2st batch: Intellectual Property Law
1. E.Y Industrial, Inc. v. Shen Dar Electricity and Machinery Co., Ltd.
G.R. No. 184850 October 20, 2010
E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners,
vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February
21, 2008 Decision1and the October 6, 2008 Resolution2 rendered by the Court of Appeals
(CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y.
Industrial Sales, Inc. and Engracio Yap.
The assailed decision reversed the Decision dated May 25, 2007 3 issued by the Director
General of the Intellectual Property Office (IPO) in Inter Partes Case No. 14-2004-00084.
The IPO Director General upheld Certificate of Registration (COR) No. 4-1999-005393
issued by the IPO for the trademark "VESPA" in favor of petitioner E.Y. Industrial Sales, Inc.
(EYIS), but ordered the cancellation of COR No. 4-1997-121492, also for the trademark
"VESPA," issued in favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen
Dar). The Decision of the IPO Director General, in effect, affirmed the Decision dated May
29, 20064 issued by the Director of the Bureau of Legal Affairs (BLA) of the IPO.
The Facts
EYIS is a domestic corporation engaged in the production, distribution and sale of air
compressors and other industrial tools and equipment.5 Petitioner Engracio Yap is the
Chairman of the Board of Directors of EYIS.6
Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture
of air compressors.7
Both companies claimed to have the right to register the trademark "VESPA" for air
compressors.
From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts.
In the Sales Contract dated April 20, 2002, 8 for example, Shen Dar would supply EYIS in
one (1) year with 24 to 30 units of 40-ft. containers worth of air compressors identified in the
Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In
the corresponding Bill of Ladings, the items were described merely as air
compressors.9 There is no documentary evidence to show that such air compressors were
marked "VESPA."
On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with the
IPO for the mark "VESPA, Chinese Characters and Device" for use on air compressors and
welding machines.10
On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for the
mark "VESPA," for use on air compressors.11 On January 18, 2004, the IPO issued COR
No. 4-1999-005393 in favor of EYIS.12 Thereafter, on February 8, 2007, Shen Dar was also
issued COR No. 4-1997-121492.13
In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS COR
with the BLA.14 In the Petition, Shen Dar primarily argued that the issuance of the COR in
favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA)
8293, otherwise known as the Intellectual Property Code (IP Code), having first filed an
application for the mark. Shen Dar further alleged that EYIS was a mere distributor of air
compressors bearing the mark "VESPA" which it imported from Shen Dar. Shen Dar also
argued that it had prior and exclusive right to the use and registration of the mark "VESPA"
in the Philippines under the provisions of the Paris Convention. 15
In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the mark
"VESPA" being the sole assembler and fabricator of air compressors since the early 1990s.
They further alleged that the air compressors that Shen Dar allegedly supplied them bore
the mark "SD" for Shen Dar and not "VESPA." Moreover, EYIS argued that Shen Dar, not
being the owner of the mark, could not seek protection from the provisions of the Paris
Convention or the IP Code.16
Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS
and against Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby,
DENIED. Consequently, Certificate of Registration No. 4-1999-[005393] for the mark
"VESPA" granted in the name of E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby
upheld.
Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative,
Financial and Human Resource Development Services Bureau for issuance and appropriate
action in accordance with this DECISION and a copy thereof furnished to the Bureau of
Trademarks for information and update of its records.
SO ORDERED.17
Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In
the appeal, Shen Dar raised the following issues:
1. Whether the BLA Director erred in ruling that Shen Dar failed to present
evidence;
2. Whether the registration of EYIS application was proper considering that Shen
Dar was the first to file an application for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is the true owner of the
mark.18
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Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the COR
issued in favor of EYIS while cancelling the COR of Shen Dar, the dispositive portion of
which reads:
WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No.
4-1999-005393 for the mark VESPA for air compressor issued in favor of Appellee is hereby
upheld. Consequently, Certificate of Registration No. 4-1997-121492 for the mark VESPA,
Chinese Characters & Device for goods air compressor and spot welding machine issued in
favor of Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case be furnished and returned to
the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors
of the Bureau of Trademarks, the Administrative, Financial and Human Resources
Development Services Bureau, and the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information, guidance, and records
purposes.19
Shen Dar appealed the above decision of the IPO Director General to the CA where Shen
Dar raised the following issues:
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling Shen Dars COR No. 4-
1997-121492 without a petition for cancellation; and
6. Whether Shen Dar sustained damages.20
In the assailed decision, the CA reversed the IPO Director General and ruled in favor of
Shen Dar. The dispositive portion states:
WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed
decision of the Director General of the Intellectual Property Office dated May 25, 2007 is
hereby REVERSED and SET ASIDE. In lieu thereof, a new one is entered: a) ordering the
cancellation of Certificate of Registration No. 4-1999-005393 issued on January 19, 2004
for the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b) ordering the restoration of
the validity of Certificate of Registration No. 4-1997-121492 for the trademark VESPA in
favor of Shen Dar Electricity and Machinery Co., Ltd. No pronouncement as to costs.
SO ORDERED.21
In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer
its evidence before the BLA, such evidence was properly attached to the Petition for
Cancellation. As such, Shen Dars evidence may be properly considered. The CA also
enunciated that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293,
which prohibits the registration of a trademark in favor of a party when there is an earlier
filed application for the same mark. The CA further ruled that Shen Dar should be considered
to have prior use of the mark based on the statements made by the parties in their respective
Declarations of Actual Use. The CA added that EYIS is a mere importer of the air
compressors with the mark "VESPA" as may be gleaned from its receipts which indicated
that EYIS is an importer, wholesaler and retailer, and therefore, cannot be considered an
owner of the mark.22
EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the
assailed resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:
A. Whether the Director General of the IPO correctly upheld the rights of Petitioners
over the trademark VESPA.
B. Whether the Director General of the IPO can, under the circumstances, order
the cancellation of Respondents certificate of registration for VESPA, which has
been fraudulently obtained and erroneously issued.
C. Whether the Honorable Court of Appeals was justified in reversing the findings
of fact of the IPO, which affirm the rights of Petitioner EYIS over the trademark
VESPA and when such findings are supported by the evidence on record.
D. Whether this Honorable Court may review questions of fact considering that the
findings of the Court of Appeals and the IPO are in conflict and the conclusions of
the appellee court are contradicted by the evidence on record. 23
The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is. As a general rule,
this Court is not a trier of facts. However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission, 24 the Court ruled that:
We are very much aware that the rule to the effect that this Court is not a trier of facts admits
of exceptions. As we have stated in Insular Life Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the Court is
not a trier of facts and does not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case considering that the findings
of facts of the CA are conclusive and binding on the Court. However, the Court had
recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely
on speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of facts are
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conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts
set forth in the petition as well as in the petitioners main and reply briefs are not disputed by
the respondent; (10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion. (Emphasis supplied.)
In the instant case, the records will show that the IPO and the CA made differing conclusions
on the issue of ownership based on the evidence presented by the parties. Hence, this issue
may be the subject of this Courts review.
Second Issue:
Whether evidence presented before the BLA must be formally offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in
support of its allegations as required under Office Order No. 79, Series of 2005,
Amendments to the Regulations on Inter Partes Proceedings, having failed to formally offer
its evidence during the proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to adduce any evidence in support of its allegations
in the Petition for Cancellation. Petitioner did not file nor submit its marked evidence as
required in this Bureaus Order No. 2006-157 dated 25 January 2006 in compliance with
Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes
Proceedings.25 x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series
of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences in accordance with
Sections 7 and 8 of the rules on summary proceedings shall be construed as a waiver on
the part of the parties. In such a case, the original petition, opposition, answer and the
supporting documents therein shall constitute the entire evidence for the parties subject to
applicable rules.
The CA concluded that Shen Dar needed not formally offer its evidence but merely needed
to attach its evidence to its position paper with the proper markings, 26 which it did in this
case.
The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall establish
the procedure for the application for the registration of a trademark, as well as the opposition
to it:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the
following functions:
xxxx
10.3. The Director General may by Regulations establish the procedure to govern the
implementation of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005 amending the
regulations on Inter Partes Proceedings, Sec. 12.1 of which provides:
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses,
and the documents submitted, shall constitute the entire evidence for the petitioner or
opposer. The verified answer, rejoinder if any, and the duly marked affidavits and documents
submitted shall constitute the evidence for the respondent. Affidavits, documents and other
evidence not submitted and duly marked in accordance with the preceding sections shall not
be admitted as evidence.
The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which,
in turn, provide:
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the affidavits of witnesses and originals of the
documents and other requirements, shall be filed with the Bureau, provided, that in case of
public documents, certified copies shall be allowed in lieu of the originals. The Bureau shall
check if the petition or opposition is in due form as provided in the Regulations particularly
Rule 3, Section 3; Rule 4, Section 2; Rule 5, Section 3; Rule 6, Section 9; Rule 7, Sections
3 and 5; Rule 8, Sections 3 and 4. For petition for cancellation of layout design (topography)
of integrated circuits, Rule 3, Section 3 applies as to the form and requirements. The
affidavits, documents and other evidence shall be marked consecutively as "Exhibits"
beginning with the letter "A".
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall
issue an order for the respondent to file an answer together with the affidavits of witnesses
and originals of documents, and at the same time shall notify all parties required to be notified
in the IP Code and these Regulations, provided, that in case of public documents, certified
true copies may be submitted in lieu of the originals. The affidavits and documents shall be
marked consecutively as "Exhibits" beginning with the number "1".
Section 9. Petition or Opposition and Answer must be verified Subject to Rules 7 and 8 of
these regulations, the petition or opposition and the answer must be verified. Otherwise, the
same shall not be considered as having been filed.
In other words, as long as the petition is verified and the pieces of evidence consisting of the
affidavits of the witnesses and the original of other documentary evidence are attached to
the petition and properly marked in accordance with Secs. 7.1 and 8.1 abovementioned,
2st batch: Intellectual Property Law
these shall be considered as the evidence of the petitioner. There is no requirement under
the abovementioned rules that the evidence of the parties must be formally offered to the
BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the Regulations on
Inter Partes Proceedings, the BLA is not bound by technical rules of procedure. The
evidence attached to the petition may, therefore, be properly considered in the resolution of
the case.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact that the instant case
was for the cancellation of the COR issued in favor of EYIS, the interests of justice dictate,
and in view of its findings, that the COR of Shen Dar must be cancelled. The Director General
explained:
Accordingly, while the instant case involves a petition to cancel the registration of the
Appellees trademark VESPA, the interest of justice requires that Certificate of Registration
No. 4-1997-121492 be cancelled. While the normal course of proceedings should have been
the filing of a petition for cancellation of Certificate of Registration No. 4-1997-121492, that
would involve critical facts and issues that have already been resolved in this case. To allow
the Applicant to still maintain in the Trademark Registry Certificate of Registration No. 4-
1997-121492 would nullify the exclusive rights of Appellee as the true and registered owner
of the mark VESPA and defeat the purpose of the trademark registration system. 27
Shen Dar challenges the propriety of such cancellation on the ground that there was no
petition for cancellation as required under Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes
cases.The rules of procedure herein contained primarily apply in the conduct of hearing of
Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not be
bound by strict technical rules of procedure and evidence but may adopt, in the absence of
any applicable rule herein, such mode of proceedings which is consistent with the
requirements of fair play and conducive to the just, speedy and inexpensive disposition of
cases, and which will give the Bureau the greatest possibility to focus on the contentious
issues before it. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative
bodies are not bound by technical rules of procedure. Such principle, however, is tempered
by fundamental evidentiary rules, including due process. Thus, we ruled in Aya-ay, Sr. v.
Arpaphil Shipping Corp.:28
That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of
procedure in the adjudication of cases does not mean that the basic rules on proving
allegations should be entirely dispensed with. A party alleging a critical fact must still support
his allegation with substantial evidence. Any decision based on unsubstantiated allegation
cannot stand as it will offend due process.
x x x The liberality of procedure in administrative actions is subject to limitations imposed by
basic requirements of due process. As this Court said in Ang Tibay v. CIR, the provision for
flexibility in administrative procedure "does not go so far as to justify orders without a basis
in evidence having rational probative value." More specifically, as held in Uichico v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the
technical rules of procedure in the adjudication of cases. However, this procedural rule
should not be construed as a license to disregard certain fundamental evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis: 29
While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by
the technical rules of procedure in the adjudication of cases, this procedural rule should not
be construed as a license to disregard certain fundamental evidentiary rules. The evidence
presented must at least have a modicum of admissibility for it to have probative value. Not
only must there be some evidence to support a finding or conclusion, but the evidence must
be substantial. Substantial evidence is more than a mere scintilla. It means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion. Thus,
even though technical rules of evidence are not strictly complied with before the LA and the
NLRC, their decision must be based on evidence that must, at the very least, be substantial.
The fact that no petition for cancellation was filed against the COR issued to Shen Dar does
not preclude the cancellation of Shen Dars COR. It must be emphasized that, during the
hearing for the cancellation of EYIS COR before the BLA, Shen Dar tried to establish that
it, not EYIS, was the true owner of the mark "VESPA" and, thus, entitled to have it registered.
Shen Dar had more than sufficient opportunity to present its evidence and argue its case,
and it did. It was given its day in court and its right to due process was respected. The IPO
Director Generals disregard of the procedure for the cancellation of a registered mark was
a valid exercise of his discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual findings of the BLA that Shen
Dar and not EYIS is the prior user and, therefore, true owner of the mark. In arguing its
position, petitioners cite numerous rulings of this Court where it was enunciated that the
factual findings of administrative bodies are given great weight if not conclusive upon the
courts when supported by substantial evidence.
We agree with petitioners that the general rule in this jurisdiction is that the factual findings
of administrative bodies deserve utmost respect when supported by evidence. However,
such general rule is subject to exceptions.
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In Fuentes v. Court of Appeals,30 the Court established the rule of conclusiveness of factual
findings of the CA as follows:
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to
it from the Court of Appeals x x x is limited to the review and revision of errors of law allegedly
committed by the appellate court, as its findings of fact are deemed conclusive. As such this
Court is not duty-bound to analyze and weigh all over again the evidence already considered
in the proceedings below. This rule, however, is not without exceptions." The findings of fact
of the Court of Appeals, which are as a general rule deemed conclusive, may admit of review
by this Court:
(1) when the factual findings of the Court of Appeals and the trial court are
contradictory;
(2) when the findings are grounded entirely on speculation, surmises, or
conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible;
(4) when there is grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings, goes beyond the issues of the
case, and such findings are contrary to the admissions of both appellant and
appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension
of facts;
(7) when the Court of Appeals fails to notice certain relevant facts which, if properly
considered, will justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific
evidence on which they are based; and
(10) when the findings of fact of the Court of Appeals are premised on the absence
of evidence but such findings are contradicted by the evidence on record.
(Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals,31 this Court applied the above principle to factual
findings of quasi-judicial bodies, to wit:
Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of
the Court of Appeals, enumerated in Fuentes vs. Court of Appeals, can also be applied to
those of quasi-judicial bodies x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly overlooked by the BLA and
the IPO Director General which it opined, when correctly appreciated, would alter the result
of the case. An examination of the IPO Decisions, however, would show that no such
evidence was overlooked.
First, as to the date of first use of the mark by the parties, the CA stated:
To begin with, when respondents-appellees filed its application for registration of the VESPA
trademark on July 28, 1999, they stated under oath, as found in their DECLARATION OF
ACTUAL USE, that their first use of the mark was on December 22, 1998. On the other hand,
[Shen Dar] in its application dated June 09, 1997 stated, likewise under oath in their
DECLARATION OF ACTUAL USE, that its first use of the mark was in June 1996. This
cannot be made any clearer. [Shen Dar] was not only the first to file an application for
registration but likewise first to use said registrable mark.32
Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the
statements of the parties in their respective Declarations of Actual Use. Such conclusion is
premature at best. While a Declaration of Actual Use is a notarized document, hence, a
public document, it is not conclusive as to the fact of first use of a mark. The declaration
must be accompanied by proof of actual use as of the date claimed. In a declaration of actual
use, the applicant must, therefore, present evidence of such actual use.
The BLA ruled on the same issue, as follows:
More importantly, the private respondents prior adoption and continuous use of the mark
VESPA on air compressors is bolstered by numerous documentary evidence consisting of
sales invoices issued in the name of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375).
Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners date of first use on
January 1, 1997 indicated in its trademark application filed on June 9, 1997 as well as the
date of first use in June of 1996 as indicated in the Declaration of Actual Use submitted on
December 3, 2001 (Exhibit 385). The use by respondent registrant in the concept of owner
is shown by commercial documents, sales invoices unambiguously describing the goods as
"VESPA" air compressors. Private respondents have sold the air compressors bearing the
"VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas since
the early 1990s. We carefully inspected the evidence consisting of three hundred seventy-
one (371) invoices and shipment documents which show that VESPA air compressors were
sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City,
Zamboanga City, Cagayan de Oro City, Davao City, to name a few. There is no doubt that
it is through private respondents efforts that the mark "VESPA" used on air compressors
has gained business goodwill and reputation in the Philippines for which it has validly
acquired trademark rights. Respondent E.Y. Industrials right has been preserved until the
passage of RA 8293 which entitles it to register the same. 33
Comparatively, the BLAs findings were founded upon the evidence presented by the parties.
An example of such evidence is Invoice No. 12075 dated March 29, 1995 34 where EYIS sold
four units of VESPA air compressors to Veteran Paint Trade Center. Shen Dar failed to rebut
such evidence. The truth, as supported by the evidence on record, is that EYIS was first to
use the mark.
Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS
and the proof submitted was appropriately considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA"
on the concept of an owner as early as 1991. Although Respondent E.Y. indicated in its
trademark application that its first use was in December 22, 1998, it was able to prove by
clear and positive evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966, the
High Court clarified: Where an applicant for registration of a trademark states under oath the
date of his earliest use, and later on he wishes to carry back his first date of use to an earlier
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date, he then takes on the greater burden of presenting "clear and convincing evidence" of
adoption and use as of that earlier date. (B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.) 35
The CA further found that EYIS is not a manufacturer of air compressors but merely imports
and sells them as a wholesaler and retailer. The CA reasoned:
Conversely, a careful perusal of appellees own submitted receipts shows that it is not
manufacturer but an importer, wholesaler and retailer. This fact is corroborated by the
testimony of a former employee of appellees. Admittedly too, appellees are importing air
compressors from [Shen Dar] from 1997 to 2004. These matters, lend credence to [Shen
Dars] claim that the letters SD followed by a number inscribed in the air compressor is only
to describe its type, manufacturer business name and capacity. The VESPA mark is in the
sticker which is attached to the air compressors. The ruling of the Supreme Court, in the
case of UNNO Commercial Enterprises, Inc. vs. General Milling Corporation et al., is quite
enlightening, thus We quote:
"The term owner does not include the importer of the goods bearing the trademark, trade
name, service mark, or other mark of ownership, unless such importer is actually the owner
thereof in the country from which the goods are imported. Thus, this Court, has on several
occasions ruled that where the applicants alleged ownership is not shown in any notarial
document and the applicant appears to be merely an importer or distributor of the
merchandise covered by said trademark, its application cannot be granted." 36
This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales
invoice as an importer, wholesaler and retailer does not preclude its being a manufacturer.
