G.R. No.

138900 September 20, 2005

LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC., Petitioners,
vs.
CLINTON APPARELLE, INC., Respondent.

Before us is a petition for review on certiorari1 under Rule 45 of the 1997 Rules of
Civil Procedure filed by Levi Strauss & Co. (LS & Co.) and Levi Strauss (Philippines),
Inc. (LSPI) assailing the Court of Appeals Decision2 and Resolution3 respectively
dated 21 December 1998 and 10 May 1999. The questioned Decision granted
respondents prayer for a writ of preliminary injunction in its Petition4 and set
aside the trial courts orders dated 15 May 19985 and 4 June 19986 which
respectively granted petitioners prayer for the issuance of a temporary restraining
order (TRO) and application for the issuance of a writ of preliminary injunction.

This case stemmed from the Complaint7 for Trademark Infringement, Injunction
and Damages filed by petitioners LS & Co. and LSPI against respondent Clinton
Apparelle, Inc.* (Clinton Aparelle) together with an alternative defendant, Olympian
Garments, Inc. (Olympian Garments), before the Regional Trial Court of Quezon City,
Branch 90.8 The Complaint was docketed as Civil Case No. Q-98-34252, entitled
"Levi Strauss & Co. and Levi Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or
Olympian Garments, Inc."

The Complaint alleged that LS & Co., a foreign corporation duly organized and
existing under the laws of the State of Delaware, U.S.A., and engaged in the apparel
business, is the owner by prior adoption and use since 1986 of the internationally
famous "Dockers and Design" trademark. This ownership is evidenced by its valid
and existing registrations in various member countries of the Paris Convention. In
the Philippines, it has a Certificate of Registration No. 46619 in the Principal
Register for use of said trademark on pants, shirts, blouses, skirts, shorts,
sweatshirts and jackets under Class 25.9

The "Dockers and Design" trademark was first used in the Philippines in or about
May 1988, by LSPI, a domestic corporation engaged in the manufacture, sale and
distribution of various products bearing trademarks owned by LS & Co. To date,
LSPI continues to manufacture and sell Dockers Pants with the "Dockers and
Design" trademark.10

LS & Co. and LSPI further alleged that they discovered the presence in the local
market of jeans under the brand name "Paddocks" using a device which is
substantially, if not exactly, similar to the "Dockers and Design" trademark owned
by and registered in the name of LS & Co., without its consent. Based on their
information and belief, they added, Clinton Apparelle manufactured and continues
to manufacture such "Paddocks" jeans and other apparel.
However, since LS & Co. and LSPI are unsure if both, or just one of impleaded
defendants are behind the manufacture and sale of the "Paddocks" jeans complained
of, they brought this suit under Section 13, Rule 311 of the 1997 Rules of Civil
Procedure.12

The Complaint contained a prayer that reads as follows:

1. That upon the filing of this complaint, a temporary restraining order be

immediately issued restraining defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from committing the acts herein
complained of, and, specifically, for the defendants, their officers, employees, agents,
representatives, dealers and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising, or otherwise using
denims, jeans or pants with the design herein complained of as substantially, if not
exactly similar, to plaintiffs "Dockers and Design" trademark.

2. That after notice and hearing, and pending trial on the merits, a writ of
preliminary injunction be issued enjoining defendants, their officers, employees,
agents, dealers, retailers, or assigns from manufacturing, distributing, selling,
offering for sale, advertising, jeans the design herein complained of as substantially,
if not exactly similar, to plaintiffs "Dockers and Design" trademark.

3. That after trial on the merits, judgment be rendered as follows:

a. Affirming and making permanent the writ of preliminary injunction;

b. Ordering that all infringing jeans in the possession of either or both defendants as
the evidence may warrant, their officers, employees, agents, retailers, dealers or
assigns, be delivered to the Honorable Court of plaintiffs, and be accordingly
destroyed;13

Acting on the prayer for the issuance of a TRO, the trial court issued an Order14
setting it for hearing on 5 May 1998. On said date, as respondent failed to appear
despite notice and the other defendant, Olympian Garments, had yet to be notified,
the hearing was re-scheduled on 14 May 1998.15

On 14 May 1998, neither Clinton Apparelle nor Olympian Garments appeared.

Clinton Apparelle claimed that it was not notified of such hearing. Only Olympian
Garments allegedly had been issued with summons. Despite the absence of the
defendants, the hearing on the application for the issuance of a TRO continued.16

The following day, the trial court issued an Order17 granting the TRO applied for,
the pertinent portions of which state:

Considering the absence of counsel/s for the defendant/s during the summary
hearing scheduled on May 5, 1998 and also during the re-scheduled summary
hearing held on May 14, 1998 set for the purpose of determining whether or not a
Temporary Restraining Order shall be issued, this Court allowed the counsel for the
plaintiffs to present on May 14, 1998 their arguments/evidences in support of their
application. After hearing the arguments presented by the counsel for the plaintiffs
during the summary hearing, this Court is of the considered and humble view that
grave injustice and irreparable injury to the plaintiffs would arise before the matter
of whether or not the application for the issuance of a Writ of Preliminary Injunction
can be heard, and that, in the interest of justice, and in the meantime, a Temporary
Restraining Order be issued.

WHEREFORE, let this Temporary Restraining Order be issued restraining the

defendants, their officers, employees, agents, representatives, dealers, retailers or
assigns from committing the acts complained of in the verified Complaint, and
specifically, for the defendants, their officers, employees, agents, representatives,
dealers and retailers or assigns, to cease and desist from manufacturing,
distributing, selling, offering for sale, advertising or otherwise using denims, jeans
or pants with the design complained of in the verified Complaint as substantially, if
not exactly similar, to plaintiffs "Dockers and Design" trademark; until after the
application/prayer for the issuance of a Writ of Preliminary Injunction is
heard/resolved, or until further orders from this Court.

The hearing on the application for the issuance of a Writ of Preliminary Injunction
as embodied in the verified Complaint is set on May 26, 1998 (Tuesday) at 2:00 P.M.
which setting is intransferable in character considering that the lifetime of this
Temporary Restraining Order is twenty (20) days from date hereof.18

On 4 June 1998, the trial court issued another Order19 granting the writ of
preliminary injunction, to wit:

ORDER

This resolves the plaintiffs application or prayer for the issuance of a writ of
preliminary injunction as embodied in the verified complaint in this case.
Parenthetically, this Court earlier issued a temporary restraining order. (see Order
dated May 15, 1998; see also Order dated May 26, 1998)

After a careful perusal of the contents of the pleadings and documents on record
insofar as they are pertinent to the issue under consideration, this Court finds that
at this point in time, the plaintiffs appear to be entitled to the relief prayed for and
this Court is of the considered belief and humble view that, without necessarily
delving on the merits, the paramount interest of justice will be better served if the
status quo shall be maintained and that an injunction bond of P2,500,000.00
appears to be in order. (see Sections 3 and 4, Rule 58, 1997 Rules of Civil Procedure)

IN VIEW OF THE FOREGOING, the plaintiffs prayer for the issuance of a writ of
preliminary injunction is GRANTED. Accordingly, upon the plaintiffs filing, within
ten (10) days from their receipt hereof, an injunction bond of P2,500,000.00
executed to the defendants to the effect that the plaintiffs will pay all damages the
defendants may sustain by reason of this injunction in case the Court should finally
decide that the plaintiffs are not entitled thereto, let a writ of preliminary injunction
issue enjoining or restraining the commission of the acts complained of in the
verified Complaint in this case, and specifically, for the defendants, their officers,
employees, agents, representatives, dealers and retailers or assigns or persons
acting in their behalf to cease and desist from manufacturing, distributing, selling,
offering for sale, advertising, or otherwise using, denims, jeans or pants with the
design complained of in the verified Complaint in this case, which is substantially, if
not exactly, similar to plaintiffs "DOCKERS and DESIGN" trademark or logo as
covered by the Bureau of Patents, Trademarks and Technology Transfer Certificate
of Registration No. 46619, until after this case shall have been decided on the merits
and/or until further orders from this Court.20

The evidence considered by the trial court in granting injunctive relief were as
follows: (1) a certified true copy of the certificate of trademark registration for
"Dockers and Design"; (2) a pair of DOCKERS pants bearing the "Dockers and
Design" trademark; (3) a pair of "Paddocks" pants bearing respondents assailed
logo; (4) the Trends MBL Survey Report purportedly proving that there was
confusing similarity between two marks; (5) the affidavit of one Bernabe Alajar
which recounted petitioners prior adoption, use and registration of the "Dockers
and Design" trademark; and (6) the affidavit of one Mercedes Abad of Trends MBL,
Inc. which detailed the methodology and procedure used in their survey and the
results thereof.21

Clinton Apparelle thereafter filed a Motion to Dismiss22 and a Motion for

Reconsideration23 of the Order granting the writ of preliminary injunction.
Meantime, the trial court issued an Order24 approving the bond filed by petitioners.

On 22 June 1998, the trial court required25 the parties to file their "respective
citation of authorities/ jurisprudence/Supreme Court decisions" on whether or not
the trial court may issue the writ of preliminary injunction pending the resolution of
the Motion for Reconsideration and the Motion to Dismiss filed by respondent.

On 2 October 1998, the trial court denied Clinton Apparelles Motion to Dismiss and
Motion for Reconsideration in an Omnibus Order,26 the pertinent portions of which
provide:

After carefully going over the contents of the pleadings in relation to pertinent
portions of the records, this Court is of the considered and humble view that:

On the first motion, the arguments raised in the plaintiffs aforecited Consolidated
Opposition appears to be meritorious. Be that as it may, this Court would like to
emphasize, among other things, that the complaint states a cause of action as
provided under paragraphs 1 to 18 thereof.
On the second motion, the arguments raised in the plaintiffs aforecited
Consolidated Opposition likewise appear to be impressed with merit. Besides, there
appears to be no strong and cogent reason to reconsider and set aside this Courts
Order dated June 4, 1998 as it has been shown so far that the trademark or logo of
defendants is substantially, if not exactly, similar to plaintiffs "DOCKERS and
DESIGN" trademark or logo as covered by BPTTT Certificate of Registration No.
46619 even as the BPTTT Certificate of Registration No. 49579 of Clinton Apparelle,
Inc. is only for the mark or word "PADDOCKS" (see Records, p. 377) In any event,
this Court had issued an Order dated June 18, 1998 for the issuance of the writ of
preliminary injunction after the plaintiffs filed the required bond of P2,500,000.00.

IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss and Motion For
Reconsideration are both DENIED for lack of merit, and accordingly, this Courts
Order dated June 18, 1998 for the issuance of the writ of preliminary injunction is
REITERATED so the writ of preliminary injunction could be implemented unless the
implementation thereof is restrained by the Honorable Court of Appeals or Supreme
Court.

The writ of preliminary injunction was thereafter issued on 8 October 1998.27

Thus, Clinton Apparelle filed with the Court of Appeals a Petition28 for certiorari,
prohibition and mandamus with prayer for the issuance of a temporary restraining
order and/or writ of preliminary injunction, assailing the orders of the trial court
dated 15 May 1998, 4 June 1998 and 2 October 1998.

On 20 October 1998, the Court of Appeals issued a Resolution29 requiring herein

petitioners to file their comment on the Petition and at the same time issued the
prayed-for temporary restraining order.

The appellate court rendered on 21 December 1998 its now assailed Decision
granting Clinton Apparelles petition. The Court of Appeals held that the trial court
did not follow the procedure required by law for the issuance of a temporary
restraining order as Clinton Apparelle was not duly notified of the date of the
summary hearing for its issuance. Thus, the Court of Appeals ruled that the TRO had
been improperly issued.30

The Court of Appeals also held that the issuance of the writ of preliminary injunction
is questionable. In its opinion, herein petitioners failed to sufficiently establish its
material and substantial right to have the writ issued. Secondly, the Court of Appeals
observed that the survey presented by petitioners to support their contentions was
commissioned by petitioners. The Court of Appeals remarked that affidavits taken
ex-parte are generally considered to be inferior to testimony given in open court.
The appellate court also considered that the injury petitioners have suffered or are
currently suffering may be compensated in terms of monetary consideration, if after
trial, a final judgment shall be rendered in their favor.31
In addition, the Court of Appeals strongly believed that the implementation of the
questioned writ would effectively shut down respondents business, which in its
opinion should not be sanctioned. The Court of Appeals thus set aside the orders of
the trial court dated 15 May 1998 and 4 June 1998, respectively issuing a temporary
restraining order and granting the issuance of a writ of preliminary injunction.

With the denial of their Motion for Reconsideration,32 petitioners are now before
this Court seeking a review of the appellate courts Decision and Resolution. LS & Co.
and LSPI claim that the Court of Appeals committed serious error in: (1)
disregarding the well-defined limits of the writ of certiorari that questions on the
sufficiency of evidence are not to be resolved in such a petition; (2) in holding that
there was no confusion between the two marks; (3) in ruling that the erosion of
petitioners trademark is not protectable by injunction; (4) in ignoring the
procedure previously agreed on by the parties and which was adopted by the trial
court; and (5) in declaring that the preliminary injunction issued by the trial court
will lead to the closure of respondents business.

In its Comment,33 Clinton Apparelle maintains that only questions of law may be
raised in an appeal by certiorari under Rule 45 of the Rules of Court. It asserts that
the question of whether the Court of Appeals erred in: (1) disregarding the survey
evidence; (2) ruling that there was no confusion between the two marks; and (c)
finding that the erosion of petitioners trademark may not be protected by
injunction, are issues not within the ambit of a petition for review on certiorari
under Rule 45. Clinton Apparelle also contends that the Court of Appeals acted
correctly when it overturned the writ of preliminary injunction issued by the trial
court. It believes that the issued writ in effect disturbed the status quo and disposed
of the main case without trial.

There is no merit in the petition.

At issue is whether the issuance of the writ of preliminary injunction by the trial
court was proper and whether the Court of Appeals erred in setting aside the orders
of the trial court.

Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order

granted at any stage of an action prior to the judgment or final order requiring a
party or a court, agency or a person to refrain from a particular act or acts.
Injunction is accepted as the strong arm of equity or a transcendent remedy to be
used cautiously as it affects the respective rights of the parties, and only upon full
conviction on the part of the court of its extreme necessity. An extraordinary
remedy, injunction is designed to preserve or maintain the status quo of things and
is generally availed of to prevent actual or threatened acts until the merits of the
case can be heard.34 It may be resorted to only by a litigant for the preservation or
protection of his rights or interests and for no other purpose during the pendency of
the principal action.35 It is resorted to only when there is a pressing necessity to
avoid injurious consequences, which cannot be remedied under any standard
compensation. The resolution of an application for a writ of preliminary injunction
rests upon the existence of an emergency or of a special recourse before the main
case can be heard in due course of proceedings.36

Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of
a preliminary injunction:

SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction

may be granted when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;

(b) That the commission, continuance, or non-performance of the act or acts

complained of during the litigation would probably work injustice to the applicant;
or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to

do, or is procuring or suffering to be done, some act or acts probably in violation of
the rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.

Under the cited provision, a clear and positive right especially calling for judicial
protection must be shown. Injunction is not a remedy to protect or enforce
contingent, abstract, or future rights; it will not issue to protect a right not in esse
and which may never arise, or to restrain an act which does not give rise to a cause
of action. There must exist an actual right.37 There must be a patent showing by the
complaint that there exists a right to be protected and that the acts against which
the writ is to be directed are violative of said right.38

There are generally two kinds of preliminary injunction: (1) a prohibitory injunction
which commands a party to refrain from doing a particular act; and (2) a mandatory
injunction which commands the performance of some positive act to correct a
wrong in the past.39

The Court of Appeals did not err in reviewing proof adduced by petitioners to
support its application for the issuance of the writ. While the matter of the issuance
of a writ of preliminary injunction is addressed to the sound discretion of the trial
court, this discretion must be exercised based upon the grounds and in the manner
provided by law. The exercise of discretion by the trial court in injunctive matters is
generally not interfered with save in cases of manifest abuse.40 And to determine
whether there was abuse of discretion, a scrutiny must be made of the bases, if any,
considered by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with great caution and
deliberation, and only in cases of great injury where there is no commensurate
remedy in damages.41

In the present case, we find that there was scant justification for the issuance of the
writ of preliminary injunction.

Petitioners anchor their legal right to "Dockers and Design" trademark on the
Certificate of Registration issued in their favor by the Bureau of Patents,
Trademarks and Technology Transfer.* According to Section 138 of Republic Act No.
8293,42 this Certificate of Registration is prima facie evidence of the validity of the
registration, the registrants ownership of the mark and of the exclusive right to use
the same in connection with the goods or services and those that are related thereto
specified in the certificate. Section 147.1 of said law likewise grants the owner of the
registered mark the exclusive right to prevent all third parties not having the
owners consent from using in the course of trade identical or similar signs for
goods or services which are identical or similar to those in respect of which the
trademark is registered if such use results in a likelihood of confusion.

However, attention should be given to the fact that petitioners registered

trademark consists of two elements: (1) the word mark "Dockers" and (2) the wing-
shaped design or logo. Notably, there is only one registration for both features of the
trademark giving the impression that the two should be considered as a single unit.
Clinton Apparelles trademark, on the other hand, uses the "Paddocks" word mark
on top of a logo which according to petitioners is a slavish imitation of the "Dockers"
design. The two trademarks apparently differ in their word marks ("Dockers" and
"Paddocks"), but again according to petitioners, they employ similar or identical
logos. It could thus be said that respondent only "appropriates" petitioners logo and
not the word mark "Dockers"; it uses only a portion of the registered trademark and
not the whole.

Given the single registration of the trademark "Dockers and Design" and considering
that respondent only uses the assailed device but a different word mark, the right to
prevent the latter from using the challenged "Paddocks" device is far from clear.
Stated otherwise, it is not evident whether the single registration of the trademark
"Dockers and Design" confers on the owner the right to prevent the use of a fraction
thereof in the course of trade. It is also unclear whether the use without the owners
consent of a portion of a trademark registered in its entirety constitutes material or
substantial invasion of the owners right.

It is likewise not settled whether the wing-shaped logo, as opposed to the word
mark, is the dominant or central feature of petitioners trademarkthe feature that
prevails or is retained in the minds of the publican imitation of which creates the
likelihood of deceiving the public and constitutes trademark infringement.43 In
sum, there are vital matters which have yet and may only be established through a
full-blown trial.
From the above discussion, we find that petitioners right to injunctive relief has not
been clearly and unmistakably demonstrated. The right has yet to be determined.
Petitioners also failed to show proof that there is material and substantial invasion
of their right to warrant the issuance of an injunctive writ. Neither were petitioners
able to show any urgent and permanent necessity for the writ to prevent serious
damage.

Petitioners wish to impress upon the Court the urgent necessity for injunctive relief,
urging that the erosion or dilution of their trademark is protectable. They assert that
a trademark owner does not have to wait until the mark loses its distinctiveness to
obtain injunctive relief, and that the mere use by an infringer of a registered mark is
already actionable even if he has not yet profited thereby or has damaged the
trademark owner.

Trademark dilution is the lessening of the capacity of a famous mark to identify and
distinguish goods or services, regardless of the presence or absence of: (1)
competition between the owner of the famous mark and other parties; or (2)
likelihood of confusion, mistake or deception. Subject to the principles of equity, the
owner of a famous mark is entitled to an injunction "against another persons
commercial use in commerce of a mark or trade name, if such use begins after the
mark has become famous and causes dilution of the distinctive quality of the mark."
This is intended to protect famous marks from subsequent uses that blur
distinctiveness of the mark or tarnish or disparage it.44

Based on the foregoing, to be eligible for protection from dilution, there has to be a
finding that: (1) the trademark sought to be protected is famous and distinctive; (2)
the use by respondent of "Paddocks and Design" began after the petitioners mark
became famous; and (3) such subsequent use defames petitioners mark. In the case
at bar, petitioners have yet to establish whether "Dockers and Design" has acquired
a strong degree of distinctiveness and whether the other two elements are present
for their cause to fall within the ambit of the invoked protection. The Trends MBL
Survey Report which petitioners presented in a bid to establish that there was
confusing similarity between two marks is not sufficient proof of any dilution that
the trial court must enjoin.

The Court also finds that the trial courts order granting the writ did not adequately
detail the reasons for the grant, contrary to our ruling in University of the
Philippines v. Hon. Catungal Jr., 45 wherein we held that:

The trial court must state its own findings of fact and cite particular law to justify
grant of preliminary injunction. Utmost care in this regard is demanded.46

The trial court in granting the injunctive relief tersely ratiocinated that "the
plaintiffs appear to be entitled to the relief prayed for and this Court is of the
considered belief and humble view that, without necessarily delving on the merits,
the paramount interest of justice will be better served if the status quo shall be
maintained." Clearly, this statement falls short of the requirement laid down by the
above-quoted case. Similarly, in Developers Group of Companies, Inc. v. Court of
Appeals,47 we held that it was "not enough" for the trial court, in its order granting
the writ, to simply say that it appeared "after hearing that plaintiff is entitled to the
relief prayed for."

