E.Y. Industrial Sales vs. Shen Dar Electricity and Machinery Co.

Intellectual Property Law

Mark; likelihood of confusion. According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is identical with a
registered mark belonging to a different proprietor with an earlier filing or priority date, with respect to: (1) the same goods or
services; (2) closely related goods or services; or (3) near resemblance of such mark as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion, jurisprudence has developed teststhe Dominancy Test and the Holistic or
Totality Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the competing trademarks that
might cause confusion, mistake, and deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither
is it required that the mark sought to be registered suggests an effort to imitate. Given more consideration are the aural and visual
impressions created by the marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets, and market
segments.
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the products, including
the labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both labels so that the observer may draw conclusion on whether one is
confusingly similar to the other. Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No. 183404, October 13, 2010.
Mark; ownership. The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of
the goods made available to the purchasing public. Section 122 of R.A. No. 8293 provides that the rights in a mark shall be acquired
by means of its valid registration with the IPO. A certificate of registration of a mark, once issued, constitutes prima facie evidence of
the validity of the registration, of the registrants ownership of the mark, and of the registrants exclusive right to use the same in
connection with the goods or services and those that are related thereto specified in the certificate. R.A. No. 8293, however, requires
the applicant for registration or the registrant to file a declaration of actual use (DAU) of the mark, with evidence to that effect, within
three (3) years from the filing of the application for registration; otherwise, the application shall be refused or the mark shall be
removed from the register. In other words, the prima faciepresumption brought about by the registration of a mark may be challenged
and overcome, in an appropriate action, by proof of the nullity of the registration or of non-use of the mark, except when excused.
Moreover, the presumption may likewise be defeated by evidence of prior use by another person, i.e., it will controvert a claim of legal
appropriation or of ownership based on registration by a subsequent user. This is because a trademark is a creation of use and belongs
to one who first used it in trade or commerce.
The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does not suffice. One may make
advertisements, issue circulars, distribute price lists on certain goods, but these alone will not inure to the claim of ownership of the
mark until the goods bearing the mark are sold to the public in the market. Accordingly, receipts, sales invoices, and testimonies of
witnesses as customers, or orders of buyers, best prove the actual use of a mark in trade and commerce during a certain period of time.
Here, Berris was able to establish that it was using its mark D-10 80 WP since June 20, 2002, even before it filed for its registration
with the IPO on November 29, 2002, as shown by its DAU which was under oath and notarized, bearing the stamp of the Bureau of
Trademarks of the IPO on April 25, 2003, and which stated that it had an attachment as Annex B sales invoices and official receipts
of goods bearing the mark. Indeed, the DAU, being a notarized document, especially when received in due course by the IPO, is
evidence of the facts it stated and has the presumption of regularity, entitled to full faith and credit upon its face. Thus, the burden of
proof to overcome the presumption of authenticity and due execution lies on the party contesting it, and the rebutting evidence should
be clear, strong, and convincing as to preclude all controversy as to the falsity of the certificate. What is more, the DAU is buttressed
by the Certification dated April 21, 2006 issued by the Bureau of Trademarks that Berris mark is still valid and existing. Berris
Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No. 183404, October 13, 2010.
Mark; ownership. Under Section 123(d) of RA 8293, the registration of a mark is prevented with the filing of an earlier application for
registration. This must not, however, be interpreted to mean that ownership should be based upon an earlier filing date. While RA
8293 removed the previous requirement of proof of actual use prior to the filing of an application for registration of a mark, proof of
prior and continuous use is necessary to establish ownership of a mark. Such ownership constitutes sufficient evidence to oppose the
registration of a mark.
Sec. 134 of the IP Code provides that any person who believes that he would be damaged by the registration of a mark x x x may
file an opposition to the application. The term any person encompasses the true owner of the markthe prior and continuous user.
Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the presumptive ownership of the
registrant and be held as the owner of the mark.
Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of the mark. On
the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen Dar failed to present
sufficient evidence to prove its own prior use of the mark VESPA.

As such, EYIS must be considered as the prior and continuous user of the mark VESPA and its true owner. Hence, EYIS is entitled
to the registration of the mark in its name. E.Y. Industrial Sales, Inc. and Engracio Yap vs. Shen Dar Electricity Machinery Co., Ltd.,
G.R. No. 184850, October 20, 2010.
Superior Commercial Enterprises, Inc. vs. Kunnan Enterprises Ltd. and Sports Concept & Distributor, Inc., G.R. No. 169974,
April 20, 2010
Intellectual Property Code
Trademark; right to file action for infringement. Section 22 of RA 166 states that only a registrant of a mark can file a case for
infringement. Corollary to this, Section 19 of RA 166 provides that any right conferred upon the registrant under the provisions of RA
166 terminates when the judgment or order of cancellation has become final. The cancellation of registration of a trademark has the
effect of depriving the registrant of protection from infringement from the moment judgment or order of cancellation has become
final.
In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect of SUPERIORs case
has been rendered moot and academic in view of the finality of the decision in the Registration Cancellation Case. In short,
SUPERIOR is left without any cause of action for trademark infringement since the cancellation of registration of a trademark
deprived it of protection from infringement from the moment judgment or order of cancellation became final. To be sure, in a
trademark infringement, title to the trademark is indispensable to a valid cause of action and such title is shown by its certificate of
registration. With its certificates of registration over the disputed trademarks effectively cancelled with finality, SUPERIORs case for
trademark infringement lost its legal basis and no longer presented a valid cause of action. Superior Commercial Enterprises, Inc.
vs. Kunnan Enterprises Ltd. and Sports Concept & Distributor, Inc., G.R. No. 169974, April 20, 2010.
Trademark; unfair competition. From jurisprudence, unfair competition has been defined as the passing off (or palming off) or
attempting to pass off upon the public of the goods or business of one person as the goods or business of another with the end and
probable effect of deceiving the public. The essential elements of unfair competition are (1) confusing similarity in the general
appearance of the goods; and (2) intent to deceive the public and defraud a competitor.
Jurisprudence also formulated the following true test of unfair competition: whether the acts of the defendant have the intent of
deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular trade to
which the controversy relates. One of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent to
deceive, actual or probable must be shown before the right to recover can exist.
In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e. sportswear, sporting
goods and equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith or fraud imputable to KUNNAN in using
the disputed trademarks. Specifically, SUPERIOR failed to adduce any evidence to show that KUNNAN by the above-cited acts
intended to deceive the public as to the identity of the goods sold or of the manufacturer of the goods sold. In McDonalds
Corporation v. L.C. Big Mak Burger, Inc., we held that there can be trademark infringement without unfair competition such as when
the infringer discloses on the labels containing the mark that he manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner. In this case, no issue of confusion arises because the same
manufactured products are sold; only the ownership of the trademarks is at issue. Furthermore, KUNNANs January 29, 1993 notice
by its terms prevents the public from being deceived that the goods originated fromSUPERIOR since the notice clearly indicated
that KUNNAN is the manufacturer of the goods bearing the trademarks KENNEX and PRO KENNEX. Superior Commercial
Enterprises, Inc. vs. Kunnan Enterprises Ltd. and Sports Concept & Distributor, Inc., G.R. No. 169974, April 20, 2010.
Birkenstock Orthopaedie Gmbh & Co
In 1994, the German company Birkenstock Orthopaedie Gmbh & Co., filed several trade mark applications for its mark
BIRKENSTOCK and its variants in the Philippines. To its surprise, Birkenstock learned that its BIRKENSTOCK trade mark was
already registered to a Philippine company called Philippine Shoe Expo Marketing Corporation (Shoe Expo).
Birkenstock quickly filed actions for cancellation against the registered mark. While the cancellation case was pending, Shoe Expo
failed to file the required 10th year Declaration of Actual Use (DAU). Failure to file the DAU results in the trade mark registrations
being deemed withdrawn. Because of this, the cancellation action filed by Birkenstock was dismissed for being moot and academic,
paving the way for its own trade mark applications to be allowed. Shoe Expo, not deterred by the cancellation of its registration, filed
oppositions to the trade mark applications of Birkenstock, on the grounds that it had been using the mark BIRKENSTOCK for over
16 years in the Philippines and that it had re-applied for said trade marks, and had also obtained copyright registration for the word
BIRKENSTOCK in 1991.
The Bureau of Legal Affairs (BLA), adjudicating bureau of the Intellectual Property Office in the Philippines (IPOPHL), consolidated
the opposition actions, and on May 28 2008 issued a decision sustaining ShoeExpos oppositions and rejecting the applications of
Birkenstock based on the following:
(i) Shoe Expo was the prior user and adopter of the BIRKENSTOCK trade mark in the Philippines.

(ii) Birkenstock did not present evidence of actual use of the mark in the Philippines.
(iii) The marks of Birkenstock are not internationally well-known.
(iv) Birkenstock submitted only photocopies of its certificates of registrations from other countries which were not considered
admissible as evidence.

Action taken
Birkenstock appealed the BLA decision to the IPOPHL Director General (DG) who reversed the BLA, and held that with the
cancellation of Shoe Expos registrations, the reason to reject Birkenstocks applications on the ground of prior registration no longer
existed, and that the evidence presented showed that Birkenstock was the true and lawful owner and prior user of the mark
BIRKENSTOCK. The DG disregarded Shoe Expos copyright registration for the Birkenstock word since copyright and trade
marks are different forms of intellectual property rights and cannot be interchanged.
Dissatisfied, Shoe Expo appealed the DGs decision to the Court of Appeals (CA) which reinstated the BLA decision. Birkenstock
then appealed the CA decision to the Supreme Court.
Outcome
The Supreme Court, in its decision issued on November 20, 2013 (G.R. 194307), reversed the CA decision and held the following:
(i) The photocopied documents submitted by Birkenstock were admissible in evidence since the IPOPHL is not bound by strict rules
of evidence, and moreover, the IPOPHL already had the original documents in the earlier cancellation case.
(ii) The failure of Shoe Expo to file the DAU is tantamount to abandonment, hence, it had lost any right or interest over the said mark.
(iii) Birkenstock had proven by clear and convincing evidence that it was the true owner of the mark, citing evidence relating to the
origin and history of the mark, and demonstrating that Shoe Expo registered an identical mark in its name in bad-faith.
The Supreme Court emphasised that it is not the registration of a mark by itself which is the mode of acquiring ownership since the
applicant, if not the owner of the mark, has no right to apply for its registration; it is the ownership of a mark that confers the right to
register it. The Supreme Court also, quoting the IPOPHL DG, stated that BIRKENSTOCK is obviously of German origin and is a
highly distinct and arbitrary mark, adding that it is very remote and incredible that two persons could coin the same or identical
mark for use in the same line of business without any plausible explanation from Shoe Expo.
It must be noted that this case went through four stages of contentious litigation, from the BLA up to the Supreme Court and that the
estimated total cost of this litigation would not be below EUR 11,000.
Lessons Learned

For SMEs that have plans to enter foreign markets to sell their products or services, the importance of obtaining protection
for their trade marks cannot be overemphasised.

The costs of filing and obtaining trade mark registration in a foreign country are significantly lower than the costs of
litigation which a SME may have to incur to protect its mark, and do business in said country.

Berris Agricultural co. Inc vs. Norvy abyadang

Intellectual Property Law

Mark; likelihood of confusion. According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is identical
with a registered mark belonging to a different proprietor with an earlier filing or priority date, with respect to: (1) the same
goods or services; (2) closely related goods or services; or (3) near resemblance of such mark as to likely deceive or cause
confusion.

In determining similarity and likelihood of confusion, jurisprudence has developed teststhe Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the purchasing public. Duplication
or imitation is not necessary; neither is it required that the mark sought to be registered suggests an effort to imitate. Given
more consideration are the aural and visual impressions created by the marks on the buyers of goods, giving little weight to
factors like prices, quality, sales outlets, and market segments.

In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not

only on the predominant words but also on the other features appearing on both labels so that the observer may draw
conclusion on whether one is confusingly similar to the other. Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No.
183404, October 13, 2010.

Mark; ownership. The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or
distributor of the goods made available to the purchasing public. Section 122 of R.A. No. 8293 provides that the rights in a
mark shall be acquired by means of its valid registration with the IPO. A certificate of registration of a mark, once issued,
constitutes prima facie evidence of the validity of the registration, of the registrants ownership of the mark, and of the
registrants exclusive right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. R.A. No. 8293, however, requires the applicant for registration or the registrant to file a
declaration of actual use (DAU) of the mark, with evidence to that effect, within three (3) years from the filing of the
application for registration; otherwise, the application shall be refused or the mark shall be removed from the register. In
other words, the prima faciepresumption brought about by the registration of a mark may be challenged and overcome, in an
appropriate action, by proof of the nullity of the registration or of non-use of the mark, except when excused. Moreover, the
presumption may likewise be defeated by evidence of prior use by another person, i.e., it will controvert a claim of legal
appropriation or of ownership based on registration by a subsequent user. This is because a trademark is a creation of use and
belongs to one who first used it in trade or commerce.

The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does not suffice. One may
make advertisements, issue circulars, distribute price lists on certain goods, but these alone will not inure to the claim of
ownership of the mark until the goods bearing the mark are sold to the public in the market. Accordingly, receipts, sales
invoices, and testimonies of witnesses as customers, or orders of buyers, best prove the actual use of a mark in trade and
commerce during a certain period of time.

Here, Berris was able to establish that it was using its mark D-10 80 WP since June 20, 2002, even before it filed for its
registration with the IPO on November 29, 2002, as shown by its DAU which was under oath and notarized, bearing the
stamp of the Bureau of Trademarks of the IPO on April 25, 2003, and which stated that it had an attachment as Annex B
sales invoices and official receipts of goods bearing the mark. Indeed, the DAU, being a notarized document, especially
when received in due course by the IPO, is evidence of the facts it stated and has the presumption of regularity, entitled to full
faith and credit upon its face. Thus, the burden of proof to overcome the presumption of authenticity and due execution lies
on the party contesting it, and the rebutting evidence should be clear, strong, and convincing as to preclude all controversy as
to the falsity of the certificate. What is more, the DAU is buttressed by the Certification dated April 21, 2006 issued by the
Bureau of Trademarks that Berris mark is still valid and existing. Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No.
183404, October 13, 2010.

Mark; ownership. Under Section 123(d) of RA 8293, the registration of a mark is prevented with the filing of an earlier
application for registration. This must not, however, be interpreted to mean that ownership should be based upon an earlier
filing date. While RA 8293 removed the previous requirement of proof of actual use prior to the filing of an application for
registration of a mark, proof of prior and continuous use is necessary to establish ownership of a mark. Such ownership
constitutes sufficient evidence to oppose the registration of a mark.

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

Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the presumptive ownership of
the registrant and be held as the owner of the mark.

Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of the
mark. On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen Dar
failed to present sufficient evidence to prove its own prior use of the mark VESPA.

As such, EYIS must be considered as the prior and continuous user of the mark VESPA and its true owner. Hence, EYIS is
entitled to the registration of the mark in its name. E.Y. Industrial Sales, Inc. and Engracio Yap vs. Shen Dar Electricity
Machinery Co., Ltd., G.R. No. 184850, October 20, 2010.

Prosource International Inc vs. Horphag Research Management SA

Tradename; infringement. In Prosource International, Inc. v. Horphag Research Management SA, this Court laid down
what constitutes infringement of an unregistered trade name, thus:

(1) The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name,
the same need not be registered;

(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;

(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods,
business or services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles,
or advertisements intended to be used upon or in connection with such goods, business, or services;

(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive
purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the
identity of such business; and

(5) It is without the consent of the trademark or trade name owner or the assignee thereof.

Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the
owner of an infringing trademark. All that is required is that the trade name is previously used in trade or commerce in the
Philippines.

Section 22 of Republic Act No. 166, as amended, required registration of a trade name as a condition for the institution of an
infringement suit.

However, RA 8293, which took effect on 1 January 1998, has dispensed with the registration requirement. Section 165.2 of
RA 8293 categorically states that trade names shall be protected, even prior to or without registration with the IPO, against
any unlawful act including any subsequent use of the trade name by a third party, whether as a trade name or a trademark
likely to mislead the public. Thus: It is the likelihood of confusion that is the gravamen of infringement. But there is no
absolute standard for likelihood of confusion. Only the particular, and sometimes peculiar, circumstances of each case can
determine its existence. Thus, in infringement cases, precedents must be evaluated in the light of each particular case. Coffee
Partners, Inc. vs. San Francisco Coffee & Roastery, Inc., G.R. No. 169504, March 3, 2010.

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

In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products, including the labels
and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both marks in order that the observer may draw his conclusion
whether one is confusingly similar to the other.

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

In Philips Export B.V. v. Court of Appeals, this court held that a corporation has an exclusive right to the use of its name. The
right proceeds from the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried
on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such
a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation
to the name. Coffee Partners, Inc. vs. San Francisco Coffee & Roastery, Inc., G.R. No. 169504, March 3, 2010.

Dermaline Inc vs. Myra Pharmaceuticals Inc

Facts: Dermaline filed with the IPO an application to register the trademark Dermaline. Myra opposed this alleging that the
trademark resembles its trademark Dermalin and will cause confusion, mistake and deception to the purchasing public. Dermalin
was registered way back 1986 and was commercially used since 1977. Myra claims that despite attempts of Dermaline to differentiate
its mark, the dominant feature is the term Dermaline to which the first 8 letters were identical to that of Dermalin. The
pronunciation for both is also identical. Further, both have 3 syllables each with identical sound and appearance.
Issue: W/N the IPO should allow the registration of the trademark Dermaline. NO
Held: As Myra correctly posits, it has the right under Section 147 of R.A. No. 8293 to prevent third parties from using a trademark, or
similar signs or containers for goods or services, without its consent, identical or similar to its registered trademark, where such use
would result in a likelihood of confusion. In determining confusion, case law has developed two (2) tests, the Dominancy Test and the
Holistic
or
Totality
Test.
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or
deception. Duplication or imitation is not even required; neither is it necessary that the label of the applied mark for registration should
suggest an effort to imitate. Relative to the question on confusion of marks and trade names, jurisprudence noted two (2) types of
confusion, viz: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other; and (2) confusion of business (source or origin confusion), where, although the
goods of the parties are different, the product, the mark of which registration is applied for by one party, is such as might reasonably
be assumed to originate with the registrant of an earlier product, and the public would then be deceived either into that belief or into
the
belief
that
there
is
some
connection
between
the
two
parties,
though
inexistent.
Using this test, the IPO declared that both confusion of goods and service and confusion of business or of origin were apparent in both
trademarks. While it is true that the two marks are presented differently, they are almost spelled in the same way, except for
Dermalines mark which ends with the letter "E," and they are pronounced practically in the same manner in three (3) syllables, with
the ending letter "E" in Dermalines mark pronounced silently. Thus, when an ordinary purchaser, for example, hears an advertisement
of Dermalines applied trademark over the radio, chances are he will associate it with Myras. When one applies for the registration of
a trademark or label which is almost the same or that very closely resembles one already used and registered by another, the
application should be rejected and dismissed outright, even without any opposition on the part of the owner and user of a previously
registered
label
or
trademark.
Further, Dermalines stance that its product belongs to a separate and different classification from Myras products with the registered
trademark does not eradicate the possibility of mistake on the part of the purchasing public to associate the former with the latter,
especially considering that both classifications pertain to treatments for the skin.

G.R. No. 172276 : August 8, 2010

SOCIETE DES PRODUITS NESTLE, S.A., Petitioner, v. MARTIN T. DY, JR., Respondent.
DECISION
CARPIO, J.:
The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 1 September 2005 Decision
and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy, Jr.) not
liable for trademark infringement. The Court of Appeals reversed the 18 September 1998 Decision of the Regional Trial Court (RTC),
Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation organized under the laws of Switzerland. It manufactures
food products and beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7 April 1969 by the then Bureau of
Patents, Trademarks and Technology Transfer, Nestle owns the "NAN" trademark for its line of infant powdered milk products,
consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified under Class 6 - "diatetic preparations for infant feeding."
Nestle distributes and sells its NAN milk products all over the Philippines. It has been investing tremendous amounts of resources to
train its sales force and to promote the NAN milk products through advertisements and press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia and repacks the powdered milk into three sizes of
plastic packs bearing the name "NANNY." The packs weigh 80, 180 and 450 grams and are sold for P8.90, P17.50 and P39.90,
respectively. NANNY is is also classified under Class 6 - "full cream milk for adults in [sic] all ages." Dy, Jr. distributes and sells the
powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using "NANNY" and to undertake that he would stop
infringing the "NAN" trademark. Dy, Jr. did not act on Nestle's request. On 1 March 1990, Nestle filed before the RTC, Judicial
Region 7, Branch 31, Dumaguete City, a complaint against Dy, Jr. for infringement. Dy, Jr. filed a motion to dismiss alleging that the
complaint did not state a cause of action. In its 4 June 1990 order, the trial court dismissed the complaint. Nestle appealed the 4 June
1990 order to the Court of Appeals. In its 16 February 1993 Resolution, the Court of Appeals set aside the 4 June 1990 order and
remanded the case to the trial court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the trial court a motion to transfer the case to the RTC,
Judicial Region 7, Branch 9, Cebu City, which was designated as a special court for intellectual property rights.
The RTC's Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for infringement. The trial court held:chan robles virtual law
library
If determination of infringement shall only be limited on whether or not the mark used would likely cause confusion or mistake in the
minds of the buying public or deceive customers, such in [sic] the most considered view of this forum would be highly unlikely to
happen in the instant case. This is because upon comparison of the plaintiff's NAN and defendant's NANNY, the following features
would reveal the absence of any deceptive tendency in defendant's NANNY: (1) all NAN products are contained tin cans [sic], while
NANNY are contained in plastic packs; (2) the predominant colors used in the labels of NAN products are blue and white, while the
predominant colors in the plastic packings of NANNY are blue and green; (3) the labels of NAN products have at the bottom portion
an elliptical shaped figure containing inside it a drawing of nestling birds, which is overlapped by the trade-name "Nestle", while the
plastic packs of NANNY have a drawing of milking cows lazing on a vast green field, back-dropped with snow covered mountains;
(4) the word NAN are [sic] all in large, formal and conservative-like block letters, while the word NANNY are [sic] all in small and
irregular style of letters with curved ends; and (5) all NAN products are milk formulas intended for use of [sic] infants, while NANNY
is an instant full cream powdered milk intended for use of [sic] adults.
The foregoing has clearly shown that infringement in the instant case cannot be proven with the use of the "test of dominancy"
because the deceptive tendency of the unregistered trademark NANNY is not apparent from the essential features of the registered
trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971, Aug. 31, 1982, the Supreme Court took the occasion of
discussing what is implied in the definition of "infringement" when it stated: "Implicit in this definition is the concept that the goods
must be so related that there is likelihood either of confusion of goods or business. x x x But as to whether trademark infringement
exists depends for the most part upon whether or not the goods are so related that the public may be, or is actually, deceived and
misled that they came from the same maker or manufacturer. For non-competing goods may be those which, though they are not in
actual competition, are so related to each other that it might reasonably be assumed that they originate from one manufacturer. Noncompeting goods may also be those which, being entirely unrelated, could not reasonably be assumed to have a common source. In the
former case of related goods, confusion of business could arise out of the use of similar marks; in the latter case of non-related goods,
it could not."
Furthermore, in said case the Supreme Court as well discussed on when goods may become so related for purposes of infringement
when it stated: "Goods are related when they belong to the same class or have same descriptive properties; when they possess the

same physical attributes or essential characteristics with reference to their form, composition, texture or quality. They may also be
related because they serve the same purpose or are sold in grocery stores. x x x
Considering that defendant's NANNY belongs to the same class as that of plaintiff's NAN because both are food products, the
defendant's unregistered trade mark NANNY should be held an infringement to plaintiff's registered trademark NAN because
defendant's use of NANNY would imply that it came from the manufacturer of NAN. Furthermore, since the word "nanny" means a
"child's nurse," there might result the not so remote probability that defendant's NANNY may be confused with infant formula NAN
despite the aparent [sic] disparity between the features of the two products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
The Court of Appeals' Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the trial court's 18 September 1998 Decision and found Dy, Jr. not
liable for infringement. The Court of Appeals held:chan robles virtual law library
[T]he trial court appeared to have made a finding that there is no colorable imitation of the registered mark "NAN" in Dy's use of
"NANNY" for his own milk packs. Yet it did not stop there. It continued on applying the "concept of related goods."
The Supreme Court utlilized the "concept of related goods" in the said case of Esso Standard Easter, Inc. versus Court of Appeals, et
al. wherein two contending parties used the same trademark "ESSO" for two different goods, i.e. petroleum products and cigarettes. It
rules that there is infringement of trademark involving two goods bearing the same mark or label, even if the said goods are noncompeting, if and only if they are so related that the public may be, or is actually, deceived that they originate from the one maker or
manufacturer. Since petroleum products and cigarettes, in kind and nature, flow through different trade channels, and since the
possibility of confusion is unlikely in the general appearances of each mark as a whole, the Court held in this case that they cannot be
so related in the context of infringement.
In applying the concept of related goods in the present case, the trial court haphazardly concluded that since plaintiff-appellee's NAN
and defendant-appellant's NANNY belong to the same class being food products, the unregistered NANNY should be held an
infringement of Nestle's NAN because "the use of NANNY would imply that it came from the manufacturer of NAN." Said court
went on to elaborate further: "since the word "NANNY" means a "child's nurse," there might result the not so remote probability that
defendant's NANNY may be confused with infant formula NAN despite the aparent (sic) disparity between the features of the two
products as discussed above."
The trial court's application of the doctrine laid down by the Supreme Court in the Esso Standard case aforementioned and the cases
cited therein is quite misplaced. The goods of the two contending parties in those cases bear similar marks or labels: "Esso" for
petroleum products and cigarettes, "Selecta" for biscuits and milk, "X-7" for soap and perfume, lipstick and nail polish. In the instant
case, two dissimilar marks are involved - plaintiff-appellee's "NAN" and defendant-appellant's "NANNY." Obviously, the concept of
related goods cannot be utilized in the instant case in the same way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that in resolving infringement or trademark cases in the
Philippines, particularly in ascertaining whether one trademark is confusingly similar to or is a colorable imitation of another,
precedent must be studied in the light of the facts of the particular case. Each case must be decided on its own merits. In the more
recent case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the High Court further stressed that due to the peculiarity of
the facts of each infringement case, a judicial forum should not readily apply a certain test or standard just because of seeming
similarities. The entire panoply of elements constituting the relevant factual landscape should be comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the word "NAN" is contained in the word "NANNY," there are
more glaring dissimilarities in the entirety of their trademarks as they appear in their respective labels and also in relation to the goods
to which they are attached. The discerning eye of the observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other. Even the
trial court found these glaring dissimilarities as above-quoted. We need not add more of these factual dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all infant preparations, while NANNY is a full cream
milk for adults in [sic] all ages. NAN milk products are sold in tin cans and hence, far expensive than the full cream milk NANNY
sold in three (3) plastic packs containing 80, 180 and 450 grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of
NAN products are of the colors blue and white and have at the bottom portion an elliptical shaped figure containing inside it a drawing
of nestling birds, which is overlapped by the trade-name "Nestle." On the other hand, the plastic packs NANNY have a drawing of
milking cows lazing on a vast green field, back-dropped with snow-capped mountains and using the predominant colors of blue and
green. The word NAN are [sic] all in large, formal and conservative-like block letters, while the word NANNY are [sic] all in small
and irregular style of letters with curved ends. With these material differences apparent in the packaging of both milk products,
NANNY full cream milk cannot possibly be an infringement of NAN infant milk.

Moreover, NAN infant milk preparation is more expensive than NANNY instant full cream milk. The cheaper price of NANNY would
give, at the very first instance, a considerable warning to the ordinary purchaser on whether he is buying an infant milk or a full cream
milk for adults. A cursory examination of the packaging would confirm the striking differences between the products in question.
In view of the foregoing, we find that the mark NANNY is not confusingly similar to NAN. Dy therefore cannot be held liable for
infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court of Appeals denied the motion for lack of merit.
Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Court's Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:chan robles virtual law library
Infringement, what constitutes. - Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy
or colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others
as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate
any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein provided.
Section 155 of R.A. No. 8293 states:chan robles virtual law library
Remedies; Infringement. - Any person who shall, without the consent of the owner of the registered mark:chan robles virtual law
library
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used
in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by
the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.
In Prosource International, Inc. v. Horphag Research Management SA, the Court laid down the elements of infringement under R.A.
Nos. 166 and 8293:chan robles virtual law library
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following constitute the elements
of trademark infringement:chan robles virtual law library
"(a) A trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or in
connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or colorably imitated by
another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business or services as to likely cause
confusion or mistake or to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant or assignee."

On the other hand, the elements of infringement under R.A. No. 8293 are as follows:chan robles virtual law library
The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the same need
not be registered;
The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;
The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services;
The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others
as to the goods or services themselves or as to the source or origin of such goods or services or the idenity of such business; and
It is without the consent of the trademark or trade name owner or the assignee thereof.
Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement. There are two types of
confusion in trademark infringement: confusion of goods and confusion of business. In Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft, the Court distinguished the two types of confusion:chan robles virtual law library
Callman notes two types of confusion. The first is the confusion of goods "in which event the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was purchasing the other." In which case, "defendant's goods are then bought as
the plaintiff's, and the poorer quality of the former reflects adversely on the plaintiff's reputation." The other is the confusion of
business: "Here though the goods of the parties are different, the defendant's product is such as might reasonably be assumed to
originate with the plaintiff, and the public would then be deceived either into that belief or into the belief that there is some connection
between the plaintiff and defendant which, in fact, does not exist."
There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The dominancy test focuses on the
similarity of the main, prevalent or essential features of the competing trademarks that might cause confusion. Infringement takes
place when the competing trademark contains the essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is
not only on the predominant words but also on the other features appearing on the labels.
In cases involving trademark infringement, no set of rules can be deduced. Each case must be decided on its own merits.
Jurisprudential precedents must be studied in the light of the facts of each particular case. In McDonald's Corporation v. MacJoy
Fastfood Corporation, the Court held:chan robles virtual law library
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced
because each case must be decided on its merits. In such cases, even more than in any other litigation, precedent must be studied in the
light of the facts of the particular case. That is the reason why in trademark cases, jurisprudential precedents should be applied only to
a case if they are specifically in point.
In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In recent cases with similar factual
milieus, the Court has consistently applied the dominancy test. In Prosource International, Inc., the Court applied the dominancy test
in holding that "PCO-GENOLS" is confusingly similar to "PYCNOGENOL." The Court held:chan robles virtual law library
The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity between the marks
PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:chan robles virtual law library
"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which on evidence, appears to be merely
descriptive and furnish no indication of the origin of the article and hence, open for trademark registration by the plaintiff through
combination with another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3." Furthermore, although the letters "Y"
between P and C, "N" between O and C and "S" after L are missing in the [petitioner's] mark PCO-GENOLS, nevertheless, when the
two words are pronounced, the sound effects are confusingly similar not to mention that they are both described by their
manufacturers as a food supplement and thus, identified as such by their public consumers. And although there were dissimilarities in
the trademark due to the type of letters used as well as the size, color and design employed on their individual packages/bottles, still
the close relationship of the competing product's name is sounds as they were pronounced, clearly indicates that purchasers could be
misled into believing that they are the same and/or originates from a common source and manufacturer."
We find no cogent reason to depart from such conclusion.