Sec. 237 of the National Internal Revenue Code states:
Section 237. Issuance of Receipts or Sales or Commercial Invoices.All persons subject to
an internal revenue tax shall, for each sale and transfer of merchandise or for services
rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or
sale or commercial invoices, prepared at least in duplicate, showing the date of transaction,
quantity, unit cost and description of merchandise or nature of service: Provided, however,
That where the receipt is issued to cover payment made as rentals, commissions,
compensation or fees, receipts or invoices shall be issued which shall show the name,
business style, if any, and address of the purchaser, customer or client.
The original of each receipt or invoice shall be issued to the purchaser, customer or client at
the time the transaction is effected, who, if engaged in business or in the exercise of
profession, shall keep and preserve the same in his place of business for a period of three
(3) years from the close of the taxable year in which such invoice or receipt was issued,
while the duplicate shall be kept and preserved by the issuer, also in his place of business,
for a like period.
The Commissioner may, in meritorious cases, exempt any person subject to an internal
revenue tax from compliance with the provisions of this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of
Internal Revenue defined a Sales Invoice and identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold or services rendered
and the prices charged therefor used in the ordinary course of business evidencing sale and
transfer or agreement to sell or transfer of goods and services. It contains the same
information found in the Official Receipt.
Official Receipt (OR) is a receipt issued for the payment of services rendered or goods
sold. It contains the following information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and
date of issuance of receipts.
There is no requirement that a sales invoice should accurately state the nature of all the
businesses of the seller. There is no legal ground to state that EYIS "declaration" in its sales
invoices that it is an importer, wholesaler and retailer is restrictive and would preclude its
being a manufacturer.
From the above findings, there was no justifiable reason for the CA to disregard the factual
findings of the IPO. The rulings of the IPO Director General and the BLA Director were
supported by clear and convincing evidence. The facts cited by the CA and Shen Dar do not
justify a different conclusion from that of the IPO. Hence, the findings of the BLA Director
and the IPO Director General must be deemed as conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark "VESPA"
In any event, given the length of time already invested by the parties in the instant case, this
Court must write finis to the instant controversy by determining, once and for all, the true
owner of the mark "VESPA" based on the evidence presented.
RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging to a different proprietor or a mark with an
earlier filing or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion.
(Emphasis supplied.)
2st batch: Intellectual Property Law
Under this provision, 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. As aptly
stated by the Court in Shangri-la International Hotel Management, Ltd. v. Developers Group
of Companies, Inc.:37
Registration, without more, does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration is merely a prima facie proof that the registrant
is the owner of the registered mark or trade name. Evidence of prior and continuous use of
the mark or trade name by another can overcome the presumptive ownership of the
registrant and may very well entitle the former to be declared owner in an appropriate case.
xxxx
Ownership of a mark or trade name may be acquired not necessarily by registration but by
adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails over
the latter. For a rule widely accepted and firmly entrenched, because it has come down
through the years, is that actual use in commerce or business is a pre-requisite to the
acquisition of the right of ownership.
xxxx
By itself, registration is not a mode of acquiring ownership. When the applicant is not the
owner of the trademark being applied for, he has no right to apply for registration of the
same. Registration merely creates a prima facie presumption of the validity of the
registration, of the registrants ownership of the trademark and of the exclusive right to the
use thereof. Such presumption, just like the presumptive regularity in the performance of
official functions, is rebuttable and must give way to evidence to the contrary.
Here, the incontrovertible truth, as established by the evidence submitted by the parties, is
that EYIS is the prior user of the mark. The exhaustive discussion on the matter made by
the BLA sufficiently addresses the issue:
Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in
buying, importing, selling, industrial machineries and tools, manufacturing, among others
since its incorporation in 1988. (Exhibit "1"). Indeed private respondents have submitted
photographs (Exhibit "376", "377", "378", "379") showing an assembly line of its
manufacturing or assembly process.1avvphi1
More importantly, the private respondents prior adoption and continuous use of the mark
"VESPA" on air compressors is bolstered by numerous documentary evidence consisting of
sales invoices issued in the name of respondent EY Industrial and Bills of Lading. (Exhibits
"4" to "375"). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners date of
first use in January 1, 1997 indicated in its trademark application filed in June 9, 1997 as
well as the date of first use in June of 1996 as indicated in the Declaration of Actual Use
submitted on December 3, 2001 (Exhibit "385"). The use by respondent-registrant in the
concept of owner is shown by commercial documents, sales invoices unambiguously
describing the goods as "VESPA" air compressors. Private respondents have sold the air
compressors bearing the "VESPA" to various locations in the Philippines, as far as Mindanao
and the Visayas since the early 1990s. We carefully inspected the evidence consisting of
three hundred seventy one (371) invoices and shipment documents which show that
"VESPA" air compressors were sold not only in Manila, but to locations such as Iloilo City,
Cebu City, Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City to name a
few. There is no doubt that it is through private respondents efforts that the mark "VESPA"
used on air compressors has gained business goodwill and reputation in the Philippines for
which it has validly acquired trademark rights. Respondent EY Industrials right has been
preserved until the passage of RA 8293 which entitles it to register the same. x x x 38
On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision.
More importantly, Shen Dar failed to present sufficient evidence to prove its own prior use
of the mark "VESPA." We cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air
compressors. The thrust of [Shen Dars] argument is that respondent E.Y. Industrial Sales,
Inc. is a mere distributor of the "VESPA" air compressors. We disagree.
This conclusion is belied by the evidence. We have gone over each and every document
attached as Annexes "A", "A" 1-48 which consist of Bill of Lading and Packing Weight List.
Not one of these documents referred to a "VESPA" air compressor. Instead, it simply
describes the goods plainly as air compressors which is type "SD" and not "VESPA". More
importantly, the earliest date reflected on the Bill of Lading was on May 5, 1997. (Annex
"A"-1). [Shen Dar] also attached as Annex "B" a purported Sales Contract with respondent
EY Industrial Sales dated April 20, 2002. Surprisingly, nowhere in the document does it state
that respondent EY Industrial agreed to sell "VESPA" air compressors. The document only
mentions air compressors which if genuine merely bolsters respondent Engracio Yaps
contention that [Shen Dar] approached them if it could sell the "Shen Dar" or "SD" air
compressor. (Exhibit "386") In its position paper, [Shen Dar] merely mentions of Bill of Lading
constituting respondent as consignee in 1993 but never submitted the same for
consideration of this Bureau. The document is also not signed by [Shen Dar]. The agreement
was not even drafted in the letterhead of either [Shen Dar] nor [sic] respondent registrant.
Our only conclusion is that [Shen Dar] was not able to prove to be the owner of the VESPA
mark by appropriation. Neither was it able to prove actual commercial use in the Philippines
of the mark VESPA prior to its filing of a trademark application in 9 June 1997. 39
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.
WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and
October 6, 2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET
ASIDE. The Decision dated May 25, 2007 issued by the IPO Director General in Inter Partes
2st batch: Intellectual Property Law
Case No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA Director of the
IPO are hereby REINSTATED.
No costs. SO ORDERED
2. Berris Agricultural Co.,Inc. v. Norvy Abyadang
G.R. No. 183404 October 13, 2010
BERRIS AGRICULTURAL CO., INC., Petitioner,
vs.
NORVY ABYADANG, Respondent.
DECISION
NACHURA, J.:
This petition for review1 on certiorari under Rule 45 of the Rules of Court seeks the reversal
of the Decision dated April 14, 20082 and the Resolution dated June 18, 20083 of the Court
of Appeals (CA) in CA-G.R. SP No. 99928.
The antecedents
On January 16, 2004, respondent Norvy A. Abyadang (Abyadang), proprietor of NS Northern
Organic Fertilizer, with address at No. 43 Lower QM, Baguio City, filed with the Intellectual
Property Office (IPO) a trademark application for the mark "NS D-10 PLUS" for use in
connection with Fungicide (Class 5) with active ingredient 80% Mancozeb. The application,
under Application Serial No. 4-2004-00450, was given due course and was published in the
IPO e-Gazette for opposition on July 28, 2005.
On August 17, 2005, petitioner Berris Agricultural Co., Inc. (Berris), with business address
in Barangay Masiit, Calauan, Laguna, filed with the IPO Bureau of Legal Affairs (IPO-BLA)
a Verified Notice of Opposition4 against the mark under application allegedly because "NS
D-10 PLUS" is similar and/or confusingly similar to its registered trademark "D-10 80 WP,"
also used for Fungicide (Class 5) with active ingredient 80% Mancozeb. The opposition was
docketed as IPC No. 14-2005-00099.
After an exchange of pleadings, on April 28, 2006, Director Estrellita Beltran-Abelardo
(Director Abelardo) of the IPO-BLA issued Decision No. 2006-245 (BLA decision), the
dispositive portion of which reads
WHEREFORE, viewed in the light of all the foregoing, this Bureau finds and so holds that
Respondent-Applicants mark "NS D-10 PLUS" is confusingly similar to the Opposers mark
and as such, the opposition is hereby SUSTAINED. Consequently, trademark application
bearing Serial No. 4-2004-00450 for the mark "NS D-10 PLUS" filed on January 16, 2004 by
Norvy A. Ab[yada]ng covering the goods fungicide under Class 5 of the International
Classification of goods is, as it is hereby, REJECTED.
Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be
forwarded to the Administrative, Financial and Human Resources Development Services
Bureau (AFHRDSB) for appropriate action in accordance with this Order with a copy to be
furnished the Bureau of Trademark (BOT) for information and to update its records.
SO ORDERED.6
Abyadang filed a motion for reconsideration, and Berris, in turn, filed its opposition to the
motion.
On August 2, 2006, Director Abelardo issued Resolution No. 2006-09(D)7 (BLA resolution),
denying the motion for reconsideration and disposing as follows
IN VIEW OF THE FOREGOING, the Motion for Reconsideration filed by the Respondent-
Applicant is hereby DENIED FOR LACK OF MERIT. Consequently, Decision No. 2006-24
dated April 28, 2006 STANDS.
Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be
forwarded to the Bureau of Trademarks for appropriate action in accordance with this
Resolution.
SO ORDERED.8
Aggrieved, Abyadang filed an appeal on August 22, 2006 with the Office of the Director
General, Intellectual Property Philippines (IPPDG), docketed as Appeal No. 14-06-13.
With the filing of the parties respective memoranda, Director General Adrian S. Cristobal,
Jr. of the IPPDG rendered a decision dated July 20, 2007, 9 ruling as follows
Wherefore, premises considered[,] the appeal is hereby DENIED. Accordingly, the appealed
Decision of the Director is hereby AFFIRMED.
Let a copy of this Decision as well as the trademark application and records be furnished
and returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let
also the Directors of the Bureau of Trademarks, the Administrative, Financial and Human
Resources Development Services Bureau, and the library of the Documentation, Information
and Technology Transfer Bureau be furnished a copy of this Decision for information,
guidance, and records purposes.
SO ORDERED.10
Undeterred, Abyadang filed a petition for review11 before the CA.
In its Decision dated April 14, 2008, the CA reversed the IPPDG decision. It held
In sum, the petition should be granted due to the following reasons: 1) petitioners mark "NS
D-10 PLUS" is not confusingly similar with respondents trademark "D-10 80 WP"; 2)
2st batch: Intellectual Property Law
respondent failed to establish its ownership of the mark "D-10 80 WP" and 3) respondents
trademark registration for "D-10 80 WP" may be cancelled in the present case to avoid
multiplicity of suits.
WHEREFORE, the petition is GRANTED. The decision dated July 20, 2007 of the IPO
Director General in Appeal No. 14-06-13 (IPC No. 14-2005-00099) is REVERSED and SET
ASIDE, and a new one is entered giving due course to petitioners application for registration
of the mark "NS D-10 PLUS," and canceling respondents trademark registration for "D-10
80 WP."
SO ORDERED.12
Berris filed a Motion for Reconsideration, but in its June 18, 2008 Resolution, the CA denied
the motion for lack of merit. Hence, this petition anchored on the following arguments
I. The Honorable Court of Appeals finding that there exists no confusing similarity between
Petitioners and respondents marks is based on misapprehension of facts, surmise and
conjecture and not in accord with the Intellectual Property Code and applicable Decisions of
this Honorable Court [Supreme Court].
II. The Honorable Court of Appeals Decision reversing and setting aside the technical
findings of the Intellectual Property Office even without a finding or, at the very least, an
allegation of grave abuse of discretion on the part of said agency is not in accord with law
and earlier pronouncements of this Honorable Court [Supreme Court].
III. The Honorable Court of Appeals Decision ordering the cancellation of herein Petitioners
duly registered and validly existing trademark in the absence of a properly filed Petition for
Cancellation before the Intellectual Property Office is not in accord with the Intellectual
Property Code and applicable Decisions of this Honorable Court [Supreme Court]. 13
The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No.
829314 (Intellectual Property Code of the Philippines), specifically Sections 121 to 170
thereof. It took effect on January 1, 1998. Prior to its effectivity, the applicable law was R.A.
No. 166,15 as amended.
Interestingly, R.A. No. 8293 did not expressly repeal in its entirety R.A. No. 166, but merely
provided in Section 239.116 that Acts and parts of Acts inconsistent with it were repealed. In
other words, only in the instances where a substantial and irreconcilable conflict is found
between the provisions of R.A. No. 8293 and of R.A. No. 166 would the provisions of the
latter be deemed repealed.
R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods.17 It also defines a "collective mark" as any visible sign
designated as such in the application for registration and capable of distinguishing the origin
or any other common characteristic, including the quality of goods or services of different
enterprises which use the sign under the control of the registered owner of the collective
mark.18
On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name,
symbol, emblem, sign, or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those
manufactured, sold, or dealt by another.19 A trademark, being a special property, is afforded
protection by law. But for one to enjoy this legal protection, legal protection ownership of the
trademark should rightly be established.
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public. Section
12220 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. 21 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.22 In other words, the prima facie presumption brought about
by the registration of a mark may be challenged and overcome, in an appropriate action, by
proof of the nullity of the registration or of non-use of the mark, except when
excused.23 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. 24
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. 25
In the instant case, both parties have submitted proof to support their claim of ownership of
their respective trademarks.
Culled from the records, Berris, as oppositor to Abyadangs application for registration of his
trademark, presented the following evidence: (1) its trademark application dated November
29, 200226 with Application No. 4-2002-0010272; (2) its IPO certificate of registration dated
October 25, 2004,27 with Registration No. 4-2002-010272 and July 8, 2004 as the date of
registration; (3) a photocopy of its packaging28 bearing the mark "D-10 80 WP"; (4)
photocopies of its sales invoices and official receipts;29 and (5) its notarized DAU dated April
23, 2003,30 stating that the mark was first used on June 20, 2002, and indicating that, as
proof of actual use, copies of official receipts or sales invoices of goods using the mark were
attached as Annex "B."
On the other hand, Abyadangs proofs consisted of the following: (1) a photocopy of the
packaging31 for his marketed fungicide bearing mark "NS D-10 PLUS"; (2) Abyadangs
Affidavit dated February 14, 2006,32 stating among others that the mark "NS D-10 PLUS"
was his own creation derived from: N for Norvy, his name; S for Soledad, his wifes name;
D the first letter for December, his birth month; 10 for October, the 10th month of the
year, the month of his business name registration; and PLUS to connote superior quality;
2st batch: Intellectual Property Law
that when he applied for registration, there was nobody applying for a mark similar to "NS
D-10 PLUS"; that he did not know of the existence of Berris or any of its products; that "D-
10" could not have been associated with Berris because the latter never engaged in any
commercial activity to sell "D-10 80 WP" fungicide in the local market; and that he could not
have copied Berris mark because he registered his packaging with the Fertilizer and
Pesticide Authority (FPA) ahead of Berris; (3) Certification dated December 19,
200533 issued by the FPA, stating that "NS D-10 PLUS" is owned and distributed by NS
Northern Organic Fertilizer, registered with the FPA since May 26, 2003, and had been in
the market since July 30, 2003; (4) Certification dated October 11, 2005 34 issued by the FPA,
stating that, per monitoring among dealers in Region I and in the Cordillera Administrative
Region registered with its office, the Regional Officer neither encountered the fungicide with
mark "D-10 80 WP" nor did the FPA provincial officers from the same area receive any report
as to the presence or sale of Berris product; (5) Certification dated March 14, 2006 35 issued
by the FPA, certifying that all pesticides must be registered with the said office pursuant to
Section 936 of Presidential Decree (P.D.) No. 114437 and Section 1, Article II of FPA Rules
and Regulations No. 1, Series of 1977; (6) Certification dated March 16, 200638 issued by
the FPA, certifying that the pesticide "D-10 80 WP" was registered by Berris on November
12, 2004; and (7) receipts from Sunrise Farm Supply39 in La Trinidad, Benguet of the sale of
Abyadangs goods referred to as "D-10" and "D-10+."
Based on their proffered pieces of evidence, both Berris and Abyadang claim to be the prior
user of their respective marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark "D-10 80 WP" since June 20, 2002,
even before it filed for its registration with the IPO on November 29, 2002, as shown by its
DAU which was under oath and notarized, bearing the stamp of the Bureau of Trademarks
of the IPO on April 25, 2003,40 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. 41 What is more,
the DAU is buttressed by the Certification dated April 21, 2006 42 issued by the Bureau of
Trademarks that Berris mark is still valid and existing.