In addition, we agree with the Court of Appeals in its holding that the damages the
petitioners had suffered or continue to suffer may be compensated in terms of
monetary consideration. As held in Government Service Insurance System v.
Florendo:48

a writ of injunction should never have been issued when an action for damages
would adequately compensate the injuries caused. The very foundation of the
jurisdiction to issue the writ of injunction rests in the probability of irreparable
injury, inadequacy of pecuniary estimation and the prevention of the multiplicity of
suits, and where facts are not shown to bring the case within these conditions, the
relief of injunction should be refused.49

We also believe that the issued injunctive writ, if allowed, would dispose of the case
on the merits as it would effectively enjoin the use of the "Paddocks" device without
proof that there is basis for such action. The prevailing rule is that courts should
avoid issuing a writ of preliminary injunction that would in effect dispose of the
main case without trial.50 There would be a prejudgment of the main case and a
reversal of the rule on the burden of proof since it would assume the proposition
which petitioners are inceptively bound to prove.51

Parenthetically, we find no flaw in the Court of Appeals disquisition on the

consequences of the issued injunction. An exercise of caution, we believe that such
reflection is necessary to weigh the alleged entitlement to the writ vis--vis its
possible effects. The injunction issued in the instant case is of a serious nature as it
tends to do more than to maintain the status quo. In fact, the assailed injunction if
sustained would bring about the result desired by petitioners without a trial on the
merits.

Then again, we believe the Court of Appeals overstepped its authority when it
declared that the "alleged similarity as to the two logos is hardly confusing to the
public." The only issue brought before the Court of Appeals through respondents
Petition under Rule 65 of the Rules of Court involved the grave abuse of discretion
allegedly committed by the trial court in granting the TRO and the writ of
preliminary injunction. The appellate court in making such a statement went
beyond that issue and touched on the merits of the infringement case, which
remains to be decided by the trial court. In our view, it was premature for the Court
of Appeals to declare that there is no confusion between the two devices or logos.
That matter remains to be decided on by the trial court.
Finally, we have no contention against the procedure adopted by the trial court in
resolving the application for an injunctive writ and we believe that respondent was
accorded due process. Due process, in essence, is simply an opportunity to be heard.
And in applications for preliminary injunction, the requirement of hearing and prior
notice before injunction may issue has been relaxed to the point that not all
petitions for preliminary injunction must undergo a trial-type hearing, it being a
hornbook doctrine that a formal or trial-type hearing is not at all times and in all
instances essential to due process. Due process simply means giving every
contending party the opportunity to be heard and the court to consider every piece
of evidence presented in their favor. Accordingly, this Court has in the case of Co v.
Calimag, Jr.,52 rejected a claim of denial of due process where such claimant was
given the opportunity to be heard, having submitted his counter-affidavit and
memorandum in support of his position.53

After a careful consideration of the facts and arguments of the parties, the Court
finds that petitioners did not adequately prove their entitlement to the injunctive
writ. In the absence of proof of a legal right and the injury sustained by the
applicant, an order of the trial court granting the issuance of an injunctive writ will
be set aside for having been issued with grave abuse of discretion.54 Conformably,
the Court of Appeals was correct in setting aside the assailed orders of the trial
court.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals
dated 21 December 1998 and its Resolution dated 10 May 1999 are AFFIRMED.
Costs against petitioners.

SO ORDERED.

G.R. No. 120900 July 20, 2000

CANON KABUSHIKI KAISHA, petitioner,

vs.
COURT OF APPEALS and NSR RUBBER CORPORATION, respondents.

Before us is a petition for review that seeks to set aside the Decision1 dated
February 21, 1995 of the Court of Appeals in CA-GR SP No. 30203, entitled "Canon
Kabushiki Kaisha vs. NSR Rubber Corporation" and its Resolution dated June 27,
1995 denying the motion for reconsideration of herein petitioner Canon Kabushiki
Kaisha (petitioner).

On January 15, 1985, private respondent NSR Rubber Corporation (private

respondent) filed an application for registration of the mark CANON for sandals in
the Bureau of Patents, Trademarks, and Technology Transfer (BPTTT). A Verified
Notice of Opposition was filed by petitioner, a foreign corporation duly organized
and existing under the laws of Japan, alleging that it will be damaged by the
registration of the trademark CANON in the name of private respondent. The case
was docketed as Inter Partes Case No. 3043.

Petitioner moved to declare private respondent in default for its failure to file its
answer within the prescribed period. The BPTTT then declared private respondent
in default and allowed petitioner to present its evidence ex-parte.

Based on the records, the evidence presented by petitioner consisted of its

certificates of registration for the mark CANON in various countries covering goods
belonging to class 2 (paints, chemical products, toner, and dye stuff). Petitioner also
submitted in evidence its Philippine Trademark Registration No. 39398, showing its
ownership over the trademark CANON also under class 2.

On November 10, 1992, the BPTTT issued its decision dismissing the opposition of
petitioner and giving due course to private respondent's application for the
registration of the trademark CANON. On February 16, 1993, petitioner appealed
the decision of the BPTTT with public respondent Court of Appeals that eventually
affirmed the decision of BPTTT. Hence, this petition for review.

Petitioner anchors this instant petition on these grounds:

A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE MARK CANON BECAUSE

IT IS ITS TRADEMARK AND IS USED ALSO FOR FOOTWEAR.

B) TO ALLOW PRIVATE RESPONDENT TO REGISTER CANON FOR FOOTWEAR IS TO

PREVENT PETITIONER FROM USING CANON FOR VARIOUS KINDS OF FOOTWEAR,
WHEN IN FACT, PETITIONER HAS EARLIER USED SAID MARK FOR SAID GOODS.

C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO EXCLUSIVELY USE CANON

TO PREVENT CONFUSION OF BUSINESS.

D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE USE OF CANON BECAUSE IT

FORMS PART OF ITS CORPORATE NAME, PROTECTED BY THE PARIS
CONVENTION.2

The BPTTT and the Court of Appeals share the opinion that the trademark "CANON"
as used by petitioner for its paints, chemical products, toner, and dyestuff, can be
used by private respondent for its sandals because the products of these two parties
are dissimilar. Petitioner protests the appropriation of the mark CANON by private
respondent on the ground that petitioner has used and continues to use the
trademark CANON on its wide range of goods worldwide. Allegedly, the corporate
name or tradename of petitioner is also used as its trademark on diverse goods
including footwear and other related products like shoe polisher and polishing
agents. To lend credence to its claim, petitioner points out that it has branched out
in its business based on the various goods carrying its trademark CANON3,
including footwear which petitioner contends covers sandals, the goods for which
private respondent sought to register the mark CANON. For petitioner, the fact
alone that its trademark CANON is carried by its other products like footwear, shoe
polisher and polishing agents should have precluded the BPTTT from giving due
course to the application of private respondent.

We find the arguments of petitioner to be unmeritorious. Ordinarily, the ownership

of a trademark or tradename is a property right that the owner is entitled to
protect4 as mandated by the Trademark Law.5 However, when 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.6

A review of the records shows that with the order of the BPTTT declaring private
respondent in default for failure to file its answer, petitioner had every opportunity
to present ex-parte all of its evidence to prove that its certificates of registration for
the trademark CANON cover footwear. The certificates of registration for the
trademark CANON in other countries and in the Philippines as presented by
petitioner, clearly showed that said certificates of registration cover goods
belonging to class 2 (paints, chemical products, toner, dyestuff). On this basis, the
BPTTT correctly ruled that since the certificate of registration of petitioner for the
trademark CANON covers class 2 (paints, chemical products, toner, dyestuff),
private respondent can use the trademark CANON for its goods classified as class 25
(sandals). Clearly, there is a world of difference between the paints, chemical
products, toner, and dyestuff of petitioner and the sandals of private respondent.

Petitioner counters that notwithstanding the dissimilarity of the products of the

parties, the trademark owner is entitled to protection when the use of by the junior
user "forestalls the normal expansion of his business".7 Petitioner's opposition to
the registration of its trademark CANON by private respondent rests upon
petitioner's insistence that it would be precluded from using the mark CANON for
various kinds of footwear, when in fact it has earlier used said mark for said goods.
Stretching this argument, petitioner claims that it is possible that the public could
presume that petitioner would also produce a wide variety of footwear considering
the diversity of its products marketed worldwide.

We do not agree. Even in this instant petition, except for its bare assertions,
petitioner failed to attach evidence that would convince this Court that petitioner
has also embarked in the production of footwear products. We quote with approval
the observation of the Court of Appeals that:

"The herein petitioner has not made known that it intends to venture into the
business of producing sandals. This is clearly shown in its Trademark Principal
Register (Exhibit "U") where the products of the said petitioner had been clearly and
specifically described as "Chemical products, dyestuffs, pigments, toner developing
preparation, shoe polisher, polishing agent". It would be taxing one's credibility to
aver at this point that the production of sandals could be considered as a possible
"natural or normal expansion" of its business operation".8

In Faberge, Incorporated vs. Intermediate Appellate Court,9 the Director of patents

allowed the junior user to use the trademark of the senior user on the ground that
the briefs manufactured by the junior user, the product for which the trademark
BRUTE was sought to be registered, was unrelated and non-competing with the
products of the senior user consisting of after shave lotion, shaving cream,
deodorant, talcum powder, and toilet soap. The senior user vehemently objected
and claimed that it was expanding its trademark to briefs and argued that
permitting the junior user to register the same trademark would allow the latter to
invade the senior user's exclusive domain. In sustaining the Director of Patents, this
Court said that since "(the senior user) has not ventured in the production of briefs,
an item which is not listed in its certificate of registration, (the senior user), cannot
and should not be allowed to feign that (the junior user) had invaded (the senior
user's) exclusive domain."10 We reiterated the principle that the certificate of
registration confers upon the trademark owner the exclusive right to use its own
symbol only to those goods specified in the certificate, subject to the conditions and
limitations stated therein.11 Thus, the exclusive right of petitioner in this case to use
the trademark CANON is limited to the products covered by its certificate of
registration.

