c





  Petitioner, collectively known as the MCDONALD͛S marks) such that when used on identical
vs. or related goods, the trademark applied for would confuse or deceive purchasers
c 
 

 , Respondent. into believing that the goods originate from the same source or origin. Likewise,
the petitioner alleged that the respondent͛s use and adoption in bad faith of the
DECISION "MACJOY & DEVICE" mark would falsely tend to suggest a connection or affiliation
with petitioner͛s restaurant services and food products, thus, constituting a fraud

i
upon the general public and further cause the dilution of the distinctiveness of
petitioner͛s registered and internationally recognized MCDONALD͛S marks to its
prejudice and irreparable damage. The application and the opposition thereto was
In this petition for review on certiorari under Rule 45 of the Rules of Court, herein
docketed as Inter Partes Case No. 3861.
petitioner McDonald͛s Corporation seeks the reversal and setting aside of the
following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to wit:
Respondent denied the aforementioned allegations of the petitioner and averred
1 that it has used the mark "MACJOY" for the past many years in good faith and has
1. Decision dated 29 July 2004 reversing an earlier decision of the Intellectual
spent considerable sums of money for said mark͛s extensive promotion in tri-
Property Office (IPO) which rejected herein respondent MacJoy FastFood
media, especially in Cebu City where it has been doing business long before the
Corporation͛s application for registration of the trademark "MACJOY & DEVICE";
petitioner opened its outlet thereat sometime in 1992; and that its use of said
and
mark would not confuse affiliation with the petitioner͛s restaurant services and
food products because of the differences in the design and detail of the two (2)
2. Resolution dated 12 November 20042 denying the petitioner͛s motion for
marks.
reconsideration.
In a decision4 dated December 28, 1998, the IPO, ratiocinating that the
     predominance of the letter "M," and the prefixes "Mac/Mc" in both the
"MACJOY" and the "MCDONALDS" marks lead to the conclusion that there is
On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic .confusing similarity between them especially since both are used on almost the
corporation engaged in the sale of fast food products in Cebu City, filed with the same products falling under classes 29 and 30 of the International Classification of
then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the Goods, i.e., food and ingredients of food, sustained the petitioner͛s opposition
Intellectual Property Office (IPO), an application, thereat identified as Application and rejected the respondent͛s application, viz:
Serial No. 75274, for the registration of the trademark "MACJOY & DEVICE" for
fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, A


 

       i



sandwiches, halo-halo and steaks under classes 29 and 30 of the International              
  
! 
Classification of Goods.  "   !#!          $ %&%'(
 
 !$

!  %  !( )*+),    

 #

!


Petitioner McDonald͛s Corporation, a corporation duly organized and existing 
i
'
 
under the laws of the State of Delaware, USA, filed a verified Notice of
3
Opposition against the respondent͛s application claiming that the trademark Let the filewrapper of MACJOY subject matter of this case be sent to the
"MACJOY & DEVICE" so resembles its corporate logo, otherwise known as the Administrative, Financial and Human Resources Development Bureau for
Golden Arches or "M" design, and its marks "McDonalds," McChicken,"
"MacFries," "BigMac," "McDo," "McSpaghetti," "McSnack," and "Mc," (hereinafter
appropriate action in accordance with this Decision, with a copy to be furnished
the Bureau of Trademarks for information and to update its record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the IPO denied the
5
motion in its Order of January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review with prayer
6
for Preliminary Injunction under Rule 43 of the Rules of Court, whereat its
appellate recourse was docketed as CA-G.R. SP No. 57247.
Finding no confusing similarity between the marks "MACJOY" and
"MCDONALD͛S," the CA, in its herein assailed Decision7 dated July 29, 2004,
reversed and set aside the appealed IPO decision and order, thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us
REVERSING and SETTING ASIDE the Decision of the IPO dated 28 December 1998
and its Order dated 14 January 2000 and ORDERING the IPO to give due course to
petitioner͛s Application Serial No. 75274.
SO ORDERED.

-
!
1. The word "MacJoy" is written in round script while the word "McDonald͛s" is
written in single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken head with cap and
bowtie and wings sprouting on both sides, while the word "McDonald͛s" comes
with an arches "M" in gold colors, and absolutely without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while
"McDonald͛s" is written in red, yellow and black color combination;
4. The façade of the respective stores of the parties are entirely different. Exhibits
1 and 1-A, show that [respondent͛s] restaurant is set also in the same bold,
brilliant and noticeable color scheme as that of its wrappers, containers, cups,
etc., while [petitioner͛s] restaurant is in yellow and red colors, and with the
mascot of "Ronald McDonald" being prominently displayed therein." (Words in
brackets supplied.)
Petitioner promptly filed a motion for reconsideration. However, in its similarly
challenged Resolution8 of November 12, 2004, the CA denied the motion, as it
further held:
A!" #$"%$"$%
"&%$%# $%#$%$% %"% %%
 

 


 &  #$%  "% ' The articles and trademarks employed and
used by the [respondent] Macjoy Fastfood Corporation are so different and
distinct as to preclude any probability or likelihood of confusion or deception on
xxx, it is clear that the IPO brushed aside and rendered useless the glaring and
the part of the public to the injury of the trade or business of the [petitioner]
drastic differences and variations in style of the two trademarks and even decreed
McDonald͛s Corporation. The "Macjoy & Device" mark is dissimilar in color,
that these pronounced differences are "miniscule" and considered them to have
design, spelling, size, concept and appearance to the McDonald͛s marks. (Words
been "overshadowed by the appearance of the predominant features" such as
in brackets supplied.)
"M," "Mc," and "Mac" appearing in both MCDONALD͛S and MACJOY marks.
Instead of taking into account these differences, the IPO unreasonably shrugged
off these differences in the device, letters and marks in the trademark sought to Hence, the petitioner͛s present recourse on the following grounds:
be registered. The IPO brushed aside and ignored the following irrefutable facts
and circumstances showing differences between the marks of MACJOY and I.
MCDONALD͛S. They are, as averred by the petitioner [now respondent]:
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT͛S "MACJOY &
DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO PETITIONER͛S "McDONALD͛S
MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY TEST WHICH HAS
BEEN CONSISTENTLY APPLIED BY THIS HONORABLE COURT IN DETERMINING THE
EXISTENCE OF CONFUSING SIMILARITY BETWEEN COMPETING MARKS.
A. The McDonald͛s Marks belong to a well-known and established "family of
marks" distinguished by the use of the prefix "Mc" and/or "Mac" and the
corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner͛s
McDonald͛s Marks and the Respondent͛s "Macjoy & Device" mark. As such, the
marks are confusingly similar under the Dominancy Test.
C. Petitioner͛s McDonald͛s Marks are well-known and world-famous marks which
must be protected under the Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO DATED
28 DECEMBER 1998 AND ITS ORDER DATED 14 JANUARY 2000 WERE NOT BASED
ON SUBSTANTIAL EVIDENCE.
In its Comment,9 the respondent asserts that the petition should be dismissed
outright for being procedurally defective: first, because the person who signed the
certification against forum shopping in behalf of the petitioner was not specifically
authorized to do so, and second, because the petition does not present a
reviewable issue as what it challenges are the factual findings of the CA. In any
event, the respondent insists that the CA committed no reversible error in finding
no confusing similarity between the trademarks in question.
The petition is impressed with merit.
Contrary to respondent͛s claim, the petitioner͛s Managing Counsel, Sheila Lehr,
was specifically authorized to sign on behalf of the petitioner the Verification and
Certification10 attached to the petition. As can be gleaned from the petitioner͛s
Board of Director͛s Resolution dated December 5, 2002, as embodied in the
Certificate of the Assistant Secretary dated December 21, 2004,11 Sheila Lehr was
one of those authorized and empowered "to execute and deliver for and on
behalf of [the petitioner] all documents as may be required in connection with x x
x the protection and maintenance of any foreign patents, trademarks, trade-
names, and copyrights owned now or hereafter by [the petitioner], including, but
not limited to, x x x documents required to institute opposition or cancellation
proceedings against conflicting trademarks, and to do such other acts and things
and to execute such other documents as may be necessary and appropriate to
effect and carry out the intent of this resolution." Indeed, the afore-stated
authority given to Lehr necessarily includes the authority to execute and sign the
mandatorily required certification of non-forum shopping to support the instant
petition for review which stemmed from the "opposition proceedings" lodged by
the petitioner before the IPO. Considering that the person who executed and
signed the certification against forum shopping has the authority to do so, the
petition, therefore, is not procedurally defective.
As regards the respondent͛s argument that the petition raises only questions of
fact which are not proper in a petition for review, suffice it to say that the
contradictory findings of the IPO and the CA constrain us to give due course to the
petition, this being one of the recognized exceptions to Section 1, Rule 45 of the
Rules of Court. True, this Court is not the proper venue to consider factual issues
as it is not a trier of facts.12 Nevertheless, when the factual findings of the
appellate court are mistaken, absurd, speculative, conjectural, conflicting, tainted
with grave abuse of discretion, or contrary to the findings culled by the court of
origin,13 as here, this Court will review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a
"trademark" as any distinctive word, name, symbol, emblem, sign, or device, or
any combination thereof adopted and used by a manufacturer or merchant on his
goods to identify and distinguish them from those manufactured, sold, or dealt in
14
by others.
Under the same law, the registration of a trademark is subject to the provisions of
Section 4 thereof, paragraph (d) of which is pertinent to this case. The provision
reads:
Section 4. Registration of trademarks, trade-names and service-marks on the
principal register. ʹ There is hereby established a register of trademarks,
tradenames and service-marks which shall be known as the principal register. The
owner of the trade-mark, trade-name or service-mark used to distinguish his
goods, business or services of others shall have the right to register the same on
the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles a mark or
trade-name registered in the Philippines or a mark or trade-name previously used
in the Philippines by another and not abandoned, as to be likely, when applied to
or used in connection with the goods, business or services of the applicant, to
cause confusion or mistake or to deceive purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity between the
MCDONALD͛S marks of the petitioner and the respondent͛s "MACJOY & DEVICE"
trademark when applied to Classes 29 and 30 of the International Classification of
Goods, i.e., food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has developed
15
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 or deception.16 In contrast, the holistic test requires the court to
consider the entirety of the marks as applied to the products, including the labels
and packaging, in determining confusing similarity.17 Under the latter test, a
18
comparison of the words is not the only determinant factor. u
u
Here, the IPO used the dominancy test in concluding that there was confusing
similarity between the two (2) trademarks in question as it took note of the
appearance of the predominant features "M", "Mc" and/or "Mac" in both the
marks. In reversing the conclusion reached by the IPO, the CA, while seemingly
applying the dominancy test, in fact actually applied the holistic test. The
appellate court ruled in this wise:
Applying the Dominancy test to the present case, the IPO should have taken into
consideration the entirety of the two marks instead of simply fixing its gaze on the
single letter "M" or on the combinations "Mc" or "Mac". A mere cursory look of
the subject marks will reveal that, save for the letters "M" and "c", no other
similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted for the IPO to
consider the prefix "Mac" as the predominant feature and the rest of the designs
in [respondent͛s] mark as details. Taking into account such paramount factors as
color, designs, spelling, sound, concept, sizes and audio and visual effects, the
prefix "Mc" will appear to be the only similarity in the two completely different
marks; and it is the prefix "Mc" that would thus appear as the miniscule detail.
When pitted against each other, the two marks reflect a distinct and disparate
visual impression that negates any possible confusing similarity in the mind of the
buying public. (Words in brackets supplied.)
Petitioner now vigorously points out that the dominancy test should be the one
applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each case
must be decided on its merits.19 In such cases, even more than in any other
litigation, precedent must be studied in the light of the facts of the particular
20
case. That is the reason why in trademark cases, jurisprudential precedents
21
should be applied only to a case if they are specifically in point.
While we agree with the CA͛s detailed enumeration of differences between the
two (2) competing trademarks herein involved, we believe that the holistic test is
not the one applicable in this case, the dominancy test being the one more
suitable. In recent cases with a similar factual milieu as here, the Court has
consistently used and applied the dominancy test in determining confusing
similarity or likelihood of confusion between competing trademarks.22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where the
trademark "Big Mak" was found to be confusingly similar with the "Big Mac" mark
of the herein the petitioner, the Court explicitly held:
This Court, xxx, has relied on the dominancy test rather than the holistic test. The
dominancy test considers the dominant features in the competing marks in
determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product
arising from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors
like prices, quality, sales outlets and market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying the
dominancy test, concluded that the use by the respondent therein of the word
"MASTER" for its coffee product "FLAVOR MASTER" was likely to cause confusion
with therein petitioner͛s coffee products͛ "MASTER ROAST" and "MASTER BLEND"
and further ruled:
xxx, the totality or holistic test is contrary to the elementary postulate of the law
on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in
the marketplace. The totality or holistic test only relies on visual comparisons
between two trademarks whereas the dominancy test relies not only on the visual
but also on the aural and connotative comparisons and overall impressions
between the two trademarks.
Applying the dominancy test to the instant case, the Court finds that herein
petitioner͛s "MCDONALD͛S" and respondent͛s "MACJOY" marks are confusingly
similar with each other such that an ordinary purchaser can conclude an
association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes
"Mc" and/or "Mac" as dominant features. The first letter "M" in both marks puts
emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which they are
depicted i.e. in an arch-like, capitalized and stylized manner.25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally
catches the attention of the consuming public. Verily, the word "MACJOY" attracts
attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo,"
"Big Mac" and the rest of the MCDONALD͛S marks which all use the prefixes Mc
and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood
products. Indisputably, the respondent͛s trademark application for the "MACJOY
& DEVICE" trademark covers goods under Classes 29 and 30 of the International
Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries,
spaghetti, etc. Likewise, the petitioner͛s trademark registration for the
MCDONALD͛S marks in the Philippines covers goods which are similar if not
identical to those covered by the respondent͛s application.
Thus, we concur with the IPO͛s findings that:
In the case at bar, the predominant features such as the "M," "Mc," and "Mac"
appearing in both McDonald͛s marks and the MACJOY & DEVICE" easily attract the
attention of would-be customers. Even non-regular customers of their fastfood
restaurants would readily notice the predominance of the "M" design, "Mc/Mac"
prefixes shown in both marks. Such that the common awareness or perception of
customers that the trademarks McDonalds mark and MACJOY & DEVICE are one
and the same, or an affiliate, or under the sponsorship of the other is not far-
fetched.
The differences and variations in styles as the device depicting a head of chicken
with cap and bowtie and wings sprouting on both sides of the chicken head, the
heart-shaped "M," and the stylistic letters in "MACJOY & DEVICE;" in contrast to
the arch-like "M" and the one-styled gothic letters in McDonald͛s marks are of no
moment. These minuscule variations are overshadowed by the appearance of the
predominant features mentioned hereinabove.
Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in
both marks, the inevitable conclusion is there is confusing similarity between the
trademarks Mc Donald͛s marks and "MACJOY AND DEVICE" especially considering
the fact that both marks are being used on almost the same products falling under
Classes 29 and 30 of the International Classification of Goods i.e. Food and
ingredients of food.
With the existence of confusing similarity between the subject trademarks, the
resulting issue to be resolved is who, as between the parties, has the rightful claim
of ownership over the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from registration under the
Trademark Law. However, once registered, not only the mark͛s validity but also
26
the registrant͛s ownership thereof is prima facie presumed.
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision
regarding the protection of industrial property of foreign nationals in this country
28
as embodied in the Paris Convention under which the Philippines and the
petitioner͛s domicile, the United States, are adherent-members, the petitioner
was able to register its MCDONALD͛S marks successively, i.e., "McDonald͛s" in 04
October, 197129 ; the corporate logo which is the "M" or the golden arches design
and the "McDonald͛s" with the "M" or golden arches design both in 30 June
197730 ; and so on and so forth.31
On the other hand, it is not disputed that the respondent͛s application for
registration of its trademark "MACJOY & DEVICE" was filed only on March 14,
1991 albeit the date of first use in the Philippines was December 7, 1987.32
Hence, from the evidence on record, it is clear that the petitioner has duly
established its ownership of the mark/s.
Respondent͛s contention that it was the first user of the mark in the Philippines
having used "MACJOY & DEVICE" on its restaurant business and food products
since December, 1987 at Cebu City while the first McDonald͛s outlet of the
petitioner thereat was opened only in 1992, is downright unmeritorious. For the
requirement of "actual use in commerce x x x in the Philippines" before one may
register a trademark, trade-name and service mark under the Trademark Law33
pertains to the territorial jurisdiction of the Philippines and is not only confined to
a certain region, province, city or barangay.
Likewise wanting in merit is the respondent͛s claim that the petitioner cannot
acquire ownership of the word "Mac" because it is a personal name which may
not be monopolized as a trademark as against others of the same name or
surname. As stated earlier, once a trademark has been registered, the validity of
the mark is prima facie presumed. In this case, the respondent failed to overcome
such presumption. We agree with the observations of the petitioner regarding the
respondent͛s explanation that the word "MACJOY" is based on the name of its
president͛s niece, Scarlett Yu Carcell. In the words of the petitioner:
First of all, Respondent failed to present evidence to support the foregoing claim
which, at best, is a mere self-serving assertion. Secondly, it cannot be denied that
there is absolutely no connection between the name "Scarlett Yu Carcel" and
"MacJoy" to merit the coinage of the latter word. Even assuming that the word
"MacJoy" was chosen as a term of endearment, fondness and affection for a
certain Scarlett Yu Carcel, allegedly the niece of Respondent͛s president, as well as
to supposedly bring good luck to Respondent͛s business, one cannot help but
wonder why out of all the possible letters or combinations of letters available to
Respondent, its president had to choose and adopt a mark with the prefix "Mac"
as the dominant feature thereof. A more plausible explanation perhaps is that the
niece of Respondent͛s president was fond of the food products and services of the
Respondent, but that is beside the point." 34
By reason of the respondent͛s implausible and insufficient explanation as to how
and why out of the many choices of words it could have used for its trade-name
and/or trademark, it chose the word "MACJOY," the only logical conclusion
deducible therefrom is that the respondent would want to ride high on the
established reputation and goodwill of the MCDONALD͛s marks, which, as applied
to petitioner͛s restaurant business and food products, is undoubtedly beyond
question.
Thus, the IPO was correct in rejecting and denying the respondent͛s application
for registration of the trademark "MACJOY & DEVICE." As this Court ruled in
Faberge Inc. v. IAC,35 citing Chuanchow Soy & Canning Co. v. Dir. of Patents and
Villapanta:36
When one applies for the registration of a trademark or label which is almost the
same or very closely resembles one already used and registered by another, the
application should be rejected and dismissed outright, even without any
opposition on the part of the owner and user of a previously registered label or
trademark, this not only to avoid confusion on the part of the public, but also to 
protect an already used and registered trademark and an established goodwill.

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed Decision
and Resolution of the Court of Appeals in CA-G.R. SP NO. 57247, are REVERSED 
and SET ASIDE and the Decision of the Intellectual Property Office in Inter Partes
Case No. 3861 is REINSTATED. 


No pronouncement as to costs.

SO ORDERED.



