Hence, we cannot subscribe to the contention of Abyadang that Berris DAU is fraudulent
based only on his assumption that Berris could not have legally used the mark in the sale of
its goods way back in June 2002 because it registered the product with the FPA only on
November 12, 2004. As correctly held by the IPPDG in its decision on Abyadangs appeal,
the question of whether or not Berris violated P.D. No. 1144, because it sold its product
without prior registration with the FPA, is a distinct and separate matter from the jurisdiction
and concern of the IPO. Thus, even a determination of violation by Berris of P.D. No. 1144
would not controvert the fact that it did submit evidence that it had used the mark "D-10 80
WP" earlier than its FPA registration in 2004.
Furthermore, even the FPA Certification dated October 11, 2005, stating that the office had
neither encountered nor received reports about the sale of the fungicide "D-10 80 WP" within
Region I and the Cordillera Administrative Region, could not negate the fact that Berris was
selling its product using that mark in 2002, especially considering that it first traded its goods
in Calauan, Laguna, where its business office is located, as stated in the DAU.
Therefore, Berris, as prior user and prior registrant, is the owner of the mark "D-10 80 WP."
As such, Berris has in its favor the rights conferred by Section 147 of R.A. No. 8293, which
provides
Sec. 147. Rights Conferred.
147.1. The owner of a registered mark shall have the exclusive right to prevent all third
parties not having the owners consent from using in the course of trade identical or similar
signs or containers for goods or services which are identical or similar to those in respect of
which the trademark is registered where such use would result in a likelihood of confusion.
In case of the use of an identical sign for identical goods or services, a likelihood of confusion
shall be presumed.
147.2. The exclusive right of the owner of a well-known mark defined in Subsection 123.1(e)
which is registered in the Philippines, shall extend to goods and services which are not
similar to those in respect of which the mark is registered: Provided, That use of that mark
in relation to those goods or services would indicate a connection between those goods or
services and the owner of the registered mark: Provided, further, That the interests of the
owner of the registered mark are likely to be damaged by such use.
Now, we confront the question, "Is Abyadangs mark NS D-10 PLUS confusingly similar to
that of Berris D-10 80 WP such that the latter can rightfully prevent the IPO registration of
the former?"
We answer in the affirmative.
According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is identical
with a registered mark belonging to a different proprietor with an earlier filing or priority date,
with respect to: (1) the same goods or services; (2) closely related goods or services; or (3)
near resemblance of such mark as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion, jurisprudence has developed teststhe
Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public. Duplication or
imitation is not necessary; neither is it required that the mark sought to be registered
suggests an effort to imitate. Given more consideration are the aural and visual impressions
created by the marks on the buyers of goods, giving little weight to factors like prices, quality,
sales outlets, and market segments.43
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. 44
2st batch: Intellectual Property Law
Comparing Berris mark "D-10 80 WP" with Abyadangs mark "NS D-10 PLUS," as appearing
on their respective packages, one cannot but notice that both have a common component
which is "D-10." On Berris package, the "D-10" is written with a bigger font than the "80
WP." Admittedly, the "D-10" is the dominant feature of the mark. The "D-10," being at the
beginning of the mark, is what is most remembered of it. Although, it appears in Berris
certificate of registration in the same font size as the "80 WP," its dominancy in the "D-10 80
WP" mark stands since the difference in the form does not alter its distinctive character. 45
Applying the Dominancy Test, it cannot be gainsaid that Abyadangs "NS D-10 PLUS" is
similar to Berris "D-10 80 WP," that confusion or mistake is more likely to occur. Undeniably,
both marks pertain to the same type of goods fungicide with 80% Mancozeb as an active
ingredient and used for the same group of fruits, crops, vegetables, and ornamental plants,
using the same dosage and manner of application. They also belong to the same
classification of goods under R.A. No. 8293. Both depictions of "D-10," as found in both
marks, are similar in size, such that this portion is what catches the eye of the purchaser.
Undeniably, the likelihood of confusion is present.
This likelihood of confusion and mistake is made more manifest when the Holistic Test is
applied, taking into consideration the packaging, for both use the same type of material (foil
type) and have identical color schemes (red, green, and white); and the marks are both
predominantly red in color, with the same phrase "BROAD SPECTRUM FUNGICIDE" written
underneath.1awphi1
Considering these striking similarities, predominantly the "D-10," the buyers of both
products, mainly farmers, may be misled into thinking that "NS D-10 PLUS" could be an
upgraded formulation of the "D-10 80 WP."
Moreover, notwithstanding the finding of the IPPDG that the "D-10" is a fanciful component
of the trademark, created for the sole purpose of functioning as a trademark, and does not
give the name, quality, or description of the product for which it is used, nor does it describe
the place of origin, such that the degree of exclusiveness given to the mark is closely
restricted,46 and considering its challenge by Abyadang with respect to the meaning he has
given to it, what remains is the fact that Berris is the owner of the mark "D-10 80 WP,"
inclusive of its dominant feature "D-10," as established by its prior use, and prior registration
with the IPO. Therefore, Berris properly opposed and the IPO correctly rejected Abyadangs
application for registration of the mark "NS D-10 PLUS."
Verily, the protection of trademarks as intellectual property is intended not only to preserve
the goodwill and reputation of the business established on the goods bearing the mark
through actual use over a period of time, but also to safeguard the public as consumers
against confusion on these goods.47 On this matter of particular concern, administrative
agencies, such as the IPO, by reason of their special knowledge and expertise over matters
falling under their jurisdiction, are in a better position to pass judgment thereon. Thus, their
findings of fact in that regard are generally accorded great respect, if not finality by the courts,
as long as they are supported by substantial evidence, even if such evidence might not be
overwhelming or even preponderant. It is not the task of the appellate court to weigh once
more the evidence submitted before the administrative body and to substitute its own
judgment for that of the administrative agency in respect to sufficiency of evidence. 48
Inasmuch as the ownership of the mark "D-10 80 WP" fittingly belongs to Berris, and
because the same should not have been cancelled by the CA, we consider it proper not to
belabor anymore the issue of whether cancellation of a registered mark may be done absent
a petition for cancellation.
WHEREFORE, the petition is GRANTED. The assailed Decision dated April 14, 2008 and
Resolution dated June 18, 2008 of the Court of Appeals in CA-G.R. SP No. 99928 are
REVERSED and SET ASIDE. Accordingly, the Decision No. 2006-24 dated April 28, 2006
and the Resolution No. 2006-09(D) dated August 2, 2006 in IPC No. 14-2005-00099, and
the Decision dated July 20, 2007 in Appeal No. 14-06-13 are REINSTATED. Costs against
respondent.
SO ORDERED.
3. Hickok Manufacturing Co.,Inc. v. CA
G.R. No. L-44707 August 31, 1982
HICKOK MANUFACTURING CO., INC., petitioner,
vs.
COURT OF APPEALS ** and SANTOS LIM BUN LIONG, respondents.
TEEHANKEE, J.:1wph1.t
The Court affirms on the strength of controlling doctrine as reaffirmed in the companion case
of Esso Standard Eastern Inc. vs. Court of Appeals 1 promulgated also on this date and the
recent case of Philippine Refining Co., Inc. vs. Ng Sam and Director of Parents 2 the
appealed decision of the Court of Appeals reversing the patent director's decision and
instead dismissing petitioner's petition to cancel private respondent's registration of the
trademark of HICKOK for its Marikina shoes as against petitioner's earlier registration of the
same trademark for its other non-competing products.
On the basis of the applicable reasons and considerations extensively set forth in the above-
cited controlling precedents and the leading case of Acoje Mining Co., Inc. vs. Director of
Patents 3 on which the appellate court anchored its decision at bar, said decision must stand
affirmed, as follows: 1wph1.t
An examination of the trademark of petitioner-appellee and that of registrant-
appellant convinces us that there is a difference in the design and the coloring of, as
well as in the words on the ribbons, the two trademarks.
In petitioner-appellee's trademark for handkerchiefs (Exhibit 'Q'), the word 'HICKOK'
is in red with white background in the middle of two branches of laurel in light gold.
At the lower part thereof is a ribbon on which are the words 'POSITIVELY FINER' in
light gold. In the trademark for underwear (Exhibit 'R'), the word 'HICKOK' is also in
red with white background in the middle of two branches of laurel in dark gold with
similar ribbons and the words 'POSITIVELY FINER' in dark gold. And in the
trademark for briefs (Exhibit 'S'), the word 'HICKOK' is in white but with red
2st batch: Intellectual Property Law
background in the middle of two branches of laurel, the leaves being in dark gold
with white edges, and with similar ribbon and words 'POSITIVELY FINER' in dark
gold. In contrast, in respondent-appellant's trademark (Exhibit 'J'), the word 'HICKOK'
is in white with gold background between the two branches of laurel in red, with the
word 'SHOES' also in red below the word 'HICKOK'.t@lF The ribbon is in red with
the words 'QUALITY AT YOUR FEET,' likewise in red.
While the law does not require that the competing trademarks be Identical, the two
marks must be considered in their entirety, as they appear in the respective labels,
in relation to the goods to which they are attached.
The case of H.E. Heacock Co. vs. American Trading Co., 56 Phil. 763, cited by
petitioner - appellee, is hardly applicable here, because the defendant in that case
imported and sold merchandise which are very similar to, and precisely of the same
designs as, that imported and sold by the plaintiff. ...
In the recent case of Acoje Mining Co., Inc. vs. Director of Patents, 38 SCRA 480,
482-483, the Supreme Court stated - 1wph1.t
Can it be said then that petitioner's application would be likely to cause
confusion or mistake on the part of the buying public? The answer should be
in the negative. It does not defy common sense to assert that a purchaser
would be cognizant of the product he is buying. There is quite a difference
between soy sauce and edible oil. If one is in the market for the former, he is
not likely to purchase the latter just because on the trademark LOTUS. Even
on the rare occasion that a mistake does occur, it can easily be rectified.
Moreover, there is no denying that the possibility of confusion is remote
considering petitioner's trademark being in yellow and red while that of the
Philippine Refining Company being in green and yellow, and the much
smaller size of petitioner's trademark. When regard is had for the principle
that the two trademarks in their entirety as they appear in their respective
labels should be considered in relation to the goods advertised before
registration could be denied, the conclusion is inescapable that respondent
Director ought to have reached a different conclusion. Petitioner has
successfully made out a case for registration.
From the statements of the Supreme Court in the two cases aforementioned, we
gather that there must be not only resemblance between the trademark of the plaintiff
and that of the defendant, but also similarity of the goods to which the two trademarks
are respectively attached.
Since in this case the trademark of petitioner-appellee is used in the sale of leather
wallets, key cases, money folds made of leather, belts, men's briefs, neckties,
handkerchiefs and men's socks, and the trademark of registrant-appellant is used in
the sale of shoes, which have different channels of trade, the Director of Patents, as
in the case of Acoje Mining Co., Inc. vs. Director of Patents, supra, 'ought to have
reached a different conclusion.
It is established doctrine, as held in the above-cited cases, that "emphasis should be on the
similarity of the products involved and not on the arbitrary classification or general
description of their properties or characteristics" 4and that "the mere fact that one person has
adopted and used a trademark on his goods does not prevent the adoption and use of the
same trademark by others on unrelated articles of a different kind." 5 Taking into account the
facts of record that petitioner, a foreign corporation registered the trademark for its diverse
articles of men's wear such as wallets, belts and men's briefs which are all manufactured
here in the Philippines by a licensee Quality House, Inc. (which pays a royalty of 1-1/2 % of
the annual net sales) but are so labelled as to give the misimpression that the said goods
are of foreign (stateside) manufacture and that respondent secured its trademark registration
exclusively for shoes (which neither petitioner nor the licensee ever manufactured or traded
in) and which are clearly labelled in block letters as "Made in Marikina, Rizal, Philippines,"
no error can be attributed to the appellate court in upholding respondent's registration of the
same trademark for his unrelated and non-competing product of Marikina shoes. 6
ACCORDINGLY, the petition is dismissed and the appealed judgment of the Court of
Appeals is hereby affirmed.
4. Esso Standard Easter, Inc. v. CA
G.R. No. L-29971 August 31, 1982
ESSO STANDARD EASTERN, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS ** and UNITED CIGARETTE
CORPORATION, respondents.
TEEHANKEE, J.:1wph1.t
The Court affirms on the basis of controlling doctrine the appealed decision of the Court of
Appeals reversing that of the Court of First Instance of Manila and dismissing the complaint
filed by herein petitioner against private respondent for trade infringement for using
petitioner's trademark ESSO, since it clearly appears that the goods on which the trademark
ESSO is used by respondent is non-competing and entirely unrelated to the products of
petitioner so that there is no likelihood of confusion or deception on the part of the purchasing
public as to the origin or source of the goods.
Petitioner Esso Standard Eastern, Inc., 1 then a foreign corporation duly licensed to do
business in the Philippines, is engaged in the sale of petroleum products which are Identified
with its trademark ESSO (which as successor of the defunct Standard Vacuum Oil Co. it
registered as a business name with the Bureaus of Commerce and Internal Revenue in April
and May, 1962). Private respondent in turn is a domestic corporation then engaged in the
manufacture and sale of cigarettes, after it acquired in November, 1963 the business, factory
and patent rights of its predecessor La Oriental Tobacco Corporation, one of the rights thus
acquired having been the use of the trademark ESSO on its cigarettes, for which a permit
had been duly granted by the Bureau of Internal Revenue.
Barely had respondent as such successor started manufacturing cigarettes with the
trademark ESSO, when petitioner commenced a case for trademark infringement in the
Court of First Instance of Manila. The complaint alleged that the petitioner had been for many
2st batch: Intellectual Property Law
years engaged in the sale of petroleum products and its trademark ESSO had acquired a
considerable goodwill to such an extent that the buying public had always taken the
trademark ESSO as equivalent to high quality petroleum products. Petitioner asserted that
the continued use by private respondent of the same trademark ESSO on its cigarettes was
being carried out for the purpose of deceiving the public as to its quality and origin to the
detriment and disadvantage of its own products.
In its answer, respondent admitted that it used the trademark ESSO on its own product of
cigarettes, which was not Identical to those produced and sold by petitioner and therefore
did not in any way infringe on or imitate petitioner's trademark. Respondent contended that
in order that there may be trademark infringement, it is indispensable that the mark must be
used by one person in connection or competition with goods of the same kind as the
complainant's.
The trial court, relying on the old cases of Ang vs. Teodoro 2 and Arce & Sons, Inc. vs.
Selecta Biscuit Company, 3referring to related products, decided in favor of petitioner and
ruled that respondent was guilty of infringement of trademark.
On appeal, respondent Court of Appeals found that there was no trademark infringement
and dismissed the complaint. Reconsideration of the decision having been denied, petitioner
appealed to this Court by way of certiorari to reverse the decision of the Court of Appeals
and to reinstate the decision of the Court of First Instance of Manila. The Court finds no
ground for granting the petition.
The law defines infringement as the use without consent of the trademark owner of any
"reproduction, counterfeit, copy or colorable limitation 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 or colorably imitate any such mark
or tradename and apply such reproduction, counterfeit, copy or colorable limitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services." 4 Implicit in this definition is the
concept that the goods must be so related that there is a likelihood either of confusion of
goods or business. 5But likelihood of confusion is a relative concept; to be determined only
according to the particular, and sometimes peculiar, circumstances of each case. 6 It is
unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc. 7 "In trademark cases,
even more than in other litigation, precedent must be studied in the light of the facts of the
particular case.
It is undisputed that the goods on which petitioner uses the trademark ESSO, petroleum
products, and the product of respondent, cigarettes, are non-competing. But as to whether
trademark infringement exists depends for the most part upon whether or not the goods are
so related that the public may be, or is actually, deceived and misled that they came from
the same maker or manufacturer. For non-competing goods may be those which, though
they are not in actual competition, are so related to each other that it might reasonably be
assumed that they originate from one manufacturer. Non-competing goods may also be
those which, being entirely unrelated, could not reasonably be assumed to have a common
source. in the former case of related goods, confusion of business could arise out of the use
of similar marks; in the latter case of non-related goods, it could not. 8 The vast majority of
courts today follow the modern theory or concept of "related goods" 9 which the Court has
likewise adopted and uniformly recognized and applied. 10
Goods are related when they belong to the same class or have the same descriptive
properties; when they possess the same physical attributes or essential characteristics with
reference to their form, composition, texture or quality. They may also be related because
they serve the same purpose or are sold in grocery stores. 11 Thus, biscuits were held related
to milk because they are both food products. 12 Soap and perfume, lipstick and nail polish
are similarly related because they are common household items now a days. 13 The
trademark "Ang Tibay" for shoes and slippers was disallowed to be used for shirts and pants
because they belong to the same general class of goods. 14 Soap and pomade although
non- competitive, were held to be similar or to belong to the same class, since both are toilet
articles. 15 But no confusion or deception can possibly result or arise when the name
"Wellington" which is the trademark for shirts, pants, drawers and other articles of wear for
men, women and children is used as a name of a department store. 16
Thus, in Acoje Mining Co., Inc. vs. Director of Patents, 17 the Court, through now Chief
Justice Fernando, reversed the patent director's decision on the question of "May petitioner
Acoje Mining Company register for the purpose of advertising its product, soy sauce, the
trademark LOTUS, there being already in existence one such registered in favor of the
Philippine Refining Company for its product, edible oil, it being further shown that the
trademark applied for is in smaller type, colored differently, set on a background which is
dissimilar as to yield a distinct appearance?" and ordered the granting of petitioner's
application for registration ruling that "there is quite a difference between soy sauce and
edible oil. If one is in the market for the former, he is not likely to purchase the latter just
because of the trademark LOTUS" and "when regard is had for the principle that the two
trademarks in their entirety as they appear in their respective labels should be considered in
relation to the goods advertised before registration could be denied, the conclusion is
inescapable that respondent Director ought to have reached a different conclusion. "
By the same token, in the recent case of Philippine Refining Co., Inc. vs. Ng Sam and
Director of Patents, 18 the Court upheld the patent director's registration of the same
trademark CAMIA for therein respondent's product of ham notwithstanding its already being
used by therein petitioner for a wide range of products: lard butter, cooking oil, abrasive
detergents, polishing materials and soap of all kinds. The Court, after noting that the same
CAMIA trademark had been registered by two other companies, Everbright Development
Company and F. E. Zuellig, Inc. for their respective products of thread and yarn (for the
former) and textiles, embroideries and laces (for the latter) ruled that "while ham and some
of the products of petitioner are classified under Class 47 (Foods and Ingredients of Food),
this alone cannot serve as the decisive factor in the resolution of whether or not they are
related goods. Emphasis should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties or characteristics." The
Court, therefore, concluded that "In fine, We hold that the businesses of the parties are non-
competitive and their products so unrelated that the use of Identical trademarks is not likely
to give rise to confusion, much less cause damage to petitioner."
