name "B[ig] M[ak]"
in its signages, wrappers, and containers in connection with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a trademark or
tradename in their signages, or in causing the name "B[ig] M[ak]" to be printed on the
wrappers and containers of their food products also constitute an act of unfair
competition under Section 29 of the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader and more inclusive
than the law concerning the infringement of trademark, which is of more limited range,
but within its narrower range recognizes a more exclusive right derived by the adoption
and registration of the trademark by the person whose goods or services are first
associated therewith. xxx Notwithstanding the distinction between an action for
trademark infringement and an action for unfair competition, however, the law extends
substantially the same relief to the injured party for both cases. (See Sections 23 and 29 of
Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to pass off on the
public the goods of one man as the goods of another. The choice of "B[ig] M[ak]" as
tradename by defendant corporation is not merely for sentimental reasons but was
clearly made to take advantage of the reputation, popularity and the established goodwill
of plaintiff McDonald's. For, as stated in Section 29, a person is guilty of unfair
competition who in selling his goods shall give them the general appearance, of goods of
another manufacturer or dealer, either as to the goods themselves or in the wrapping of
the packages in which they are contained, or the devices or words thereon, or
in any other feature of their appearance, which would likely influence purchasers to
believe that the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs have established their valid cause
of action against the defendants for trademark infringement and unfair competition and
for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's Corporation and
McGeorge Food Industries, Inc. and against defendant L.C. Big Mak Burger, Inc., as
follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990] is made
permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual damages in
the amount ofP400,000.00, exemplary damages in the amount of P100,000.00, and
attorney's fees and expenses of litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B. Dy, Wiliam B. Dy,
Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well as all counter-claims, are
dismissed for lack of merit as well as for insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment ("Court of Appeals' Decision")
reversing the RTC Decision and ordering McDonald's to pay respondents P1,600,000 as actual and
compensatory damages and P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court that the use
of defendants-appellants of its corporate name – the whole "L.C. B[ig] M[ak] B[urger],
I[nc]." which appears on their food packages, signages and advertisements is an
infringement of their trademark "B[ig] M[ac]" which they use to identify [their] double
decker sandwich, sold in a Styrofoam box packaging material with the McDonald's logo of
umbrella "M" stamped thereon, together with the printed mark in red bl[o]ck capital
letters, the words being separated by a single space. Specifically, plaintiffs-appellees
argue that defendants-appellants' use of their corporate name is a colorable imitation of
their trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no colorable imitation exists. As
the definition dictates, it is not sufficient that a similarity exists in both names, but
that more importantly, the over-all presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or CONFUSE persons in the ordinary
course of purchasing the genuine article. A careful comparison of the way the trademark
"B[ig] M[ac]" is being used by plaintiffs-appellees and corporate name L.C. Big Mak
Burger, Inc. by defendants-appellants, would readily reveal that no confusion could take
place, or that the ordinary purchasers would be misled by it. As pointed out by
defendants-appellants, the plaintiffs-appellees' trademark is used to designate only one
product, a double decker sandwich sold in a Styrofoam box with the "McDonalds" logo. On
the other hand, what the defendants-appellants corporation is using is not a trademark
for its food product but a business or corporate name. They use the business name "L.C.
Big Mak Burger, Inc." in their restaurant business which serves diversified food items
such as siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants' corporate or business name appearing in
the food packages and signages are written in silhouette red-orange letters with the "b"
and "m" in upper case letters. Above the words "Big Mak" are the upper case letter "L.C.".
Below the words "Big Mak" are the words "Burger, Inc." spelled out in upper case
letters. Furthermore, said corporate or business name appearing in such food packages
and signages is always accompanied by the company mascot, a young chubby boy named
Maky who wears a red T-shirt with the upper case "m" appearing thereinand a blue lower
garment. Finally, the defendants-appellants' food packages are made of plastic material.
 xxxx I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS' CORPORATE
NAME "L.C. BIG MAK BURGER, INC." IS NOT A COLORABLE IMITATION OF THE
MCDONALD'S TRADEMARK "BIG MAC", SUCH COLORABLE IMITATION BEING
xxx [I]t is readily apparent to the naked eye that there appears a vast difference in the
AN ELEMENT OF TRADEMARK INFRINGEMENT.
appearance of the product and the manner that the tradename "Big Mak" is being used
and presented to the public. As earlier noted, there are glaring dissimilarities between
plaintiffs-appellees' trademark and defendants-appellants' corporate name. Plaintiffs- A. Respondents use the words "Big Mak" as trademark for their products and
appellees' product carrying the trademark "B[ig] M[ac]" is a double decker sandwich not merely as their business or corporate name.
(depicted in the tray mat containing photographs of the various food products xxx sold in
a Styrofoam box with the "McDonald's" logo and trademark in red, bl[o]ck capital letters
B. As a trademark, respondents' "Big Mak" is undeniably and unquestionably
printed thereon xxx at a price which is more expensive than the defendants-appellants'
similar to petitioners' "Big Mac" trademark based on the dominancy test and
comparable food products. In order to buy a "Big Mac", a customer needs to visit an air-
the idem sonans test resulting inexorably in confusion on the part of the
conditioned "McDonald's" restaurant usually located in a nearby commercial center,
consuming public.
advertised and identified by its logo - the umbrella "M", and its mascot – "Ronald
McDonald". A typical McDonald's restaurant boasts of a playground for kids, a second
floor to accommodate additional customers, a drive-thru to allow customers with cars to II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE INHERENT
make orders without alighting from their vehicles, the interiors of the building are well- SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE WORD MARK "BIG MAC" AS
lighted, distinctly decorated and painted with pastel colors xxx. In buying a "B[ig] M[ac]", AN INDICATION OF RESPONDENTS' INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES
it is necessary to specify it by its trademark. Thus, a customer needs to look for a OF ESTABLISHING UNFAIR COMPETITION.22
"McDonald's" and enter it first before he can find a hamburger sandwich which carry the
mark "Big Mac". On the other hand,defendants-appellants sell their goods through snack
Petitioners pray that we set aside the Court of Appeals' Decision and reinstate the RTC Decision.
vans xxxx

In their Comment to the petition, respondents question the propriety of this petition as it allegedly
Anent the allegation that defendants-appellants are guilty of unfair competition,
raises only questions of fact. On the merits, respondents contend that the Court of Appeals
We likewise find the same untenable.
committed no reversible error in finding them not liable for trademark infringement and unfair
competition and in ordering petitioners to pay damages.
Unfair competition is defined as "the employment of deception or any other means
contrary to good faith by which a person shall pass off the goods manufactured by him or
The Issues
in which he deals, or his business, or service, for those of another who has already
established good will for his similar good, business or services, or any acts calculated to
produce the same result" (Sec. 29, Rep. Act No. 166, as amended). The issues are:

To constitute unfair competition therefore it must necessarily follow that there was 1. Procedurally, whether the questions raised in this petition are proper for a petition for review
malice and that the entity concerned was in bad faith. under Rule 45.

In the case at bar, We find no sufficient evidence adduced by plaintiffs-appellees that 2. On the merits, (a) whether respondents used the words "Big Mak" not only as part of the
defendants-appellants deliberately tried to pass off the goods manufactured by them for corporate name "L.C. Big Mak Burger, Inc." but also as a trademark for their hamburger products,
those of plaintiffs-appellees. The mere suspected similarity in the sound of the and (b) whether respondent corporation is liable for trademark infringement and unfair
defendants-appellants' corporate name with the plaintiffs-appellees' trademark is competition.23
not sufficient evidence to conclude unfair competition. Defendants-appellants explained
that the name "M[ak]" in their corporate name was derived from both the first names of
The Court's Ruling
the mother and father of defendant Francis Dy, whose names are Maxima and Kimsoy.
With this explanation, it is up to the plaintiffs-appellees to prove bad faith on the part
of defendants-appellants. It is a settled rule that the law always presumes good faith such The petition has merit.
that any person who seeks to be awarded damages due to acts of another has the burden
of proving that the latter acted in bad faith or with ill motive. 21
On Whether the Questions Raised in the Petition are Proper for a Petition for Review