(
 ))


  .  *
  ( % +(

 )( c
( NOW THEREFORE, in view of the foregoing and in consideration of the stipulations
A(
,(,
((( )-+cA  
   hereunder stated, the ASSIGNOR hereby affirms the said assignment and transfer
DECISION
MENDOZA, i.:
This is a petition for review of the decision of the Court of Appeals dismissing a
complaint for specific performance which petitioner had filed against private
respondent on the ground that the Regional Trial Court of Quezon City did not
acquire jurisdiction over private respondent, a nonresident foreign corporation,
and of the appellate court's order denying petitioner's motion for reconsideration.
The following are the facts:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and
style "Hahn-Manila." On the other hand, private respondent Bayerische Motoren
Werke Aktiengesellschaft (BMW) is a nonresident foreign corporation existing
under the laws of the former Federal Republic of Germany, with principal office at
Munich, Germany.
On March 7, 1967, petitioner executed in favor of private respondent a "Deed of
Assignment with Special Power of Attorney," which reads in full as follows:
WHEREAS, the ASSIGNOR is the present owner and holder of the BMW trademark
and device in the Philippines which ASSIGNOR uses and has been using on the
products manufactured by ASSIGNEE, and for which ASSIGNOR is the authorized
exclusive Dealer of the ASSIGNEE in the Philippines, the same being evidenced by
certificate of registration issued by the Director of Patents on 12 December 1963
and is referred to as Trademark No. 10625;
WHEREAS, the ASSIGNOR has agreed to transfer and consequently record said
transfer of the said BMW trademark and device in favor of the ASSIGNEE herein
with the Philippines Patent Office;
in favor of the ASSIGNEE under the following terms and conditions:
1. The ASSIGNEE shall take appropriate steps against any user other than
ASSIGNOR or infringer of the BMW trademark in the Philippines, for such purpose,
the ASSIGNOR shall inform the ASSIGNEE immediately of any such use or
infringement of the said trademark which comes to his knowledge and upon such
information the ASSIGNOR shall automatically act as Attorney-In-Fact of the
ASSIGNEE for such case, with full power, authority and responsibility to prosecute
unilaterally or in concert with ASSIGNEE, any such infringer of the subject mark
and for purposes hereof the ASSIGNOR is hereby named and constituted as
ASSIGNEE's Attorney-In-Fact, but any such suit without ASSIGNEE's consent will
exclusively be the responsibility and for the account of the ASSIGNOR,
2. That the ASSIGNOR and the ASSIGNEE shall continue business relations as has
been usual in the past without a formal contract, and for that purpose, the
dealership of ASSIGNOR shall cover the ASSIGNEE's complete production program
with the only limitation that, for the present, in view of ASSIGNEE's limited
production, the latter shall not be able to supply automobiles to ASSIGNOR.
Per the agreement, the parties "continue[d] business relations as has been usual
in the past without a formal contract." But on February 16, 1993, in a meeting
with a BMW representative and the president of Columbia Motors Corporation
(CMC), Jose Alvarez, petitioner was informed that BMW was arranging to grant
the exclusive dealership of BMW cars and products to CMC, which had expressed
interest in acquiring the same. On February 24, 1993, petitioner received
confirmation of the information from BMW which, in a letter, expressed
dissatisfaction with various aspects of petitioner's business, mentioning among
other things, decline in sales, deteriorating services, and inadequate showroom
and warehouse facilities, and petitioner's alleged failure to comply with the
standards for an exclusive BMW dealer. Nonetheless, BMW expressed willingness
to continue business relations with the petitioner on the basis of a "standard
BMW importer" contract, otherwise, it said, if this was not acceptable to
petitioner, BMW would have no alternative but to terminate petitioner's exclusive
dealership effective June 30, 1993.
Petitioner protested, claiming that the termination of his exclusive dealership
would be a breach of the Deed of Assignment. Hahn insisted that as long as the
assignment of its trademark and device subsisted, he remained BMW's exclusive
dealer in the Philippines because the assignment was made in consideration of
the exclusive dealership. In the same letter petitioner explained that the decline in
sales was due to lower prices offered for BMW cars in the United States and the
fact that few customers returned for repairs and servicing because of the
durability of BMW parts and the efficiency of petitioner's service.
Because of Hahn's insistence on the former business relation, BMW withdrew on
March 26, 1993 its offer of a "standard importer contract" and terminated the
exclusive dealer relationship effective June 30, 1993. At a conference of BMW
Regional Importers held on April 26, 1993 in Singapore, Hahn was surprised to
find Alvarez among those invited from the Asian region. On April 29, 1993, BMW
proposed that Hahn and CMC jointly import and distribute BMW cars and parts.
Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for
specific performance and damages against BMW to compel it to continue the
exclusive dealership. Later he filed an amended complaint to include an
application for temporary restraining order and for writs of preliminary,
mandatory and prohibitory injunction to enjoin BMW from terminating his
exclusive dealership. Hahn's amended complaint alleged in pertinent parts:
2. Defendant [BMW] is a foreign corporation doing business in the Philippines
with principal offices at Munich, Germany. It may be served with summons and
other court processes through the Secretary of the Department of Trade and
Industry of the Philippines. . . .
....
5. On March 7, 1967, Plaintiff executed in favor of defendant BMW a Deed of
Assignment with Special Power of Attorney covering the trademark and in
consideration thereof, under its first whereas clause, Plaintiff was duly
acknowledged as the "exclusive Dealer of the Assignee in the Philippines" . . . .
....
8. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in
the Philippines up to the present, Plaintiff, through its firm name "HAHN MANILA"
and without any monetary contribution from defendant BMW, established BMW's
goodwill and market presence in the Philippines. Pursuant thereto, Plaintiff has
invested a lot of money and resources in order to single-handedly compete
against other motorcycle and car companies .... Moreover, Plaintiff has built
buildings and other infrastructures such as service centers and showrooms to
maintain and promote the car and products of defendant BMW.
....
10. In a letter dated February 24, 1993, defendant BMW advised Plaintiff that it
was willing to maintain with Plaintiff a relationship but only "on the basis of a
standard BMW importer contract as adjusted to reflect the particular situation in
the Philippines" subject to certain conditions, otherwise, defendant BMW would
terminate Plaintiff's exclusive dealership and any relationship for cause effective
June 30, 1993. . . .
....
15. The actuations of defendant BMW are in breach of the assignment agreement
between itself and plaintiff since the consideration for the assignment of the
BMW trademark is the continuance of the exclusive dealership agreement. It thus,
follows that the exclusive dealership should continue for so long as defendant
BMW enjoys the use and ownership of the trademark assigned to it by Plaintiff.
The case was docketed as Civil Case No. Q-93-15933 and raffled to Branch 104 of
the Quezon City Regional Trial Court, which on June 14, 1993 issued a temporary
restraining order. Summons and copies of the complaint and amended complaint
were thereafter served on the private respondent through the Department of
Trade and Industry, pursuant to Rule 14, § 14 of the Rules of Court. The order,
summons and copies of the complaint and amended complaint were later sent by
the DTI to BMW via registered mail on June 15, 1993 and received by the latter on
June 24, 1993.
On June 17, 1993, without proof of service on BMW, the hearing on the
application for the writ of preliminary injunction proceeded 
  with
 petitioner Hahn testifying. On June 30, 1993, the trial court issued an order
granting the writ of preliminary injunction upon the filing of a bond of
P100,000.00. On July 13, 1993, following the posting of the required bond, a writ
.
of preliminary injunction was issued.
On July 1, 1993, BMW moved to dismiss the case, contending that the trial court
did not acquire jurisdiction over it through the service of summons on the
Department of Trade and Industry, because it (BMW) was a foreign corporation
and it was not doing business in the Philippines. It contended that the execution
of the Deed of Assignment was an isolated transaction; that Hahn was not its
agent because the latter undertook to assemble and sell BMW cars and products
without the participation of BMW and sold other products; and that Hahn was an
indentor or middleman transacting business in his own name and for his own
account.
Petitioner Alfred Hahn opposed the motion. He argued that BMW was doing
business in the Philippines through him as its agent, as shown by the fact that
BMW invoices and order forms were used to document his transactions; that he
gave warranties as exclusive BMW dealer; that BMW officials periodically
inspected standards of service rendered by him; and that he was described in
service booklets and international publications of BMW as a "BMW Importer" or
"BMW Trading Company" in the Philippines.
The trial court deferred resolution of the Motion to dismiss until after trial on the
merits for the reason that the grounds advanced by BMW in its motion did not
seem to be indubitable.
Without seeking reconsideration of the aforementioned order, BMW filed a
petition for ‘
  with the Court of Appeals alleging that:
I. THE RESPONDENT JUDGE ACTED WITH UNDUE HASTE OR OTHERWISE
INJUDICIOUSLY IN PROCEEDINGS LEADING TOWARD THE ISSUANCE OF THE WRIT
OF PRELIMINARY INJUNCTION, AND IN PRESCRIBING THE TERMS FOR THE
ISSUANCE THEREOF.
II. THE RESPONDENT JUDGE PATENTLY ERRED IN DEFERRING RESOLUTION OF THE
MOTION TO DISMISS ON THE GROUND OF LACK OF JURISDICTION, AND THEREBY
FAILING TO IMMEDIATELY DISMISS THE CASE 
BMW asked for the immediate issuance of a temporary restraining order and,
after hearing, for a writ of preliminary injunction, to enjoin the trial court from
proceeding further in Civil Case No. Q-93-15933. Private respondent pointed out
that, unless the trial court's order was set aside, it would be forced to submit to
the jurisdiction of the court by filing its answer or to accept judgment in default,
when the very question was whether the court had jurisdiction over it.
The Court of Appeals enjoined the trial court from hearing petitioner's complaint.
On December 20, 1993, it rendered judgment finding the trial court guilty of grave
abuse of discretion in deferring resolution of the motion to dismiss. It stated:
Going by the pleadings already filed with the respondent court before it came out
with its questioned order of July 26, 1993, we rule and so hold that petitioner's
(BMW) motion to dismiss could be resolved then and there, and that the
respondent judge's deferment of his action thereon until after trial on the merit
constitutes, to our mind, grave abuse of discretion.
....
. . . [T]here is not much appreciable disagreement as regards the factual matters
relating, to the motion to dismiss. What truly divide (sic) the parties and to which
they greatly differ is the legal conclusions they respectively draw from such facts,
(sic) with Hahn maintaining that on the basis thereof, BMW is doing business in
the Philippines while the latter asserts that it is not.
Then, after stating that any ruling which the trial court might make on the motion
to dismiss would anyway be elevated to it on appeal, the Court of Appeals itself
resolved the motion. It ruled that BMW was not doing business in the country
and, therefore, jurisdiction over it could not be acquired through service of
summons on the DTI pursuant to Rule 14, Section 14. The court upheld private
respondent's contention that Hahn acted in his own name and for his own
account and independently of BMW, based on Alfred Hahn's allegations that he
had invested his own money and resources in establishing BMW's goodwill in the
Philippines and on BMW's claim that Hahn sold products other than those of
BMW. It held that petitioner was a mere indentor or broker and not an agent
through whom private respondent BMW transacted business in the Philippines.
Consequently, the Court of Appeals dismissed petitioner's complaint against
BMW.
Hence, this appeal. Petitioner contends that the Court of Appeals erred (1) in
finding that the trial court gravely abused its discretion in deferring action on the
motion to dismiss and (2) in finding that private respondent BMW is not doing
business in the Philippines and, for this reason, dismissing petitioner's case.
Petitioner's appeal is well taken. Rule 14, § 14 provides:
§14. ?‘




‘

 
 Ͷ If the defendant is a foreign (1).... A foreign firm which does business through middlemen acting in their own
corporation, or a nonresident joint stock company or association, $%."$%
$%  $$##$%, service may be made on its resident agent designated in
accordance with law for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on any of its officers or
agents within the Philippines. (Emphasis added)
What acts are considered "doing business in the Philippines" are enumerated in
§3(d) of the Foreign Investments Act of 1991 (R.A. No. 7042) as follows:
d) the phrase "doing business" shall include soliciting orders, service contracts,
opening offices, whether called "liaison" offices or branches, ##$%$%.
#%$/  $$" $ $ $%  $$##$% or who in any
calendar year stay in the country for a period or periods totalling one hundred
eighty (180) days or more; participating in the management, supervision or
control of any domestic business, firm, entity or corporation in the Philippines;
% %&        $#&  %$%$&   $ $%. 
%.%% %#0%#%  !
0 $% $%%&$% $%%$%#.$/
# $%   $ .$%    ## % "1    "$%
.%$2$% Provided, however, That the phrase 3$%."$%3 % "
  $%  mere investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business, and/or the exercise of rights
as such investor; nor having, a nominee director or officer to represent its
interests in such corporation; % ##$%$%.  #%$/  $$"
$ $$%$$##$%$ % "$%$%$%%%$
% %'(Emphasis supplied)
Thus, the phrase includes "appointing representatives or distributors in the
Philippines" but not when the representative or distributor "transacts business in
its name and for its own account." In addition, Section 1(f)(1) of the Rules and
Regulations implementing (IRR) the Omnibus Investment Code of 1987 (E.O. No.
226) provided:
(f) "Doing business" shall be any act or combination of acts, enumerated in Article
44 of the Code. In particular, "doing business" includes:
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.
The question is whether petitioner Alfred Hahn is the agent or distributor in the
Philippines of private respondent BMW. If he is, BMW may be considered doing
business in the Philippines and the trial court acquired jurisdiction over it (BMW)
by virtue of the service of summons on the Department of Trade and Industry.
Otherwise, if Hahn is not the agent of BMW but an independent dealer, albeit of
BMW cars and products, BMW, a foreign corporation, is not considered doing
business in the Philippines within the meaning of the Foreign Investments Act of
1991 and the IRR, and the trial court did not acquire jurisdiction over it (BMW).
The Court of Appeals held that petitioner Alfred Hahn acted in his own name and
for his own account and not as agent or distributor in the Philippines of BMW on
the ground that "he alone had contacts with individuals or entities interested in
acquiring BMW vehicles. Independence characterizes Hahn's undertakings, for
which reason he is to be considered, under governing statutes, as doing business."
(p. 13) In support of this conclusion, the appellate court cited the following
allegations in Hahn's amended complaint:
8. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in
the Philippines up to the present, Plaintiff, through its firm name "HAHN MANILA"
and without any monetary contributions from defendant BMW; established
BMW's goodwill and market presence in the Philippines. Pursuant thereto,
Plaintiff invested a lot of money and resources in order to single-handedly
compete against other motorcycle and car companies.... Moreover, Plaintiff has
built buildings and other infrastructures such as service centers and showrooms to
maintain and promote the car and products of defendant BMW.
As the above quoted allegations of the amended complaint show, however, there
is nothing to support the appellate court's finding that Hahn solicited orders alone
and for his own account and without "interference from, let alone direction of,
BMW." (p. 13) To the contrary, Hahn claimed he took orders for BMW cars and
transmitted them to BMW. Upon receipt of the orders, BMW fixed the down
payment and pricing charges, notified Hahn of the scheduled production month
for the orders, and reconfirmed the orders by signing and returning to Hahn the
acceptance sheets. Payment was made by the buyer directly to BMW. Title to cars
purchased passed directly to the buyer and Hahn never paid for the purchase
price of BMW cars sold in the Philippines. Hahn was credited with a commission
equal to 14% of the purchase price upon the invoicing of a vehicle order by BMW.
Upon confirmation in writing that the vehicles had been registered in the
Philippines and serviced by him, Hahn received an additional 3% of the full
purchase price. Hahn performed after-sale services, including, warranty services,
for which he received reimbursement from BMW. All orders were on invoices and
forms of BMW.
These allegations were substantially admitted by BMW which, in its petition for
‘
  before the Court of Appeals, stated: example, in its letter to Hahn dated February 23, 1996, BMW stated:
9.4. As soon as the vehicles are fully manufactured and full payment of the
purchase prices are made, the vehicles are shipped to the Philippines. (The
payments may be made by the purchasers or third-persons or even by Hahn.) The
bills of lading are made up in the name of the purchasers, but Hahn-Manila is
therein indicated as the person to be notified.
9.5. It is Hahn who picks up the vehicles from the Philippine ports, for purposes of
conducting pre-delivery inspections. Thereafter, he delivers the vehicles to the
purchasers.
9.6. As soon as BMW invoices the vehicle ordered, Hahn is credited with a
commission of fourteen percent (14%) of the full purchase price thereof, and as
soon as he confirms in writing, that the vehicles have been registered in the
Philippines and have been serviced by him, he will receive an additional three
percent (3%) of the full purchase prices as commission.
Contrary to the appellate court's conclusion, this arrangement shows an agency.
An agent receives a commission upon the successful conclusion of a sale. On the
other hand, a broker earns his pay merely by bringing the buyer and the seller
together, even if no sale is eventually made.
As to the service centers and showrooms which he said he had put up at his own
expense, Hahn said that he had to follow BMW specifications as exclusive dealer
of BMW in the Philippines. According to Hahn, BMW periodically inspected the
service centers to see to it that BMW standards were maintained. Indeed, it
would seem from BMW's letter to Hahn that it was for Hahn's alleged failure to
maintain BMW standards that BMW was terminating Hahn's dealership.
The fact that Hahn invested his own money to put up these service centers and
showrooms does not necessarily prove that he is not an agent of BMW. For as
already noted, there are facts in the record which suggest that BMW exercised
control over Hahn's activities as a dealer and made regular inspections of Hahn's
premises to enforce compliance with BMW standards and specifications. For
In the last years we have pointed out to you in several discussions and letters that
we have to tackle the Philippine market more professionally and that we are
through your present activities not adequately prepared to cope with the
forthcoming challenges.
In effect, BMW was holding Hahn accountable to it under the 1967 Agreement.
This case fits into the mould of m
‘ 

  
‘

m


motion is based does not appear to be indubitable. Here the record of the case
 , in which the foreign corporation entered into a "Representative
Agreement" and a "Licensing Agreement" with a domestic corporation, by virtue
of which the latter was appointed "exclusive representative" in the Philippines for
a stipulated commission. Pursuant to these contracts, the domestic corporation
sold products exported by the foreign corporation and put up a service center for
the products sold locally. This Court held that these acts constituted doing
business in the Philippines. The arrangement showed that the foreign
corporation's purpose was to penetrate the Philippine market and establish its
presence in the Philippines.
In addition, BMW held out private respondent Hahn as its exclusive distributor in
the Philippines, even as it announced in the Asian region that Hahn was the
"official BMW agent" in the Philippines.
The Court of Appeals also found that petitioner Alfred Hahn dealt in other
products, and not exclusively in BMW products, and, on this basis, ruled that Hahn
was not an agent of BMW. (p. 14) This finding is based entirely on allegations of
BMW in its motion to dismiss filed in the trial court and in its petition for ‘
  of the court over its person is now to be deemed a foreclosed matter. If it is true,
before the Court of Appeals. But this allegation was denied by Hahn and therefore
the Court of Appeals should not have cited it as if it were the fact.
Indeed this is not the only factual issue raised, which should have indicated to the
Court of Appeals the necessity of affirming the trial court's order deferring
resolution of BMW's motion to dismiss. Petitioner alleged that whether or not he
is considered an agent of BMW, the fact is that BMW did business in the
Philippines because it sold cars directly to Philippine buyers. This was denied by
BMW, which claimed that Hahn was not its agent and that, while it was true that
it had sold cars to Philippine buyers, this was done without solicitation on its part.
It is not true then that the question whether BMW is doing business could have
been resolved simply by considering the parties' pleadings. There are genuine
issues of facts which can only be determined on the basis of evidence duly
presented. BMW cannot short circuit the process on the plea that to compel it to
go to trial would be to deny its right not to submit to the jurisdiction of the trial
court which precisely it denies. Rule 16, §3 authorizes courts to defer the
resolution of a motion to dismiss until after the trial if the ground on which the
bristles with factual issues and it is not at all clear whether some allegations
correspond to the proof.
Anyway, private respondent need not apprehend that by responding to the
summons it would be waiving its objection to the trial court's jurisdiction. It is now
settled that. for purposes of having summons served on a foreign corporation in
accordance with Rule 14, §14, it is sufficient that it be alleged in the complaint
that the foreign corporation is doing business in the Philippines. The court need
not go beyond the allegations of the complaint in order to determine whether it
has jurisdiction. A determination that the foreign corporation is doing business is
only tentative and is made only for the purpose of enabling the local court to
acquire jurisdiction over the foreign corporation through service of summons
pursuant to Rule 14, §14. Such determination does not foreclose a contrary
finding should evidence later show that it is not transacting business in the
country. As this Court has explained:
This is not to say, however, that the petitioner's right to question the jurisdiction
as Signetics claims, that its only involvement in the Philippines was through a
passive investment in Sigfil, which it even later disposed of, and that TEAM Pacific
is not its agent, then it cannot really be said to be doing business in the
Philippines. It is a defense, however, that requires the contravention of the
allegations of the complaint, as well as a full ventilation, in effect, of the main
merits of the case, which should not thus be within the province of a mere motion
to dismiss. So, also, the issue posed by the petitioner as to whether a foreign
corporation which has done business in the country, but which has ceased to do
business at the time of the filing, of a complaint, can still be made to answer for a
cause of action which accrued while it was doing, business, is another matter that
would yet have to await the reception and admission of evidence. Since these
points have seasonably been raised by the petitioner, there should be no real
cause for what may understandably be its apprehension, i.e., that by its
participation during the trial on the merits, it may, absent an invocation of
separate or independent reliefs of its own, be considered to have voluntarily
submitted itself to the court's jurisdiction.
Far from committing an abuse of discretion, the trial court properly deferred
resolution of the motion to dismiss and thus avoided prematurely deciding a
question which requires a factual basis, with the same result if it had denied the
motion and conditionally assumed jurisdiction. It is the Court of Appeals which, by
ruling that BMW is not doing business on the basis merely of uncertain allegations
in the pleadings, disposed of the whole case with finality and thereby deprived
petitioner of his right to be heard on his cause of action. Nor was there
justification for nullifying the writ of preliminary injunction issued by the trial
court. Although the injunction was issued 
 , the fact is that BMW was
subsequently heard on its defense by filing a motion to dismiss.

A)(
(
(, the decision of the Court of Appeals is REVERSED and the case is
REMANDED to the trial court for further proceedings.

SO ORDERED.
 c*('c(

(
4' *
(
A

 That for valuable consideration, I hereby grant unto WILFRO P. LUMINLUN,
*c
*
(
(' Filipino, of legal age and with business address at No. 959 Soler Street, Binondo,
 Manila, a non-transferable, non- assignable, non-exclusive right and license to use

( 

 said trademark OTTO for jeans only. This authority shall remain valid and existing
for as long as I remain the owner of the trademark OTTO unless said WILFRO P.


' LUMINLUN should do or cause to be done any act which in any way prejudice or
discredit the trademark OTTO not only in connection with its use for jeans but as
  well as for other products enumerated in my registration certificates/application
documents.
[1]
This is a petition for review of the Decision dated 6 September 1999 of the Court
of Appeals in CA-G.R. CV No. 31904 reversing the Decision[2] dated 15 May 1990 IN WITNESS WHEREOF, I have hereunto affixed my signature this 29th day of
and the Order dated 7 December 1990 of the Regional Trial Court, Branch 160, December, 1983.
Pasig City in Civil Case No. 58052.
SGD. MANUEL P. SAMSON
% %  On 19 March 1984, the Philippine Patent Office issued to Samson a Certificate of
Registration for the mark "OTTO" in the principal register for use on belts, bags, t-
On 26 February 1982, petitioner Manuel P. Samson (Samson) applied for the shirts, blouses, briefs, pants, jackets, jeans, and bra.
registration of the "OTTO" trademark with the Philippine Patent Office on belts,
bags, t-shirts, blouses, briefs, pants, jackets, jeans, and bra. On 21 January 1983, [4]
In a letter dated 29 March 1989, Samson, through counsel, informed Luminlun
respondent Wilfro Luminlun (Luminlun) likewise filed fo the registration of the that he was revoking the latter's authority to use the trademark "OTTO." Samson
"OTTO" trademark on jeans, sportswear, skirts, and socks. advised Luminlun to "cease and desist from further manufacturing and
[3] distributing OTTO jeans" otherwise he would confiscate jeans using the
On 29 December 1983, Samson executed the following document granting unauthorized "OTTO" trademark. Samson likewise demanded the payment of
Luminlun the authority to use the "OTTO" trademark for jeans only: royalties, thus:
Dear Mr. Luminlun:
*)

*(

(c
,
On behalf of my client, Mr. Manuel P. Samson, this is to demand that you CEASE
KNOW ALL MEN BY THESE PRESENTS: and DESIST from further manufacturing and distributing OTTO jeans effective as of
receipt of this notice considering that my aforesaid client had already revoked the
I, MANUEL P. SAMSON, Filipino, of legal age and a resident of Doña Betang
authority granted to you for the use of the trademark `OTTO' in jeans. A copy of
Subdivision, Santolan, Metro Manila, am the registered owner of the trademark
the Revocation of Authority To Use Trademark filed in the Patent Office on March
OTTO for bags, shoes, sandals and slippers under Registration Certificate No.
21, 1989 is attached.
29840 issued on September 29, 1981, and the applicant in Application hearing
Serial No. 47626 for the same trademark OTTO filed on February 26, 1982 for Further, you have to account for the sale of OTTO jeans beginning January 1984
belts, bags, t-shirts, blouses, briefs, pants, jackets, jeans and bras, which up to March 1989 as we will get a percentage thereof for the royalty due to my
application was duly approved for publication in the Official Gazette last
client of not less than P5,000,000.00 for your use of said trademark for more than
November 18, 1982;
five (5) years.
 