In the situation before us, the goods are obviously different from each other with "absolutely
no iota of similitude" 19as stressed in respondent court's judgment. They are so foreign to
each other as to make it unlikely that purchasers would think that petitioner is the
manufacturer of respondent's goods.t@lF The mere fact that one person has adopted
2st batch: Intellectual Property Law
and used a trademark on his goods does not prevent the adoption and use of the same
trademark by others on unrelated articles of a different kind. 20
Petitioner uses the trademark ESSO and holds certificate of registration of the trademark for
petroleum products, including aviation gasoline, grease, cigarette lighter fluid and other
various products such as plastics, chemicals, synthetics, gasoline solvents, kerosene,
automotive and industrial fuel, bunker fuel, lubricating oil, fertilizers, gas, alcohol,
insecticides and the ESSO Gasul" burner, while respondent's business is solely for the
manufacture and sale of the unrelated product of cigarettes. The public knows too well that
petitioner deals solely with petroleum products that there is no possibility that cigarettes with
ESSO brand will be associated with whatever good name petitioner's ESSO trademark may
have generated. Although petitioner's products are numerous, they are of the same class or
line of merchandise which are non-competing with respondent's product of cigarettes, which
as pointed out in the appealed judgment is beyond petitioner's "zone of potential or natural
and logical expansion" 21When a trademark is used by a party for a product in which the
other party does not deal, the use of the same trademark on the latter's product cannot be
validly objected to. 22
Another factor that shows that the goods involved are non-competitive and non-related is
the appellate court's finding that they flow through different channels of trade, thus: "The
products of each party move along and are disposed through different channels of
distribution. The (petitioner's) products are distributed principally through gasoline service
and lubrication stations, automotive shops and hardware stores. On the other hand, the
(respondent's) cigarettes are sold in sari-sari stores, grocery stores, and other small
distributor outlets. (Respondent's) cigarettes are even peddled in the streets while
(petitioner's) 'gasul' burners are not. Finally, there is a marked distinction between oil and
tobacco, as well as between petroleum and cigarettes. Evidently, in kind and nature the
products of (respondent) and of (petitioner) are poles apart." 23
Respondent court correctly ruled that considering the general appearances of each mark as
a whole, the possibility of any confusion is unlikely. A comparison of the labels of the samples
of the goods submitted by the parties shows a great many differences on the trademarks
used. As pointed out by respondent court in its appealed decision, "(A) witness for the
plaintiff, Mr. Buhay, admitted that the color of the "ESSO" used by the plaintiff for the oval
design where the blue word ESSO is contained is the distinct and unique kind of blue. In his
answer to the trial court's question, Mr. Buhay informed the court that the plaintiff never used
its trademark on any product where the combination of colors is similar to the label of the
Esso cigarettes," and "Another witness for the plaintiff, Mr. Tengco, testified that generally,
the plaintiff's trademark comes all in either red, white, blue or any combination of the three
colors. It is to be pointed out that not even a shade of these colors appears on the trademark
of the appellant's cigarette. The only color that the appellant uses in its trademark is
green." 24
Even the lower court, which ruled initially for petitioner, found that a "noticeable difference
between the brand ESSO being used by the defendants and the trademark ESSO of the
plaintiff is that the former has a rectangular background, while in that of the plaintiff the word
ESSO is enclosed in an oval background."
In point of fact and time, the Court's dismissal of the petition at bar was presaged by its
Resolution of May 21, 1979 dismissing by minute resolution the petition for review for lack
of merit in the Identical case of Shell Company of the Philippines, Ltd vs. Court of Appeals 25,
wherein the Court thereby affirmed the patent office's registration of the trademark SHELL
as used in the cigarettes manufactured by therein respondent Fortune Tobacco Corporation
notwithstanding the therein petitioner Shell Company's opposition thereto as the prior
registrant of the same trademark for its gasoline and other petroleum trademarks, on the
strength of the controlling authority of Acoje Mining Co. vs. Director of Patents, Supra, and
the same rationale that "(I)n the Philippines, where buyers of appellee's (Fortune Corp.'s)
cigarettes, which are low cost articles, can be more numerous compared to buyers of the
higher priced petroleum and chemical products of appellant (Shell Co.) and where appellant
(Shell) is known to be in the business of selling petroleum and petroleum-based chemical
products, and no others, it is difficult to conceive of confusion in the minds of the buying
public in the sense it can be thought that appellant (Shell) is the manufacturer of appellee's
(Fortune's) cigarettes, or that appellee (Fortune) is the manufacturer or processor of
appellant's (Shell's) petroleum and chemical products." 26
ACCORDINGLY, the petition is dismissed and the decision of respondent Court of Appeals
is hereby affirmed.
5. Unno Commercial Enterprises, Inc. v. General Milling Corp.
G.R. No. L-28554 February 28, 1983
UNNO COMMERCIAL ENTERPRISES, INCORPORATED, petitioner,
vs.
GENERAL MILLING CORPORATION and TIBURCIO S. EVALLE, in his capacity as
Director of Patents, respondents.
TEEHANKEE, J.:
The Court affirms respondent Director of Patent's decision declaring respondent General
Milling Corporation as the prior user of the trademark "All Montana" on wheat flour in the
Philippines and ordering the cancellation of the certificate of registration for the same
trademark previously issued in favor of petitioner Unno Commercial Enterprises,
Incorporated, it appearing that Unno Commercial Enterprises, Inc. merely acted as exclusive
distributor of All Montana wheat flour in the Philippines. Only the owner of a trademark, trade
name or service mark may applly for its registration and an importer, broker, indentor or
distributor acquires no rights to the trademark of the goods he is dealing with in the absence
of a valid transfer or assignment of the trade mark.
On December 11, 1962, respondent General Milling Corporation filed an application for the
registration of the trademark "All Montana" to be used in the sale of wheat flour. In view of
the fact that the same trademark was previously, registered in favor of petitioner Unno
Commercial Enterprises, Inc., the Chief Trademark Examiner of the Philippines Patent Office
declared an interference proceeding 1 between respondent corporation's application (Serial
No. 9732), as Junior - Party-Applicant and petitioner company's registration (Registration
No. 9589), as Senior Party-Applicant, docketed in the Philippines Patent Office as Inter
Partes Case No. 313, to determine which party has previously adopted and used the
trademark "All Montana".
2st batch: Intellectual Property Law
Respondent General Milling Corporation, in its application for registration, alleged that it
started using the trademark "All Montana" on August 31, 1955 and subsequently was
licensed to use the same by Centennial Mills, Inc. by virtue of a deed of assignment executed
on September 20, 1962. On the other hand petitioner Unno Commercial Enterprises, Inc.
argued that the same trademark had been registered in its favor on March 8, 1962 asserting
that it started using the trademark on June 30, 1956, as indentor or broker for S.H. Huang
Bros. & Co., a local firm.
The Director of Patents, after hearing, ruled in favor of respondent General Milling
Corporation and rendered its decision as follows:
However, there is testimony in the record (t.s.n., pp. 11-12, Jan.17,1967, testimony
of Jose Uy) to the effect that, indispensable, "ALL MONTANA" wheat flour is a
premium flour produced from premium wheat coming from the State of Montana,
U.S.A. It is apparent that the trademark is primarily geographically descriptive of the
goods. It is therefore a matter overlooked by the Trademark Examiner, and it is
incumbent upon him to determine if the applicant should claim and is qualified to
claim distinctiveness under Section 4(f) of the Trademark Statute. Otherwise, it is
registrable on the Supplemental Register and should thus be registered therein.
WHEREFORE, the Junior Party-Applicant is adjudged prior -user of the trademark
ALL MONTANA, but 'because it is primarily geographically descriptive, the
application is herein remanded to the Chief Trademark Examiner for proper
proceeding before issuance of the certificate of registration.
The certificate of registration issued to the Senior Party is ordered cancelled.
IT IS SO ORDERED.
After its motion for reconsideration was denied, petitioner brought the instant petition seeking
the reversal of the decision and praying that it be declared the owner and prior user of the
trademark "All Montana" on wheat flour.
Petitioner based its claim of ownership over the trademark in question by the fact that it acted
as an indentor or broker for S. H. Huang Bros. & Co., a local importer of wheat flour, offering
as evidence the various shipments, documents, invoices and other correspondence of
Centennial Mills, Inc., shipping thousand of bags of wheat flour bearing the trademark "All
Montana" to the Philippines. Petitioner argued that these documents, invoices and
correspondence proved the fact that it has been using the trademark "All Montana" as early
as 1955 in the concept of an owner and maintained that anyone, whether he is only an
importer, broker or indentor can appropriate, use and own a particular mark of its own choice
although he is not the manufacturer of the goods he deals with. Relying on the provisions of
Section 2-A of the Trademarks Law 2 (Republic Act 166), petitioner insists that "the
appropriation and ownership of a particular trademark is not merely confined to producers
or manufacturers but likewise to anyone who lawfully deals in merchandise who renders any
lawful service in commerce, like petitioner in the case at bar. 3
The right to register trademark is based on ownership. 4 When the applicant is not the owner
of the trademark being applied for, he has no right to apply for the registration of the
same. 5 Under the Trademark Law only the owner of the trademark, trade name or service
mark used to distinguish his goods, business or service from the goods, business or service
of others is entitled to register the same. 6
The term owner does not include the importer of the goods bearing the trademark, trade
name, service mark, or other mark of ownership, unless such importer is actually the owner
thereof in the country from which the goods are imported. A local importer, however, may
make application for the registration of a foreign trademark, trade name or service mark if
he is duly authorized by the actual owner of the name or other mark of ownership. 7
Thus, this Court, has on several occasions ruled that where the applicant's alleged
ownership is not shown in any notarial document and the applicant appears to be merely an
importer or distributor of the merchandise covered by said trademark, its application cannot
be granted. 8
Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act No. 166) allows one
"who lawfully produces or deals in merchandise ... or who engages in any lawful business
or who renders any lawful service in commerce, by actual use thereof . . . (to) appropriate to
his exclusive use a trademark, or a service mark not so appropriated by another. " In the
case at bar, the evidence showed that the trademark "All Montana" was owned and
registered in the name of Centennial Mills, Inc. which later transferred it to respondent
General Milling Corporation by way of a deed of assignment. It is undisputed that way back
in March, 1955, Centennial Mills, Inc. under the tradename Wenatchee Milling Co., exported
flour to the Philippines, through its distributor, herein petitioner Unno Commercial
Enterprises, Inc. which acted as indentor or broker for the firm S. H. Huang Bros. & Co.
However, because of increased taxes and subsidies, Centennial Mills discontinued
shipments of flour in the Philippines and eventually sold its brands for wheat flour, including
"All Montana" brand to respondent General Milling Corporation in consideration of 1,000
shares of stock of respondent corporation with a par value of P100.00 per share or a total of
P100,000.00. Respondent General Milling Corporation, since the start of the operation in
1961 of its flour mills located in Lapu-lapu City, Cebu has been manufacturing and selling
"All Montana" flour in the Philippines.
As against petitioner's argument that respondent failed to establish convincingly the
ownership of the trademark "All Montana" by its assignor Centennial Mills, Inc., the Director
of Patents correctly found that ample evidence was presented that Centennial Mills, Inc. was
the owner and prior user in the Philippines of the trademark "All Montana" through a local
importer and broker. The Deed of Assignment itself constitutes sufficient proof of its
ownership of the trademark "All Montana," showing that Centennial Mills was a corporation
duly organized and existing under and by virtue of the laws of the State of Oregon, U.S.A.
with principal place and business at Portland, Oregon, U.S.A. and the absolute and
registered owner of several trademarks for wheat flour, i.e. (Imperial, White Lily, Duck,
General, Swan, White Horse, Vinta, El Paro, Baker's Joy, Choice, Red Bowl All Montana
and Dollar.) all of which were assigned by it to respondent General Milling Corporation. The
deed of assignment was signed by its president, Dugald MacGregor, duly acknowledged
before James Hunt, a notary public for the State of Oregon, accompanied by a certification
issued by the Secretary of State of the State of Oregon stating that the said James Hunt is
a duly qualified Notary Public with full power and authority to take acknowledgments of all
oaths and that full faith and credit should be given to his official acts as notary public.
2st batch: Intellectual Property Law
The Director of Patents likewise correctly rejected petitioner's contention that in a 1954
conference in Manila the ownership and use by petitioner of the brand "All Montana" was
agreed upon, on the contrary finding that "Details of that meeting were, however, explained
by Mr. Dugald MacGregor, President of Centennial Mills, Inc., as the Junior Party's rebuttal
witness. Mr. MacGregor confirmed holding such conference in a restaurant in Manila with
representatives of the Senior Party, namely; Messrs. Jose Uy, Francisco Gonzales and S.
H. Huang although he could not remember the name of the restaurant. He further explained
that his company owned the trademark; that it had been using the mark in the United States;
and that ownership of the mark had never been conferred upon any other company, much
less the Senior Party"; and "Inasmuch as it was not the owner of the trademark, the Senior
Party could not be regarded as having used and adopted it, and had no right to apply for its
registration. It acknowledged that it was a mere importer of flour, and a mere importer and
distributor acquires no rights in the mark used on the imported goods by the foreign exporter
in the absence of an assignment of any kind ... Trademarks used and adopted on goods
manufactured or packed in a foreign country in behalf of a domestic importer, broker, or
indentor and distributor are presumed to be owned by the manufacturer or packer, unless
there is a written agreement clearly showing that ownership vests in the importer, broker,
indentor or distributor.
Thus, petitioner's contention that it is the owner of the mark "All Montana" because of its
certificate of registration issued by the Director of Patents, must fail, since ownership of a
trademark is not acquired by the mere fact of registration alone. 9 Registration merely
creates a prima facie presumption of the validity of the registration, of the registrant's
ownership of the trademark and of the exclusive right to the use thereof. 10 Registration does
not perfect a trademark right. 11 As conceded itself by petitioner, evidence may be presented
to overcome the presumption. Prior use by one will controvert a claim of legal appropriation,
by subsequent users. In the case at bar, the Director of Patents found that "ample evidence
was presented in the record that Centennial Mills, Inc. was the owner and prior user in the
Philippines of the trademark 'All Montana' through a local importer and broker. Use of a
trademark by a mere importer, indentor or exporter (the Senior Party herein) inures to the
benefit of the foreign manufacturer whose goods are Identified by the trademark. The Junior
Party has hereby established a continuous chain of title and, consequently, prior adoption
and use" and ruled that "based on the facts established, it is safe to conclude that the Junior
Party has satisfactorily discharged the burden of proving priority of adoption and use and is
entitled to registration." It is well-settled that we are precluded from making further inquiry,
since the findings of fact of the Director of Patents in the absence of any showing that there
was grave abuse of discretion is binding on us 12 and the findings of facts by the Director of
Patents are deemed conclusive in the Supreme Court provided that they are supported by
substantial evidence. 13 Petitioner has failed to show that the findings of fact of the Director
of Patents are not substantially supported by evidence nor that any grave abuse of discretion
was committed.
Finally, the Court finds without merit petitioner's argument that the Director of Patents could
not order the cancellation of' its certificate of registration in an interference proceeding and
that the question of whether or not a certificate of registration is to be cancelled should have
been brought in cancellation proceedings. Under Rule 178 of the Rules of the Patent Office
in Trademark Cases, 14 the Director of Patents is expressly authorized to order the
cancellation of a registered mark or trade name or name or other mark of ownership in an
inter partes case, such as the interference proceeding at bar. 15
WHEREFORE, the appealed decision is hereby affirmed. No costs.
6. La Chemise Lacoste v. Fernandez
G.R. No. L-63796-97 May 2, 1984
LA CHEMISE LACOSTE, S. A., petitioner,
vs.
HON. OSCAR C. FERNANDEZ, Presiding Judge of Branch XLIX, Regional Trial
Court, National Capital Judicial Region, Manila and GOBINDRAM
HEMANDAS, respondents.
G.R. No. L-65659 May 2l, 1984
GOBINDRAM HEMANDAS SUJANANI, petitioner,
vs.
HON. ROBERTO V. ONGPIN, in his capacity as Minister of Trade and Industry, and
HON. CESAR SAN DIEGO, in his capacity as Director of Patents, respondents.
GUTIERREZ, JR., J.:
It is among this Court's concerns that the Philippines should not acquire an unbecoming
reputation among the manufacturing and trading centers of the world as a haven for
intellectual pirates imitating and illegally profiting from trademarks and tradenames which
have established themselves in international or foreign trade.
Before this Court is a petition for certiorari with preliminary injunction filed by La Chemise
Lacoste, S.A., a well known European manufacturer of clothings and sporting apparels sold
in the international market and bearing the trademarks "LACOSTE" "CHEMISE LACOSTE",
"CROCODILE DEVICE" and a composite mark consisting of the word "LACOSTE" and a
representation of a crocodile/alligator. The petitioner asks us to set aside as null and void,
the order of judge Oscar C. Fernandez, of Branch XLIX, Regional Trial Court, National
Capital Judicial Region, granting the motion to quash the search warrants previously issued
by him and ordering the return of the seized items.
The facts are not seriously disputed. The petitioner is a foreign corporation, organized and
existing under the laws of France and not doing business in the Philippines, It is undeniable
from the records that it is the actual owner of the abovementioned trademarks used on
clothings and other goods specifically sporting apparels sold in many parts of the world and
which have been marketed in the Philippines since 1964, The main basis of the private
respondent's case is its claim of alleged prior registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was issued Reg.
No. SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE
LACOSTE & CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts,
sportswear and other garment products of the company. Two years later, it applied for the
registration of the same trademark under the Principal Register. The Patent Office eventually
issued an order dated March 3, 1977 which states that:
2st batch: Intellectual Property Law
xxx xxx xxx
... Considering that the mark was already registered in the Supplemental Register in
favor of herein applicant, the Office has no other recourse but to allow the application,
however, Reg. No. SR-2225 is now being contested in a Petition for Cancellation
docketed as IPC No. 1046, still registrant is presumed to be the owner of the mark
until after the registration is declared cancelled.
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights, title,
and interest in the trademark "CHEMISE LACOSTE & DEVICE".
On November 21, 1980, the petitioner filed its application for registration of the trademark
"Crocodile Device" (Application Serial No. 43242) and "Lacoste" (Application Serial No.