This is not the first time the Court takes into account the aural effects of the words and letters contained in the marks in determining
the issue of confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., cited in McDonald's Corporation v.
L.C. Big Mak Burger, Inc., the Court held:chan robles virtual law library
"The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims, Unfair Competition and
Trade Marks, 1947, Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust"
and ""Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and
"Cellonite"; "Chartreuse" and Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo
Hoo." Leon Amdur, in his book "Trade-Mark Law and Practice," pp. 419-421, cities [sic], as coming within the purview of the idem
sonans rule, "Yusea" and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs.
Director of Patents, this Court unequivocally said that "Celdura" and "Condura" are confusingly similar in sound; this Court held in
Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an infringement of the trademark "Sapolin," as the sound of the
two names is almost the same."
In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy test in holding that "MACJOY" is
confusingly similar to "MCDONALD'S." The Court held:chan robles virtual law library
While we agree with the CA's detailed enumeration of differences between the two (2) competing trademarks herein involved, we
believe that the holistic test is not the one applicable in this case, the dominancy test being the one more suitable. In recent cases with
a similar factual milieu as here, the Court has consistently used and applied the dominancy test in determining confusing similarity or
likelihood of confusion between competing trademarks.
xxx
Applying the dominancy test to the instant case, the Court finds that herein petitioner's "MCDONALD'S" and respondent's
"MACJOY" marks are are confusingly similar with each other that an ordinary purchaser can conclude an association or relation
between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant features. x x x
For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and aurally catches the attention of the consuming public.
Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo," "Big Mac"
and the rest of the MCDONALD'S marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the respondent's trademark
application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the International Classification of
Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner's trademark registration for the
MCDONALD'S marks in the Philippines covers goods which are similar if not identical to those covered by the respondent's
application.
In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court applied the dominancy test in holding that "BIG MAK" is
confusingly similar to "BIG MAC." The Court held:chan robles virtual law library
This Court x x x has relied on the dominancy test rather than the holistic test. The dominancy test considers the dominant features in
the competing marks in determining whether they are confusingly similar. Under the dominancy test, courts give greater weight to the
similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding
minor differences. Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:chan robles virtual law library
x x x It has been consistently held that the question of infringement of a trademark is to be determined by the test of dominancy.
Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark contains the main or essential or
dominant features of another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not
necessary; nor is it necessary that the infringing label should suggest an effort to imitate. (G. Heilman Brewing Co. vs. Independent
Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the
public or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; x x x)
xxx
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which defines
infringement as the "colorable imitation of a registered mark x x x or a dominant feature thereof."

Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in likelihood of confusion. First,
"Big Mak" sounds exactly the same as "Big Mac." Second, the first word in "Big Mak" is exactly the same as the first word in "Big
Mac." Third, the first two letters in "Mak" are the same as the first two letters in "Mac." Fourth, the last letter "Mak" while a "k"
sounds the same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus "Caloocan"
is spelled "Kalookan."
In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the dominancy test in holding that "FLAVOR MASTER" is
confusingly similar to "MASTER ROAST" and "MASTER BLEND." The Court held:chan robles virtual law library
While this Court agrees with the Court of Appeals' detailed enumeration of differences between the respective trademarks of the two
coffee products, this Court cannot agree that totality test is the one applicable in this case. Rather, this Court believes that the
dominancy test is more suitable to this case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by
the marks in controversy as they are encountered in the realities of the marketplace. The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:chan robles virtual law library
From the evidence at hand, it is sufficiently established that the word MASTER is the dominant feature of opposer's mark. The word
MASTER is printed across the middle portion of the label in bold letters almost twice the size of the printed word ROAST. Further,
the word MASTER has always been given emphasis in the TV and radio commercials and other advertisements made in promoting
the product. x x x In due time, because of these advertising schemes the mind of the buying public had come to learn to associate the
word MASTER with the opposer's goods.
x x x. It is the observation of this Office that much of the dominance which the word MASTER has acquired through Opposer's
advertising schemes is carried over when the same is incorporated into respondent-applicant's trademark FLAVOR MASTER. Thus,
when one looks at the label bearing the trademark FLAVOR MASTER (exh. 4) one's attention is easily attracted to the word
MASTER, rather than to the dissimilarities that exist. Therefore, the possibility of confusion as to the goods which bear the competing
marks or as to the origins thereof is not farfetched.
Applying the dominancy test in the present case, the Court finds that "NANNY" is confusingly similar to "NAN." "NAN" is the
prevalent feature of Nestle's line of infant powdered milk products. It is written in bold letters and used in all products. The line
consists of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, "NANNY" contains the prevalent feature "NAN." The first three
letters of "NANNY" are exactly the same as the letters of "NAN." When "NAN" and "NANNY" are pronounced, the aural effect is
confusingly similar.
In determining the issue of confusing similarity, the Court takes into account the aural effect of the letters contained in the marks. In
Marvex Commercial Company, Inc. v. Petra Hawpia & Company, the Court held:chan robles virtual law library
It is our considered view that the trademarks "SALONPAS" and "LIONPAS" are confusingly similar in sound.
Both these words have the same suffix, "PAS", which is used to denote a plaster that adheres to the body with curative powers. "PAS,"
being merely descriptive, furnishes no indication of the origin of the article and therefore is open for appropriation by anyone (Ethepa
vs. Director of Patents, L-20635, March 31, 1966) and may properly become the subject of a trademark by combination with another
word or phrase.
xxx
The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims, Unfair Competition and Trade
Marks, 1947, Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust" and
""Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite";
"Chartreuse" and Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo Hoo." Leon
Amdur, in his book "Trade-Mark Law and Practice," pp. 419-421, cities [sic], as coming within the purview of the idem sonans rule,
"Yusea" and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of
Patents, this Court unequivocally said that "Celdura" and "Condura" are confusingly similar in sound; this Court held in Sapolin Co.
vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an infringement of the trademark "Sapolin," as the sound of the two names is
almost the same.
The scope of protection afforded to registered trademark owners is not limited to protection from infringers with identical goods. The
scope of protection extends to protection from infringers with related goods, and to market areas that are the normal expansion of
business of the registered trademark owners. Section 138 of R.A. No. 8293 states:chan robles virtual law library

Certificates of Registration. - A certificate of registration of a mark shall be prima facie evidence of validity of the registration, the
registrant's ownership of the mark, and of the registrant's exclusive right to use the same in connection with the goods or services and
those that are related thereto specified in the certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, "Non-competing goods may be those which, though they are not
in actual competition, are so related to each other that it can reasonably be assumed that they originate from one manufacturer, in
which case, confusion of business can arise out of the use of similar marks." In that case, the Court enumerated factors in determining
whether goods are related: (1) classification of the goods; (2) nature of the goods; (3) descriptive properties, physical attributes or
essential characteristics of the goods, with reference to their form, composition, texture or quality; and (4) style of distribution and
marketing of the goods, including how the goods are displayed and sold.
NANNY and NAN have the same classification, descriptive properties and physical attributes. Both are classified under Class 6, both
are milk products, and both are in powder form. Also, NANNY and NAN are displayed in the same section of stores - the milk
section.
The Court agrees with the lower courts that there are differences between NAN and NANNY: (1) NAN is intended for infants while
NANNY is intended for children past their infancy and for adults; and (2) NAN is more expensive than NANNY. However, as the
registered owner of the "NAN" mark, Nestle should be free to use its mark on similar products, in different segments of the market,
and at different price levels. In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court held that the scope of protection
afforded to registered trademark owners extends to market areas that are the normal expansion of business:chan robles virtual law
library
xxx
Even respondent's use of the "Big Mak" mark on non-hamburger food products cannot excuse their infringement of petitioners'
registered mark, otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and
at different price levels depending on variations of the products for specific segments of the market. The Court has recognized
that the registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of
his business. Thus, the Court has declared:chan robles virtual law library
Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a
junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his business into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or is
in any way connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576, 577). (Emphasis supplied)
WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision and 4 April 2006 Resolution of the Court
of Appeals in CA-G.R. CV No. 62730 and REINSTATE the 18 September 1998 Decision of the Regional Trial Court, Judicial Region
7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
FIRST DIVISION
[G.R. NO. 164321 : November 30, 2006]
SKECHERS, U.S.A., INC., Petitioner, v. INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER PACIFIC
TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA and/or JEFFREY R.
MORALES and/or any of its other proprietor/s, directors, officers, employees and/or occupants of its premises located at S-7,
Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Paraaque City, Respondents.
TRENDWORKS INTERNATIONAL CORPORATION, Petitioner-Intervenor, v. INTER PACIFIC INDUSTRIAL TRADING
CORP. and/or INTER PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES
WAREHOUSE and/or STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T.
MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors, officers, employees and/or
occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Paraaque City,
Respondents.
DECISION
CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision1 of the Court of
Appeals in CA-G.R. SP No. 77269, dated 17 November 2003, which denied petitioner's Petition for Certiorari seeking to annul the
Order2 of the Regional Trial Court (RTC) of Manila, Branch 24 dated 7 November 2002, quashing Search Warrant No. 02-2827 and
directing National Bureau of Investigation (NBI) Special Investigator Carlos N. Borromeo III to return the seized items to respondents
and the Order dated 6 March 2003 denying petitioner's Motion for Reconsideration.
Petitioner is a foreign corporation existing under the laws of the State of California, United States of America and engaged in the
manufacture of footwear. Petitioner is not doing business in the Philippines and is suing before the trial court only to protect its
intellectual property rights. In the course of business, petitioner registered the trademark "SKECHERS" with the Intellectual Property
Office (IPO) under Registration No. 63364, Class 25 on 30 August 1996, and the trademark "S" (within an oval design) under
Registration No. 4-1996-110182, Class 25 on 12 July 2000, both to be used in men's, women's, and children's footwear, namely, shoes,
boots and slippers of all kinds, and men's, women's and children's clothing, namely, t-shirts, sweat shirts, sweat pants, socks, shorts,
and hats. Petitioner also has a pending application for the trademark "S" and design to be used for the same kinds of goods.
Sometime in March 2002, petitioner engaged the services of Zetetic Far East, Inc. (Zetetic), a private investigative firm, to conduct an
investigation on Inter Pacific Industrial Trading Corporation (Inter Pacific) in coordination with the NBI to confirm if Inter Pacific is
indeed engaged in the importation, distribution and sale of unauthorized products bearing counterfeit or unauthorized trademarks
owned by petitioner.
On 11 April 2002, Mr. Alvin Ambion, a Market Researcher for Zetetic, visited the business address of Inter Pacific/Strongshoes
Warehouse and/or Strong Fashion Shoes Trading at S-7 No. 153 Quirino Avenue, Paraaque City. Located at said business address
was Warehouse No. 7 of Ed & Joe's Commercial Arcade. Upon entering said warehouse, Mr. Ambion saw different kinds and models
of rubber shoes including shoes bearing the "S" logo. During the visit, Mr. Ambion allegedly talked with the caretakers of said
warehouse who informed him that Inter Pacific directly imports the goods from China and that their company distributes them to
wholesalers and retailers in the Baclaran area. One of the caretakers allegedly claimed that the shoes bearing the "Strong" name with
the "S" logo have the same style as Skechers shoes. Another caretaker purportedly informed Mr. Ambion that they have an outlet
located at Stall C-11, Baclaran Terminal, Plaza 2 Shopping Center, Taft Avenue Ext., Pasay City, managed by Violeta T. Magayaga,
which sells the same footwear products.
Together with his colleague, Ms. Amelita Angeles, Mr. Ambion again visited respondent's warehouse on 12 April 2002 and purchased
four pairs of rubber shoes bearing the "Strong" mark containing the "S" logo for P730.00, for which he was issued Sales Invoice No.
0715. On the same day, Mr. Ambion and Ms. Angeles visited respondent's outlet store in Baclaran.
On 17 May 2002, counsel for petitioner filed a letter complaint with the Office of the NBI Director requesting their assistance in
stopping the illegal importation, manufacture and sale of counterfeit products bearing the trademarks owned by petitioner, and in
prosecuting the owners of the establishments engaged therein. Thus, on 21 May 2002 Mr. Ambion and Ms. Angeles, together with
NBI Special Investigator Carlos N. Borromeo III of the Intellectual Property Rights Division of the NBI, visited respondent's
warehouse located at Ed & Joe's Commercial Arcade and purchased 24 pairs of rubber shoes bearing the "Strong" name and the "S"
logo. Afterwards, they went to respondent's outlet store in Baclaran and therein purchased a pair of rubber shoes also bearing the
"Strong" name and the "S" logo.
On 11 June 2002, Special Investigator Borromeo of the NBI, with Mr. Ambion as witness, proceeded to Branch 24, RTC, Manila, to
apply for search warrants against the warehouse and outlet store being operated and managed by respondent for infringement of
trademark under Section 1553 in relation to Section 1704 of Republic Act No. 8293, otherwise known as The Intellectual Property
Code of the Philippines.
After personally examining the search warrant applicant and his witness, the court a quo found probable cause to issue the search
warrants applied for and thus issued on the same day Search Warrant Nos. 02-2827 and 02-2828 to be served on the warehouse and
retail outlet of respondent. That same afternoon, the search warrants were simultaneously served by the operatives of the Intellectual
Property Rights Division of the NBI and seized from the warehouse 71 boxes containing 36 pairs of rubber shoes each or 2,556 pairs
of rubber shoes bearing the "S" logo, 147 boxes containing 24 pairs per box or 3,528 pairs of rubber shoes bearing the "S" logo and six
pages of various documents evidencing the sale and distribution of similar merchandise; and from the outlet store, 295 pairs of rubber
shoes bearing the "S" logo and five pieces of rubber shoes bearing the "S" logo.
In compliance with the Order dated 9 July 2002 of the RTC directing respondents to file their Comment on the issuance of the search
warrant, respondents filed their Compliance and Comment with Prayer to Quash the search warrants. On 28 August 2002, respondents
filed their Amended Comment with Motion to Quash Search Warrants on the ground that there is no confusing similarity between the
petitioner's Skechers' rubber shoes and respondent's Strong rubber shoes.
On 7 November 2002, the lower court issued the assailed Order quashing Search Warrant No. 02-2827 and directing the NBI to return
to respondents the items seized by virtue of said search warrant. According to the court a quo:
The question to be posed in this case is this: Will the purchaser be deceived or likely to be deceived into purchasing respondent's
Strong Rubber Shoes because of the belief that they are Skechers shoes in the ordinary course of purchase? We answer in the negative.

A careful perusal of the Strong Rubber Shoes and Skechers shoes presented by both respondents and private complainants reveals
glaring differences that an ordinary prudent purchaser would not likely be mislead or confused in purchasing the wrong article. Some
of these are;
1. The mark "S" found in Strong Shoes is not enclosed in an "oval design";
2. The word "Strong" is conspicuously placed at the backside and insoles;
3. The hang tags and labels attached to the shoes bears the word "Strong" for respondent and "Sketchers U.S.A." for private
complainant;
4. Strong Shoes are modestly priced compared to the costs of Sketchers Shoes.
xxx
Similarly as in this case, although the mark "S" is prominent on both products, the same should be considered as a whole and not
piecemeal. Factoring the variables already cited make the dissimilarities between the two marks conspicuous, noticeable and
substantial.
Further, the products involved in the case at bar are not your ordinary household items. These are shoes which vary in price. The
casual buyer is predisposed to be more cautious and discriminating and would prefer to mull over his purchase. Confusion and
deception is less likely.
Finally, like beer and maong pants and jeans, the average consumer generally buys his rubber shoes by brand. He does not ask the
sales clerk for rubber shoes but for, say Adidas, Reebok, or Nike. He is, more or less, knowledgeable and familiar with his preference
and will not easily be distracted. (Emerald Garment Manufacturing Corp., v. Court of Appeals, 251 SCRA 600, supra)
ACCORDINGLY, respondent's Inter Pacific Industrial Trading Corporation, Motion to Quash Search [Warrant] is hereby granted.
Search Warrant No. 02-2827 is quashed. The applicant, Carlos N. Borromeo of the National Bureau of Investigation is hereby directed
to return to respondents the seized items.5
Petitioner's Motion for Reconsideration was subsequently denied in an Order dated 6 March 2003. Aggrieved, petitioner filed a
Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals assailing the Orders of the court a quo on the
ground that public respondent court committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in ruling that
the act of private respondents in selling and distributing rubber shoes which contain the trademarks and designs owned by petitioner
does not constitute trademark infringement.
On 17 November 2003, the appellate court denied the petition in this wise:
In the instant case, after examining and evaluating the foregoing factual milieu and the respective arguments of the parties, We are
inclined to agree with the ruling of the public respondent that the holistic test is better suited to the present case and consequently, hold
that the private respondents' appropriation and use of the letter "S" on their rubber shoes did not constitute an infringement of the
trademark of the petitioner. Hence, the instant petition must necessarily fail.
A careful appreciation of the products in question readily reveals that these products are not the ordinary household items like catsup,
coffee or candy which are commonly inexpensive. As such, the ordinary purchaser would be naturally inclined to closely examine
specific details and would prefer to mull over his purchase. The case of Del Monte Corp. vs. Court of Appeals (181 SCRA 410), is
clear on this point:
Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a
general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable items are normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent replacement are
bought by the casual consumer without care x x x.
In his context, although one of the essential features of the private respondents' shoes is the letter "S", suffice it to state that this alone
would not likely cause confusion, deception or mistake on the part of the ordinary buying public. For it must be stressed that an
ordinary purchaser of a product like a pair of rubber shoes is an intelligent buyer, who "is accustomed to buy, and therefore to some
extent familiar with the goods" (Dy Buncio v. Tan Tiao Bok, 42 Phil. 190). x x x.
xxxx

Going further, contrary to the contention of the petitioner, the case of Converse Rubber Corp. v. Universal Rubber Products, Inc. (147
SCRA 154) is in no way controlling in the instant case considering that it involved a different factual milieu in contrast with that of the
instant case. In said case, the respondent sought for the registration of the trademark "UNIVERSAL CONVERSE AND DEVICE"
used on rubber shoes. Petitioner opposed on the ground that respondent's trademark is confusingly similar to petitioner's corporate
name which is CONVERSE RUBBER CORPORATION and that it would likely deceive purchasers of products on which it is to be
used to an extent that said products may be mistaken by the unwary public to be manufactured by the petitioner, i.e. "CONVERSE
CHUCK TAYLOR," "CONVERSE ALL STAR," "ALL STAR CONVERSE CHUCK TAYLOR," OR "ALL STAR DEVICE." The
High Court denied the application for registration of respondent's trademark ratiocinating as follows:
The similarity in the general appearance of respondent's trademark and that of petitioner would evidently create a likelihood of
confusion among the purchasing public. But even assuming arguendo, that the trademark sought to be registered by respondent is
distinctively dissimilar from those of the petitioner, the likelihood of confusion would still subsists, not on the purchaser's perception
of the goods but on the origins thereof. By appropriating the world "CONVERSE," respondent's products are likely to be mistaken as
having been produced by petitioner. The risk of damage is not limited to a possible confusion of goods but also includes confusion of
reputation if the public could reasonably assume that the goods of the parties originated from the same source.
Verily, the foregoing ruling does not apply on all fours in the instant case. The word "CONVERSE" is highly identified not only to the
products of Converse Rubber Corporation but to the corporate entity most importantly such that the mere appropriation of the word
"CONVERSE" on products like rubber shoes, regardless of whether or not it was compounded with other letters, symbols or words;
would not only likely but actually cause one to be mistaken that such rubber shoes had been produced by Converse Rubber
Corporation.
On the other hand, the letter "S" used on private respondents' rubber shoes in the instant case could hardly be considered as highly
identifiable to the products of petitioner alone. For it is not amiss to state that the letter "S" has been used in many existing trademarks,
the most popular of which is the trademark "S" enclosed by an inverted triangle, which is extremely and profoundly identifiable to the
well-known comics action hero, Superman. And perhaps it is due to the existence of these trademarks containing letter "S" that the
petitioner was prompted to accessorize that letter "S" in its trademark with an outer oval design and accompany it with the word
"SKECHERS" in order to make it distinct from the rest and identifiable only to its products. As such, the dominancy test as applied in
the Converse case could not be applied in the instant case inasmuch as the letter "S," although a dominant feature in petitioner's
trademark; is neither extremely and profoundly identifiable to the products of petitioner alone nor has it acquired a certain connotation
to mean the rubber shoes produced by the petitioner. What is extremely and profoundly identifiable to the products of the petitioner is
the whole trademark consisting of the letter "S" enclosed by a uniquely designed oval. Further, confusion and deception are less likely
in the instant case considering that the private respondents' rubber shoes were distinctly and conspicuously marked "STRONG" at
their front side, back side and insoles. Furthermore their hang tags and labels attached to the shoes bear the word "STRONG." In view
of these, the dissimilarities between the private respondents' and petitioner's shoes became more striking and noticeable to the ordinary
purchaser who could not in any way be deceived or misled that the shoes he buys is produced by the petitioner. With this, the holistic
test is squarely applicable.
xxxx
As set out in the decision, the foregoing case involves a peculiar factual milieu in stark contrast with the instant case. As such, it finds
no application in the controversy in the instant case.
Taking off from the foregoing premises, the public respondent judge did not commit grave abuse of discretion amounting to lack or
excess of jurisdiction in ruling that the act of the private respondent in selling and distributing rubber shoes which contain the
trademarks and designs owned by the petitioners does not constitute trademark infringement. After all, the public respondent judge
was merely exercising his judgmental call conformably with the factual and legal issues proferred and presented before him. Suffice it
to state, it is a hornbook doctrine in our jurisdiction that certiorari will not be issued to cure errors in proceedings or to correct
erroneous conclusions of law and fact. The special civil action for certiorari is not a remedy for errors of judgment, which are
correctible by appeal (Montecillo v. Civil Service Commission, 360 SCRA 99).
WHEREFORE, in consideration of the foregoing premises, the instant petition is perforce denied.6
Petitioner's Motion for Reconsideration having been denied in an Order dated 18 June 2004, petitioner filed the instant case
contending that the Court of Appeals committed grave abuse of discretion in considering matters of defense in a criminal trial for
trademark infringement in passing upon the validity of the search warrant and in concluding that respondents are not guilty of
trademark infringement in the case where the sole triable issue is the existence of probable cause to issue a search warrant.
For its part, respondent maintains that it is logical for the Court of Appeals to touch on the issue of whether or not there was trademark
infringement since it was the very issue raised in the Petition for Certiorari. According to respondent, petitioner failed to qualify
whether or not the determination of the Court of Appeals should be limited to whether or not there was probable cause to issue the
search warrants. Furthermore, respondent claims that the trial court may not be faulted for quashing the search warrants it had issued
after finding that there was no basis for its issuance in the first place. According to respondent, after full appreciation of the trademarks
and logos depicted in the rubber shoes presented before the court a quo for close comparison, it was only prudent for the lower court

to correct itself and quash the search warrant following a finding that probable cause does not exist for the offense of trademark
infringement.
At this juncture, it is paramount to stress that the power to issue search warrants is exclusively vested with the trial judges in the
exercise of their judicial function.7 And inherent in the courts' power to issue search warrants is the power to quash warrants already
issued.8 After the judge has issued a warrant, he is not precluded to subsequently quash the same, if he finds upon re-evaluation of the
evidence that no probable cause exists.9 Though there is no fixed rule for the determination of the existence of probable cause since
the existence depends to a large degree upon the finding or opinion of the judge conducting the examination, 10 however, the findings
of the judge should not disregard the facts before him nor run counter to the clear dictates of reason.11
In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or
quashal of the search warrant.12 In the case at bar, the subject search warrant was issued allegedly in connection with trademark
infringement, particularly the unauthorized use of the "S" logo by respondent in their Strong rubber shoes. After conducting the
hearing on the application for a search warrant, the court a quo was initially convinced that there was sufficient reason to justify the
issuance of the search warrant. However, upon motion of respondent to quash the search warrant, the lower court changed its position
and declared that there was no probable cause to issue the search warrant as there was no colorable imitation between respondent's
trademark and that of petitioner.
Based on its appreciation of the respective parties' arguments and the pieces of evidence, particularly the samples of the original
Skechers rubber shoes vis - -vis respondent's Strong rubber shoes, the trial court concluded that respondent's appropriation of the
symbol "S" on their rubber shoes does not constitute an infringement on the trademark of petitioner. This exercise of judgment was
further strengthened by the affirmation of the Court of Appeals that public respondent judge did not commit grave abuse of discretion
amounting to lack or excess of jurisdiction in ruling that the acts of respondent do not constitute trademark infringement in light of the
factual and legal issues presented before it for consideration.
In ruling that there was no colorable imitation of petitioner's trademark in light of the factual milieu prevalent in the instant case, the
trial court may not be faulted for reversing its initial finding that there was probable cause. Based on the courts' inherent power to
issue search warrants and to quash the same, the courts must be provided with the opportunity to correct itself of an error inadvertently
committed. After reevaluating the evidence presented before it, the trial court may reverse its initial finding of probable cause in order
that its conclusion may be made to conform to the facts prevailing in the instant case.
Furthermore, the court was acting reasonably when it went into a discussion of whether or not there was trademark infringement, this
is so because in the determination of the existence of probable cause for the issuance or quashal of a warrant, it is inevitable that the
court may touch on issues properly threshed out in a regular proceeding. 13 This finding that there was no colorable imitation of
petitioner's trademark is merely preliminary and did not finally determine the merits of the possible criminal proceedings that may be
instituted by petitioner. As held in the case of Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93: 14 rbl rl l lbrr
When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offense has been committed, it
does not interfere with or encroach upon the proceedings in the preliminary investigation. The court does not oblige the investigating
officer not to file an information for the court's ruling that no crime exists is only for the purposes of issuing or quashing the warrant.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. SP No.
77269, dated 17 November 2003 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

G.R. No. 158589

June 27, 2006

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A., (now
known as PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
DECISION
GARCIA, J.:
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson & Hedges (Canada)
Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal and setting aside of the following
issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig City, Branch 166, in its
Civil Case No. 47374, which dismissed the complaint for trademark infringement and damages thereat commenced by the
petitioners against respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 20032 denying petitioners motion for reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of America, is, per
Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine Patents Office (PPO), the registered owner of the
trademark "MARK VII" for cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the
registered owner of the trademark "MARK TEN" for cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as can
be seen in Trademark Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de
Tabac Reunies, S.A., is the assignee of the trademark "LARK," which was originally registered in 1964 by Ligget and Myers Tobacco
Company. On the other hand, respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and
sells cigarettes using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their respective
trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of Trademark and Damages against
respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that they are foreign corporations
not doing business in the Philippines and are suing on an isolated transaction. xxx they averred that the countries in which they are
domiciled grant xxx to corporate or juristic persons of the Philippines the privilege to bring action for infringement, xxx without need
of a license to do business in those countries. [Petitioners] likewise manifested [being registered owners of the trademark "MARK
VII" and "MARK TEN" for cigarettes as evidenced by the corresponding certificates of registration and an applicant for the
registration of the trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the aforementioned trademarks in
their respective countries of origin and that, by virtue of the long and extensive usage of the same, these trademarks have already
gained international fame and acceptance. Imputing bad faith on the part of the [respondent], petitioners claimed that the [respondent],
without any previous consent from any of the [petitioners], manufactured and sold cigarettes bearing the identical and/or confusingly
similar trademark "MARK" xxx Accordingly, they argued that [respondents] use of the trademark "MARK" in its cigarette products
have caused and is likely to cause confusion or mistake, or would deceive purchasers and the public in general into buying these
products under the impression and mistaken belief that they are buying [petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual Property (Paris Convention, for
brevity), to which the Philippines is a signatory xxx, [petitioners] pointed out that upon the request of an interested party, a country of
the Union may prohibit the use of a trademark which constitutes a reproduction, imitation, or translation of a mark already belonging
to a person entitled to the benefits of the said Convention. They likewise argued that, in accordance with Section 21-A in relation to
Section 23 of Republic Act 166, as amended, they are entitled to relief in the form of damages xxx [and] the issuance of a writ of
preliminary injunction which should be made permanent to enjoin perpetually the [respondent] from violating [petitioners] right to
the exclusive use of their aforementioned trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred [among other things] xxx that "MARK"
is a common word, which cannot particularly identify a product to be the product of the [petitioners] xxx
xxx
lawphil.net

xxx

xxx.

Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the [petitioners] prayer for the issuance of
a writ of preliminary injunction was negatively resolved by the court in an Order xxx dated March 28, 1973. [The incidental issue of
the propriety of an injunction would eventually be elevated to the CA and would finally be resolved by the Supreme Court in its
Decision dated July 16, 1993 in G.R. No. 91332]. xxx.
xxx

xxx

xxx

After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated November 3, 1999 dismissing the
complaint and counterclaim after making a finding that the [respondent] did not commit trademark infringement against the
[petitioners]. Resolving first the issue of whether or not [petitioners] have capacity to institute the instant action, the trial court opined
that [petitioners] failure to present evidence to support their allegation that their respective countries indeed grant Philippine
corporations reciprocal or similar privileges by law xxx justifies the dismissal of the complaint xxx. It added that the testimonies of
[petitioners] witnesses xxx essentially declared that [petitioners] are in fact doing business in the Philippines, but [petitioners] failed
to establish that they are doing so in accordance with the legal requirement of first securing a license. Hence, the court declared that
[petitioners] are barred from maintaining any action in Philippine courts pursuant to Section 133 of the Corporation Code.
The issue of whether or not there was infringement of the [petitioners] trademarks by the [respondent] was likewise answered xxx in
the negative. It expounded that "in order for a name, symbol or device to constitute a trademark, it must, either by itself or by
association, point distinctly to the origin or ownership of the article to which it is applied and be of such nature as to permit an
exclusive appropriation by one person". Applying such principle to the instant case, the trial court was of the opinion that the words
"MARK", "TEN", "LARK" and the Roman Numerals "VII", either alone or in combination of each other do not by themselves or by
association point distinctly to the origin or ownership of the cigarettes to which they refer, such that the buying public could not be
deceived into believing that [respondents] "MARK" cigarettes originated either from the USA, Canada, or Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial court stated that the general rule
is that an infringement exists if the resemblance is so close that it deceives or is likely to deceive a customer exercising ordinary
caution in his dealings and induces him to purchase the goods of one manufacturer in the belief that they are those of another. xxx. The
trial court ruled that the [petitioners] failed to pass these tests as it neither presented witnesses or purchasers attesting that they have
bought [respondents] product believing that they bought [petitioners] "MARK VII", "MARK TEN" or "LARK", and have also failed
to introduce in evidence a specific magazine or periodical circulated locally, which promotes and popularizes their products in the
Philippines. It, moreover, elucidated that the words consisting of the trademarks allegedly infringed by [respondent] failed to show
that they have acquired a secondary meaning as to identify them as [petitioners] products. Hence, the court ruled that the [petitioners]
cannot avail themselves of the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either party stating that, since the [petitioners] filed the
action in the belief that they were aggrieved by what they perceived to be an infringement of their trademark, no wrongful act or
omission can be attributed to them. xxx.3 (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has committed trademark infringement, petitioners went
on appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter of their legal capacity to sue in
this country for trademark infringement, nevertheless affirmed the trial courts decision on the underlying issue of respondents
liability for infringement as it found that:
xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not qualify as well-known marks
entitled to protection even without the benefit of actual use in the local market and that the similarities in the trademarks in question
are insufficient as to cause deception or confusion tantamount to infringement. Consequently, as regards the third issue, there is
likewise no basis for the award of damages prayed for by the appellants herein. 4 (Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally challenged Resolution of May 30, 2003, petitioners
are now with this Court via this petition for review essentially raising the following issues: (1) whether or not petitioners, as Philippine
registrants of trademarks, are entitled to enforce trademark rights in this country; and (2) whether or not respondent has committed
trademark infringement against petitioners by its use of the mark "MARK" for its cigarettes, hence liable for damages.
In its Comment,5 respondent, aside from asserting the correctness of the CAs finding on its liability for trademark infringement and
damages, also puts in issue the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises both questions of fact and law
contrary to the prescription against raising factual questions in a petition for review on certiorari filed before the Court. A question of
law exists when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt
or difference arises as to the truth or falsity of alleged facts.6
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts. 7 Unless the factual findings of the
appellate court are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled
by the court of origin,8 we will not disturb them.
It is petitioners posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn therefrom by the CA is correct is one
of law.9 But, even if we consider and accept as pure questions of law the issues raised in this petition, still, the Court is not inclined to
disturb the conclusions reached by the appellate court, the established rule being that all doubts shall be resolved in favor of the
correctness of such conclusions.10

Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in accordance with law and established
jurisprudence in arriving at its assailed decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt in by others. 11
Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.: 12
The protection of trademarks is the laws recognition of the psychological function of symbols. If it is true that we live by symbols, it
is no less true that we purchase goods by them. A trade-mark is a merchandising short-cut which induces a purchaser to select what he
wants, or what he has been led to believe what he wants. The owner of a mark exploits this human propensity by making every effort
to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the aim is
the same - to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears.
Once this is attained, the trade-mark owner has something of value. If another poaches upon the commercial magnetism of the symbol
he has created, the owner can obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce trademark rights in this country,
specifically, the right to sue for trademark infringement in Philippine courts and be accorded protection against unauthorized use of
their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate nationals of member-countries of the
Paris Union, they can sue before Philippine courts for infringement of trademarks, or for unfair competition, without need of obtaining
registration or a license to do business in the Philippines, and without necessity of actually doing business in the Philippines. To
petitioners, these grievance right and mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No. 166, as amended,
or the Trademark Law, but also by Article 2 of the Paris Convention for the Protection of Industrial Property, otherwise known as the
Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines as evidenced by the certificates of
registration of their trademarks. The marks "MARK TEN" and "LARK" were registered on the basis of actual use in accordance with
Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing for a 2-month pre-registration use in local commerce and trade while
the registration of "MARK VII" was on the basis of registration in the foreign country of origin pursuant to Section 37 of the same law
wherein it is explicitly provided that prior use in commerce need not be alleged. 15
Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that cigarettes bearing their
trademarks are not available and sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products, Inc., 16 petitioners
state that such availability and sale may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks in the country in
view of the Philippines adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS Agreement and the
enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the "IP Code"), both of which provide that the fame of a
trademark may be acquired through promotion or advertising with no explicit requirement of actual use in local trade or commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it must be emphasized that their
standing to sue in Philippine courts had been recognized, and rightly so, by the CA. It ought to be pointed out, however, that the
appellate court qualified its holding with a statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court of
Appeals and Fortune Tobacco Corporation,17 that such right to sue does not necessarily mean protection of their registered marks in
the absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of their trademarks in
the Philippines.
As we ruled in G.R. No. 91332,18 supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages denied non-registrants or ordinary
users, like respondent. But while petitioners enjoy the statutory presumptions arising from such registration, 19 i.e., as to the validity of
the registration, ownership and the exclusive right to use the registered marks, they may not successfully sue on the basis alone of their
respective certificates of registration of trademarks. For, petitioners are still foreign corporations. As such, they ought, as a condition
to availment of the rights and privileges vis--vis their trademarks in this country, to show proof that, on top of Philippine registration,
their country grants substantially similar rights and privileges to Filipino citizens pursuant to Section 21-A 20 of R.A. No. 166.
In Leviton Industries v. Salvador,21 the Court further held that the aforementioned reciprocity requirement is a condition sine qua non
to filing a suit by a foreign corporation which, unless alleged in the complaint, would justify dismissal thereof, a mere allegation that
the suit is being pursued under Section 21-A of R.A. No. 166 not being sufficient. In a subsequent case, 22 however, the Court held that
where the complainant is a national of a Paris Convention- adhering country, its allegation that it is suing under said Section 21-A
would suffice, because the reciprocal agreement between the two countries is embodied and supplied by the Paris Convention which,
being considered part of Philippine municipal laws, can be taken judicial notice of in infringement suits. 23
As well, the fact that their respective home countries, namely, the United States, Switzerland and Canada, are, together with the
Philippines, members of the Paris Union does not automatically entitle petitioners to the protection of their trademarks in this country
absent actual use of the marks in local commerce and trade.
True, the Philippines adherence to the Paris Convention24 effectively obligates the country to honor and enforce its provisions25 as
regards the protection of industrial property of foreign nationals in this country. However, any protection accorded has to be made

subject to the limitations of Philippine laws.26 Hence, despite Article 2 of the Paris Convention which substantially provides that (1)
nationals of member-countries shall have in this country rights specially provided by the Convention as are consistent with Philippine
laws, and enjoy the privileges that Philippine laws now grant or may hereafter grant to its nationals, and (2) while no domicile
requirement in the country where protection is claimed shall be required of persons entitled to the benefits of the Union for the
enjoyment of any industrial property rights,27 foreign nationals must still observe and comply with the conditions imposed by
Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-A29 thereof, mandates actual use of the marks and/or
emblems in local commerce and trade before they may be registered and ownership thereof acquired, the petitioners cannot, therefore,
dispense with the element of actual use. Their being nationals of member-countries of the Paris Union does not alter the legal
situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its rulings in Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate Court,32 and Philip Morris v. Court of
Appeals and Fortune Tobacco Corporation33 on the importance of actual commercial use of a trademark in the Philippines
notwithstanding the Paris Convention:
The provisions of the 1965 Paris Convention relied upon by private respondent and Sec. 21-A of the Trademark Law were
sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc., et. al. vs. Court of Appeals:
xxx

xxx

xxx

Following universal acquiescence and comity, our municipal law on trademarks regarding the requirements of actual use in the
Philippines must subordinate an international agreement inasmuch as the apparent clash is being decided by a municipal tribunal. Xxx.
Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of
International Law are given a standing equal, not superior, to national legislative enactments.
xxx

xxx

xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement but the question of whether they have an
exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the
Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign
corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need not be actually using its
trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it
may not necessarily be entitled to protection due to absence of actual use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual use of such trademark
in local commerce. As it were, registration does not confer upon the registrant an absolute right to the registered mark. The certificate
of registration merely constitutes prima facie evidence that the registrant is the owner of the registered mark. Evidence of non-usage of
the mark rebuts the presumption of trademark ownership,34 as what happened here when petitioners no less admitted not doing
business in this country.35
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an absolute right or exclusive
ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development Group of Companies, Inc. 36
trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive ownership; registration is only an administrative
confirmation of the existence of the right of ownership of the mark, but does not perfect such right; actual use thereof is the perfecting
ingredient.37
Petitioners reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast in a different factual milieu. There, we
ruled that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in, business in the Philippines, may
actually earn reputation or goodwill for its goods in the country. But unlike in the instant case, evidence of actual sales of Converse
rubber shoes, such as sales invoices, receipts and the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein having been filed in
August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however, took effect only on January 1, 1998
without a provision as to its retroactivity.39 In the same vein, the TRIPS Agreement was inexistent when the suit for infringement was
filed, the Philippines having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by actual use thereof in
the country accords the registrant only the standing to sue for infringement in Philippine courts. Entitlement to protection of such
trademark in the country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce,

counterfeit, copy of color ably imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with
such goods, business, or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondents mark "MARK" for cigarettes is confusingly or deceptively
similar with their duly registered "MARK VII," "MARK TEN" and "LARK" marks likewise for cigarettes. To them, the word
"MARK" would likely cause confusion in the trade, or deceive purchasers, particularly as to the source or origin of respondents
cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement.40 But likelihood of confusion is a relative concept, the
particular, and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in trademark infringement
cases, more than in other kinds of litigation, precedents must be evaluated in the light of each particular case. 41
In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and the holistic test. 42
The dominancy test43 sets sight on the similarity of the prevalent features of the competing trademarks that might cause confusion and
deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of the marks involved would
be likely to cause confusion or mistake in the mind of the public or deceive purchasers. 44
In contrast, the holistic test45 entails a consideration of the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the likelihood of confusion resulting in
infringement arising from the respondents use of the trademark "MARK" for its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they appear on the products, 46 the
striking dissimilarities are significant enough to warn any purchaser that one is different from the other. Indeed, although the perceived
offending word "MARK" is itself prominent in petitioners trademarks "MARK VII" and "MARK TEN," the entire marking system
should be considered as a whole and not dissected, because a discerning eye would focus not only on the predominant word but also
on the other features appearing in the labels. Only then would such discerning observer draw his conclusion whether one mark would
be confusingly similar to the other and whether or not sufficient differences existed between the marks. 47
This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three cigarette brands of the petitioners,
correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a trademark serves as a tool to
point out distinctly the origin or ownership of the goods to which it is affixed,48 the likelihood of confusion tantamount to infringement
appears to be farfetched. The reason for the origin and/or ownership angle is that unless the words or devices do so point out the origin
or ownership, the person who first adopted them cannot be injured by any appropriation or imitation of them by others, nor can the
public be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral "VII," does not point to the
origin or ownership of the cigarettes to which they apply, the local buying public could not possibly be confused or deceived that
respondents "MARK" is the product of petitioners and/or originated from the U.S.A., Canada or Switzerland. And lest it be
overlooked, no actual commercial use of petitioners marks in local commerce was proven. There can thus be no occasion for the
public in this country, unfamiliar in the first place with petitioners marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable circumstances in determining
likelihood of confusion. Del Monte Corp. v. CA50 dealt with another, where we instructed to give due regard to the "ordinary
purchaser," thus:
The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion
made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying under the
normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods is the
touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary customer" but to the "ordinarily
intelligent buyer" considering the type of product involved.51
It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by those who are already
predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be all too familiar with his brand and discriminating as
well. We, thus, concur with the CA when it held, citing a definition found in Dy Buncio v. Tan Tiao Bok, 52 that the "ordinary
purchaser" in this case means "one accustomed to buy, and therefore to some extent familiar with, the goods in question."
Pressing on with their contention respecting the commission of trademark infringement, petitioners finally point to Section 22 of R.A.
No. 166, as amended. As argued, actual use of trademarks in local commerce is, under said section, not a requisite before an aggrieved
trademark owner can restrain the use of his trademark upon goods manufactured or dealt in by another, it being sufficient that he had
registered the trademark or trade-name with the IP Office. In fine, petitioners submit that respondent is liable for infringement, having
manufactured and sold cigarettes with the trademark "MARK" which, as it were, are identical and/or confusingly similar with their
duly registered trademarks "MARK VII," "MARK TEN" and "LARK".

This Court is not persuaded.

In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following constitute the elements of trademark infringement in
accordance not only with Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54 and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent
Office,
(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services
or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited,
copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such
goods, business or services as to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.lawphil.net
As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN" and "LARK" for cigarettes in
the Philippines, prior actual commercial use thereof had not been proven. In fact, petitioners judicial admission of not doing business
in this country effectively belies any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known and/or have acquired
goodwill in the Philippines so as to be entitled to protection even without actual use in this country in accordance with Article 6bis 55 of
the Paris Convention. As correctly found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants [petitioners] products are indeed well-known in the Philippines,
either through actual sale of the product or through different forms of advertising. This finding is supported by the fact that appellants
admit in their Complaint that they are not doing business in the Philippines, hence, admitting that their products are not being sold in
the local market. We likewise see no cogent reason to disturb the trial courts finding that the appellants failed to establish that their
products are widely known by local purchasers as "(n)o specific magazine or periodical published in the Philippines, or in other
countries but circulated locally" have been presented by the appellants during trial. The appellants also were not able to show the
length of time or the extent of the promotion or advertisement made to popularize their products in the Philippines. 56
Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts having
peremptorily found allegations of infringement on the part of respondent to be without basis. As we said time and time again, factual
determinations of the trial court, concurred in by the CA, are final and binding on this Court.57
For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to respondents use of its
mark and for petitioners failure to demonstrate confusing similarity between said trademarks, the dismissal of their basic complaint
for infringement and the concomitant plea for damages must be affirmed. The law, the surrounding circumstances and the equities of
the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of Appeals are
AFFIRMED.
Costs against the petitioners.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 180677

February 18, 2013

VICTORIO P. DIAZ, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.
DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen of the offense of
infringement of a registered trademark. The acquittal of the accused should follow if the allegedly infringing mark is not likely to
cause confusion. Thereby, the evidence of the State does not satisfy the quantum of proof beyond reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 20071 and November 22, 2007,2 whereby the Court of
Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated filing of the appellant's brief, and denied
his motion for reconsideration. Thereby, the decision rendered on February 13, 2006 in Criminal Case No. 00-0318 and Criminal Case
No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City (RTC) convicting him for two counts of infringement of
trademark were affirmed.3
Antecedents
On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Pias City, charging Diaz with violation of
Section 155, in relation to Section 170, of Republic Act No. 8293, also known as the Intellectual Property Code of the Philippines
(Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this Honorable Court,
the abovenamed accused, with criminal intent to defraud Levis Strauss (Phil.) Inc. (hereinafter referred to as LEVIS), did then and
there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying
and colorably imitating Levis registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE
BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE
ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit
patches and jeans, including other preparatory steps necessary to carry out the sale of said patches and jeans, which likely caused
confusion, mistake, and /or deceived the general consuming public, without the consent, permit or authority of the registered owner,
LEVIS, thus depriving and defrauding the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage
and prejudice of LEVIS.
CONTRARY TO LAW.4
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this Honorable Court,
the abovenamed accused, with criminal intent to defraud Levis Strauss (Phil.) Inc. (hereinafter referred to as LEVIS), did then and
there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying
and colorably imitating Levis registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE
BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE
ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit
patches and jeans, including other preparatory steps necessary to carry out the sale of said patches and jeans, which likely caused
confusion, mistake, and /or deceived the general consuming public, without the consent, permit or authority of the registered owner,
LEVIS, thus depriving and defrauding the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage
and prejudice of LEVIS.
CONTRARY TO LAW.5
The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to each information on June 21, 2000.6

1.
Evidence of the Prosecution
Levi Strauss and Company (Levis), a foreign corporation based in the State of Delaware, United States of America, had been engaged
in the apparel business. It is the owner of trademarks and designs of Levis jeans like LEVIS 501, the arcuate design, the two-horse
brand, the two-horse patch, the two-horse patch with pattern arcuate, and the composite tab arcuate. LEVIS 501 has the following
registered trademarks, to wit: (1) the leather patch showing two horses pulling a pair of pants; (2) the arcuate pattern with the
inscription "LEVI STRAUSS & CO;" (3) the arcuate design that refers to "the two parallel stitching curving downward that are being
sewn on both back pockets of a Levis Jeans;" and (4) the tab or piece of cloth located on the structural seam of the right back pocket,
upper left side. All these trademarks were registered in the Philippine Patent Office in the 1970s, 1980s and early part of 1990s. 7
Levi Strauss Philippines, Inc. (Levis Philippines) is a licensee of Levis. After receiving information that Diaz was selling counterfeit
LEVIS 501 jeans in his tailoring shops in Almanza and Talon, Las Pias City, Levis Philippines hired a private investigation group to
verify the information. Surveillance and the purchase of jeans from the tailoring shops of Diaz established that the jeans bought from
the tailoring shops of Diaz were counterfeit or imitations of LEVIS 501. Levis Philippines then sought the assistance of the National
Bureau of Investigation (NBI) for purposes of applying for a search warrant against Diaz to be served at his tailoring shops. The
search warrants were issued in due course. Armed with the search warrants, NBI agents searched the tailoring shops of Diaz and
seized several fake LEVIS 501 jeans from them. Levis Philippines claimed that it did not authorize the making and selling of the
seized jeans; that each of the jeans were mere imitations of genuine LEVIS 501 jeans by each of them bearing the registered
trademarks, like the arcuate design, the tab, and the leather patch; and that the seized jeans could be mistaken for original LEVIS 501
jeans due to the placement of the arcuate, tab, and two-horse leather patch. 8
2.
Evidence of the Defense
On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.
Diaz stated that he did not manufacture Levis jeans, and that he used the label "LS Jeans Tailoring" in the jeans that he made and sold;
that the label "LS Jeans Tailoring" was registered with the Intellectual Property Office; that his shops received clothes for sewing or
repair; that his shops offered made-to-order jeans, whose styles or designs were done in accordance with instructions of the customers;
that since the time his shops began operating in 1992, he had received no notice or warning regarding his operations; that the jeans he
produced were easily recognizable because the label "LS Jeans Tailoring," and the names of the customers were placed inside the
pockets, and each of the jeans had an "LSJT" red tab; that "LS" stood for "Latest Style;" and that the leather patch on his jeans had two
buffaloes, not two horses.9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:
WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond reasonable doubt of
twice violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the Informations in Criminal Case Nos. 00-0318 & 000319, respectively, and hereby sentences him to suffer in each of the cases the penalty of imprisonment of TWO (2) YEARS of
prision correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as maximum, as well as pay a fine of P50,000.00 for
each of the herein cases, with subsidiary imprisonment in case of insolvency, and to suffer the accessory penalties provided for by law.
Also, accused Diaz is hereby ordered to pay to the private complainant Levis Strauss (Phils.), Inc. the following, thus:
1. P50,000.00 in exemplary damages; and
2. P222,000.00 as and by way of attorneys fees.
Costs de officio.
SO ORDERED.10
Ruling of the CA
Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his appellants brief on time
despite being granted his requested several extension periods.
Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.

Issue
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE RULE
ON TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE PETITIONER
FOR LATE FILING OF APPELLANTS BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his appellants brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellants brief in the CA "within forty-five (45)
days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the record, seven (7) copies of
his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies thereof upon the appellee." Section 1(e)
of Rule 50 of the Rules of Court grants to the CA the discretion to dismiss an appeal either motu proprio or on motion of the appellee
should the appellant fail to serve and file the required number of copies of the appellants brief within the time provided by the Rules
of Court.12
The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the appellants brief
is not mandatory, but discretionary. Verily, the failure to serve and file the required number of copies of the appellants brief within the
time provided by the Rules of Court does not have the immediate effect of causing the outright dismissal of the appeal. This means
that the discretion to dismiss the appeal on that basis is lodged in the CA, by virtue of which the CA may still allow the appeal to
proceed despite the late filing of the appellants brief, when the circumstances so warrant its liberality. In deciding to dismiss the
appeal, then, the CA is bound to exercise its sound discretion upon taking all the pertinent circumstances into due consideration.
The records reveal that Diazs counsel thrice sought an extension of the period to file the appellants brief. The first time was on
March 12, 2007, the request being for an extension of 30 days to commence on March 11, 2007. The CA granted his motion under its
resolution of March 21, 2007. On April 10, 2007, the last day of the 30-day extension, the counsel filed another motion, seeking an
additional 15 days. The CA allowed the counsel until April 25, 2007 to serve and file the appellants brief. On April 25, 2007, the
counsel went a third time to the CA with another request for 15 days. The CA still granted such third motion for extension, giving the
counsel until May 10, 2007. Notwithstanding the liberality of the CA, the counsel did not literally comply, filing the appellants brief
only on May 28, 2007, which was the 18th day beyond the third extension period granted.
Under the circumstances, the failure to file the appellants brief on time rightly deserved the outright rejection of the appeal. The acts
of his counsel bound Diaz like any other client. It was, of course, only the counsel who was well aware that the Rules of Court fixed
the periods to file pleadings and equally significant papers like the appellants brief with the lofty objective of avoiding delays in the
administration of justice.
Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by the CA on appeal because
of the failure of his counsel to serve and file the appellants brief on time despite the grant of several extensions the counsel requested.
Diaz was convicted and sentenced to suffer two indeterminate sentences that would require him to spend time in detention for each
conviction lasting two years, as minimum, to five years, as maximum, and to pay fines totaling P100,000.00 (with subsidiary
imprisonment in case of his insolvency). His personal liberty is now no less at stake. This reality impels us to look beyond the
technicality and delve into the merits of the case to see for ourselves if the appeal, had it not been dismissed, would have been worth
the time of the CA to pass upon. After all, his appellants brief had been meanwhile submitted to the CA. While delving into the merits
of the case, we have uncovered a weakness in the evidence of guilt that cannot be simply ignored and glossed over if we were to be
true to our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable negligence tendered by Diazs
counsel to justify the belated filing of the appellants brief as unworthy of serious consideration, Diaz should not be made to suffer the
dire consequence. Any accused in his shoes, with his personal liberty as well as his personal fortune at stake, expectedly but
innocently put his fullest trust in his counsels abilities and professionalism in the handling of his appeal. He thereby delivered his fate
to the hands of his counsel. Whether or not those hands were efficient or trained enough for the job of handling the appeal was a
learning that he would get only in the end. Likelier than not, he was probably even unaware of the three times that his counsel had
requested the CA for extensions. If he were now to be left to his unwanted fate, he would surely suffer despite his innocence. How
costly a learning it would be for him! That is where the Court comes in. It is most important for us as dispensers of justice not to allow
the inadvertence or incompetence of any counsel to result in the outright deprivation of an appellants right to life, liberty or property.13
We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on the line, the people whose
futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of professionalism of any member
of the Law Profession. They reasonably expect a just result in every litigation. The courts must give them that just result. That
assurance is the peoples birthright. Thus, we have to undo Diazs dire fate.

Even as we now set aside the CAs rejection of the appeal of Diaz, we will not remand the records to the CA for its review. In an
appeal of criminal convictions, the records are laid open for review. To avoid further delays, therefore, we take it upon ourselves to
review the records and resolve the issue of guilt, considering that the records are already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:
Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used
in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by
the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.
The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore, the following:
1. The trademark being infringed is registered in the Intellectual Property Office;
2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;
3. The infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business or services;
or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services;
4. The use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or others as
to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business; and
5. The use or application of the infringing mark is without the consent of the trademark owner or the assignee thereof. 14
As can be seen, the likelihood of confusion is the gravamen of the offense of trademark infringement.15 There are two tests to
determine likelihood of confusion, namely: the dominancy test, and the holistic test. The contrasting concept of these tests was
explained in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:
x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the competing trademarks that might
cause confusion. Infringement takes place when the competing trademark contains the essential features of another. Imitation or an
effort to imitate is unnecessary. The question is whether the use of the marks is likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is
not only on the predominant words but also on the other features appearing on the labels.16
As to what test should be applied in a trademark infringement case, we said in McDonalds Corporation v. Macjoy Fastfood
Corporation17 that:
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced
because each case must be decided on its merits. In such cases, even more than in any other litigation, precedent must be studied in the
light of the facts of the particular case. That is the reason why in trademark cases, jurisprudential precedents should be applied only to
a case if they are specifically in point.
The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an alleged trademark infringement of
jeans products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the United States of America,
claimed that Emerald Garments trademark of "STYLISTIC MR. LEE" that it used on its jeans products was confusingly similar to the
"LEE" trademark that H.D. Lee used on its own jeans products. Applying the holistic test, the Court ruled that there was no
infringement.
The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in relation to jeans
products. Accordingly, the jeans trademarks of Levis Philippines and Diaz must be considered as a whole in determining the
likelihood of confusion between them. The maong pants or jeans made and sold by Levis Philippines, which included LEVIS 501,

were very popular in the Philippines. The consuming public knew that the original LEVIS 501 jeans were under a foreign brand and
quite expensive. Such jeans could be purchased only in malls or boutiques as ready-to-wear items, and were not available in tailoring
shops like those of Diazs as well as not acquired on a "made-to-order" basis. Under the circumstances, the consuming public could
easily discern if the jeans were original or fake LEVIS 501, or were manufactured by other brands of jeans. Confusion and deception
were remote, for, as the Court has observed in Emerald Garments:
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your ordinary household items like
catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would prefer to mull over his purchase. Confusion and deception, then, is
less likely. In Del Monte Corporation v. Court of Appeals, we noted that:
.... Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a
general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable items are normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent replacement are
bought by the casual consumer without great care....
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk for generic
jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable and familiar with his
preference and will not easily be distracted.
Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the
type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the "ordinary purchaser" was defined
as one "accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of fraudulent simulation is to be
found in the likelihood of the deception of some persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is not found in the deception, or the possibility of
deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent between that
and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer
who has a need to supply and is familiar with the article that he seeks to purchase.19
Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. His trademark was
visually and aurally different from the trademark "LEVI STRAUSS & CO" appearing on the patch of original jeans under the
trademark LEVIS 501. The word "LS" could not be confused as a derivative from "LEVI STRAUSS" by virtue of the "LS" being
connected to the word "TAILORING", thereby openly suggesting that the jeans bearing the trademark "LS JEANS TAILORING"
came or were bought from the tailoring shops of Diaz, not from the malls or boutiques selling original LEVIS 501 jeans to the
consuming public.
There were other remarkable differences between the two trademarks that the consuming public would easily perceive. Diaz aptly
noted such differences, as follows:
The prosecution also alleged that the accused copied the "two horse design" of the petitioner-private complainant but the evidence
will show that there was no such design in the seized jeans. Instead, what is shown is "buffalo design." Again, a horse and a buffalo
are two different animals which an ordinary customer can easily distinguish. x x x.
The prosecution further alleged that the red tab was copied by the accused. However, evidence will show that the red tab used by the
private complainant indicates the word "LEVIS" while that of the accused indicates the letters "LSJT" which means LS JEANS
TAILORING. Again, even an ordinary customer can distinguish the word LEVIS from the letters LSJT.
xxxx
In terms of classes of customers and channels of trade, the jeans products of the private complainant and the accused cater to different
classes of customers and flow through the different channels of trade. The customers of the private complainant are mall goers
belonging to class A and B market group while that of the accused are those who belong to class D and E market who can only
afford Php 300 for a pair of made-toorder pants.20 x x x.
Moreover, based on the certificate issued by the Intellectual Property Office, "LS JEANS TAILORING" was a registered trademark of
Diaz. He had registered his trademark prior to the filing of the present cases.21 The Intellectual Property Office would certainly not
have allowed the registration had Diazs trademark been confusingly similar with the registered trademark for LEVIS 501 jeans.