$%.$ 
Kindly give us the name and address of your sales outlet in order that they maybe
properly appraised (sic) of this development. In its Decision dated 15 May 1990, the trial court dismissed Luminlun's complaint.
The dispositive portion of the decision reads:
Should you fail to heed this advice, we will be constrained to file an action for
damages and we will pray for issuance of injunction against you and for the WHEREFORE, foregoing considered, the complaint is ordered DISMISSED. With
confiscation and removal of jeans with the use of an unauthorized trademark costs against plaintiff.
`OTTO'.
The writ of preliminary injunction earlier issued by the Court is set aside and
I trust for your compliance within five (5) days from receipt hereof to obviate recalled.
being embroiled in a costly and cumbersome litigation.
On the counterclaim, plaintiff is ordered to pay defendant attorney's fees of
Very truly yours, P25,000.00.
[6]
SGD. NELSON Y. NG SO ORDERED.
Samson also filed with the Philippine Patent Office a Revocation of Authority to The trial court ruled that Samson was justified in revoking the authority of
Use Trademark.[5] Luminlun to use the trademark. The trial court found that Luminlun's acts of
manufacturing and selling products bearing the trademark "OTTO LTD." like skirts,
As a result, Luminlun filed a complaint before the Regional Trial Court, Pasig City shorts, pants, jeans, as as well as products with the trademark "OTTO" like belts,
questioning the validity of Samson's revocation of his authority to use the "OTTO" buttons, and bags, clearly violated the authority granted by Samson to use the
trademark. Luminlun likewise prayed that he be compensated for the loss of sales "OTTO" trademark for jeans only. The trial court, however, ruled that Samson
he suffered since the sales outlets refused to accept his deliveries for fear that the failed to prove that he was entitled to royalties.
goods would be confiscated and removed from their stores.
Upon motion for reconsideration of both parties, the trial court in an Order dated
[7]
On 10 April 1989, the trial court issued an Order restraining Samson from 7 December 1990 affirmed its decision with the modification of an award of
"proceeding and carrying out the confiscation and the removal of jeans with moral damages of P20,000 in favor of Samson.
trademark `OTTO' pending hearing on the petition for preliminary injunction." On
19 April 1989, Samson filed an "Opposition to Motion for Issuance of preliminary
$%. ##
injunction and/or Motion to Lift Restraining Order."
After presentation of evidence and submission of memoranda by both parties, on
28 April 1989, the trial court issued an Order granting Luminlun's prayer for
preliminary injunction.
On 9 May 1989, Samson filed his Answer. Samson raised, among others, the
defenses that: (1) Luminlun failed to pay royalties for the use of the trademark;
and (2) Luminlun violated the terms and conditions of the Authority to Use
Trademark when he used the "OTTO" trademark for other products.

On appeal, the Court of Appeals reversed the ruling of the trial court. The
appellate court found that Samson revoked the authority on the sole ground that
Luminlun failed to pay royalties. According to the appellate court, Samson could
not validly revoke the authority based on this ground since he failed to prove that
royalties were due him. The appellate court further ruled that Luminlun suffered
losses as a result of the revocation and thus awarded damages. The dispositive
portion of the Court of Appeals' decision reads:
WHEREFORE, judgment is hereby rendered setting aside the decision appealed x x x
% ##5 ##$$%c$% 
%  $$%&
%1% $%
from and a new one issue making the injunction permanent and ordering appellee %6c$%$
$%$%.#$787989-#':;
  $
to pay appellant the following sums of money: $ &    /!  $&  * ! %  
.%##%$#&&&0, thus:
a) actual and compensatory damages in the amount of P2,257,872.20.
"x x x. When plaintiff unjustly and illegally failed, refused and neglected and still
b) attorney's fees in the amount of P50,000.00. fails, refuse, and neglects to pay royalty tax, defendant revoked the grant of
authority and the same was filed with the Patent Office on March 21, 1989, a copy
Costs against appellee. of which was served on plaintiff and received by him contained in a letter dated
March 29, 1989. (at page 3 of Opposition)
[8]
SO ORDERED.

 x x x x x x x x x

Thus, in this petition, Samson raises the following assignment of errors:[9] "It is defendant who is entitled to the issuance of injunction to restrain plantiff
from further manufacturing and distributing OTTO jeans #$%$5$&
(a) The Court of Appeals erred in concluding that the revocation of the Authority "%/!$ #&$$"$.$%#&&&0
to Use Trademark made by Samson was unjustified; %%."
As correctly pointed out by appellant, the issue that appellee had been allegedly
(b) The Court of Appeals erred in awarding actual or compensatory damages of affected and his products allegedly discredited by appellant's use of the
P2,257,872.20 in spite of the total absence of evidence to show that Luminlun trademark OTTO and OTTO Ltd. was but a belated attempt on the part of the
sustained such damages as a consequence of the revocation of the Authority to appellee to justify his illegal act of revoking the Authority to Use Trademark issued
Use Trademark; to the appellant. It was only after realizing the weakness of his sole ground for
revoking the authority that he raised said issue.
(c) The Court of Appeals erred in awarding attorney's fees of P50,000 in spite of
the absence of any legal ground for such award; and  $ /$%  % ## 0  
/ $%  $&  *
!%c <87989% % %$##%5
d) The Court of Appeals erred in not sustaining the trial court's award of moral !'%##%5# %!%"
damages and attorney's fees in favor of Samson. % "% "    % #1$  %
$#'Otherwise, he could have mentioned the same in the Revocation and in
 5
$%. the demand letter dated March 29, 1989 of his counsel, Atty Nelson Y. Ng [10]
(Emphasis supplied)
The resolution of this case hinges on whether Samson was justified in revoking We disagree with the appellate court's ruling.
Luminlun's authority to use the "OTTO" trademark.
The authority granted to Luminlun to use the "OTTO" trademark was limited for
We rule in the affirmative. use on jeans only. Under the agreement, Samson could revoke the authority if
Luminlun "should do or cause to be done any act which would in any way
In finding for respondent Luminlun, the appellate court rationalized: prejudice or discredit the trademark OTTO %%&$% %% $%$$
1% "      # 3 enumerated in Samson's registration
certificates. Injunction and/or Motion to Lift Restraining Order."

As correctly found by the trial court, Luminlun manufactured "OTTO" belts, We find such reasoning flawed.
buttons, and bags as well as "OTTO LTD." clothing in violation of the terms and
conditions of the authority which affected Samson and discredited his products, The records reveal that Samson, in his Answer, raised, among others, the
thus: affirmative defense that he had the right to revoke the Authority to Use
Trademark because Luminlun manufactured other "OTTO" products aside from
% %$ $%%%"% %$ jeans:
# $ $"&#$%$5!33%
'3%
 #  $  1%' $%$ $ % $%. % $%. Defendant had every right and prerogative to revoke the authority granted to
#  "$%.  ! 3 
'3 $! !$  #% 1%= plaintiff on the use of the trademark for "OTTO" for jeans only when plaintiff
#$%$% %# $!33$!
""%%".' (Exh. "3"; also pp. 67, 68, 69, 91, rec.) The authority given
to plaintiff was a non-transferable, non-assignable, non-exclusive right and license
to use said trademark "OTTO" for jeans only x x x". (Underlining supplied) Clearly,
plaintiff failed to comply with the terms and conditions enumerated in the
agreement. Plaintiff had the option to use the trademark "OTTO" but he had done
acts constituting bad faith, necessarily discrediting the interest of defendant on
his products which were duly registered with the Philippine Patent Office, such as:
Exh. "6," photograph of over all with trademark "OTTO"; Exh. "7", issue of
Panorama Magazine; Exh. "7-A", trousers with "OTTO LTD.", Exh. "8", t-shirt with
brand "OTTO [LTD.]"; Exh. "14", pants bearing "OTTO [LTD.]", Exh. "14-A" Exh.
"14-B"; belt and pant with "OTTO LTD." "OTTO"; Exh. "15" Cash invoice, pants
"OTTO"; Exh. "17"- .", jeans classic with trademark "OTTO".
Defendant therefore was justified when he served notice of revocation of the
authority of
plaintiff to use the trademark.[11] (Emphasis supplied)
Under the circumstances and in accordance with the terms and conditions of the
Authority to Use Trademark, we find that Samson was justified in revoking
Luminlun's authority to use the "OTTO" trademark.
However, the appellate court chose to ignore Luminlun's glaring violation of the
terms and conditions of the Authority. The appellate court instead resorted to
hair-splitting and ruled that Samson could not justify the revocation since he did
not raise this ground in his "Opposition to Motion for Issuance of Preliminary
failed to pay a single centavo of royalty and  $!$ /$  .% 
$& "& $.& % $%. % $$"$%. $  1% 
# $!1 !!$$"%$ % /"&
.%$&.%$' [12] (Emphasis supplied)
We find that Samson seasonably raised this defense and we do not see any basis
for the apellate court's ruling that Samson could not invoke this ground.
The appellate court further makes issue of the fact that Samson did not mention
in both the Revocation of Authority to Use Trademark and his demand letter
dated 29 March 1989 that Luminlun's manufacture of other "OTTO" products such
as belts and buttons was prejudicial to him and was the cause for the revocation.
We note that the Revocation of Authority simply mentioned that "it was
Luminlun's failure to comply with his undertaking when the authority was
executed as the reason for the revocation." The fact that Samson did not indicate
the specific reason for the revocation is of no moment and should not be taken
against him. Thus, we find no basis for the appellate court's conclusion that when
Samson executed the Revocation of Authority he was not concerned with
Luminlun's use of the "OTTO" trademark on other products because there was no
prejudice on his part. Samson was affected and his products discredited by
Luminlun's unauthorized manufacture of other "OTTO" products. Thus, in its
Order resolving the Motions for Reconsideration filed by the parties, the trial
court stated:
x x x it is not denied defendant was given the authority by the Patent Office and
has been the registered owner of the trademark "OTTO" under principal register
no. 33064 and 29840 and supplemental register 7390 and 4166. The license was
issued to the defendant for the protection of his rights as a registered owner of
the trademark in order to identify the lawful user. It was intended to protect the
public to be deceived of the use of the products.

On the issue of the violation of the conditions involving the claim of royalty, the
Court said that defendant has been affected and his products discredited by the
plaintiff's use of trademark "OTTO" and "OTTO LTD," on other products. $%$
$% $%.%$%.# $!%
!$#%%1%'+$/$% #$%$'
$&#$%$!331%/!
/$$%.%'[13] (Emphasis supplied)
Considering that Samson was justified in revoking the authority of Luminlun to use
the "OTTO" trademark, it necessarily follows that the damages awarded by the
appellate court in favor of Luminlun have no basis.

A)(
(
(, we 
 the Petition. We ( 
( the assailed Decision and
Resolution of the Court of Appealsand
( ( the 15 May 1990 Decision and
the 7 December 1990 Order of the Regional Trial Court, Branch 160, Pasig City.



(
(
.
()A

 

(

6
+(
>?@

(
 '(

(
4' BURGERâΦR in its restaurant in Pasig City.[7] Hence, respondent filed a complaint

AA* +*
(

 '
(
(' for violation of intellectual property rights.


( 

 In their answer with counterclaim, petitioners alleged that respondent lack the
legal capacity to sue because it was not doing business in the Philippines and that

(A
' it has no cause of action because its mark is not registered or used in the
[1]
This petition for review assails the Decision of the Court of Appeals in CA-G.R. SP
No. 88004 dated October 21, 2005, which affirmed the December 7, 2004 Order[2]
of Director General Emma C. Francisco of the Intellectual Property Office (IPO), in
Appeal No. 14-2004-0004 finding that petitionersâΦΡ appeal was filed out of time,
as well as the Resolution[3] dated January 12, 2006 denying the motion for
reconsideration.
‘ 


m



.[8]
Respondent IN-N-OUT Burger, Inc., a foreign corporation organized under the
laws of California, U.S.A., and not doing business in the Philippines, filed before
the Bureau of Legal Affairs of the IPO (BLA-IPO), an administrative complaint
against petitioners Sehwani, Inc. and BenitaâΦΡs Frites, Inc. for violation of
intellectual property rights, attorneyâΦΡs fees and damages with prayer for the
issuance of a restraining order or writ of preliminary injunction.[4]
Respondent alleged that it is the owner of the tradename âΦœIN-N-OUTâΦR and
trademarks âΦœIN-N-OUT,âΦR âΦœIN-N-OUT Burger & Arrow DesignâΦR and
âΦœIN-N-OUT Burger Logo,âΦR which are used in its business since 1948 up to
the present. These tradename and trademarks were registered in the United
States as well as in other parts of the world.[5]
On June 2, 1997, respondent applied with the IPO for the registration of its
trademark âΦœIN-N-OUT Burger & Arrow DesignâΦR and servicemark âΦœIN-N-
OUT.âΦR In the course of its application, respondent discovered that petitioner
Sehwani, Inc. had obtained Trademark Registration No. 56666 for the mark âΦœIN
N OUTâΦR (THE INSIDE OF THE LETTER âΦœOâΦR FORMED LIKE A STAR) on
December 17, 1993 without its authority.[6] Respondent thus demanded that
petitioner Sehwani, Inc. desist from claiming ownership of the mark âΦœIN-N-
OUTâΦR and to voluntarily cancel its Trademark Registration No. 56666.
Petitioner Sehwani, Inc. however refused to accede to the demand and even
entered into a Licensing Agreement granting its co-petitioner BenitaâΦΡs Frites,
Inc. license to use for a period of five years the trademark âΦœIN-N-OUT
Philippines. Petitioner Sehwani, Inc. also claimed that as the registered owner of
the âΦœIN-N-OUTâΦR mark, it enjoys the presumption that the same was validly
acquired and that it has the exclusive right to use the mark. Moreover,
petitioners argued that other than the bare allegation of fraud in the registration
of the mark, respondent failed to show the existence of any of the grounds for
cancellation thereof under Section 151 of Republic Act (R.A.) No. 8293, otherwise
known as à
On December 22, 2003, Bureau Director Estrellita Beltran-Abelardo rendered
Decision No. 2003-02 finding that respondent has the legal capacity to sue and
that it is the owner of the internationally well-known trademarks; however, she
held that petitioners are not guilty of unfair competition, thus:
With the foregoing disquisition, Certificate of Registration No. 56666 dated 17
December 1993 for the mark âΦœIN-N-OUT (the inside of the letter âΦœOâΦR
formed like a star) issued in favor of Sehwani, Incorporated is hereby CANCELLED.
Consequently, Respondents Sehwani, Inc. and BenitaâΦΡs Frites are hereby
ordered to permanently cease and desist from using the mark âΦœIN-N-OUTâΦR
and âΦœIN-N-OUT BURGER LOGOâΦR on its goods and in its business. With
regard to mark âΦœDouble-DoubleâΦR, considering that as earlier discussed, the
mark has been approved by this Office for publication and that as shown by the
evidence, Complainant is the owner of the said mark, Respondents are also
ordered to permanently cease and desist from using the mark Double-Double. NO
COSTS.
SO ORDERED.[9]
Petitioners filed a motion for reconsideration[10] insisting that respondent has no
legal capacity to sue, that no ground for cancellation was duly proven, and that
the action is barred by  ‘; while respondent moved for partial
[11]
reconsideration assailing the finding that petitioners are not guilty of unfair
competition. Both, however, were denied in Resolution No. 2004-18 dated
October 28, 2004[12] and Resolution No. 2005-05 dated April 25, 2005,
[13]
respectively.

On separate dates, the parties appealed to the Office of the Director General
which rendered an Order dated December 7, 2004,[14] in Appeal No. 14-2004-
0004, dismissing petitionersâΦΡ appeal for being filed out of time, thus:
WHEREFORE, premises considered, the MOTION TO ADMIT COPY OF DECISION
NO. 2003-02 is hereby granted. The instant appeal, however, is hereby
[15]
DISMISSED for having been filed out of time.
Aggrieved, petitioners filed a petition before the Court of Appeals which was
dismissed for lack of merit. It held that the right to appeal is not a natural right or
a part of due process, but a procedural remedy of statutory origin, hence, its
requirements must be strictly complied with. The appeal being filed out of time,
the December 22, 2003 Decision and the October 28, 2004 Orders of Bureau
[16]
Director Beltran-Abelardo are now final and executory.
Meanwhile, respondent filed a Manifestation with the Court of Appeals that on
December 23, 2005, Director General Adrian S. Cristobal, Jr. had rendered a
Decision in Appeal 10-05-01 finding petitioners guilty of unfair competition.[17]
PetitionersâΦΡ motion for reconsideration was denied; hence, the instant petition
raising the following issues:
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN UPHOLDING THE IPO
DIRECTOR GENERALâΦΡS DISMISSAL OF APPEAL NO. 14-2004-0004 ON A MERE
TECHNICALITY.
SUBSTANTIAL JUSTICE WOULD BE BETTER SERVED IF THE COURT OF APPEALS AND
THE IPO DIRECTOR GENERAL ENTERTAINED PETITIONERS APPEAL AS THE BUREAU
OF LEGAL AFFAIRâΦΡS DECISION AND RESOLUTION (1) CANCELING PETITIONER
SEHWANIâΦΡS CERTIFICATE OF REGISTRATION FOR THE MARK âΦœIN-N-OUT,âΦR
AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM
USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS ARE CONTRARY TO LAW
AND/OR NOT SUPPORTED BY EVIDENCE.[18]
Petitioners contend that the Court of Appeals erred when it dismissed the petition
on mere technicality which resulted in a miscarriage of justice and deprivation of
intellectual property rights. They claim that their counsel believed in good faith
that Resolution No. 2004-18 dated October 28, 2004, denying the motion for
reconsideration, was received only on November 3, 2004, thus, they have until
November 18, 2004 within which to file an appeal memorandum with the Office
of the Director General. They claim that they should not be prejudiced by their
counselâΦΡs mistake in computing the period to appeal; besides, the same is
understandable and excusable as their counsel is a solo practitioner with only a
handful of non-legal staff assisting him. They also reiterate their position that
respondent has no legal capacity to sue, that no ground for cancellation was duly
proven, and that the complaint is barred by  ‘, if not, by prescription.[19]
The petition has no merit.
The Court has invariably ruled that perfection of an appeal within the statutory or
reglementary period is not only mandatory but also jurisdictional; failure to do so
renders the questioned decision/final order final and executory, and deprives the
appellate court of jurisdiction to alter the judgment or final order, much less to
[20]
entertain the appeal. True, this rule had been relaxed but only in highly
meritorious cases to prevent a grave injustice from being done.[21] Such does not
obtain in this case.
Director General Francisco, as affirmed by the Court of Appeals, correctly held:
[T]hat the appeal must be dismissed outright. Section 2 of the Uniform Rules on
Appeal (Office Order no. 12, s. 2002) states that:
Section 2. Appeal to the Director General. âΦ͞ The decisions or final orders of the
Bureau Director shall become final and executory thirty (30) days after receipt of a
copy thereof by the appellant or appellants unless, within the same period, a
motion for reconsideration is filed with the Bureau Director or an appeal to the
Director General has been perfected; Provided, that only one (1) motion for
reconsideration of the decision or order of the Bureau Director shall be allowed,
and, in case the motion for reconsideration is denied, the appellant or appellants
has/have the balance of the period prescribed above within which to file the
appeal.
Considering that the Respondent-Appellants received a copy of the
appealed Decision on 15 January 2004 and filed their MOTION FOR
RECONSIDERATION on 30 January 2004, said parties had a balance of 15
days from their receipt of the Resolution denying said motion within which
to file the APPEAL MEMORANDUM. Per records of the Bureau of Legal
Affairs, the Respondents-Appellants received a copy of the Resolution on
29 October 2004. Hence the deadline for the filing of the APPEAL
MEMORANDUM was on 13 November 2004. Since said date fell on a
Saturday, the appeal should have been filed on the ensuing working day,
 that is, 15 November 2004.
Contrary to petitionersâΦΡ argument, respondent has the legal capacity to sue for
On this score, Section 5(c) of the Uniform Rules on Appeal provides: the protection of its trademarks,  it is not doing business in the Philippines.
Section 160 in relation to Section 3 of R.A. No. 8293, provides:
Section 5. Action on the Appeal Memorandum âΦ͞ The Director General shall: SECTION 160. 




m

 



?

à  !


?‘
 !