Petitioner further argues that the alleged diversity of its products all over the world
makes it plausible that the public might be misled into thinking that there is some
supposed connection between private respondent's goods and petitioner. Petitioner
is apprehensive that there could be confusion as to the origin of the goods, as well as
confusion of business, if private respondent is allowed to register the mark CANON.
In such a case, petitioner would allegedly be immensely prejudiced if private
respondent would be permitted to take "a free ride on, and reap the advantages of,
the goodwill and reputation of petitioner Canon".12 In support of the foregoing
arguments, petitioner invokes the rulings in Sta. Ana vs. Maliwat13 , Ang vs.
Teodoro14 and Converse Rubber Corporation vs. Universal Rubber Products, Inc.15.

The likelihood of confusion of goods or business is a relative concept, to be

determined only according to the particular, and sometimes peculiar, circumstances
of each case.16 Indeed, in trademark law cases, even more than in other litigation,
precedent must be studied in the light of the facts of the particular case.17 Contrary
to petitioner's supposition, the facts of this case will show that the cases of Sta. Ana
vs. Maliwat,, Ang vs. Teodoro and Converse Rubber Corporation vs. Universal
Rubber Products, Inc. are hardly in point. The just cited cases involved goods that
were confusingly similar, if not identical, as in the case of Converse Rubber
Corporation vs. Universal Rubber Products, Inc. Here, the products involved are so
unrelated that the public will not be misled that there is the slightest nexus between
petitioner and the goods of private respondent.
In cases of confusion of business or origin, the question that usually arises is
whether the respective goods or services of the senior user and the junior user are
so related as to likely cause confusion of business or origin, and thereby render the
trademark or tradenames confusingly similar.18 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.19 They may also be related because they serve the
same purpose or are sold in grocery stores.20

Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled that the
petroleum products on which the petitioner therein used the trademark ESSO, and
the product of respondent, cigarettes are "so foreign to each other as to make it
unlikely that purchasers would think that petitioner is the manufacturer of
respondent's goods"21. Moreover, the fact that the goods involved therein flow
through different channels of trade highlighted their dissimilarity, a factor explained
in this wise:

"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 store, and other small distributor outlets. (Respondnet'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."22

Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that
carry the trademark CANON are unrelated to sandals, the product of private
respondent. We agree with the BPTTT, following the Esso doctrine, when it noted
that the two classes of products in this case flow through different trade channels.
The products of petitioner are sold through special chemical stores or distributors
while the products of private respondent are sold in grocery stores, sari-sari stores
and department stores.23 Thus, the evident disparity of the products of the parties
in the case at bar renders unfounded the apprehension of petitioner that confusion
of business or origin might occur if private respondent is allowed to use the mark
CANON.

In its bid to bar the registration of private respondent of the mark CANON,
petitioner invokes the protective mantle of the Paris Convention. Petitioner asserts
that it has the exclusive right to the mark CANON because it forms part of its
corporate name or tradename, protected by Article 8 of the Paris Convention, to wit:

"A tradename shall be protected in all the countries of the Union without the
obligation of filing or registration, whether or not it forms part of a trademark."
Public respondents BPTTT and the Court of Appeals allegedly committed an
oversight when they required petitioner to prove that its mark is a well-known
mark at the time the application of private respondent was filed. Petitioner
questions the applicability of the guidelines embodied in the Memorandum of then
Minister of Trade and Industry Roberto Ongpin (Ongpin) dated October 25, 1983
which according to petitioner implements Article 6bis of the Paris Convention, the
provision referring to the protection of trademarks. The memorandum reads:

"a) the mark must be internationally known;

b) the subject of the right must be a trademark, not a patent or copyright or

anything else;

c) the mark must be for use in the same or similar class of goods;

d) the person claiming must be the owner of the mark."

According to petitioner, it should not be required to prove that its trademark is well-
known and that the products are not similar as required by the quoted
memorandum. Petitioner emphasizes that the guidelines in the memorandum of
Ongpin implement Article 6bis of the Paris Convention, the provision for the
protection of trademarks, not tradenames. Article 6bis of the Paris Convention
states:

(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 and to prohibit the use of a trademark which constitutes a
reproduction, imitation or translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to be
well-known in that country as being already the mark of a person entitled to the
benefits of the present Convention and used for identical or similar goods. These
provisions shall also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to create confusion
therewith.

(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for
a period within which the prohibition of use must be sought.

(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the
use of marks or used in bad faith."

Petitioner insists that what it seeks is the protection of Article 8 of the Paris
Convention, the provision that pertains to the protection of tradenames. Petitioner
believes that the appropriate memorandum to consider is that issued by the then
Minister of Trade and Industry, Luis Villafuerte, directing the Director of patents to:
"reject all pending applications for Philippine registration of signature and other
world famous trademarks by applicants other than the original owners or users."

As far as petitioner is concerned, the fact that its tradename is at risk would call for
the protection granted by Article 8 of the Paris Convention. Petitioner calls attention
to the fact that Article 8, even as embodied in par. 6, sec. 37 of RA 166, mentions no
requirement of similarity of goods. Petitioner claims that the reason there is no
mention of such a requirement, is "because there is a difference between the
referent of the name and that of the mark"24 and that "since Art. 8 protects the
tradename in the countries of the Union, such as Japan and the Philippines,
Petitioner's tradename should be protected here."25

We cannot uphold petitioner's position.

The term "trademark" is defined by RA 166, the Trademark Law, as including "any
word, name, symbol, emblem, sign or device or any combination thereof adopted
and used by a manufacturer or merchant to identify his goods and distinguish them
for those manufactured, sold or dealt in by others."26 Tradename is defined by the
same law as including "individual names and surnames, firm names, tradenames,
devices or words used by manufacturers, industrialists, merchants, agriculturists,
and others to identify their business, vocations, or occupations; the names or titles
lawfully adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other organizations engaged
in trade or commerce."27 Simply put, a trade name refers to the business and its
goodwill; a trademark refers to the goods.28

The Convention of Paris for the Protection of Industrial Property, otherwise known
as the Paris Convention, of which both the Philippines and Japan, the country of
petitioner, are signatories29, is a multilateral treaty that seeks to protect industrial
property consisting of patents, utility models, industrial designs, trademarks,
service marks, trade names and indications of source or appellations of origin, and
at the same time aims to repress unfair competition.30 We agree with public
respondents that the controlling doctrine with respect to the applicability of Article
8 of the Paris Convention is that established in Kabushi Kaisha Isetan vs.
Intermediate Appellate Court.31 As pointed out by the BPTTT:

"Regarding the applicability of Article 8 of the Paris Convention, this Office believes
that there is no automatic protection afforded an entity whose tradename is alleged
to have been infringed through the use of that name as a trademark by a local entity.

In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No.
75420, 15 November 1991, the Honorable Supreme Court held that:

'The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it from using a
tradename which happens to be used in one country. To illustrate if a taxicab or
bus company in a town in the United Kingdom or India happens to use the
tradename "Rapid Transportation", it does not necessarily follow that "Rapid" can
no longer be registered in Uganda, Fiji, or the Philippines.

This office is not unmindful that in the Treaty of Paris for the Protection of
Intellectual Property regarding well-known marks and possible application thereof
in this case. Petitioner, as this office sees it, is trying to seek refuge under its
protective mantle, claiming that the subject mark is well known in this country at
the time the then application of NSR Rubber was filed.

However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin,
issued a memorandum dated 25 October 1983 to the Director of Patents, a set of
guidelines in the implementation of Article 6bis (sic) of the Treaty of Paris. These
conditions are:

a) the mark must be internationally known;

b) the subject of the right must be a trademark, not a patent or copyright or

anything else;

c) the mark must be for use in the same or similar kinds of goods; and

d) the person claiming must be the owner of the mark (The Parties Convention
Commentary on the Paris Convention. Article by Dr. Bogsch, Director General of the
World Intellectual Property Organization, Geneva, Switzerland, 1985)'

From the set of facts found in the records, it is ruled that the Petitioner failed to
comply with the third requirement of the said memorandum that is the mark must
be for use in the same or similar kinds of goods. The Petitioner is using the mark
"CANON" for products belonging to class 2 (paints, chemical products) while the
Respondent is using the same mark for sandals (class 25). Hence, Petitioner's
contention that its mark is well-known at the time the Respondent filed its
application for the same mark should fail. "32

Petitioner assails the application of the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court to this case. Petitioner points out that in the case of
Kabushi Kaisha Isetan vs. Intermediate Appellate Court, petitioner therein was
found to have never at all conducted its business in the Philippines unlike herein
petitioner who has extensively conducted its business here and also had its
trademark registered in this country. Hence, petitioner submits that this factual
difference renders inapplicable our ruling in the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court that Article 8 of the Paris Convention does not
automatically extend protection to a tradename that is in danger of being infringed
in a country that is also a signatory to said treaty. This contention deserves scant
consideration. Suffice it to say that the just quoted pronouncement in the case of
Kabushi Kaisha Isetan vs. Intermediate Appellate Court, was made independent of
the factual finding that petitioner in said case had not conducted its business in this
country.

WHEREFORE, in view of the foregoing, the instant petition for review on certiorari
is DENIED for lack of merit.

SO ORDERED.

G.R. No. 166886 July 30, 2008

MATTEL, INC. Petitioner,

vs.
EMMA FRANCISCO, Director-General >of the Intellectual Property Office, HON.
ESTRELLITA B. ABELARDO, Director of the Bureau of Legal Affairs (IPO), and
JIMMY UY, Respondents.

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court assailing the Decision1 dated June 11, 2004 of the Court of Appeals (CA) in
CA-G.R. SP No. 80480 and the CA Resolution2 dated January 19, 2005 which denied
petitioner's Motion for Reconsideration.

The factual background of the case is as follows:

On November 14, 1991, Jimmy A. Uy (Uy) filed a trademark application Serial No.
785433 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT)
for registration of the trademark "BARBIE" for use on confectionary products, such
as milk, chocolate, candies, milkbar and chocolate candies in Class 30 of the
International Classification of Goods. The trademark application was published in
the March-April 1993 issue of the BPTTT Official Gazette, Vol. VI, No. 2, which was
released for circulation on May 31, 1993.

On July 19, 1993, Mattel, Inc. (Mattel), a corporation organized under the laws of the
State of Delaware, United States of America, filed a Notice of Opposition4 against
Uy's "Barbie" trademark as the latter was confusingly similar to its trademark on
dolls, doll clothes and doll accessories, toys and other similar commercial products.
It was docketed as Inter Partes Case No. 3898.

On August 26, 1993, Uy filed his Answer5 to the Notice of Opposition, denying the
allegations therein and claiming that there is no similarity between the two goods.

While the case was pending, Republic Act (R.A.) No. 8293, otherwise known as the
Intellectual Property Code of the Philippines was enacted and took effect on January
1, 1998. The BPTTT was abolished and its functions transferred to the newly
created Intellectual Property Office (IPO).