Given the foregoing, it should be plain that there was no likelihood of confusion between the trademarks involved. Thereby, the
evidence of guilt did not satisfy the quantum of proof required for a criminal conviction, which is proof beyond reasonable doubt.
According to Section 2, Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not mean such a degree of proof as,
excluding possibility of error, produces absolute certainty. Moral certainty only is required, or that degree of proof which produces
conviction in an unprejudiced mind. Consequently, Diaz should be acquitted of the charges.
WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of trademark charged in
Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for failure of the State to establish his guilt by proof beyond reasonable
doubt.
No pronouncement on costs of suit.
SO ORDERED.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164324

August 14, 2009

TANDUAY DISTILLERS, INC., Petitioner,

vs.
GINEBRA SAN MIGUEL, INC., Respondent.
DECISION
CARPIO, J.:
The Case
Tanduay Distillers, Inc. (Tanduay) filed this Petition for Review on Certiorari 1 assailing the Court of Appeals Decision dated 9
January 20042 as well as the Resolution dated 2 July 20043 in CA-G.R. SP No. 79655 denying the Motion for Reconsideration. In the
assailed decision, the Court of Appeals (CA) affirmed the Regional Trial Courts Orders 4 dated 23 September 2003 and 17 October
2003 which respectively granted Ginebra San Miguel, Inc.s (San Miguel) prayer for the issuance of a temporary restraining order
(TRO) and writ of preliminary injunction. The Regional Trial Court of Mandaluyong City, Branch 214 (trial court), enjoined Tanduay
"from committing the acts complained of, and, specifically, to cease and desist from manufacturing, distributing, selling, offering for
sale, advertising, or otherwise using in commerce the mark "Ginebra," and manufacturing, producing, distributing, or otherwise
dealing in gin products which have the general appearance of, and which are confusingly similar with," San Miguels marks, bottle
design, and label for its gin products.5
The Facts
Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor business since 1854. In 2002,
Tanduay developed a new gin product distinguished by its sweet smell, smooth taste, and affordable price. Tanduay claims that it
engaged the services of an advertising firm to develop a brand name and a label for its new gin product. The brand name eventually
chosen was "Ginebra Kapitan" with the representation of a revolutionary Kapitan on horseback as the dominant feature of its label.
Tanduay points out that the label design of "Ginebra Kapitan" in terms of color scheme, size and arrangement of text, and other label

features were precisely selected to distinguish it from the leading gin brand in the Philippine market, "Ginebra San Miguel." Tanduay
also states that the "Ginebra Kapitan" bottle uses a resealable twist cap to distinguish it from "Ginebra San Miguel" and other local gin
products with bottles which use the crown cap or tansan.6
After filing the trademark application for "Ginebra Kapitan" with the Intellectual Property Office (IPO) and after securing the
approval of the permit to manufacture and sell "Ginebra Kapitan" from the Bureau of Internal Revenue, Tanduay began selling
"Ginebra Kapitan" in Northern and Southern Luzon areas in May 2003. In June 2003, "Ginebra Kapitan" was also launched in Metro
Manila.7
On 13 August 2003, Tanduay received a letter from San Miguels counsel. The letter informed Tanduay to immediately cease and
desist from using the mark "Ginebra" and from committing acts that violate San Miguels intellectual property rights. 8
On 15 August 2003, San Miguel filed a complaint for trademark infringement, unfair competition and damages, with applications for
issuance of TRO and Writ of Preliminary Injunction against Tanduay before the Regional Trial Court of Mandaluyong. The case was
raffled to Branch 214 and docketed as IP Case No. MC-03-01 and Civil Case No. MC-03-073.9
On 25 and 29 August and 4 September 2003, the trial court conducted hearings on the TRO. San Miguel submitted five affidavits, but
only one affiant, Mercedes Abad, was presented for cross-examination because the trial court ruled that such examination would be
inconsistent with the summary nature of a TRO hearing.10 San Miguel submitted the following pieces of evidence:11
1. Affidavit of Mercedes Abad, President and Managing Director of the research firm NFO Trends, Inc. (NFO Trends), to
present, among others, market survey results which prove that gin drinkers associate the term "Ginebra" with San Miguel,
and that the consuming public is being misled that "Ginebra Kapitan" is a product of San Miguel;
2. Market Survey results conducted by NFO Trends to determine the brand associations of the mark "Ginebra" and to prove
that the consuming public is confused as to the manufacturer of "Ginebra Kapitan";
3. Affidavit of Ramon Cruz, San Miguels Group Product Manager, to prove, among others, the prior right of San Miguel to
the mark "Ginebra" as shown in various applications for, and registrations of, trademarks that contain the mark "Ginebra."
His affidavit included documents showing that the mark "Ginebra" has been used on San Miguels gin products since 1834;
4. Affidavits of Leopoldo Guanzon, Jr., San Miguels Trade and Promo Merchandising Head for North Luzon Area, and
Juderick Crescini, San Miguels District Sales Supervisor for South Luzon-East Area, to prove, among others, that Tanduays
salesmen or distributors misrepresent "Ginebra Kapitan" as San Miguels product and that numerous retailers of San Miguels
gin products are confused as to the manufacturer of "Ginebra Kapitan"; and
5. Affidavit of Jose Reginald Pascual, San Miguels District Sales Supervisor for the North-Greater Manila Area, to prove,
among others, that gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan" due to the use of the
dominant feature "Ginebra."
Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which motion was denied by the trial court. Tanduay presented
witnesses who affirmed their affidavits in open court, as follows:12
1. Ramoncito Bugia, General Services Manager of Tanduay. Attached to his affidavit were various certificates of registration
of trademarks containing the word "Ginebra" obtained by Tanduay and other liquor companies, to prove that the word
"Ginebra" is required to be disclaimed by the IPO. The affidavit also attested that there are other liquor companies using the
word "Ginebra" as part of their trademarks for gin products aside from San Miguel and Tanduay.
2. Herbert Rosales, Vice President of J. Salcedo and Associates, Inc., the advertising and promotions company hired by
Tanduay to design the label of "Ginebra Kapitan." His affidavit attested that the label was designed to make it "look
absolutely different from the Ginebra San Miguel label."
On 23 September 2003, the trial court issued a TRO prohibiting Tanduay from manufacturing, selling and advertising "Ginebra
Kapitan."13 The dispositive portion reads in part:
WHEREFORE, the application for temporary restraining order is hereby GRANTED and made effective immediately. Plaintiff is
directed to post a bond of ONE MILLION PESOS (Php 1,000,000.00) within five (5) days from issuance hereof, otherwise, this
restraining order shall lose its efficacy. Accordingly, defendant Tanduay Distillers, Inc., and all persons and agents acting for and in
behalf are enjoined to cease and desist from manufacturing, distributing, selling, offering for sale and/or advertising or otherwise using
in commerce the mark "GINEBRA KAPITAN" which employs, thereon, or in the wrappings, sundry items, cartons and packages
thereof, the mark "GINEBRA" as well as from using the bottle design and labels for its gin products during the effectivity of this
temporary restraining order unless a contrary order is issued by this Court.14

On 3 October 2003, Tanduay filed a petition for certiorari with the CA.15 Despite Tanduays Urgent Motion to Defer Injunction
Hearing, the trial court continued to conduct hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show cause why no writ of
preliminary injunction should be issued.16 On 17 October 2003, the trial court granted San Miguels application for the issuance of a
writ of preliminary injunction.17 The dispositive portion of the Order reads:
WHEREFORE, the plaintiffs application for a writ of preliminary injunction is GRANTED. Upon plaintiffs filing of an injunctive
bond executed to the defendant in the amount of P20,000,000.00 (TWENTY MILLION) PESOS, let a Writ of Preliminary Injunction
issue enjoining the defendant, its employees, agents, representatives, dealers, retailers or assigns, and any all persons acting on its
behalf, from committing the acts complained of, and, specifically, to cease and desist from manufacturing, distributing, selling,
offering for sale, advertising, or otherwise using in commerce the mark "GINEBRA", and manufacturing, producing, distributing or
otherwise dealing in gin products which have the general appearance of, and which are confusingly similar with, plaintiffs marks,
bottle design and label for its gin products.
SO ORDERED.18
On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the injunction order. On 10 November 2003, the CA
issued a TRO enjoining the trial court from implementing its injunction order and from further proceeding with the case. 19 On 23
December 2003, the CA issued a resolution directing the parties to appear for a hearing on 6 January 2004 to determine the need for
the issuance of a writ of preliminary injunction.20
On 9 January 2004, the CA rendered a Decision dismissing Tanduays petition and supplemental petition. On 28 January 2004,
Tanduay moved for reconsideration which was denied in a Resolution dated 2 July 2004.21
Aggrieved by the decision dismissing the petition and supplemental petition and by the resolution denying the Motion for
Reconsideration, Tanduay elevated the case before this Court.
The Trial Courts Orders
In the Order dated 23 September 2003, the trial court stated that during the hearings conducted on 25 and 29 August and on 4 and 11
September 2003, the following facts have been established:
1. San Miguel has registered the trademark "Ginebra San Miguel";
2. There is a close resemblance between "Ginebra San Miguel" and "Ginebra Kapitan";
3. The close similarity between "Ginebra San Miguel" and "Ginebra Kapitan" may give rise to confusion of goods since San
Miguel and Tanduay are competitors in the business of manufacturing and selling liquors; and
"Ginebra," which is a well-known trademark, was adopted by Tanduay to benefit from the reputation and advertisement of the
originator of the mark "Ginebra San Miguel," and to convey to the public the impression of some supposed connection between the
manufacturer of the gin product sold under the name "Ginebra San Miguel" and the new gin product "Ginebra Kapitan." 22
Based on these facts, the trial court concluded that San Miguel had demonstrated a clear, positive, and existing right to be protected by
a TRO. Otherwise, San Miguel would suffer irreparable injury if infringement would not be enjoined. Hence, the trial court granted
the application for a TRO and set the hearing for preliminary injunction.23
In the Order dated 17 October 2003, the trial court granted the application for a writ of preliminary injunction. The trial court ruled
that while a corporation acquires a trade name for its product by choice, it should not select a name that is confusingly similar to any
other name already protected by law or is patently deceptive, confusing, or contrary to existing law.24
The trial court pointed out that San Miguel and its predecessors have continuously used "Ginebra" as the dominant feature of its gin
products since 1834. On the other hand, Tanduay filed its trademark application for "Ginebra Kapitan" only on 7 January 2003. The
trial court declared that San Miguel is the prior user and registrant of "Ginebra" which has become closely associated to all of San
Miguels gin products, thereby gaining popularity and goodwill from such name.25
The trial court noted that while the subject trademarks are not identical, it is obviously clear that the word "Ginebra" is the dominant
feature in the trademarks. The trial court stated that there is a strong indication that confusion is likely to occur since one would
inevitably be led to conclude that both products are affiliated with San Miguel due to the distinctive mark "Ginebra" which is readily
identified with San Miguel. The trial court concluded that ordinary purchasers would not examine the letterings or features printed on
the label but would simply be guided by the presence of the dominant mark "Ginebra." Any difference would pale in significance in
the face of evident similarities in the dominant features and overall appearance of the products. The trial court emphasized that the
determinative factor was whether the use of such mark would likely cause confusion on the part of the buying public, and not whether
it would actually cause confusion on the part of the purchasers. Thus, Tanduays choice of "Ginebra" as part of the trademark of
"Ginebra Kapitan" tended to show Tanduays intention to ride on the popularity and established goodwill of "Ginebra San Miguel." 26

The trial court held that to constitute trademark infringement, it was not necessary that every word should be appropriated; it was
sufficient that enough be taken to deceive the public in the purchase of a protected article. 27
The trial court conceded to Tanduays assertion that the term "Ginebra" is a generic word; hence, it is non-registrable because generic
words are by law free for all to use. However, the trial court relied on the principle that even if a word is incapable of appropriation as
a trademark, the word may still acquire a proprietary connotation through long and exclusive use by a business entity with reference to
its products. The purchasing public would associate the word to the products of a business entity. The word thus associated would be
entitled to protection against infringement and unfair competition. The trial court held that this principle could be made to apply to this
case because San Miguel has shown that it has established goodwill of considerable value, such that its gin products have acquired a
well-known reputation as just "Ginebra." In essence, the word "Ginebra" has become a popular by-word among the consumers and
they had closely associated it with San Miguel.28
On the other hand, the trial court held that Tanduay failed to substantiate its claim against the issuance of the injunctive relief. 29
The Ruling of the Court of Appeals
In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the determination of whether
the TRO and the writ of preliminary injunction were issued by the trial court with grave abuse of discretion amounting to lack of
jurisdiction.30
To warrant the issuance of a TRO, the CA ruled that the affidavits of San Miguels witnesses and the fact that the registered trademark
"Ginebra San Miguel" exists are enough to make a finding that San Miguel has a clear and unmistakable right to prevent irreparable
injury because gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan." 31
The CA enumerated the requisites for an injunction: (1) there must be a right in esse or the existence of a right to be protected and (2)
the act against which the injunction is to be directed is a violation of such right. The CA stated that the trademarks "Ginebra San
Miguel" and "Ginebra Kapitan" are not identical, but it is clear that the word "Ginebra" is the dominant feature in both trademarks.
There was a strong indication that confusion was likely to occur. One would be led to conclude that both products are affiliated with
San Miguel because the distinctive mark "Ginebra" is identified with San Miguel. It is the mark which draws the attention of the buyer
and leads him to conclude that the goods originated from the same manufacturer.32
The CA observed that the gin products of "Ginebra San Miguel" and "Ginebra Kapitan" possess the same physical attributes with
reference to their form, composition, texture, or quality. The CA upheld the trial courts ruling that San Miguel has sufficiently
established its right to prior use and registration of the mark "Ginebra" as a dominant feature of its trademark. "Ginebra" has been
identified with San Miguels goods, thereby, it acquired a right in such mark, and if another infringed the trademark, San Miguel could
invoke its property right.33
The Issue
The central question for resolution is whether San Miguel is entitled to the writ of preliminary injunction granted by the trial court as
affirmed by the CA. For this reason, we shall deal only with the questioned writ and not with the merits of the case pending before the
trial court.
The Ruling of the Court
Clear and Unmistakable Right
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of a proceeding prior to the
judgment or final order, requiring a party or a court, agency, or a person to refrain from a particular act or acts.
A preliminary injunction is a provisional remedy for the protection of substantive rights and interests. It is not a cause of action in
itself but merely an adjunct to the main case. Its objective is to prevent a threatened or continuous irreparable injury to some of the
parties before their claims can be thoroughly investigated and advisedly adjudicated. It is resorted to only when there is a pressing
need to avoid injurious consequences which cannot be remedied under any standard compensation.34
Section 3, Rule 58 of the Rules of Court provides:
SECTION 3. Grounds for issuance of a writ of preliminary injunction.A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a
limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done,
some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
Before an injunctive writ is issued, it is essential that the following requisites are present: (1) the existence of a right to be protected
and (2) the acts against which the injunction is directed are violative of the right. The onus probandi is on the movant to show that the
invasion of the right sought to be protected is material and substantial, that the right of the movant is clear and unmistakable, and that
there is an urgent and paramount necessity for the writ to prevent serious damage. 35
San Miguel claims that the requisites for the valid issuance of a writ of preliminary injunction were clearly established. The clear and
unmistakable right to the exclusive use of the mark "Ginebra" was proven through the continuous use of "Ginebra" in the manufacture,
distribution, marketing and sale of gin products throughout the Philippines since 1834. To the gin-drinking public, the word "Ginebra"
does not simply indicate a kind of beverage; it is now synonymous with San Miguels gin products. 36
San Miguel contends that "Ginebra" can be appropriated as a trademark, and there was no error in the trial courts provisional ruling
based on the evidence on record. Assuming that "Ginebra" is a generic word which is proscribed to be registered as a trademark under
Section 123.1(h)37 of Republic Act No. 8293 or the Intellectual Property Code (IP Code),38 it can still be appropriated and registered as
a trademark under Section 123.1(j)39 in relation to Section 123.240 of the IP Code, considering that "Ginebra" is also a mark which
designates the kind of goods produced by San Miguel.41 San Miguel alleges that although "Ginebra," the Spanish word for "gin," may
be a term originally incapable of exclusive appropriation, jurisprudence dictates that the mark has become distinctive of San Miguels
products due to its substantially exclusive and continuous use as the dominant feature of San Miguels trademarks since 1834. Hence,
San Miguel is entitled to a finding that the mark is deemed to have acquired a secondary meaning.42 San Miguel states that Tanduay
failed to present any evidence to disprove its claims; thus, there is no basis to set aside the grant of the TRO and writ of preliminary
injunction.43
San Miguel states that its disclaimer of the word "Ginebra" in some of its registered marks is without prejudice to, and did not affect,
its existing or future rights over "Ginebra," especially since "Ginebra" has demonstrably become distinctive of San Miguels
products.44 San Miguel adds that it did not disclaim "Ginebra" in all of its trademark registrations and applications like its registration
for "Ginebra Cruz de Oro," "Ginebra Ka Miguel," "Ginebra San Miguel" bottle, "Ginebra San Miguel," and "Barangay Ginebra." 45
Tanduay asserts that not one of the requisites for the valid issuance of a preliminary injunction is present in this case. Tanduay argues
that San Miguel cannot claim the exclusive right to use the generic word "Ginebra" for its gin products based on its registration of the
composite marks "Ginebra San Miguel," "Ginebra S. Miguel 65," and "La Tondea Cliq! Ginebra Mix," because in all of these
registrations, San Miguel disclaimed any exclusive right to use the non-registrable word "Ginebra" for gin products. 46 Tanduay
explains that the word "Ginebra," which is disclaimed by San Miguel in all of its registered trademarks, is an unregistrable component
of the composite mark "Ginebra San Miguel." Tanduay argues that this disclaimer further means that San Miguel does not have an
exclusive right to the generic word "Ginebra."47 Tanduay states that the word "Ginebra" does not indicate the source of the product, but
it is merely descriptive of the name of the product itself and not the manufacturer thereof. 48
Tanduay submits that it has been producing gin products under the brand names Ginebra 65, Ginebra Matador, and Ginebra Toro
without any complaint from San Miguel. Tanduay alleges that San Miguel has not filed any complaint against other liquor companies
which use "Ginebra" as part of their brand names such as Ginebra Pinoy, a registered trademark of Webengton Distillery; Ginebra
Presidente and Ginebra Luzon as registered trademarks of Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra Santiago
as registered trademarks of Distileria Limtuaco & Co., Inc.49 Tanduay claims that the existence of these products, the use and
registration of the word "Ginebra" by other companies as part of their trademarks belie San Miguels claim that it has been the
exclusive user of the trademark containing the word "Ginebra" since 1834.
Tanduay argues that before a court can issue a writ of preliminary injunction, it is imperative that San Miguel must establish a clear
and unmistakable right that is entitled to protection. San Miguels alleged exclusive right to use the generic word "Ginebra" is far from
clear and unmistakable. Tanduay claims that the injunction issued by the trial court was based on its premature conclusion that
"Ginebra Kapitan" infringes "Ginebra San Miguel."50
In Levi Strauss & Co. v. Clinton Apparelle, Inc.,51 we held:
While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, this
discretion must be exercised based upon the grounds and in the manner provided by law. The exercise of discretion by the trial court in
injunctive matters is generally not interfered with save in cases of manifest abuse. And to determine whether there was grave abuse of
discretion, a scrutiny must be made of the bases, if any, considered by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with great caution and deliberation, and only in cases of great injury where
there is no commensurate remedy in damages.52

The CA upheld the trial courts ruling that San Miguel has sufficiently established its right to prior use and registration of the word
"Ginebra" as a dominant feature of its trademark. The CA ruled that based on San Miguels extensive, continuous, and substantially
exclusive use of the word "Ginebra," it has become distinctive of San Miguels gin products; thus, a clear and unmistakable right was
shown.
We hold that the CA committed a reversible error. The issue in the main case is San Miguels right to the exclusive use of the mark
"Ginebra." The two trademarks "Ginebra San Miguel" and "Ginebra Kapitan" apparently differ when taken as a whole, but according
to San Miguel, Tanduay appropriates the word "Ginebra" which is a dominant feature of San Miguels mark.
It is not evident whether San Miguel has the right to prevent other business entities from using the word "Ginebra." It is not settled (1)
whether "Ginebra" is indeed the dominant feature of the trademarks, (2) whether it is a generic word that as a matter of law cannot be
appropriated, or (3) whether it is merely a descriptive word that may be appropriated based on the fact that it has acquired a secondary
meaning.
The issue that must be resolved by the trial court is whether a word like "Ginebra" can acquire a secondary meaning for gin products
so as to prohibit the use of the word "Ginebra" by other gin manufacturers or sellers. This boils down to whether the word "Ginebra" is
a generic mark that is incapable of appropriation by gin manufacturers.
In Asia Brewery, Inc. v. Court of Appeals,53 the Court ruled that "pale pilsen" are generic words, "pale" being the actual name of the
color and "pilsen" being the type of beer, a light bohemian beer with a strong hops flavor that originated in Pilsen City in
Czechoslovakia and became famous in the Middle Ages, and hence incapable of appropriation by any beer manufacturer.54 Moreover,
Section 123.1(h) of the IP Code states that a mark cannot be registered if it "consists exclusively of signs that are generic for the goods
or services that they seek to identify."1avvphi1
In this case, a cloud of doubt exists over San Miguels exclusive right relating to the word "Ginebra." San Miguels claim to the
exclusive use of the word "Ginebra" is clearly still in dispute because of Tanduays claim that it has, as others have, also registered the
word "Ginebra" for its gin products. This issue can be resolved only after a full-blown trial.
In Ong Ching Kian Chuan v. Court of Appeals,55 we held that in the absence of proof of a legal right and the injury sustained by the
movant, the trial courts order granting the issuance of an injunctive writ will be set aside, for having been issued with grave abuse of
discretion.
We find that San Miguels right to injunctive relief has not been clearly and unmistakably demonstrated. The right to the exclusive use
of the word "Ginebra" has yet to be determined in the main case. The trial courts grant of the writ of preliminary injunction in favor
of San Miguel, despite the lack of a clear and unmistakable right on its part, constitutes grave abuse of discretion amounting to lack of
jurisdiction.
Prejudging the Merits of the Case
Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary injunction, has prejudged the merits of the case since
nothing is left to be decided by the trial court except the amount of damages to be awarded to San Miguel. 56
San Miguel claims that neither the CA nor the trial court prejudged the merits of the case. San Miguel states that the CA did not rule
on the ultimate correctness of the trial courts evaluation and appreciation of the evidence before it, but merely found that the assailed
Orders of the trial court are supported by the evidence on record and that Tanduay was not denied due process.57 San Miguel argues
that the CA only upheld the trial courts issuance of the TRO and writ of preliminary injunction upon a finding that there was
sufficient evidence on record, as well as legal authorities, to warrant the trial courts preliminary findings of fact. 58
The instructive ruling in Manila International Airport Authority v. Court of Appeals59 states:
Considering the far-reaching effects of a writ of preliminary injunction, the trial court should have exercised more prudence and
judiciousness in its issuance of the injunction order. We remind trial courts that while generally the grant of a writ of preliminary
injunction rests on the sound discretion of the court taking cognizance of the case, extreme caution must be observed in the exercise of
such discretion. The discretion of the court a quo to grant an injunctive writ must be exercised based on the grounds and in the manner
provided by law. Thus, the Court declared in Garcia v. Burgos:
"It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation
and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that
should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in
damages.
Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted
lightly or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands
it." (Emphasis in the original)

We believe that the issued writ of preliminary injunction, if allowed, disposes of the case on the merits as it effectively enjoins the use
of the word "Ginebra" without the benefit of a full-blown trial. In Rivas v. Securities and Exchange Commission, 60 we ruled that courts
should avoid issuing a writ of preliminary injunction which would in effect dispose of the main case without trial. The issuance of the
writ of preliminary injunction had the effect of granting the main prayer of the complaint such that there is practically nothing left for
the trial court to try except the plaintiffs claim for damages.
Irreparable Injury
Tanduay points out that the supposed damages that San Miguel will suffer as a result of Tanduays infringement or unfair competition
cannot be considered irreparable because the damages are susceptible of mathematical computation. Tanduay invokes Section 156.1 of
the IP Code61 as the basis for the computation of damages.62
San Miguel avers that it stands to suffer irreparable injury if the manufacture and sale of Tanduays "Ginebra Kapitan" are not
enjoined. San Miguel claims that the rough estimate of the damages 63 it would incur is simply a guide for the trial court in computing
the appropriate docket fees. San Miguel asserts that the full extent of the damage it would suffer is difficult to measure with any
reasonable accuracy because it has invested hundreds of millions over a period of 170 years to establish goodwill and reputation now
being enjoyed by the "Ginebra San Miguel" mark.64 San Miguel refutes Tanduays claim that the injury which San Miguel stands to
suffer can be measured with reasonable accuracy as the legal formula to determine such injury is provided in Section 156.1 of the IP
Code. San Miguel reasons that if Tanduays claim is upheld, then there would never be a proper occasion to issue a writ of preliminary
injunction in relation to complaints for infringement and unfair competition, as the injury which the owner of the mark suffers, or
stands to suffer, will always be susceptible of mathematical computation.65
In Levi Strauss & Co. v. Clinton Apparelle, Inc.,66 this Court upheld the appellate courts ruling that the damages Levi Strauss & Co.
had suffered or continues to suffer may be compensated in terms of monetary consideration. This Court, quoting Government Service
Insurance System v. Florendo,67 held:
x x x a writ of injunction should never issue when an action for damages would adequately compensate the injuries caused. The very
foundation of the jurisdiction to issue the writ of injunction rests in the probability of irreparable injury, inadequacy of pecuniary
compensation and the prevention of the multiplicity of suits, and where facts are not shown to bring the case within these conditions,
the relief of injunction should be refused.
Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has failed to prove the
probability of irreparable injury which it will stand to suffer if the sale of "Ginebra Kapitan" is not enjoined. San Miguel has not
presented proof of damages incapable of pecuniary estimation. At most, San Miguel only claims that it has invested hundreds of
millions over a period of 170 years to establish goodwill and reputation now being enjoyed by the "Ginebra San Miguel" mark such
that the full extent of the damage cannot be measured with reasonable accuracy. Without the submission of proof that the damage is
irreparable and incapable of pecuniary estimation, San Miguels claim cannot be the basis for a valid writ of preliminary injunction.
Wherefore, we GRANT the petition. We SET ASIDE the Decision of the Court of Appeals dated 9 January 2004 and the Resolution
dated 2 July 2004 in CA-G.R. SP No. 79655. We declare VOID the Order dated 17 October 2003 and the corresponding writ of
preliminary injunction issued by Branch 214 of the Regional Trial Court of Mandaluyong City in IP Case No. MC-03-01 and Civil
Case No. MC-03-073.
The Regional Trial Court of Mandaluyong City, Branch 214, is directed to continue expeditiously with the trial to resolve the merits of
the case.
SO ORDERED.

THIRD DIVISION
WILLIAM C. YAO, SR vs PeopleG.R. No. 168306
MARTINEZ, NazaRIO, nACHURADOCTRINE: corporation is an entity separate and distinct from its stockholders, directors or officers.
However, whenthe notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the
lawwill regard the corporation as an association of persons, or in the case of two corporations merge them into
one.Where the separate corporate entity is disregarded, the corporation will be treated merely as an association of personsand the stockholders or
members will be considered as the corporation, that is, liability will attach personally or directly to the officers and
stockholders.
FACTS
:Petitioners are incorporators and officers of MASAGANA GAS CORPORATION (MASAGANA), an entity engaged in
therefilling, sale and distribution of LPG products. Private respondents Petron Corporation (Petron) and Pilipinas ShellPetroleum
Corporation (Pilipinas Shell) are two of the largest bulk suppliers and producers of LPG in the
Philippines.Petron is the registered owner in the Philippines of the trademarks GASUL and GASUL cylinders used
for its LPGproducts. It is the sole entity in the Philippines authorized to allow refillers and distributors to refill,
use, sell, anddistribute GASUL LPG containers, products and its trademarks. Pilipinas Shell, on the other hand, is the authorized userin the Philippines of
the tradename, trademarks, symbols, or designs of its principal, Shell International
PetroleumCompany Limited (Shell International), including the marks SHELLANE and
SHELL device in connection with theproduction, sale and distribution of SHELLANE LPGs.
It is the only corporation in the Philippinesauthorized toallow refillers and distributors to refill, use, sell and distribute SHELLANE LPG
containers and products.

On 3 April 2003,(NBI) agent Ritche N. Oblanca (Oblanca) filed two applications for search warrant with the RTC, Cavite City, against
petitioners and other occupants of the MASAGANA compound for alleged violation of Section 155, in relation to Section170 of The Intellectual Property
Code of the Philippines. The two applications for search warrant uniformly
allegedthat per information, belief, and personal verification of Oblanca, the petitioners are actually producing, se
lling,offering for sale and/or distributing LPG products using steel cylinders owned by, and bearing the tradenam
es,trademarks, and devices of Petron and Pilipinas Shell, without authority and in violation of the rights of the sa
identities. MASAGANA, as third party claimant, filed with the RTC a Motion for the Return of Motor Compressor and LPG Refilling
Machine.
It claimed that it is the owner of the said motor compressor and LPG refilling machine; that these items were used in the operation of
its legitimate business; and that their seizure will jeopardize its business interests.RTC resolved that MASAGANA cannot be considered a third
party claimant whose rights were violated as a result of the seizure since the evidence disclosed that petitioners
are stockholders of MASAGANA and that they conduct their business through the same juridical entity. CA affirmed RTCs decision
Issue: Whether or not CA ERRED IN RULING THAT THE COMPLAINT IS DIRECTED AGAINST MASAGANA GAS
CORPORATION,ACTING THROUGH ITS OFFICERS AND DIRECTORS, HENCE MASAGANA GAS CORPORATION MAY
NOT BE CONSIDEREDAS THIRD PARTY CLAIMANT WHOSE RIGHTS WERE VIOLATED AS ARESULT OF THE SEIZURE
Held: No. It is an elementary and fundamental principle of corporation law that a corporation is an entity separate
and distinct from its stockholders, directors or officers. However, when the notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association
of persons, or in the case of two corporations merge them into one.
In other words, the law will not recognize the separate corporate existence if the corporation is being used pursuant to the foregoing
unlawful objectives. This non-recognition is sometimes referred to as the doctrine of piercing the veil of corporate entity or
disregarding the fiction of corporate entity. Where the separate corporate entity is disregarded, the corporation will be treated merely
as an association of persons and the stockholders or members will be considered as the corporation, that is, liability will attach
personally or directly to the officers and stockholders. As we now find, the petitioners, as directors/officers
of MASAGANA, are utilizing the latter in violating the intellectual property rights ofPetron and Pilipinas Shell. T
hus,petitioners collectively and MASAGANA should be considered as one and the same
person for liability purposes.Consequently, MASAGANAs third party claim serves no refuge for petitioners. The
law does not require that the property to be seized should be owned by the person against whom the search
warrants is directed. Ownership, therefore, is of no consequence, and it is sufficient that the person against whom the warrant is
directed has control or possession of the property sought to be seized. Hence, even if, as petitioners claimed, the properties seized
belong to MASAGANA as a separate entity, their seizure pursuant to the search warrants is still valid. Further, it is apparent that the motor
compressor, LPG refilling machine and the GASUL and SHELL LPG cylinders seized were the corpus delicti the body or
substance of the crime, or the evidence of the commission of
trademarki n f r i n g e m e n t . T h e s e w e r e t h e v e r y i n s t r u m e n t s u s e d o r i n t e n d e d t o b e u s e d b y t h e p e t i t i o n e
r s i n t r a d e m a r k infringement. It is possible that, if returned to MASAGANA, these items will be used again in violating the
intellectual property rights of Petron and Pilipinas Shell

G.R. No. 169440

November 23, 2011

GEMMA ONG A.K.A. Maria Teresa Gemma Catacutan, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of Court, to set aside and reverse the June
16, 2005 Decision1 of the Court of Appeals in CA-G.R. CR No. 28308, which affirmed the September 23, 2003
Decision2 of the Regional Trial Court (RTC) of Manila, Branch 24 in Criminal Case No. 00-184454.
On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma) was charged before the RTC
for Infringement under Section 155 in relation to Section 170 of Republic Act No. 8293 or the Intellectual Property Code.
The accusatory portion of the Information reads:
That sometime in September 25, 1998 and prior thereto at Sta. Cruz, Manila and within the jurisdiction of this Honorable
Court, the above-named accused did then and there, knowingly, maliciously, unlawfully and feloniously engage in the
distribution, sale, [and] offering for sale of counterfeit Marlboro cigarettes which had caused confusion, deceiving the
public that such cigarettes [were] Marlboro cigarettes and those of the Telengtan Brothers and Sons, Inc., doing business
under the style of La Suerte Cigar and Cigarettes Factory, the exclusive manufacturer of Marlboro Cigarette in the
Philippines and that of Philip Morris Products, Inc. (PMP7) the registered owner and proprietor of the MARLBORO
trademark together with the devices, including the famous-Root Device, to their damage and prejudice, without the
accused seeking their permit or authority to manufacture and distribute the same. 3
On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a warrant of arrest against Gemma, but
lifted4 and set aside5 the same after Gemma voluntarily surrendered on August 4, 2000, and filed a cash bond
for P 12,000.00.
Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000. 6 After the pre-trial conference on
February 13, 2001,7 trial on the merits ensued.
The prosecution called to the witness stand the following: Roger Sherman Slagle, the Director of Operations of Philip
Morris Malaysia, and Philip Morris Philippines, Inc.s (PMPI) product/brand security expert, to testify that according to his
examination, the products they seized at the subject premises were counterfeit cigarettes; 8 as well as Jesse Lara, who, as
then Senior Investigator III at the Intellectual Property Rights (IPR) Unit of the Economic Intelligence and Investigation
Bureau (EIIB), Department of Finance, led the investigating team, to testify on the events that led to the arrest of
Gemma.9 The prosecution also presented the billing accountant of Quasha Ancheta Pea & Nolasco Law Office (Quasha
Law Office), Juliet Flores, to show that PMPI, being one of Quasha Law Offices clients, paid the amount of $4,069.12 for
legal services rendered.10 The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a senior law partner at
Quasha Law Office, who testified that as the duly appointed Attorney-in-Fact of PMPI, he was in charge of the EIIB search
operation in the subject premises. Atty. Ancheta said that while he was not personally present during the implementation
of the search warrant, he sent Atty. Leonardo Salvador, who constantly reported the developments to him. 11
The facts, as succinctly summarized by the Court of Appeals, are as follows:
On September 10, 1998, Jesse S. Lara, then Senior Investigator III at the Intellectual Property Rights (IPR) Unit of the
Economic Intelligence and Investigation Bureau (EIIB), Department of Finance, received reliable information that
counterfeit "Marlboro" cigarettes were being distributed and sold by two (2) Chinese nationals, Johnny Sia and Jessie
Concepcion, in the areas of Tondo, Binondo, Sta. Cruz and Quiapo, Manila. A mission team formed by EIIB, including
Lara, conducted surveillance operation to verify the report. EIIB agents Leonardo Villanueva and Jigo Madrigal did a "testbuy" on the different sari-sari stores of Manila located in Quiapo, Tondo, Sta. Cruz and Blumentritt areas and took samples
of "Marlboro" cigarettes sold therein. During the surveillance, the container van delivering the "Marlboro" packed in black
plastic bags was seen parked at 1677 Bulacan corner Hizon Streets, Sta. Cruz, Manila [(the subject premises)]. Upon
inquiry from the Barangay Chairman, they also learned that the place is owned by a certain Mr. Jackson Ong.
The EIIB team coordinated with officers of Philip Morris, Inc., owner of the trademark Marlboro Label in the Philippines
duly registered with the Philippine Patents Office and subsequently with the Intellectual Property Office (IPO) since 1956.
Initial examination made by Philip Morris, Inc. on those random sample purchases revealed that the cigarettes were
indeed fake products unauthorized by the company. With official indorsement by the EIIB, Senior Investigator Lara filed an
application for search warrant before the Regional Trial Court of Dasmarias, Cavite, Branch 90.