Petitioners sought reconsideration of the Court of Appeals' Decision but the appellate court denied
their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
A party intending to appeal from a judgment of the Court of Appeals may file with this Court a
petition for review under Section 1 of Rule 45 ("Section 1")24 raising only questions of law. A
question of law exists when the doubt or difference arises on what the law is on a certain state of
facts. There is a question of fact when the doubt or difference arises on the truth or falsity of
the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court of Appeals' findings on
respondent corporation's non-liability for trademark infringement and unfair competition.
Ordinarily, the Court can deny due course to such a petition. In view, however, of the contradictory
findings of fact of the RTC and Court of Appeals, the Court opts to accept the petition, this being one
of the recognized exceptions to Section 1.26 We took a similar course of action in Asia Brewery, Inc.
v. Court of Appeals27 which also involved a suit for trademark infringement and unfair competition
in which the trial court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate name "L.C. Big Mak
Burger, Inc." appears in the packaging for respondents' hamburger products and not the words "Big
Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for the issuance of a writ of
preliminary injunction shows that the plastic wrappings and plastic bags used by respondents for
their hamburger sandwiches bore the words "Big Mak." The other descriptive words "burger" and
"100% pure beef" were set in smaller type, along with the locations of branches.28 Respondents'
cash invoices simply refer to their hamburger sandwiches as "Big Mak."29It is respondents' snack
vans that carry the words "L.C. Big Mak Burger, Inc."30
It was only during the trial that respondents presented in evidence the plastic wrappers and bags
for their hamburger sandwiches relied on by the Court of Appeals.31 Respondents' plastic wrappers
and bags were identical with those petitioners presented during the hearings for the injunctive writ
except that the letters "L.C." and the words "Burger, Inc." in respondents' evidence were added
above and below the words "Big Mak," respectively. Since petitioners' complaint was based on facts
existing before and during the hearings on the injunctive writ, the facts established during those
hearings are the proper factual bases for the disposition of the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"), the law applicable to this
case,32 defines trademark infringement as follows:
Infringement, what constitutes. — Any person who [1] shall use, without the consent of
the registrant, anyreproduction, counterfeit, copy or colorable imitation of any registered
mark or trade-name in connection withthe sale, offering for sale, or advertising
of any goods, business or services on or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers or others as to the source or origin
of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy,
or colorably imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods,
business or services, shall be liable to a civil action by the registrant for any or all of the
remedies herein provided.33
Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly
used, without petitioners' consent, a colorable imitation of the "Big Mac" mark in advertising and
selling respondents' hamburger sandwiches. This likely caused confusion in the mind of the
purchasing public on the source of the hamburgers or the identity of the business.
To establish trademark infringement, the following elements must be shown: (1) the validity of
plaintiff's mark; (2) the plaintiff's ownership of the mark; and (3) the use of the mark or its colorable
imitation by the alleged infringer results in "likelihood of confusion."34 Of these, it is the element
of likelihood of confusion that is the gravamen of trademark infringement. 35
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark
A mark is valid if it is "distinctive" and thus not barred from registration under Section 4 36 of RA 166
("Section 4"). However, once registered, not only the mark's validity but also the registrant's
ownership of the mark is prima facie presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is only the word "Mac" that is
valid because the word "Big" is generic and descriptive (proscribed under Section 4[e]), and thus
"incapable of exclusive appropriation."38
The contention has no merit. The "Big Mac" mark, which should be treated in its entirety and not
dissected word for word,39 is neither generic nor descriptive. Generic marks are commonly used as
the name or description of a kind ofgoods,40 such as "Lite" for beer41 or "Chocolate Fudge" for
chocolate soda drink.42 Descriptive marks, on the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has never seen it or does not know it exists, 43 such
as "Arthriticare" for arthritis medication.44 On the contrary, "Big Mac" falls under theclass of fanciful
or arbitrary marks as it bears no logical relation to the actual characteristics of the product it
represents.45 As such, it is highly distinctive and thus valid. Significantly, the trademark "Little
Debbie" for snack cakes was found arbitrary or fanciful.46
The Court also finds that petitioners have duly established McDonald's exclusive ownership of the
"Big Mac" mark. Although Topacio and the Isaiyas Group registered the "Big Mac" mark ahead of
McDonald's, Topacio, as petitioners disclosed, had already assigned his rights to McDonald's. The
Isaiyas Group, on the other hand, registered its trademark only in the Supplemental Register. A
mark which is not registered in the Principal Register, and thus not distinctive, has no real
protection.47 Indeed, we have held that registration in the Supplemental Register is not even a prima
facie evidence of the validity of the registrant's exclusive right to use the mark on the goods
specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or colorable imitation
marks, namely, confusion of goods (product confusion) and confusion of business (source or origin
confusion). In Sterling Products International, Incorporated v. Farbenfabriken Bayer
Aktiengesellschaft, et al.,49 the Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of goods "in
which event the ordinarily prudent purchaser would be induced to purchase one product
in the belief that he was purchasing the other." xxx The other is the confusion of business:
"Here though the goods of the parties are different, the defendant's product is such as
might reasonably be assumed to originate with the plaintiff, and the public would then be
deceived either into that belief or into the belief that there is some connection between
the plaintiff and defendant which, in fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement was limited to confusion of goods only,
when the infringing mark is used on "goods of a similar kind."51 Thus, no relief was afforded to the
party whose registered mark or its colorable imitation is used on different although related goods.
To remedy this situation, Congress enacted RA 166 on 20 June 1947. In defining trademark
infringement, Section 22 of RA 166 deleted the requirement in question and expanded its scope to
include such use of the mark or its colorable imitation that is likely to result in confusion on "the
source or origin of such goods or services, or identity of such business."52 Thus, while there is
confusion of goods when the products are competing, confusion of business exists when the
products are non-competing but related enough to produce confusion of affiliation. 53
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents' use of the "Big Mak" mark on respondents' hamburgers results
in confusion of goods, particularly with respect to petitioners' hamburgers labeled "Big Mac." Thus,
petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly infringed upon the property rights of
plaintiffs in the McDonald's Marks, particularly the mark "B[ig] M[ac]". Defendants'
unauthorized acts are likely, and calculated, to confuse, mislead or deceive the public into
believing that the products and services offered by defendant Big Mak Burger, and the
business it is engaged in, are approved and sponsored by, or affiliated with,
plaintiffs.54 (Emphasis supplied)
Since respondents used the "Big Mak" mark on the same goods, i.e. hamburger sandwiches, that
petitioners' "Big Mac" mark is used, trademark infringement through confusion of goods is a proper
issue in this case.
Petitioners also claim that respondents' use of the "Big Mak" mark in the sale of hamburgers, the
same business that petitioners are engaged in, results in confusion of business. Petitioners alleged in
their complaint:
1.10. For some period of time, and without the consent of plaintiff McDonald's nor its
licensee/franchisee, plaintiff McGeorge, and in clear violation of plaintiffs' exclusive right
to use and/or appropriate the McDonald's marks, defendant Big Mak Burger acting
through individual defendants, has been operating "Big Mak Burger", a fast food
restaurant business dealing in the sale of hamburger and cheeseburger sandwiches,
french fries and other food products, and has caused to be printed on the wrapper of
defendant's food products and incorporated in its signages the name "Big Mak Burger",
which is confusingly similar to and/or is a colorable imitation of the plaintiff McDonald's
mark "B[ig] M[ac]", xxx. Defendant Big Mak Burger has thus unjustly created the
impression that its business is approved and sponsored by, or affiliated with,
plaintiffs.xxxx
2.2 As a consequence of the acts committed by defendants, which unduly prejudice and
infringe upon the property rights of plaintiffs McDonald's and McGeorge as the real owner
and rightful proprietor, and the licensee/franchisee, respectively, of the McDonald's
marks, and which are likely to have caused confusion or deceived the public as to the
true source, sponsorship or affiliation of defendants' food products and restaurant
business, plaintiffs have suffered and continue to suffer actual damages in the form
of injury to their business reputation and goodwill, and of the dilution of the distinctive
quality of the McDonald's marks, in particular, the mark "B[ig] M[ac]".55 (Emphasis
supplied)
Respondents admit that their business includes selling hamburger sandwiches, the same food product
that petitioners sell using the "Big Mac" mark. Thus, trademark infringement through confusion of
business is also a proper issue in this case.
Respondents assert that their "Big Mak" hamburgers cater mainly to the low-income group while
petitioners' "Big Mac" hamburgers cater to the middle and upper income groups. Even if this is true,
the likelihood of confusion of business remains, since the low-income group might be led to believe
that the "Big Mak" hamburgers are the low-end hamburgers marketed by petitioners. After all,
petitioners have the exclusive right to use the "Big Mac" mark. On the other hand, respondents
would benefit by associating their low-end hamburgers, through the use of the "Big Mak" mark, with
petitioners' high-end "Big Mac" hamburgers, leading to likelihood of confusion in the identity of
business.
Respondents further claim that petitioners use the "Big Mac" mark only on petitioners' double-
decker hamburgers, while respondents use the "Big Mak" mark on hamburgers and other products
like siopao, noodles and pizza. Respondents also point out that petitioners sell their Big Mac double-
deckers in a styrofoam box with the "McDonald's" logo and trademark in red, block letters at a price
more expensive than the hamburgers of respondents. In contrast, respondents sell their Big Mak
hamburgers in plastic wrappers and plastic bags. Respondents further point out that petitioners'
restaurants are air-conditioned buildings with drive-thru service, compared to respondents' mobile
vans.
These and other factors respondents cite cannot negate the undisputed fact that respondents use
their "Big Mak" mark on hamburgers, the same food product that petitioners' sell with the use
of their registered mark "Big Mac." Whether a hamburger is single, double or triple-decker, and
whether wrapped in plastic or styrofoam, it remains the same hamburger food product. Even
respondents' use of the "Big Mak" mark on non-hamburger food products cannot excuse their
infringement of petitioners' registered mark, otherwise registered marks will lose their protection
under the law.
The registered trademark owner may use his mark on the same or similar products, in different
segments of the market, and at different price levels depending on variations of the products for
specific segments of the market. The Court has recognized that the registered trademark owner
enjoys protection in product and market areas that are the normal potential expansion of his
business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a trademark is entitled
is not limited to guarding his goods or business from actual market competition with
identical or similar products of the parties, but extends to all cases in which the use by a
junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of
source, as where prospective purchasers would be misled into thinking that the
complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am
Jur. 576) or is in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur.
576, 577).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak"
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test
and the holistic test.57 The dominancy test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion. In contrast, the holistic test requires the court to
consider the entirety of the marks as applied to the products, including the labels and packaging,
in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that could arise in the use same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in
of respondents' "Big Mak" mark on hamburgers, relied on the holistic test. Thus, the Court of spelling, thus "Caloocan" is spelled "Kalookan."
Appeals ruled that "it is not sufficientthat a similarity exists in both name(s), but that more
importantly, the overall presentation, or in their essential, substantive and distinctive parts is such
In short, aurally the two marks are the same, with the first word of both marks phonetically the
as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the genuine
same, and the second word of both marks also phonetically the same. Visually, the two marks
article." The holistic test considers the two marks in their entirety, as they appear on the goods with
have both two words and six letters, with the first word of both marks having the same letters and
their labels and packaging. It is not enough to consider their words and compare the spelling and
the second word having the same first two letters. In spelling, considering the Filipino language,
pronunciation of the words.58
even the last letters of both marks are the same.

Respondents now vigorously argue that the Court of Appeals' application of the holistic test to this
Clearly, respondents have adopted in "Big Mak" not only the dominant but also almost all the
case is correct and in accord with prevailing jurisprudence.
features of "Big Mac." Applied to the same food product of hamburgers, the two marks will likely
result in confusion in the public mind.
This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy
test considers the dominant features in the competing marks in determining whether they are
The Court has taken into account the aural effects of the words and letters contained in the marks
confusingly similar. Under the dominancy test, courts give greater weight to the similarity of the
in determining the issue of confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra
appearance of the product arising from the adoption of the dominant features of the registered
Hawpia & Co., et al.,66 the Court held:
mark, disregarding minor differences.59 Courts will consider more the aural and visual impressions
created by the marks in the public mind, giving little weight to factors like prices, quality, sales
outlets and market segments. The following random list of confusingly similar sounds in the matter of trademarks,
culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce our
view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust" and
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court ruled:
"Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and
"Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
xxx It has been consistently held that the question of infringement of a trademark is to "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon
be determined by the test of dominancy. Similarity in size, form and color, while relevant, Amdur, in his book "Trade-Mark Law and Practice", pp. 419-421, cities, as
is not conclusive. If the competing trademark contains the main or essential or coming within the purview of the idem sonans rule, "Yusea" and "U-C-A", "Steinway
dominant features of another, and confusion and deception is likely to result, Pianos" and "Steinberg Pianos", and "Seven-Up" and "Lemon-Up". In Co Tiong vs. Director
infringement takes place. Duplication or imitation is not necessary; nor is of Patents, this Court unequivocally said that "Celdura" and "Cordura" are confusingly
it necessary that the infringing label should suggest an effort to imitate. (G. Heilman similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name
Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co. vs. "Lusolin" is an infringement of the trademark "Sapolin", as the sound of the two names is
Pflugh (CC) 180 Fed. 579). The question at issue in cases of infringement of trademarks is almost the same. (Emphasis supplied)
whether the use of the marks involved would be likely to cause confusion or mistakes in
the mind of the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater confusion, not only aurally
Rubber Co., 107 F. 2d 588; xxx) (Emphasis supplied.)
but also visually.