On May 18, 2000, public respondent Estrellita B. Abelardo, the Director of the
Bureau of Legal Affairs, IPO, rendered a Decision6 dismissing Mattel's opposition
and giving due course to Uys application for the registration of the trademark
"Barbie" used on confectionary products. The Director held that there was no
confusing similarity between the two competing marks because the goods were
non-competing or unrelated.

On June 5, 2000, Mattel filed a Motion for Reconsideration.7 On May 27, 2002, the
Director of the Bureau of Legal Affairs, IPO issued a Resolution8 denying Mattel's
Motion for Reconsideration.

On June 24, 2002, Mattel filed an Appeal Memorandum9 with the Office of the
Director General, IPO. Despite due notice, no comment was submitted by Uy. Thus,
in an Order10 dated October 7, 2002, Uy was deemed to have waived his right to file
a comment on the appeal.

On September 3, 2003, public respondent Emma C. Francisco, the Director General,

rendered a Decision11 denying the appeal on the ground that there was no proof on
record that Mattel had ventured into the production of chocolates and confectionary
products under the trademark "Barbie" to enable it to prevent Uy from using an
identical "Barbie" trademark on said goods; that the records were bereft of the fact
that the Director of the Bureau of Trademarks (BOT) had already declared the
subject trademark application abandoned due to the non-filing of the Declaration of
Actual Use (DAU) by Uy.

On September 12, 2003, Mattel filed a Motion for New Trial12 on the ground of
newly discovered evidence -- i.e., Mattel's Trademark Application Serial No. 4-1997-
124327 for registration of the trademark "Barbie" for use on "confectionaries,
sweets and chewing gum, none being medicated, sweetmeats included in Class 30,
chocolate, popcorn, chocolate biscuits (other than biscuits for animals), pastries,
preparations for cereals for food for human consumption, ices, ice creams" under
Class 30 of the International Classification of Goods -- was unopposed after
publication in Vol. VI No. 3 of the IPO Official Gazette which was released on June 20,
2003.

On October 22, 2003, the Director General issued an Order13 denying the motion
for new trial.

On November 12, 2003, Mattel filed a Petition for Review14 with the CA. Again,
despite due notice, no comment on the petition was filed by Uy. Thus, in a
Resolution15 dated April 20, 2004, the CA resolved to dispense with the filing of the
comment and considered the petition submitted for resolution/decision sans
comment.
On June 11, 2004, the CA rendered a Decision16 affirming the decision of the
Director General.

On July 15, 2004, Mattel filed a Motion for Reconsideration17 but it was denied by
the CA in a Resolution18 dated January 19, 2005.

Hence, the present petition raising the following issues:

I.

WHETHER OR NOT IT IS GRAVE ERROR ON THE PART OF THE HON. COURT OF

APPEALS TO RULE THAT "Dolls, Doll Clothes, and Doll Accessories, Costumes, Toys
and other similar commercial products" VIS--VIS "Confectionery products, namely,
milk chocolate, candies, milkbar, and chocolate candies" ARE UNRELATED SUCH
THAT USE OF IDENTICAL TRADEMARKS IS UNLIKELY TO CAUSE CONFUSION IN
THE MINDS OF THE PURCHASING PUBLIC.

II.

WHETHER OR NOT IT IS GRAVE ERROR ON THE PART OF THE HON. COURT OF

APPEALS TO SUSTAIN THE FINDINGS OF THE DIRECTOR GENERAL OF THE
INTELLECTUAL PROPERTY OFFICE (IPO) THAT IT IS PREMATURE TO CONCLUDE
THAT APPLICATION SERIAL NO. 78543 BE DEEMED WITHDRAWN FOR FAILURE
TO FILE THE DECLARATION OF ACTUAL USE (DAU), CONSIDERING THAT SUCH
DECLARATION IS THE PREROGATIVE OF THE DIRECTOR OF TRADEMARKS.

III.

WHETHER OR NOT PRIVATE-RESPONDENT SHOULD BE PRESUMED TO HAVE

INTENDED TO CASH-IN AND RIDE ON THE GOODWILL AND WIDESPREAD
RECOGNITION OF THE PETITIONER'S MARK CONSIDERING THAT PRIVATE
RESPONDENT ADOPTED A MARK THAT IS EXACTLY IDENTICAL TO PETITIONER'S
MARK IN SPELLING AND STYLE.

IV.

WHETHER OR NOT TRADEMARK APPLICATION NO. 4-1997-124327 SHOULD BE

CONSIDERED "NEWLY-DISCOVERED EVIDENCE."19

Mattel argues that its products are items related to Uy's products; hence, identical
trademarks should not be used where the possibility of confusion as to source or
origin of the product is certain; that the Director General of the IPO has the power to
act on a pending trademark application considered as "withdrawn" for failure to file
the DAU; that by adopting an exactly identical mark, in spelling and style, Uy should
be presumed to have intended to cash in or ride on the goodwill and widespread
recognition enjoyed by Mattel's mark; that Mattel should be allowed to introduce
Trademark Application Serial No. 4-1997-124327 as "newly discovered evidence."

On the other hand, Uy submits that the case has become moot and academic since
the records of the IPO will show that no DAU was filed on or before December 1,
2001; thus, he is deemed to have abandoned his trademark application for failure to
comply with the mandatory filing of the DAU.

For its part, the OSG contends that the petition primarily raised factual issues which
are not proper subject of a petition for review under Rule 45 of the Rules of Court
and that, at any rate, Mattel failed to establish any grave error on the part of
respondent public officials which will warrant the grant of the present petition. It
submits that confectionary products, namely: milk chocolate, candies, milkbar and
chocolate candies, on the one hand; and dolls, doll clothes and doll accessories,
costumes, toys and other similar commercial products, on the other hand, are
products which are completely unrelated to one another; that withdrawal of
pending application for failure to file a DAU must first be the subject of an
administrative proceeding before the Director of Trademarks; that Mattel's
Trademark Application Serial No. 4-1997-124327 cannot be considered as newly
discovered evidence since said trademark application was filed only on September
3, 1997, or more than two years after the case had been deemed submitted for
decision.

The instant case has been rendered moot and academic.

Uy's declaration in his Comment and Memorandum before this Court that he has not
filed the DAU as mandated by pertinent provisions of R.A. No. 8293 is a judicial
admission that he has effectively abandoned or withdrawn any right or interest in
his trademark.

Section 124.2 of R.A. No. 8293 provides:

The applicant or the registrant shall file a declaration of actual use of the mark with
evidence to that effect, as prescribed by the Regulations within three (3) years from
the filing date of the application. Otherwise, the applicant shall be refused or the
marks shall be removed from the Register by the Director. (Emphasis supplied)

Moreover, Rule 204 of the Rules and Regulations on Trademarks provides:

Declaration of Actual Use. The Office will not require any proof of use in commerce
in the processing of trademark applications.1avvphi1 However, without need of any
notice from the Office, all applicants or registrants, shall file a declaration of actual
use of the mark with evidence to that effect within three years, without possibility of
extension, from the filing date of the application. Otherwise, the application shall be
refused or the mark shall be removed from the register by the Director motu propio.
(Emphasis supplied)
Meanwhile, Memorandum Circular No. BT 2K1-3-04 dated March 29, 200120 of the
IPO provides:

2. For pending applications prosecuted under R.A. 166 we distinguish as follows:

2.1. Based on use must submit DAU and evidence of use on or before December 1,
2001, subject to a single six (6) month extension. (Sec. 3.2, Final Provisions of the
Trademark Regulations, R.A. 8293, IPO Fee Structure and MC. No. BT Y2K-8-02)

x x x x21

Uy's admission in his Comment and Memorandum of non-compliance with the

foregoing requirements is a judicial admission and an admission against interest22
combined. A judicial admission binds the person who makes the same.23 In the
same vein, an admission against interest is the best evidence which affords the
greatest certainty of the facts in dispute.24 The rationale for the rule is based on the
presumption that no man would declare anything against himself unless such
declaration is true.25 Thus, it is fair to presume that the declaration corresponds
with the truth, and it is his fault if it does not.26

In the present case, Mattel is seeking a ruling on whether Uy's "Barbie" trademark is
confusingly similar to it's (Mattel's) "Barbie" trademark. Given Uy's admission that
he has effectively abandoned or withdrawn any rights or interest in his trademark
by his non-filing of the required DAU, there is no more actual controversy, or no
useful purpose will be served in passing upon the merits of the case. It would be
unnecessary to rule on the trademark conflict between the parties. A ruling on the
matter would practically partake of a mere advisory opinion, which falls beyond the
realm of judicial review. The exercise of the power of judicial review is limited to
actual cases and controversies. Courts have no authority to pass upon issues
through advisory opinions or to resolve hypothetical or feigned
problems.27lawphi1

It cannot be gainsaid that for a court to exercise its power of adjudication, there
must be an actual case or controversy one which involves a conflict of legal
rights, an assertion of opposite legal claims susceptible of judicial resolution; the
case must not be moot or academic or based on extra-legal or other similar
considerations not cognizable by a court of justice.28 Where the issue has become
moot and academic, there is no justiciable controversy, and an adjudication thereof
would be of no practical use or value as courts do not sit to adjudicate mere
academic questions to satisfy scholarly interest, however intellectually
challenging.29

Admittedly, there were occasions in the past when the Court passed upon issues
although supervening events had rendered those petitions moot and academic.
After all, the "moot and academic" principle is not a magical formula that can
automatically dissuade the courts from resolving a case. Courts will decide cases,
otherwise moot and academic, if: first, there is a grave violation of the Constitution;
second, the exceptional character of the situation and the paramount public interest
is involved; third, when the constitutional issue raised requires formulation of
controlling principles to guide the bench, the bar, and the public; and fourth, the
case is capable of repetition yet evading review.30

Thus, in Constantino v. Sandiganbayan (First Division),31 Constantino, a public

officer, and his co-accused, Lindong, a private citizen, filed separate appeals from
their conviction by the Sandiganbayan for violation of Section 3(e) of Republic Act
No. 3019 or the Anti-Graft and Corrupt Practices Act. While Constantino died during
the pendency of his appeal, the Court still ruled on the merits thereof, considering
the exceptional character of the appeals of Constantino and Lindong in relation to
each other; that is, the two petitions were so intertwined that the absolution of the
deceased Constantino was determinative of the absolution of his co-accused
Lindong.