On September 24, 1998, Executive Judge Dolores L. Espaol issued a search warrant after finding probable cause to
believe that Mr. Jackson Ong has in his possession/control in the premises located at 1675-1677 Bulacan St. cor. M.
Hizon St., Sta. Cruz, Manila, the following properties:
"Substantial number of fake locally made and imported fake cigarettes bearing the Marlboro brand, together with the
corresponding labels, cartons, boxes and other packaging as well as receipts, invoices and other documents relative to
the purchase, sale, and distribution of the aforesaid fake Marlboro cigarettes."
On September 25, 1998, the EIIB team led by Senior Investigator Lara implemented the search warrant, together with
SPO2 Rommel P. Sese of the Western Police District (WPD) as representative of the Philippine National Police (PNP),
Barangay Chairman Ernesto Traje, Sr., Barangay Kagawad Vivian V. Rallonza and Atty. Leonardo P. Salvador who was
sent by [Quasha Pea & Nolasco Law Office,] the law firm engaged by Philip Morris, Inc. They proceeded to the subject
premises but Jackson Ong, the alleged owner, was not there. It was accused, who is supposedly either the spouse or
common-law wife of Jackson Ong, who entertained them. At first, accused refused to allow them entry into the premises
but eventually the team was able to search the premises and found Marlboro cigarettes stocked in several boxes
containing fifty (50) reams inside each box which were packed in black plastic sacks like in "balikbayan boxes." The
"Inventory" and "Certification In the Conduct of Search" were duly accomplished and signed by the members of the EIIB
and the other representatives present during the actual search (SPO2 Sese, Jess Lara, Traje, Sr., Henry Mariano, Isidro
Burgos and Atty. Salvador). Accused signed her name in the said documents as "Gemma Ong," as the
Owner/Representative, while a certain employee, Girlie Cantillo, also signed as witness.
On September 28, 1998, a Return of Search Warrant was submitted by the EIIB to the issuing court stating that the
articles seized pursuant to the warrant were stored in the premises of the EIIB and requesting that EIIB be granted
temporary custody of the goods. Acting on the Urgent Motion To Transfer Custody of Confiscated Articles filed by Philip
Morris Products, Inc. (PMPI) of Virginia, U.S.A., Executive Judge Dolores L. Espaol ordered the custody of the seized
goods transferred from EIIB to PMPI c/o Quasha Ancheta Pea and Nolasco Law Office, the Attorney-in-Fact of PMPI.
Judge Espaol subsequently also issued an order dated October 15, 1998 authorizing PMPI to secure and take out
samples of the unauthorized products from the confiscated cartons/boxes of Marlboro cigarettes which are stored at Four
Winds Phils. Inc. warehouse located at No. 2241 Pasong Tamo Extension, Makati City under the direct and personal
control and supervision of Sheriff IV Tomas C. Azurin. PMPI had earlier sought such order from the court for the purpose
of laboratory analysis and scientific testing of the samples from the confiscated cigarettes.
On the basis of the results of the examination conducted by PMPI on the samples obtained from the confiscated boxes of
cigarettes bearing the Marlboro brand, which confirmed the same to be unauthorized products and not genuine Marlboro
cigarettes, the EIIB filed a case for Violation of Sections 155 and 168 in relation to Section 170 of Republic Act No. 8293
against Jackson Ong who is not an authorized distributor of Marlboro products in the Philippines. 12
After the prosecution rested its case, the defense filed a Demurrer to Evidence, 13 which the RTC denied on March 26,
2003.14 The defense moved for a reconsideration of this order but the same was denied on April 22, 2003. 15
Gemma, as the lone witness for the defense, then took the witness stand. She said that she is married to Co Yok Piao, a
Chinese national, but she still uses her maiden name Catacutan. 16 She denied that she is the Gemma Ong accused in this
case. She testified that she was arrested on August 4, 2000, without the arresting officers asking for her name. She said
that when she pleaded to be released, she was instructed to post a cash bond, which she did in the amount
of P 12,000.00. Gemma averred that when she posted her bond and signed her certificate of arraignment, she did so
under her real name Maria Teresa Gemma Catacutan, as opposed to the signatures in the Inventory and Certification in
the Conduct of Search (search documents), which she denied signing. She claimed that she was not able to bring up her
defense of mistaken identity early on as she did not know when the proper time to raise it was. She avowed that she was
not interrogated by the police prior to her arrest, despite the two-year gap between it and the search of the subject
premises. She alleged that she did not know Jackson Ong and that the prosecution witnesses, whom she first saw during
her trial, couldnt even point to her as the person present during the raid when they testified in court. Gemma further
asseverated that while she could not remember where she was on September 25, 1998, she was sure that she was not at
the subject premises on that date. Gemma presented her Identification Card issued by the Professional Regulation
Commission (PRC) to show that she is a dentist by profession, although she claimed that she is a businessperson in
practice. She said that she used to buy and sell gear fabrics, t-shirts, truck materials, and real estate 17 under the business
name "Fascinate Trading" based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased operations in February
1998.18 Gemma denied ever having engaged in the manufacture and sale of any kind of cigarettes and claimed that she
could not even distinguish between a fake and a genuine Marlboro cigarette. 19
On September 30, 2003, the RTC convicted Gemma of the crime as charged. The dispositive portion of its Decision
reads:
Accordingly, this Court finds accused Gemma Catacutan guilty beyond reasonable doubt of violation of Section 155 in
relation to Section 170 of Republic Act No. 8293 and hereby sentences her to suffer the penalty of imprisonment of two (2)
years and to pay a fine of Fifty Thousand (P 50,000.00) Pesos.

Accused is further directed to indemnify private complainant the sum of US$4,069.12 or its peso equivalent, as actual
damages.
The records of the case as against Jackson Ong is hereby ordered archived pending his arrest.
With costs against accused Gemma Catacutan.20
In resolving the case, the RTC narrowed down the issue to whether Gemma Catacutan was the same accused identified
as Gemma Ong. The RTC answered this in the affirmative as it found Gemmas defense of mistaken identity as
untenable, especially since she claimed to be a professional. The RTC explained:
Ranged against the positive and forthright declaration of the prosecution witnesses, the mere uncorroborated and selfserving denials of the accused cannot stand. (People vs. Hortaleza, 258 SCRA 201)
We note in disbelief that it was only in the hearing of November 26, 2001, that accused[s] former lawyer manifested that
accused is known as Gemma Catacutan never as Gemma Ong (tsn, November 26, 2001, p. 3) and as admitted by her,
she never revealed her true identity when arrested, when she posted her bail bond and even during her arraignment.
She could have protested at the time of her arrest that they were arresting the wrong person but this she did not do. She
proceeded to post a bond for her provisional liberty, hired a lawyer to defend her but failed to divulge the very information
that could have led to an early dismissal of the case, if true.
Her pretensions of ignorance as to the proper stage of when to explain (tsn, May 26, 2003), p. 13 can hardly be given
credit. A dentist by profession, it is utterly incredible that she remained meek all through-out her arrest and the posting of
her bail bond.21
The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale and manufacture of
Marlboro cigarettes, the address of her business "Fascinate Trading" is registered as 1677 Bulacan Street, Sta. Cruz,
Manila, the same property raided by the EIIB that contained the counterfeit cigarettes. 22
Aggrieved, Gemma appealed the RTCs decision to the Court of Appeals based on the following grounds:
I
THE LOWER COURT GRIEVOUSLY ERRED IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN
GUILTY OF THE CRIME OF VIOLATION OF THE INTELLECTUAL PROPERTY RIGHTS LAW DESPITE UTTER
LACK OF EVIDENCE.
II
THE LOWER COURT IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN ON THE BASIS OF
SURMISE (sic), CONJECTURES AND GUESSWORK COMMITTED GRAVE VIOLENCE AGAINST THE
CONSTITUTIONAL PRESUMPTION OF INNOCENCE.
III
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN CONVICTING THE ACCUSEDAPPELLANT WHO HAD NOT BEEN POSITIVELY IDENTIFIED AND PINPOINTED AS MANUFACTURER NOR
(sic) DISTRIBUTOR OF FAKE MARLBORO PRODUCT.
IV
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN NOT GIVING THE SLIGHTEST
CREDENCE TO THE UNCONTRADICTED, UNREFUTED AND CANDID TESTIMONY OF THE ACCUSEDAPPELLANT, BUT INSTEAD, CONVICTED HER ON [T]HE BASIS OF EXTRAPOLATED EVIDENCE NOT
BORNE BY THE RECORDS.
V
THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN CONVICTING ACCUSED-APPELLANT
DESPITE THE UTTER AND PATHETIC LACK OF EVIDENCE TO SUSTAIN THE PROSECUTIONS LAME,
SHALLOW AND UNCONFOUNDED THEORY OF GUILT.23

The Court of Appeals found Gemmas appeal to be unmeritorious. It said that Gemma was positively identified by the
prosecution witnesses as the woman who entertained them during the search of the subject premises on September 25,
1998, and the woman who signed the Certification in the Conduct of Search and Inventory. The Court of Appeals agreed
with the RTCs rejection of Gemmas defense of mistaken identity, as she should have raised it at the earliest opportunity,
which was at the time of her arrest, the posting of her bail bond, or during her arraignment. The Court of Appeals held that
the amendment of the prosecution witnesses affidavits was explained during the hearing, and although the original
affidavits were the ones marked during the pre-trial, the amended ones provided the basis for the filing of the Information
against Gemma and her co-accused Jackson Ong. The Court of Appeals also noted that the March 20, 2000 Resolution of
the State Prosecutor specifically mentioned that the search warrant was served on Gemma Ong. The Court of Appeals
then proclaimed that in the hierarchy of evidence, the testimony of the witness in court commands greater weight than his
written affidavit.24
The Court of Appeals affirmed the conviction of Gemma for trademark infringement under Section 155 of Republic Act No.
8293, as the counterfeit goods seized by the EIIB were not only found in her possession and control, but also in the
building registered under her business, Fascinate Trading. The Court of Appeals said that the prosecution had
satisfactorily proven Gemmas commission of the offense since the unauthorized use of the trademark Marlboro, owned
by PMPI, was clearly intended to deceive the public as to the origin of the cigarettes being distributed and sold, or
intended to be distributed and sold. The Court of Appeals further sustained the penalty and damages imposed by the RTC
for being in accord with the law and facts.25
Gemma is now before this Court with the following assignment of errors:
A.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION WITNESSES
IDENTIFYING PETITIONER AS PRESENT AT THE TIME AND PLACE WHEN THE SEARCH AND SEIZURE TOOK
PLACE.
B.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION WITNESSES
THAT THEY SAW PETITIONER SIGN HER NAME AS "GEMMA ONG" AS OWNER/CLAIMANT/REPRESENTATIVE (OF
THE ARTICLES SEIZED) ON THE SEARCH WARRANT (EXH. "A"), CERTIFICATION IN THE CONDUCT OF SEARCH
(EXH. "B") AND INVENTORY OF THE S[E]IZED ARTICLES AT THE TIME OF THE SEARCH (EXH. "D").
C.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONERS SIGNATURE IN EXHIBITS "A", "B" AND "C"
ARE NOT HERS BUT WERE FORGED, BEING COMPLETELY AND PATENTLY DISSIMILAR TO HER TRUE AND REAL
SIGNATURE AS SHOWN IN HER OFFICIAL I.D AS PROFESSIONAL DENTIST.
D.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF THE PROSECUTION WITNESSES
WHICH DID NOT MENTION PETITIONERS PRESENCE AT THE TIME AND PLACE OF THE SEARCH CANNOT TAKE
PRECEDENCE OVER THEIR CONTRARY TESTIMONIES IN COURT THAT SHE WAS PRESENT AND IN FACT THE
OCCUPANT AND OWNER OF THE PREMISES FROM WHICH SHE INITIALLY BLOCKED THEIR ENTRY INTO.
E.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS THE VERY SAME PERSON WHO
WAS CAUGHT IN POSSESSION AND CONTROL OF THE PREMISES WHERE THE COUNTERFEIT ARTICLES WERE
SEIZED BECAUSE SHE ALLEGEDLY NEVER PROTESTED BEING WRONGFULLY ACCUSED AT THE TIME OF HER
ARREST ON 4 AUGUST 2000, WHEN SHE POSTED HER CASH BOND AND WHEN SHE EVEN SIGNED HER NAME
AS MA. TERESA GEMMA CATACUTAN IN THE WAIVER, UNDERTAKING AND CERTIFICATE OR ARRAIGNMENT, ALL
IN THE NAME OF THE ACCUSED AS "GEMMA ONG, a.k.a. MA. THERESA CATACUTAN."
F.
THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR FAILURE OF THE PROSECUTION TO
PROVE THE GUILT OF THE ACCUSED-APPELLANT BEYOND REASONABLE DOUBT.26
Gemma argues that if it were true that she was in the subject premises when it was raided on September 25, 1998, then
her name and presence would have been mentioned in the respective affidavits of Slagle and Atty. Ancheta; and the EIIB

agents who conducted the search would have confronted, investigated, or arrested her. Gemma insists that the fact that
her name was only mentioned for the first time in the amended affidavits yields to the conclusion that she was not in the
subject premises when it was searched and that the testimonies of the prosecution witnesses were perjured. 27
Gemma further claims that the courts below were wrong in finding that she never protested that she was mistakenly
identified. She claims that she was arrested without the benefit of a preliminary investigation and all she wanted to do at
that point was to "get out [of] the clutches of overzealous and eager beaver policemen who were exuberant in arresting an
innocent party like"28 her. Gemma also explains that her non-protest during her arraignment was upon the advice of her
former lawyer, who said that he would correct it in the proper time during the trial.
Respondent People of the Philippines, in its comment, 29 avers that there are only two issues to be resolved in this case, to
wit:
1. THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES QUESTIONS OF FACT WHICH ARE NOT
PROPER FOR REVIEW UNDER RULE 45 OF THE REVISED RULES OF COURT.
2. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONERS CONVICTION FOR VIOLATION
OF SECTION 155 IN RELATION TO SECTION 170 OF R.A. 8293 (INTELLECTUAL PROPERTY CODE OF THE
PHILIPPINES).30
Respondent claims that a perusal of the issues in Gemmas petition readily discloses that only questions of fact have been
raised, which are not reviewable in an appeal by certiorari. 31 Respondent asseverates that Gemmas conviction was
warranted as the prosecution had sufficiently established her presence during the search of the subject premises where
she signed the search documents as "Gemma Ong." Moreover, the respondent avers, Gemma failed to timely protest her
arrest and raise her claim that she is not Gemma Ong. 32
Issues
A study of the pleadings filed before this Court shows that the only issues to be resolved are the following:
1. Whether or not accused-appellants petition for review on certiorari under Rule 45 of the Rules of Court is fatally
defective as it raises questions of fact; and
2. Whether or not Gemmas guilt was proven beyond reasonable doubt in light of her alleged mistaken identity.
This Courts Ruling
Procedural Issue
As this case reached this Court via Rule 45 of the Rules of Court, the basic rule is that factual questions are beyond the
province of this Court, because only questions of law may be raised in a petition for review. 33However, in exceptional
cases, this Court has taken cognizance of questions of fact in order to resolve legal issues, such as when there was
palpable error or a grave misapprehension of facts by the lower court. 34 In Armed Forces of the Philippines Mutual Benefit
Association, Inc. v. Court of Appeals,35 we said that although submission of issues of fact in an appeal by certiorari taken
to this Court is ordinarily proscribed, this Court nonetheless retains the option in the exercise of its sound discretion,
taking into account the attendant circumstances, either to decide the case or refer it to the proper court for
determination.36 Since the determination of the identity of Gemma is the very issue affecting her guilt or innocence, this
Court chooses to take cognizance of this case in the interest of proper administration of justice.
Gemma is guilty of violating Section 155 in relation to Section 170 of Republic Act No. 8293
Gemma was charged and convicted of violating Section 155 in relation to Section 170 of Republic Act No. 8293, or the
Intellectual Property Code of the Philippines.
Section 155. Remedies; Infringement. - Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or

advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection
are committed regardless of whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A.
No 166a)
Section 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of
imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P 50,000) to Two hundred
thousand pesos (P 200,000), shall be imposed on any person who is found guilty of committing any of the acts mentioned
in Section 155, Section 168 and Subsection 169.1. (Arts. 188 and 189, Revised Penal Code.) (Emphases supplied.)
A "mark" is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise
and shall include a stamped or marked container of goods. 37
In McDonalds Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., 38 this Court held:
To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiffs mark; (2) the
plaintiffs ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in
"likelihood of confusion." Of these, it is the element of likelihood of confusion that is the gravamen of trademark
infringement.
A mark is valid if it is distinctive and not barred from registration. Once registered, not only the marks validity, but also the
registrants ownership of the mark is prima facie presumed. 39
The prosecution was able to establish that the trademark "Marlboro" was not only valid for being neither generic nor
descriptive, it was also exclusively owned by PMPI, as evidenced by the certificates of registration issued by the
Intellectual Property Office of the Department of Trade and Industry.40
Anent the element of confusion, both the RTC and the Court of Appeals have correctly held that the counterfeit cigarettes
seized from Gemmas possession were intended to confuse and deceive the public as to the origin of the cigarettes
intended to be sold, as they not only bore PMPIs mark, but they were also packaged almost exactly as PMPIs products. 41
Regarding the Claim of Mistaken Identity
Despite all these findings, Gemma has posited only a single defense, from the RTC all the way up to this Court: that she is
not the Gemma Ong named and accused in this case. She bases this claim on the alleged discrepancies in the
prosecution witnesses original affidavits vis--vis the amended ones, which discrepancies, according to her, strongly
suggest her innocence.
This Court has time and again held that between an affidavit executed outside the court, and a testimony given in open
court, the latter almost always prevails.
Discrepancies between a sworn statement and testimony in court do not outrightly justify the acquittal of an accused.
Such discrepancies do not necessarily discredit the witness since ex parte affidavits are often incomplete. They do not
purport to contain a complete compendium of the details of the event narrated by the affiant. Thus, our rulings generally
consider sworn statements taken out of court to be inferior to in court testimony. x x x. 42
A reading of the original affidavits43 executed by Slagle and Atty. Ancheta, readily reveals that they concentrated on the
facts and events leading up to the search and seizure of the contraband materials from the subject premises. They not
only failed to mention Gemma Ongs presence there, but they also failed to mention the other witnesses names and
presence there as well. Although this might appear to be a mistake on the part of a known and established law firm like
the Quasha Law Office, the firm immediately sought to rectify this by having the affidavits of Slagle, Atty. Ancheta, and
Lara amended.
If it were true that Gemma was not at the subject premises at all on September 25, 1998, then she should have grabbed
every chance to correct this notion and expose this mistake before she was arrested. She could have brought up her
defense of mistaken identity or absence at the raid in the preliminary investigation conducted prior to the issuance of her
warrant of arrest; but instead, she chose to ignore her subpoena and disregard the preliminary investigation. Even then,
Gemma had the opportunity to raise the fact that she was not Gemma Ong; not only during her arrest, but also during the
posting of the cash bond for her bail, and more importantly, during her arraignment, when she was asked if she
understood the charges against her. Gemma also knew that the Information was filed against her on the basis of the
amended affidavits, thus, she could have filed a motion to quash the information before she entered her plea, or asked
that a reinvestigation be conducted. However, all these Gemma failed to do. We agree with the RTC that it is highly
unlikely that a person of her stature and educational attainment would be so meek and timid that she failed to protest

against her being wrongly identified, accused, arrested, and potentially imprisoned. If what she says were true, she would
not have agreed to post bail or to be arraigned without at the very least, bringing up the fact that she was not the Gemma
Ong the police officers were looking for. In addition, her own lawyer, Atty. Maglinao, brought up the fact that she was not
Gemma Ong, only for the purpose of correcting the Information, and not to contest it, to wit:
WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR CONTINUATION OF DIRECT EXAMINATION
BY:
ATTY. ERESE:
With the kind permission of the hon. court.
COURT: Proceed.
ATTY. MAGLINAO:
I would just want to be on record that my client, Gemma Catacutan has never been known as Gemma Ong because her
real name is Gemma Catacutan.
COURT: Do you have any objection to the amendment of the information?
ATTY. MAGLINAO:
No, your Honor. May we request to correct the information from Gemma Ong to Gemma Catacutan. 44
Gemma further accuses the prosecution witnesses of falsely testifying and of perjuring themselves just so they can satisfy
a big client like PMPI by showing that somebody had been arrested for counterfeiting its cigarettes. The crimes Gemma is
imputing on these witnesses are serious crimes, and in the absence of concrete and convincing evidence, this Court could
not believe her mere allegations that imply that these people would destroy someones life just so they can please a client,
more so over mere cigarettes. In Principio v. Hon. Barrientos, 45 we said:
Bad faith is never presumed while good faith is always presumed and the chapter on Human Relations of the Civil Code
directs every person, inter alia, to observe good faith, which springs from the fountain of good conscience. Therefore, he
who claims bad faith must prove it. For one to be in bad faith, the same must be "evident." x x x. 46
The prosecution witnesses, contrary to Gemmas claim, had positively identified her as the person who initially refused the
search team entrance, then later acquiesced to the search operations. Slagle explained that even though he mentioned
Gemma only in his amended affidavit, he was sure that she was at the subject premises on the day that they searched it:
Testimony of Roger Sherman Slagle
ATTY. MAGLINAO:
Q In this amended affidavit you mentioned the name, Gemma Catacutan as one of the accused?
A Yes sir.
Q Can you tell the court how you were able to include the name of Gemma Catacutan in your amended affidavit, when in
fact it did not appear in the first affidavit?
A When we arrived she was there and she was very nervous and upset.
xxxx
A It is very clear to me when I arrived there that she was somehow involved. 47 (Emphases ours.)
Lara on the other hand, even pointed to her and thus positively identified her to be the one who had signed the search
documents,48 as the owner of the subject premises, to wit:
Testimony of Jesse Lara
ATTY. FREZ
Q : Mr. Witness, do you know this person who wrote the name Gemma Ong?

A : Yes, sir, Gemma Ong is the owner of the premises when we served the search warrant and also, she was the one who
refused us to gain entry during the service of the search warrant.
Q : Were you able to gain entry at the premises?
A : Yes, sir.
Q : So, as regard to the person whom you identify as the one who refused you to gain entry, would you be able to identify
this person?
A : Yes, sir, that lady in pink is Mrs. Gemma Ong.
(As witness is pointing to the accused Gemma Ong).
Q : Mr. Witness, why do you say that the person whom you pointed to us is the one who wrote the name Mrs. Gemma
Ong?
WITNESS
Because when we served the search warrant she signed it in our presence and that is her own signature.
xxxx
ATTY. FREZ
Q : So, Mr. Witness, in this Inventory, we made some markings during the pre-trial conference and I see here above the
signature (Owner/Representative), there exist a handwritten name which reads GEMMA ONG and above it, there exist a
signature, are you familiar with this person which appears to be Gemma Ong?
A : Yes, sir, Gemma Ong signed that in my presence.
Q : Your Honor, during the pre-trial conference, it was previously marked as Exhibit "D-1". Mr. Witness, I also see here a
Verification but there also exist an entry below the name and I quote "Owner/Claimant/Representative", there appears a
handwritten name Gemma Ong and a signature above it, are you familiar with this person which appears to be Gemma
Ong?
A : Yes, sir, Gemma Ong signed that in my presence.
xxxx
Q : Mr. Witness, in this document which is the certification in the Conduct of Search and I have here above the entry
(Owner/Representative), a handwritten name which reads Gemma Ong and there exist a signature above the handwritten
name, can you identify the signature?
A : Yes, sir, this was signed by Gemma Ong in my presence.49 (Emphases ours.)
Lara further attested to the fact that the search warrant was served on Gemma, who later on entertained the search team:
ATTY. FREZ
Mr. Witness, the person to whom you served the search warrant is identified as Mrs. Gemma Ong, do you know her
relationship with the accused Jackson Ong?
ATTY. FERNANDEZ
Objection, your honor, the witness would be incompetent . . .
COURT
May answer.
(The stenographer read back the question).
WITNESS

I am not familiar with the relationship of Mrs. Gemma Ong with Jackson Ong because during the service of the search
warrant, Mrs. Gemma Ong was there together with two employees and when I asked where was Jackson Ong, she was
the one who entertained us.
ATTY. FREZ
So, the search warrant was served against Gemma Ong?
WITNESS
Yes, Sir.50
Positive identification of a culprit is of great weight in determining whether an accused is guilty or not. 51 Gemma, in
claiming the defense of mistaken identity, is in reality denying her involvement in the crime. This Court has held that the
defense of denial is insipid and weak as it is easy to fabricate and difficult to prove; thus, it cannot take precedence over
the positive testimony of the offended party.52 The defense of denial is unavailing when placed astride the undisputed fact
that there was positive identification of the accused. 53
While Gemma claims she does not know Jackson Ong, the subject premises where the counterfeit cigarettes were seized
was registered under her admitted business "Fascinate Trading." 54 Aside from the bare allegation that she had stopped
operations in the subject premises as early as February 1998, she has neither proven nor shown any evidence that she
had relinquished control of the building after that date. Gemmas allegation that she did not sign the search documents,
and that the signatures therein did not match the signature on her PRC identification card, must also be struck down as
she has not shown proof that her PRC signature is the only way she has ever signed her name. She could have, at the
very least, gotten a handwriting expert to testify on her behalf that there is no way that the signatures in the search
documents and the signature on her PRC identification card could have been written by one and the same person;
instead, she relied on the flimsy contention that the two signatures were, on their face, different.1awp++i1
Gemmas defense consists of her claim of mistaken identity, her denial of her involvement in the crime, and her
accusation against the prosecution witnesses of allegedly giving false testimonies and committing perjury. These are all
weak, unproven, and unfounded claims, and will not stand against the strong evidence against her.
WHEREFORE, this Court DENIES the Petition. The June 16, 2005 Decision of the Court of Appeals in CA-G.R. CR No.
28308 is AFFIRMED.
SO ORDERED.
G.R. No. 194062

June 17, 2013

REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI ANTONETTE N. TY, ORLANDO REYES, FERRER SUAZO and
ALVIN U. TV, Petitioners,
vs.
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM CORPORATION, and SHELL INTERNATIONAL
PETROLEUM COMPANY LIMITED, Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioners seeking the
reversal of the Decision1 dated July 2, 2010, and Resolution2 dated October 11, 2010 of the Court of Appeals (CA) in CAG.R. SP No. 106385.
Stripped of non-essentials, the facts of the case, as summarized by the CA, are as follows:
Petitioners Petron Corporation ("Petron" for brevity) and Pilipinas Shell Petroleum Corporation ("Shell" for brevity) are two
of the largest bulk suppliers and producers of LPG in the Philippines. Petron is the registered owner in the Philippines of
the trademarks GASUL and GASUL cylinders used for its LGP products. It is the sole entity in the Philippines authorized
to allow refillers and distributors to refill, use, sell, and distribute GASUL LPG containers, products and its trademarks.
Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the tradename, trademarks, symbols or
designs of its principal, Shell International Petroleum Company Limited, including the marks SHELLANE and SHELL
device in connection with the production, sale and distribution of SHELLANE LPGs. It is the only corporation in the
Philippines authorized to allow refillers and distributors to refill, use, sell and distribute SHELLANE LGP containers and

products. Private respondents, on the other hand, are the directors and officers of Republic Gas Corporation
("REGASCO" for brevity), an entity duly licensed to engage in, conduct and carry on, the business of refilling, buying,
selling, distributing and marketing at wholesale and retail of Liquefied Petroleum Gas ("LPG").
LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc. and
Totalgaz Dealers Association, received reports that certain entities were engaged in the unauthorized refilling, sale and
distribution of LPG cylinders bearing the registered tradenames and trademarks of the petitioners. As a consequence, on
February 5, 2004, Genesis Adarlo (hereinafter referred to as Adarlo), on behalf of the aforementioned dealers
associations, filed a letter-complaint in the National Bureau of Investigation ("NBI") regarding the alleged illegal trading of
petroleum products and/or underdelivery or underfilling in the sale of LPG products.
Acting on the said letter-complaint, NBI Senior Agent Marvin E. De Jemil (hereinafter referred to as "De Jemil") was
assigned to verify and confirm the allegations contained in the letter-complaint. An investigation was thereafter conducted,
particularly within the areas of Caloocan, Malabon, Novaliches and Valenzuela, which showed that several persons and/or
establishments, including REGASCO, were suspected of having violated provisions of Batas Pambansa Blg. 33 (B.P. 33).
The surveillance revealed that REGASCO LPG Refilling Plant in Malabon was engaged in the refilling and sale of LPG
cylinders bearing the registered marks of the petitioners without authority from the latter. Based on its General Information
Sheet filed in the Securities and Exchange Commission, REGASCOs members of its Board of Directors are: (1) Arnel U.
Ty President, (2) Marie Antoinette Ty Treasurer, (3) Orlando Reyes Corporate Secretary, (4) Ferrer Suazo and (5)
Alvin Ty (hereinafter referred to collectively as private respondents).
De Jemil, with other NBI operatives, then conducted a test-buy operation on February 19, 2004 with the former and a
confidential asset going undercover. They brought with them four (4) empty LPG cylinders bearing the trademarks of
SHELLANE and GASUL and included the same with the purchase of J&S, a REGASCOs regular customer. Inside
REGASCOs refilling plant, they witnessed that REGASCOs employees carried the empty LPG cylinders to a refilling
station and refilled the LPG empty cylinders. Money was then given as payment for the refilling of the J&Ss empty
cylinders which included the four LPG cylinders brought in by De Jemil and his companion. Cash Invoice No. 191391
dated February 19, 2004 was issued as evidence for the consideration paid.
After leaving the premises of REGASCO LPG Refilling Plant in Malabon, De Jemil and the other NBI operatives
proceeded to the NBI headquarters for the proper marking of the LPG cylinders. The LPG cylinders refilled by REGASCO
were likewise found later to be underrefilled.
Thus, on March 5, 2004, De Jemil applied for the issuance of search warrants in the Regional Trial Court, Branch 24, in
the City of Manila against the private respondents and/or occupants of REGASCO LPG Refilling Plant located at Asucena
Street, Longos, Malabon, Metro Manila for alleged violation of Section 2 (c), in relation to Section 4, of B.P. 33, as
amended by PD 1865. In his sworn affidavit attached to the applications for search warrants, Agent De Jemil alleged as
follows:
"x x x.
"4. Respondents REGASCO LPG Refilling Plant-Malabon is not one of those entities authorized to refill LPG cylinders
bearing the marks of PSPC, Petron and Total Philippines Corporation. A Certification dated February 6, 2004 confirming
such fact, together with its supporting documents, are attached as Annex "E" hereof.
6. For several days in the month of February 2004, the other NBI operatives and I conducted surveillance and
investigation on respondents REGASCO LPG refilling Plant-Malabon. Our surveillance and investigation revealed that
respondents REGASCO LPG Refilling Plant-Malabon is engaged in the refilling and sale of LPG cylinders bearing the
marks of Shell International, PSPC and Petron.
x x x.
8. The confidential asset and I, together with the other operatives of the NBI, put together a test-buy operation. On
February 19, 2004, I, together with the confidential asset, went undercover and executed our testbuy operation. Both the
confidential assets and I brought with us four (4) empty LPG cylinders branded as Shellane and Gasul. x x x in order to
have a successful test buy, we decided to "ride-on" our purchases with the purchase of Gasul and Shellane LPG by J & S,
one of REGASCOs regular customers.
9. We proceeded to the location of respondents REGASCO LPG Refilling Plant-Malabon and asked from an employee of
REGASCO inside the refilling plant for refill of the empty LPG cylinders that we have brought along, together with the LPG
cylinders brought by J & S. The REGASCO employee, with some assistance from other employees, carried the empty
LPG cylinders to a refilling station and we witnessed the actual refilling of our empty LPG cylinders.