The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,61 Phil. Nut Industry, Inc.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their sound. When one hears a "Big
v. Standard Brands Inc.,62 Converse Rubber Corporation v. Universal Rubber Products,
Mac" or "Big Mak" hamburger advertisement over the radio, one would not know whether the "Mac"
Inc.,63 and Asia Brewery, Inc. v. Court of Appeals.64 In the 2001 case of Societe Des Produits Nestlé,
or "Mak" ends with a "c" or a "k."
S.A. v. Court of Appeals,65 the Court explicitly rejected the holistic test in this wise:

Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their advertisement expenses,
[T]he totality or holistic test is contrary to the elementary postulate of the law on
has built goodwill and reputation for such mark making it one of the easily recognizable marks in
trademarks and unfair competition that confusing similarity is to be determined on the
the market today. This increases the likelihood that consumers will mistakenly associate petitioners'
basis of visual, aural, connotative comparisons and overall impressions engendered by
hamburgers and business with those of respondents'.
the marks in controversy as they are encountered in the realities of the marketplace.
(Emphasis supplied)
Respondents' inability to explain sufficiently how and why they came to choose "Big Mak" for their
hamburger sandwiches indicates their intent to imitate petitioners' "Big Mac" mark. Contrary to the
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual
Court of Appeals' finding, respondents' claim that their "Big Mak" mark was inspired by the first
Property Code which defines infringement as the "colorable imitation of a registered mark xxx or
names of respondent Dy's mother (Maxima) and father (Kimsoy) is not credible. As petitioners well
a dominant feature thereof."
noted:

Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at a more
likelihood of confusion. First, "Big Mak" sounds exactly the same as "Big Mac." Second, the first word
creative choice for a corporate name by using the names of his parents, especially since
in "Big Mak" is exactly the same as the first word in "Big Mac." Third, the first two letters in "Mak"
he was allegedly driven by sentimental reasons. For one, he could have put his father's
are the same as the first two letters in "Mac." Fourth, the last letter in "Mak" while a "k" sounds the
name ahead of his mother's, as is usually done in this patriarchal society, and derived
 letters from said names in that order. Or, he could have taken an equal number of letters
(i.e., two) from each name, as is the more usual thing done. Surely, the more plausible
reason behind Respondents' choice of the word "M[ak]", especially when taken in
conjunction with the word "B[ig]", was their intent to take advantage of Petitioners' xxx
"B[ig] M[ac]" trademark, with their allegedsentiment-focused "explanation" merely
thought of as a convenient, albeit unavailing, excuse or defense for such an unfair choice
of name.67
Absent proof that respondents' adoption of the "Big Mak" mark was due to honest mistake or was
fortuitous,68 the inescapable conclusion is that respondents adopted the "Big Mak" mark to "ride on
the coattails" of the more established "Big Mac" mark.69 This saves respondents much of the expense
in advertising to create market recognition of their mark and hamburgers. 70
Thus, we hold that confusion is likely to result in the public mind. We sustain petitioners' claim of
trademark infringement.
On the Lack of Proof of
Actual Confusion
Petitioners' failure to present proof of actual confusion does not negate their claim of trademark
infringement. As noted in American Wire & Cable Co. v. Director of Patents,71 Section
22 requires the less stringent standard of "likelihood of confusion" only. While proof
of actual confusion is the best evidence of infringement, its absence is inconsequential. 72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
xxxx
Any person who will employ deception or any other means contrary to good faith by
which he shall pass off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words thereon,
or in any feature of their appearance, which would be likely to influence purchasers to
believe that the goods offered are those of a manufacturer or dealer, other
than the actual manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shalldeceive the public and defraud another of his legitimate trade,
or any subsequent vendor of such goods or any agent of any vendor engaged in selling
such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated
to induce the false belief that such person is offering the services of another who has
identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to discredit
the goods, business or services of another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the public and defraud a competitor. 74 The
confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. The intent to deceive and defraud
may be inferred from the similarity of the appearance of the goods as offered for sale to the
public.75 Actual fraudulent intent need not be shown.76
Unfair competition is broader than trademark infringement and includes passing off goods with or
without trademark infringement. Trademark infringement is a form of unfair
competition.77 Trademark infringement constitutes unfair competition when there is not merely
likelihood of confusion, but also actual or probable deception on the public because of the general
appearance of the goods. There can be trademark infringement without unfair competition as when
the infringer discloses on the labels containing the mark that he manufactures the goods, thus
preventing the public from being deceived that the goods originate from the trademark owner. 78
To support their claim of unfair competition, petitioners allege that respondents fraudulently
passed off their hamburgers as "Big Mac" hamburgers. Petitioners add that respondents' fraudulent
intent can be inferred from the similarity of the marks in question.79
Passing off (or palming off) takes place where the defendant, by imitative devices on the general
appearance of the goods, misleads prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors. 80 Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of deceiving the public that the
goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its double decker
hamburger sandwich. The packaging material is a styrofoam box with the McDonald's
logo and trademark in red with block capital letters printed on it. All letters of the "B[ig]
M[ac]" mark are also in red and block capital letters. On the other hand,defendants' "B[ig]
M[ak]" script print is in orange with only the letter "B" and "M" being capitalized and the
packaging material is plastic wrapper. xxxx Further, plaintiffs' logo and mascot are the
umbrella "M" and "Ronald McDonald's", respectively, compared to the mascot of
defendant Corporation which is a chubby boy called "Macky" displayed or printed
between the words "Big" and "Mak."81 (Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not give their hamburgers the
general appearance of petitioners' "Big Mac" hamburgers.
The dissimilarities in the packaging are minor compared to the stark similarities in the words that
give respondents' "Big Mak" hamburgers the general appearance of petitioners' "Big Mac"
hamburgers. Section 29(a) expressly provides that the similarity in the general appearance of the
goods may be in the "devices or words" used on the wrappings. Respondents have applied on their
plastic wrappers and bags almost the same words that petitioners use on their styrofoam box.
What attracts the attention of the buying public are the words "Big Mak" which are almost the same,
aurally and visually, as the words "Big Mac." The dissimilarities in the material and other devices are
insignificant compared to the glaring similarity in the words used in the wrappings.
Section 29(a) also provides that the defendant gives "his goods the general appearance of goods of
another manufacturer." Respondents' goods are hamburgers which are also the goods of
petitioners. If respondents sold egg sandwiches only instead of hamburger sandwiches, their use of
the "Big Mak" mark would not give their goods the general appearance of petitioners' "Big Mac"
hamburgers. In such case, there is only trademark infringement but no unfair competition. However,
since respondents chose to apply the "Big Mak" mark on hamburgers, just like petitioner's use of the
"Big Mac" mark on hamburgers, respondents have obviously clothed their goods with the general
appearance of petitioners' goods.

Moreover, there is no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big
Mak Burger, Inc." Respondents introduced during the trial plastic wrappers and bags with the
words "L.C. Big Mak Burger, Inc." to inform the public of the name of the seller of the
hamburgers. However, petitioners introduced during the injunctive hearings plastic wrappers and
bags with the "Big Mak" mark without the name "L.C. Big Mak Burger, Inc." Respondents' belated
presentation of plastic wrappers and bags bearing the name of "L.C. Big Mak Burger, Inc." as the
seller of the hamburgers is an after-thought designed to exculpate them from their unfair business
conduct. As earlier stated, we cannot consider respondents' evidence since petitioners' complaint
was based on facts existing before and during the injunctive hearings.

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

The Remedies Available to Petitioners

Under Section 2383 ("Section 23") in relation to Section 29 of RA 166, a plaintiff who successfully
maintains trademark infringement and unfair competition claims is entitled to injunctive and
monetary reliefs. Here, the RTC did not err in issuing the injunctive writ of 16 August 1990 (made
permanent in its Decision of 5 September 1994) and in ordering the payment
of P400,000 actual damages in favor of petitioners. The injunctive writ is indispensable to prevent
further acts of infringement by respondent corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent corporation's gross sales for three (1988-1989 and
1991) of the six years (1984-1990) respondents have used the "Big Mak" mark.84

The RTC also did not err in awarding exemplary damages by way of correction for the public
good85 in view of the finding of unfair competition where intent to deceive the public is essential. The
award of attorney's fees and expenses of litigation is also in order.86

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

SO ORDERED.