" ‘
‘ . âΦ͟ Any foreign national or juridical person who meets the
xxxx 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,
c.V Dismiss the appeal for being patently without merit, provided that the dismissal cancellation, infringement, unfair competition, or false designation of origin and
shall be outright if the appeal is not filed within the prescribed period or for false description, whether or not it is licensed to do business in the Philippines
failure of the appellant to pay the required fee within the period of appeal.[22] under existing laws.
(Underscoring supplied) Section 3 thereof provides:
SECTION 3.    
m  

‘ ‘. âΦ͟ Any person who is a
national or who is domiciled or has a real and effective industrial establishment in
PetitionersâΦΡ allegation that they honestly believed that they received
a country which is a party to any convention, treaty or agreement relating to
Resolution No. 2004-18 dated October 28, 2004 on November 3, 2004 and not on
intellectual property rights or the repression of unfair competition, to which the
October 29, 2004, as what appears on the records of the BLA-IPO, is self-serving
Philippines is also a party, or extends reciprocal rights to nationals of the
and unbelievable. The inadvertent computation of the period for one to file a
Philippines by law, shall be entitled to benefits to the extent necessary to give
pleading is inexcusable, and has become an all too familiar and ready excuse on
effect to any provision of such convention, treaty or reciprocal law, in addition to
the part of lawyers remiss in their bounden duty to comply with the mandatory
the rights to which any owner of an intellectual property right is otherwise
periods.[23]
entitled by this Act.
bis
Respondent anchors its causes of action under Articles 6 and 8 of à

This Court has always reminded the members of the legal profession that every
m




 




‘



 

, otherwise known as
case they handle deserves full and undivided attention, diligence, skill and
[24] the  
m

, wherein both the United States and the Philippines are
competence, regardless of its importance. A lawyer has the responsibility of
signatories.[26] The Articles read:
monitoring and keeping track of the period of time left to file pleadings and to see
Article 6bis
to it that said pleadings are filed before the lapse of the period. If he fails to do
so, his client is bound by his conduct, negligence and mistakes.[25] This
(1) The countries of the Union undertake, ex officio if their legislation so permits,
responsibility is imposed on all lawyers notwithstanding the presence or absence
or at the request of an interested party, to refuse or to cancel the registration,
of staff assisting them in the discharge thereof.
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
Thus, as correctly held by the Court of Appeals, petitionersâΦΡ belated filing of an
competent authority of the country of registration or use to be well known in that
appeal memorandum rendered the December 22, 2003 Decision and the October
country as being already the mark of a person entitled to the benefits of this
28, 2004 Order of Bureau Director Beltran-Abelardo final and executory.
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
At this point, the Court could very well write  to this petition. However, in
well-known mark or an imitation liable to create confusion therewith.
disposing of the instant case, we shall resolve the principal issues raised by
petitioners.
x x x x.
Article 8
A tradename shall be protected in all countries of the Union without the
obligation of filing or registration whether or not it forms part of a trademark.
bis
Article 6 which governs the protection of well-known trademarks, is a self-
executing provision and does not require legislative enactment to give it effect in
the member country. It may be applied directly by the tribunals and officials of
each member country by the mere publication or proclamation of the Convention,
after its ratification according to the public law of each state and the order for its
execution. The essential requirement under this Article is that the trademark to
be protected must be "well-known" in the country where protection is sought.
The power to determine whether a trademark is well-known lies in the
âΦœcompetent authority of the country of registration or use.âΦR This
competent authority would be either the registering authority if it has the power
to decide this, or the courts of the country in question if the issue comes before a
court.[27]
The question of whether or not respondentâΦΡs trademarks are considered
âΦœwell-knownâΦR is factual in nature, involving as it does the appreciation of
evidence adduced before the BLA-IPO. The settled rule is that the factual findings
of quasi-judicial agencies, like the IPO, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only
respect, but, at times, even finality if such findings are supported by substantial
evidence.[28]
Director Beltran-Abelardo found that:
Arguing mainly that it is the owner of an internationally well-known mark,
complainant presented its United States trademark registrations, namely: United
States Trademark Registration No. 1,514,689 for the mark âΦœIN-N-OUT Burger
and Arrow DesignâΦR under class 25 dated November 29, 1988 for the shirts
(Exhibit âΦœLâΦR); United States Trademark Registration No. 1,528,456 for the




 !



mark âΦœIN-N-OUT Burger and Arrow DesignâΦR under Class 29, 30, 32 and 42

, also takes into account the extent to which the mark has been registered
dated March 7, 1989 for milk and french-fried potatoes for consumption on or off
the premises, for hamburger sandwiches, cheeseburger sandwiches, hot coffee
and milkshakes for consumption on or off the premises, lemonade and softdrinks
for consumption on and off the premises, restaurant services respectively (Exhibit
âΦœMâΦR); US Trademark Registration No. 1,101,638 for the mark âΦœIN-N-
OUTâΦR under Class No. 30 dated September 5, 1978 for cheeseburgers,
hamburgers, hot coffee and milkshake for consumption on or off premises (Exhibit
âΦœNâΦR); US Trademark Registration No. 1,085,163 âΦœIN-N-OUTâΦR under
Class 42 dated February 7, 1978 for Restaurant Services and carry-out restaurant
services (Exhibit âΦœQâΦR). For its mark âΦœDouble-DoubleâΦR it submitted
Certificates of Registration of said mark in several countries (Exhibits âΦœMMâΦR
and submarkings).
x x x x
Moreover, complainant also cites our decision in Inter Pares Case No. 14-1998-
00045 dated 12 September 2000, an opposition case involving the mark âΦœIN-N-
OUTâΦR between IN-N-OUT Burger (herein complainant) and Nestor SJ Bonjales
where we ruled:
âΦœAnd last but not the lease, the herein Opposer was able to prove substantially
that its mark âΦœIN-N-OUT Burger and Arrow DesignâΦR is an internationally
well known mark as evidenced by its trademark registrations around the world
and its comprehensive advertisements therein.âΦR
The nub of complainantâΦΡs reasoning is that the Intellectual Property Office as a
competent authority had declared in previous inter partes case that âΦœIN-N-
OUT Burger and Arrow DesignâΦR is an internationally well known mark.
In the aforementioned case, we are inclined to favor the declaration of the mark
âΦœIN-N-OUTâΦR as an internationally well-known mark on the basis of
âΦœregistrations in various countries around the world and its comprehensive
advertisements therein.âΦR
The Ongpin Memorandum dated 25 October 1983 which was the basis for the
decision in the previous inter partes case and which set the criteria for
determining whether a mark is well known, takes into consideration the extent of
registration of a mark. Similarly, the implementing rules of Republic Act 8293,
specifically Section (e) Rule 102 m
!
in the world in determining whether a mark is well known.
Likewise, as shown by the records of the instant case, Complainant submitted
evidence consisting of articles about âΦœIN-N-OUT BurgerâΦR appearing in
magazines, newspapers and print-out of what appears to be printed
representations of its internet website (www.innout.com) (Exhibits âΦœCCCâΦR
to âΦœQQQâΦR), as well as object evidence consisting of videotapes of famous
celebrities mentioning IN-N-OUT burgers in the course of their interviews (Exhibits (i) that the mark has been used in, or that the mark has been registered or that an
âΦœEEEEâΦR and âΦœFFFFâΦR) showing a tremendous following among application for registration of the mark has been filed in or in respect of, the
celebrities. Member State;

The quality image and reputation acquired by the complainantâΦΡs IN-N-OUT (ii) that the mark is well known in, or that the mark has been registered or that an
mark is unmistakable. With this, complainantâΦΡs mark have met other criteria application for registration of the mark has been filed in or in respect of, any
set in the Implementing Rules of Republic Act 8293, namely, âΦȂaâΦΡ and jurisdiction other than the Member State; or
âΦȂdâΦΡ of Rule 102, to wit:
(iii) that the mark is well known by the public at large in the Member State.
âΦœRule 102: (Underscoring supplied)
Moreover, petitionersâΦΡ claim that no ground exists for the cancellation of their
(a) the duration, extent and geographical area of any use of the mark, in registration lacks merit. Section 151(b) of RA 8293 provides:
particular, the duration, extent and geographical area of any promotion of the SECTION 151. m ‘  . âΦ͟ 151.1. A petition to cancel a registration of a mark
mark, including publicity and the presentation at fairs or exhibitions, of the under this Act may be filed with the Bureau of Legal Affairs by any person who
goods and/or services to which the mark applies; believes that he is or will be damaged by the registration of a mark under this Act
xxxx as follows:
(d) the quality image or reputation acquired by the markâΦR
x x x x
Hence, on the basis of evidence presented consisting of worldwide registration of
mark âΦœIN-N-OUTâΦR almost all of which were issued earlier than the (b) At any time, if the registered mark becomes the generic name for the goods or
respondentâΦΡs date of filing of its application and the subsequent registration of services, or a portion thereof, for which it is registered, or has been abandoned,
the mark âΦœIN-N-OUTâΦR in this Office, as well as the advertisements therein or its registration was obtained fraudulently or contrary to the provisions of this
by the complainant, this Office hereby affirms its earlier declaration that indeed, Act, or if the registered mark is being used by, or with the permission of, the
the mark âΦœIN-N-OUT BURGER LOGOâΦR is an internally well-known mark.[29] registrant so as to misrepresent the source of the goods or services on or in
We find the foregoing findings and conclusions of Director Beltran-Abelardo fully connection with which the mark is used. x x x.
substantiated by the evidence on record and in accord with law. The evidence on record shows that not only did the petitioners use the IN-N-OUT
Burger trademark for the name of their restaurant, but they also used identical or
The fact that respondentâΦΡs marks are neither registered nor used in the confusingly similar mark for their hamburger wrappers and french-fries
Philippines is of no moment. The scope of protection initially afforded by Article receptacles, thereby effectively misrepresenting the source of the goods and
6bis of the Paris Convention has been expanded in the 1999 i 
‘   
services.[30]
m ‘
  


 ‘ 

#$%

 !, wherein the World
Intellectual Property Organization (WIPO) General Assembly and the Paris Union Finally, petitionerâΦΡs contention that respondent is precluded from asserting its
agreed to a nonbinding recommendation that a well-known mark should be claim by  ‘, if not by prescription, lacks basis. Section 151(b) of R.A. No. 8293
protected in a country even if the mark is neither registered nor used in that specifically provides that a petition to cancel the registration of a mark which is
country. Part I, Article 2(3) thereof provides: registered contrary to the provisions thereof, or which is used to misrepresent the
(3) [ ‘ 
#‘
? 
& 
'
(] (a) A Member State shall not require, as source of the goods or services, may be filed at any time. Moreover,  ‘ may
a condition for determining whether a mark is a well-known mark: not prevail against a specific provision of law, since equity, which has been
defined as âΦȂjustice outside legalityâΦΡ is applied in the absence of and not
against statutory law or rules of procedure.[31] Aside from the specific provisions
of R.A. No. 8293, the Paris Convention and the WIPO Joint Recommendation have
the force and effect of law, for under Section 2, Article II of the Constitution, the
Philippines adopts the generally accepted principles of international law as part of
the law of the land. To rule otherwise would be to defeat the equitable
consideration that no one other than the owner of the well-known mark shall
reap the fruits of an honestly established goodwill.

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



(
(
'
 Petitioner McGeorge Food Industries (͞petitioner McGeorge͟), a domestic
corporation, is McDonald͛s Philippine franchisee.
c %4+$.c! Respondent L.C. Big Mak Burger, Inc. (͞respondent corporation͟) is a domestic
corporation which operates fast-food outlets and snack vans in Metro Manila and
 
This is a petition for review of the Decision dated 26 November 1999 of the
Court of Appeals 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 Appeals͛ Decision reversed the 5
September 1994 Decision of the Regional Trial Court of Makati, Branch 137,

 the ͞Big Mak͟ mark for its hamburger sandwiches. McDonald͛s
finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and
unfair competition.
nearby provinces. Respondent corporation͛s menu includes hamburger
sandwiches and other food items. Respondents Francis B. Dy, Edna A. Dy, Rene B.
Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto (͞private
respondents͟) are the incorporators, stockholders and directors of respondent
corporation.
On 21 October 1988, respondent corporation applied with the PBPTT for 
registra
opposed respondent corporation͛s application on the ground that ͞Big Mak͟ was
a colorable imitation of its registered ͞Big Mac͟ mark for the same food products.
McDonald͛s also informed respondent Francis Dy (͞respondent Dy͟), the chairman
of the Board of Directors of respondent corporation, of its exclusive right to the
 
͞Big Mac͟ mark and requested him to  from using the ͞Big Mac͟ mark or 
similar mark.
Petitioner McDonald͛s Corporation (͞McDonald͛s͟) is a corporation
Having ‘ no reply from respondent Dy, petitioners on 6 June 1990
organized under the laws of Delaware, United States. McDonald͛s operates, 

sued respondents in the Regional Trial Court of Makati, Branch 137 (͞RTC͟), for
 or through its franchisees, a global chain of fast-food restaurants.
trademark infringement and unfair competition. In its Order of 11 July 1990, the
McDonald͛s owns a family of marks including the ͞Big Mac͟ mark for its ͞double-
RTC issued a temporary restraining order (͞TRO͟) against respondents enjoining
decker hamburger sandwich.͟ McDonald͛s registered this trademark with the
them from using the ͞Big Mak͟ mark in  opera


 their business in the
United States Trademark Registry on 16 October 1979. Based on this Home
National Capital Region. On 16 August 1990, the RTC issued a writ of preliminary
Registration, McDonald͛s applied for  registra


 the same mark in the
‘  Register of the then Philippine Bureau of Patents, Trademarks and injunction replacing the TRO.
Technology (͞PBPTT͟), 

the Intellectual Property Office (͞IPO͟). 
approval of its application, McDonald͛s introduced its ͞Big Mac͟ hamburger In their Answer, respondents admitted that they have been using the name
sandwiches in the Philippine market in September 1981. On 18 July 1985,  ͞Big Mak Burger͟ for their fast-food business. Respondents claimed, however,
PBPTT allowed registra


 the ͞Big Mac͟ mark in the ‘  Register based that McDonald͛s does not have an exclusive right to the ͞Big Mac͟ mark or to 
on its Home Registration in the United States. other similar mark. Respondents point out that the Isaiyas Group of Corporations
(͞Isaiyas Group͟) registered the same mark for hamburger sandwiches with the
PBPTT on 31 March 1979. One Rodolfo Topacio (͞Topacio͟) similarly registered
Like its other marks, McDonald͛s displays the ͞Big Mac͟ mark in items and
the same mark on 24 June 1983, 


McDonald͛s registration on 18 July 1985.
paraphernalia in its restaurants, and in its outdoor and indoor signages. From
 , respondents claimed that they are not liable for trademark
1982 to 1990, McDonald͛s spent P10.5 million in advertisement for ͞Big Mac͟
infringement or for unfair competition, as the ͞Big Mak͟ mark they sought to
hamburger sandwiches alone.
register does not constitute a colorable imitation of the ͞Big Mac͟ mark.
Respondents asserted that they did not fraudulently pass off their hamburger
sandwiches as those of petitioners͛ Big Mac hamburgers. Respondents sought
damages in their counterclaim.
In their Reply, petitioners denied respondents͛ claim that McDonald͛s is not
the exclusive owner of the ͞Big Mac͟ mark. Petitioners asserted that while the
‘  along
Isaiyas Group and Topacio did register the ͞Big Mac͟ mark ahead of McDonald͛s,

the Isaiyas Group did so only in the Supplemental Register of the PBPTT and such
registration does not provide  protection. McDonald͛s disclosed that it had
‘( Topacio͛s rights to his registration in a Deed of Assignment dated 18 May
1981.
. Surely, defendant corporation has its own secret
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 McDonald͛s fast-food chain has   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 corporation͛s mobile snack vans 
busy streets or highways. But the thing is that what is being sold by 
contending parties is a food item ʹ 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 McDonald͛s, or a subsidiary or allied
outlet 
$ 
$%. 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
On 5 September 1994, the RTC  judgment (͞RTC Decision͟) finding
chains and restaurants. )‘, the trademark ͞B[ig] M[ac]͟ has been
respondent corporation liable for trademark infringement and unfair competition.
infringed by defendant corporation when it used the name ͞B[ig] M[ak]͟
)

, the RTC dismissed the complaint against private respondents and the
in its signages, wrappers, and containers 
‘
‘


 its food
counterclaim against petitioners for lack of merit and insufficiency of evidence.
business. xxxx
The RTC held:
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
Undeniably, the mark ͞B[ig] M[ac]͟ is a registered trademark for ͞B[ig] M[ak]͟ to be printed on the wrappers and containers of their food
plaintiff McDonald͛s, and 
‘, it is entitled [to] protection against products also constitute an act of unfair competition under Section 29 of
infringement. the Trademark Law?
The answer is in the affirmative. xxxx
xxxx The xxx provision of the law ‘
‘ unfair competition is
broader and more inclusive than the law ‘
‘ the infringement of
trademark, which is of 

 range, but within its narrower range
à
  some distinctions between the names ͞B[ig] M[ac]͟ recognizes a more exclusive right derived by  adoption and
and ͞B[ig] M[ak]͟ as appearing in the respective signages, wrappers and registra


 the trademark by the person whose goods or services are
containers of the food products of the parties. But infringement goes first associated 
. xxx &

  the distinction between
beyond the physical features of the questioned name and the original an action for trademark infringement and an action for unfair
name. There are still other factors to be considered. competition, however, the law extends substantially the same relief to
xxxx the injured party for 
 cases. (See Sections 23 and 29 of Republic Act
Significantly, the contending parties are both in the business of No. 166)
fast-food chains and restaurants. An average person who is hungry and  conduct may be said to constitute unfair competition if the
wants to eat a hamburger sandwich may not be discriminating enough effect is to pass off on the public the goods of one man as the goods of
to look for a McDonald͛s restaurant and buy a ͞B[ig] M[ac]͟ hamburger. another. The choice of ͞B[ig] M[ak]͟ as tradename by defendant
corporation is not merely for sentimental reasons but was clearly made Plaintiffs-appellees in the instant case would like to impress on
to take advantage of the reputation, popularity and the established this Court that 


 defendants-appellants of its corporate name ʹ
goodwill of plaintiff McDonald͛s. For, as stated in Section 29, a person is the whole ͞L.C. B[ig] M[ak] B[urger], I[nc].͟ which appears on their food
guilty of unfair competition who in selling his goods   give them the packages, signages and advertisements is an infringement of their
general appearance, of goods of another manufacturer or dealer, either trademark ͞B[ig] M[ac]͟ which they use to identify [their] double decker


the goods themselves or in the wrapping of the packages in which sandwich, sold in a Styrofoam box packaging material with the
they are contained, or the devices or words thereon, or in  other McDonald͛s logo of umbrella ͞M͟ stamped thereon, 


 the
feature of their appearance, which would likely influence purchasers to printed mark in red bl[o]ck capital letters, the words being separated by
believe that the goods offered are those of a manufacturer or dealer
 space. Specifically, plaintiffs-appellees argue that defendants-


  the ‘  manufacturer or dealer. à, plaintiffs have appellants͛ use of their corporate name is a colorable imitation of their
established their valid cause of action against the defendants for trademark ͞Big Mac͟.
trademark infringement and unfair competition and for damages. xxxx
To Our mind, however, this Court is fully convinced that no
The dispositive 

 of the RTC Decision provides: colorable imitation exists. As the definition dictates, it is not ‘
that a similarity exists in 
 names, but that 


 , the
WHEREFORE, judgment is  in favor of plaintiffs over-all presentation, or in their essential, substantive and distinctive
McDonald͛s Corporation and McGeorge Food Industries, Inc. and parts is such as would likely MISLEAD or CONFUSE persons in the
against defendant L.C. Big Mak Burger, Inc., as follows: ordinary course of purchasing the genuine article. A ‘  comparison
1. The writ of preliminary injunction issued in this case on of the way the trademark ͞B[ig] M[ac]͟ is being used by plaintiffs-
[16 August 1990] is made permanent; appellees and corporate name L.C. Big Mak Burger, Inc. by defendants-
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay appellants, would readily   that no confusion could take place, or
plaintiffs ‘  damages in the 


 P400,000.00, exemplary that the ordinary purchasers would be misled by it. As pointed out by
damages in the 


 P100,000.00, and attorney͛s fees and defendants-appellants, the plaintiffs-appellees͛ trademark is used to
expenses of litigation in the 


 P100,000.00; designate only one product, a double decker sandwich sold in a
3. The complaint against defendants Francis B. Dy, Edna A. Styrofoam box with the ͞McDonalds͟ logo. 



  what the
Dy, Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace defendants-appellants corporation is using is not a trademark for its food
Huerto, 


 all counter-claims, are dismissed for lack of merit 
product but a business or corporate name. They use the business name


 for insufficiency of evidence. ͞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. ?‘
, defendants-
Respondents appealed to the Court of Appeals.
appellants͛ corporate or business name appearing in the food packages
and signages are written in silhouette red-orange letters with the ͞b͟ and

$%. ## ͞m͟ in upper case letters. Above the words ͞Big Mak͟ are the upper case
letter ͞L.C.͟. Below the words ͞Big Mak͟ are the words ͞Burger, Inc.͟
On 26 November 1999, the Court of Appeals  judgment (͞Court of spelled out in upper case letters. 
, said corporate or
Appeals͛ Decision͟) reversing the RTC Decision and ordering McDonald͛s to pay business name appearing in such food packages and signages is always
respondents P1,600,000 as ‘  and compensatory damages and P300,000 as accompanied by the company mascot, a young chubby boy named Maky
moral damages. The Court of Appeals held: who wears a red T-shirt with the upper case ͞m͟ appearing  and a
blue lower garment.   the defendants-appellants͛ food packages In the case at bar, We find no ‘ evidence adduced by
are made of plastic material. plaintiffs-appellees that defendants-appellants deliberately tried to pass
xxxx off the goods manufactured by them for those of plaintiffs-appellees. The
xxx [I]t is readily apparent to the naked eye that there appears a mere suspected similarity in the sound of the defendants-appellants͛
vast difference in the appearance of the product and the   that the corporate name with the plaintiffs-appellees͛ trademark is not ‘
tradename ͞Big Mak͟ is being used and presented to the public. As evidence to conclude unfair competition. Defendants-appellants
earlier noted, there are glaring dissimilarities between plaintiffs- explained that the name ͞M[ak]͟ in their corporate name was derived
appellees͛ trademark and defendants-appellants͛ corporate name. from 
 the first names of the mother and father of defendant Francis
Plaintiffs-appellees͛ product carrying the trademark ͞B[ig] M[ac]͟ is a Dy, whose names are Maxima and Kimsoy. With this explanation, it is up
double decker sandwich (depicted in the tray mat containing to the plaintiffs-appellees to prove bad faith


 

 defendants-
photographs of the various food products xxx sold in a Styrofoam box appellants. It is a settled rule that the law always presumes good faith
with the ͞McDonald͛s͟ logo and trademark in red, bl[o]ck capital letters such that  person who seeks to be awarded damages 

acts of
printed thereon xxx at a price which is more expensive than the another has the burden of 

  the   acted in bad faith or
defendants-appellants͛ comparable food products. 



buy a ͞Big with ill motive.
Mac͟, a customer needs to visit an air-conditioned ͞McDonald͛s͟
restaurant usually 
‘ 
 a nearby commercial center, advertised and Petitioners sought reconsideration of the Court of Appeals͛ Decision but the
identified by its logo - the umbrella ͞M͟, and its mascot ʹ ͞Ronald appellate court denied their motion in its Resolution of 11 July 2000.
McDonald͟. A typical McDonald͛s restaurant boasts of a playground for
kids, a second floor to accommodate 
  customers, a drive-thru )‘, this petition for review.
to allow customers with cars to make orders without alighting from their
vehicles, the interiors of the building are well-lighted, distinctly
Petitioners raise the following grounds for their petition:
decorated and painted with pastel colors xxx. In buying a ͞B[ig] M[ac]͟, it
is ‘  to specify it by its trademark. à, a customer needs to
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS͛
look for a ͞McDonald͛s͟ and enter it first before he can find a hamburger
CORPORATE NAME ͞L.C. BIG MAK BURGER, INC.͟ IS NOT A COLORABLE
sandwich which carry the mark ͞Big Mac͟. 