10. Since the REGASCO employees were under the impression that we were together with J & S, they made the
necessary refilling of our empty LPG cylinders alongside the LPG cylinders brought by J & S. When we requested for a
receipt, the REGASCO employees naturally counted our LPG cylinders together with the LPG cylinders brought by J & S
for refilling. Hence, the amount stated in Cash Invoice No. 191391 dated February 19, 2004, equivalent to Sixteen
Thousand Two Hundred Eighty-Six and 40/100 (Php16,286.40), necessarily included the amount for the refilling of our
four (4) empty LPG cylinders. x x x.
11. After we accomplished the purchase of the illegally refilled LPG cylinders from respondents REGASCO LPG Refilling
Plant-Malabon, we left its premises bringing with us the said LPG cylinders. Immediately, we proceeded to our
headquarters and made the proper markings of the illegally refilled LPG cylinders purchased from respondents
REGASCO LPG Refilling Plant-Malabon by indicating therein where and when they were purchased. Since REGASCO is
not an authorized refiller, the four (4) LPG cylinders illegally refilled by respondents REGASCO LPG Refilling PlantMalabon, were without any seals, and when weighed, were underrefilled. Photographs of the LPG cylinders illegally
refilled from respondents REGASCO LPG Refilling Plant-Malabon are attached as Annex "G" hereof. x x x."
After conducting a personal examination under oath of Agent De Jemil and his witness, Joel Cruz, and upon reviewing
their sworn affidavits and other attached documents, Judge Antonio M. Eugenio, Presiding Judge of the RTC, Branch 24,
in the City of Manila found probable cause and correspondingly issued Search Warrants Nos. 04-5049 and 04-5050.
Upon the issuance of the said search warrants, Special Investigator Edgardo C. Kawada and other NBI operatives
immediately proceeded to the REGASCO LPG Refilling Station in Malabon and served the search warrants on the private
respondents. After searching the premises of REGASCO, they were able to seize several empty and filled Shellane and
Gasul cylinders as well as other allied paraphernalia.
Subsequently, on January 28, 2005, the NBI lodged a complaint in the Department of Justice against the private
respondents for alleged violations of Sections 155 and 168 of Republic Act (RA) No. 8293, otherwise known as the
Intellectual Property Code of the Philippines.
On January 15, 2006, Assistant City Prosecutor Armando C. Velasco recommended the dismissal of the complaint. The
prosecutor found that there was no proof introduced by the petitioners that would show that private respondent
REGASCO was engaged in selling petitioners products or that it imitated and reproduced the registered trademarks of
the petitioners. He further held that he saw no deception on the part of REGASCO in the conduct of its business of refilling
and marketing LPG. The Resolution issued by Assistant City Prosecutor Velasco reads as follows in its dispositive portion:
"WHEREFORE, foregoing considered, the undersigned finds the evidence against the respondents to be insufficient to
form a well-founded belief that they have probably committed violations of Republic Act No. 9293. The DISMISSAL of this
case is hereby respectfully recommended for insufficiency of evidence."
On appeal, the Secretary of the Department of Justice affirmed the prosecutors dismissal of the complaint in a Resolution
dated September 18, 2008, reasoning therein that:
"x x x, the empty Shellane and Gasul LPG cylinders were brought by the NBI agent specifically for refilling. Refilling the
same empty cylinders is by no means an offense in itself it being the legitimate business of Regasco to engage in the
refilling and marketing of liquefied petroleum gas. In other words, the empty cylinders were merely filled by the employees
of Regasco because they were brought precisely for that purpose. They did not pass off the goods as those of
complainants as no other act was done other than to refill them in the normal course of its business.
"In some instances, the empty cylinders were merely swapped by customers for those which are already filled. In this
case, the end-users know fully well that the contents of their cylinders are not those produced by complainants. And the
reason is quite simple it is an independent refilling station.
"At any rate, it is settled doctrine that a corporation has a personality separate and distinct from its stockholders as in the
case of herein respondents. To sustain the present allegations, the acts complained of must be shown to have been
committed by respondents in their individual capacity by clear and convincing evidence. There being none, the complaint
must necessarily fail. As it were, some of the respondents are even gainfully employed in other business pursuits. x x x." 3
Dispensing with the filing of a motion for reconsideration, respondents sought recourse to the CA through a petition for
certiorari.
In a Decision dated July 2, 2010, the CA granted respondents certiorari petition. The fallo states:
WHEREFORE, in view of the foregoing premises, the petition filed in this case is hereby GRANTED. The assailed
Resolution dated September 18, 2008 of the Department of Justice in I.S. No. 2005-055 is hereby REVERSED and SET
ASIDE.

SO ORDERED.4
Petitioners then filed a motion for reconsideration. However, the same was denied by the CA in a Resolution dated
October 11, 2010.
Accordingly, petitioners filed the instant Petition for Review on Certiorari raising the following issues for our resolution:
Whether the Petition for Certiorari filed by RESPONDENTS should have been denied outright.
Whether sufficient evidence was presented to prove that the crimes of Trademark Infringement and Unfair Competition as
defined and penalized in Section 155 and Section 168 in relation to Section 170 of Republic Act No. 8293 (The Intellectual
Property Code of the Philippines) had been committed.
Whether probable cause exists to hold INDIVIDUAL PETITIONERS liable for the offense charged. 5
Let us discuss the issues in seriatim.
Anent the first issue, the general rule is that a motion for reconsideration is a condition sine qua non before a certiorari
petition may lie, its purpose being to grant an opportunity for the court a quo to correct any error attributed to it by reexamination of the legal and factual circumstances of the case. 6
However, this rule is not absolute as jurisprudence has laid down several recognized exceptions permitting a resort to the
special civil action for certiorari without first filing a motion for reconsideration, viz.:
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court.
(c) Where there is an urgent necessity for the resolution of the question and any further delay would prejudice the
interests of the Government or of the petitioner or the subject matter of the petition is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court
is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to object; and,
(i) Where the issue raised is one purely of law or public interest is involved. 7
In the present case, the filing of a motion for reconsideration may already be dispensed with considering that the
questions raised in this petition are the same as those that have already been squarely argued and passed upon by the
Secretary of Justice in her assailed resolution.
Apropos the second and third issues, the same may be simplified to one core issue: whether probable cause exists to
hold petitioners liable for the crimes of trademark infringement and unfair competition as defined and penalized under
Sections 155 and 168, in relation to Section 170 of Republic Act (R.A.) No. 8293.
Section 155 of R.A. No. 8293 identifies the acts constituting trademark infringement as follows:
Section 155. Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark of the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2 Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or

advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection
are committed regardless of whether there is actual sale of goods or services using the infringing material. 8
From the foregoing provision, the Court in a very similar case, made it categorically clear that the mere unauthorized use
of a container bearing a registered trademark in connection with the sale, distribution or advertising of goods or services
which is likely to cause confusion, mistake or deception among the buyers or consumers can be considered as trademark
infringement.9
Here, petitioners have actually committed trademark infringement when they refilled, without the respondents consent,
the LPG containers bearing the registered marks of the respondents. As noted by respondents, petitioners acts will
inevitably confuse the consuming public, since they have no way of knowing that the gas contained in the LPG tanks
bearing respondents marks is in reality not the latters LPG product after the same had been illegally refilled. The public
will then be led to believe that petitioners are authorized refillers and distributors of respondents LPG products,
considering that they are accepting empty containers of respondents and refilling them for resale.
As to the charge of unfair competition, Section 168.3, in relation to Section 170, of R.A. No. 8293 describes the acts
constituting unfair competition as follows:
Section 168. Unfair Competition, Rights, Regulations and Remedies. x x x.
168.3 In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be
deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;
xxxx
Section 170. Penalties. Independent of the civil and administrative sanctions imposed by law, a criminal penalty of
imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred
thousand pesos (P200,000), shall be imposed on any person who is found guilty of committing any of the acts mentioned
in Section 155, Section 168 and Subsection 169.1.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon
the public of the goods or business of one person as the goods or business of another with the end and probable effect of
deceiving the public.10
Passing off (or palming off) takes place where the defendant, by imitative devices on the general appearance of the
goods, misleads prospective purchasers into buying his merchandise under the impression that they are buying that of his
competitors. Thus, the defendant gives his goods the general appearance of the goods of his competitor with the intention
of deceiving the public that the goods are those of his competitor.11
In the present case, respondents pertinently observed that by refilling and selling LPG cylinders bearing their registered
marks, petitioners are selling goods by giving them the general appearance of goods of another manufacturer.
What's more, the CA correctly pointed out that there is a showing that the consumers may be misled into believing that the
LPGs contained in the cylinders bearing the marks "GASUL" and "SHELLANE" are those goods or products of the
petitioners when, in fact, they are not. Obviously, the mere use of those LPG cylinders bearing the trademarks "GASUL"
and "SHELLANE" will give the LPGs sold by REGASCO the general appearance of the products of the petitioners.
In sum, this Court finds that there is sufficient evidence to warrant the prosecution of petitioners for trademark
infringement and unfair competition, considering that petitioner Republic Gas Corporation, being a corporation, possesses
a personality separate and distinct from the person of its officers, directors and stockholders. 12Petitioners, being corporate
officers and/or directors, through whose act, default or omission the corporation commits a crime, may themselves be
individually held answerable for the crime.13 Veritably, the CA appropriately pointed out that petitioners, being in direct
control and supervision in the management and conduct of the affairs of the corporation, must have known or are aware
that the corporation is engaged in the act of refilling LPG cylinders bearing the marks of the respondents without authority

or consent from the latter which, under the circumstances, could probably constitute the crimes of trademark infringement
and unfair competition. The existence of the corporate entity does not shield from prosecution the corporate agent who
knowingly and intentionally caused the corporation to commit a crime. Thus, petitioners cannot hide behind the cloak of
the separate corporate personality of the corporation to escape criminal liability. A corporate officer cannot protect himself
behind a corporation where he is the actual, present and efficient actor.14
WHEREFORE, premises considered, the petition is hereby DENIED and the Decision dated July 2, 2010 and Resolution
dated October 11, 2010 of the Court of Appeals in CA-G.R. SP No. 106385 are AFFIRMED.
SO ORDERED.

G.R. No. 188526

November 11, 2013

CENTURY CHINESE MEDICINE CO., MING SENG CHINESE DRUGSTORE, XIANG JIAN CHINESE DRUG STORE,
TEK SAN CHINESE DRUG STORE, SIM SIM CHINESE DRUG STORE, BAN SHIONG TAY CHINESE DRUG STORE
and/or WILCENDO TAN MENDEZ, SHUANG YING CHINESE DRUGSTORE, and BACLARAN CHINESE DRUG
STORE, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES and LING NA LAU, Respondents.
DECISION
PERALTA, J.:
Before us is a petition for review on certiorari which seeks to reverse and set aside the Decision 1 dated March 31, 2009 of
the Court of Appeals in CA-G.R. CV No. 88952 and the Resolution 2 dated July 2, 2009, which denied reconsideration
thereof. The CA reversed the Order3 dated September 25, 2006 of the Regional Trial Court (RTC), Branch 143, Makati
City, quashing Search Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042 and 05-043, and the
Order4 dated March 7, 2007 denying reconsideration thereof.
The antecedent facts are as follows:
Respondent Ling Na Lau, doing business under the name and style Worldwide Pharmacy,5 is the sole distributor and
registered trademark owner of TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap as shown by Certificate of
Registration 4-2000-009881 issued to her by the Intellectual Property Office (IPO) for a period of ten years from August
24, 2003.6 On November 7, 2005, her representative, Ping Na Lau, (Ping) wrote a letter 7addressed to National Bureau of
Investigation (NBI) Director Reynaldo Wycoco, through Atty. Jose Justo Yap and Agent Joseph G. Furing (Agent Furing),
requesting assistance for an investigation on several drugstores which were selling counterfeit whitening papaya soaps
bearing the general appearance of their products.
Agent Furing was assigned to the case and he executed an affidavit 8 stating that: he conducted his own investigation, and
on November 9 and 10, 2005, he, together with Junayd Esmael (Esmael), were able to buy whitening soaps bearing the
trademark "TOP-GEL", "T.G." & "DEVICE OF A LEAF" with corresponding receipts from a list of drugstores which included
herein petitioners Century Chinese Medicine Co., Min Seng Chinese Drugstore, Xiang Jiang Chinese Drug Store, Tek San
Chinese Drug Store, Sim Sim Chinese Drug Store, Ban Shiong Tay Drugstore, Shuang Ying Chinese Drugstore, and
Baclaran Chinese Drug Store; while conducting the investigation and test buys, he was able to confirm Ping's complaint to
be true as he personally saw commercial quantities of whitening soap bearing the said trademarks being displayed and
offered for sale at the said drugstores; he and Esmael took the purchased items to the NBI, and Ping, as the authorized
representative and expert of Worldwide Pharmacy in determining counterfeit and unauthorized reproductions of its
products, personally examined the purchased samples, and issued a Certification 9 dated November 18, 2005 wherein he
confirmed that, indeed, the whitening soaps bearing the trademarks "TOP-GEL", "T.G." & "DEVICE OF A LEAF" from the
subject drugstores were counterfeit.
Esmael also executed an affidavit10 corroborating Agent Furing's statement. Ping's affidavit11 stated that upon his personal
examination of the whitening soaps purchased from petitioners bearing the subject trademark, he found that the whitening
soaps were different from the genuine quality of their original whitening soaps with the trademarks "TOP-GEL", "T.G." &
"DEVICE OF A LEAF" and certified that they were all counterfeit.

On November 21, 2005, Agent Furing applied for the issuance of search warrants before the Regional Trial Court (RTC),
Branch 143, Makati City, against petitioners and other establishments for violations of Sections 168 and 155, both in
relation to Section 170 of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines. Section 168, in relation to Section 170, penalizes unfair competition; while Section 155, in relation to Section
170, punishes trademark infringement.
On November 23, 2005, after conducting searching questions upon Agent Furing and his witnesses, the RTC granted the
applications and issued Search Warrants Nos. 05-030, 05-033, and 05-038 for unfair competition and Search Warrants
Nos. 05-022, 05-023, 05-025, 05-042 and 05-043 for trademark infringement against petitioners.
On December 5, 2005, Agent Furing filed his Consolidated Return of Search Warrants. 12
On December 8, 2005, petitioners collectively filed their Motion to Quash 13 the Search Warrants contending that their
issuances violated the rule against forum shopping; that Benjamin Yu (Yu) is the sole owner and distributor of the product
known as "TOP-GEL"; and there was a prejudicial question posed in Civil Case No. 05-54747 entitled Zenna Chemical
Industry v. Ling Na Lau, et al., pending in Branch 93 of the RTC of Quezon City, which is a case filed by Yu against
respondent for damages due to infringement of trademark/tradename, unfair competition with prayer for the immediate
issuance of a temporary restraining order and/or preliminary prohibitory injunction.
On January 9, 2006, respondent filed her Comment/Opposition 14 thereto arguing the non-existence of forum shopping;
that Yu is not a party- respondent in these cases and the pendency of the civil case filed by him is immaterial and
irrelevant; and that Yu cannot be considered the sole owner and distributor of "TOP GEL T.G. & DEVICE OF A LEAF." The
motion was then submitted for resolution in an Order dated January 30, 2006. During the pendency of the case,
respondent, on April 20, 2006, filed a Submission15 in relation to the Motion to Quash attaching an Order16 dated March
21, 2006 of the IPO in IPV Case No. 10-2005-00001 filed by respondent against Yu, doing business under the name and
style of MCA Manufacturing and Heidi S. Cua, proprietor of South Ocean Chinese Drug Stores for trademark infringement
and/or unfair competition and damages with prayer for preliminary injunction. The Order approved therein the parties'
Joint Motion To Approve Compromise Agreement filed on March 8, 2006. We quote in its entirety the Order as follows:
The Compromise Agreement between the herein complainant and respondents provides as follows:
1. Respondents acknowledge the exclusive right of Complainant over the trademark TOP GEL T.G. & DEVICE OF
A LEAF for use on papaya whitening soap as registered under Registration No. 4-2000-009881 issued on August
24, 2003.
2. Respondents acknowledge the appointment by Zenna Chemical Industry Co., Ltd. of Complainant as the
exclusive Philippine distributor of its products under the tradename and trademark TOP GEL MCA & MCA
DEVICE (A SQUARE DEVICE CONSISTING OF A STYLIZED REPRESENTATION OF A LETTER "M" ISSUED "
OVER THE LETTER "CA") as registered under Registration No. 4-1996-109957 issued on November 17, 2000,
as well as the assignment by Zenna Chemical Industry Co., Ltd. to Complainant of said mark for use on papaya
whitening soap.
3. Respondents admit having used the tradename and trademark aforesaid but after having realized that
Complainant is the legitimate assignee of TOP GEL MCA & MCA DEVICE and the registered owner of TOP GEL
T.G. & DEVICE OF A LEAF, now undertake to voluntarily cease and desist from using the aforesaid tradename
and trademark and further undertake not to manufacture, sell, distribute, and otherwise compete with
Complainant, now and at anytime in the future, any papaya whitening soap using or bearing a mark or name
identical or confusingly similar to, or constituting a colorable imitation of, the tradename and trademark TOP GEL
MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF as registered and described above.
4. Respondents further undertake to withdraw and/or dismiss their counterclaim and petition to cancel and/or
revoke Registration No. 4-2000-009881 issued to Complainant. Respondents also further undertake to pull out
within 45 days from approval of the Compromise Agreement all their products bearing a mark or name identical or
confusingly similar to, or constituting a colorable imitation of, the tradename and trademark TOP GEL MCA &
MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF, from the market nationwide.
5. Respondents finally agree and undertake to pay Complainant liquidated damages in the amount of FIVE
HUNDRED THOUSAND (Php500,000.00) PESOS for every breach or violation of any of the foregoing
undertakings which complainant may enforce by securing a writ of execution from this Office, under this case.
6. Complainant, on the other hand, agrees to waive all her claim for damages against Respondents as alleged in
her complaint filed in the Intellectual Property Office only.

7. The Parties hereby agree to submit this Compromise Agreement for Approval of this Office and pray for
issuance of a decision on the basis thereof.
Finding the Compromise Agreement to have been duly executed and signed by the parties and/or their
representatives/counsels and the terms and conditions thereof to be in conformity with the law, morals, good customs,
public order and public policy, the same is hereby APPROVED. Accordingly, the above-entitled case is DISMISSED as all
issues raised concerning herein parties have been rendered MOOT AND ACADEMIC.
SO ORDERED.17
On September 25, 2006, the RTC issued its Order18 sustaining the Motion to Quash the Search Warrants, the dispositive
portion of which reads as follows:
WHEREFORE, finding that the issuance of the questioned search warrants were not supported by probable cause, the
Motion to Quash is GRANTED. Search warrants nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-043
are ordered lifted and recalled.
The NBI Officers who effected the search warrants are hereby ordered to return the seized items to herein respondents
within ten (10) days from receipt of this Order.
So Ordered.19
In quashing the search warrants, the RTC applied the Rules on Search and Seizure for Civil Action in Infringement of
Intellectual Property Rights.20 It found the existence of a prejudicial question which was pending before Branch 93 of RTC
Quezon City, docketed as Civil Case No. 05-54747, on the determination as to who between respondent and Yu is the
rightful holder of the intellectual property right over the trademark TOP GEL T.G. & DEVICE OF A LEAF; and there was
also a case for trademark infringement and/or unfair competition filed by respondent against Yu before the IPO which was
pending at the time of the application for the search warrants. It is clear, therefore, that at the time of the filing of the
application for the search warrants, there is yet no determination of the alleged right of respondent over the subject
trademark/tradename. Also, the RTC found that petitioners relied heavily on Yu's representation that he is the sole
owner/distributor of the Top Gel whitening soap, as the latter even presented Registration No. 4-1996-109957 from the
IPO for a term of 20 years from November 17, 2000 covering the same product. There too was the notarized certification
from Zenna Chemical Industry of Taiwan, owner of Top Gel MCA, with the caveat that the sale, production or
representation of any imitated products under its trademark and tradename shall be dealt with appropriate legal action.
The RTC further said that in the determination of probable cause, the court must necessarily resolve whether or not an
offense exists to justify the issuance of a search warrant or the quashal of the one already issued. In this case, respondent
failed to prove the existence of probable cause, which warranted the quashal of the questioned search warrants.
On November 13, 2006, respondent filed an Urgent Motion to Hold in Abeyance the Release of Seized Evidence. 21
Respondent filed a motion for reconsideration, which the RTC denied in its Order 22 dated March 7, 2007.
Respondent then filed her appeal with the CA. After respondent filed her appellant's brief and petitioners their appellee's
brief, the case was submitted for decision.
On March 31, 2009, the CA rendered its assailed Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the appeal filed in this
case and SETTING ASIDE the Order dated March 7, 2007 issued by Branch 143 of the Regional Trial Court of the
National Capital Judicial Region stationed in Makati City in the case involving Search Warrants Nos. 05-030, 05-033, 05038, 05-022, 05-023, 05-025, 05-042, 05-043.23
In reversing the RTC's quashal of the search warrants, the CA found that the search warrants were applied for and issued
for violations of Sections 155 and 168, in relation to Section 170, of the Intellectual Property Code and that the
applications for the search warrants were in anticipation of criminal actions which are to be instituted against petitioners;
thus, Rule 126 of the Rules of Criminal Procedure was applicable. It also ruled that the basis for the applications for
issuance of the search warrants on grounds of trademarks infringement and unfair competition was the trademark TOP
GEL T.G. & DEVICE OF A LEAF; that respondent was the registered owner of the said trademark, which gave her the
right to enforce and protect her intellectual property rights over it by seeking assistance from the NBI.
The CA did not agree with the RTC that there existed a prejudicial question, since Civil Case No. 05-54747 was already
dismissed on June 10, 2005, i.e., long before the search warrants subject of this appeal were applied for; and that Yu's

motion for reconsideration was denied on September 15, 2005 with no appeal having been filed thereon as evidenced by
the Certificate of Finality issued by the said court.
Petitioners' motion for reconsideration was denied by the CA in a Resolution dated July 2, 2009. Hence, this petition filed
by petitioners raising the issue that:
(A) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN REVERSING THE
FINDINGS OF THE REGIONAL TRIAL COURT AND HELD THAT THE LATTER APPLIED THE RULES ON
SEARCH AND SEIZURE IN CIVIL ACTIONS FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS. 24
(B) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT BASED ITS
RULING ON THE ARGUMENT WHICH WAS BROUGHT UP FOR THE FIRST TIME IN RESPONDENT LING NA
LAU'S APPELLANT'S BRIEF.25
Petitioners contend that the products seized from their respective stores cannot be the subject of the search warrants and
seizure as those Top Gel products are not fruits of any crime, infringed product nor intended to be used in any crime; that
they are legitimate distributors who are authorized to sell the same, since those genuine top gel products bore the original
trademark/tradename of TOP GEL MCA, owned and distributed by Yu. Petitioners also claim that despite the RTC's order
to release the seized TOP GEL products, not one had been returned; that one or two samples from each petitioners'
drugstore would have sufficed in case there is a need to present them in a criminal prosecution, and that confiscation of
thousands of these products was an overkill.
Petitioners also argue that the issue that the RTC erred in applying the rules on search and seizure in anticipation of a civil
action was never raised in the RTC.
The issue for resolution is whether or not the CA erred in reversing the RTC's quashal of the assailed search warrants.
We find no merit in the petition.
The applications for the issuance of the assailed search warrants were for violations of Sections 155 and 168, both in
relation to Section 170 of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines. Section 155, in relation to Section 170, punishes trademark infringement; while Section 168, in relation to
Section 170, penalizes unfair competition, to wit:
Sec 155. Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
While
Sec. 168. Unfair Competition, Rights, Regulation and Remedies.
xxxx
168.3. In particular, and without in any way limiting the scope of protection against unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;
And
SEC. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of
imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two
hundred thousand pesos (P200,000.00) shall be imposed on any person who is found guilty of committing any of the acts
mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and Subsection 169.1 [False Designation of
Origin and False Description or Representation].

Thus, we agree with the CA that A.M. No. 02-1-06-SC, which provides for the Rules on the Issuance of the Search and
Seizure in Civil Actions for Infringement of Intellectual Property Rights, is not applicable in this case as the search
warrants were not applied based thereon, but in anticipation of criminal actions for violation of intellectual property rights
under RA 8293. It was established that respondent had asked the NBI for assistance to conduct investigation and search
warrant implementation for possible apprehension of several drugstore owners selling imitation or counterfeit TOP GEL
T.G. & DEVICE OF A LEAF papaya whitening soap. Also, in his affidavit to support his application for the issuance of the
search warrants, NBI Agent Furing stated that "the items to be seized will be used as relevant evidence in the criminal
actions that are likely to be instituted." Hence, Rule 126 of the Rules of Criminal Procedure applies.
Rule 126 of the Revised Rules of Court, which governs the issuance of the assailed Search Warrants, provides, to wit:
SEC. 3. Personal property to be seized. - A search warrant may be issued for the search and seizure of personal property:
(a) Subject of the offense;
(b) Stolen or embezzled and other proceeds or fruits of the offense; or
(c) Used or intended to be used as the means of committing an offense.
SEC. 4. Requisites for issuing search warrant. - A search warrant shall not issue except upon probable cause in
connection with one specific offense to be determined personally by the judge after examination under oath or affirmation
of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the things
to be seized which may be anywhere in the Philippines.
SEC. 5. Examination of complainant; record. - The judge must, before issuing the warrant, personally examine in the form
of searching questions and answers, in writing and under oath, the complainant and the witnesses he may produce on
facts personally known to them and attach to the record their sworn statements together with the affidavits submitted.
A core requisite before a warrant shall validly issue is the existence of a probable cause, meaning "the existence of such
facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been
committed and that the objects sought in connection with the offense are in the place to be searched." 26 And when the law
speaks of facts, the reference is to facts, data or information personally known to the applicant and the witnesses he may
present. Absent the element of personal knowledge by the applicant or his witnesses of the facts upon which the issuance
of a search warrant may be justified, the warrant is deemed not based on probable cause and is a nullity, its issuance
being, in legal contemplation, arbitrary.27 The determination of probable cause does not call for the application of rules and
standards of proof that a judgment of conviction requires after trial on the merits. 28 As implied by the words themselves,
"probable cause" is concerned with probability, not absolute or even moral certainty. The prosecution need not present at
this stage proof beyond reasonable doubt. The standards of judgment are those of a reasonably prudent man, 29 not the
exacting calibrations of a judge after a full-blown trial. 30
The RTC quashed the search warrants, saying that (1) there exists a prejudicial question pending before Branch 93 of the
RTC of Quezon City, docketed as Civil Case No. 05-54747, i.e., the determination as to who between respondent and Yu
is the rightful holder of the intellectual property right over the trademark TOP GEL T.G. & DEVICE OF A LEAF; and there
was also a case for trademark infringement and/or unfair competition filed by respondent against Yu pending before the
IPO, docketed as IPV Case No. 10-2005-00001; and (2) Yu's representation that he is the sole distributor of the Top Gel
whitening soap, as the latter even presented Registration No. 4-1996-109957 issued by the IPO to Zenna Chemical
Industry as the registered owner of the trademark TOP GEL MCA & DEVICE MCA for a term of 20 years from November
17, 2000 covering the same product.
We do not agree. We affirm the CA's reversal of the RTC Order quashing the search warrants.
The affidavits of NBI Agent Furing and his witnesses, Esmael and Ling, clearly showed that they are seeking protection for
the trademark "TOP GEL T.G. and DEVICE OF A LEAF" registered to respondent under Certificate of Registration 4-2000009881 issued by the IPO on August 24, 2003, and no other. While petitioners claim that the product they are distributing
was owned by Yu with the trademark TOP GEL MCA and MCA DEVISE under Certificate of Registration 4-1996-109957,
it was different from the trademark TOP GEL T.G. and DEVICE OF A LEAF subject of the application. We agree with the
CA's finding in this wise:
x x x It bears stressing that the basis for the applications for issuances of the search warrants on grounds of trademark
infringement and unfair competition is the trademark TOP GEL T.G. & DEVICE OF A LEAF. Private complainant-appellant
was issued a Certificate of Registration No. 4-2000-009881 of said trademark on August 24, 2003 by the Intellectual
Property Office, and is thus considered the lawful holder of the said trademark. Being the registrant and the holder of the
same, private complainant-appellant had the authority to enforce and protect her intellectual property rights over it. This
prompted her to request for assistance from the agents of the NBI, who thereafter conducted a series of investigation, test

buys and inspection regarding the alleged trademark infringement by herein respondents-appellees. Subsequently, Ping
Na Lau, private complainant-appellants representative, issued a certification with the finding that the examined goods
were counterfeit. This prompted the NBI agents to apply for the issuances of search warrants against the respondentsappellees. Said applications for the search warrants were granted after by Judge Laguilles after examining under oath the
applicant Agent Furing of the NBI and his witnesses Ping Na Lau and Junayd R. Ismael.
Based on the foregoing, it is clear that the requisites for the issuance of the search warrants had been complied with and
that there is probable cause to believe that an offense had been committed and that the objects sought in connection with
the offense were in the places to be searched. The offense pertains to the alleged violations committed by respondentsappellees upon the intellectual property rights of herein private complainant-appellant, as holder of the trademark TOP
GEL T.G. & DEVICE OF A LEAF under Certificate of Registration No. 4-2000-009881, issued on August 24, 2003 by the
Intellectual Property Office.31
Notably, at the time the applications for the issuance of the search warrants were filed on November 21, 2005, as the CA
correctly found, Civil Case No. Q-05-54747, which the RTC found to be where a prejudicial question was raised, was
already dismissed on June 10, 2005,32 because of the pendency of a case involving the same issues and parties before
the IPO. Yu's motion for reconsideration was denied in an Order 33 dated September 15, 2005. In fact, a Certificate of
Finality34 was issued by the RTC on January 4, 2007.
Moreover, the IPO case for trademark infringement and unfair competition and damages with prayer for preliminary
injunction filed by respondent against Yu and Heidi Cua, docketed as IPV Case No. 10-2005-00001, would not also be a
basis for quashing the warrants.1avvphi1 In fact, prior to the applications for the issuance of the assailed search warrants
on November 21, 2005, the IPO had issued an Order35 dated October 20, 2005 granting a writ of preliminary injunction
against Yu and Cua, the dispositive portion of which reads:
WHEREFORE, the WRIT OF PRELIMINARY INJUNCTION is hereby issued against Respondent, Benjamin Yu, doing
business under the name and style of MCA Manufacturing and Heidi S. Cua, Proprietor of South Ocean Chinese Drug
Store, and their agents, representatives, dealers and distributors and all persons acting in their behalf, to cease and desist
using the trademark "TOP GEL T.G. & DEVICE OF A LEAF" or any colorable imitation thereof on Papaya whitening soaps
they manufacture, sell, and/or offer for sale, and otherwise, from packing their Papaya Whitening Soaps in boxes with the
same general appearance as those of complainant's boxes within a period of NINETY (90) DAYS, effective upon the
receipt of respondent of the copy of the COMPLIANCE filed with this Office by the Complainant stating that it has posted a
CASH BOND in the amount of ONE HUNDRED THOUSAND PESOS (Php100,000.00) together with the corresponding
Official Receipt Number and date thereof. Consequently, complainant is directed to inform this Office of actual date of
receipt by Respondent of the aforementioned COMPLIANCE. 36
To inform the public of the issuance of the writ of preliminary injunction, respondent's counsel had the dispositive portion
of the Order published in The Philippine Star newspaper on October 30, 2005. 37 Thus, it was clearly stated that Yu, doing
business under the name and style of MCA Manufacturing, his agents, representatives, dealers and distributors and all
persons acting in his behalf, were to cease and desist from using the trademark "TOP GEL & DEVICE OF A LEAF" or any
colorable imitation thereof on Papaya Whitening soaps they manufacture, sell and/or offer for sale. Petitioners, who
admitted having derived their TOP GEL products from Yu, are, therefore, notified of such injunction and were enjoined
from selling the same.
Notwithstanding, at the time of the application of the search warrants on November 21, 2005, and while the injunction was
in effect, petitioners were still selling the alleged counterfeit products bearing the trademark TOP GEL T.G. & DEVICE OF
A LEAF. There exists a probable cause for violation of respondent's intellectual property rights, which entitles her as the
registered owner of the trademark TOP GEL and DEVICE OF A LEAF to be protected by the issuance of the search
warrants.
More importantly, during the pendency of petitioners' motion to quash in the RTC, respondent submitted the Order dated
March 8, 2006 of the IPO in IPV Case No. 10-2005-00001, where the writ of preliminary injunction was earlier issued,
approving the compromise agreement entered into by respondent with Yu and Cua where it was stated, among others,
that:
1. Respondents acknowledge the exclusive right of Complainant over the trademark TOP GEL T.G. & DEVICE OF
A LEAF for use on papaya whitening soap as registered under Registration No. 4-2000-009881 issued on August
24, 2003.
2. Respondents acknowledge the appointment by Zenna Chemical Industry Co., Ltd. of Complainant as the
exclusive Philippine distributor of its products under the tradename and trademark TOP GEL MCA & MCA
DEVICE (A SQUARE DEVICE CONSISTING OF A STYLIZED REPRESENTATION OF A LETTER "M" OVER
THE LETTER "CA") as registered under Registration No 4-1996-109957 issued on November 17, 2000, as well
as the assignment by Zenna Chemical Industry Co., Ltd. to Complainant of said mark for use on papaya whitening
soap.