43241).The former was approved for publication while the latter was opposed by Games
and Garments in Inter Partes Case No. 1658. In 1982, the petitioner filed a Petition for the
Cancellation of Reg. No. SR-2225 docketed as Inter Partes Case No. 1689. Both cases have
now been considered by this Court in Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National Bureau of Investigation (NBI) a
letter-complaint alleging therein the acts of unfair competition being committed by Hemandas
and requesting their assistance in his apprehension and prosecution. The NBI conducted an
investigation and subsequently filed with the respondent court two applications for the
issuance of search warrants which would authorize the search of the premises used and
occupied by the Lacoste Sports Center and Games and Garments both owned and operated
by Hemandas.
The respondent court issued Search Warrant Nos. 83-128 and 83-129 for violation of Article
189 of the Revised Penal Code, "it appearing to the satisfaction of the judge after examining
under oath applicant and his witnesses that there are good and sufficient reasons to believe
that Gobindram Hemandas ... has in his control and possession in his premises the ...
properties subject of the offense," (Rollo, pp. 67 and 69) The NBI agents executed the two
search warrants and as a result of the search found and seized various goods and articles
described in the warrants.
Hemandas filed a motion to quash the search warrants alleging that the trademark used by
him was different from petitioner's trademark and that pending the resolution of IPC No. 1658
before the Patent Office, any criminal or civil action on the same subject matter and between
the same parties would be premature.
The petitioner filed its opposition to the motion arguing that the motion to quash was fatally
defective as it cited no valid ground for the quashal of the search warrants and that the
grounds alleged in the motion were absolutely without merit. The State Prosecutor likewise
filed his opposition on the grounds that the goods seized were instrument of a crime and
necessary for the resolution of the case on preliminary investigation and that the release of
the said goods would be fatal to the case of the People should prosecution follow in court.
The respondent court was, however, convinced that there was no probable cause to justify
the issuance of the search warrants. Thus, in its order dated March 22, 1983, the search
warrants were recalled and set aside and the NBI agents or officers in custody of the seized
items were ordered to return the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following issues:
Did respondent judge act with grave abuse of discretion amounting to lack of
jurisdiction,
(i) in reversing the finding of probable cause which he himself had made in issuing
the search warrants, upon allegations which are matters of defense and as such can
be raised and resolved only upon trial on the merits; and
(ii) in finding that the issuance of the search warrants is premature in the face of the
fact that (a) Lacoste's registration of the subject trademarks is still pending with the
Patent Office with opposition from Hemandas; and (b) the subject trademarks had
been earlier registered by Hemandas in his name in the Supplemental Register of
the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the following issues:
I. THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE COURTS.
II. THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION IN ISSUING THE ORDER DATED APRIL 22,
1983.
Hemandas argues in his comment on the petition for certiorari that the petitioner being a
foreign corporation failed to allege essential facts bearing upon its capacity to sue before
Philippine courts. He states that not only is the petitioner not doing business in the
Philippines but it also is not licensed to do business in the Philippines. He also cites the case
of Leviton Industries v. Salvador (114 SCRA 420) to support his contention
The Leviton case, however, involved a complaint for unfair competition under Section 21-A
of Republic Act No. 166 which provides:
Sec. 21 A. Any foreign corporation or juristic person to which a mark or tradename
has been registered or assigned under this Act may bring an action hereunder for
infringement, for unfair competition, or false designation of origin and false
description, whether or not it has been licensed to do business in the Philippines
under Act numbered Fourteen Hundred and Fifty-Nine, as amended, otherwise
known as the Corporation Law, at the time it brings the complaint; Provided, That the
country of which the said foreign corporation or juristic person is a citizen, or in which
it is domiciled, by treaty, convention or law, grants a similar privilege to corporate or
juristic persons of the Philippines.
We held that it was not enough for Leviton, a foreign corporation organized and existing
under the laws of the State of New York, United States of America, to merely allege that it is
a foreign corporation. It averred in Paragraph 2 of its complaint that its action was being filed
under the provisions of Section 21-A of Republic Act No. 166, as amended. Compliance with
2st batch: Intellectual Property Law
the requirements imposed by the abovecited provision was necessary because Section 21-
A of Republic Act No. 166 having explicitly laid down certain conditions in a specific proviso,
the same must be expressly averred before a successful prosecution may ensue. It is
therefore, necessary for the foreign corporation to comply with these requirements or aver
why it should be exempted from them, if such was the case. The foreign corporation may
have the right to sue before Philippine courts, but our rules on pleadings require that the
qualifying circumstances necessary for the assertion of such right should first be affirmatively
pleaded.
In contradistinction, the present case involves a complaint for violation of Article 189 of the
Revised Penal Code. The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton argument, Hemandas argued in his
brief that the petitioner was doing business in the Philippines but was not licensed to do so.
To support this argument, he states that the applicable ruling is the case of Mentholatum
Co., Inc. v. Mangaliman: (72 Phil. 524) where Mentholatum Co. Inc., a foreign corporation
and Philippine-American Drug Co., the former's exclusive distributing agent in the
Philippines filed a complaint for infringement of trademark and unfair competition against the
Mangalimans.
The argument has no merit. The Mentholatum case is distinct from and inapplicable to the
case at bar. Philippine American Drug Co., Inc., was admittedly selling products of its
principal Mentholatum Co., Inc., in the latter's name or for the latter's account. Thus, this
Court held that "whatever transactions the Philippine-American Drug Co., Inc. had executed
in view of the law, the Mentholatum Co., Inc., did it itself. And, the Mentholatum Co., Inc.,
being a foreign doing business in the Philippines without the license required by Section 68
of the Corporation Law, it may not prosecute this action for violation of trademark and unfair
competition."
In the present case, however, the petitioner is a foreign corporation not doing business in
the Philippines. The marketing of its products in the Philippines is done through an exclusive
distributor, Rustan Commercial Corporation The latter is an independent entity which buys
and then markets not only products of the petitioner but also many other products bearing
equally well-known and established trademarks and tradenames. in other words, Rustan is
not a mere agent or conduit of the petitioner.
The rules and regulations promulgated by the Board of Investments pursuant to its rule-
making power under Presidential Decree No. 1789, otherwise known as the Omnibus
Investment Code, support a finding that the petitioner is not doing business in the
Philippines. Rule I, Sec. 1 (g) of said rules and regulations defines "doing business" as one"
which includes, inter alia:
(1) ... A foreign firm which does business through middlemen acting on their own
names, such as indentors, commercial brokers or commission merchants, shall not
be deemed doing business in the Philippines. But such indentors, commercial
brokers or commission merchants shall be the ones deemed to be doing business in
the Philippines.
(2) Appointing a representative or distributor who is domiciled in the Philippines,
unless said representative or distributor has an independent status, i.e., it transacts
business in its name and for its account, and not in the name or for the account of a
principal Thus, where a foreign firm is represented by a person or local company
which does not act in its name but in the name of the foreign firm the latter is doing
business in the Philippines.
xxx xxx xxx
Applying the above provisions to the facts of this case, we find and conclude that the
petitioner is not doing business in the Philippines. Rustan is actually a middleman acting and
transacting business in its own name and or its own account and not in the name or for the
account of the petitioner.
But even assuming the truth of the private respondent's allegation that the petitioner failed
to allege material facts in its petition relative to capacity to sue, the petitioner may still
maintain the present suit against respondent Hemandas. As early as 1927, this Court was,
and it still is, of the view that a foreign corporation not doing business in the Philippines
needs no license to sue before Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 115), this Court
held that a foreign corporation which has never done any business in the Philippines and
which is unlicensed and unregistered to do business here, but is widely and favorably known
in the Philippines through the use therein of its products bearing its corporate and
tradename, has a legal right to maintain an action in the Philippines to restrain the residents
and inhabitants thereof from organizing a corporation therein bearing the same name as the
foreign corporation, when it appears that they have personal knowledge of the existence of
such a foreign corporation, and it is apparent that the purpose of the proposed domestic
corporation is to deal and trade in the same goods as those of the foreign corporation.
We further held:
xxx xxx xxx
... That company is not here seeking to enforce any legal or control rights arising
from, or growing out of, any business which it has transacted in the Philippine
Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill, whenever that reputation,
corporate name or goodwill have, through the natural development of its trade,
established themselves.' And it contends that its rights to the use of its corporate and
trade name:
Is a property right, a right in rem, which it may assert and protect against all the world,
in any of the courts of the world-even in jurisdictions where it does not transact
business-just the same as it may protect its tangible property, real or personal,
against trespass, or conversion. Citing sec. 10, Nims on Unfair Competition and
TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks, Trade Names
and Unfair Competition and cases cited.' That point is sustained by the authorities,
and is well stated in Hanover Star Mining Co. v. Allen and Wheeler Co. (208 Fed.,
513). in which the syllabus says:
2st batch: Intellectual Property Law

Since it is the trade and not the mark that is to be protected, a trade-mark (2) Nationals of each of the countries of the Union shall as regards the protection of
acknowledges no territorial boundaries of municipalities or states or nations, but industrial property, enjoy in all the other countries of the Union the advantages that
extends to every market where the trader's goods have become known and Identified their respective laws now grant, or may hereafter grant, to nationals, without
by the use of the mark. prejudice to the rights specially provided by the present Convention. Consequently,
they shall have the same protection as the latter, and the same legal remedy against
Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent any infringement of their rights, provided they observe the conditions and formalities
imposed upon nationals.
setting. Our jurisprudence is replete with cases illustrating instances when foreign
corporations not doing business in the Philippines may nonetheless sue in our courts. In East
Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1), we recognized a right of foreign xxx xxx xxx
corporation to sue on isolated transactions. In General Garments Corp. v. Director of
Patents (41 SCRA 50), we sustained the right of Puritan Sportswear Corp., a foreign
ARTICLE 6
corporation not licensed to do and not doing business in the Philippines, to file a petition for
cancellation of a trademark before the Patent Office.
(1) The countries of the Union undertake, either administratively if their legislation so
permits, or at the request of an interested party, to refuse or to cancel the registration
More important is the nature of the case which led to this petition. What preceded this petition and to prohibit the use of a trademark which constitutes a reproduction, imitation or
for certiorari was a letter complaint filed before the NBI charging Hemandas with a criminal translation, liable to create confusion, of a mark considered by the competent
offense, i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after
authority of the country of registration or use to be well-known in that country as
the completion of the preliminary investigation being conducted by the Special Prosecutor being already the mark of a person entitled to the benefits of the present Convention
the information shall be in the name of the People of the Philippines and no longer the
and used for Identical or similar goods. These provisions shall also apply when the
petitioner which is only an aggrieved party since a criminal offense is essentially an act essential part of the mark constitutes a reproduction of any such well-known mark or
against the State. It is the latter which is principally the injured party although there is a an imitation liable to create confusion therewith.
private right violated. Petitioner's capacity to sue would become, therefore, of not much
significance in the main case. We cannot snow a possible violator of our criminal statutes to
escape prosecution upon a far-fetched contention that the aggrieved party or victim of a xxx xxx xxx
crime has no standing to sue.
ARTICLE 8
In upholding the right of the petitioner to maintain the present suit before our courts for unfair
competition or infringement of trademarks of a foreign corporation, we are moreover A trade name shall be protected in all the countries of the Union without the obligation
recognizing our duties and the rights of foreign states under the Paris Convention for the of filing or registration, whether or not it forms part of a trademark.
Protection of Industrial Property to which the Philippines and France are parties. We are
simply interpreting and enforcing a solemn international commitment of the Philippines
embodied in a multilateral treaty to which we are a party and which we entered into because xxx xxx xxx
it is in our national interest to do so.
ARTICLE 10bis
The Paris Convention provides in part that:
(1) The countries of the Union are bound to assure to persons entitled to the benefits
ARTICLE 1 of the Union effective protection against unfair competition.

(1) The countries to which the present Convention applies constitute themselves into
a Union for the protection of industrial property.
ARTICLE 10ter
(2) The protection of industrial property is concerned with patents, utility models,
industrial designs, trademarks service marks, trade names, and indications of source
or appellations of origin, and the repression of unfair competition.
xxx xxx xxx
ARTICLE 2
xxx xxx xxx
(1) The countries of the Union undertake to assure to nationals of the other countries
of the Union appropriate legal remedies to repress effectively all the acts referred to
in Articles 9, 10 and l0bis.
(2) They undertake, further, to provide measures to permit syndicates and
associations which represent the industrialists, producers or traders concerned and
the existence of which is not contrary to the laws of their countries, to take action in
2st batch: Intellectual Property Law
the Courts or before the administrative authorities, with a view to the repression of
the acts referred to in Articles 9, 10 and 10bis, in so far as the law of the country in
which protection is claimed allows such action by the syndicates and associations of
that country.
xxx xxx xxx
ARTICLE 17
Every country party to this Convention undertakes to adopt, in accordance with its
constitution, the measures necessary to ensure the application of this Convention.
It is understood that at the time an instrument of ratification or accession is deposited
on behalf of a country; such country will be in a position under its domestic law to
give effect to the provisions of this Convention. (61 O.G. 8010)
xxx xxx xxx
In Vanity Fair Mills, Inc. v. T Eaton Co. (234 F. 2d 633) the United States Circuit Court of
Appeals had occasion to comment on the extraterritorial application of the Paris Convention
It said that:
[11] The International Convention is essentially a compact between the various
member countries to accord in their own countries to citizens of the other contracting
parties trademark and other rights comparable to those accorded their own citizens
by their domestic law. The underlying principle is that foreign nationals should be
given the same treatment in each of the member countries as that country makes
available to its own citizens. In addition, the Convention sought to create uniformity
in certain respects by obligating each member nation 'to assure to nationals of
countries of the Union an effective protection against unfair competition.'
[12] The Convention is not premised upon the Idea that the trade-mark and related
laws of each member nation shall be given extra-territorial application, but on exactly
the converse principle that each nation's law shall have only territorial application.
Thus a foreign national of a member nation using his trademark in commerce in the
United States is accorded extensive protection here against infringement and other
types of unfair competition by virtue of United States membership in the Convention.
But that protection has its source in, and is subject to the limitations of, American
law, not the law of the foreign national's own country. ...
By the same token, the petitioner should be given the same treatment in the Philippines as
we make available to our own citizens. We are obligated to assure to nationals of "countries
of the Union" an effective protection against unfair competition in the same way that they are
obligated to similarly protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20, 1980 issued a
memorandum addressed to the Director of the Patents Office directing the latter:
xxx xxx xxx
... to reject all pending applications for Philippine registration of signature and other
world famous trademarks by applicants other than its original owners or users.
The conflicting claims over internationally known trademarks involve such name
brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci,
Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey
Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such
trademarks should be asked to surrender their certificates of registration, if any, to
avoid suits for damages and other legal action by the trademarks' foreign or local
owners or original users.
The memorandum is a clear manifestation of our avowed adherence to a policy of
cooperation and amity with all nations. It is not, as wrongly alleged by the private respondent,
a personal policy of Minister Luis Villafuerte which expires once he leaves the Ministry of
Trade. For a treaty or convention is not a mere moral obligation to be enforced or not at the
whims of an incumbent head of a Ministry. It creates a legally binding obligation on the
parties founded on the generally accepted principle of international law of pacta sunt
servanda which has been adopted as part of the law of our land. (Constitution, Art. II, Sec.
3). The memorandum reminds the Director of Patents of his legal duty to obey both law and
treaty. It must also be obeyed.
Hemandas further contends that the respondent court did not commit grave abuse of
discretion in issuing the questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion to quash the search warrants
reveals the fact that they are not appropriate for quashing a warrant. They are matters of
defense which should be ventilated during the trial on the merits of the case. For instance,
on the basis of the facts before the Judge, we fail to understand how he could treat a bare
allegation that the respondent's trademark is different from the petitioner's trademark as a
sufficient basis to grant the motion to quash. We will treat the issue of prejudicial question
later. Granting that respondent Hemandas was only trying to show the absence of probable
cause, we, nonetheless, hold the arguments to be untenable.
As a mandatory requirement for the issuance of a valid search warrant, the Constitution
requires in no uncertain terms the determination of probable cause by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce
(Constitution, Art. IV, Sec. 3). Probable cause has traditionally meant such facts and
circumstances antecedent to the issuance of the warrant that are in themselves sufficient to
induce a cautious man to rely upon them and act in pursuance thereof (People v. Sy Juco,
64 Phil. 667).
This concept of probable cause was amplified and modified by our ruling in Stonehill v.
Diokno, (20 SCRA 383) that probable cause "presupposes the introduction of competent
proof that the party against whom it is sought has performed particular acts, or committed
specific omissions, violating a given provision of our criminal laws."
2st batch: Intellectual Property Law
The question of whether or not probable cause exists is one which must be decided in the
light of the conditions obtaining in given situations (Central Bank v. Morfe, 20 SCRA 507).
We agree that there is no general formula or fixed rule for the determination of the existence
of probable cause since, as we have recognized in Luna v. Plaza (26 SCRA 310), the
existence depends to a large degree upon the finding or opinion of the judge conducting the
examination. However, the findings of the judge should not disregard the facts before him
nor run counter to the clear dictates of reason. More so it is plain that our country's ability to
abide by international commitments is at stake.
The records show that the NBI agents at the hearing of the application for the warrants
before respondent court presented three witnesses under oath, sworn statements, and
various exhibits in the form of clothing apparels manufactured by Hemandas but carrying the
trademark Lacoste. The respondent court personally interrogated Ramon Esguerra, Samuel
Fiji, and Mamerto Espatero by means of searching questions. After hearing the testimonies
and examining the documentary evidence, the respondent court was convinced that there
were good and sufficient reasons for the issuance of the warrant. And it then issued the
warrant.
The respondent court, therefore, complied with the constitutional and statutory requirements
for the issuance of a valid search warrant. At that point in time, it was fully convinced that
there existed probable cause. But after hearing the motion to quash and the oppositions
thereto, the respondent court executed a complete turnabout and declared that there was
no probable cause to justify its earlier issuance of the warrants.
True, the lower court should be given the opportunity to correct its errors, if there be any, but
the rectification must, as earlier stated be based on sound and valid grounds. In this case,
there was no compelling justification for the about face. The allegation that vital facts were
deliberately suppressed or concealed by the petitioner should have been assessed more
carefully because the object of the quashal was the return of items already seized and easily
examined by the court. The items were alleged to be fake and quite obviously would be
needed as evidence in the criminal prosecution. Moreover, an application for a search
warrant is heard ex parte. It is neither a trial nor a part of the trial. Action on these
applications must be expedited for time is of the essence. Great reliance has to be accorded
by the judge to the testimonies under oath of the complainant and the witnesses. The
allegation of Hemandas that the applicant withheld information from the respondent court
was clearly no basis to order the return of the seized items.