 
IMITATION OF THE MCDONALD͛S TRADEMARK ͞BIG MAC͟, SUCH
defendants-appellants sell their goods through snack vans xxxx
COLORABLE IMITATION BEING AN "-""&à
 TRADEMARK
Anent the allegation that defendants-appellants are guilty of unfair
INFRINGEMENT.
competition, We !
 find the same untenable.
A. Respondents use the words ͞Big Mak͟ as trademark for their products
Unfair competition is defined as ͞the 
 of deception or
and not merely as their business or corporate name.
 other means contrary to good faith by which a person   pass off
B. As a trademark, respondents͛ ͞Big Mak͟ is undeniably and
the goods manufactured by him or in which he deals, or his business, or
unquestionably similar to petitioners͛ ͞Big Mac͟ trademark based on the
service, for those of another who has already established good will for his
dominancy test and the 

  test resulting inexorably in
similar good, business or services, or  acts calculated to produce the
confusion on the part of the consuming public.
same result͟ (?‘
*+

‘
&

u,,

).
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE INHERENT
To constitute unfair competition therefore it must ‘ 
SIMILARITY BETWEEN THE MARK ͞BIG MAK͟ AND THE WORD MARK ͞BIG
follow that there was malice and that the entity concerned was in bad
MAC͟ AS AN &.mà& OF RESPONDENTS͛ INTENT TO DECEIVE OR
faith.
DEFRAUD FOR ?"?
 "?à'-?)&/ UNFAIR COMPETITION.
Petitioners pray that we set aside the Court of Appeals͛ Decision and reinstate the
RTC Decision.
In their Comment to the petition, respondents question the propriety of
this petition as it allegedly raises only questions of fact. On the merits,
Here, petitioners raise questions of fact and law in assailing the Court of
Appeals͛ findings on respondent corporation͛s 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
respondents contend that the Court of Appeals committed no reversible error in recognized exceptions to Section 1. We took a similar course of action in 

finding them not liable for trademark infringement and unfair competition and in / " $   .    

! which also involved a suit for trademark

ordering petitioners to pay damages.  infringement and unfair competition in which the trial court and the Court of

 Appeals arrived at conflicting findings.
#%%*
The issues are:
1. Procedurally, whether the questions raised in this petition are proper
for a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words ͞Big Mak͟
not only as part of the corporate name ͞L.C. Big Mak Burger, Inc.͟ but also as a
trademark for their hamburger products, and (b) whether respondent corporation
is liable for trademark infringement and unfair competition.
%c%%
C+$.c!D$%$+$%
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
respondents͛ hamburger products and not the words ͞Big Mak͟ only.
The contention has merit.
The evidence presented during the hearings on petitioners͛ 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 ͞burger͟ and ͞100% pure beef͟ were set
in smaller type, along with the locations of branches. Respondents͛ cash invoices
simply refer to their hamburger sandwiches as ͞Big Mak.͟ It is respondents͛
 
$%. snack vans that carry the words ͞L.C. Big Mak Burger, Inc.͟
It was only during the trial that respondents presented in evidence the
plastic wrappers and bags for their hamburger sandwiches 

 by the Court
The petition has merit. of Appeals. Respondents͛ 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 respondents͛ evidence were added
%AB$%
$$%$$% above and below the words ͞Big Mak,͟ ‘. Since petitioners͛ 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.
A party  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 1͟) %
!
%$%.%
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 Section 22 (͞Section 22) of Republic Act No. 166, as amended (͞RA 166͟), the
of fact when the doubt or difference arises on the truth or falsity of the 
facts. law applicable to this case, defines trademark infringement as follows:
 

 
‘
. Ͷ  person who [1]   use, such as ͞Arthriticare͟ for arthritis medication. On the contrary, ͞Big Mac͟ falls
without the consent of the registrant,  reproduction, counterfeit, under  class

 fanciful or arbitrary marks as it bears no logical relation to the
copy or colorable imitation of  registered mark or trade-name 
‘  characteristics of the product it represents. 
‘, it is highly distinctive
‘
‘


 the sale, offering for sale, or advertising of  goods, and thus valid. Significantly, the trademark ͞Little Debbie͟ for snack cakes was
business or services on or 
‘
‘


 which such use is likely to found arbitrary or fanciful.
cause confusion or mistake or to deceive purchasers or others 

the The Court also finds that petitioners have duly established McDonald͛s exclusive
source or origin of such goods or services, or identity of such business; or ownership of the ͞Big Mac͟ mark. Although Topacio and the Isaiyas Group
[2] reproduce, counterfeit, copy, or colorably imitate  such mark or registered the ͞Big Mac͟ mark ahead of McDonald͛s, Topacio, as petitioners
trade-name and apply such reproduction, counterfeit, copy, or colorable disclosed, had already assigned his rights to McDonald͛s. The Isaiyas Group, on
imitation to labels, signs, prints, packages, wrappers, receptacles or the other hand, registered its trademark only in the Supplemental Register. A
advertisements intended to be used 
 or 
‘
‘


 such mark which is not registered in the ‘  Register, and thus not distinctive, has
goods, business or services,   be  

a civil action by the no real protection. Indeed, we have held that registration in the Supplemental
registrant for  or 

 the remedies  provided. Register is not even a 
 ‘
evidence of the validity of the registrant͛s
Petitioners base their cause of action under the first part of Section 22,  exclusive right to use the mark on the goods specified in the certificate.
respondents allegedly used, without petitioners͛ consent, a colorable imitation of
the ͞Big Mac͟ mark in advertising and selling respondents͛ 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. Section 22 covers two types of confusion arising from 


 similar or
To   trademark infringement, the following elements must be shown: (1) colorable imitation marks,  , confusion of goods (product confusion) and
the validity of plaintiff͛s mark; (2) the plaintiff͛s ownership of the mark; and (3) 
confusion of business (source or origin confusion). In % !
 0


 the mark or its colorable imitation by the  infringer results in  
! 
  .    
  /$  
  !!,  ! ,
͞likelihood of confusion.͟ Of these, it is the 

 likelihood of confusion that the Court distinguished these two types of confusion, thus:
is the gravamen of trademark infringement.
%4$$&C+$.c Dc!
[Rudolf] Callman notes two types of confusion. The first is the confusion
%c
%%$# c!
of goods ͞in which event the ordinarily prudent purchaser would be
A mark is valid if it is ͞distinctive͟ and thus not barred from
induced to purchase one product in the belief that he was purchasing the
registration under Section 4 of RA 166 (͞Section 4͟). )

, once registered,
other.͟ xxx The other is the
confusion of business: ͞Here though the
not only the mark͛s validity but also the registrant͛s ownership of the mark is
goods of the parties are different, the defendant͛s product is such as

 ‘
presumed.
might reasonably be assumed to originate with the plaintiff, and the
Respondents contend that of the two words in the ͞Big Mac͟ mark, it is only the
public would then be deceived either into that belief or into the belief
word ͞Mac͟ that is valid because the word ͞Big͟ is generic and descriptive
that there is some connection between the plaintiff and defendant
(proscribed under Section 4[e]), and thus ͞incapable of exclusive appropriation.͟
which, 
 ‘, does not exist.͟
The contention has no merit. The ͞Big Mac͟ mark, which should be treated
in its entirety and not dissected word for word, is neither generic nor descriptive.
Generic marks are commonly used as the name or description of a 


 goods, Under Act No. 666, the first trademark law, infringement was limited to confusion
of goods only, when the infringing mark is used on ͞goods of a similar kind.͟ Thus,
such as ͞Lite͟ for beer or ͞Chocolate Fudge͟ for chocolate soda drink. Descriptive
no relief was afforded to the party whose registered mark or its colorable
marks, on the other hand, convey the characteristics, ‘
, qualities or
imitation is used on different although related goods. To remedy this situation,
ingredients of a product to one who has never seen it or does not know it exists,
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
 is a colorable imitation of the plaintiff McDonald͛s mark ͞B[ig]
source or origin of such goods or services, or identity of such business.͟ à,
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.
‘
(‘
 the acts committed by defendants,
 the property rights of plaintiffs
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 defendant͛s food products and incorporated
in its signages the name ͞Big Mak Burger͟, which is confusingly similar to
0
M[ac]͟, xxx.
%% +$. c! +.   %1&  
$#$%$"$%$##/%#%"&$$
$#$%$' xxxx
2.2 
which unduly prejudice and infringe 
A  
1
/
  

!  ! McDonald͛s and McGeorge as the real owner and rightful proprietor, and
the licensee/franchisee, ‘, of the McDonald͛s marks, and
which are likely to have  %$% $/#"$ 
Petitioners claim that respondents͛ use of the ͞Big Mak͟ mark on respondents͛
 #%$#$$$%%%# 
hamburgers results in confusion of goods, particularly

‘
 petitioners͛
% % "$% plaintiffs have suffered and continue to suffer
hamburgers labeled ͞Big Mac.͟ à, petitioners  in their complaint:
‘  damages 

 
 injury to their business reputation and
goodwill, and of  dilu 
 the distinctive quality of the McDonald͛s
1.15. Defendants have unduly prejudiced and clearly
marks, 
 ‘ , the mark ͞B[ig] M[ac]͟. (Emphasis supplied)
infringed   the property rights of plaintiffs in the McDonald͛s Marks,
particularly the mark ͞B[ig] M[ac]͟. Defendants͛ unauthorized acts are
likely, and calculated, to confuse, mislead or deceive the public into  

 


‘

 
 
‘


 
 
 ‘
 
 



1'
 ‘
 !
à, trademark
believing that the # %/$ "&%%+$.c!
infringement through confusion of business is also a proper issue in this case.
Burger, and the business it is engaged in, are approved and sponsored
by, or affiliated with, plaintiffs. (Emphasis supplied)
Respondents assert that their ͞Big Mak͟ hamburgers cater   to the
low-income group while petitioners͛ ͞Big Mac͟ hamburgers cater to the middle
Since respondents used the ͞Big Mak͟ mark on the same goods,  hamburger
and upper income groups. Even if this is true, the likelihood of confusion of
sandwiches, that petitioners͛ ͞Big Mac͟ mark is used, trademark infringement
business remains, since the low-income group might be led to believe that the
through confusion of goods is a proper issue in this case.
͞Big Mak͟ hamburgers are the low-end hamburgers marketed by petitioners.
After all, petitioners have the exclusive right to use the ͞Big Mac͟ mark. 


Petitioners also claim that respondents͛ use of the ͞Big Mak͟ mark in the 
  respondents would benefit by associating their low-end hamburgers,
sale of hamburgers, the same business that petitioners are engaged in, results in through 

 the ͞Big Mak͟ mark, with petitioners͛ high-end ͞Big Mac͟
confusion of business. etitioners  in their complaint: hamburgers, leading to likelihood of confusion in the identity of business.

1.10. For some  


, and without the consent of
plaintiff McDonald͛s nor its licensee/franchisee, plaintiff McGeorge, and
in clear violation of plaintiffs͛ exclusive right to use 0    
Respondents further claim that petitioners use the ͞Big Mac͟ mark only
the McDonald͛s marks, defendant Big Mak Burger acting through
on petitioners͛ double-decker hamburgers, while respondents use the ͞Big Mak͟
individual defendants, has been operating ͞Big Mak Burger͟, a fast food
mark on hamburgers and other products like siopao, noodles and pizza. A   
 2&  3/ 4
Respondents also point out that petitioners sell their Big Mac double-deckers in a
styrofoam box with the ͞McDonald͛s͟ logo and trademark in red, block letters at a  ! 5  !  
price more expensive than the hamburgers of respondents. In contrast,
respondents sell their Big Mak hamburgers in plastic wrappers and plastic bags.  In  likelihood of confusion, jurisprudence has developed two
Respondents further point out that petitioners͛ restaurants are air-conditioned tests, the dominancy test and the holistic test. The dominancy test focuses on the
buildings with drive-thru service, compared to respondents͛ mobile vans. similarity of the   features of the competing trademarks that might cause
confusion. In contrast, the holistic test ( the court to consider the entirety
These and other factors respondents cite cannot negate the undisputed of the marks as applied to the products, including the labels and packaging, in
fact that respondents use their ͞Big Mak͟ mark on hamburgers, the same food  confusing similarity.
product that petitioners͛ sell with 

 their registered mark ͞Big Mac.͟
Whether a hamburger is single, double or triple-decker, and whether wrapped in The Court of Appeals, in finding that there is no likelihood of confusion
plastic or styrofoam, it remains the same hamburger food product. Even that could arise in 

 respondents͛ ͞Big Mak͟ mark on hamburgers, relied
respondents͛ use of the ͞Big Mak͟ mark on non-hamburger food products cannot on the holistic test. à, the Court of Appeals ruled that ͞it is not ‘ that a
excuse their infringement of petitioners͛ registered mark, otherwise registered similarity exists in   name(s), but that  
  , the . !!
marks will lose their protection under the law. #%$%, or in their essential, substantive and distinctive parts is such as
would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing
the genuine article.͟ The holistic test considers the two marks in their entirety, as
they appear on the goods with their labels and packaging. It is not enough to
The registered trademark owner may use his mark on the same or similar consider their words and compare  spelling and pronuncia 
 the words.
products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the market. The Respondents 
vigorously argue that the Court of Appeals͛ application
Court has recognized that the registered trademark owner enjoys protection in of the holistic test to this case is correct and in ‘‘  with prevailing
product and market areas that are the % #%$ 0#%$%  $ jurisprudence.
"$%' à, the Court has declared:
This Court, however, has relied on the dominancy test rather than the
Modern law recognizes that the protection to which the owner holistic test. The dominancy test considers the dominant features in the
of a trademark is entitled is not limited to guarding his goods or business competing marks in  whether they are confusingly similar. Under the
from ‘  market competition with identical or similar products of the dominancy test, courts give greater weight to the similarity of the appearance of
parties, but extends to all cases in which the use by a junior appropriator the product arising from  adop 
 the dominant features of the registered
of a trade-mark or trade-name is $!& %$%  mark, disregarding   differences. Courts will consider more the aural and
## $/# "$$%$%!$%. visual impressions created by the marks in the public mind, giving little weight to
#$%$%.#&0%$"$%$%$ (see 148 ALR factors like prices, quality, sales outlets and market segments.
56 et seq; 53 Am Jur. 576) or is in  way connected with the activities
of the infringer; %$%#%$0#%$% à, in the 1954 case of ' %.   0 , the Court
$ "$% (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577). (Emphasis ruled:
supplied)
 xxx It has been consistently held that the question of In short, aurally the two marks are the same, with the first word of   marks
infringement of a trademark is to be  by the test of phonetically the same, and the second word of   marks also phonetically the
dominancy. Similarity in size, form and color, while relevant, is not same. Visually, the two marks have   two words and six letters, with the first
conclusive.   #$%. ! %$%  $%  %$ word of   marks having the same letters and the second word having the same
$%%%% %$%% #$%$$!& first two letters. In spelling, considering the Filipino language, even the last letters
  $%$%.% ! # . Duplication or imitation is not of   marks are the same.
‘ ; nor is it ‘  that the infringing label should suggest an ! !$ 
 . 
  3/ 4!$   !
effort to imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., ! !!       3/  .͟ Applied to the same food product of
191 F., 489, 495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. hamburgers, the two marks will likely result in confusion in the public mind.
579). The question at issue in ‘ 
 infringement of trademarks is The Court has taken into account the   of the words and letters
whether 

 the marks involved would be likely to cause confusion ‘  
 the marks in  

 confusing similarity. à, in
or mistakes in the mind of the public or deceive purchasers. (Auburn . -  !  . 0  "
  ! , the Court held:
Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; xxx) The following random list of confusingly $$ % in the matter of
(Emphasis supplied.) trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1,
will reinforce our view that ͞SALONPAS͟ and ͞LIONPAS͟ are confusingly similar in
The Court reiterated the dominancy test in 5   .      sound: ͞Gold Dust͟ and ͞Gold Drop͟; ͞Jantzen͟ and ͞Jass-Sea͟; ͞Silver Flash͟ and
0 , 0 !  ( $   .  % /  , .     ͞Supper Flash͟; ͞Cascarete͟ and ͞Celborite͟; ͞Celluloid͟ and ͞Cellonite͟;

 . & . ! 0 , and  / " $ .  ͞Chartreuse͟ and ͞Charseurs͟; ͞Cutex͟ and ͞Cuticlean͟; ͞Hebe͟ and ͞Meje͟;


!. In the 2001 case of %     0  ( !6 %   .    ͞Kotex͟ and ͞Femetex͟; ͞Zuso͟ and ͞Hoo Hoo͟. Leon Amdur, in his book ͞Trade-


!, the Court explicitly rejected the holistic test in this wise: Mark Law and Practice͟, pp. 419-421, cities, as coming
 the purview of the


  rule, ͞Yusea͟ and ͞U-C-A͟, ͞Steinway Pianos͟ and ͞Steinberg
[T]he $&$$ $ %&%&# Pianos͟, and ͞Seven-Up͟ and ͞Lemon-Up͟. In Co Tiong vs. Director of Patents, this
%!%%$ #$$% that confusing similarity Court unequivocally said that ͞Celdura͟ and ͞Cordura͟ are confusingly similar in
is to be 


 

 visual, aural, connotative comparisons sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name
and
  impressions %.%"&!$% %/& as they ͞Lusolin͟ is an infringement of the trademark ͞Sapolin͟, as the sound of the two
are ‘
 in the realities of the marketplace. (Emphasis supplied) names is almost the same. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section 155.1 of m , ͞Big Mac͟ and ͞Big Mak͟ for hamburgers create even greater confusion,
the Intellectual Property Code which defines infringement as  ͞colorable not only aurally but also visually.
imita


 a registered mark xxx or a $%% 
.͟
Indeed, a person cannot distinguish ͞Big Mac͟ from ͞Big Mak͟ by their sound.
Applying the dominancy test, the Court finds that respondents͛ use of the ͞Big When one hears a ͞Big Mac͟ or ͞Big Mak͟ hamburger advertisement over the
Mak͟ mark results in likelihood of confusion. First, ͞Big Mak͟ sounds  ‘ the radio, one would not know whether the ͞Mac͟ or ͞Mak͟ ends with a ͞c͟ or a ͞k.͟
same as ͞Big Mac.͟ Second, the first word in ͞Big Mak͟ is  ‘ the same as the Petitioners͛ aggressive promotion of the ͞Big Mac͟ mark, as borne by their
first word in ͞Big Mac.͟ Third, the first two letters in ͞Mak͟ are the same as the advertisement  , has built goodwill and reputation for such mark making it
first two letters in ͞Mac.͟ Fourth, the last letter in ͞Mak͟ while a ͞k͟ sounds the one of the easily recognizable marks in the market today. This ‘  the
same as ͞c͟ when the word ͞Mak͟ is pronounced. Fifth, in Filipino, the letter ͞k͟ likelihood that consumers will mistakenly associate petitioners͛ hamburgers and
replaces ͞c͟ in spelling, thus ͞Caloocan͟ is spelled ͞Kalookan.͟ business with those of respondents͛.
 espondents͛ inability to explain ‘ how and why they came to
choose ͞Big Mak͟ for their hamburger sandwiches ‘  their intent to imitate
petitioners͛ ͞Big Mac͟ mark. Contrary to the Court of Appeals͛ finding,
respondents͛ claim that their ͞Big Mak͟ mark was inspired by the first names of
respondent Dy͛s mother (Maxima) and father (Kimsoy) is not credible. As
petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at
a more creative choice for a corporate name by using the names of his parents,
.
especially since he was allegedly driven by sentimental reasons. For one, he could
 ‘ , and without in  way limiting the scope of unfair
xxxx
 person who will employ deception or  other means
contrary to good faith by which he   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   commit  acts
calculated to produce said result,   be guilty of unfair competition,
and   be subject to an action 

have put his father͛s name ahead of his mother͛s, as is usually done in this competition, $%.!!".$&%$ #$$%:
patriarchal society, and derived letters from said names in that order. Or, he (a) $ #%  $% $%. $ . !!.$/ 
could have taken an equal 

 letters (i.e., two) from each name, as is the .%##% .%% $
more usual thing done. Surely, the more plausible reason behind Respondents͛ ./ or in the wrapping of the packages in which
choice of the word ͞M[ak]͟, especially when taken in conjunction with the word they are contained, /$ %, or in  feature of
͞B[ig]͟, was their intent to take advantage of Petitioners͛ xxx ͞B[ig] M[ac]͟ their appearance, which would be likely to influence purchasers to
trademark, with their  sentiment-focused ͞explanation͟ merely thought of believe that the goods offered are those of a manufacturer or dealer,
as a convenient,  unavailing, excuse or defense for such an unfair choice of

  the ‘  manufacturer or dealer, or who otherwise clothes
name. the goods with such appearance as   deceive the public and defraud
Absent proof that respondents͛ adop


 the ͞Big Mak͟ mark was 

another of his legitimate trade, or  subsequent vendor of such goods
honest mistake or was fortuitous, the inescapable conclusion is that respondents or  agent of  vendor engaged in selling such goods with a like
adopted the ͞Big Mak͟ mark to ͞ride on the coattails͟ of the more established purpose;
͞Big Mac͟ mark. This saves respondents much of the expense in advertising to (b)  person who by  artifice, or device, or who 

create market recognition of their mark and hamburgers.  other means calculated to induce the false belief that such person is
Thus, we hold that confusion is likely to result in the public mind. We sustain offering the services of another who has identified such services in the
petitioners͛ claim of trademark infringement. mind of the public; or
(c)  person who   make  false statement 


 50!  ‘ 

 trade or who   commit  other act contrary to good faith
of a nature calculated to discredit the goods, business or services of
Petitioners͛ failure to present proof of ‘  confusion does not negate another. (Emphasis supplied)
their claim of trademark infringement. As noted in  
A
  !  .  The essential 

 an action for unfair competition are (1) confusing

 0 , Section 22 ( the less stringent standard of ͞$!$
of confusion͟ only. # proof of ‘  confusion is the best evidence of
infringement, its absence is inconsequential.

 the goods. The intent to deceive and defraud may
%
*%$ #$$%
Section 29 (͞Section 29͟) of RA 166 defines unfair competition, thus:
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 
packaging or presenta
be inferred from the similarity of the appearance of the goods as offered for sale
to the public. ‘  fraudulent intent need not be shown.
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. Trademark infringement constitutes unfair
competition when there is not merely likelihood of confusion, but also ‘  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.
 hamburger sandwiches, their use of the ͞Big Mak͟
To support their claim of unfair competition, petitioners allege that respondents
fraudulently passed off their hamburgers as ͞Big Mac͟ hamburgers. Petitioners
add that respondents͛ fraudulent intent can be inferred from the similarity of the

, since respondents chose to apply the ͞Big Mak͟ mark on
marks in question.
Passing off (or palming off) takes place where the defendant, by imitative devices

 clothed their goods with the general appearance of
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. à, 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.