G.R. No. 154491 November 14, 2008
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga Plant, petitioner,
vs.
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E. GALICIA, a.k.a. "DANNY
GALICIA", respondents.
DECISION
BRION, J.:
Is the hoarding of a competitor's product containers punishable as unfair competition under the
Intellectual Property Code (IP Code, Republic Act No. 8293) that would entitle the aggrieved party to
a search warrant against the hoarder? This is the issue we grapple with in this petition for review
on certiorari involving two rival multinational softdrink giants; petitioner Coca-Cola Bottlers, Phils.,
Inc. (Coca-Cola) accuses Pepsi Cola Products Phils., Inc. (Pepsi), represented by the respondents, of
hoarding empty Coke bottles in bad faith to discredit its business and to sabotage its operation in
Bicolandia.
BACKGROUND
The facts, as culled from the records, are summarized below.
On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi for hoarding Coke empty
bottles in Pepsi's yard in Concepcion Grande, Naga City, an act allegedly penalized as unfair
competition under the IP Code. Coca-Cola claimed that the bottles must be confiscated to preclude
their illegal use, destruction or concealment by the respondents. 1 In support of the application,
Coca-Cola submitted the sworn statements of three witnesses: Naga plant representative Arnel John
Ponce said he was informed that one of their plant security guards had gained access into the Pepsi
compound and had seen empty Coke bottles; acting plant security officer Ylano A. Regaspi said he
investigated reports that Pepsi was hoarding large quantities of Coke bottles by requesting their
security guard to enter the Pepsi plant and he was informed by the security guard that Pepsi
hoarded several Coke bottles; security guard Edwin Lirio stated that he entered Pepsi's yard on July
2, 2001 at 4 p.m. and saw empty Coke bottles inside Pepsi shells or cases. 2
Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga City, after taking the joint
deposition of the witnesses, issued Search Warrant No. 2001-013 to seize 2,500 Litro and 3,000
eight and 12 ounces empty Coke bottles at Pepsi's Naga yard for violation of Section 168.3 (c) of the
IP Code.4 The local police seized and brought to the MTC's custody 2,464 Litro and 4,036 eight and
12 ounces empty Coke bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells for smaller (eight and
12 ounces) empty Coke bottles, and later filed with the Office of the City Prosecutor of Naga a
complaint against two Pepsi officers for violation of Section 168.3 (c) in relation to Section 170 of
the IP Code.5 The named respondents, also the respondents in this petition, were Pepsi regional
sales manager Danilo E. Galicia (Galicia) and its Naga general manager Quintin J. Gomez,
Jr. (Gomez).
In their counter-affidavits, Galicia and Gomez claimed that the bottles came from various Pepsi
retailers and wholesalers who included them in their return to make up for shortages of empty
Pepsi bottles; they had no way of ascertaining beforehand the return of empty Coke bottles as they
simply received what had been delivered; the presence of the bottles in their yard was not
intentional nor deliberate; Ponce and Regaspi's statements are hearsay as they had no personal
knowledge of the alleged crime; there is no mention in the IP Code of the crime of possession of
empty bottles; and that the ambiguity of the law, which has a penal nature, must be construed
strictly against the State and liberally in their favor. Pepsi security guards Eduardo E. Miral and
Rene Acebuche executed a joint affidavit stating that per their logbook, Lirio did not visit or enter
the plant premises in the afternoon of July 2, 2001.
The respondents also filed motions for the return of their shells and to quash the search warrant.
They contended that no probable cause existed to justify the issuance of the search warrant; the
facts charged do not constitute an offense; and their Naga plant was in urgent need of the shells.
Coca-Cola opposed the motions as the shells were part of the evidence of the crime, arguing that
Pepsi used the shells in hoarding the bottles. It insisted that the issuance of warrant was based on
probable cause for unfair competition under the IP Code, and that the respondents violated R.A. 623,
the law regulating the use of stamped or marked bottles, boxes, and other similar containers.
THE MTC RULINGS
On September 19, 2001, the MTC issued the first assailed order 6 denying the twin motions. It
explained there was an exhaustive examination of the applicant and its witnesses through searching
questions and that the Pepsi shells are prima facie evidence that the bottles were placed there by
the respondents.
In their motion for reconsideration, the respondents argued for the quashal of the warrant as the
MTC did not conduct a probing and exhaustive examination; the applicant and its witnesses had no
personal knowledge of facts surrounding the hoarding; the court failed to order the return of the
"borrowed" shells; there was no crime involved; the warrant was issued based on hearsay evidence;
and the seizure of the shells was illegal because they were not included in the warrant.
On November 14, 2001, the MTC denied the motion for reconsideration in the second assailed
order,7 explaining that the issue of whether there was unfair competition can only be resolved
during trial.
The respondents responded by filing a petition for certiorari under Rule 65 of the Revised Rules of
Court before the Regional Trial Court (RTC) of Naga City on the ground that the subject search
warrant was issued without probable cause and that the empty shells were neither mentioned in
the warrant nor the objects of the perceived crime.
THE RTC RULINGS
On May 8, 2002, the RTC voided the warrant for lack of probable cause and the non-commission of
the crime of unfair competition, even as it implied that other laws may have been violated by the
respondents. The RTC, though, found no grave abuse of discretion on the part of the issuing MTC
judge.8 Thus,
Accordingly, as prayed for, Search Warrant No. 2001-02 issued by the Honorable Judge
Julian C. Ocampo III on July 2, 2001 is ANNULLED and SET ASIDE. The Orders issued by
the Pairing Judge of Br. 1, MTCC of Naga City dated September 19, 2001 and November
14, 2001 are also declared VOID and SET ASIDE. The City Prosecutor of Naga City and
SPO1 Ernesto Paredes are directed to return to the Petitioner the properties seized by
virtue of Search Warrant No. 2001-02. No costs.
 SO ORDERED.9
In a motion for reconsideration, which the RTC denied on July 12, 2002, the petitioner stressed that
the decision of the RTC was contradictory because it absolved Judge Ocampo of grave abuse of
discretion in issuing the search warrant, but at the same time nullified the issued warrant. The MTC
should have dismissed the petition when it found out that Judge Ocampo did not commit any grave
abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us through this petition for review
on certiorari under Rule 45 of the Rules of Court to reverse the decision of the RTC. Essentially, the
petition raises questions against the RTC's nullification of the warrant when it found no grave abuse
of discretion committed by the issuing judge.
THE PETITION and
THE PARTIES' POSITIONS
In its petition, the petitioner insists the RTC should have dismissed the respondents' petition for
certiorari because it found no grave abuse of discretion by the MTC in issuing the search warrant.
The petitioner further argues that the IP Code was enacted into law to remedy various forms of
unfair competition accompanying globalization as well as to replace the inutile provision of unfair
competition under Article 189 of the Revised Penal Code. Section 168.3(c) of the IP Code does not
limit the scope of protection on the particular acts enumerated as it expands the meaning of unfair
competition to include "other acts contrary to good faith of a nature calculated to discredit the
goods, business or services of another." The inherent element of unfair competition is fraud or
deceit, and that hoarding of large quantities of a competitor's empty bottles is necessarily
characterized by bad faith. It claims that its Bicol bottling operation was prejudiced by the
respondents' hoarding and destruction of its empty bottles.
The petitioner also argues that the quashal of the search warrant was improper because it complied
with all the essential requisites of a valid warrant. The empty bottles were concealed in Pepsi shells
to prevent discovery while they were systematically being destroyed to hamper the petitioner's
bottling operation and to undermine the capability of its bottling operations in Bicol.
The respondents counter-argue that although Judge Ocampo conducted his own examination, he
gravely erred and abused his discretion when he ignored the rule on the need of sufficient evidence
to establish probable cause; satisfactory and convincing evidence is essential to hold them guilty of
unfair competition; the hoarding of empty Coke bottles did not cause actual or probable deception
and confusion on the part of the general public; the alleged criminal acts do not show conduct aimed
at deceiving the public; there was no attempt to use the empty bottles or pass them off as the
respondents' goods.
The respondents also argue that the IP Code does not criminalize bottle hoarding, as the acts
penalized must always involve fraud and deceit. The hoarding does not make them liable for unfair
competition as there was no deception or fraud on the end-users.
THE ISSUE
Based on the parties' positions, the basic issue submitted to us for resolution is whether the Naga
MTC was correct in issuing Search Warrant No. 2001-01 for the seizure of the empty Coke bottles
from Pepsi's yard for probable violation of Section 168.3 (c) of the IP Code. This basic issue involves
two sub-issues, namely, the substantive issue of whether the application for search warrant
effectively charged an offense, i.e., a violation of Section 168.3 (c) of the IP Code; and the procedural
issue of whether the MTC observed the procedures required by the Rules of Court in the issuance of
search warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the RTC decision, our agreement is more in the
result than in the reasons that supported it. The decision is correct in nullifying the search warrant
because it was issued on an invalid substantive basis - the acts imputed on the respondents do not
violate Section 168.3 (c) of the IP Code. For this reason, we deny the present petition.
The issuance of a search warrant10 against a personal property11 is governed by Rule 126 of the
Revised Rules of Court whose relevant sections state:
Section 4. Requisites for issuing search warrant. - A search warrant shall not issue except
upon probable cause in connection with one specific offense to be determined
personally by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to be searched
and the things to be seized which may be anywhere in the Philippines.
Section 5. Examination of complainant; record. - The judge must, before issuing the
warrant, personally examine in the form of searching questions and answers, in
writing and under oath, the complainant and the witnesseshe may produce on facts
personally known to them and attach to the record their sworn statements together with
the affidavits submitted.
Section 6. Issuance and form of search warrant. - If the judge is satisfied of the existence of
facts upon which the application is based or that there is probable cause to believe that
they exist, he shall issue the warrant, which must be substantially in the form prescribed
by these Rules. [Emphasis supplied]
To paraphrase this rule, a search warrant may be issued only if there is probable cause in connection
with a specific offense alleged in an application based on the personal knowledge of the applicant and
his or her witnesses. This is the substantive requirement in the issuance of a search warrant.
Procedurally, the determination of probable cause is a personal task of the judge before whom the
application for search warrant is filed, as he has to examine under oath or affirmation the applicant
and his or her witnesses in the form of "searching questions and answers" in writing and under
oath. The warrant, if issued, must particularly describe the place to be searched and the things to be
seized.
We paraphrase these requirements to stress that they have substantive and procedural aspects.
Apparently, the RTC recognized this dual nature of the requirements and, hence, treated them
separately; it approved of the way the MTC handled the procedural aspects of the issuance of the
search warrant but found its action on the substantive aspect wanting. It therefore resolved to
nullify the warrant, without however expressly declaring that the MTC gravely abused its discretion
when it issued the warrant applied for. The RTC's error, however, is in the form rather than the
substance of the decision as the nullification of the issued warrant for the reason the RTC gave was
equivalent to the declaration that grave abuse of discretion was committed. In fact, we so rule as the
discussions below will show.
Jurisprudence teaches us that probable cause, as a condition for the issuance of a search warrant, is
such reasons supported by facts and circumstances as will warrant a cautious man in the belief that
his action and the means taken in prosecuting it are legally just and proper. Probable cause requires