3. Respondents admit having used the tradename and trademark aforesaid, but after having realized that
Complainant is the legitimate assignee of TOP GEL MCA & MCA DEVICE and the registered owner of TOP GEL
T.G. & DEVICE OF A LEAF, now undertake to voluntarily cease and desist from using the aforesaid tradename
and trademark, and further undertake not to manufacture, sell and distribute and otherwise compete with
complainant, now and at anytime in the future, any papaya whitening soap using or bearing a mark or name
identical or confusingly similar to, or constituting a colorable imitation of the tradename and trademark TOP GEL
MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF as registered and described above. 38
Hence, it appears that there is no more controversy as to who is the rightful holder of the trademark TOP GEL T.G. &
DEVICE OF A LEAF. Therefore, respondent, as owner of such registered trademark has the right to the issuance of the
search warrants.
Anent petitioners' claim that one or two samples of the Top Gel products from each of them, instead of confiscating
thousands of the products, would have sufficed for the purpose of an anticipated criminal action, citing our ruling in
Summerville General Merchandising Co. v. Court of Appeals,39 is not meritorious.
We do not agree.
The factual milieu of the two cases are different. In Summerville, the object of the violation of Summerville's intellectual
property rights, as assignee of Royal playing cards and Royal brand playing cards case, was limited to the design of
Summerville's Royal plastic container case which encased and wrapped the Crown brand playing cards. In the application
for the search warrant which the RTC subsequently issued, one of the items to be seized were the Crown brand playing
cards using the copyright plastic and Joker of Royal brand. Thus, numerous boxes containing Crown playing cards were
seized and upon the RTC's instruction were turned over to Summerville, subject to the condition that the key to the said
warehouse be turned over to the court sheriff. Respondents moved for the quashal of the search warrant and for the
return of the seized properties. The RTC partially granted the motion by ordering the release of the seized Crown brand
playing cards and the printing machines; thus, only the Royal plastic container cases of the playing cards were left in the
custody of Summerville. The CA sustained the RTC order. On petition with us, we affirmed the CA. We found therein that
the Crown brand playing cards are not the subject of the offense as they are genuine and the Crown trademark was
registered to therein respondents names; that it was the design of the plastic container/case that is alleged to have been
utilized by respondents to deceive the public into believing that the Crown brand playing cards are the same as those
manufactured by Summerville. We then said that assuming that the Crown playing cards could be considered subject of
the offense, a sample or two are more than enough to retain should there have been a need to examine them along with
the plastic container/case; and that there was no need to hold the hundreds of articles seized. We said so in the context
that since what was in dispute was the design of the Royal plastic cases/containers of playing cards and not the playing
card per se, a small number of Crown brand playing cards would suffice to examine them with the Royal plastic
cases/containers. And the return of the playing cards would better serve the purposes of justice and expediency. However,
in this case, the object of the violation of respondent's intellectual property right is the alleged counterfeit TOP GEL T.G. &
DEVICE OF A LEAF papaya whitening soap being sold by petitioners, so there is a need to confiscate all these articles to
protect respondent's right as the registered owner of such trademark.
Petitioners next contend that the CA's ruling on the applicability of Rule 126 of the Rules of Court that the search warrants
were issued in anticipation of a criminal action was only based on respondent's claim which was only brought for the first
time in her appellant's brief.
We are not persuaded.
We find worth quoting respondent's argument addressing this issue in its Comment, thus:
In the assailed Decision, the Court of Appeals found that the Rule correctly applicable to the subject search warrants was
Rule 126 of the Rules of Court. Petitioners fault the appellate court for ruling that the Regional Trial Court incorrectly
applied the Rules on Search and Seizure in Civil Actions for Infringement of Intellectual Property Rights on the basis of an
argument that private respondent brought up for the first time in her Appellant's Brief.
A cursory perusal of the Appellant's Brief shows that the following issues/errors were raised, that: (1) the Honorable Trial
Court erred in holding that the "Rules on Search and Seizure for Infringement of Intellectual Property Rights" apply to the
search warrants at bar; (2) x x x.
It must be remembered that there was no trial on the merits to speak of in the trial court, and the matter of the application
of the wrong set of Rules only arose in the Order dated 25th September 2006 which sustained the Motion to Quash. A
thorough examination of the Appellee's Brief filed by petitioners (respondents-appellees in the Court of Appeals) reveals,
however, that petitioners NEVER assailed the first issue/error on the ground that the same was raised for the first time on
appeal. It is only now, after the appellate court rendered a Decision and Resolution unfavorable to them, that petitioners
questioned the alleged procedural error. Petitioners should now be considered in estoppel to question the same. 40

Indeed, perusing the appellee's (herein petitioners) brief filed with the CA, the matter of the non-applicability of the rules
on search and seizure in civil action for infringement of intellectual property rights was never objected as being raised for
the first time. On the contrary, petitioners had squarely faced respondent's argument in this wise:
Appellant (herein respondent) contends that the rule (SC Adm. Memo 1-06, No. 02-1-06, Rule on Search and Seizure in
Civil Actions for Infringement of Intellectual Property Rights) does [not] apply to the search warrants in the [case] at bar,
for the reason that the search warrants themselves reveal that the same were applied for and issued for violations of
"Section 155 in relation to Section 170 of RA 8293" and violations of "Section 168 in relation to Section 170 of RA 8293,"
and that a perusal of the records would show that there is no mention of a civil action or anticipation thereof, upon which
the search warrants are applied for.
Appellees (herein petitioners) cannot agree with the contention of the appellant.1wphi1 Complainant NBI Agent Joseph
G. Furing, who applied for the search warrants, violated the very rule on search and seizure for infringement of Intellectual
Property Rights. The search warrants applied for by the complainants cannot be considered a criminal action. There was
no criminal case yet to speak of when complainants applied for issuance of the search warrants. There is distinction here
because the search applied for is civil in nature and no criminal case had been filed. The complaint is an afterthought after
the respondents-appellees filed their Motion to Quash Search Warrant before the Regional Trial Court of Manila, Branch
24. The grounds enumerated in the rule must be complied with in order to protect the constitutional mandate that "no
person shall be deprived of life liberty or property without due process of law nor shall any person be denied the equal
protection of the law." Clearly, the application of the search warrants for violation of unfair competition and infringement is
in the nature of a civil action.41
WHEREFORE, the petition for review is DENIED. The Decision dated March 31, 2009 and the Resolution dated July 2,
2009 of the Court of Appeals, in CA-G.R. CV No. 88952, are hereby AFFIRMED.
SO ORDERED.

G.R. No. 154491

November 14, 2008

COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga Plant, petitioner,

vs.
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E. GALICIA, a.k.a. "DANNY GALICIA",respondents.
DECISION
BRION, J.:
Is the hoarding of a competitor's product containers punishable as unfair competition under the Intellectual Property Code
(IP Code, Republic Act No. 8293) that would entitle the aggrieved party to a search warrant against the hoarder? This is
the issue we grapple with in this petition for review oncertiorari involving two rival multinational softdrink giants; petitioner
Coca-Cola Bottlers, Phils., Inc. (Coca-Cola) accuses Pepsi Cola Products Phils., Inc. (Pepsi), represented by the
respondents, of hoarding empty Coke bottles in bad faith to discredit its business and to sabotage its operation in
Bicolandia.
BACKGROUND
The facts, as culled from the records, are summarized below.
On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi for hoarding Coke empty bottles in Pepsi's yard in
Concepcion Grande, Naga City, an act allegedly penalized as unfair competition under the IP Code. Coca-Cola claimed
that the bottles must be confiscated to preclude their illegal use, destruction or concealment by the respondents. 1 In
support of the application, Coca-Cola submitted the sworn statements of three witnesses: Naga plant representative Arnel
John Ponce said he was informed that one of their plant security guards had gained access into the Pepsi compound and
had seen empty Coke bottles; acting plant security officer Ylano A. Regaspi said he investigated reports that Pepsi was
hoarding large quantities of Coke bottles by requesting their security guard to enter the Pepsi plant and he was informed
by the security guard that Pepsi hoarded several Coke bottles; security guard Edwin Lirio stated that he entered Pepsi's
yard on July 2, 2001 at 4 p.m. and saw empty Coke bottles inside Pepsi shells or cases. 2
Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga City, after taking the joint deposition of the
witnesses, issued Search Warrant No. 2001-013 to seize 2,500 Litro and 3,000 eight and 12 ounces empty Coke bottles at
Pepsi's Naga yard for violation of Section 168.3 (c) of the IP Code. 4 The local police seized and brought to the MTC's

custody 2,464 Litro and 4,036 eight and 12 ounces empty Coke bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells
for smaller (eight and 12 ounces) empty Coke bottles, and later filed with the Office of the City Prosecutor of Naga a
complaint against two Pepsi officers for violation of Section 168.3 (c) in relation to Section 170 of the IP Code. 5The named
respondents, also the respondents in this petition, were Pepsi regional sales managerDanilo E. Galicia (Galicia) and its
Naga general manager Quintin J. Gomez, Jr. (Gomez).
In their counter-affidavits, Galicia and Gomez claimed that the bottles came from various Pepsi retailers and wholesalers
who included them in their return to make up for shortages of empty Pepsi bottles; they had no way of ascertaining
beforehand the return of empty Coke bottles as they simply received what had been delivered; the presence of the bottles
in their yard was not intentional nor deliberate; Ponce and Regaspi's statements are hearsay as they had no personal
knowledge of the alleged crime; there is no mention in the IP Code of the crime of possession of empty bottles; and that
the ambiguity of the law, which has a penal nature, must be construed strictly against the State and liberally in their favor.
Pepsi security guards Eduardo E. Miral and Rene Acebuche executed a joint affidavit stating that per their logbook, Lirio
did not visit or enter the plant premises in the afternoon of July 2, 2001.
The respondents also filed motions for the return of their shells and to quash the search warrant. They contended that no
probable cause existed to justify the issuance of the search warrant; the facts charged do not constitute an offense; and
their Naga plant was in urgent need of the shells.
Coca-Cola opposed the motions as the shells were part of the evidence of the crime, arguing that Pepsi used the shells in
hoarding the bottles. It insisted that the issuance of warrant was based on probable cause for unfair competition under the
IP Code, and that the respondents violated R.A. 623, the law regulating the use of stamped or marked bottles, boxes, and
other similar containers.
THE MTC RULINGS
On September 19, 2001, the MTC issued the first assailed order 6 denying the twin motions. It explained there was an
exhaustive examination of the applicant and its witnesses through searching questions and that the Pepsi shells are prima
facie evidence that the bottles were placed there by the respondents.
In their motion for reconsideration, the respondents argued for the quashal of the warrant as the MTC did not conduct a
probing and exhaustive examination; the applicant and its witnesses had no personal knowledge of facts surrounding the
hoarding; the court failed to order the return of the "borrowed" shells; there was no crime involved; the warrant was issued
based on hearsay evidence; and the seizure of the shells was illegal because they were not included in the warrant.
On November 14, 2001, the MTC denied the motion for reconsideration in the second assailed order, 7explaining that the
issue of whether there was unfair competition can only be resolved during trial.
The respondents responded by filing a petition for certiorari under Rule 65 of the Revised Rules of Court before the
Regional Trial Court (RTC) of Naga City on the ground that the subject search warrant was issued without probable cause
and that the empty shells were neither mentioned in the warrant nor the objects of the perceived crime.
THE RTC RULINGS
On May 8, 2002, the RTC voided the warrant for lack of probable cause and the non-commission of the crime of unfair
competition, even as it implied that other laws may have been violated by the respondents. The RTC, though, found no
grave abuse of discretion on the part of the issuing MTC judge. 8Thus,
Accordingly, as prayed for, Search Warrant No. 2001-02 issued by the Honorable Judge Julian C. Ocampo III on
July 2, 2001 is ANNULLED and SET ASIDE. The Orders issued by the Pairing Judge of Br. 1, MTCC of Naga City
dated September 19, 2001 and November 14, 2001 are also declared VOID and SET ASIDE. The City Prosecutor
of Naga City and SPO1 Ernesto Paredes are directed to return to the Petitioner the properties seized by virtue of
Search Warrant No. 2001-02. No costs.
SO ORDERED.9
In a motion for reconsideration, which the RTC denied on July 12, 2002, the petitioner stressed that the decision of the
RTC was contradictory because it absolved Judge Ocampo of grave abuse of discretion in issuing the search warrant, but
at the same time nullified the issued warrant. The MTC should have dismissed the petition when it found out that Judge
Ocampo did not commit any grave abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us through this petition for review on certiorari under Rule 45 of the
Rules of Court to reverse the decision of the RTC. Essentially, the petition raises questions against the RTC's nullification
of the warrant when it found no grave abuse of discretion committed by the issuing judge.

THE PETITION and

THE PARTIES' POSITIONS
In its petition, the petitioner insists the RTC should have dismissed the respondents' petition for certiorari because it found
no grave abuse of discretion by the MTC in issuing the search warrant. The petitioner further argues that the IP Code was
enacted into law to remedy various forms of unfair competition accompanying globalization as well as to replace the inutile
provision of unfair competition under Article 189 of the Revised Penal Code. Section 168.3(c) of the IP Code does not limit
the scope of protection on the particular acts enumerated as it expands the meaning of unfair competition to include "other
acts contrary to good faith of a nature calculated to discredit the goods, business or services of another." The inherent
element of unfair competition is fraud or deceit, and that hoarding of large quantities of a competitor's empty bottles is
necessarily characterized by bad faith. It claims that its Bicol bottling operation was prejudiced by the respondents'
hoarding and destruction of its empty bottles.
The petitioner also argues that the quashal of the search warrant was improper because it complied with all the essential
requisites of a valid warrant. The empty bottles were concealed in Pepsi shells to prevent discovery while they were
systematically being destroyed to hamper the petitioner's bottling operation and to undermine the capability of its bottling
operations in Bicol.
The respondents counter-argue that although Judge Ocampo conducted his own examination, he gravely erred and
abused his discretion when he ignored the rule on the need of sufficient evidence to establish probable cause; satisfactory
and convincing evidence is essential to hold them guilty of unfair competition; the hoarding of empty Coke bottles did not
cause actual or probable deception and confusion on the part of the general public; the alleged criminal acts do not show
conduct aimed at deceiving the public; there was no attempt to use the empty bottles or pass them off as the respondents'
goods.
The respondents also argue that the IP Code does not criminalize bottle hoarding, as the acts penalized must always
involve fraud and deceit. The hoarding does not make them liable for unfair competition as there was no deception or
fraud on the end-users.
THE ISSUE
Based on the parties' positions, the basic issue submitted to us for resolution is whether the Naga MTC was correct in
issuing Search Warrant No. 2001-01 for the seizure of the empty Coke bottles from Pepsi's yard for probable violation of
Section 168.3 (c) of the IP Code. This basic issue involves two sub-issues, namely, the substantive issue of whether the
application for search warrant effectively charged an offense, i.e., a violation of Section 168.3 (c) of the IP Code; and the
procedural issue of whether the MTC observed the procedures required by the Rules of Court in the issuance of search
warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the RTC decision, our agreement is more in the result than in the reasons
that supported it. The decision is correct in nullifying the search warrant because it was issued on an invalid substantive
basis - the acts imputed on the respondents do not violate Section 168.3 (c) of the IP Code. For this reason, we deny the
present petition.
The issuance of a search warrant10 against a personal property11 is governed by Rule 126 of the Revised Rules of Court
whose relevant sections state:
Section 4. Requisites for issuing search warrant. - A search warrant shall not issue except uponprobable cause
in connection with one specific offense to be determined personally by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the Philippines.
Section 5. Examination of complainant; record. - The judge must, before issuing the warrant,personally examine
in the form of searching questions and answers, in writing and under oath, the complainant and the
witnesses he may produce on facts personally known to them and attach to the record their sworn statements
together with the affidavits submitted.
Section 6. Issuance and form of search warrant. - If the judge is satisfied of the existence of facts upon which the
application is based or that there is probable cause to believe that they exist, he shall issue the warrant, which
must be substantially in the form prescribed by these Rules. [Emphasis supplied]

To paraphrase this rule, a search warrant may be issued only if there is probable cause in connection with a specific
offense alleged in an application based on the personal knowledge of the applicant and his or her witnesses. This is the
substantive requirement in the issuance of a search warrant. Procedurally, the determination of probable cause is a
personal task of the judge before whom the application for search warrant is filed, as he has to examine under oath or
affirmation the applicant and his or her witnesses in the form of "searching questions and answers" in writing and under
oath. The warrant, if issued, must particularly describe the place to be searched and the things to be seized.
We paraphrase these requirements to stress that they have substantive and procedural aspects. Apparently, the RTC
recognized this dual nature of the requirements and, hence, treated them separately; it approved of the way the MTC
handled the procedural aspects of the issuance of the search warrant but found its action on the substantive aspect
wanting. It therefore resolved to nullify the warrant, without however expressly declaring that the MTC gravely abused its
discretion when it issued the warrant applied for. The RTC's error, however, is in the form rather than the substance of the
decision as the nullification of the issued warrant for the reason the RTC gave was equivalent to the declaration that grave
abuse of discretion was committed. In fact, we so rule as the discussions below will show.
Jurisprudence teaches us that probable cause, as a condition for the issuance of a search warrant, is such reasons
supported by facts and circumstances as will warrant a cautious man in the belief that his action and the means taken in
prosecuting it are legally just and proper. Probable cause requires facts and circumstances that would lead a reasonably
prudent man to believe that an offense has been committed and the objects sought in connection with that offense are in
the place to be searched.12Implicit in this statement is the recognition that an underlying offense must, in the first place,
exist. In other words, the acts alleged, taken together, must constitute an offense and that these acts are imputable to an
offender in relation with whom a search warrant is applied for.
In the context of the present case, the question is whether the act charged - alleged to be hoarding of empty Coke bottles
- constitutes an offense under Section 168.3 (c) of the IP Code. Section 168 in its entirety states:
SECTION 168. Unfair Competition, Rights, Regulation and Remedies. 168.1. A person who has identified in the mind of the public the goods he manufactures or deals in, his business
or services from those of others, whether or not a registered mark is employed, has a property right in the goodwill
of the said goods, business or services so identified, which will be protected in the same manner as other property
rights.
168.2. Any person who shall employ deception or any other means contrary to good faith by which he shall pass
off the goods manufactured by him or in which he deals, or his business, or services for those of the one having
established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other feature of their appearance, which
would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or
dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the
false belief that such person is offering the services of another who has identified such services in the
mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall commit any other
act contrary to good faith of a nature calculated to discredit the goods, business or services of another.
168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis. (Sec. 29, R.A. No.
166a)
The petitioner theorizes that the above section does not limit the scope of protection on the particular acts enumerated as
it expands the meaning of unfair competition to include "other acts contrary to good faith of a nature calculated to discredit
the goods, business or services of another." Allegedly, the respondents' hoarding of Coca Cola empty bottles is one such
act.

We do not agree with the petitioner's expansive interpretation of Section 168.3 (c).
"Unfair competition," previously defined in Philippine jurisprudence in relation with R.A. No. 166 and Articles 188 and 189
of the Revised Penal Code, is now covered by Section 168 of the IP Code as this Code has expressly repealed R.A. No.
165 and R.A. No. 166, and Articles 188 and 189 of the Revised Penal Code.
Articles 168.1 and 168.2, as quoted above, provide the concept and general rule on the definition of unfair competition.
The law does not thereby cover every unfair act committed in the course of business; it covers only acts characterized by
"deception or any other means contrary to good faith" in the passing off of goods and services as those of another who
has established goodwill in relation with these goods or services, or any other act calculated to produce the same result.
What unfair competition is, is further particularized under Section 168.3 when it provides specifics of what unfair
competition is "without in any way limiting the scope of protection against unfair competition." Part of these particulars is
provided under Section 168.3(c) which provides the general "catch-all" phrase that the petitioner cites. Under this phrase,
a person shall be guilty of unfair competition "who shall commit any other act contrary to good faith of a nature calculated
to discredit the goods, business or services of another."
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon
the public the goods or business of one person as the goods or business of another with the end and probable effect of
deceiving the public. It formulated the "true test" of unfair competition: whether the acts of defendant are such as are
calculated to deceive the ordinary buyer making his purchases under the ordinary conditions which prevail in the particular
trade to which the controversy relates.13 One of the essential requisites in an action to restrain unfair competition is proof
of fraud; the intent to deceive must be shown before the right to recover can exist. 14 The advent of the IP Code has not
significantly changed these rulings as they are fully in accord with what Section 168 of the Code in its entirety
provides. Deception, passing off and fraud upon the public are still the key elements that must be present for unfair
competition to exist.
The act alleged to violate the petitioner's rights under Section 168.3 (c) is hoarding which we gather to be the collection of
the petitioner's empty bottles so that they can be withdrawn from circulation and thus impede the circulation of the
petitioner's bottled products. This, according to the petitioner, is an act contrary to good faith - a conclusion that, if true, is
indeed an unfair act on the part of the respondents. The critical question, however, is not the intrinsic unfairness of the act
of hoarding; what is critical for purposes of Section 168.3 (c) is to determine if the hoarding, as charged, "is of a nature
calculated to discredit the goods, business or services" of the petitioner.
We hold that it is not. Hoarding as defined by the petitioner is not even an act within the contemplation of the IP Code.
The petitioner's cited basis is a provision of the IP Code, a set of rules that refer to a very specific subject - intellectual
property. Aside from the IP Code's actual substantive contents (which relate specifically to patents, licensing, trademarks,
trade names, service marks, copyrights, and the protection and infringement of the intellectual properties that these
protective measures embody), the coverage and intent of the Code is expressly reflected in its "Declaration of State
Policy" which states:
Section 2. Declaration of State Policy. - The State recognizes that an effective intellectual and industrial property
system is vital to the development of domestic and creative activity, facilitates transfer of technology, attracts
foreign investments, and ensures market access for our products. It shall protect and secure the exclusive
rights of scientists, inventors, artists and other gifted citizensto their intellectual property and creations, particularly
when beneficial to the people, for such periods as provided in this Act.
The use of intellectual property bears a social function. To this end, the State shall promote the diffusion of
knowledge and information for the promotion of national development and progress and the common good.
It is also the policy of the State to streamline administrative procedures of registering patents, trademarks and
copyright, to liberalize the registration on the transfer of technology, and to enhance the enforcement of
intellectual property rights in the Philippines. (n)
"Intellectual property rights" have furthermore been defined under Section 4 of the Code to consist of: a) Copyright and
Related Rights; b) Trademarks and Service Marks; c) Geographic Indications; d) IndustrialDesigns; e) Patents; f) LayoutDesigns (Topographies) of Integrated Circuits; and g)Protection of Undisclosed Information.
Given the IP Code's specific focus, a first test that should be made when a question arises on whether a matter is covered
by the Code is to ask if it refers to an intellectual property as defined in the Code. If it does not, then coverage by the
Code may be negated.

A second test, if a disputed matter does not expressly refer to an intellectual property right as defined above, is whether it
falls under the general "unfair competition" concept and definition under Sections 168.1 and 168.2 of the Code. The
question then is whether there is "deception" or any other similar act in "passing off" of goods or services to be those of
another who enjoys established goodwill.
Separately from these tests is the application of the principles of statutory construction giving particular attention, not so
much to the focus of the IP Code generally, but to the terms of Section 168 in particular. Under the principle of "noscitur a
sociis," when a particular word or phrase is ambiguous in itself or is equally susceptible of various meanings, its correct
construction may be made clear and specific by considering the company of words in which it is found or with which it is
associated.15
As basis for this interpretative analysis, we note that Section 168.1 speaks of a person who has earned goodwill with
respect to his goods and services and who is entitled to protection under the Code, with or without a registered
mark. Section 168.2, as previously discussed, refers to the general definition of unfair competition. Section 168.3, on the
other hand, refers to the specific instances of unfair competition, with Section 168.1 referring to the sale of goods given
the appearance of the goods of another; Section 168.2, to the inducement of belief that his or her goods or services are
that of another who has earned goodwill; while the disputed Section 168.3 being a "catch all" clause whose coverage the
parties now dispute.
Under all the above approaches, we conclude that the "hoarding" - as defined and charged by the petitioner - does not fall
within the coverage of the IP Code and of Section 168 in particular. It does not relate to any patent, trademark, trade name
or service mark that the respondents have invaded, intruded into or used without proper authority from the petitioner. Nor
are the respondents alleged to be fraudulently "passing off" their products or services as those of the petitioner. The
respondents are not also alleged to be undertaking any representation or misrepresentation that would confuse or tend to
confuse the goods of the petitioner with those of the respondents, or vice versa. What in fact the petitioner alleges is an
act foreign to the Code, to the concepts it embodies and to the acts it regulates; as alleged, hoarding inflicts unfairness by
seeking to limit the opposition's sales by depriving it of the bottles it can use for these sales.
In this light, hoarding for purposes of destruction is closer to what another law - R.A. No. 623 - covers, to wit:
SECTION 1. Persons engaged or licensed to engage in the manufacture, bottling or selling of soda water, mineral
or aerated waters, cider, milk, cream, or other lawful beverages in bottles, boxes, casks, kegs, or barrels, and
other similar containers, with their names or the names of their principals or products, or other marks of ownership
stamped or marked thereon, may register with the Philippine Patent Office a description of the names or are used
by them, under the same conditions, rules, and regulations, made applicable by law or regulation to the issuance
of trademarks.
SECTION 2. It shall be unlawful for any person, without the written consent of the manufacturer, bottler or seller
who has successfully registered the marks of ownership in accordance with the provisions of the next preceding
section, to fill such bottles, boxes, kegs, barrels, or other similar containers so marked or stamped, for the
purpose of sale, or to sell, dispose of, buy, or traffic in, or wantonly destroy the same, whether filled or
not, or to use the same for drinking vessels or glasses or for any other purpose than that registered by
the manufacturer, bottler or seller. Any violation of this section shall be punished by a fine or not more than one
hundred pesos or imprisonment of not more than thirty days or both.
As its coverage is defined under Section 1, the Act appears to be a measure that may overlap or be affected by the
provisions of Part II of the IP Code on "The Law on Trademarks, Service Marks and Trade Names." What is certain is that
the IP Code has not expressly repealed this Act. The Act appears, too, to have specific reference to a special type of
registrants - the manufacturers, bottlers or sellers of soda water, mineral or aerated waters, cider, milk, cream, or other
lawful beverages in bottles, boxes, casks, kegs, or barrels, and other similar containers - who are given special protection
with respect to the containers they use. In this sense, it is in fact a law of specific coverage and application, compared
with the general terms and application of the IP Code. Thus, under its Section 2, it speaks specifically of unlawful use of
containers and even of the unlawfulness of their wanton destruction - a matter that escapes the IP Code's generalities
unless linked with the concepts of "deception" and "passing off" as discussed above.
Unfortunately, the Act is not the law in issue in the present case and one that the parties did not consider at all in the
search warrant application. The petitioner in fact could not have cited it in its search warrant application since the "one
specific offense" that the law allows and which the petitioner used was Section 168.3 (c). If it serves any purpose at all in
our discussions, it is to show that the underlying factual situation of the present case is in fact covered by another law, not
by the IP Code that the petitioner cites. Viewed in this light, the lack of probable cause to support the disputed search
warrant at once becomes apparent.
Where, as in this case, the imputed acts do not violate the cited offense, the ruling of this Court penned by Mr. Justice
Bellosillo is particularly instructive:

In the issuance of search warrants, the Rules of Court requires a finding of probable cause in connection with one
specific offense to be determined personally by the judge after examination of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the things to be seized. Hence, since
there is no crime to speak of, the search warrant does not even begin to fulfill these stringent
requirements and is therefore defective on its face. The nullity of the warrant renders moot and academic the
other issues raised in petitioners' Motion to Quash and Motion for Reconsideration. Since the assailed search
warrant is null and void, all property seized by virtue thereof should be returned to petitioners in accordance with
established jurisprudence.16
Based on the foregoing, we conclude that the RTC correctly ruled that the petitioner's search warrant should properly be
quashed for the petitioner's failure to show that the acts imputed to the respondents do not violate the cited offense. There
could not have been any probable cause to support the issuance of a search warrant because no crime in the first place
was effectively charged. This conclusion renders unnecessary any further discussion on whether the search warrant
application properly alleged that the imputed act of holding Coke empties was in fact a "hoarding" in bad faith aimed to
prejudice the petitioner's operations, or whether the MTC duly complied with the procedural requirements for the issuance
of a search warrant under Rule 126 of the Rules of Court.
WHEREFORE, we hereby DENY the petition for lack of merit. Accordingly, we confirm that Search Warrant No. 2001-01,
issued by the Municipal Trial Court, Branch 1, Naga City, is NULL and VOID. Costs against the petitioner.
SO ORDERED.