, petitioners
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 McDonald͛s to identify its double
decker hamburger sandwich. The packaging material is a styrofoam box with the
McDonald͛s 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. 

consider respondents͛ evidence since petitioners͛ complaint was based on facts

͞Big Mak͟ 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.͟ Respondents͛ goods are
hamburgers which are also the goods of petitioners. If respondents sold egg
sandwiches only  
mark would not give their goods the general appearance of petitioners͛ ͞Big Mac͟
hamburgers. In such case, there is only trademark infringement but no unfair
competition. )
hamburgers, just like petitioner͛s use of the ͞Big Mac͟ mark on hamburgers,
respondents have
petitioners͛ goods.
Moreover, there is no notice to the public that the ͞Big Mak͟ 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. )
introduced during the injunctive hearings plastic wrappers and bags with the ͞Big
Mak͟ mark $ the name ͞L.C. Big Mak Burger, Inc.͟ Respondents͛ 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
  defendants͛ ͞B[ig] M[ak]͟ script print is in orange with only the letter existing before and during the injunctive hearings.
͞B͟ and ͞M͟ being capitalized and the packaging material is plastic wrapper. xxxx à, there is ‘  no notice to the public that the ͞Big Mak͟ hamburgers are
Further, plaintiffs͛ logo and mascot are the umbrella ͞M͟ and ͞Ronald products of ͞L.C. Big Mak Burger, Inc.͟ and not those of petitioners who have the
McDonald͛s͟, ‘, compared to the mascot of defendant Corporation exclusive right to the ͞Big Mac͟ mark. This clearly shows respondents͛ intent to
which is a chubby boy called ͞Macky͟ displayed or printed between the words deceive the public. Had respondents͛ placed a notice on their plastic wrappers
͞Big͟ and ͞Mak.͟ (Emphasis supplied) and bags that the hamburgers are sold by ͞L.C. Big Mak Burger, Inc.͟, then they
Respondents point to these dissimilarities as proof that they did not give their could validly claim that they did not intend to deceive the public. In such case,
hamburgers the general appearance of petitioners͛ ͞Big Mac͟ hamburgers. there is only trademark infringement but no unfair competition. Respondents,
The dissimilarities in the packaging are 
 compared to the !$$$$$% however, did not give such notice. We hold that as found by the RTC, respondent
 that give respondents͛ ͞Big Mak͟ hamburgers the general appearance corporation is liable for unfair competition.
of petitioners͛ ͞Big Mac͟ hamburgers. Section 29(a) expressly provides that the
similarity in the general appearance of the goods may be in the ͞devices or
͟ used on the wrappings. Respondents have applied on their plastic
wrappers and bags almost the   that petitioners use on their
styrofoam box. What attracts the attention of the buying public are the words
 In 1972, per ͞Trademark, Technical Data, and Technical Assistance Agreement,͟[3]
Levi Strauss & Co., the principal based in Delaware, United States of America,
granted petitioner Levi Strauss (Phils.) a non-exclusive license to use LEVI͛S
trademark, design, and name in the manufacturing, marketing, distribution, and
sale of its clothing and other goods.[4] The licensing agreement was renewed
several times, the recent one being under Certificate of Registration No. 1379-
A.[5] Levi Strauss & Co. obtained certificates of registration from the BPTTT for the
following trademarks: ͞LEVI͛S͟[6]; ͞501͟[7]; ͞Two Horse Design͟[8]; ͞Two Horse
Label͟[9]; ͞Two Horse Patch͟[10]; ͞Two Horse Label with Patterned Arcuate
Design͟[11]; ͞Arcuate Design͟[12]; and the composite trademarks,[13] namely,
͞Arcuate,͟ ͞Tab,͟ and ͞Two Horse Patch.͟

Petitioner discovered the existence of some trademark registrations belonging to

respondent which, in its view, were confusingly similar to its trademarks. Thus, it
instituted two cases before the BPTTT for the cancellation of respondent͛s
trademark registrations, to wit: 
  Case No. 4216, a petition for
cancellation of Certificate of Registration No. 53918 (for ͞LIVE͛S͟) and 
 

Case No. 4217, a petition for cancellation of Certificate of Registration No. 8868
(for ͞LIVE͛S͟ Label Mark).
(4

*-)
' 
 '


 . 4*(

(
 )

c 
 ' Petitioner then applied for the issuance of a search warrant on the premises of
respondent Vogue Traders Clothing Company, owned by one Tony Lim, with the
DECISION Regional Trial Court of Manila, Branch 3. On December 12, 1995, said trial court
issued Search Warrant No. 95-757[14] and Search Warrant No. 95-758[15] based
AZCUNA, i.: on its finding of probable cause that the respondent had violated Article 189 of
the Revised Penal Code[16] in manufacturing, selling, and incorporating designs or
marks in its jeans which were confusingly similar to petitioner͛s ͞LEVI͛s jeans.͟
This is a petition for review on ‘
  seeking to annul the decision[1] of the
These search warrants commanded the seizure of certain goods bearing copies or
Court of Appeals, dated August 13, 1997, which annulled and set aside the
imitations of the trademarks which belonged to petitioner.[17] On December 13,
orders,[2] dated December 10, 1996 and April 11, 1997, issued by the Regional
1995, the search warrants were enforced and several goods belonging to
Trial Court of Manila, Branch 1 and which directed the trial court to desist from
respondent were seized.[18] Meanwhile, it appears that criminal charges were
proceeding with the said case until the Bureau of Patents, Trademarks and
filed against Tony Lim of respondent company in the Department of Justice,[19]
Technology Transfer (BPTTT) has finally resolved 
  Cases Nos. 4216 and
but the same were eventually dismissed and the search warrants were quashed.
4217, and the resolution of the Court of Appeals, dated March 5, 1998, denying
petitioner͛s motion for reconsideration.
Consequently, on February 1, 1996, respondent filed a complaint[20] for damages
in the Regional Trial Court of Manila, Branch 50, against petitioner. The complaint
The factual antecedents are as follows:
alleged that since January 1, 1988, respondent, through Antonio Sevilla, with
business address at 1082 Carmen Planas Street, Tondo, Manila, had been a lawful
assignee and authorized user of: (a) the trademark ͞LIVE͛S͟ under Certificate of
Registration No. 53918 issued by the BPTTT, (b) the trademark ͞LIVE͛S LABEL
MARK͟ under Certificate of Registration No. SR 8868 issued by the BPTTT, and (c)
the copyright registrations of ͞LIVE͛S ORIGINAL JEANS,͟ its pocket design, and
hand tag; that the goods, articles, and effects seized from respondent͛s
establishment were manufactured and used in its legitimate business of
manufacturing and selling of the duly registered trademark ͞LIVE͛S͟ and ͞LIVE͛S
ORIGINAL JEANS;͟ and that the trademarks of respondent did not have any
deceptive resemblance with the trademarks of petitioner. Respondent sought to
recover the seized assorted sewing materials, equipment, and finished products
or the value thereof, in case the same had been destroyed or impaired as a result
of the seizure. Respondent also prayed that, after due trial, judgment be
rendered ordering the petitioner to pay compensatory damages of P320,000 with
an additional amount of damages of P11,000 per day until the seized properties
are restored; P2,000,000 as exemplary damages; P100,000 for attorney͛s fees
with an additional amount of P100,000 in the event of an appeal plus P1,500 per
court appearance and the costs of the suit.
In its amended answer with counterclaim,[21] petitioner countered that
respondent͛s LIVE͛S brand infringed upon its licensed brand name LEVI͛S. It
sought to cancel respondent͛s Copyright Registration No. I-3838 and enjoin the
respondent from further manufacturing, selling, offering for sale, and advertising
the denim jeans or slacks by using a design substantially, if not exactly similar to,
or a colorable imitation of the trademarks[22] of petitioner.
Upon manifestation/motion[23] by petitioner, the RTC of Manila, Branch 50
issued an order dated May 9, 1996,[24] forwarding the case to the Executive
Judge (RTC of Manila, Branch 23) for re-raffle among the courts designated as
Special Courts to try and decide cases involving violations of Intellectual Property
Rights pursuant to Administrative Order No. 113-95, dated October 2, 1995. On
May 17, 1996, Branch 23 issued an order[25] directing that the case be forwarded
to Branch 1 (a designated Special Court per said administrative order) for further
proceedings.
On the scheduled hearing on December 4, 1996 in the RTC of Manila, Branch 1,
respondent (as therein plaintiff) failed to appear. Upon motion of petitioner, the
trial court declared respondent to have waived its right to present evidence to
controvert petitioner͛s application for a writ of preliminary injunction.[26]
In an order dated December 10, 1996, the trial court found that the respondent
intended to appropriate, copy, and slavishly imitate the genuine appearance of
authentic LEVI͛s jeans and pass off its LIVE͛s jeans as genuine LEVI͛s jeans. Thus,
In opposing defendant͛s application for preliminary in injunction, plaintiff alleges
that it has obtained Certificates of Registration for the trademarks ͞LIVE[͚]S,͟
͞LIVE[͚]S LABEL MARK,͟ [͞]LIVE[͚]S ORIGINAL JEANS[͞] as well as the patch pocket
design and hand tag. It did not, however, present any evidence to support the
same.
In any event, plaintiff͛s backpocket design is not copyrightable, as it is neither an
original work nor a novel design. Rather it is a copy or slavish imitation of LS &
Co./LSPI͛s Arcuate trademark which was first used by LS & Co. worldwide in 1873
and the Philippines Registration of which is based on LS & Co.͛s US Certificate of
Registration No. 404243, issued on November 16, 1943. Thus, no rights attendant
to a copyright can ever attach to plaintiff͛s infringing backpocket design.
Also, it could not have been pure chance or coincidence that plaintiff͛s LIVE͛S
jeans use a trademark, symbol or design which is substantially, if not exactly
similar to, or a colorable imitation of LS & CO./LSPI trademarks, since there is a
practically limitless array of other marks, words, numbers, devices, symbols and
designs which plaintiff could have used on its products to identify and distinguish
them from those of defendant and other manufacturers. All told, from the mass
of evidence adduced, plaintiff͛s intent to appropriate, copy, and slavishly imitate
the genuine appearance of authentic LEVI͛s jeans and pass off its LIVE͛s jeans as
genuine LEVI͛S jeans in much too stark.
As above-discussed, through more than a century͛s use and continuous
substantial promotions and advertising of the LEVI͛s TRADEMARKS on its products
Ͷ on jeans and trousers in particular Ͷ LS & Co. has cultivated, gained and
established an invaluable goodwill in its name ͞LEVI͛s STRAUSS & COMPANY͟ and
in the products which carry such name and the LEVI͛s TRADEMARKS. Hence,
unless plaintiff is immediately enjoined from further manufacturing, selling,
offering for sale and advertising denims, jeans or slacks using a design
substantially, if not exactly similar to, or a colorable imitation of the LS & Co./LSPI
trademarks, it will continue to have a free ride on, and erode such invaluable
goodwill and reputation by the mere effortless expedient of imitating the overall
visual impression of genuine LEVI͛s JEANS on its own designs, employing minute
points of distinction sufficient to muddle the overall conclusion which is actually
generated, but do not dispel the similitude between the trademarks. Well has
been said that the most successful form of copying is to employ enough points of
similarity to confuse the public with enough points of difference to confuse the
court. [(]Del Monte Corporation vs. Court of Appeals, 181 SCRA 418[)].
There is no question that the above-discussed circumstances call for the
intervention of equity to prevent further irreparable harm to defendant͛s goodwill
and reputation. In consonance with Section 3 (a), (b) and (c), Rule 58 of the Rules,
defendant is thus entitled to the ancillary relief demanded either for a limited
period or perpetually.
Corollarily, defendant is hereby directed to execute a bond to the party enjoined
to the effect that defendant will pay to plaintiff all damages it may sustain by
reason of the injunction if the court should finally decide that defendant is not
entitled thereto.
WHEREFORE, upon the filing of a bond in the sum of FIVE HUNDRED THOUSAND
PESOS (P500,000.00), let a writ of preliminary injunction issue restraining plaintiff,
its officers, employees, agents, representatives, dealers, retailers or assigns from
manufacturing, distributing, selling, offering for sale, advertising or otherwise
using denims or jeans with a design which is substantially, if not exactly similar to
defendant͛s trademarks.
Meanwhile, the hearing on the main cause of action is hereby set on February 5
and 12, 1997, both at 9:00 a.m.
SO ORDERED.[27]
On motion for reconsideration, respondent prayed that the petitioner͛s
counterclaim be dismissed and that the order dated December 10, 1996, be set
aside. In an order dated April 11, 1997, the trial court denied the motion, stating
that:
Considering:
(1) That the defendant͛s application for injunctive relief was properly directed
against the real property in interest, the self-proclaimed lawful assignee and
authorized user of the subject trademarks, hence, the party who would be
benefited or injured by this court͛s final decision on the application;
(2) That the acts which plaintiff was enjoined from doing are within the scope
of the reliefs demanded by defendant;
(3) That the institution of defendant͛s counterclaim for infringement and
damages does not amount to forum-shopping in that the elements of 
 which form the basis for a charge for forum-shopping are not all
present in the instant case;
(4) That the injunctive order sought to be reconsidered, by its very nature, is
merely provisional and does not dispose of the case on the merits. Hence, it
would not amount to a prejudgment considering that the defendant still has the
burden of proving during trial on the merits that it is entitled to protection and
that confusion does, in fact, or likely to exist, and, on the other hand, plaintiff
would have its opportunity to prove that confusion does not exist or is not likely
to happen; and
(5) That the evidence on record justifies the injunctive relief granted by this
court in favor of defendant.
WHEREFORE, in view of all the foregoing, plaintiff͛s motion for reconsideration
and supplemental motion for reconsideration are DENIED for lack of merit.
SO ORDERED.[28]
Respondent took the matter to the Court of Appeals. On August 13, 1997, the
Court of Appeals rendered a decision in favor of the respondent, enjoining the
trial court from further proceeding with the case. The dispositive portion thereof
reads:
WHEREFORE, the petition is 
(
' The assailed Orders dated December 10, IV
1996 and April 11, 1997 are annulled and set aside for having been issued with
grave abuse of discretion and in excess of jurisdiction. Respondent court is THE COURT OF APPEALS ERRED IN HOLDING THAT THE PRELIMINARY INJUNCTIVE
ordered to desist from proceeding with Civil Case No. 96-76944, entitled ͞Vogue ORDER ISSUED IN CIVIL CASE NO. 96-76944 PREJUDGES THE CASE.[30]
Traders Clothing Company, Plaintiff, versus Levi Strauss (Phil.), Inc., Defendant.͟,
until the Bureau of Patents, Trademarks and Technology Transfer has finally The petition has merit.
resolved 
  Cases Nos. 4216 and 4217.
$' Petitioner points out that while the Court of Appeals categorically stated
No costs. that it did not commit forum-shopping when it filed its counterclaim for
infringement (to the petitioner͛s complaint for damages in the Regional Trial
SO ORDERED.[29] Court of Manila, Branch 1 Ͷ Civil Case No. 96-76944) as the causes of action in
the said civil case and the two 
 
cases (
  Cases Nos. 4216 and
After its motion for reconsideration was denied, petitioner filed the present 4217 pending before the BPTTT) are different and do not involve the same subject
petition for review on ‘
 
raising the following assignment of errors: matter and issues, it erred in applying the ͞doctrine of primary jurisdiction.͟ The
appeals court declared that the trial court never had the authority to hear and
I grant petitioner͛s prayer for injunctive relief nor to proceed with the hearing of
the case in view of the pendency of the two 
 
cases.
THE COURT OF APPEALS COMMITTED CLEARLY REVERSIBLE ERROR IN HOLDING
THAT THE DOCTRINE OF PRIMARY JURISDICTION OPERATES TO SUSPEND ANY Petitioner is a holder of Certificate of Registration No. 1379-A for its Levi͛s
AND ALL PROCEEDINGS IN CIVIL CASE NO. 96-76944, PARTICULARLY THE ABILITY trademarks. The registration gives rise to a presumption of its validity and the
OF THE TRIAL COURT TO ISSUE PRELIMINARY INJUNCTIVE RELIEF, AND THAT THE right to the exclusive use of the same. As set forth in Section 17 of Republic Act
TRIAL COURT JUDGE THEREFORE COMMITTED ABUSE OF DISCRETION IN (R.A.) No. 166 or ͞The Trademark Law,͟ an entity having a duly registered
GRANTING SUCH RELIEF. trademark can file a suit against another entity for the protection of its right:

II Sec. 17. Grounds for cancellation. Ͷ Any person, who believes that he is or will
be damaged by the registration of a mark or trade-name, may, upon the payment
THE COURT OF APPEALS ERRED IN FAILING TO HOLD THAT THE CERTIFICATION of the prescribed fee, apply to cancel said registration upon any of the following
AGAINST FORUM-SHOPPING ATTACHED BY RESPONDENT TO ITS PETITION FOR grounds:
m"à AND PROHIBITION IS FATALLY DEFECTIVE.
(a) That the registered mark or trade-name becomes the common descriptive name of
III an article or substance on which the patent has expired;

THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT JUDGE (b) That it has been abandoned;
COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING RESPONDENT TO HAVE
WAIVED ITS RIGHT TO ADDUCE EVIDENCE TO COUNTER PETITIONER͛S EVIDENCE (c) That the registration was obtained fraudulently or contrary to the provisions of
IN SUPPORT OF ITS APPLICATION FOR PRELIMINARY INJUNCTIVE RELIEF. section four, Chapter II hereof;
(d) That the registered mark or trade-name has been assigned, and is being used by, or The passage of Republic Act No. 8293, otherwise known as the ͞Intellectual
with the permission of, the assignee, so as to misrepresent the source of the Property Code of the Philippines,͟[33] expanded the rights accorded to an owner
goods, business or services in connection with which the mark or trade-name is of a registered trademark. Sections 151 (2), 156, and 161 thereof state:
used; or
Section 151.2. Notwithstanding the foregoing provisions, the court or the
(e) That cancellation is authorized by other provisions of this Act. administrative agency vested with jurisdiction to hear and adjudicate any action
to enforce the rights to a registered mark shall likewise exercise jurisdiction to
Section 27 thereof states that the proper Regional Trial Court shall have determine whether the registration of said mark may be cancelled in accordance
jurisdiction over the damage suits. 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
In m  

m  
‘

m 

 ,[31] as reiterated in the case of over a subsequently filed petition to cancel the same mark. On the other hand,
? $-
   
) 
  
-

m 

 ,[32] the the earlier filing of petition to cancel the mark with the Bureau of Legal Affairs
Court clarified that while an administrative cancellation of a registered trademark, {formerly BPTTT] shall not constitute a prejudicial question that must be resolved
on any of the grounds under Section 17 of R.A. No. 166, is within the ambit of the before an action to enforce the rights to same registered mark may be decided.
BPTTT, an action for infringement or any other incidental remedy sought is within (Sec. 17, R.A. No. 166a)
the jurisdiction of the ordinary courts. Thus,
Section 156. Actions, and Damages and Injunction for Infringement. Ͷ 156.1 The
. . . It might be mentioned that while an application for the administrative owner of a registered mark may recover damages from any person who infringes
‘ ‘   of a registered trademark on any of the grounds enumerated in his rights, and the measure of the damages suffered shall be either the reasonable
Section 17 of Republic Act No. 166, as amended, otherwise known as the Trade- profit which the complaining party would have made, had the defendant not
Mark Law, falls under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark infringed his rights, or the profit which the defendant actually made out of the
Law), an action, however, for infringement or unfair competition, as well as the infringement, or in the event such measure of damages cannot be readily
remedy of injunction and relief for damages, is explicitly and unquestionably ascertained with reasonable certainty, then the court may award as damages a
within the competence and jurisdiction of ordinary courts. reasonable percentage based upon the amount of gross sales of the defendant or
the value of the services in connection with which the mark or trade name was
used in the infringement of the rights of the complaining party (Sec. 23, first par.,
...
R.A. No. 166a).
Surely, an application with BPTTT for an administrative cancellation of a registered
156.2 On application of the complainant, the court may impound during the
trade mark cannot per se have the effect of restraining or preventing the courts
pendency of the action, sales invoices and other documents evidencing sales. (n)
from the exercise of their lawfully conferred jurisdiction. A contrary rule would
unduly expand the doctrine of primary jurisdiction which, simply expressed, would
merely behoove regular courts, in controversies involving specialized disputes, to 156.3. In cases where actual intent to mislead the public or to defraud the
defer to the findings or resolutions of administrative tribunals on certain technical complainant is shown, in the discretion of the court, the damages may be
matters. This rule, evidently, did not escape the appellate court for it likewise doubled. (Sec. 23, first par., R.A. No. 166)
decreed that for "good cause shown, the lower court, in its sound discretion, may
suspend the action pending outcome of the cancellation proceedings" before 156.4 The complainant, upon proper showing, may also be granted injunction.
BPTTT. (Underscoring supplied.) (Sec. 23, second par., R.A. No. 166a)
Section 161.  