facts and circumstances that would lead a reasonably prudent man to believe that an offense has
been committed and the objects sought in connection with that offense are in the place to be
searched.12 Implicit in this statement is the recognition that an underlying offense must, in the first
place, exist. In other words, the acts alleged, taken together, must constitute an offense and that
these acts are imputable to an offender in relation with whom a search warrant is applied for.
In the context of the present case, the question is whether the act charged - alleged to be hoarding of
empty Coke bottles - constitutes an offense under Section 168.3 (c) of the IP Code. Section 168 in its
entirety states:
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.
168.2. Any person who shall employ deception or any other means contrary to good faith
by which he shall pass off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance
of goods of another manufacturer or dealer, either as to the goods themselves
or in the wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which would be
likely to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with a like
purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another.
168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29,R.A. No. 166a)
The petitioner theorizes that the above section does not limit the scope of protection on the
particular acts enumerated as it expands the meaning of unfair competition to include "other acts
contrary to good faith of a nature calculated to discredit the goods, business or services of another."
Allegedly, the respondents' hoarding of Coca Cola empty bottles is one such act.
We do not agree with the petitioner's expansive interpretation of Section 168.3 (c).
"Unfair competition," previously defined in Philippine jurisprudence in relation with R.A. No. 166
and Articles 188 and 189 of the Revised Penal Code, is now covered by Section 168 of the IP Code as
this Code has expressly repealed R.A. No. 165 and R.A. No. 166, and Articles 188 and 189 of the
Revised Penal Code.
Articles 168.1 and 168.2, as quoted above, provide the concept and general rule on the definition of
unfair competition. The law does not thereby cover every unfair act committed in the course of
business; it covers only acts characterized by "deception or any other means contrary to good faith"
in the passing off of goods and services as those of another who has established goodwill in relation
with these goods or services, or any other act calculated to produce the same result.
What unfair competition is, is further particularized under Section 168.3 when it provides specifics
of what unfair competition is "without in any way limiting the scope of protection against unfair
competition." Part of these particulars is provided under Section 168.3(c) which provides the
general "catch-all" phrase that the petitioner cites. Under this phrase, a person shall be guilty of
unfair competition "who shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another."
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or
attempting to pass off upon the public the goods or business of one person as the goods or business
of another with the end and probable effect of deceiving the public. It formulated the "true test" of
unfair competition: whether the acts of defendant are such as are calculated to deceive the ordinary
buyer making his purchases under the ordinary conditions which prevail in the particular trade to
which the controversy relates.13 One of the essential requisites in an action to restrain unfair
competition is proof of fraud; the intent to deceive must be shown before the right to recover can
exist.14 The advent of the IP Code has not significantly changed these rulings as they are fully in
accord with what Section 168 of the Code in its entirety provides. Deception, passing off and fraud
upon the public are still the key elements that must be present for unfair competition to exist.
The act alleged to violate the petitioner's rights under Section 168.3 (c) is hoarding which we gather
to be the collection of the petitioner's empty bottles so that they can be withdrawn from circulation
and thus impede the circulation of the petitioner's bottled products. This, according to the
petitioner, is an act contrary to good faith - a conclusion that, if true, is indeed an unfair act on the
part of the respondents. The critical question, however, is not the intrinsic unfairness of the act of
hoarding; what is critical for purposes of Section 168.3 (c) is to determine if the hoarding, as
charged, "is of a nature calculated to discredit the goods, business or services" of the petitioner.
We hold that it is not. Hoarding as defined by the petitioner is not even an act within the
contemplation of the IP Code.
The petitioner's cited basis is a provision of the IP Code, a set of rules that refer to a very specific
subject - intellectual property. Aside from the IP Code's actual substantive contents (which relate
specifically to patents, licensing, trademarks, trade names, service marks, copyrights, and the
protection and infringement of the intellectual properties that these protective measures embody),
the coverage and intent of the Code is expressly reflected in its "Declaration of State Policy" which
states:
 Section 2. Declaration of State Policy. - The State recognizes that an effective intellectual
and industrial property system is vital to the development of domestic and creative
activity, facilitates transfer of technology, attracts foreign investments, and ensures
market access for our products. It shall protect and secure the exclusive rights of
scientists, inventors, artists and other gifted citizens to their intellectual property and
creations, particularly when beneficial to the people, for such periods as provided in this
Act.
The use of intellectual property bears a social function. To this end, the State shall
promote the diffusion of knowledge and information for the promotion of national
development and progress and the common good.
It is also the policy of the State to streamline administrative procedures of registering
patents, trademarks and copyright, to liberalize the registration on the transfer of
technology, and to enhance the enforcement of intellectual property rights in the
Philippines. (n)
"Intellectual property rights" have furthermore been defined under Section 4 of the Code to consist
of: a) Copyright and Related Rights; b) Trademarks and Service Marks; c) Geographic Indications; d)
IndustrialDesigns; e) Patents; f) Layout-Designs (Topographies) of Integrated Circuits; and
g)Protection of Undisclosed Information.
Given the IP Code's specific focus, a first test that should be made when a question arises on
whether a matter is covered by the Code is to ask if it refers to an intellectual property as defined in
the Code. If it does not, then coverage by the Code may be negated.
A second test, if a disputed matter does not expressly refer to an intellectual property right as
defined above, is whether it falls under the general "unfair competition" concept and definition
under Sections 168.1 and 168.2 of the Code. The question then is whether there is "deception" or
any other similar act in "passing off" of goods or services to be those of another who enjoys
established goodwill.
Separately from these tests is the application of the principles of statutory construction giving
particular attention, not so much to the focus of the IP Code generally, but to the terms of Section
168 in particular. Under the principle of "noscitur a sociis," when a particular word or phrase is
ambiguous in itself or is equally susceptible of various meanings, its correct construction may be
made clear and specific by considering the company of words in which it is found or with which it is
associated.15
As basis for this interpretative analysis, we note that Section 168.1 speaks of a person who has
earned goodwill with respect to his goods and services and who is entitled to protection under the
Code, with or without a registered mark. Section 168.2, as previously discussed, refers to the
general definition of unfair competition. Section 168.3, on the other hand, refers to the specific
instances of unfair competition, with Section 168.1 referring to the sale of goods given the
appearance of the goods of another; Section 168.2, to the inducement of belief that his or her goods
or services are that of another who has earned goodwill; while the disputed Section 168.3 being a
"catch all" clause whose coverage the parties now dispute.
Under all the above approaches, we conclude that the "hoarding" - as defined and charged by the
petitioner - does not fall within the coverage of the IP Code and of Section 168 in particular. It does
not relate to any patent, trademark, trade name or service mark that the respondents have invaded,
intruded into or used without proper authority from the petitioner. Nor are the respondents alleged
to be fraudulently "passing off" their products or services as those of the petitioner. The
respondents are not also alleged to be undertaking any representation or misrepresentation that
would confuse or tend to confuse the goods of the petitioner with those of the respondents, or vice
versa. What in fact the petitioner alleges is an act foreign to the Code, to the concepts it embodies
and to the acts it regulates; as alleged, hoarding inflicts unfairness by seeking to limit the
opposition's sales by depriving it of the bottles it can use for these sales.
In this light, hoarding for purposes of destruction is closer to what another law - R.A. No. 623 -
covers, to wit:
SECTION 1. Persons engaged or licensed to engage in the manufacture, bottling or selling
of soda water, mineral or aerated waters, cider, milk, cream, or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar containers, with their names or
the names of their principals or products, or other marks of ownership stamped or
marked thereon, may register with the Philippine Patent Office a description of the names
or are used by them, under the same conditions, rules, and regulations, made applicable
by law or regulation to the issuance of trademarks.
SECTION 2. It shall be unlawful for any person, without the written consent of the
manufacturer, bottler or seller who has successfully registered the marks of ownership in
accordance with the provisions of the next preceding section, to fill such bottles, boxes,
kegs, barrels, or other similar containers so marked or stamped, for the purpose of
sale, or to sell, dispose of, buy, or traffic in, or wantonly destroy the same, whether
filled or not, or to use the same for drinking vessels or glasses or for any other
purpose than that registered by the manufacturer, bottler or seller. Any violation of
this section shall be punished by a fine or not more than one hundred pesos or
imprisonment of not more than thirty days or both.
As its coverage is defined under Section 1, the Act appears to be a measure that may overlap or be
affected by the provisions of Part II of the IP Code on "The Law on Trademarks, Service Marks and
Trade Names." What is certain is that the IP Code has not expressly repealed this Act. The Act
appears, too, to have specific reference to a special type of registrants - the manufacturers, bottlers
or sellers of soda water, mineral or aerated waters, cider, milk, cream, or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar containers - who are given special
protection with respect to the containers they use. In this sense, it is in fact a law of specific
coverage and application, compared with the general terms and application of the IP Code. Thus,
under its Section 2, it speaks specifically of unlawful use of containers and even of the unlawfulness
of their wanton destruction - a matter that escapes the IP Code's generalities unless linked with the
concepts of "deception" and "passing off" as discussed above.
Unfortunately, the Act is not the law in issue in the present case and one that the parties did not
consider at all in the search warrant application. The petitioner in fact could not have cited it in its
search warrant application since the "one specific offense" that the law allows and which the
petitioner used was Section 168.3 (c). If it serves any purpose at all in our discussions, it is to show
that the underlying factual situation of the present case is in fact covered by another law, not by the
IP Code that the petitioner cites. Viewed in this light, the lack of probable cause to support the
disputed search warrant at once becomes apparent.
Where, as in this case, the imputed acts do not violate the cited offense, the ruling of this Court
penned by Mr. Justice Bellosillo is particularly instructive:
In the issuance of search warrants, the Rules of Court requires a finding of probable cause
in connection with one specific offense to be determined personally by the judge after
examination of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized. Hence, since there is no
 crime to speak of, the search warrant does not even begin to fulfill these stringent
requirements and is therefore defective on its face. The nullity of the warrant renders
moot and academic the other issues raised in petitioners' Motion to Quash and Motion for
Reconsideration. Since the assailed search warrant is null and void, all property seized by
virtue thereof should be returned to petitioners in accordance with established
jurisprudence.16