Hemandas relied heavily below and before us on the argument that it is the holder of a
certificate of registration of the trademark "CHEMISE LACOSTE & CROCODILE DEVICE".
Significantly, such registration is only in the Supplemental Register.
A certificate of registration in the Supplemental Register is not prima facie evidence of the
validity of registration, of the registrant's exclusive right to use the same in connection with
the goods, business, or services specified in the certificate. Such a certificate of registration
cannot be filed, with effect, with the Bureau of Customs in order to exclude from the
Philippines, foreign goods bearing infringement marks or trade names (Rule 124, Revised
Rules of Practice Before the Phil. Pat. Off. in Trademark Cases; Martin, Philippine
Commercial Laws, 1981, Vol. 2, pp. 513-515).
Section 19-A of Republic Act 166 as amended not only provides for the keeping of the
supplemental register in addition to the principal register but specifically directs that:
xxx xxx xxx
The certificates of registration for marks and trade names registered on the
supplemental register shall be conspicuously different from certificates issued for
marks and trade names on the principal register.
xxx xxx xxx
The reason is explained by a leading commentator on Philippine Commercial Laws:
The registration of a mark upon the supplemental register is not, as in the case of
the principal register, prima facie evidence of (1) the validity of registration; (2)
registrant's ownership of the mark; and (3) registrant's exclusive right to use the
mark. It is not subject to opposition, although it may be cancelled after its issuance.
Neither may it be the subject of interference proceedings. Registration on the
supplemental register is not constructive notice of registrant's claim of ownership. A
supplemental register is provided for the registration of marks which are not
registrable on the principal register because of some defects (conversely, defects
which make a mark unregistrable on the principal register, yet do not bar them from
the supplemental register.) (Agbayani, II Commercial Laws of the Philippines, 1978,
p. 514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of Director of Patents,
Apr. 30, 1963);
Registration in the Supplemental Register, therefore, serves as notice that the registrant is
using or has appropriated the trademark. By the very fact that the trademark cannot as yet
be entered in the Principal Register, all who deal with it should be on guard that there are
certain defects, some obstacles which the user must Still overcome before he can claim
legal ownership of the mark or ask the courts to vindicate his claims of an exclusive right to
the use of the same. It would be deceptive for a party with nothing more than a registration
in the Supplemental Register to posture before courts of justice as if the registration is in the
Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on
application Serial No. 30954 that "registrant is presumed to be the owner of the mark until
after the registration is declared cancelled" is, therefore, misplaced and grounded on shaky
foundation, The supposed presumption not only runs counter to the precept embodied in
Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark
Cases but considering all the facts ventilated before us in the four interrelated petitions
involving the petitioner and the respondent, it is devoid of factual basis. And even in cases
where presumption and precept may factually be reconciled, we have held that the
presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R. No. L10612, May 30,
1958, Unreported). One may be declared an unfair competitor even if his competing
trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil. 928; La Yebana
Co. v. Chua Seco & Co., 14 Phil. 534).
2st batch: Intellectual Property Law
By the same token, the argument that the application was premature in view of the pending
case before the Patent Office is likewise without legal basis.
The proceedings pending before the Patent Office involving IPC Co. 1658 do not partake of
the nature of a prejudicial question which must first be definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
A petition for the suspension of the criminal action based upon the pendency of a
pre-judicial question in a civil case, may only be presented by any party before or
during the trial of the criminal action.
The case which suspends the criminal prosecution must be a civil case which is
determinative of the innocence or, subject to the availability of other defenses, the guilt of
the accused. The pending case before the Patent Office is an administrative proceeding and
not a civil case. The decision of the Patent Office cannot be finally determinative of the
private respondent's innocence of the charges against him.
In Flordelis v. Castillo (58 SCRA 301), we held that:
As clearly delineated in the aforecited provisions of the new Civil Code and the Rules
of Court, and as uniformly applied in numerous decisions of this Court, (Berbari v.
Concepcion, 40 Phil. 837 (1920); Aleria v. Mendoza, 83 Phil. 427 (1949); People v.
Aragon, 94 Phil. 357 (1954); Brito-Sy v. Malate Taxicab & Garage, Inc., 102 Phil 482
(1957); Mendiola v. Macadael, 1 SCRA 593; Benitez v. Concepcion, 2 SCRA 178;
Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia, 22 SCRA 1380.) In
Buenaventura v. Ocampo (55 SCRA 271) the doctrine of prejudicial question was
held inapplicable because no criminal case but merely an administrative case and a
civil suit were involved. The Court, however, held that, in view of the peculiar
circumstances of that case, the respondents' suit for damages in the lower court was
premature as it was filed during the pendency of an administrative case against the
respondents before the POLCOM. 'The possibility cannot be overlooked,' said the
Court, 'that the POLCOM may hand down a decision adverse to the respondents, in
which case the damage suit will become unfounded and baseless for wanting in
cause of action.') the doctrine of pre-judicial question comes into play generally in a
situation where a civil action and a criminal action both penned and there exists in
the former an issue which must be preemptively resolved before the criminal action
may proceed, because howsoever the issue raised in the civil action is resolved
would be determinative juris et de jure of the guilt or innocence of the accused in the
criminal case.
In the present case, no civil action pends nor has any been instituted. What was pending
was an administrative case before the Patent Office.
Even assuming that there could be an administrative proceeding with exceptional or special
circumstances which render a criminal prosecution premature pending the promulgation of
the administrative decision, no such peculiar circumstances are present in this case.
Moreover, we take note of the action taken by the Patents Office and the Minister of Trade
and affirmed by the Intermediate Appellate Court in the case of La Chemise Lacoste S. A.
v. Ram Sadhwani (AC-G.R. No. SP-13356, June 17, 1983).
The same November 20, 1980 memorandum of the Minister of Trade discussed in this
decision was involved in the appellate court's decision. The Minister as the "implementing
authority" under Article 6bis of the Paris Convention for the protection of Industrial Property
instructed the Director of Patents to reject applications for Philippine registration of signature
and other world famous trademarks by applicants other than its original owners or users.
The brand "Lacoste" was specifically cited together with Jordache, Gloria Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar dela Renta, Calvin Klein, Givenchy,
Ralph Laurence, Geoffrey Beene, Lanvin, and Ted Lapidus. The Director of Patents was
likewise ordered to require Philippine registrants of such trademarks to surrender their
certificates of registration. Compliance by the Director of Patents was challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v. Sadhwani decision
which we cite with approval sustained the power of the Minister of Trade to issue the
implementing memorandum and, after going over the evidence in the records, affirmed the
decision of the Director of Patents declaring La Chemise Lacoste &A. the owner of the
disputed trademark and crocodile or alligator device. The Intermediate Appellate Court
speaking through Mr. Justice Vicente V. Mendoza stated:
In the case at bar, the Minister of Trade, as 'the competent authority of the country
of registration,' has found that among other well-known trademarks 'Lacoste' is the
subject of conflicting claims. For this reason, applications for its registration must be
rejected or refused, pursuant to the treaty obligation of the Philippines.
Apart from this finding, the annexes to the opposition, which La Chemise Lacoste
S.A. filed in the Patent Office, show that it is the owner of the trademark 'Lacoste'
and the device consisting of a representation of a crocodile or alligator by the prior
adoption and use of such mark and device on clothing, sports apparel and the like.
La Chemise Lacoste S.A, obtained registration of these mark and device and was in
fact issued renewal certificates by the French National Industry Property Office.
xxx xxx xxx
Indeed, due process is a rule of reason. In the case at bar the order of the Patent
Office is based not only on the undisputed fact of ownership of the trademark by the
appellee but on a prior determination by the Minister of Trade, as the competent
authority under the Paris Convention, that the trademark and device sought to be
registered by the appellant are well-known marks which the Philippines, as party to
the Convention, is bound to protect in favor of its owners. it would be to exalt form
over substance to say that under the circumstances, due process requires that a
hearing should be held before the application is acted upon.
The appellant cites section 9 of Republic Act No. 166, which requires notice and
hearing whenever an opposition to the registration of a trademark is made. This
provision does not apply, however, to situations covered by the Paris Convention,
where the appropriate authorities have determined that a well-known trademark is
already that of another person. In such cases, the countries signatories to the
2st batch: Intellectual Property Law
Convention are obliged to refuse or to cancel the registration of the mark by any
other person or authority. In this case, it is not disputed that the trademark Lacoste
is such a well-known mark that a hearing, such as that provided in Republic Act No.
166, would be superfluous.
The issue of due process was raised and fully discussed in the appellate court's decision.
The court ruled that due process was not violated.
In the light of the foregoing it is quite plain that the prejudicial question argument is without
merit.
We have carefully gone over the records of all the cases filed in this Court and find more
than enough evidence to sustain a finding that the petitioner is the owner of the trademarks
"LACOSTE", "CHEMISE LACOSTE", the crocodile or alligator device, and the composite
mark of LACOSTE and the representation of the crocodile or alligator. Any pretensions of
the private respondent that he is the owner are absolutely without basis. Any further
ventilation of the issue of ownership before the Patent Office will be a superfluity and a
dilatory tactic.
The issue of whether or not the trademark used by the private respondent is different from
the petitioner's trade mark is a matter of defense and will be better resolved in the criminal
proceedings before a court of justice instead of raising it as a preliminary matter in an
administrative proceeding.
The purpose of the law protecting a trademark cannot be overemphasized. They are to point
out distinctly the origin or ownership of the article to which it is affixed, to secure to him, who
has been instrumental in bringing into market a superior article of merchandise, the fruit of
his industry and skill, and to prevent fraud and imposition (Etepha v. Director of Patents, 16
SCRA 495).
The legislature has enacted laws to regulate the use of trademarks and provide for the
protection thereof. Modern trade and commerce demands that depredations on legitimate
trade marks of non-nationals including those who have not shown prior registration thereof
should not be countenanced. The law against such depredations is not only for the protection
of the owner of the trademark but also, and more importantly, for the protection of purchasers
from confusion, mistake, or deception as to the goods they are buying. (Asari Yoko Co., Ltd.
v. Kee Boc, 1 SCRA 1; General Garments Corporation v. Director of Patents, 41 SCRA 50).
The law on trademarks and tradenames is based on the principle of business integrity and
common justice' This law, both in letter and spirit, is laid upon the premise that, while it
encourages fair trade in every way and aims to foster, and not to hamper, competition, no
one, especially a trader, is justified in damaging or jeopardizing another's business by fraud,
deceipt, trickery or unfair methods of any sort. This necessarily precludes the trading by one
dealer upon the good name and reputation built up by another (Baltimore v. Moses, 182 Md
229, 34 A (2d) 338).
The records show that the goodwill and reputation of the petitioner's products bearing the
trademark LACOSTE date back even before 1964 when LACOSTE clothing apparels were
first marketed in the Philippines. To allow Hemandas to continue using the trademark
Lacoste for the simple reason that he was the first registrant in the Supplemental Register
of a trademark used in international commerce and not belonging to him is to render nugatory
the very essence of the law on trademarks and tradenames.
We now proceed to the consideration of the petition in Gobindram Hemandas Suianani
u. Hon. Roberto V Ongpin, et al. (G.R. No. 65659).
Actually, three other petitions involving the same trademark and device have been filed with
this Court.
In Hemandas & Co. v. Intermediate Appellate Court, et al. (G.R. No. 63504) the petitioner
asked for the following relief:
IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a) that the Resolutions
of the respondent Court of January 3, 1983 and February 24, 1983 be nullified; and
that the Decision of the same respondent Court of June 30, 1983 be declared to be
the law on the matter; (b) that the Director of Patents be directed to issue the
corresponding registration certificate in the Principal Register; and (c) granting upon
the petitioner such other legal and equitable remedies as are justified by the
premises.
On December 5, 1983, we issued the following resolution:
Considering the allegations contained, issues raised and the arguments adduced in
the petition for review, the respondent's comment thereon, and petitioner's reply to
said comment, the Court Resolved to DENY the petition for lack of merit.
The Court further Resolved to CALL the attention of the Philippine Patent Office to
the pendency in this Court of G.R. No. 563796-97 entitled 'La Chemise Lacoste, S.A.
v. Hon. Oscar C. Fernandez and Gobindram Hemandas' which was given due course
on June 14, 1983 and to the fact that G.R. No. 63928-29 entitled 'Gobindram
Hemandas v. La Chemise Lacoste, S.A., et al.' filed on May 9, 1983 was dismissed
for lack of merit on September 12, 1983. Both petitions involve the same dispute over
the use of the trademark 'Chemise Lacoste'.
The second case of Gobindram Hemandas vs. La Chemise Lacoste, S.A., et al. (G.R. No.
63928-29) prayed for the following:
I. On the petition for issuance of writ of preliminary injunction, an order be issued
after due hearing:
l. Enjoining and restraining respondents Company, attorneys-in-fact, and Estanislao
Granados from further proceedings in the unfair competition charges pending with
the Ministry of Justice filed against petitioner;
2. Enjoining and restraining respondents Company and its attorneys-in-fact from
causing undue publication in newspapers of general circulation on their unwarranted
claim that petitioner's products are FAKE pending proceedings hereof; and
2st batch: Intellectual Property Law
3. Enjoining and restraining respondents Company and its attorneys-in-fact from
sending further threatening letters to petitioner's customers unjustly stating that
petitioner's products they are dealing in are FAKE and threatening them with
confiscation and seizure thereof.
II. On the main petition, judgment be rendered:
l. Awarding and granting the issuance of the Writ of Prohibition, prohibiting, stopping,
and restraining respondents from further committing the acts complained of;
2. Awarding and granting the issuance of the Writ of Mandamus, ordering and
compelling respondents National Bureau of Investigation, its aforenamed agents,
and State Prosecutor Estanislao Granados to immediately comply with the Order of
the Regional Trial Court, National Capital Judicial Region, Branch XLIX, Manila,
dated April 22, 1983, which directs the immediate return of the seized items under
Search Warrants Nos. 83-128 and 83-129;
3. Making permanent any writ of injunction that may have been previously issued by
this Honorable Court in the petition at bar: and
4. Awarding such other and further relief as may be just and equitable in the
premises.
As earlier stated, this petition was dismissed for lack of merit on September 12, 1983. Acting
on a motion for reconsideration, the Court on November 23, 1983 resolved to deny the
motion for lack of merit and declared the denial to be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
In this last petition, the petitioner prays for the setting aside as null and void and for the
prohibiting of the enforcement of the following memorandum of respondent Minister Roberto
Ongpin:
MEMORANDUM:
FOR: THE DIRECTOR OF PATENTS
Philippine Patent Office
xxx xxx xxx
Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-
making and adjudicatory powers of the Minister of Trade and Industry and provides inter
alia, that 'such rule-making and adjudicatory powers should be revitalized in order that the
Minister of Trade and Industry can ...apply more swift and effective solutions and remedies
to old and new problems ... such as the infringement of internationally-known tradenames
and trademarks ...'and in view of the decision of the Intermediate Appellate Court in the case
of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. Sp. No. 13359 (17)
June 1983] which affirms the validity of the MEMORANDUM of then Minister Luis R.
Villafuerte dated 20 November 1980 confirming our obligations under the PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY to which the
Republic of the Philippines is a signatory, you are hereby directed to implement measures
necessary to effect compliance with our obligations under said convention in general, and,
more specifically, to honor our commitment under Section 6 bis thereof, as follows:
1. Whether the trademark under consideration is well-known in the Philippines or is
a mark already belonging to a person entitled to the benefits of the CONVENTION,
this should be established, pursuant to Philippine Patent Office procedures in inter
partes and ex parte cases, according to any of the following criteria or any
combination thereof:
(a) a declaration by the Minister of Trade and Industry that' the trademark being
considered is already well-known in the Philippines such that permission for
its use by other than its original owner will constitute a reproduction, imitation,
translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by proof
that goods bearing the trademark are sold on an international scale,
advertisements, the establishment of factories, sales offices, distributorships,
and the like, in different countries, including volume or other measure of
international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s) of
another country or countries, taking into consideration the dates of such
registration;
(d) that the trademark has been long established and obtained goodwill and
general international consumer recognition as belonging to one owner or
source;
(e) that the trademark actually belongs to a party claiming ownership and has
the right to registration under the provisions of the aforestated PARIS
CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include tradenames,
service marks, logos, signs, emblems, insignia or other similar devices used for
Identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or imitation of
a trademark owned by a person, natural or corporate, who is a citizen of a country
signatory to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in cases
already or hereafter filed against the registration of trademarks entitled to protection
of Section 6 bis of said PARIS CONVENTION as outlined above, by remanding
applications filed by one not entitled to such protection for final disallowance by the
Examination Division.
5. All pending applications for Philippine registration of signature and other world
famous trademarks filed by applicants other than their original owners or users shall
be rejected forthwith. Where such applicants have already obtained registration
contrary to the abovementioned PARIS CONVENTION and/or Philippine Law, they
shall be directed to surrender their Certificates of Registration to the Philippine Patent
Office for immediate cancellation proceedings.
6. Consistent with the foregoing, you are hereby directed to expedite the hearing and
to decide without delay the following cases pending before your Office:
1. INTER PARTES CASE NO. 1689-Petition filed by La Chemise Lacoste, S.A.
for the cancellation of Certificate of Registration No. SR-2225 issued to
Gobindram Hemandas, assignee of Hemandas and Company;
2st batch: Intellectual Property Law
2. INTER PARTES CASE NO. 1658-Opposition filed by Games and Garments
Co. against the registration of the trademark Lacoste sought by La Chemise
Lacoste, S.A.;
3. INTER PARTES CASE NO. 1786-Opposition filed by La Chemise Lacoste,
S.A. against the registration of trademark Crocodile Device and Skiva sought by
one Wilson Chua.
Considering our discussions in G.R. Nos. 63796-97, we find the petition in G.R. No. 65659
to be patently without merit and accordingly deny it due course.
In complying with the order to decide without delay the cases specified in the memorandum,
the Director of Patents shall limit himself to the ascertainment of facts in issues not resolved
by this decision and apply the law as expounded by this Court to those facts.