.


  
Ͷ In any action Civil Case No. No. 96-76944) a counterclaim for infringement with a prayer for the
involving a registered mark, the court may determine the right to registration, issuance of a writ of preliminary injunction.
order the cancellation of a registration, in whole or in part, and otherwise rectify
the register with respect to the registration of any party to the action in the  %' As to the procedural matter, petitioner argues that the Court of Appeals
exercise of this. Judgment and orders shall be certified by the court to the erred in giving due course to the respondent͛s petition for ‘   even if it was
Director, who shall make appropriate entry upon the records of the Bureau, and the latter͛s counsel, Atty. Danilo A. Soriano, not one of its duly authorized officers,
shall be controlled thereby (Sec. 25, R.A. No. 166a). who executed the certification of non-forum shopping.

Sections 155 (2), 156, and 163 of the said law further provide for the remedy of an
owner of a registered mark to institute an action for infringement or damages
against a person or entity that may reproduce, counterfeit, copy or colorably
imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely
to cause confusion, or to cause mistake, or to deceive.
Finally, Rule 8, Section 7 of the Regulations on 
  Proceedings, provides: and, to the best of his knowledge, no such other action or claim is pending
Section 7. Effect of filing of a suit before the Bureau or with the proper court. Ͷ
The filing of a suit to enforce the registered mark with the proper court or Bureau
shall exclude any other court or agency from assuming jurisdiction over a
subsequently filed petition to cancel the same mark. On the other hand, the
earlier filing of petition to cancel the mark with the Bureau shall not constitute a
prejudicial question that must be resolved before an action to enforce the rights
to same registered mark may be decided. (Emphasis supplied)
It bears stressing that an action for infringement or unfair competition, including
the available remedies of injunction and damages, in the regular courts can
proceed independently or simultaneously with an action for the administrative
cancellation of a registered trademark in the BPTTT. As applied to the present
case, petitioner͛s prior filing of two 
 
cases against the respondent and deliberate forum shopping, the same shall be ground for summary dismissal
before the BPTTT for the cancellation of the latter͛s trademark registrations,
namely, ͞LIVE͛S͟ and ͞LIVE͛S Label Mark,͟ does not preclude petitioner͛s right (as
a defendant) to include in its answer (to respondent͛s complaint for damages in
Section 5, Rule 7 of the Rules of Civil Procedure incorporating Administrative
Circular Nos. 28-91 (effective January 1, 1992) and 04-94 (effective April 1, 1994)
states the requirement of a plaintiff or petitioner to include in his initiatory
pleading or petition a certification of non-forum shopping. Thus,
Sec. 5. Certification against forum shopping. Ͷ The plaintiff or principal party
shall certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and simultaneously
filed therewith: (a) that he has not theretofore commenced any action or filed
any claim involving the same issues in any court, tribunal or quasi-judicial agency
therein; (b) if there is such other pending action or claim, a complete statement of
the present status thereof; and (c) if he should thereafter learn that the same or
similar action or claim has been filed or is pending, he shall report that fact within
five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for
the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing. The submission of a false certification or non-
compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel clearly constitute willful
with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions.
In . 
‘


m


m,[34] this Court gave the rationale for this rule, Branch 1, Atty. Joselito C. Frial, even made a notation in the minutes that
namely, that the certification against forum shopping is required to be respondent (as oppositor) shall be given a period of 10 days to interpose its
accomplished by petitioner himself because only the petitioner himself has actual opposition to the petitioner͛s prayer for injunctive relief.[35] The Order dated
knowledge of whether or not he has initiated similar actions or proceedings in November 6, 1996 states:
different courts or agencies. Even his counsel may be unaware of such fact as he
may only be aware of the action for which he has been retained. As to After witness Atty. Gilbert Raymond T. Reyes [witness for the petitioner] had
corporations, the law requires that the certification could be made by its duly finished his testimony, the counsel for defendant [herein petitioner] moved for
authorized director or officer. The Court also stresses that the petitioner͛s non- and was allowed ten (10) days from today within which to file a written formal
compliance and utter disregard of the rules cannot be rationalized by invoking the offer of exhibits, copy furnish[ed] the counsel for plaintiff [herein respondent]
policy of liberal construction. who is allowed a similar period of time from receipt thereof within which to file
comment and/or objection.
The requirement of certification against forum shopping under the Rules is to be
executed by the petitioner, or in the case of a corporation, its duly authorized In the meantime, let the hearing be continued on December 4 & 11, 1996, both at
director or officer, but not petitioner͛s counsel whose professional services have 9:00 a.m. as previously scheduled.
been engaged to handle the subject case. The reason is that it is the petitioner
who has personal knowledge whether there are cases of similar nature pending The counsels are notified of this order in open court.
with the other courts, tribunals, or agencies. Thus, in the present case, the Court
of Appeals should have outrightly dismissed the petition for ‘
  filed by the
SO ORDERED.[36]
respondent (as therein petitioner in the appeals court) due to the defective
certification of non-forum shopping. The certification made by Atty. Soriano,
counsel for the respondent, who is not one of its duly authorized directors or However, on December 4, 1996, Atty. Yatco failed to appear without proferring
officers, is defective.Even if Atty. Soriano was the ͞in-house counsel,͟ the fact any valid reason which prompted the trial court to issue an order that respondent
remains that no board resolution, or even a Secretary͛s Certificate containing the was deemed to have waived its right to present evidence:
board resolution, was submitted to show that he was indeed authorized to file the
said petition in the Court of Appeals. On call for hearing, only the counsel for defendant [herein petitioner] appeared.
There was no appearance for plaintiff [herein respondent] although its counsel
$' Petitioner avers that the Court of Appeals erred in finding that the
respondent was denied due process. It contends that the trial court had correctly
ruled that respondent was deemed to have waived its right to present evidence
due to its non-appearance at the scheduled hearing (to oppose the petitioner͛s
application for the issuance of a writ of preliminary injunction) on December 4,
1996.
The records show that respondent, through its former counsel, Atty. Alfonso R.
Yatco, was present during the hearing on November 6, 1996 as reflected in the
minutes of the court proceedings that day. The counsels for both parties had
been duly notified in open court. The Branch Clerk of Court of RTC of Manila,
was duly notified. In view thereof, upon motion of counsel for defendant, plaintiff
is considered to have waived its right to present evidence to controvert
defendant͛s application for a writ of preliminary injunction, which, consequently,
is hereby deemed submitted for resolution.
The counsel for defendant is notified in open court. Furnish the counsel for
plaintiff with a copy hereof.
SO ORDERED.[37]
Respondent explained to the trial court that its former counsel, Atty. Yatco, had
honestly thought that the December 4, 1996 hearing had been rescheduled to
December 11, 1996 per agreement with the petitioner͛s counsel. This is not a of Rule 58 of the Rules of Civil Procedure gives the trial courts sufficient discretion
sufficient ground. It was correct for the trial court, upon motion of petitioner, to to evaluate the conflicting claims in an application for a provisional writ which
consider the matter submitted for resolution on the basis of petitioner͛s often involves a factual determination, the appellate courts generally will not
evidence. Respondent cannot find solace in its lame excuse of honest mistake interfere in the absence of manifest abuse of such discretion.[38] A writ of
which was, in fact, negligence and lack of vigilance. preliminary injunction would become a prejudgment of a case only when it grants
the main prayer in the complaint or responsive pleading, so much so that there is
' Petitioner claims that the assailed orders of the trial court, dated nothing left for the trial court to try except merely incidental matters.[39] Such
December 10, 1996 and April 11, 1997, did not prejudge the case. On the other fact does not obtain in the present case.
hand, respondent counters that the trial court͛s order dated December 10, 1996
amounted to a prejudgment of the case, to wit: that its LIVE͛s backpocket design A)(
(
(, the petition is GRANTED and the Decision of the Court of Appeals
was not copyrightable because it was neither an original work nor a novel design; dated August 13, 1997 and its Resolution dated March 5, 1998 are REVERSEDand
that it was a copy or slavish imitation of petitioner͛s LEVI͛s Arcuate trademark; SET ASIDE. The Regional Trial Court of Manila, Branch 1 is ORDERED to proceed
and that no rights attendant to a copyright can ever attach to respondent͛s with the hearing of Civil Case No. 96-76944 with dispatch.
backpocket design.
No costs.
The trial court granted petitioner͛s prayer for the issuance of a writ of preliminary
injunction in its answer with counterclaim (to respondent͛s complaint for SO ORDERED.
damages). The writ did not have the effect of prejudging or disposing of the
merits of the case, but merely enjoined the respondent͛s acts of manufacturing,
distributing, selling, or offering for sale the jeans which had allegedly incorporated
exact or colorable imitations of the products belonging to petitioner. The Order
dated April 11, 1997 of the trial court denying the respondent͛s motion for
reconsideration categorically stated that the said Order did not amount to a
prejudgment of the case. Petitioner has yet to establish during the trial that it is
entitled to a permanent injunction by reason of respondent͛s confusingly similar
LIVE͛S products. Otherwise, the trial court could declare that the LIVE͛S
trademark belonging to respondent was not confusingly similar with the LEVI͛s
trademark of petitioner.

Indeed, a writ of preliminary injunction is generally based solely on initial and

incomplete evidence adduced by the applicant (herein petitioner). The evidence
submitted during the hearing of the incident is not conclusive, for only a
"sampling" is needed to give the trial court an idea of the justification for its
issuance pending the decision of the case on the merits. As such, the findings of
fact and opinion of a court when issuing the writ of preliminary injunction are
interlocutory in nature. Moreover, the sole object of a preliminary injunction is to
preserve the  
(
until the merits of the case can be heard. Since Section 4
)

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A To centralize the operations of all Shangri-la hotels and the ownership of the

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 '
,*, "Shangri-La" mark and "S" logo, the Kuok Group had incorporated in Hong Kong
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 'Petitioners, and Singapore, among other places, several companies that form part of the
vs.

(4((

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(
 'Respondent. Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc.
DECISION

i
All hotels owned, operated and managed by the aforesaid SLIHM Group of
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, , 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.
Shangri-La International Hotel Management Ltd. Group of Companies. EDSA
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.
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. vs. 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. vs.
Court of Appeals, et al. and G.R. No. 111580, entitled Shangri-La International
Hotel Management LTD., et al. vs. Court of Appeals, et al., which were accordingly
consolidated.
In a consolidated 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.] -
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; and
e) Ordering [petitioners], jointly and severally, to indemnify [respondent]
in the amounts of P2,000,000.00 as actual and compensatory damages,
P500,000.00 as attorney's fee and expenses of litigation.
Let a copy of this Decision be 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 were made through travel agents not owned, controlled or
managed by the Kuok Group.
4. While the Paris Convention protects internationally known marks, R.A.
No. 166 still requires use in commerce in the Philippines. Accordingly,
and on the premise that international agreements, such as Paris
Convention, must yield to a municipal law, the question on the exclusive
right over the mark and logo would still depend on actual use in
commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the CA
in its equally assailed Resolution of September 15, 2003.10
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; and
8. Whether petitioners should be prohibited from continuing their use of
the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our
attention to, namely:
1. Whether the 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 & 
 
?
m

 


m,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,
 ‘ proof
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 mark. The certificate of registration is merely a 
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.14
Among the effects of registration of a mark, as catalogued by the Court in
15
Lorenzana v. Macagba, are:
 1. Registration in the Principal Register gives rise to a ##$% of the
validity of the registration, the registrant's ownership of the mark, and
his right to the exclusive use thereof. x x x
the
2. Registration in the Principal Register is $$ % of
the trademark and proceedings therein pass on the issue of ownership,
which & " % . ##$$%  $%% 
# $%..$$%$%#$$% % $%. xxx
[Emphasis supplied]u 2
Ownership of a mark or trade name may be acquired not necessarily by
registration but by adoption and use in trade or commerce. As between actual use
of a mark without registration, and registration of the mark without actual use
thereof, the former prevails over the latter. For a rule widely accepted and 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.16
While the present law on trademarks17 has dispensed with the requirement of
prior actual use at the time of registration, the law in force at the time of
registration must be applied, and thereunder it was held that as a condition
precedent to registration of trademark, trade name or service mark, the same
must have been in actual use in the Philippines before the filing of the application
for registration.18 Trademark is a creation of use and therefore actual use is a pre-
requisite to exclusive ownership and its registration with the Philippine Patent
19
Office is a mere administrative confirmation of the existence of such right.
By itself, registration is not a mode of acquiring ownership. When the applicant is
not the owner of the trademark being applied for, he has no right to apply for
registration of the same. Registration merely creates a 
 ‘
presumption of
the validity of the registration, of the registrant's 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.
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 
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 scope of a petition for review, there
are, however, noted exceptions thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or
24
impossible;
2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts;26
27
4. When the findings of fact are conflicting; and
5. When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondent.28
And these are naming but a few of the recognized exceptions to the rule.
The CA itself, in its Decision of May 15, 2003, found that the respondent's
president and chairman of the board, Ramon Syhunliong, had been a guest at the
petitioners' hotel before he caused the registration of the mark and logo, and
surmised that he must have copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise
from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that
he was a visitor of [petitioners'] hotel abroad at one time (September 27, 1982)
establishes [petitioners'] allegation that he got the idea there.29
Yet, in the very next paragraph, despite the preceding admission that the mark
and logo must have been copied, the CA tries to make it appear that the adoption
of the same mark and logo could have been coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The word
"Shangri-la" refers to a (a) remote beautiful imaginary place where life
approaches perfection or (b) imaginary mountain land depicted as a utopia in the
novel Lost Horizon by James Hilton. The Lost Horizon was a well-read and popular
novel written in 1976. It is not impossible that the parties, inspired by the novel,
both adopted the mark for their business to conjure [a] place of beauty and
pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old English
print.30
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
3

, that petitioners had prior widespread use of 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 6(3) of the Paris Convention, no
34
time limit is fixed for the cancellation of marks registered or used in bad faith.
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 

mark and logo abroad:
There is, to be sure, an $#$/   # 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."36 To petitioners' mind, it was error
for the CA to rule that their worldwide use of the mark and logo in dispute could difference between the aforequoted Section 2 and Section 2-A of R.A. No. 166.
not have conferred upon them any right thereto. Again, this is a legal question For, while Section 2 provides for what is
  Section 2-A, on the other
which is well worth delving into.


is acquired. These are two distinct concepts.
R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are .$". - Trademarks, trade names and service marks
% by persons, corporations, partnerships or associations domiciled in the
Philippines and by persons, corporations, partnerships or associations domiciled
in any foreign country may be registered in accordance with the provisions of this
Act: Provided, That said trademarks trade names, or service marks are  &$%
$%  %/$ %%%$%$$##$%before
the time the applications for registration are filed: And provided, further, That the
country of which the applicant for registration is a citizen grants by law
substantially similar privileges to citizens of the Philippines, and such fact is
officially certified, with a certified true copy of the foreign law translated into the
English language, by the government of the foreign country to the Government of
the Republic of the Philippines.
Section 2-A. %$# of trademarks, trade names and service marks; how
acquired. - Anyone who lawfully produces or deals in merchandise of any kind or
hand, sets out how
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
who engages in any lawful business, or who renders any lawful service in
commerce, by   thereof in manufacture or trade, in business, and in the
service rendered, may appropriate to his exclusive use a trademark, a trade name,
or a servicemark %###$"&%, 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 


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
appropriated ( 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

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 %$ &
#%"&%1$$ #%, unions, and any manufacturing,
industrial, commercial, agricultural or other organizations engaged in trade or
commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or device
or any combination thereof adopted and used by a manufacturer or merchant to
identify his goods and distinguish them from those manufactured, sold or dealt in
by others.
The term "service mark" means a mark used in the sale or advertising of services
to identify the s/$ %#%%$$%.$/$ 
 % $%  $ $$$%  ! % &" $
$.%$% .%   % % $$% $/   $ 
/$$%.. [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,



, is Nor can the petitioners' separate personalities from their mother corporation be
identical with or confusingly similar to or constitutes a translation of a mark that is
sought to be registered or is actually registered.37
"any person who believes that he is or will be damaged by
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, %$ $#%!
.$%.F$% $%$$##$%"$%%
$%%$% .% inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has been made part of the
law of the land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given a standing equal,
not superior, to national legislative enactments (Salonga and Yap, Public
International Law, Fourth ed., 1974, p. 16)."39 [Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris
Convention. Nevertheless, with the double infirmity of lack of two-month prior
use, as well as bad faith in the respondent's registration of the mark, it is evident
that the petitioners cannot be guilty of infringement. It would be a great injustice
to adjudge the petitioners guilty of infringing a mark when they are actually the
originator and creator thereof.
an obstacle in the enforcement of their rights as part of the Kuok Group of
Companies and as official repository, manager and operator of the subject mark
and logo. Besides, R.A. No. 166 did not require the party seeking relief to be the
owner of the mark but
the registration of a mark or trade name."40
WHEREFORE, the instant petition is GRANTED. The assailed Decision and
Resolution of the Court of Appeals dated May 15, 2003 and September 15, 2003,
respectively, and the Decision of the Regional Trial Court of Quezon City dated
March 8, 1996 are hereby SET ASIDE. Accordingly, the complaint for infringement
in Civil Case No. Q-91-8476 is ordered DISMISSED.
$$#c$/'%" '
''7G8G89 trademarks had been committed, filed, on August 18, 1982, a m
 






à  !

.   against respondent Fortune
- this petition for review under Rule 45 of the Rules of Court, herein Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional
petitioners Philip Morris, Inc., Benson & Hedges (Canada) Inc., and Trial Court of Pasig, Branch 166.
Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek The decision under review summarized what happened next, as
the reversal and setting aside of the following issuances of the Court of follows:
Appeals (CA) in m$/
m-
&

,,,u+, to wit:
1.
 $$%%&<7<HH: affirming an earlier decision of the
Regional Trial Court of Pasig City, Branch 166, in its Civil Case No. 47374,
which dismissed the complaint for trademark infringement and damages In the m
  xxx with prayer for the issuance of a
thereat commenced by the petitioners against respondent Fortune preliminary injunction, [petitioners] alleged that they are foreign
Tobacco Corporation; and corporations not doing business in the Philippines and are suing
on an isolated transaction. xxx they averred that the countries
in which they are domiciled grant xxx to corporate or juristic
2.
$%  c& :H <HH: denying petitioners͛ motion for
persons of the Philippines the privilege to bring action for
reconsideration. infringement, xxx without need of a license to do business in
those countries. [Petitioners] likewise manifested [being
registered owners of the trademark ͞MARK VII͟ and ͞MARK
Petitioner Philip Morris, Inc., a corporation organized under the laws TEN͟ for cigarettes as evidenced by the corresponding
of the State of Virginia, United States of America, is, per Certificate of certificates of registration and an applicant for the registration
Registration No. 18723 issued on April 26, 1973 by the Philippine Patents of the trademark ͞LARK MILDS͟]. xxx. [Petitioners] claimed that
Office (PPO), the registered owner of the trademark ͞7 ͟ for they have registered the aforementioned trademarks in their
cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a respective countries of origin and that, by virtue of the long and
subsidiary of Philip Morris, Inc., is the registered owner of the trademark extensive usage of the same, these trademarks have already
gained international fame and acceptance. Imputing bad faith
37'
(͟ for cigarettes as evidenced by PPO
Certificate of Registration
on the part of the [respondent], petitioners claimed that the
No. 11147
And as can be seen in Trademark Certificate of Registration No.
[respondent], without any previous consent from any of the
19053
another subsidiary of Philip Morris, Inc., the Swiss company
Fabriques de Tabac Reunies, S.A., is the assignee of the trademark 357͟
which was originally registered in 1964 by Ligget and Myers Tobacco
Company. On the other hand, respondent Fortune Tobacco Corporation, a
company organized in the Philippines, manufactures and sells cigarettes
using the trademark ͞7 ͟
The legal dispute between the parties started when the herein
petitioners, on the claim that an infringement of their respective
[petitioners], manufactured and sold cigarettes bearing the
identical and/or confusingly similar trademark ͞MARK͟ xxx
Accordingly, they argued that [respondent͛s] use of the
trademark ͞MARK͟ in its cigarette products have caused and is
likely to cause confusion or mistake, or would deceive
purchasers and the public in general into buying these products
under the impression and mistaken belief that they are buying
[petitioners͛] products.
 Invoking the provisions of the  
m





xxx xxx xxx

‘



 