Based on the foregoing, we conclude that the RTC correctly ruled that the petitioner's search
warrant should properly be quashed for the petitioner's failure to show that the acts imputed to the
respondents do not violate the cited offense. There could not have been any probable cause to
support the issuance of a search warrant because no crime in the first place was effectively charged.
This conclusion renders unnecessary any further discussion on whether the search warrant
application properly alleged that the imputed act of holding Coke empties was in fact a "hoarding" in
bad faith aimed to prejudice the petitioner's operations, or whether the MTC duly complied with the
procedural requirements for the issuance of a search warrant under Rule 126 of the Rules of Court.

WHEREFORE, we hereby DENY the petition for lack of merit. Accordingly, we confirm that Search
Warrant No. 2001-01, issued by the Municipal Trial Court, Branch 1, Naga City, is NULL and VOID.
Costs against the petitioner.

SO ORDERED.
G.R. No. 202423 January 28, 2013
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-ONG, Petitioners,
vs.
VICENTE LO, Respondent.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration1 dated October 22, 2012 filed by petitioners Chester
Uyco, Winston Uychiyong and Cherry C. Uyco-Ong to set aside the Resolution2 dated September 12,
2012 of this Court, which affirmed the decision3 dated March 9, 2012 and the resolution4 dated June
21, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 111964. The CA affirmed the
resolution5 dated September 1, 2008 of the Department of Justice (DOJ). Both the CA and the DOJ
found probable cause to charge the petitioners with false designation of origin, in violation of
Section 169.1, in relation with Section 170, of Republic Act No. (RA) 8293, otherwise known as the
"Intellectual Property Code of the Philippines."6
The disputed marks in this case are the "HIPOLITO & SEA HORSE & TRIANGULAR DEVICE," "FAMA,"
and other related marks, service marks and trade names of Casa Hipolito S.A. Portugal appearing in
kerosene burners. Respondent Vicente Lo and Philippine Burners Manufacturing Corporation
(PBMC) filed a complaint against the officers of Wintrade Industrial SalesCorporation (Wintrade),
including petitioners Chester Uyco, Winston Uychiyong and Cherry Uyco-Ong, and of National
Hardware, including Mario Sy Chua, for violation of Section 169.1, in relation to Section 170, of RA
8293.
Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes para Gass, Lda.
(Gasirel), the owner of the disputed marks, executed a deed of assignment transferring these marks
in his favor, to be used in all countries except for those in Europe and America.7 In a test buy, Lo
purchased from National Hardware kerosene burners with the subject marks and the designations
"Made in Portugal" and "Original Portugal" in the wrappers. These products were manufactured by
Wintrade. Lo claimed that as the assignee for the trademarks, he had not authorized Wintrade to use
these marks, nor had Casa Hipolito S.A. Portugal. While a prior authority was given to Wintrade’s
predecessor-in-interest, Wonder Project & Development Corporation (Wonder), Casa Hipolito S.A.
Portugal had already revoked this authority through a letter of cancellation dated May 31,
1993.8 The kerosene burners manufactured by Wintrade have caused confusion, mistake and
deception on the part of the buying public. Lo stated that the real and genuine burners are those
manufactured by its agent, PBMC.
In their Answer, the petitioners stated that they are the officers of Wintrade which owns the subject
trademarks and their variants. To prove this assertion, they submitted as evidence the certificates of
registration with the Intellectual Property Office. They alleged that Gasirel, not Lo, was the real
party-in-interest. They allegedly derived their authority to use the marks from Casa Hipolito S.A.
Portugal through Wonder, their predecessor-in-interest. Moreover, PBMC had already ceased to be
a corporation and, thus, the licensing agreement between PBMC and Lo could not be given effect,
particularly because the agreement was not notarized and did not contain the provisions required
by Section 87 of RA 8293. The petitioners pointed out that Lo failed to sufficiently prove that the
burners bought from National Hardware were those that they manufactured. But at the same time,
they also argued that the marks "Made in Portugal" and "Original Portugal" are merely descriptive
and refer to the source of the design and the history of manufacture.
In a separate Answer, Chua admitted that he had dealt with Wintrade for several years and had sold
its products. He had not been aware that Wintrade had lost the authority to manufacture, distribute,
and deal with products containing the subject marks, and he was never informed of Wintrade’s loss
of authority. Thus, he could have not been part of any conspiracy.
After the preliminary investigation, the Chief State Prosecutor found probable cause to indict the
petitioners for violation of Section 169.1, in relation with Section 170, of RA 8293. This law punishes
any person who uses in commerce any false designation of origin which is likely to cause confusion
or mistake as to the origin of the product. The law seeks to protect the public; thus, even if Lo does
not have the legal capacity to sue, the State can still prosecute the petitioners to prevent damage and
prejudice to the public.
On appeal, the DOJ issued a resolution affirming the finding of probable case. It gave credence to
Lo’s assertion that he is the proper assignee of the subject marks. More importantly, it took note of
the petitioners’ admission that they used the words "Made in Portugal" when in fact, these products
were made in the Philippines. Had they intended to refer to the source of the design or the history of
the manufacture, they should have explicitly said so in their packaging. It then concluded that the
petitioners’ defenses would be better ventilated during the trial and that the admissions of the
petitioners make up a sufficient basis for probable cause.
The CA found no grave abuse of discretion on the part of the DOJ and affirmed the DOJ’s ruling.
When the petitioners filed their petition before us, we denied the petition for failure to sufficiently
show any reversible error in the assailed judgment to warrant the exercise of the Court’s
discretionary power.
We find no reversible error on the part of the CA and the DOJ to merit reconsideration. The
petitioners reiterate their argument that the products bought during the test buy bearing the
trademarks in question were not manufactured by, or in any way connected with, the petitioners
and/or Wintrade. They also allege that the words "Made in Portugal" and "Original Portugal" refer
to the origin of the design and not to the origin of the goods.
The petitioners again try to convince the Court that they have not manufactured the products
bearing the marks "Made in Portugal" and "Original Portugal" that were bought during the test buy.
However, their own admission and the statement given by Chua bear considerable weight.
The admission in the petitioners’ Joint Affidavit is not in any way hypothetical, as they would have
us believe. They narrate incidents that have happened. They refer to Wintrade’s former association
with Casa Hipolito S.A. Portugal; to their decision to produce the burners in the Philippines; to their
use of the disputed marks; and to their justification for their use. It reads as follows:
24. As earlier mentioned, the predecessor-in-interest of Wintrade was the former exclusive licensee
of Casa Hipolito SA of Portugal since the 1970’s, and that Wintrade purchased all the rights on the
said trademarks prior to the closure of said company. Indeed, the burners sold by Wintrade used to
be imported from Portugal, but Wintrade later on discovered the possibility of obtaining these
burners from other sources or of manufacturing the same in the Philippines.
Wintrade’s decision to procure these burners from sources other than Portugal is certainly its
management prerogative. The presence of the words "made in Portugal" and "original Portugal" on
the wrappings of the burners and on the burners themselves which are manufactured by Wintrade
is an allusion to the fact that the origin of the design of said burners can be traced back to Casa
Hipolito SA of Portugal, and that the history of the manufacture of said burners are rooted in
Portugal. These words were not intended to deceive or cause mistake and confusion in the minds of
the buying public.9

Chua, the owner of National Hardware — the place where the test buy was conducted — admits that
Wintrade has been furnishing it with kerosene burners with the markings "Made in Portugal" for
the past 20 years, to wit:

5. I hereby manifests (sic) that I had been dealing with Wintrade Industrial Sales Corporation
(WINTRADE for brevity) for around 20 years now by buying products from it. I am not however
aware that WINTRADE was no longer authorized to deal, distribute or sell kerosene burner bearing
the mark HIPOLITO and SEA HORSE Device, with markings "Made in Portugal" on the wrapper as I
was never informed of such by WINTRADE nor was ever made aware of any notices posted in the
newspapers informing me of such fact. Had I been informed, I would have surely stopped dealing
with WINTRADE.101âwphi1

Thus, the evidence shows that petitioners, who are officers of Wintrade, placed the words "Made in
Portugal" and "Original Portugal" with the disputed marks knowing fully well — because of their
previous dealings with the Portuguese company — that these were the marks used in the products
of Casa Hipolito S.A. Portugal. More importantly, the products that Wintrade sold were admittedly
produced in the Philippines, with no authority from Casa Hipolito S.A. Portugal. The law on
trademarks and trade names precisely precludes a person from profiting from the business
reputation built by another and from deceiving the public as to the origins of products. These facts
support the consistent findings of the State Prosecutor, the DOJ and the CA that probable cause
exists to charge the petitioners with false designation of origin. The fact that the evidence did not
come from Lo, but had been given by the petitioners, is of no significance.

The argument that the words "Made in Portugal" and "Original Portugal" refer to the origin of the
design and not to the origin of the goods does not negate the finding of probable cause; at the same
time, it is an argument that the petitioners are not barred by this Resolution from raising as a
defense during the hearing of the case.

WHEREFORE, premises considered, we hereby DENY the motion for reconsideration for lack of
merit.