In Public Interest Center, Inc. v. Elma,32 the petition sought to declare as null and
void the concurrent appointments of Magdangal B. Elma as Chairman of the
Presidential Commission on Good Government (PCGG) and as Chief Presidential
Legal Counsel (CPLC) for being contrary to Section 13, Article VII and Section 7, par.
2, Article IX-B of the 1987 Constitution. While Elma ceased to hold the two offices
during the pendency of the case, the Court still ruled on the merits thereof,
considering that the question of whether the PCGG Chairman could concurrently
hold the position of CPLC was one capable of repetition.

In David v. Arroyo,33 seven petitions for certiorari and prohibition were filed
assailing the constitutionality of the declaration of a state of national emergency by
President Gloria Macapagal-Arroyo. While the declaration of a state of national
emergency was already lifted during the pendency of the suits, this Court still
resolved the merits of the petitions, considering that the issues involved a grave
violation of the Constitution and affected the public interest. The Court also affirmed
its duty to formulate guiding and controlling constitutional precepts, doctrines or
rules, and recognized that the contested actions were capable of repetition.

In Pimentel, Jr. v. Ermita,34 the petition questioned the constitutionality of

President Gloria Macapagal-Arroyos appointment of acting secretaries without the
consent of the Commission on Appointments while Congress was in session. While
the President extended ad interim appointments to her appointees immediately
after the recess of Congress, the Court still resolved the petition, noting that the
question of the constitutionality of the Presidents appointment of department
secretaries in acting capacities while Congress was in session was one capable of
repetition.

In Atienza v. Villarosa,35 the petitioners, as Governor and Vice-Governor, sought for

clarification of the scope of the powers of the Governor and Vice-Governor under
the pertinent provisions of the Local Government Code of 1991. While the terms of
office of the petitioners expired during the pendency of the petition, the Court still
resolved the issues presented to formulate controlling principles to guide the bench,
bar and the public.

In Gayo v. Verceles,36 the petition assailing the dismissal of the petition for quo
warranto filed by Gayo to declare void the proclamation of Verceles as Mayor of the
Municipality of Tubao, La Union during the May 14, 2001 elections, became moot
upon the expiration on June 30, 2004 of the contested term of office of Verceles.
Nonetheless, the Court resolved the petition since the question involving the one-
year residency requirement for those running for public office was one capable of
repetition.

In Albaa v. Commission on Elections,37 the petitioners therein assailed the

annulment by the Commission on Elections of their proclamation as municipal
officers in the May 14, 2001 elections. When a new set of municipal officers was
elected and proclaimed after the May 10, 2004 elections, the petition was mooted
but the Court resolved the issues raised in the petition in order to prevent a
repetition thereof and to enhance free, orderly, and peaceful elections.

The instant case does not fall within the category of any of these exceptional cases in
which the Court was persuaded to resolve moot and academic issues to formulate
guiding and controlling constitutional principles, precepts, doctrines or rules for
future guidance of both bench and bar. The issues in the present case call for an
appraisal of factual considerations which are peculiar only to the transactions and
parties involved in this controversy. The issues raised in this petition do not call for
a clarification of any constitutional principle. Perforce, the Court dispenses with the
need to adjudicate the instant case.

WHEREFORE, the petition is DISMISSED for being moot and academic.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 171053 October 15, 2007

SEHWANI, INCORPORATED and/or BENITA'S FRITES, INC., Petitioner,

vs.
IN-N-OUT BURGER, INC., Respondent.

This petition for review assails the Decision1 of the Court of Appeals in CA-G.R. SP
No. 88004 dated October 21, 2005, which affirmed the December 7, 2004 Order2 of
Director General Emma C. Francisco of the Intellectual Property Office (IPO), in
Appeal No. 14-2004-0004 finding that petitioners appeal was filed out of time, as
well as the Resolution3 dated January 12, 2006 denying the motion for
reconsideration.

Respondent IN-N-OUT Burger, Inc., a foreign corporation organized under the laws
of California, U.S.A., and not doing business in the Philippines, filed before the
Bureau of Legal Affairs of the IPO (BLA-IPO), an administrative complaint against
petitioners Sehwani, Inc. and Benitas Frites, Inc. for violation of intellectual
property rights, attorneys fees and damages with prayer for the issuance of a
restraining order or writ of preliminary injunction.4

Respondent alleged that it is the owner of the tradename "IN-N-OUT" and

trademarks "IN-N-OUT," "IN-N-OUT Burger & Arrow Design" and "IN-N-OUT Burger
Logo," which are used in its business since 1948 up to the present. These tradename
and trademarks were registered in the United States as well as in other parts of the
world.5

On June 2, 1997, respondent applied with the IPO for the registration of its
trademark "IN-N-OUT Burger & Arrow Design" and servicemark "IN-N-OUT." In the
course of its application, respondent discovered that petitioner Sehwani, Inc. had
obtained Trademark Registration No. 56666 for the mark "IN N OUT" (THE INSIDE
OF THE LETTER "O" FORMED LIKE A STAR) on December 17, 1993 without its
authority.6 Respondent thus demanded that petitioner Sehwani, Inc. desist from
claiming ownership of the mark "IN-N-OUT" and to voluntarily cancel its Trademark
Registration No. 56666. Petitioner Sehwani, Inc. however refused to accede to the
demand and even entered into a Licensing Agreement granting its co-petitioner
Benitas Frites, Inc. license to use for a period of five years the trademark "IN-N-OUT
BURGER" in its restaurant in Pasig City.7 Hence, respondent filed a complaint for
violation of intellectual property rights.

In their answer with counterclaim, petitioners alleged that respondent lack the legal
capacity to sue because it was not doing business in the Philippines and that it has
no cause of action because its mark is not registered or used in the Philippines.
Petitioner Sehwani, Inc. also claimed that as the registered owner of the "IN-N-OUT"
mark, it enjoys the presumption that the same was validly acquired and that it has
the exclusive right to use the mark. Moreover, petitioners argued that other than the
bare allegation of fraud in the registration of the mark, respondent failed to show
the existence of any of the grounds for cancellation thereof under Section 151 of
Republic Act (R.A.) No. 8293, otherwise known as The Intellectual Property Code of
the Philippines.8

On December 22, 2003, Bureau Director Estrellita Beltran-Abelardo rendered

Decision No. 2003-02 finding that respondent has the legal capacity to sue and that
it is the owner of the internationally well-known trademarks; however, she held
that petitioners are not guilty of unfair competition, thus:
With the foregoing disquisition, Certificate of Registration No. 56666 dated 17
December 1993 for the mark "IN-N-OUT (the inside of the letter "O" formed like a
star) issued in favor of Sehwani, Incorporated is hereby CANCELLED. Consequently,
Respondents Sehwani, Inc. and Benitas Frites are hereby ordered to permanently
cease and desist from using the mark "IN-N-OUT" and "IN-N-OUT BURGER LOGO"
on its goods and in its business. With regard to mark "Double-Double", considering
that as earlier discussed, the mark has been approved by this Office for publication
and that as shown by the evidence, Complainant is the owner of the said mark,
Respondents are also ordered to permanently cease and desist from using the mark
Double-Double. NO COSTS.

SO ORDERED.9

Petitioners filed a motion for reconsideration10 insisting that respondent has no

legal capacity to sue, that no ground for cancellation was duly proven, and that the
action is barred by laches; while respondent moved for partial reconsideration11
assailing the finding that petitioners are not guilty of unfair competition. Both,
however, were denied in Resolution No. 2004-18 dated October 28, 200412 and
Resolution No. 2005-05 dated April 25, 2005,13 respectively.

On separate dates, the parties appealed to the Office of the Director General which
rendered an Order dated December 7, 2004,14 in Appeal No. 14-2004-0004,
dismissing petitioners appeal for being filed out of time, thus:

WHEREFORE, premises considered, the MOTION TO ADMIT COPY OF DECISION NO.

2003-02 is hereby granted. The instant appeal, however, is hereby DISMISSED for
having been filed out of time.15

Aggrieved, petitioners filed a petition before the Court of Appeals which was
dismissed for lack of merit. It held that the right to appeal is not a natural right or a
part of due process, but a procedural remedy of statutory origin, hence, its
requirements must be strictly complied with. The appeal being filed out of time, the
December 22, 2003 Decision and the October 28, 2004 Orders of Bureau Director
Beltran-Abelardo are now final and executory.16

Meanwhile, respondent filed a Manifestation with the Court of Appeals that on

December 23, 2005, Director General Adrian S. Cristobal, Jr. had rendered a Decision
in Appeal 10-05-01 finding petitioners guilty of unfair competition.17

Petitioners motion for reconsideration was denied; hence, the instant petition
raising the following issues:

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN UPHOLDING THE IPO

DIRECTOR GENERALS DISMISSAL OF APPEAL NO. 14-2004-0004 ON A MERE
TECHNICALITY.
SUBSTANTIAL JUSTICE WOULD BE BETTER SERVED IF THE COURT OF APPEALS
AND THE IPO DIRECTOR GENERAL ENTERTAINED PETITIONERS APPEAL AS THE
BUREAU OF LEGAL AFFAIRS DECISION AND RESOLUTION (1) CANCELING
PETITIONER SEHWANIS CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-
OUT," AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST
FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS ARE CONTRARY
TO LAW AND/OR NOT SUPPORTED BY EVIDENCE.18

Petitioners contend that the Court of Appeals erred when it dismissed the petition
on mere technicality which resulted in a miscarriage of justice and deprivation of
intellectual property rights. They claim that their counsel believed in good faith that
Resolution No. 2004-18 dated October 28, 2004, denying the motion for
reconsideration, was received only on November 3, 2004, thus, they have until
November 18, 2004 within which to file an appeal memorandum with the Office of
the Director General. They claim that they should not be prejudiced by their
counsels mistake in computing the period to appeal; besides, the same is
understandable and excusable as their counsel is a solo practitioner with only a
handful of non-legal staff assisting him. They also reiterate their position that
respondent has no legal capacity to sue, that no ground for cancellation was duly
proven, and that the complaint is barred by laches, if not, by prescription.19

The petition has no merit.

The Court has invariably ruled that perfection of an appeal within the statutory or
reglementary period is not only mandatory but also jurisdictional; failure to do so
renders the questioned decision/final order final and executory, and deprives the
appellate court of jurisdiction to alter the judgment or final order, much less to
entertain the appeal.20 True, this rule had been relaxed but only in highly
meritorious cases to prevent a grave injustice from being done.21 Such does not
obtain in this case.