One final point. It is essential that we stress our concern at the seeming inability of law
enforcement officials to stem the tide of fake and counterfeit consumer items flooding the
Philippine market or exported abroad from our country. The greater victim is not so much
the manufacturer whose product is being faked but the Filipino consuming public and in the
case of exportations, our image abroad. No less than the President, in issuing Executive
Order No. 913 dated October 7, 1983 to strengthen the powers of the Minister of Trade and
Industry for the protection of consumers, stated that, among other acts, the dumping of
substandard, imitated, hazardous, and cheap goods, the infringement of internationally
known tradenames and trademarks, and the unfair trade practices of business firms has
reached such proportions as to constitute economic sabotage. We buy a kitchen appliance,
a household tool, perfume, face powder, other toilet articles, watches, brandy or whisky, and
items of clothing like jeans, T-shirts, neck, ties, etc. the list is quite length and pay good
money relying on the brand name as guarantee of its quality and genuine nature only to
explode in bitter frustration and genuine nature on helpless anger because the purchased
item turns out to be a shoddy imitation, albeit a clever looking counterfeit, of the quality
product. Judges all over the country are well advised to remember that court processes
should not be used as instruments to, unwittingly or otherwise, aid counterfeiters and
intellectual pirates, tie the hands of the law as it seeks to protect the Filipino consuming
public and frustrate executive and administrative implementation of solemn commitments
pursuant to international conventions and treaties.
WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED. The order dated
April 22, 1983 of the respondent regional trial court is REVERSED and SET ASIDE. Our
Temporary Restraining Order dated April 29, 1983 is ma(i.e. PERMANENT. The petition in
G.R. NO. 65659 is DENIED due course for lack of merit. Our Temporary Restraining Order
dated December 5, 1983 is LIFTED and SET ASIDE, effective immediately.
SO ORDERED.
7. Fruit of the Loom v. CA
G.R. No. L-32747 November 29, 1984
FRUIT OF THE LOOM, INC., petitioner,
vs.
COURT OF APPEALS and GENERAL GARMENTS CORPORATION, respondents.
MAKASIAR, J.:
This is a petition for review on certiorari of the decision dated October 8, 1970 of the former
Court of Appeals reversing the decision of the defunct Court of First Instance of Manila,
Branch XIV, ordering the cancellation of private respondent's registration of the trademark
FRUIT FOR EVE, enjoining it permanently from using trademark and ordering it to pay herein
petitioner P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under the laws of the State of Rhode
Island, United States of America, is the registrant of a trademark, FRUIT OF THE LOOM, in
the Philippines Patent Office and was issued two Certificates of Registration Nos. 6227 and
6680, on November 29, 1957 and July 26, 1958, respectively. The classes of merchandise
covered by Registration Certificate No. 6227 are, among others, men's, women's and
children's underwear, which includes women's panties and which fall under class 40 in the
Philippine Patent Office's classification of goods. Registration Certificate No. 6680 covers
knitted, netted and textile fabrics.
Private respondent, a domestic corporation, is the registrant of a trademark FRUIT FOR
EVE in the Philippine Patent Office and was issued a Certificate of Registration No. 10160,
on January 10, 1963 covering garments similar to petitioner's products like women's panties
and pajamas.
On March 31, 1965 petitioner filed before the lower court, a complaint for infringement of
trademark and unfair competition against the herein private respondent. Petitioner principally
alleged in the complaint that private respondent's trademark FRUIT FOR EVE is confusingly
similar to its trademark FRUIT OF THE LOOM used also on women's panties and other
textile products. Furthermore, it was also alleged therein that the color get-up and general
appearance of private respondent's hang tag consisting of a big red apple is a colorable
imitation to the hang tag of petitioner.
On April 19, 1965, private respondent filed an answer invoking the special defense that its
registered trademark is not confusingly similar to that of petitioner as the latter alleged.
Likewise, private respondent stated that the trademark FRUIT FOR EVE is being used on
ladies' panties and pajamas only whereas petitioner's trademark is used even on men's
underwear and pajamas.
At the pre-trial on May 5, 1965, the following admissions were made: (1) That the trademark
FRUIT OF THE LOOM has been registered with the Bureau of Patents and it does not bear
the notice 'Reg. Phil. Patent Off.', and (2) That the trademark FRUIT FOR EVE has been
registered with the Bureau of Patents and it bears the notice "Reg. Phil. Patent Off." and (3)
That at the time of its registration, plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in favor of herein petitioner, the
dispositive portion of which reads as follows:
2st batch: Intellectual Property Law
Judgment is, therefore, rendered ordering the Bureau of Patents to cancel the
registration of the Trademark "Fruit for Eve", permanently enjoining Defendant from
using the trademark "Fruit for Eve", ordering Defendant to pay plaintiff the sum of
P10,000.00 as attorney's fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein petitioner's appeal being
centered on the failure of the trial court to award damages in its favor. Private respondent,
on the other hand, sought the reversal of the lower court's decision.
On October 8, 1970, the former Court of Appeals, as already stated, rendered its questioned
decision reversing the judgment of the lower court and dismissing herein petitioner's
complaint.
Petitioner's motion for reconsideration having been denied, the present petition was filed
before this Court.
The first and second arguments advanced by petitioner are that the respondent court
committed an error in holding that the word FRUIT, being a generic word, is not capable of
exclusive appropriation by petitioner and that the registrant of a trademark is not entitled to
the exclusive use of every word of his mark. Otherwise stated, petitioner argues that the
respondent court committed an error in ruling that petitioner cannot appropriate exclusively
the word FRUIT in its trademark FRUIT OF THE LOOM.
The third and fourth arguments submitted by petitioner which We believe is the core of the
present controversy, are that the respondent court erred in holding that there is no confusing
similarity in sound and appearance between the two trademarks in question. According to
petitioner, the prominent and dominant features in both of petitioner's and private
respondent's trademark are the word FRUIT and the big red apple design; that ordinary or
average purchasers upon seeing the word FRUIT and the big red apple in private
respondent's label or hang tag would be led to believe that the latter's products are those of
the petitioner, The resolution of these two assigned errors in the negative will lay to rest the
matter in litigation and there is no need to touch on the other issues raised by petitioner.
Should the said questions be resolved in favor of petitioner, then the other matters may be
considered.
Petitioner, on its fifth assigned error, blames the former Court of Appeals for not touching
the question of the fraudulent registration of private respondent's trademark FRUIT FOR
EVE. As may be gleaned from the questioned decision, respondent court did not pass upon
the argument of petitioner that private respondent obtained the registration of its trademark
thru fraud or misrepresentation because of the said court's findings that there is no confusing
similarity between the two trademarks in question. Hence, said court has allegedly nothing
to determine as to who has the right to registration because both parties have the right to
have their respective trademarks registered.
Lastly, petitioner asserts that respondent court should have awarded damages in its favor
because private respondent had clearly profited from the infringement of the former's
trademark.
The main issue involved in this case is whether or not private respondent's trademark FRUIT
FOR EVE and its hang tag are confusingly similar to petitioner's trademark FRUIT OF THE
LOOM and its hang tag so as to constitute an infringement of the latter's trademark rights
and justify the cancellation of the former.
In cases involving infringement of trademark brought before this Court it has been
consistently held that there is infringement of trademark when the use of the mark involved
would be likely to cause confusion or mistake in the mind of the public or to deceive
purchasers as to the origin or source of the commodity (Co Tiong Sa vs. Director of Patents,
95 Phil. 1; Alhambra Cigar & Cigarette Co. vs. Mojica, 27 Phil. 266; Sapolin Co. vs.
Balmaceda, 67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to whether there is a confusing
similarity in the contesting trademarks than the labels or hang tags themselves. A visual
presentation of the labels or hang tags is the best argument for one or the other, hence, We
are reproducing hereunder pictures of the hang tags of the products of the parties to the
case. The pictures below are part of the documentary evidence appearing on page 124 of
the original records.
Petitioner asseverates in the third and fourth assignment of errors, which, as We have said,
constitute the main argument, that the dominant features of both trademarks is the word
FRUIT. In determining whether the trademarks are confusingly similar, a comparison of the
words is not the only determinant factor. The trademarks in their entirety as they appear in
their respective labels or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels in order that he
may draw his conclusion whether one is confusingly similar to the other (Bristol Myers Co.
vs. Director of Patents, 17 SCRA 131).
In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone similar word is
FRUIT. WE agree with the respondent court that by mere pronouncing the two marks, it
could hardly be said that it will provoke a confusion, as to mistake one for the other. Standing
by itself, FRUIT OF THE LOOM is wholly different from FRUIT FOR EVE. WE do not agree
with petitioner that the dominant feature of both trademarks is the word FRUIT for even in
the printing of the trademark in both hang tags, the word FRUIT is not at all made dominant
over the other words.
As to the design and coloring scheme of the hang tags, We believe that while there are
similarities in the two marks like the red apple at the center of each mark, We also find
differences or dissimilarities which are glaring and striking to the eye such as:
1. The shape of petitioner's hang tag is round with a base that looks like a paper
rolled a few inches in both ends; while that of private respondent is plain rectangle
without any base.
2. The designs differ. Petitioner's trademark is written in almost semi-circle while that
of private respondent is written in straight line in bigger letters than petitioner's.
Private respondent's tag has only an apple in its center but that of petitioner has also
clusters of grapes that surround the apple in the center.
2st batch: Intellectual Property Law
3. The colors of the hang tag are also very distinct from each other. Petitioner's hang
tag is fight brown while that of respondent is pink with a white colored center piece.
The apples which are the only similarities in the hang tag are differently colored.
Petitioner's apple is colored dark red, while that of private respondent is light red.
The similarities of the competing trademarks in this case are completely lost in the
substantial differences in the design and general appearance of their respective hang tags.
WE have examined the two trademarks as they appear in the hang tags submitted by the
parties and We are impressed more by the dissimilarities than by the similarities appearing
therein. WE hold that the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE do not
resemble each other as to confuse or deceive an ordinary purchaser. The ordinary purchaser
must be thought of as having, and credited with, at least a modicum of intelligence (Carnation
Co. vs. California Growers Wineries, 97 F. 2d 80; Hyram Walke and Sons vs. Penn-Maryland
Corp., 79 F. 2d 836) to be able to see the obvious differences between the two trademarks
in question. Furthermore, We believe that a person who buys petitioner's products and starts
to have a liking for it, will not get confused and reach out for private respondent's products
when she goes to a garment store.
These findings in effect render immaterial the other errors assigned by petitioner which are
premised on the assumption that private respondent's trademark FRUIT FOR EVE had
infringed petitioner's trademark FRUIT OF THE LOOM.
WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS AGAINST
PETITIONER.
SO ORDERED.
8. Converse Rubber Corp. v. Universal Products
G.R. No. L-27906 January 8, 1987
CONVERSE RUBBER CORPORATION, petitioner,
vs.
UNIVERSAL RUBBER PRODUCTS, INC. and TIBURCIO S. EVALLE, DIRECTOR OF
PATENTS, respondents.
RESOLUTION
FERNAN, J.:
The undisputed facts of the case are as follows:
Respondent Universal Rubber Products, Inc. filed an application with the Philippine Patent
office for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" used on
rubber shoes and rubber slippers.
Petitioner Converse Rubber Corporation filed its opposition to the application for registration
on grounds that:
a] The trademark sought to be registered is confusingly similar to the word
"CONVERSE" which is part of petitioner's corporate name "CONVERSE RUBBER
CORPORATION" as to 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; and,
b] The registration of respondent's trademark will cause great and irreparable injury
to the business reputation and goodwill of petitioner in the Philippines and would
cause damage to said petitioner within the, meaning of Section 8, R.A. No. 166, as
amended.
Thereafter, respondent filed its answer and at the pre-trial, the parties submitted the following
partial stipulation of facts:
1] The petitioner's corporate name is "CONVERSE RUBBER CORPORATION" and
has been in existence since July 31, 1946; it is duly organized under the laws of
Massachusetts, USA and doing business at 392 Pearl St., Malden, County of Middle
sex, Massachusetts;
2] Petitioner is not licensed to do business in the Philippines and it is not doing
business on its own in the Philippines; and,
3] Petitioner manufacturers rubber shoes and uses thereon the trademarks "CHUCK
TAYLOR "and "ALL STAR AND DEVICE". 1
At the trial, petitioner's lone witness, Mrs. Carmen B. Pacquing, a duly licensed private
merchant with stores at the Sta. Mesa Market and in Davao City, testified that she had been
selling CONVERSE rubber shoes in the local market since 1956 and that sales of petitioner's
rubber shoes in her stores averaged twelve to twenty pairs a month purchased mostly by
basketball players of local private educational institutions like Ateneo, La Salle and San
Beda.
Mrs. Pacquing, further stated that she knew petitioner's rubber shoes came from the United
States "because it says there in the trademark Converse Chuck Taylor with star red or blue
and is a round figure and made in U.S.A. " 2 In the invoices issued by her store, the rubber
shoes were described as "Converse Chuck Taylor", 3 "Converse All Star," 4 "All Star
Converse Chuck Taylor," 5 or "Converse Shoes Chuck Taylor." 6 She also affirmed that she
had no business connection with the petitioner.
Respondent, on the other hand, presented as its lone witness the secretary of said
corporation who testified that respondent has been selling on wholesale basis "Universal
Converse" sandals since 1962 and "Universal Converse" rubber shoes since 1963. Invoices
were submitted as evidence of such sales. The witness also testified that she had no Idea
why respondent chose "Universal Converse" as a trademark and that she was unaware of
the name "Converse" prior to her corporation's sale of "Universal Converse" rubber shoes
and rubber sandals.
Eventually, the Director of Patents dismissed the opposition of the petitioner and gave due
course to respondent's application. His decision reads in part:
2st batch: Intellectual Property Law
... the only question for determination is whether or not the applicant's partial
appropriation of the Opposer's [petitioner'] corporate name is of such character that
in this particular case, it is calculated to deceive or confuse the public to the injury of
the corporation to which the name belongs ...
I cannot find anything that will prevent registration of the word 'UNIVERSAL
CONVERSE' in favor of the respondent. In arriving at this conclusion, I am guided
by the fact that the opposer failed to present proof that the single word "CONVERSE'
in its corporate name has become so Identified with the corporation that whenever
used, it designates to the mind of the public that particular corporation.
The proofs herein are sales made by a single witness who had never dealt with the
petitioner . . . the entry of Opposer's [petitioner's] goods in the Philippines were not
only effected in a very insignificant quantity but without the opposer [petitioner]
having a direct or indirect hand in the transaction so as to be made the basis for
trademark pre- exemption.
Opposer's proof of its corporate personality cannot establish the use of the word
"CONVERSE" in any sense, as it is already stipulated that it is not licensed to do
business in the Philippines, and is not doing business of its own in the Philippines. If
so, it will be futile for it to establish that "CONVERSE" as part of its corporate name
Identifies its rubber shoes. Besides, it was also stipulated that opposer [petitioner],
in manufacturing rubber shoes uses thereon the trademark "CHUCK TAYLOR" and
"ALL STAR and DEVICE" and none other.
Furthermore, inasmuch as the Opposer never presented any label herein, or
specimen of its shoes, whereon the label may be seen, notwithstanding its witness'
testimony touching upon her Identification of the rubber shoes sold in her stores, no
determination can be made as to whether the word 'CONVERSE' appears thereon.
. . .the record is wanting in proof to establish likelihood of confusion so as to cause
probable damage to the Opposer. 7
Its motion for reconsideration having been denied by the respondent Director of Patents,
petitioner instituted the instant petition for review.
As correctly phrased by public respondent Director of Patents, the basic issue presented for
our consideration is whether or not the respondent's partial appropriation of petitioner's
corporate name is of such character that it is calculated to deceive or confuse the public to
the injury of the petitioner to which the name belongs.
A trade name is any individual name or surname, firm name, device or word used by
manufacturers, industrialists, merchants and others to Identify their businesses,
vocations or occupations. 8 As the trade name refers to the business and its goodwill
... the trademark refers to the goods." 9 The ownership of a trademark or tradename
is a property right which the owner is entitled to protect "since there is damage to
him from confusion or reputation or goodwill in the mind of the public as well as from
confusion of goods. The modern trend is to give emphasis to the unfairness of the
acts and to classify and treat the issue as fraud.
From a cursory appreciation of the petitioner's corporate name "CONVERSE RUBBER
CORPORATION,' it is evident that the word "CONVERSE" is the dominant word which
Identifies petitioner from other corporations engaged in similar business. Respondent, in the
stipulation of facts, admitted petitioner's existence since 1946 as a duly organized foreign
corporation engaged in the manufacture of rubber shoes. This admission necessarily betrays
its knowledge of the reputation and business of petitioner even before it applied for
registration of the trademark in question. Knowing, therefore, that the word "CONVERSE"
belongs to and is being used by petitioner, and is in fact the dominant word in petitioner's
corporate name, respondent has no right to appropriate the same for use on its products
which are similar to those being produced by petitioner.
A corporation is entitled to the cancellation of a mark that is confusingly similar to its
corporate name."11"Appropriation by another of the dominant part of a corporate
name is an infringement."12
Respondent's witness had no Idea why respondent chose "UNIVERSAL CONVERSE" as
trademark and the record discloses no reasonable explanation for respondent's use of the
word "CONVERSE" in its trademark. Such unexplained use by respondent of the dominant
word of petitioner's corporate name lends itself open to the suspicion of fraudulent motive to
trade upon petitioner's reputation, thus:
A boundless choice of words, phrases and symbols is available to one who wishes
a trademark sufficient unto itself to distinguish his product from those of others.
When, however, there is no reasonable explanation for the defendant's choice of
such a mark though the field for his selection was so broad, the inference is inevitable
that it was chosen deliberately to deceive. 13
The testimony of petitioner's witness, who is a legitimate trader as well as the invoices
evidencing sales of petitioner's products in the Philippines, give credence to petitioner's
claim that it has earned a business reputation and goodwill in this country. The sales invoices
submitted by petitioner's lone witness show that it is the word "CONVERSE" that mainly
Identifies petitioner's products, i.e. "CONVERSE CHUCK TAYLOR, 14 "CONVERSE ALL
STAR," 15 ALL STAR CONVERSE CHUCK TAYLOR," 16 or "CONVERSE SHOES CHUCK
and TAYLOR." 17 Thus, contrary to the determination of the respondent Director of Patents,
the word "CONVERSE" has grown to be Identified with petitioner's products, and in this
sense, has acquired a second meaning within the context of trademark and tradename laws.
Furthermore, said sales invoices provide the best proof that there were actual sales of
petitioner's products in the country and that there was actual use for a protracted period of
petitioner's trademark or part thereof through these sales. "The most convincing proof of use
of a mark in commerce is testimony of such witnesses as customers, or the orders of buyers
during a certain period. 18 Petitioner's witness, having affirmed her lack of business
connections with petitioner, has testified as such customer, supporting strongly petitioner's
move for trademark pre-emption.