SO ORDERED.
G.R. No. 134217 May 11, 2000
KENNETH ROY SAVAGE/K ANGELIN EXPORT TRADING, owned and managed by GEMMA
DEMORAL-SAVAGE, petitioners,
vs.
JUDGE APRONIANO B. TAYPIN, Presiding Judge, RTC-BR. 12, Cebu City, CEBU PROVINCIAL
PROSECUTOR'S OFFICE, NATIONAL BUREAU OF INVESTIGATION, Region VII, Cebu City,
JUANITA NG MENDOZA, MENDCO DEVELOPMENT CORPORATION, ALFREDO SABJON and
DANTE SOSMEÑA,respondents.
BELLOSILLO, J.:
Petitioners KENNETH ROY SAVAGE and K ANGELIN EXPORT TRADING, owned and managed by
GEMMA DEMORAL-SAVAGE, seek to nullify the search warrant issued by respondent Judge
Aproniano B. Taypin of the Regional Trial Court, Br. 12 Cebu City, which resulted in the seizure of
certain pieces of wrought iron furniture from the factory of petitioners located in Biasong, Talisay,
Cebu. Their motion to quash the search warrant was denied by respondent Judge as well as their
motion to reconsider the denial. Hence, this petition for certiorari.
The antecedent facts: Acting on a complaint lodged by private respondent Eric Ng Mendoza,
president and general manager of Mendco Development Corporation (MENDCO), 1 Supervising
Agent Jose Ermie Monsanto of the National Bureau of Investigation (NBI) filed an application for
search warrant with the Regional Trial Court of Cebu City. 2 The application sought the authorization
to search the premises of K Angelin Export International located in Biasong, Talisay, Cebu, and to
seize the pieces of wrought iron furniture found therein which were allegedly the object of unfair
competition involving design patents, punishable under Art. 189 of the Revised Penal Code as
amended. The assailed Search Warrant No. 637-10-1697-12 was issued by respondent Judge on 16
October 1997 and executed in the afternoon of the following day by NBI agents. 3 Seized from the
factory were several pieces of furniture, indicated in the Inventory Sheet attached to the Return of
Search Warrant, and all items seized have remained in NBI custody up to the present. 4
On 30 October 1997 petitioners moved to quash the search warrant alleging that: (a) the crime they
were accused of did not exist; (b) the issuance of the warrant was not based on probable cause; (c)
the judge failed to ask the witnesses searching questions; and, (d) the warrant did not particularly
describe the things to be seized. 5
On 10 November 1997 petitioners filed a Supplemental Motion to Quash where they additionally
alleged that the assailed warrant was applied for without a certification against forum
shopping. 6 On 30 January 1998 respondent Judge denied the Motion to Quash and the Supplemental
Motion to Quash. 7 On 2 March 1998 petitioners moved to reconsider the denial of their motion to
quash and alleged substantially the same grounds found in their original Motion to Quash but
adding thereto two (2) new grounds, namely: (a) respondent court has no jurisdiction over the
subject-matter; and, (b) respondent court failed to "substantiate" the order sought to be
reconsidered. 8 The denial of their last motion 9 prompted petitioners to come to this Court.
The principal issues that must be addressed in this petition are: (a) questions involving jurisdiction
over the offense; (b) the need for a certification of non-forum shopping; and, (c) the existence of the
crime.
Petitioners claim that respondent trial court had no jurisdiction over the offense since it was not
designated as a special court for Intellectual Property Rights (IPR), citing in support thereof
Supreme Court Administrative Order No. 113-95 designating certain branches of the Regional Trial
Courts, Metropolitan Trial Courts and Municipal Trial Courts in Cities as Special Courts for IPR. The
courts enumerated therein are mandated to try and decide violations of IPR including Art. 189 of
the Revised Penal Code committed within their respective territorial jurisdictions. The sala of Judge
Benigno G. Gaviola of the RTC-Br. 9, Cebu City, was designated Special Court for IPR for the 7th
Judicial Region. 10 Subsequently Supreme Court Administrative Order No. 104-96 was issued
providing that jurisdiction over all violations of IPR was thereafter confined to the Regional Trial
Courts. 11
The authority to issue search warrants was not among those mentioned in the administrative
orders. But the Court has consistently ruled that a search warrant is merely a process issued by the
court in the exercise of its ancillary jurisdiction and not a criminal action which it may entertain
pursuant to its original jurisdiction. 12 The authority to issue search warrants is inherent in all courts
and may be effected outside their territorial jurisdiction. 1 In the instant case, the premises searched
located in Biasong, Talisay, Cebu, are well within the territorial jurisdiction of the respondent
court. 14
Petitioners apparently misconstrued the import of the designation of Special Courts for IPR.
Administrative Order No. 113-95 merely specified which court could "try and decide" cases
involving violations of IPR. It did not, and could not, vest exclusive jurisdiction with regard to all
matters (including the issuance of search warrants and other judicial processes) in any one court.
Jurisdiction is conferred upon courts by substantive law; in this case, BP Blg.129, and not by a
procedural rule, much less by an administrative order. 15 The power to issue search warrants for
violations of IPR has not been exclusively vested in the courts enumerated in Supreme Court
Administrative Order No.113-95.
Petitioners next allege that the application for a search warrant should have been dismissed
outright since it was not accompanied by a certification of non-forum shopping, citing as authority
therefor Washington Distillers, Inc. v. Court of Appeals. 16 In that case, we sustained the quashal of the
search warrant because the applicant had been guilty of forum shopping as private respondent
sought a search warrant from the Manila Regional Trial Court only after he was denied by the courts
of Pampanga. The instant case differs significantly, for here there is no allegation of forum-shopping,
only failure to acquire a certification against forum-shopping. The Rules of Court as amended
requires such certification only from initiatory pleadings, omitting any mention of
"applications." 17 In contrast, Supreme Court Circular 04-94, the old rule on the matter, required
such certification even from "applications." Our ruling in Washington Distillers required no such
certification from applications for search warrants. Hence, the absence of such certification will not
result in the dismissal of an application for search warrant.
The last question to be resolved is whether unfair competition involving design patents punishable
under Art. 189 of the Revised Penal Code exists in this case. Prosecutor Ivan Herrero seems to agree
as he filed the corresponding Information against petitioners on 17 March 1998. 18 However, since
the IPR Code took effect on 1 January 1998 any discussion contrary to the view herein expressed
would be pointless. The repealing clause of the Code provides —
All Acts and parts of Acts inconsistent herewith, more particularly, Republic
Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188
and 189 of the Revised Penal Code; Presidential Decree No. 49, including
Presidential Decree No. 285, as amended, are hereby repealed (emphasis
ours). 19
The issue involving the existence of "unfair competition" as a felony involving design patents,
referred to in Art. 189 of the Revised Penal Code, has been rendered moot and academic by the
repeal of the article.
The search warrant cannot even be issued by virtue of a possible violation of the IPR Code. The
assailed acts specifically alleged were the manufacture and fabrication of wrought iron furniture
similar to that patented by MENDCO, without securing any license or patent for the same, for the
purpose of deceiving or defrauding Mendco and the buying public. 20 The Code defines "unfair
competition" thus —
168.2. Any person who shall employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in
which he deals, or his business, or services for those of the one having
established such goodwill, or shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to an action
therefor.
168.3. In particular, and without in any way limiting the scope of protection
against unfair competition, the following shall be deemed guilty of unfair
competition:
(a) Any person who is selling his goods and gives them the general appearance
of goods of another manufacturer or dealer, either as to the goods themselves
or in the wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance which would be
likely to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with a like
purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or
indirectly from a patented process, or the use of a patented process without
authorization of the patentee constitutes patent infringement. 25
Although this case traces its origins to the year 1997 or before the enactment of the IPR Code, we
are constrained to invoke the provisions of the Code. Article 22 of the Revised Penal Code provides
that penal laws shall be applied retrospectively, if such application would be beneficial to the
accused. 26 Since the IPR Code effectively obliterates the possibility of any criminal liability attaching
to the acts alleged, then that Code must be applied here.
In the issuance of search warrants, the Rules of Court requires a finding of probable cause in
connection with one specific offense to be determined personally by the judge after examination of
the complainant and the witnesses he may produce, and particularly describing the place to be
searched and the things to be seized. 27 Hence, since there is no crime to speak of, the search warrant
does not even begin to fulfill these stringent requirements and is therefore defective on its face. The
nullity of the warrant renders moot and academic the other issues raised in petitioners' Motion to
Quash and Motion for Reconsideration. Since the assailed search warrant is null and void, all
property seized by virtue thereof should be returned to petitioners in accordance with established
jurisprudence. 28
In petitioners' Reply with Additional Information they allege that the trial court denied their motion
to transfer their case to a Special Court for IPR. We have gone through the records and we fail to find
any trace of such motion or even a copy of the order denying it. All that appears in the records is a
copy of an order granting a similar motion filed by a certain Minnie Dayon with regard to Search
Warrant No. 639-10-1697-12. 29 This attachment being immaterial we shall give it no further
attention.
WHEREFORE, the Order of the Regional Trial Court, Br. 12, Cebu City, dated 30 January 1998,
denying the Motion to Quash Search Warrant No. 637-10-1697-12 dated 30 October 1997 and the
Supplemental Motion to Quash dated 10 November 1997 filed by petitioners, as well as the Order
dated 8 April 1998 denying petitioners' Motion for Reconsideration dated 2 March 1998, is SET
ASIDE. Search Warrant No. 637-10-1697-12 issued on 16 October 1997 is ANNULLED and SET
ASIDE, and respondents are ordered to return to petitioners the property seized by virtue of the
illegal search warrant.
SO ORDERED.

(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to
discredit goods, businesses or services of another. 21

There is evidently no mention of any crime of "unfair competition" involving design patents in the
controlling provisions on Unfair Competition. It is therefore unclear whether the crime exists at all,
for the enactment of RA 8293 did not result in the reenactment of Art. 189 of the Revised Penal
Code. In the face of this ambiguity, we must strictly construe the statute against the State and
liberally in favor of the accused, 22 for penal statutes cannot be enlarged or extended by intendment,
implication or any equitable consideration. 2 Respondents invoke jurisprudence to support their
contention that "unfair competition" exists in this case. 24 However, we are prevented from applying
these principles, along with the new provisions on Unfair Competition found in the IPR Code, to the
alleged acts of the petitioners, for such acts constitute patent infringement as defined by the same
Code —