‘ 

 (Paris 
Convention, for brevity), to which the Philippines is a signatory After the termination of the trial on the merits xxx trial
xxx, [petitioners] pointed out that upon the request of an court rendered its .‘
 xxx dated November 3, 1999
interested party, a country of the Union may prohibit the use of dismissing the complaint and counterclaim after making a
a trademark which constitutes a reproduction, imitation, or finding that the [respondent] did not commit trademark
translation of a mark already belonging to a person entitled to infringement against the [petitioners]. Resolving first the issue
the benefits of the said Convention. They likewise argued that, of whether or not [petitioners] have capacity to institute the
in accordance with Section 21-A in relation to Section 23 of instant action, the trial court opined that [petitioners͛] failure to
Republic Act 166, as amended, they are entitled to relief in the present evidence to support their allegation that their
form of damages xxx [and] the issuance of a writ of preliminary respective countries indeed grant Philippine corporations
injunction which should be made permanent to enjoin reciprocal or similar privileges by law xxx justifies the dismissal
perpetually the [respondent] from violating [petitioners͛] right of the complaint xxx. It added that the testimonies of
to the exclusive use of their aforementioned trademarks. [petitioners͛] witnesses xxx essentially declared that
[petitioners] are in fact doing business in the Philippines, but
[petitioners] failed to establish that they are doing so in
accordance with the legal requirement of first securing a
[Respondent] filed its 
 xxx denying [petitioners͛] license. Hence, the court declared that [petitioners] are barred
material allegations and xxx averred [among other things] xxx from maintaining any action in Philippine courts pursuant to
that ͞MARK͟ is a common word, which cannot particularly Section 133 of the Corporation Code.
identify a product to be the product of the [petitioners] xxx
The issue of whether or not there was infringement of
xxx xxx xxx. the [petitioners͛] trademarks by the [respondent] was likewise
answered xxx in the negative. It expounded that ͞in order for a
name, symbol or device to constitute a trademark, it must,
either by itself or by association, point distinctly to the origin or
ownership of the article to which it is applied and be of such
Meanwhile, after the [respondent] filed its 

 nature as to permit an exclusive appropriation by one person͟.
(Records, Vo. I, p. 26), the matter of the [petitioners͛] prayer for Applying such principle to the instant case, the trial court was of
the issuance of a writ of preliminary injunction was negatively the opinion that the words ͞MARK͟, ͞TEN͟, ͞LARK͟ and the
resolved by the court in an 
xxx dated March 28, 1973. Roman Numerals ͞VII͟, either alone or in combination of each
[The incidental issue of the propriety of an injunction would other do not by themselves or by association point distinctly to
eventually be elevated to the CA and would finally be resolved the origin or ownership of the cigarettes to which they refer,
by the Supreme Court in its Decision dated July 16, 1993 in G.R. such that the buying public could not be deceived into believing
No. 91332]. xxx. that [respondent͛s] ͞MARK͟ cigarettes originated either from
the USA, Canada, or Switzerland.
 Emphasizing that the test in an infringement case is the
likelihood of confusion or deception, the trial court stated that
the general rule is that an infringement exists if the resemblance
is so close that it deceives or is likely to deceive a customer
exercising ordinary caution in his dealings and induces him to
purchase the goods of one manufacturer in the belief that they
are those of another. xxx. The trial court ruled that the
[petitioners] failed to pass these tests as it neither presented
witnesses or purchasers attesting that they have bought
[respondent͛s] product believing that they bought [petitioners͛]
͞MARK VII͟, ͞MARK TEN͟ or ͞LARK͟, and have also failed to
introduce in evidence a specific magazine or periodical
circulated locally, which promotes and popularizes their
products in the Philippines. It, moreover, elucidated that the
words consisting of the trademarks allegedly infringed by
[respondent] failed to show that they have acquired a secondary
meaning as to identify them as [petitioners͛] products. Hence,
$%  c& :H <HH: petitioners are now with this Court 
the court ruled that the [petitioners] cannot avail themselves of
the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just
not to award any to either party stating that, since the
[petitioners] filed the action in the belief that they were
Eventually, the CA, in its
 $$%%&<7<HH: while ruling for
petitioners on the matter of their legal capacity to sue in this country for
trademark infringement, nevertheless affirmed the trial court͛s decision on the
underlying issue of respondent͛s liability for infringement as it found that:
xxx the appellants͛ [petitioners͛] trademarks, i.e.,
͞MARK VII͟, ͞MARK TEN͟ and ͞LARK͟, do not qualify as well-
known marks entitled to protection even without the benefit of
actual use in the local market and that the similarities in the
trademarks in question are insufficient as to cause deception or
confusion tantamount to infringement. Consequently, as
regards the third issue, there is likewise no basis for the award
of damages prayed for by the appellants herein. (Word in
bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally
challenged
this petition for review essentially raising the following issues: (1) whether or not
petitioners, as Philippine registrants of trademarks, are entitled to enforce
trademark rights in this country; and (2) whether or not respondent has
committed trademark infringement against petitioners by its use of the mark
͞MARK͟ for its cigarettes, hence liable for damages.
In its m
 respondent, aside from asserting the correctness of the CA͛s
aggrieved by what they perceived to be an infringement of their
trademark, no wrongful act or omission can be attributed to
them. xxx. (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that
respondent has committed trademark infringement, petitioners went on
appeal to the CA whereat their appellate recourse was docketed as m$
/
m-
&

,,,u+ Indeed, the Court is not the proper venue to consider factual issues as it is not a
finding on its liability for trademark infringement and damages, also puts in issue
the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.

Dealing first with the procedural matter interposed by respondent, we find that
the petition raises both questions of fact and law contrary to the prescription
against raising factual questions in a petition for review on certiorari filed before
the Court. A question of law exists when the doubt or difference arises as to what
the law is on a certain state of facts; there is a question of fact when the doubt or
difference arises as to the truth or falsity of alleged facts.

trier of facts. Unless the factual findings of the appellate court are mistaken,
absurd, speculative, conflicting, tainted with grave abuse of discretion, or contrary
to the findings culled by the court of origin, we will not disturb them.
It is petitioners͛ posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced
from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the
conclusion drawn therefrom by the CA is correct is one of law. But, even if we
consider and accept as pure questions of law the issues raised in this petition, still,
the Court is not inclined to disturb the conclusions reached by the appellate court,
the established rule being that all doubts shall be resolved in favor of the
correctness of such conclusions.
Be that as it may, we shall deal with the issues tendered and determine
whether the CA ruled in accordance with law and established jurisprudence in
arriving at its assailed decision.
A ͞trademark͟ is any distinctive word, name, symbol, emblem, sign, or device, or
any combination thereof adopted and used by a manufacturer or merchant on his
which it appears. Once this is attained, the trade-mark owner
has something of value. If another poaches upon the
commercial magnetism of the symbol he has created, the owner
can obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their
entitlement to enforce trademark rights in this country, specifically, the
right to sue for trademark infringement in Philippine courts and be
accorded protection against unauthorized use of their Philippine-
registered trademarks.
In support of their contention respecting their right of action, petitioners
assert that, as corporate nationals of member-countries of the Paris
Union, they can sue before Philippine courts for infringement of
trademarks, or for unfair competition, $%"$%$%.
.$$%$ %"$%$%$$##$%%$
% $& &$%."$%$%$$##$%. To petitioners,
these grievance right and mechanism are accorded not only by Section 21-
A of Republic Act (R.A.) No. 166, as amended, or the à  !
-
 but
goods to identify and distinguish them from those manufactured, sold, or dealt in
by others. Inarguably, a trademark deserves protection. For, as Mr. Justice
also by Article 2 of the  
m






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Frankfurter observed in 
!


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%
m :   otherwise known as the  
m  .

In any event, petitioners point out that there is actual use of their
trademarks in the Philippines as evidenced by the certificates of
registration of their trademarks. The marks ͞%
à"& and ͞-% were
The protection of trademarks is the law͛s recognition of registered on the basis of actual use in accordance with Sections 2-A and
the psychological function of symbols. If it is true that we live by
5(a) of R.A. No. 166, as amended, providing for a 2-month pre-registration
symbols, it is no less true that we purchase goods by them. A
trade-mark is a merchandising short-cut which induces a
use in local commerce and trade while the registration of ͞MARK VII͟ was
purchaser to select what he wants, or what he has been led to on the basis of registration in the foreign country of origin pursuant to
believe what he wants. The owner of a mark exploits this Section 37 of the same law wherein it is explicitly provided that prior use
human propensity by making every effort to impregnate the in commerce need not be alleged.
atmosphere of the market with the drawing power of a
congenial symbol. Whatever the means employed, the aim is Besides, petitioners argue that their not doing business in the Philippines,
the same - to convey through the mark, in the minds of if that be the case, does not mean that cigarettes bearing their trademarks
potential customers, the desirability of the commodity upon are not available and sold locally. Citing m 

m    


 

 ‘
‘ petitioners state that such availability and As such, they ought, as a condition to availment of the rights and privileges
sale may be effected through the acts of importers and distributors. $5$ their trademarks in this country, #%#
$$##$%.$$%$ %&.%"%$&$$$.
Finally, petitioners would press on their entitlement to protection %#$/$.$$#$% $$2%#% $%<7A
'''
even in the absence of actual use of trademarks in the country in view of 7II'
the Philippines͛ adherence to the à 
 
‘

‘ 
In - 


?   , the Court further held that the
 
 or the TRIPS Agreement and the enactment of R.A. No. aforementioned reciprocity requirement is a condition 
(
  to
8293, or the Intellectual Property Code (hereinafter the ͞IP Code͟),both filing a suit by a foreign corporation which, unless alleged in the complaint,
of which provide that the fame of a trademark may be acquired through would justify dismissal thereof, a mere allegation that the suit is being
promotion or advertising with no explicit requirement of actual use in local pursued under Section 21-A of R.A. No. 166 not being sufficient. In a
trade or commerce. subsequent case,however, the Court held that where the complainant is
a national of a Paris Convention- adhering country, its allegation that it is
Before discussing petitioners͛ claimed entitlement to enforce trademark suing under said Section 21-A would suffice, because the reciprocal
rights in the Philippines, it must be emphasized that their standing to sue agreement between the two countries is embodied and supplied by the
in Philippine courts had been recognized, and rightly so, by the CA. It Paris Convention which, being considered part of Philippine municipal
ought to be pointed out, however, that the appellate court qualified its laws, can be taken judicial notice of in infringement suits.
holding with a statement, following /
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entitled 
 

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à  ‘‘
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that
As well, the fact that their respective home countries, namely, the United
such right to sue does not necessarily mean protection of their registered States, Switzerland and Canada, are, together with the Philippines,
marks in the absence of actual use in the Philippines. members of the Paris Union does not automatically entitle petitioners to
the protection of their trademarks in this country "% 
Thus clarified, what petitioners now harp about is their entitlement to !$%   %'
protection %%..$$%$!$%
$$##$%' True, the Philippines͛ adherence to the Paris Convention effectively
obligates the country to honor and enforce its provisions as regards the
As we ruled in /
& 
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so it must be here. protection of industrial property of foreign nationals in this country.
However, any protection accorded has to be made subject to the
Admittedly, the registration of a trademark gives the registrant, such limitations of Philippine laws. Hence, despite Article 2 of the Paris
as petitioners, advantages denied non-registrants or ordinary users, Convention which substantially provides that (1) nationals of member-
like respondent. But while petitioners enjoy the statutory presumptions countries shall have in this country rights specially provided by the
arising from such registration,  as to the validity of the registration, Convention as are consistent with Philippine laws, and enjoy the privileges
ownership and the exclusive right to use the registered marks, they may that Philippine laws now grant or may hereafter grant to its nationals, and
not successfully sue on the basis alone of their respective certificates of (2) while no domicile requirement in the country where protection is
registration of trademarks. For, petitioners are still foreign corporations. claimed shall be required of persons entitled to the benefits of the Union
for the enjoyment of any industrial property rights, foreign nationals must applied in most countries, rules of International Law are given a
still observe and comply with the conditions imposed by Philippine law on standing equal, not superior, to national legislative enactments.
its nationals.

Considering that R.A. No. 166, as amended, specifically Sections 2 and

2-A thereof, mandates    of the marks and/or emblems in local xxx xxx xxx
commerce and trade before they may be registered and ownership
In other words, (a foreign corporation) may have the
thereof acquired, the petitioners cannot, therefore, dispense with the
capacity to sue for infringement ͙ but the question of whether
element of actual use. Their being nationals of member-countries of the they have an exclusive right over their symbol as to justify
Paris Union does not alter the legal situation. issuance of the controversial writ will depend on actual use of
In " 
/ 

m    

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 , the Court their trademarks in the Philippines in line with Sections 2 and 2-
reiterated its rulings in
?
 ‘
   
‘

A of the same law. It is thus incongruous for petitioners to
 !
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% 
% 
 

claim that when a foreign corporation not licensed to do
 
 
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and 
 

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business in the Philippines files a complaint for infringement,

à  ‘‘
m     on the importance of ‘ 
‘ ‘ 

the entity need not be actually using its trademark in commerce
of a trademark in the Philippines notwithstanding the Paris Convention: 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
The provisions of the 1965 Paris Convention ͙ relied use of the emblem in the local market.
upon by private respondent and Sec. 21-A of the Trademark Law
were sufficiently expounded upon and qualified in the recent Contrary to what petitioners suggest, the registration of trademark cannot be
case of 
 
‘



m 

 6 deemed conclusive as to the actual use of such trademark in local commerce. As it
were, registration does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration merely constitutes 
 ‘

evidence that the registrant is the owner of the registered mark. Evidence of non-
xxx xxx xxx
usage of the mark rebuts the presumption of trademark ownership, as what
happened here when petitioners no less admitted not doing business in this
country.
Following universal acquiescence and comity, our
municipal law on trademarks regarding the requirements of Most importantly, we stress that registration in the Philippines of trademarks
actual use in the Philippines must subordinate an international does not 
 ‘ convey an absolute right or exclusive ownership thereof. To
agreement inasmuch as the apparent clash is being decided by a borrow from ? $-
   
) 
  
-

. 

municipal tribunal. Xxx. Withal, the fact that international law / 


m
 
‘ trademark is a creation of use and, therefore, actual use
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
is a pre-requisite to exclusive ownership; registration is only an administrative
confirmation of the existence of the right of ownership of the mark, but does not
perfect such right; actual use thereof is the perfecting ingredient.
Petitioners͛ reliance on m


m

 
is quite misplaced, that case colorable imitation to labels, signs, prints, packages, wrappers,
being cast in a different factual milieu. There, we ruled that a foreign owner of a
Philippine trademark, albeit not licensed to do, and not so engaged in, business in
the Philippines, may actually earn reputation or goodwill for its goods in the
country. But unlike in the instant case, evidence of actual sales of Converse rubber
shoes, such as sales invoices, receipts and the testimony of a legitimate trader,
was presented in m
. Petitioners would insist on their thesis of infringement since respondent͛s mark
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable,
the infringement complaint herein having been filed in August 1982 and tried
under the aegis of R.A. No. 166, as amended. The IP Code, however, took effect
only on January 1, 1998 without a provision as to its retroactivity. In the same
vein, the TRIPS Agreement was inexistent when the suit for infringement was
filed, the Philippines having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the
registration of a trademark unaccompanied by actual use thereof in the country
accords the registrant only the standing to sue for infringement in Philippine
courts. Entitlement to protection of such trademark in the country is entirely a
different matter.
 ‘ test and the 
‘ test. The
This brings us to the principal issue of infringement.
 competing trademarks that might cause confusion and deception, thus constitutes
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark
infringement, as follows:
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.
͞MARK͟ for cigarettes is confusingly or deceptively similar with their duly
registered ͞MARK VII,͟ ͞MARK TEN͟ and ͞LARK͟ marks likewise for cigarettes.
To them, the word ͞MARK͟ would likely cause confusion in the trade, or deceive
purchasers, particularly as to the source or origin of respondent͛s cigarettes.
The ͞likelihood of confusion͟ is the gravamen of trademark infringement. But
likelihood of confusion is a relative concept, the particular, and sometimes
peculiar, circumstances of each case being determinative of its existence. Thus, in
trademark infringement cases, more than in other kinds of litigation, precedents
must be evaluated in the light of each particular case.

In determining similarity and likelihood of confusion, jurisprudence has
developed two tests: the 
dominancy test sets sight on the similarity of the prevalent features of the
infringement. Under this norm, the question at issue turns on whether the use of
the marks involved would be likely to cause confusion or mistake in the mind of
the public or deceive purchasers.
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.
Sec. 22. 

 
‘

7
Any person who shall
use, without the consent of the registrant, any reproduction, Upon consideration of the foregoing in the light of the peculiarity of this case, we
counterfeit, copy or colorable imitation of any registered mark rule against the likelihood of confusion resulting in infringement arising from the
or tradename in connection with the sale, offering for sale, or respondent͛s use of the trademark ͞MARK͟ for its particular cigarette product.
advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or For one, as rightly concluded by the CA after comparing the trademarks involved
mistake or to deceive purchasers or others as to the source or in their entirety as they appear on the products, the striking dissimilarities are
origin of such goods or services, or identity of such business; or significant enough to warn any purchaser that one is different from the other.
reproduce, counterfeit, copy of color ably imitate any such mark Indeed, although the perceived offending word ͞MARK͟ is itself prominent in
or tradename and apply such reproduction, counterfeit, copy or petitioners͛ trademarks ͞MARK VII͟ and ͞MARK TEN,͟ the entire marking system
should be considered as a whole and not dissected, because a discerning eye prevalent conditions in trade and giving the attention such purchasers usually give
would focus not only on the predominant word but also on the other features in buying that class of goods is the touchstone. 
appearing in the labels. Only then would such discerning observer draw his
conclusion whether one mark would be confusingly similar to the other and When we spoke of an ͞ordinary purchaser,͟ the reference was not to the
whether or not sufficient differences existed between the marks. ͞completely unwary customer͟ but to the ͞ordinarily intelligent buyer͟
 considering the type of product involved.
This said, the CA then, in finding that respondent͛s goods cannot be mistaken as
any of the three cigarette brands of the petitioners, correctly relied on the holistic It cannot be over-emphasized that the products involved are addicting cigarettes
test. purchased mainly by those who are already predisposed to a certain brand.
Accordingly, the ordinary buyer thereof would be all too familiar with his brand
But, even if the dominancy test were to be used, as urged by the petitioners, but and discriminating as well. We, thus, concur with the CA when it held, citing a
bearing in mind that a trademark serves as a tool to point out distinctly the origin definition found in .
'‘


à 
à

'
! that the 1
 
‘  in
or ownership of the goods to which it is affixed, the likelihood of confusion this case means 1

‘‘











 
  

tantamount to infringement appears to be farfetched. The reason for the origin


 

( 
and/or ownership angle is that unless the words or devices do so point out the
origin or ownership, the person who first adopted them cannot be injured by any Pressing on with their contention respecting the commission of trademark
appropriation or imitation of them by others, nor can the public be deceived. infringement, petitioners finally point to Section 22 of R.A. No. 166, as amended.
 As argued, actual use of trademarks in local commerce is, under said section, not
Since the word ͞MARK,͟ be it alone or in combination with the word ͞TEN͟ and a requisite before an aggrieved trademark owner can restrain the use of his
the Roman numeral ͞VII,͟ does not point to the origin or ownership of the trademark upon goods manufactured or dealt in by another, it being sufficient
cigarettes to which they apply, the local buying public could not possibly be that he had registered the trademark or trade-name with the IP Office. In fine,
confused or deceived that respondent͛s ͞MARK͟ is the product of petitioners petitioners submit that respondent is liable for infringement, having
and/or originated from the U.S.A., Canada or Switzerland. And lest it be manufactured and sold cigarettes with the trademark ͞MARK͟ which, as it were,
overlooked, no actual commercial use of petitioners͛ marks in local commerce are identical and/or confusingly similar with their duly registered trademarks
was proven. There can thus be no occasion for the public in this country, ͞MARK VII,͟ ͞MARK TEN͟ and ͞LARK͟.
unfamiliar in the first place with petitioners͛ marks, to be confused.
This Court is not persuaded.
For another, a comparison of the trademarks as they appear on the goods is just
one of the appreciable circumstances in determining likelihood of confusion. .
In 
m    

"
8
i
/ 
#, the Court held that the following
 
m 

mdealtwith another, where we instructed to give due regard to constitute the elements of trademark infringement in accordance not only with
the ͞ordinary purchaser,͟ thus: Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A and 20
thereof:
The question is not whether the two articles are distinguishable by their label
when set side by side but whether the general confusion made by the article upon (a) a trademark actually used in commerce in the Philippines and
the eye of the casual purchaser who is unsuspicious and off his guard, is such as to registered in the principal register of the Philippine Patent Office,
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 (b) is used by another person in connection with the sale, offering for
sale, or advertising of any goods, business or services or in connection with which
such use is !

‘ 
‘  

 !


‘
‘ 
or others periodical published in the Philippines, or in other countries but
as to the  ‘


of such goods or services, 
 of such business; or circulated locally͟ have been presented by the appellants during
such trademark is reproduced, counterfeited, copied or colorably imitated by trial. The appellants also were not able to show the length of
another person and such reproduction, counterfeit, copy or colorable imitation is time or the extent of the promotion or advertisement made to
applied to labels, signs, prints, packages, wrappers, receptacles or advertisements popularize their products in the Philippines.
intended to be used upon or in connection with such goods, business or services
as to likely cause confusion or mistake or to deceive purchasers,

(c) the trademark is used for identical or similar goods, and

(d) such act is done without the consent of the trademark registrant or
assignee.
As already found herein, while petitioners have registered the trademarks
͞MARK VII,͟ ͞MARK TEN͟ and ͞LARK͟ for cigarettes in the Philippines, prior
actual commercial use thereof had not been proven. In fact, petitioners͛ judicial
admission of not doing business in this country effectively belies any pretension to
the contrary.
 dismissal of their basic complaint for infringement and the concomitant plea for
Likewise, we note that petitioners even failed to support their claim that their
respective marks are well-known and/or have acquired goodwill in the Philippines
so as to be entitled to protection even without actual use in this country in
accordance with Article 6bis of the Paris Convention. As correctly found by the CA,
(
(, the petition is hereby
(
(
. Accordingly, the assailed decision
affirming that of the trial court:
c(
.
Last, but not least, we must reiterate that the issue of trademark infringement
is factual, with both the trial and appellate courts having peremptorily found
allegations of infringement on the part of respondent to be without basis. As we
said time and time again, factual determinations of the trial court, concurred in by
the CA, are final and binding on this Court.
For lack of convincing proof on the part of the petitioners of actual use of their
registered trademarks prior to respondent͛s use of its mark and for petitioners͛
failure to demonstrate confusing similarity between said trademarks, the
damages must be affirmed. The law, the surrounding circumstances and the
equities of the situation call for this disposition.
A)(
and resolution of the Court of Appeals are 

Costs against the petitioners.

xxx the records are bereft of evidence to establish that

the appellants͛ [petitioners͛] products are indeed well-known in 

(
(
.
the Philippines, either through actual sale of the product or
through different forms of advertising. This finding is supported
by the fact that appellants admit in their m   that they are
not doing business in the Philippines, hence, admitting that their
products are not being sold in the local market. We likewise see
no cogent reason to disturb the trial court͛s finding that the
appellants failed to establish that their products are widely
known by local purchasers as ͞(n)o specific magazine or