The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered
insignificant, considering that they appear to be of high expensive quality, which not too
many basketball players can afford to buy. Any sale made by a legitimate trader from his
store is a commercial act establishing trademark rights since such sales are made in due
course of business to the general public, not only to limited individuals. It is a matter of public
2st batch: Intellectual Property Law
knowledge that all brands of goods filter into the market, indiscriminately sold by jobbers
dealers and merchants not necessarily with the knowledge or consent of the manufacturer.
Such actual sale of goods in the local market establishes trademark use which serves as
the basis for any action aimed at trademark pre- exemption. It is a corollary logical deduction
that while Converse Rubber Corporation is not licensed to do business in the country and is
not actually doing business here, it does not mean that its goods are not being sold here or
that it has not earned a reputation or goodwill as regards its products. The Director of Patents
was, therefore, remiss in ruling that the proofs of sales presented "was made by a single
witness who had never dealt with nor had never known opposer [petitioner] x x x without
Opposer having a direct or indirect hand in the transaction to be the basis of trademark pre-
exemption."
Another factor why respondent's applications should be denied is the confusing similarity
between its trademark "UNIVERSAL CONVERSE AND DEVICE" and petitioner's corporate
name and/or its trademarks "CHUCK TAYLOR" and "ALL STAR DEVICE" which could
confuse the purchasing public to the prejudice of petitioner,
The trademark of respondent "UNIVERSAL CONVERSE and DEVICE" is imprinted in a
circular manner on the side of its rubber shoes. In the same manner, the trademark of
petitioner which reads "CONVERSE CHUCK TAYLOR" is imprinted on a circular base
attached to the side of its rubber shoes. The deteminative factor in ascertaining whether or
not marks are confusingly similar to each other "is not whether the challenged mark would
actually cause confusion or deception of the purchasers but whether the use of such mark
would likely cause confusion or mistake on the part of the buying public. It would be sufficient,
for purposes of the law, that the similarity between the two labels is such that there is a
possibility or likelihood of the purchaser of the older brand mistaking the new brand for
it." 19 Even if not an the details just mentioned were identical, with the general appearance
alone of the two products, any ordinary, or even perhaps even [sic] a not too perceptive and
discriminating customer could be deceived ... "20
When the law speaks co-purchaser," the reference is to ordinary average purchaser. 21 It is
not necessary in either case that the resemblance be sufficient to deceive experts, dealers,
or other persons specially familiar with the trademark or goods involve." 22
The similarity y 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 word "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. 23
It is unfortunate that respondent Director of Patents has concluded that since the petitioner
is not licensed to do business in the country and is actually not doing business on its own in
the Philippines, it has no name to protect iN the forum and thus, it is futile for it to establish
that "CONVERSE" as part of its corporate name identifies its rubber shoes. That a foreign
corporation has a right to maintain an action in the forum even if it is not licensed to do
business and is not actually doing business on its own therein has been enunciated many
times by this Court. In La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA 373, this Court,
reiterating Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115, stated that:
... a foreign corporation which has never done any business in the Philippines and
which is unlicensed and unregistered to do business here, but is widely and favorably
known in the Philippines through the use therein of its products bearing its corporate
and tradename, has a legal right to maintain an action in the Philippines to restrain
the residents and inhabitants thereof from organizing a corporation therein bearing
the same name as the foreign corporation, when it appears that they have personal
knowledge of the existence of such a foreign corporation, and it is apparent that the
purpose of the proposed domestic corporation is to deal and trade in the same goods
as those of the foreign corporation.
We further held:
xxx xxx xxx
That company is not here seeking to enforce any legal or control rights arising
from or growing out of, any business which it has transacted in the Philippine
Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill whenever that
reputation, corporate name or goodwill have, through the natural
development of its trade, established themselves.' And it contends that its
rights to the use of its corporate and trade name:
Is a property right, a right in recess which it may assert and protect against
all the world, in any of the courts of the world even in jurisdictions where it
does not transact business-just the same as it may protect its tangible
property, real or personal against trespass, or conversion. Citing sec. 10,
Nims on Unfair Competition and Trademarks and cases cited; secs. 21-22,
Hopkins on Trademarks, Trade Names and Unfair Competition and cases
cited That point is sustained by the authorities, and is well stated in Hanover
Star Milling Co. vs. Allen and Wheeler Co. [208 Fed., 5131, in which the
syllabus says:
Since it is the trade and not the mark that is to be protected, a trademark
acknowledges no territorial boundaries of municipalities or states or nations,
but extends to every market where the trader's goods have become known
and Identified by the use of the mark.
The ruling in the aforecited case is in consonance with the Convention of the Union of Paris
for the Protection of Industrial Property to which the Philippines became a party on
September 27, 1965. Article 8 thereof provides that "a trade name [corporate 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 the trademark. " [emphasis supplied]
2st batch: Intellectual Property Law
The object of the Convention is to accord a national of a member nation extensive protection
"against infringement and other types of unfair competition" [Vanitary Fair Mills, Inc. vs. T.
Eaton Co., 234 F. 2d 6331.
The mandate of the aforementioned Convention finds implementation in Sec. 37 of RA No.
166, otherwise known as the Trademark Law:
Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled or
have a bona fide or effective business or commercial establishment in any foreign
country, which is a party to an international convention or treaty relating to marks or
tradenames on 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 . . .
...
Tradenames 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. [emphasis supplied]
WHEREFORE, the decision of the Director of Patents is hereby set aside and a new one
entered denying Respondent Universal Rubber Products, Inc.'s application for registration
of the trademark "UNIVERSAL CONVERSE AND DEVICE" on its rubber shoes and
slippers.
SO ORDERED.
9. Armco-Steel Corp. (of the Philippines) v. SEC
G.R. No. L-54580 December 29, 1987
ARMCO STEEL CORPORATION (OF THE PHILIPPINES), petitioner,
vs.
SECURITIES AND EXCHANGE COMMISSION, ARMCO STEEL CORPORATION (of
Ohio, U.S.A.) and ARMCO MARSTEEL ALLOY CORPORATION, respondents.
GANCAYCO, J.:
On July 1, 1965 ARMCO Steel Corporation, a corporation organized in Ohio, U.S.A.,
hereinafter called ARMCO-OHIO, obtained from the Philippine Patent Office, Certificate of
Registration No. 11750 for its trademark consisting of the word "ARMCO" and a triangular
device for "ferrous metals and ferrous metal castings and forgings." On April 14, 1971,
pursuant to trademark rules, the petitioner filed with the said patent office an "Affidavit of
Use" for said trademark, which was subsequently accepted and for which the Patent Office
issued the corresponding notice of acceptance of "Affidavit of Use."
ARMCO Marsteel-Alloy Corporation was also incorporated on July 11, 1972 under its original
name Marsteel Alloy Company, Inc. but on March 28, 1973 its name was changed to
ARMCO-Marsteel Alloy Corporation hereinafter called ARMCO-Marsteel, by amendment of
its Articles of Incorporation after the ARMCO-Ohio purchased 40% of its capital stock. Both
said corporations are engaged in the manufacture of steel products. Its article of
incorporation in part reads as follows as to its purposes: "to manufacture, process ... and
deal in all kinds, form, and combinations of iron, steel or other metals and all or any products
or articles particularly consisting of iron, steel or other metals .... .
On the other hand ARMCO Steel Corporation was incorporated in the Philippines on April
25, 1973, hereinafter called ARMCO-Philippines. A pertinent portion of its articles of
incorporation provides as among its purposes: "to contract, fabricate ... manufacture ...
regarding pipelines, steel frames ... ."
ARMCO-Ohio and ARMCO-Marsteel then filed a petition in the Securities and Exchange
Commission (SEC) to compel ARMCO-Philippines to change its corporate name on the
ground that it is very similar, if not exactly the same as the name of one of the petitioners,
which is docketed as SEC Case No. 1187. In due course an order was issued by the SEC
on February 14, 1975 granting the petition, the dispositive part of which reads as follows:
In view of the foregoing, the respondent, ARMCO STEEL CORPORATION, is hereby
ordered to take out 'ARMCO' and substitute another word in lieu thereof in its
corporate name by amending the articles of incorporation to that effect, within thirty
(30) days from date of receipt of a copy of this Order; after which, three (3) copies of
the amended articles of incorporation, duly certified by a majority of the board of
directors and countersigned by the president and secretary of the corporation, shall
be submitted to this Commission, together with the corresponding filing fees, as
required by law. 1
A motion for reconsideration of the said order was filed by said respondent on March 6. 1975
but this was denied in, an order of April 16, 1965 as the motion was filed out of time, a copy
of the questioned order having been received by respondent on February 18, 1975 so that
said order had become final and executory. 2 A motion for reconsideration filed by
respondent to set aside said order of April 16, 1965 was also denied by the SEC on June
23, 1975. 3 An appeal was interposed by respondent to the Court of Appeals which was
docketed as CA G.R. No. 04448-R but the appeal was dismissed in a resolution of January
13, 1976, on the ground that the appeal was perfected beyond the reglementary period
allowed by law.
On March 22, 1976 said respondent amended its articles of incorporation by changing its
name to "ARMCO structures, Inc." which was filed with and approved by the SEC.
Nevertheless, in an order of January 6, 1977, the SEC issued an order requiring respondent,
its directors and officers to comply with the aforesaid order of the Commission of February
14, 1975 within ten (10) days from notice thereof. 5
A manifestation and motion was filed by respondent informing SEC that it had already
changed its corporate name with the approval of the SEC to ARMCO Structures, Inc. in
substantial compliance with the said order or in the alternative prayed for a hearing to
determine if there is a confusing similarity between the names of the petitioners on one hand
and the ARMCO Structures, Inc. on the other.
2st batch: Intellectual Property Law
Petitioners then filed a comment to said manifestation alleging that the change of name of
said respondent was not done in good faith and is not in accordance with the order of the
Commission of February 14, 1975 so that drastic action should be taken against the
respondent and its officers. Subsequently, petitioners filed a motion to cite said respondent,
its directors and officers in contempt for disobeying the orders of February 14, 1975 and
January 6, 1977. In an order of August 31, 1977, the SEC finding that the respondent, its
directors, and officers have not complied with the final order of February 14, 1975 required
them to appeal before the Commission on September 22, 1977 at 10:00 o'clock in the
morning to show cause why they should not be punished for contempt by the Commission. 6
After the hearing the parties submitted their respective memoranda. In another order of
January 17, 1979, the SEC finding that the respondent did not make the proper disclosure
of the circumstances when it amended its articles of incorporation and submitted the same
for the approval of the SEC thus said respondent, its directors, and officers were ordered
within ten (10) days from notice to comply with the order of February 14, 1975. An appeal
was interposed by the respondent to the SEC en banc. The Commission en banc in an order
of December 14, 1979 dismissed the appeal for lack of merit. 7
Hence, the herein petition for review filed by ARMCO-Philippines wherein it seeks the
reversal of the orders of the SEC of December 14, 1979 and August 6, 1980 and that the
order of February 14, 1975 be declared functus oficiofor having been substantially complied
with by the petitioner. The grounds of the petition are as follows:
I . THE SECURITIES AND EXCHANGE COMMISSION ERRED WHEN IT DID NOT
CONSIDER ITS ORDER DATED FEBRUARY 14,1975 FUNCTUS OFFICIO
PURSUANT TO THE LEGAL MAXIM CESSANTE LEGIS RATIONE CESSAT ET
IPSA LEX' AFTER PETITIONER HAD SUBSTANTIALLY COMPLIED IN GOOD
FAITH WITH SAID ORDER AND SAID COMPLIANCE HAD ACHIEVED THE
PURPOSE OF THE ORDER, BY CHANGING ITS CORPORATE NAME WITH
THE APPROVAL OF SAID COMMISSION.
II. THE COMMISSION ERRED WHEN IT DID NOT FIND THAT ITS APPROVAL OF
PETITIONER'S AMENDED ARTICLES OF INCORPORATION CHANGING
PETITIONER'S CORPORATE NAME FROM "ARMCO STEEL CORPORATION"
TO "ARMCO STRUCTURES, INCORPORATED" WAS REGULAR AND LEGAL.
III. THE COMMISSION ERRED WHEN IT DID NOT FIND THAT PRIVATE
RESPONDENTS WERE NO LONGER ENTITLED TO THE RELIEF AWARDED
BY THE ORDER DATED FEBRUARY 14,1975 CONSIDERING THAT SAID
ORDER HAD BECOME FUNCTUS OFFICIO AND FURTHER ENFORCEMENT
THEREOF WILL BE INEQUITABLE AS IT WILL DEPRIVE PETITIONER OF
EQUAL PROTECTION OF LAWS.
IV. THE COMMISSION ERRED WHEN, THERE BEING A DISPUTE AS TO
WHETHER OR NOT THE PURPOSE OF THE ORDER DATED FEBRUARY
14,1975 HAD BEEN COMPLIED WITH AND WHETHER THERE WAS STILL
CONFUSING SIMILARITY BETWEEN THE CORPORATE NAMES OF
RESPONDENTS AND THE NEW NAME OF PETITIONER, IT DID NOT GRANT
PETITIONER'S PRAYER THAT A HEART NG BE HELD TO THRESH THE
ISSUE."
The Court finds no merit in the petition.
The order of the public respondent SEC of February 14, 1975 which has long become final
and executory clearly spells out that petitioner must "take out ARMCO and substitute another
word in lieu thereof in its corporate name by amending the articles of incorporation to that
effect, ... ." Far from complying with said order petitioner amended its corporate name into
ARMCO Structures, Inc., and secured its approval by the SEC on March 22, 1976. That this
amendment was made by petitioner without the knowledge of the proper authorities of the
SEC is home by the fact that thereafter on January 6, 1977 an order was issued by the SEC
requiring petitioner, its board of directors, and officers to comply with the order of the
Commission of February 14, 1975. When the attention of the SEC was called by petitioner
that the change of corporate name had been undertaken by it to ARMCO Structures, Inc.
and asked that it be considered as a substantial compliance with the order of February 14,
1975, the SEC in its order of January 17, 1979 speaking through its hearing officer Antonio
R. Manabat ruled as follows:
The Order of February 14, 1975, cannot but be clearer than what it purports to require
or demand from respondent. Under in no distinct terms, it enjoins the removal or
deletion of the word 'Armco' from respondent's corporate name, which was not so
complied with. The Commission, therefore, cannot give its imprimatur to the new
corporate name because there was no compliance at all.
The fact that the Securities and Exchange Commission issued its certificate of filing
of amended articles of incorporation on March 22, 1976, is nothing but an illusory
approval of the change of corporate name and a self-induced protection from the
Commission to further exact compliance of the Order of February 14, 1975. Craftily,
the Securities and Exchange Commission and/or its administrative personnel were
made to issue such certificate during its unguarded moment. Verily, the certificate
could not have been issued were it not for such lapses or had respondent been in
good faith by making the proper disclosures of the circumstances which led it to
amend its articles of incorporation.
Correctly pointed out by petitioners, a 'new determination as to whether or not there
is confusing similarity between petitioners' names and that of 'Armco Structures,
Incorporated,' cannot be ordered without transgression on the rule of, or the
decisional law on, finality of judgment. 8
The Court finds that the said amendment in the corporate name of petitioner is not in
substantial compliance with the order of February 14, 1975. Indeed it is in contravention
therewith. To repeat, the order was for the removal of the word "ARMCO" from the corporate
name of the petitioner which it failed to do. And even if this change of corporate name was
erroneously accepted and approved in the SEC it cannot thereby legalize nor change what
is clearly unauthorized if not contemptuous act of petitioner in securing the registration of a
new corporate name against the very order of the SEC of February 14, 1975. Certainly the
said order of February 14, 1975 is not rendered functus oficio thereby. Had petitioner
revealed at the time of the registration of its amended corporate name that there was the
said order, the registration of the amended corporate name could not have been accepted
and approved by the persons in-charge of the registration. The actuations in this respect of
petitioner are far from regular much less in good faith.
2st batch: Intellectual Property Law

The arguments of the petitioner that the SEC had approved the registration of several other
entities with one principal word common to all as "ARMCO," and that there is no confusing
similarity between the corporate names of respondents and the new name of petitioner,
would indeed in effect be reopening the final and executory order of the SEC of February
14, 1975 which had already foreclosed the issue. Indeed, in said final order the SEC made
the following findings which are conclusive and well-taken:

The only question for resolution in this case is whether therespondent's name
ARMCO STEEL CORPORATION is similar, if not Identical with that of petitioner,
ARMCO STEEL CORPORATION (of Ohio, U.S.A.) and of petitioner, ARMCO-
MARSTEEL ALLOY CORPORATION, as to create uncertainty and confusion in the
minds of the public.

By mere looking at the names it is clear that the name of petitioner, ARMCO STEEL
CORPORATION (of Ohio, U.S.A.), and that of the respondent, ARMCO STEEL
CORPORATION, are not only similar but Identical and the words "of Ohio, U.S.A.,"
are being used only to Identify petitioner ARMCO STEEL-OHIO as a U.S.
corporation.

It is indisputable that ARMCO-STEEL-OHIO, having patented the term 'Armco' as

part of its trademark on its steel products, is entitled to protection in the use thereof
in the Philippines. The term "Armco" is now being used on the products being
manufactured and sold in this country by Armco-Marsteel by virtue of its tie-up with
ARMCO-STEEL-OHIO. Clearly, the two companies have the right to the exclusive
use and enjoyment of said term.

ARMCO STEEL-PHILIPPINES, has not only an Identical name but also a similar line
of business, as shown above, as that of ARMCO STEEL- OHIO. People who are
buying and using products bearing the trademark "Armco" might be led to believe
that such products are manufactured by the respondent, when in fact, they might
actually be produced by the petitioners. Thus, the goodwill that should grow and inure
to the benefit of petitioners could be impaired and prejudiced by the continued use
of the same term by the respondent.

Obviously, the petition for review is designed to further delay if not simply evade
compliance with the said final and executory SEC order. Petitioner also seeks a review of
the orders of execution of the SEC of the said February 14, 1975 order. An order or
resolution granting execution of the final judgment cannot be appealed 9 otherwise there
will be no end to the litigation. 10

WHEREFORE, the petition is DISMISSED for lack of merit with costs against petitioner.
This decision is immediately executory.

SO ORDERED.