Director General Francisco, as affirmed by the Court of Appeals, correctly held:

[T]hat the appeal must be dismissed outright. Section 2 of the Uniform Rules on
Appeal (Office Order no. 12, s. 2002) states that:

Section 2. Appeal to the Director General. The decisions or final orders of the
Bureau Director shall become final and executory thirty (30) days after receipt of a
copy thereof by the appellant or appellants unless, within the same period, a motion
for reconsideration is filed with the Bureau Director or an appeal to the Director
General has been perfected; Provided, that only one (1) motion for reconsideration
of the decision or order of the Bureau Director shall be allowed, and, in case the
motion for reconsideration is denied, the appellant or appellants has/have the
balance of the period prescribed above within which to file the appeal.
Considering that the Respondent-Appellants received a copy of the appealed
Decision on 15 January 2004 and filed their MOTION FOR RECONSIDERATION on 30
January 2004, said parties had a balance of 15 days from their receipt of the
Resolution denying said motion within which to file the APPEAL MEMORANDUM.
Per records of the Bureau of Legal Affairs, the Respondents-Appellants received a
copy of the Resolution on 29 October 2004. Hence the deadline for the filing of the
APPEAL MEMORANDUM was on 13 November 2004. Since said date fell on a
Saturday, the appeal should have been filed on the ensuing working day, that is, 15
November 2004.

On this score, Section 5(c) of the Uniform Rules on Appeal provides:

Section 5. Action on the Appeal Memorandum The Director General shall:

xxxx

c) Dismiss the appeal for being patently without merit, provided that the dismissal
shall be outright if the appeal is not filed within the prescribed period or for failure
of the appellant to pay the required fee within the period of appeal.22
(Underscoring supplied)

Petitioners allegation that they honestly believed that they received Resolution No.
2004-18 dated October 28, 2004 on November 3, 2004 and not on October 29, 2004,
as what appears on the records of the BLA-IPO, is self-serving and unbelievable. The
inadvertent computation of the period for one to file a pleading is inexcusable, and
has become an all too familiar and ready excuse on the part of lawyers remiss in
their bounden duty to comply with the mandatory periods.23

This Court has always reminded the members of the legal profession that every case
they handle deserves full and undivided attention, diligence, skill and competence,
regardless of its importance.24 A lawyer has the responsibility of monitoring and
keeping track of the period of time left to file pleadings and to see to it that said
pleadings are filed before the lapse of the period. If he fails to do so, his client is
bound by his conduct, negligence and mistakes.25 This responsibility is imposed on
all lawyers notwithstanding the presence or absence of staff assisting them in the
discharge thereof.

Thus, as correctly held by the Court of Appeals, petitioners belated filing of an

appeal memorandum rendered the December 22, 2003 Decision and the October 28,
2004 Order of Bureau Director Beltran-Abelardo final and executory.

At this point, the Court could very well write finis to this petition. However, in
disposing of the instant case, we shall resolve the principal issues raised by
petitioners.
Contrary to petitioners argument, respondent has the legal capacity to sue for the
protection of its trademarks, albeit it is not doing business in the Philippines.
Section 160 in relation to Section 3 of R.A. No. 8293, provides:

SECTION 160. Right of Foreign Corporation to Sue in Trademark or Service Mark

Enforcement Action. Any foreign national or juridical person who meets the
requirements of Section 3 of this Act and does not engage in business in the
Philippines may bring a civil or administrative action hereunder for opposition,
cancellation, infringement, unfair competition, or false designation of origin and
false description, whether or not it is licensed to do business in the Philippines
under existing laws.

Section 3 thereof provides:

SECTION 3. International Conventions and Reciprocity. Any person who is a

national or who is domiciled or has a real and effective industrial establishment in a
country which is a party to any convention, treaty or agreement relating to
intellectual property rights or the repression of unfair competition, to which the
Philippines is also a party, or extends reciprocal rights to nationals of the
Philippines by law, shall be entitled to benefits to the extent necessary to give effect
to any provision of such convention, treaty or reciprocal law, in addition to the
rights to which any owner of an intellectual property right is otherwise entitled by
this Act.

Respondent anchors its causes of action under Articles 6bis and 8 of The Convention
of Paris for the Protection of Industrial Property, otherwise known as the Paris
Convention, wherein both the United States and the Philippines are signatories.26
The Articles read:

Article 6bis

(1) The countries of the Union undertake, ex officio if their legislation so permits, or
at the request of an interested party, to refuse or to cancel the registration, and to
prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a
translation, liable to create confusion, of a mark considered by the competent
authority of the country of registration or use to be well known in that country as
being already the mark of a person entitled to the benefits of this Convention and
used for identical or similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any such well-known mark
or an imitation liable to create confusion therewith.

x x x x.

Article 8
A tradename shall be protected in all countries of the Union without the obligation
of filing or registration whether or not it forms part of a trademark.

Article 6bis which governs the protection of well-known trademarks, is a self-

executing provision and does not require legislative enactment to give it effect in the
member country. It may be applied directly by the tribunals and officials of each
member country by the mere publication or proclamation of the Convention, after
its ratification according to the public law of each state and the order for its
execution. The essential requirement under this Article is that the trademark to be
protected must be "well-known" in the country where protection is sought. The
power to determine whether a trademark is well-known lies in the "competent
authority of the country of registration or use." This competent authority would be
either the registering authority if it has the power to decide this, or the courts of the
country in question if the issue comes before a court.27

The question of whether or not respondents trademarks are considered "well-

known" is factual in nature, involving as it does the appreciation of evidence
adduced before the BLA-IPO. The settled rule is that the factual findings of quasi-
judicial agencies, like the IPO, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect,
but, at times, even finality if such findings are supported by substantial evidence.28

Director Beltran-Abelardo found that:

Arguing mainly that it is the owner of an internationally well-known mark,

complainant presented its United States trademark registrations, namely: United
States Trademark Registration No. 1,514,689 for the mark "IN-N-OUT Burger and
Arrow Design" under class 25 dated November 29, 1988 for the shirts (Exhibit "L");
United States Trademark Registration No. 1,528,456 for the mark "IN-N-OUT Burger
and Arrow Design" under Class 29, 30, 32 and 42 dated March 7, 1989 for milk and
french-fried potatoes for consumption on or off the premises, for hamburger
sandwiches, cheeseburger sandwiches, hot coffee and milkshakes for consumption
on or off the premises, lemonade and softdrinks for consumption on and off the
premises, restaurant services respectively (Exhibit "M"); US Trademark Registration
No. 1,101,638 for the mark "IN-N-OUT" under Class No. 30 dated September 5, 1978
for cheeseburgers, hamburgers, hot coffee and milkshake for consumption on or off
premises (Exhibit "N"); US Trademark Registration No. 1,085,163 "IN-N-OUT" under
Class 42 dated February 7, 1978 for Restaurant Services and carry-out restaurant
services (Exhibit "Q"). For its mark "Double-Double" it submitted Certificates of
Registration of said mark in several countries (Exhibits "MM" and submarkings).

xxxx

Moreover, complainant also cites our decision in Inter Pares Case No. 14-1998-
00045 dated 12 September 2000, an opposition case involving the mark "IN-N-OUT"
between IN-N-OUT Burger (herein complainant) and Nestor SJ Bonjales where we
ruled:

"And last but not the lease, the herein Opposer was able to prove substantially that
its mark "IN-N-OUT Burger and Arrow Design" is an internationally well known
mark as evidenced by its trademark registrations around the world and its
comprehensive advertisements therein."

The nub of complainants reasoning is that the Intellectual Property Office as a

competent authority had declared in previous inter partes case that "IN-N-OUT
Burger and Arrow Design" is an internationally well known mark.

In the aforementioned case, we are inclined to favor the declaration of the mark "IN-
N-OUT" as an internationally well-known mark on the basis of "registrations in
various countries around the world and its comprehensive advertisements therein."

The Ongpin Memorandum dated 25 October 1983 which was the basis for the
decision in the previous inter partes case and which set the criteria for determining
whether a mark is well known, takes into consideration the extent of registration of
a mark. Similarly, the implementing rules of Republic Act 8293, specifically Section
(e) Rule 102 Criteria for determining whether a mark is well known, also takes into
account the extent to which the mark has been registered in the world in
determining whether a mark is well known.

Likewise, as shown by the records of the instant case, Complainant submitted

evidence consisting of articles about "IN-N-OUT Burger" appearing in magazines,
newspapers and print-out of what appears to be printed representations of its
internet website (www.innout.com) (Exhibits "CCC" to "QQQ"), as well as object
evidence consisting of videotapes of famous celebrities mentioning IN-N-OUT
burgers in the course of their interviews (Exhibits "EEEE" and "FFFF") showing a
tremendous following among celebrities.

The quality image and reputation acquired by the complainants IN-N-OUT mark is
unmistakable. With this, complainants mark have met other criteria set in the
Implementing Rules of Republic Act 8293, namely, a and d of Rule 102, to wit:

"Rule 102:

(a) the duration, extent and geographical area of any use of the mark, in particular,
the duration, extent and geographical area of any promotion of the mark, including
publicity and the presentation at fairs or exhibitions, of the goods and/or services to
which the mark applies;

xxxx

(d) the quality image or reputation acquired by the mark"

Hence, on the basis of evidence presented consisting of worldwide registration of
mark "IN-N-OUT" almost all of which were issued earlier than the respondents date
of filing of its application and the subsequent registration of the mark "IN-N-OUT" in
this Office, as well as the advertisements therein by the complainant, this Office
hereby affirms its earlier declaration that indeed, the mark "IN-N-OUT BURGER
LOGO" is an internally well-known mark.29

We find the foregoing findings and conclusions of Director Beltran-Abelardo fully

substantiated by the evidence on record and in accord with law.