G.R. No. 169504 : March 3, 2010

COFFEE PARTNERS, INC., Petitioner, v. SAN FRANCISCO COFFEE & ROASTERY, INC., Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1ca of the 15 June 2005 Decision2ca and the 1 September 2005
Resolution3ca of the Court of Appeals in CA-G.R. SP No. 80396. In its 15 June 2005 Decision, the Court of
Appeals set aside the 22 October 2003 Decision4ca of the Office of the Director General-Intellectual
Property Office and reinstated the 14 August 2002 Decision5ca of the Bureau of Legal Affairs-Intellectual
Property Office. In its 1 September 2005 Resolution, the Court of Appeals denied petitioners motion for
reconsideration and respondents motion for partial reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing and
maintaining coffee shops in the country. It registered with the Securities and Exchange Commission (SEC)
in January 2001. It has a franchise agreement6ca with Coffee Partners Ltd. (CPL), a business entity
organized and existing under the laws of British Virgin Islands, for a non-exclusive right to operate coffee
shops in the Philippines using trademarks designed by CPL such as "SAN FRANCISCO COFFEE.cra|aw"
Respondent is a local corporation engaged in the wholesale and retail sale of coffee. It registered with the
SEC in May 1995. It registered the business name "SAN FRANCISCO COFFEE & ROASTERY, INC." with the
Department of Trade and Industry (DTI) in June 1995. Respondent had since built a customer base that
included Figaro Company, Tagaytay Highlands, Fat Willys, and other coffee companies.chanroblesvirtua|
awlibary

In 1998, respondent formed a joint venture company with Boyd Coffee USA under the company name
Boyd Coffee Company Philippines, Inc. (BCCPI). BCCPI engaged in the processing, roasting, and wholesale
selling of coffee. Respondent later embarked on a project study of setting up coffee carts in malls and
other commercial establishments in Metro Manila.chanroblesvirtua|awlibary
In June 2001, respondent discovered that petitioner was about to open a coffee shop under the name
"SAN FRANCISCO COFFEE" in Libis, Quezon City. According to respondent, petitioners shop caused
confusion in the minds of the public as it bore a similar name and it also engaged in the business of selling
coffee. Respondent sent a letter to petitioner demanding that the latter stop using the name "SAN
FRANCISCO COFFEE." Respondent also filed a complaint with the Bureau of Legal Affairs-Intellectual
Property Office (BLA-IPO) for infringement and/or unfair competition with claims for
damages.chanroblesvirtua|awlibary
In its answer, petitioner denied the allegations in the complaint. Petitioner alleged it filed with the
Intellectual Property Office (IPO) applications for registration of the mark "SAN FRANCISCO COFFEE &
DEVICE" for class 42 in 1999 and for class 35 in 2000. Petitioner maintained its mark could not be
confused with respondents trade name because of the notable distinctions in their appearances. Petitioner
argued respondent stopped operating under the trade name "SAN FRANCISCO COFFEE" when it formed a
joint venture with Boyd Coffee USA. Petitioner contended respondent did not cite any specific acts that
would lead one to believe petitioner had, through fraudulent means, passed off its mark as that of
respondent, or that it had diverted business away from respondent.chanroblesvirtua|awlibary
Mr. David Puyat, president of petitioner corporation, testified that the coffee shop in Libis, Quezon City
opened sometime in June 2001 and that another coffee shop would be opened in Glorietta Mall, Makati
City. He stated that the coffee shop was set up pursuant to a franchise agreement executed in January
2001 with CPL, a British Virgin Island Company owned by Robert Boxwell. Mr. Puyat said he became
involved in the business when one Arthur Gindang invited him to invest in a coffee shop and introduced
him to Mr. Boxwell. For his part, Mr. Boxwell attested that the coffee shop "SAN FRANCISCO COFFEE" has
branches in Malaysia and Singapore. He added that he formed CPL in 1997 along with two other
colleagues, Shirley Miller John and Leah Warren, who were former managers of Starbucks Coffee Shop in
the United States. He said they decided to invest in a similar venture and adopted the name "SAN
FRANCISCO COFFEE" from the famous city in California where he and his former colleagues once lived and
where special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property Office
In its 14 August 2002 Decision, the BLA-IPO held that petitioners trademark infringed on respondents
trade name. It ruled that the right to the exclusive use of a trade name with freedom from infringement
by similarity is determined from priority of adoption. Since respondent registered its business name with
the DTI in 1995 and petitioner registered its trademark with the IPO in 2001 in the Philippines and in 1997
in other countries, then respondent must be protected from infringement of its trade
name.chanroblesvirtua|awlibary
The BLA-IPO also held that respondent did not abandon the use of its trade name as substantial evidence
indicated respondent continuously used its trade name in connection with the purpose for which it was
organized. It found that although respondent was no longer involved in blending, roasting, and distribution
of coffee because of the creation of BCCPI, it continued making plans and doing research on the retailing
of coffee and the setting up of coffee carts. The BLA-IPO ruled that for abandonment to exist, the disuse
must be permanent, intentional, and voluntary.chanroblesvirtua|awlibary
The BLA-IPO held that petitioners use of the trademark "SAN FRANCISCO COFFEE" will likely cause
confusion because of the exact similarity in sound, spelling, pronunciation, and commercial impression of
the words "SAN FRANCISCO" which is the dominant portion of respondents trade name and petitioners
trademark. It held that no significant difference resulted even with a diamond-shaped figure with a cup in
the center in petitioner's trademark because greater weight is given to words the medium consumers use
in ordering coffee products.chanroblesvirtua|awlibary
On the issue of unfair competition, the BLA-IPO absolved petitioner from liability. It found that petitioner
adopted the trademark "SAN FRANCISCO COFFEE" because of the authority granted to it by its franchisor.
The BLA-IPO held there was no evidence of intent to defraud on the part of petitioner.chanroblesvirtua|
awlibary

The BLA-IPO also dismissed respondents claim of actual damages because its claims of profit loss were
based on mere assumptions as respondent had not even started the operation of its coffee carts. The BLAIPO likewise dismissed respondents claim of moral damages, but granted its claim of attorneys
fees.chanroblesvirtua|awlibary
Both parties moved for partial reconsideration. Petitioner protested the finding of infringement, while
respondent questioned the denial of actual damages. The BLA-IPO denied the parties partial motion for
reconsideration. The parties appealed to the Office of the Director General-Intellectual Property Office
(ODG-IPO).
The Ruling of the Office of the Director GeneralIntellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that petitioners use of the
trademark "SAN FRANCISCO COFFEE" did not infringe on respondent's trade name. The ODG-IPO found
that respondent had stopped using its trade name after it entered into a joint venture with Boyd Coffee
USA in 1998 while petitioner continuously used the trademark since June 2001 when it opened its first
coffee shop in Libis, Quezon City. It ruled that between a subsequent user of a trade name in good faith
and a prior user who had stopped using such trade name, it would be inequitable to rule in favor of the
latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 decision of the ODG-IPO
in so far as it ruled that there was no infringement. It reinstated the 14 August 2002 decision of the BLAIPO finding infringement. The appellate court denied respondents claim for actual damages and retained
the award of attorneys fees. In its 1 September 2005 Resolution, the Court of Appeals denied petitioners
motion for reconsideration and respondents motion for partial reconsideration.
The Issue
The sole issue is whether petitioners use of the trademark "SAN FRANCISCO COFFEE" constitutes
infringement of respondents trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the trade
name is not registered with the Intellectual Property Office (IPO).
The Courts Ruling
The petition has no merit.chanroblesvirtua|awlibary
Petitioner contends that when a trade name is not registered, a suit for infringement is not available.
Petitioner alleges respondent has abandoned its trade name. Petitioner points out that respondents
registration of its business name with the DTI expired on 16 June 2000 and it was only in 2001 when
petitioner opened a coffee shop in Libis, Quezon City that respondent made a belated effort to seek the
renewal of its business name registration. Petitioner stresses respondents failure to continue the use of its
trade name to designate its goods negates any allegation of infringement. Petitioner claims no confusion is
likely to occur between its trademark and respondents trade name because of a wide divergence in the
channels of trade, petitioner serving ready-made coffee while respondent is in wholesale blending,
roasting, and distribution of coffee. Lastly, petitioner avers the proper noun "San Francisco" and the
generic word "coffee" are not capable of exclusive appropriation.chanroblesvirtua|awlibary
Respondent maintains the law protects trade names from infringement even if they are not registered with
the IPO. Respondent claims Republic Act No. 8293 (RA 8293)7ca dispensed with registration of a trade
name with the IPO as a requirement for the filing of an action for infringement. All that is required is that
the trade name is previously used in trade or commerce in the Philippines. Respondent insists it never
abandoned the use of its trade name as evidenced by its letter to petitioner demanding immediate
discontinuation of the use of its trademark and by the filing of the infringement case. Respondent alleges
petitioners trademark is confusingly similar to respondents trade name. Respondent stresses ordinarily
prudent consumers are likely to be misled about the source, affiliation, or sponsorship of petitioners
coffee.chanroblesvirtua|awlibary

As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO found that respondent
continued to make plans and do research on the retailing of coffee and the establishment of coffee carts,
which negates abandonment. This finding was upheld by the Court of Appeals, which further found that
while respondent stopped using its trade name in its business of selling coffee, it continued to import and
sell coffee machines, one of the services for which the use of the business name has been registered. The
binding effect of the factual findings of the Court of Appeals on this Court applies with greater force when
both the quasi-judicial body or tribunal like the BLA-IPO and the Court of Appeals are in complete
agreement on their factual findings. It is also settled that absent any circumstance requiring the
overturning of the factual conclusions made by the quasi-judicial body or tribunal, particularly if affirmed
by the Court of Appeals, the Court necessarily upholds such findings of fact.8ca
Coming now to the main issue, in Prosource International, Inc. v. Horphag Research Management
SA,9ca this Court laid down what constitutes infringement of an unregistered trade name, thus:
cralaw(1) The trademark being infringed is registered in the Intellectual Property Office; however, in
infringement of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the
infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising
of any goods, business or services; or the infringing mark or trade name is applied to labels, signs, prints,
packages, wrappers, receptacles, or advertisements intended to be used upon or in connection with such
goods, business, or services;
(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or
to deceive purchasers or others as to the goods or services themselves or as to the source or origin of
such goods or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee thereof.10ca(Emphasis
supplied)
cralawClearly, a trade name need not be registered with the IPO before an infringement suit may be filed
by its owner against the owner of an infringing trademark. All that is required is that the trade name is
previously used in trade or commerce in the Philippines.11ca
Section 22 of Republic Act No. 166,12ca as amended, required registration of a trade name as a condition
for the institution of an infringement suit, to wit:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant,
any reproduction, counterfeit, copy, or colorable imitation of any registered mark or trade name in
connection with the sale, offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others
as to the source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy, or colorably imitate any such mark or trade name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles, or
advertisements intended to be used upon or in connection with such goods, business, or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein provided. (Emphasis supplied)
However, RA 8293, which took effect on 1 January 1998, has dispensed with the registration requirement.
Section 165.2 of RA 8293 categorically states that trade names shall be protected, even prior to or without
registration with the IPO, against any unlawful act including any subsequent use of the trade name by a
third party, whether as a trade name or a trademark likely to mislead the public. Thus:
SEC. 165.2 (a) Notwithstanding any laws or regulations providing for any obligation to register
trade names, such names shall be protected, even prior to or without registration, against any
unlawful act committed by third parties.chanroblesvirtua|awlibary
(b) In particular, any subsequent use of a trade name by a third party, whether as a trade name or a mark
or collective mark, or any such use of a similar trade name or mark, likely to mislead the public, shall be
deemed unlawful. (Emphasis supplied)

It is the likelihood of confusion that is the gravamen of infringement. But there is no absolute standard for
likelihood of confusion. Only the particular, and sometimes peculiar, circumstances of each case can
determine its existence. Thus, in infringement cases, precedents must be evaluated in the light of each
particular case.13ca
In determining similarity and likelihood of confusion, our jurisprudence has developed two tests: the
dominancy test and the holistic test. The dominancy test focuses on the similarity of the prevalent
features of the competing trademarks that might cause confusion and deception, thus constituting
infringement. If the competing trademark contains the main, essential, and dominant features of another,
and confusion or deception is likely to result, infringement occurs. Exact duplication or imitation is not
required. The question is whether the use of the marks involved is likely to cause confusion or mistake in
the mind of the public or to deceive consumers.14ca
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.15ca The discerning eye of the
observer must focus not only on the predominant words but also on the other features appearing on both
marks in order that the observer may draw his conclusion whether one is confusingly similar to the
other.16ca
Applying either the dominancy test or the holistic test, petitioners "SAN FRANCISCO COFFEE" trademark is
a clear infringement of respondents "SAN FRANCISCO COFFEE & ROASTERY, INC." trade name. The
descriptive words "SAN FRANCISCO COFFEE" are precisely the dominant features of respondents trade
name. Petitioner and respondent are engaged in the same business of selling coffee, whether wholesale or
retail. The likelihood of confusion is higher in cases where the business of one corporation is the same or
substantially the same as that of another corporation. In this case, the consuming public will likely be
confused as to the source of the coffee being sold at petitioners coffee shops. Petitioners argument that
"San Francisco" is just a proper name referring to the famous city in California and that "coffee" is simply
a generic term, is untenable. Respondent has acquired an exclusive right to the use of the trade name
"SAN FRANCISCO COFFEE & ROASTERY, INC." since the registration of the business name with the DTI in
1995. Thus, respondents use of its trade name from then on must be free from any infringement by
similarity. Of course, this does not mean that respondent has exclusive use of the geographic word "San
Francisco" or the generic word "coffee." Geographic or generic words are not, per se, subject to exclusive
appropriation. It is only the combination of the words "SAN FRANCISCO COFFEE," which is respondents
trade name in its coffee business, that is protected against infringement on matters related to the coffee
business to avoid confusing or deceiving the public.chanroblesvirtua|awlibary
In Philips Export B.V. v. Court of Appeals,17ca this Court held that a corporation has an exclusive right to
the use of its name. The right proceeds from the theory that it is a fraud on the corporation which has
acquired a right to that name and perhaps carried on its business thereunder, that another should attempt
to use the same name, or the same name with a slight variation in such a way as to induce persons to
deal with it in the belief that they are dealing with the corporation which has given a reputation to the
name.18ca
This Court is not just a court of law, but also of equity. We cannot allow petitioner to profit by the name
and reputation so far built by respondent without running afoul of the basic demands of fair play. Not only
the law but equity considerations hold petitioner liable for infringement of respondents trade
name.chanroblesvirtua|awlibary
The Court of Appeals was correct in setting aside the 22 October 2003 Decision of the Office of the
Director General-Intellectual Property Office and in reinstating the 14 August 2002 Decision of the Bureau
of Legal Affairs-Intellectual Property Office.chanroblesvirtua|awlibary
WHEREFORE, we DENY the petition for review. We AFFIRM the 15 June 2005 Decision and 1 September
2005 Resolution of the Court of Appeals in CA-G.R. SP No. 80396.chanroblesvirtua|awlibary
Costs against petitioner.
G.R. No. 185830

June 5, 2013

ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE PHILIPPINES), INC., Petitioner,

vs.
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L., B.V., Respondents.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 is the December 23, 2008 Decision2 of the Court of Appeals (CA) in CAG.R. SP No. 104672 which affirmed in toto the Intellectual Property Office (IPO) Director Generals April 21, 2008
Decision3 that declared respondent Renaud Cointreau & Cie (Cointreau) as the true and lawful owner of the mark "LE
CORDON BLEU & DEVICE" and thus, is entitled to register the same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the (now defunct) Bureau of
Patents, Trademarks, and Technology Transfer (BPTTT) of the Department of Trade and Industry a trademark application
for the mark "LE CORDON BLEU & DEVICE" for goods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the
International Classification of Goods and Services for the Purposes of Registrations of Marks ("Nice Classification")
(subject mark). The application was filed pursuant to Section 37 of Republic Act No. 166, as amended (R.A. No. 166), on
the basis of Home Registration No. 1,390,912, issued on November 25, 1986 in France. Bearing Serial No. 72264, such
application was published for opposition in the March-April 1993 issue of the BPTTT Gazette and released for circulation
on May 31, 1993.4
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition to the subject application, averring
that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE MANILLE," which it has been using since
1948 in cooking and other culinary activities, including in its restaurant business; and (b) it has earned immense and
invaluable goodwill such that Cointreaus use of the subject mark will actually create confusion, mistake, and deception to
the buying public as to the origin and sponsorship of the goods, and cause great and irreparable injury and damage to
Ecoles business reputation and goodwill as a senior user of the same. 5
On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the subject mark. It averred
that: (a) it has filed applications for the subject marks registration in various jurisdictions, including the Philippines; (b) Le
Cordon Bleu is a culinary school of worldwide acclaim which was established in Paris, France in 1895; (c) Le Cordon Bleu
was the first cooking school to have set the standard for the teaching of classical French cuisine and pastry making; and
(d) it has trained students from more than eighty (80) nationalities, including Ecoles directress, Ms. Lourdes L. Dayrit.
Thus, Cointreau concluded that Ecoles claim of being the exclusive owner of the subject mark is a fraudulent
misrepresentation.6
During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos. 60631 and 54352 for the
marks "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895 & DEVICE" for goods and services under
classes 21 and 41 of the Nice Classification, respectively.7
The Ruling of the Bureau of Legal Affairs
In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecoles opposition to the
subject mark, necessarily resulting in the rejection of Cointreaus application. 9 While noting the certificates of registration
obtained from other countries and other pertinent materials showing the use of the subject mark outside the Philippines,
the BLA did not find such evidence sufficient to establishCointreaus claim of prior use of the same in the Philippines. It
emphasized that the adoption and use of trademark must be in commerce in the Philippines and not abroad. It then
concluded that Cointreau has not established any proprietary right entitled to protection in the Philippine jurisdiction
because the law on trademarks rests upon the doctrine of nationality or territoriality.10
On the other hand, the BLA found that the subject mark, which was the predecessor of the mark "LE CORDON BLEU
MANILLE" has been known and used in the Philippines since 1948 and registered under the name "ECOLE DE CUISINE
MANILLE (THE CORDON BLEU OF THE PHILIPPINES), INC." on May 9, 1980. 11
Aggrieved, Cointreau filed an appeal with the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General reversed and set aside the BLAs decision, thus, granting
Cointreaus appeal and allowing the registration of the subject mark. 12 He held that while Section 2 of R.A. No. 166
requires actual use of the subject mark in commerce in the Philippines for at least two (2) months before the filing date of
the application, only the owner thereof has the right to register the same, explaining that the user of a mark in the
Philippines is not ipso facto its owner. Moreover, Section 2-A of the same law does not require actual use in the
Philippines to be able to acquire ownership of a mark.13

In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he considered Cointreaus
undisputed use of such mark since 1895 for its culinary school in Paris, France (in which petitioners own directress, Ms.
Lourdes L. Dayrit, had trained in 1977). Contrarily, he found that while Ecole may have prior use of the subject mark in the
Philippines since 1948, it failed to explain how it came up with such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject mark, rendering it beyond the mantle of protection of Section
4(d)14 of R.A. No. 166.15
Finding the IPO Director Generals reversal of the BLAs Decision unacceptable, Ecole filed a Petition for Review 16dated
June 7, 2008 with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO Director Generals Decision in toto. 17 It declared
Cointreau as the true and actual owner of the subject mark with a right to register the same in the Philippines under
Section 37 of R.A. No. 166, having registered such mark in its country of origin on November 25, 1986. 18
The CA likewise held that Cointreaus right to register the subject mark cannot be barred by Ecoles prior use thereof as
early as 1948 for its culinary school "LE CORDON BLEU MANILLE" in the Philippines because its appropriation of the
mark was done in bad faith. Further, Ecole had no certificate of registration that would put Cointreau on notice that the
former had appropriated or has been using the subject mark. In fact, its application for trademark registration for the same
which was just filed on February 24, 1992 is still pending with the IPO. 19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Courts resolution is whether the CA was correct in upholding the IPO Director Generals
ruling that Cointreau is the true and lawful owner of the subject mark and thus, entitled to have the same registered under
its name.
At this point, it should be noted that the instant case shall be resolved under the provisions of the old Trademark Law, R.A.
No. 166, which was the law in force at the time of Cointreaus application for registration of the subject mark.
The Courts Ruling
The petition is without merit.
In the petition, Ecole argues that it is the rightful owner of the subject mark, considering that it was the first entity that used
the same in the Philippines. Hence, it is the one entitled to its registration and not Cointreau.
Petitioners argument is untenable.
Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the owner thereof and must have actually
used the mark in commerce in the Philippines for two (2) months prior to the application for registration. Section 2-A 21 of
the same law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual
use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been
so appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Thus, as correctly mentioned by the CA, under R.A. No. 166, one may be an
owner of a mark due to its actual use but may not yet have the right to register such ownership here due to the owners
failure to use the same in the Philippines for two (2) months prior to registration. 22
Nevertheless, foreign marks which are not registered are still accorded protection against infringement and/or unfair
competition. At this point, it is worthy to emphasize that the Philippines and France, Cointreaus country of origin, are both
signatories to the Paris Convention for the Protection of Industrial Property (Paris Convention). 23Articles 6bis and 8 of the
Paris Convention state:
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to
refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation,
or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration
or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention
and used for identical or similar goods.1wphi1 These provisions shall also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith.

ARTICLE 8
A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or
not it forms part of a trademark. (Emphasis and underscoring supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to wit:
Section 37. Rights of foreign registrants. - Persons who are nationals of, domiciled in, or have a bona fide or effective
business or commercial establishment in any foreign country, which is a party to any international convention or treaty
relating to marks or trade-names, or the repression of unfair competition to which the Philippines may be a party, shall be
entitled to the benefits and subject to the provisions of this Act to the extent and under the conditions essential to give
effect to any such convention and treaties so long as the Philippines shall continue to be a party thereto, except as
provided in the following paragraphs of this section.
xxxx
Trade-names of persons described in the first paragraph of this section shall be protected without the obligation of filing or
registration whether or not they form parts of marks.
xxxx
In view of the foregoing obligations under the Paris Convention, the Philippines is obligated to assure nationals of the
signatory-countries that they are afforded an effective protection against violation of their intellectual property rights in the
Philippines in the same way that their own countries are obligated to accord similar protection to Philippine
nationals.24 "Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris Convention,
whether or not the trade name forms part of a trademark, is protected "without the obligation of filing or registration." 25
In the instant case, it is undisputed that Cointreau has been using the subject mark in France since 1895, prior to Ecoles
averred first use of the same in the Philippines in 1948, of which the latter was fully aware thereof. In fact, Ecoles present
directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco Dayrit), had trained in Cointreaus Le Cordon Bleu
culinary school in Paris, France. Cointreau was likewise the first registrant of the said mark under various classes, both
abroad and in the Philippines, having secured Home Registration No. 1,390,912 dated November 25, 1986 from its
country of origin, as well as several trademark registrations in the Philippines. 26
On the other hand, Ecole has no certificate of registration over the subject mark but only a pending application covering
services limited to Class 41 of the Nice Classification, referring to the operation of a culinary school. Its application was
filed only on February 24, 1992, or after Cointreau filed its trademark application for goods and services falling under
different classes in 1990. Under the foregoing circumstances, even if Ecole was the first to use the mark in the Philippines,
it cannot be said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the same was already being used by Cointreau, albeit
abroad, of which Ecoles directress was fully aware, being an alumna of the latters culinary school in Paris, France.
Hence, Ecole cannot claim any tinge of ownership whatsoever over the subject mark as Cointreau is the true and lawful
owner thereof. As such, the IPO Director General and the CA were correct in declaring Cointreau as the true and lawful
owner of the subject mark and as such, is entitled to have the same registered under its name.
In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the Intellectual Property Code of
the Philippines, as amended, has already dispensed with the requirement of prior actual use at the time of
registration.27 Thus, there is more reason to allow the registration of the subject mark under the name of Cointreau as its
true and lawful owner.
As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the goods (or services) to
which it is affixed; to secure to him, who has been instrumental in bringing into the market a superior article of
merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent
fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his
product."28 As such, courts will protect trade names or marks, although not registered or properly selected as trademarks,
on the broad ground of enforcing justice and protecting one in the fruits of his toil. 29
WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008 Decision of the Court of Appeals in CA-G.R.
SP No. 104672 is hereby AFFIRMED in toto.
SO ORDERED.
Manly Sportswear vs Dadotte Enterprises
Facts:

A search warrant was applied against respondent Dadotte Enterprises and/or Hermes Sports Center based on the information that it
was in possession of goods which the copyright belonged to petitioner Manly Sportswear Mfg., Inc. (MANLY). Respondent moved to
quash and annul the search warrant contending that it was invalid since the requisites for its issuance have not been complied with
and insisted that the sporting goods manufactured by and/or registered in the name of MANLY are ordinary and common hence, not
among the classes of work protected under Section 172 of RA 8293.
The trial court granted the motion to quash and declared the search warrant null and void based on its finding that the copyrighted
products of MANLY do not appear to be original creations and were being manufactured and distributed by different companies locally
and abroad under various brands, and therefore unqualified for protection under Section 172 of RA 8293. Moreover, MANLYs
certificates of registrations were issued only in 2002, whereas there were certificates of registrations for the same sports articles
which were issued earlier than MANLYs, thus further negating the claim that its copyrighted products were original creations.
Issue: What is the purpose of the certificates of registration and deposits?
Held:
Sec. 2 Effects of Registration and Deposit of Work. The registration and deposit of the work is purely for recording the date of
registration and deposit of the work and shall not be conclusive as to copyright ownership or the term of the copyrights or the rights
of the copyright owner, including neighboring rights.
At most, the certificates of registration and deposit issued by the National Library and the Supreme Court Library serve merely as a
notice of recording and registration of the work but do not confer any right or title upon the registered copyright owner or
automatically put his work under the protective mantle of the copyright law. It is not a conclusive proof of copyright ownership. As it
is, non-registration and deposit of the work within the prescribed period only makes the copyright owner liable to pay a fine.

ABS-CBN vs Philippine Multi-Media System Inc.

FACTS:
Philippine Multi-Media System Inc (PMSI) is a signal provider which has cable and satellite services. It is providing its satellite services
through Dream Broadcasting System. PMSI has its Free TV and Premium Channels. The Free TV includes ABS-CBN, GMA-7 and
other local networks. The premium channels include AXN, Jack TV, etc which are paid by subscribers before such channels can be
transmitted as feeds to a subscribers TV set which has been installed with a Dream satellite.
In May 2002, ABS-CBN sued PMSI for allegedly engaging in rebroadcasting and thereby infringing on ABS-CBNs copyrights; that the
transmission of Channels 2 and 23 to the provinces where these two channels are not usually shown, altered ABS-CBNs programming
for the said provinces. PMSI argued that it is not infringing upon ABS-CBNs copyrights because it is operating under the Must-Carry
Rule outlined in NTC (National Telecommunications Commission) Circular No. 4-08-88.
ISSUE:
Did PMSIs rebroadcasting of Channel 2 and 23 constitute infringement?
HELD:
No. The Must-Carry Rule under NTC Circular No. 4-08-88 falls under the limitations on copyright. The Filipino people must be given
wider access to more sources of news, information, education, sports event and entertainment programs other than those provided
for by mass media and afforded television programs to attain a well informed, well-versed and culturally refined citizenry and
enhance their socio-economic growth. The very intent and spirit of the NTC Circular will prevent a situation whereby station owners
and a few networks would have unfettered power to make time available only to the highest bidders, to communicate only their own
views on public issues, people, and to permit on the air only those with whom they agreed contrary to the state policy that the
(franchise) grantee like ABS-CBN, and other TV station owners and even the likes of PMSI, shall provide at all times sound and
balanced programming and assist in the functions of public information and education.
The Must-Carry Rule favors both broadcasting organizations and the public. It prevents cable television companies from excluding
broadcasting organization especially in those places not reached by signal. Also, the rule prevents cable television companies from
depriving viewers in far-flung areas the enjoyment of programs available to city viewers.

NBI-Microsoft Corporation vs Hwang

Facts:
The herein petitioner, Microsoft Corporation, is the owner of a copyright and a trademark to several computer software. Beltron
Computer Philippines, Inc., and Taiwan Machinery and Display Trade Center, Inc., or T.M.T.C, the defendants of this case, are both
Domestic Corporations. Beltron and Microsoft entered into a Licensing agreement wherein the former will reproduce and install no
more than 1 copy of Microsoft software and to distribute directly or indirectly the products. However, Microsoft terminated the
agreement for Beltrons non-payment of royalties. Afterwards, Microsoft learned that the respondents were illegally copying and
selling Microsoft software as evidenced by receipts that were issued bearing the name of T.M.T.C Inc and Beltron Computer.
Issue: Are Beltron and TMTC liable for copyright infringement?
Ruling: Yes. Section 5 of PD 49 enumerates the rights vested exclusively on the copyright owner. The gravamen of copyright
infringement is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized performance of any of
the acts covered by section 5. If any person who performs the acts enumerated in section 5 of PD 49 and does not obtain prior
consent from the copyright owner, renders himself civilly and criminally liable for copyright infringement.
section 5 of PD 49 DECREE ON THE PROTECTION OF INTELLECTUAL PROPERTY
Section 5. Copyright shall consist in the exclusive right;
(A) To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings, and pictorial illustrations of the
works;
(B) To make any translation or other version or extracts or arrangements or adaptations thereof; to dramatize it if it be a non-dramatic
work; to convert it into a non-dramatic work if it be a drama; to complete or execute if it be a model or design;
(C) To exhibit, perform, represent, produce, or reproduce, the work in any manner or by any method whatever for profit or otherwise;
it not reproduced in copies for sale, to sell any manuscript or any record whatsoever thereof;
(D) To make any other use or disposition of the work consistent with the laws of the land.