Sec. 76. Civil Action for Infringement. — 76.1. The making, using, offering for
sale, selling, or importing a patented product or a product obtained directly or
G.R. No. 169504 March 3, 2010
COFFEE PARTNERS, INC., Petitioner,
vs.
SAN FRANCISCO COFFEE & ROASTERY, INC., Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 15 June 2005 Decision2 and the 1 September 2005 Resolution3 of
the Court of Appeals in CA-G.R. SP No. 80396. In its 15 June 2005 Decision, the Court of Appeals set
aside the 22 October 2003 Decision4 of the Office of the Director General-Intellectual Property Office
and reinstated the 14 August 2002 Decision5 of the Bureau of Legal Affairs-Intellectual Property
Office. In its 1 September 2005 Resolution, the Court of Appeals denied petitioner’s motion for
reconsideration and respondent’s motion for partial reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing and
maintaining coffee shops in the country. It registered with the Securities and Exchange Commission
(SEC) in January 2001. It has a franchise agreement6 with Coffee Partners Ltd. (CPL), a business
entity organized and existing under the laws of British Virgin Islands, for a non-exclusive right to
operate coffee shops in the Philippines using trademarks designed by CPL such as "SAN FRANCISCO
COFFEE."
Respondent is a local corporation engaged in the wholesale and retail sale of coffee. It registered
with the SEC in May 1995. It registered the business name "SAN FRANCISCO COFFEE & ROASTERY,
INC." with the Department of Trade and Industry (DTI) in June 1995. Respondent had since built a
customer base that included Figaro Company, Tagaytay Highlands, Fat Willy’s, and other coffee
companies.
In 1998, respondent formed a joint venture company with Boyd Coffee USA under the company
name Boyd Coffee Company Philippines, Inc. (BCCPI). BCCPI engaged in the processing, roasting,
and wholesale selling of coffee. Respondent later embarked on a project study of setting up coffee
carts in malls and other commercial establishments in Metro Manila.
In June 2001, respondent discovered that petitioner was about to open a coffee shop under the
name "SAN FRANCISCO COFFEE" in Libis, Quezon City. According to respondent, petitioner’s shop
caused confusion in the minds of the public as it bore a similar name and it also engaged in the
business of selling coffee. Respondent sent a letter to petitioner demanding that the latter stop using
the name "SAN FRANCISCO COFFEE." Respondent also filed a complaint with the Bureau of Legal
Affairs-Intellectual Property Office (BLA-IPO) for infringement and/or unfair competition with
claims for damages.
In its answer, petitioner denied the allegations in the complaint. Petitioner alleged it filed with the
Intellectual Property Office (IPO) applications for registration of the mark "SAN FRANCISCO COFFEE
& DEVICE" for class 42 in 1999 and for class 35 in 2000. Petitioner maintained its mark could not be
confused with respondent’s trade name because of the notable distinctions in their appearances.
Petitioner argued respondent stopped operating under the trade name "SAN FRANCISCO COFFEE"
when it formed a joint venture with Boyd Coffee USA. Petitioner contended respondent did not cite
any specific acts that would lead one to believe petitioner had, through fraudulent means, passed off
its mark as that of respondent, or that it had diverted business away from respondent.
Mr. David Puyat, president of petitioner corporation, testified that the coffee shop in Libis, Quezon
City opened sometime in June 2001 and that another coffee shop would be opened in Glorietta Mall,
Makati City. He stated that the coffee shop was set up pursuant to a franchise agreement executed in
January 2001 with CPL, a British Virgin Island Company owned by Robert Boxwell. Mr. Puyat said he
became involved in the business when one Arthur Gindang invited him to invest in a coffee shop and
introduced him to Mr. Boxwell. For his part, Mr. Boxwell attested that the coffee shop "SAN
FRANCISCO COFFEE" has branches in Malaysia and Singapore. He added that he formed CPL in 1997
along with two other colleagues, Shirley Miller John and Leah Warren, who were former managers
of Starbucks Coffee Shop in the United States. He said they decided to invest in a similar venture and
adopted the name "SAN FRANCISCO COFFEE" from the famous city in California where he and his
former colleagues once lived and where special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property Office
In its 14 August 2002 Decision, the BLA-IPO held that petitioner’s trademark infringed on
respondent’s trade name. It ruled that the right to the exclusive use of a trade name with freedom
from infringement by similarity is determined from priority of adoption. Since respondent
registered its business name with the DTI in 1995 and petitioner registered its trademark with the
IPO in 2001 in the Philippines and in 1997 in other countries, then respondent must be protected
from infringement of its trade name.
The BLA-IPO also held that respondent did not abandon the use of its trade name as substantial
evidence indicated respondent continuously used its trade name in connection with the purpose for
which it was organized. It found that although respondent was no longer involved in blending,
roasting, and distribution of coffee because of the creation of BCCPI, it continued making plans and
doing research on the retailing of coffee and the setting up of coffee carts. The BLA-IPO ruled that
for abandonment to exist, the disuse must be permanent, intentional, and voluntary.
The BLA-IPO held that petitioner’s use of the trademark "SAN FRANCISCO COFFEE" will likely cause
confusion because of the exact similarity in sound, spelling, pronunciation, and commercial
impression of the words "SAN FRANCISCO" which is the dominant portion of respondent’s trade
name and petitioner’s trademark. It held that no significant difference resulted even with a
diamond-shaped figure with a cup in the center in petitioner's trademark because greater weight is
given to words – the medium consumers use in ordering coffee products.
On the issue of unfair competition, the BLA-IPO absolved petitioner from liability. It found that
petitioner adopted the trademark "SAN FRANCISCO COFFEE" because of the authority granted to it
by its franchisor. The BLA-IPO held there was no evidence of intent to defraud on the part of
petitioner.
The BLA-IPO also dismissed respondent’s claim of actual damages because its claims of profit loss
were based on mere assumptions as respondent had not even started the operation of its coffee
carts. The BLA-IPO likewise dismissed respondent’s claim of moral damages, but granted its claim of
attorney’s fees.
Both parties moved for partial reconsideration. Petitioner protested the finding of infringement,
while respondent questioned the denial of actual damages. The BLA-IPO denied the parties’ partial
motion for reconsideration. The parties appealed to the Office of the Director General-Intellectual
Property Office (ODG-IPO).
 The Ruling of the Office of the Director General-
Intellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that petitioner’s use of
the trademark "SAN FRANCISCO COFFEE" did not infringe on respondent's trade name. The ODG-
IPO found that respondent had stopped using its trade name after it entered into a joint venture
with Boyd Coffee USA in 1998 while petitioner continuously used the trademark since June 2001
when it opened its first coffee shop in Libis, Quezon City. It ruled that between a subsequent user of
a trade name in good faith and a prior user who had stopped using such trade name, it would be
inequitable to rule in favor of the latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 decision of the
ODG-IPO in so far as it ruled that there was no infringement. It reinstated the 14 August 2002
decision of the BLA-IPO finding infringement. The appellate court denied respondent’s claim for
actual damages and retained the award of attorney’s fees. In its 1 September 2005 Resolution, the
Court of Appeals denied petitioner’s motion for reconsideration and respondent’s motion for partial
reconsideration.
The Issue
The sole issue is whether petitioner’s use of the trademark "SAN FRANCISCO COFFEE" constitutes
infringement of respondent’s trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the
trade name is not registered with the Intellectual Property Office (IPO).
The Court’s Ruling
The petition has no merit.
Petitioner contends that when a trade name is not registered, a suit for infringement is not available.
Petitioner alleges respondent has abandoned its trade name. Petitioner points out that respondent’s
registration of its business name with the DTI expired on 16 June 2000 and it was only in 2001
when petitioner opened a coffee shop in Libis, Quezon City that respondent made a belated effort to
seek the renewal of its business name registration. Petitioner stresses respondent’s failure to
continue the use of its trade name to designate its goods negates any allegation of infringement.
Petitioner claims no confusion is likely to occur between its trademark and respondent’s trade name
because of a wide divergence in the channels of trade, petitioner serving ready-made coffee while
respondent is in wholesale blending, roasting, and distribution of coffee. Lastly, petitioner avers the
proper noun "San Francisco" and the generic word "coffee" are not capable of exclusive
appropriation.
Respondent maintains the law protects trade names from infringement even if they are not
registered with the IPO. Respondent claims Republic Act No. 8293 (RA 8293) 7 dispensed with
registration of a trade name with the IPO as a requirement for the filing of an action for
infringement. All that is required is that the trade name is previously used in trade or commerce in
the Philippines. Respondent insists it never abandoned the use of its trade name as evidenced by its
letter to petitioner demanding immediate discontinuation of the use of its trademark and by the
filing of the infringement case. Respondent alleges petitioner’s trademark is confusingly similar to
respondent’s trade name. Respondent stresses ordinarily prudent consumers are likely to be misled
about the source, affiliation, or sponsorship of petitioner’s coffee.
As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO found that
respondent continued to make plans and do research on the retailing of coffee and the
establishment of coffee carts, which negates abandonment. This finding was upheld by the Court of
Appeals, which further found that while respondent stopped using its trade name in its business of
selling coffee, it continued to import and sell coffee machines, one of the services for which the use
of the business name has been registered. The binding effect of the factual findings of the Court of
Appeals on this Court applies with greater force when both the quasi-judicial body or tribunal like
the BLA-IPO and the Court of Appeals are in complete agreement on their factual findings. It is also
settled that absent any circumstance requiring the overturning of the factual conclusions made by
the quasi-judicial body or tribunal, particularly if affirmed by the Court of Appeals, the Court
necessarily upholds such findings of fact.8
Coming now to the main issue, in Prosource International, Inc. v. Horphag Research Management
SA,9 this Court laid down what constitutes infringement of an unregistered trade name, thus:
(1) The trademark being infringed is registered in the Intellectual Property Office;
however, in infringement of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably
imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for
sale, or advertising of any goods, business or services; or the infringing mark or trade
name is applied to labels, signs, prints, packages, wrappers, receptacles, or
advertisements intended to be used upon or in connection with such goods, business, or
services;
(4) The use or application of the infringing mark or trade name is likely to cause
confusion or mistake or to deceive purchasers or others as to the goods or services
themselves or as to the source or origin of such goods or services or the identity of such
business; and
(5) It is without the consent of the trademark or trade name owner or the assignee
thereof.10 (Emphasis supplied)
Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed
by its owner against the owner of an infringing trademark. All that is required is that the trade name
is previously used in trade or commerce in the Philippines.11
Section 22 of Republic Act No. 166,12 as amended, required registration of a trade name as a
condition for the institution of an infringement suit, to wit:
Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy, or colorable imitation of any registered mark or
trade name in connection with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy, or colorably imitate any such mark or trade name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles, or advertisements intended to be used upon or in connection with such
goods, business, or services, shall be liable to a civil action by the registrant for any or all of the
remedies herein provided. (Emphasis supplied)
However, RA 8293, which took effect on 1 January 1998, has dispensed with the registration
requirement. Section 165.2 of RA 8293 categorically states that trade names shall be protected, even
prior to or without registration with the IPO, against any unlawful act including any subsequent use
of the trade name by a third party, whether as a trade name or a trademark likely to mislead the
public.1avvph!1 Thus:
SEC. 165.2 (a) Notwithstanding any laws or regulations providing for any obligation to
register trade names, such names shall be protected, even prior to or without registration,
against any unlawful act committed by third parties.
(b) In particular, any subsequent use of a trade name by a third party, whether as a trade name or a
mark or collective mark, or any such use of a similar trade name or mark, likely to mislead the
public, shall be deemed unlawful. (Emphasis supplied)
It is the likelihood of confusion that is the gravamen of infringement. But there is no absolute
standard for likelihood of confusion. Only the particular, and sometimes peculiar, circumstances of
each case can determine its existence. Thus, in infringement cases, precedents must be evaluated in
the light of each particular case.13
should attempt to use the same name, or the same name with a slight variation in such a way as to
induce persons to deal with it in the belief that they are dealing with the corporation which has
given a reputation to the name.18
This Court is not just a court of law, but also of equity. We cannot allow petitioner to profit by the
name and reputation so far built by respondent without running afoul of the basic demands of fair
play. Not only the law but equity considerations hold petitioner liable for infringement of
respondent’s trade name.
The Court of Appeals was correct in setting aside the 22 October 2003 Decision of the Office of the
Director General-Intellectual Property Office and in reinstating the 14 August 2002 Decision of the
Bureau of Legal Affairs-Intellectual Property Office.
WHEREFORE, we DENY the petition for review. We AFFIRM the 15 June 2005 Decision and 1
September 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 80396.
Costs against petitioner.

SO ORDERED.
In determining similarity and likelihood of confusion, our jurisprudence has developed two tests:
the dominancy test and the holistic test. The dominancy test focuses on the similarity of the
prevalent features of the competing trademarks that might cause confusion and deception, thus
constituting infringement. If the competing trademark contains the main, essential, and dominant
features of another, and confusion or deception is likely to result, infringement occurs. Exact
duplication or imitation is not required. The question is whether the use of the marks involved is
likely to cause confusion or mistake in the mind of the public or to deceive consumers. 14

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. 15 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.16

Applying either the dominancy test or the holistic test, petitioner’s "SAN FRANCISCO COFFEE"
trademark is a clear infringement of respondent’s "SAN FRANCISCO COFFEE & ROASTERY, INC."
trade name. The descriptive words "SAN FRANCISCO COFFEE" are precisely the dominant features
of respondent’s trade name. Petitioner and respondent are engaged in the same business of selling
coffee, whether wholesale or retail. The likelihood of confusion is higher in cases where the business
of one corporation is the same or substantially the same as that of another corporation. In this case,
the consuming public will likely be confused as to the source of the coffee being sold at petitioner’s
coffee shops. Petitioner’s argument that "San Francisco" is just a proper name referring to the
famous city in California and that "coffee" is simply a generic term, is untenable. Respondent has
acquired an exclusive right to the use of the trade name "SAN FRANCISCO COFFEE & ROASTERY,
INC." since the registration of the business name with the DTI in 1995. Thus, respondent’s use of its
trade name from then on must be free from any infringement by similarity. Of course, this does not
mean that respondent has exclusive use of the geographic word "San Francisco" or the generic word
"coffee." Geographic or generic words are not, per se, subject to exclusive appropriation. It is only
the combination of the words "SAN FRANCISCO COFFEE," which is respondent’s trade name in its
coffee business, that is protected against infringement on matters related to the coffee business to
avoid confusing or deceiving the public.

In Philips Export B.V. v. Court of Appeals,17 this Court held that a corporation has an exclusive right
to the use of its name. The right proceeds from the theory that it is a fraud on the corporation which
has acquired a right to that name and perhaps carried on its business thereunder, that another