The fact that respondents marks are neither registered nor used in the Philippines
is of no moment. The scope of protection initially afforded by Article 6bis of the
Paris Convention has been expanded in the 1999 Joint Recommendation Concerning
Provisions on the Protection of Well-Known Marks, wherein the World Intellectual
Property Organization (WIPO) General Assembly and the Paris Union agreed to a
nonbinding recommendation that a well-known mark should be protected in a
country even if the mark is neither registered nor used in that country. Part I, Article
2(3) thereof provides:

(3) [Factors Which Shall Not Be Required] (a) A Member State shall not require, as a
condition for determining whether a mark is a well-known mark:

(i) that the mark has been used in, or that the mark has been registered or that an
application for registration of the mark has been filed in or in respect of, the
Member State;

(ii) that the mark is well known in, or that the mark has been registered or that an
application for registration of the mark has been filed in or in respect of, any
jurisdiction other than the Member State; or

(iii) that the mark is well known by the public at large in the Member State.
(Underscoring supplied)

Moreover, petitioners claim that no ground exists for the cancellation of their
registration lacks merit. Section 151(b) of RA 8293 provides:

SECTION 151. Cancellation. 151.1. A petition to cancel a registration of a mark

under this Act may be filed with the Bureau of Legal Affairs by any person who
believes that he is or will be damaged by the registration of a mark under this Act as
follows:

xxxx

(b) At any time, if the registered mark becomes the generic name for the goods or
services, or a portion thereof, for which it is registered, or has been abandoned, or
its registration was obtained fraudulently or contrary to the provisions of this Act,
or if the registered mark is being used by, or with the permission of, the registrant
so as to misrepresent the source of the goods or services on or in connection with
which the mark is used. x x x.1wphi1

The evidence on record shows that not only did the petitioners use the IN-N-OUT
Burger trademark for the name of their restaurant, but they also used identical or
confusingly similar mark for their hamburger wrappers and french-fries
receptacles, thereby effectively misrepresenting the source of the goods and
services.30

Finally, petitioners contention that respondent is precluded from asserting its claim
by laches, if not by prescription, lacks basis. Section 151(b) of R.A. No. 8293
specifically provides that a petition to cancel the registration of a mark which is
registered contrary to the provisions thereof, or which is used to misrepresent the
source of the goods or services, may be filed at any time. Moreover, laches may not
prevail against a specific provision of law, since equity, which has been defined as
justice outside legality is applied in the absence of and not against statutory law or
rules of procedure.31 Aside from the specific provisions of R.A. No. 8293, the Paris
Convention and the WIPO Joint Recommendation have the force and effect of law,
for under Section 2, Article II of the Constitution, the Philippines adopts the
generally accepted principles of international law as part of the law of the land. To
rule otherwise would be to defeat the equitable consideration that no one other
than the owner of the well-known mark shall reap the fruits of an honestly
established goodwill.

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

SO ORDERED.

G.R. No. 111580 June 21, 2001

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD., SHANGRI-LA

PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL AND RESORT, INC. and KUOK
PHILIPPINE PROPERTIES, INC., petitioners,
vs.
THE COURT OF APPEALS, HON. FELIX M. DE GUZMAN, as Judge, RTC of Quezon
City, Branch 99 and DEVELOPERS GROUP OF COMPANIES, INC., respondents.
On June 21, 1988, the Shangri-La International Hotel Management, Ltd., Shangri-La
Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and Kuok Philippine
Properties, Inc. (hereinafter collectively referred as the "Shangri-La Group"), filed
with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) a
petition, docketed as Inter Partes Case No. 3145, praying for the cancellation of the
registration of the "Shangri-La" mark and "S" device/logo issued to the Developers
Group of Companies, Inc., on the ground that the same was illegally and fraudulently
obtained and appropriated for the latter's restaurant business. The Shangri-La
Group alleged that it is the legal and beneficial owners of the subject mark and logo;
that it has been using the said mark and logo for its corporate affairs and business
since March 1962 and caused the same to be specially designed for their
international hotels in 1975, much earlier than the alleged first use thereof by the
Developers Group in 1982.

Likewise, the Shangri-La Group filed with the BPTTT its own application for
registration of the subject mark and logo. The Developers Group filed an opposition
to the application, which was docketed as Inter Partes Case No. 3529.

Almost three (3) years later, or on April 15, 1991, the Developers Group instituted
with the Regional Trial Court of Quezon City, Branch 99, a complaint for
infringement and damages with prayer for injunction, docketed as Civil Case No. Q-
91-8476, against the Shangri-La Group.

On January 8, 1992, the Shangri-La Group moved for the suspension of the
proceedings in the infringement case on account of the pendency of the
administrative proceedings before the BPTTT.1 This was denied by the trial court in
a Resolution issued on January 16, 1992.2 The Shangri-La Group filed a Motion for
Reconsideration.3 Soon thereafter, it also filed a Motion to Inhibit against Presiding
Judge Felix M. de Guzman.4 On July 1, 1992, the trial court denied both motions.5

The Shangri-La Group filed a petition for certiorari before the Court of Appeals,
docketed as CA-G.R. SP No. 29006.6 On February 15, 1993, the Court of Appeals
rendered its decision dismissing the petition for certiorari.7 The Shangri-La Group
filed a Motion for Reconsideration, which was denied on the ground that the same
presented no new matter that warranted consideration.8

Hence, the instant petition, docketed as G.R. No. 111580, based on the following
grounds:

THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND

COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT:

I. THE INFRINGEMENT CASE SHOULD BE DISMISSED OR AT LEAST SUSPENDED;

AND
II. THE HONORABLE PRESIDING JUDGE SHOULD INHIBIT HIMSELF FROM TRYING
THE INFRINGEMENT CASE.9

Meanwhile, on October 28, 1991, the Developers Group filed in Inter Partes Case No.
3145 an Urgent Motion to Suspend Proceedings, invoking the pendency of the
infringement case it filed before the Regional Trial Court of Quezon City.10 On
January 10, 1992, the BPTTT, through Director Ignacio S. Sapalo, issued an Order
denying the Motion.11 A Motion for Reconsideration was filed which was, however,
denied in a Resolution dated February 11, 1992.12

From the denial by the BPTTT of its Urgent Motion to Suspend Proceedings and
Motion for Reconsideration, the Developers Group filed with the Court of Appeals a
petition for certiorari, mandamus and prohibition, docketed as CA-G.R. SP No.
27742.13 On March 29, 1994, the Court of Appeals dismissed the petition for lack of
merit.14

A petition for review was thereafter filed, docketed as G.R. No. 114802, raising the
issue of:

WHETHER OR NOT, GIVEN THE ESTABLISHED FACTS AND CIRCUMSTANCES ON

RECORD AND THE LAW AND JURISPRUDENCE APPLICABLE TO THE MATTER, THE
RESPONDENT COURT ERRED IN HOLDING THAT, INASMUCH AS BOTH THE CIVIL
ACTION AND THE ADMINISTRATIVE PROCEEDINGS HERE INVOLVED MAY CO-
EXIST AND THE LAW DOES NOT PROVIDE FOR ANY PREFERENCE BY ONE OVER
THE OTHER, THE RESPONDENT DIRECTOR HAD JURISDICTION TO RULE AS HE
DID AND HAD NOT INCURRED ANY GRAVE ABUSE OF DISCRETION CORRECTIBLE
BY THE EXTRAORDINARY REMEDIES OF CERTIORARI, PROHIBITION AND
MANDAMUS.15

On February 2, 1998, G.R. Nos. 111580 and 114802 were ordered consolidated.

The core issue is simply whether, despite the institution of an Inter Partes case for
cancellation of a mark with the BPTTT (now the Bureau of Legal Affairs, Intellectual
Property Office) by one party, the adverse party can file a subsequent action for
infringement with the regular courts of justice in connection with the same
registered mark.

We rule in the affirmative.

Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual
Property Code, provides, as follows

Section 151.2. Notwithstanding the foregoing provisions, the court or the

administrative agency vested with jurisdiction to hear and adjudicate any action to
enforce the rights to a registered mark shall likewise exercise jurisdiction to
determine whether the registration of said mark may be cancelled in accordance
with this Act. The filing of a suit to enforce the registered mark with the proper
court or agency shall exclude any other court or agency from assuming jurisdiction
over a subsequently filed petition to cancel the same mark. On the other hand, the
earlier filing of petition to cancel the mark with the Bureau of Legal Affairs shall not
constitute a prejudicial question that must be resolved before an action to enforce
the rights to same registered mark may be decided. (Emphasis provided)

Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings, provides

to wit

Section 7. Effect of filing of a suit before the Bureau or with the proper court. - The
filing of a suit to enforce the registered mark with the proper court or Bureau shall
exclude any other court or agency from assuming jurisdiction over a subsequently
filed petition to cancel the same mark. On the other hand, the earlier filing of
petition to cancel the mark with the Bureau shall not constitute a prejudicial
question that must be resolved before an action to enforce the rights to same
registered mark may be decided. (Emphasis provided)

Hence, as applied in the case at bar, the earlier institution of an Inter Partes case by
the Shangri-La Group for the cancellation of the "Shangri-La" mark and "S"
device/logo with the BPTTT cannot effectively bar the subsequent filing of an
infringement case by registrant Developers Group. The law and the rules are
explicit.

The rationale is plain: Certificate of Registration No. 31904, upon which the
infringement case is based, remains valid and subsisting for as long as it has not
been cancelled by the Bureau or by an infringement court. As such, Developers
Group's Certificate of Registration in the principal register continues as "prima facie
evidence of the validity of the registration, the registrant's ownership of the mark or
trade-name, and of the registrant's exclusive right to use the same in connection
with the goods, business or services specified in the certificate."16 Since the
certificate still subsists, Developers Group may thus file a corresponding
infringement suit and recover damages from any person who infringes upon the
former's rights.17

Furthermore, the issue raised before the BPTTT is quite different from that raised in
the trial court. The issue raised before the BPTTT was whether the mark registered
by Developers Group is subject to cancellation, as the Shangri-La Group claims prior
ownership of the disputed mark. On the other hand, the issue raised before the trial
court was whether the Shangri-La Group infringed upon the rights of Developers
Group within the contemplation of Section 22 of Republic Act 166.

The case of Conrad and Company, Inc. v. Court of Appeals18 is in point. We held:

We cannot see any error in the above disquisition. It might be mentioned that while
an application for the administrative cancellation of a registered trademark on any
of the grounds enumerated in Section 17 of Republic Act No. 166, as amended,
otherwise known as the Trade-Mark Law, falls under the exclusive cognizance of
BPTTT (Sec. 19, Trade-Mark Law), an action, however, for infringement or unfair
competition, as well as the remedy of injunction and relief for damages, is explicitly
and unquestionably within the competence and jurisdiction of ordinary courts.

xxx xxx xxx

Surely, an application with BPTTT for an administrative cancellation of a registered

trade mark cannot per se have the effect of restraining or preventing the courts
from the exercise of their lawfully conferred jurisdiction. A contrary rule would
unduly expand the doctrine of primary jurisdiction which, simply expressed, would
merely behoove regular courts, in controversies involving specialized disputes, to
defer to the findings or resolutions of administrative tribunals on certain technical
matters. This rule, evidently, did not escape the appellate court for it likewise
decreed that for "good cause shown, the lower court, in its sound discretion, may
suspend the action pending outcome of the cancellation proceedings" before the
BPTTT.

However, while the instant Petitions have been pending with this Court, the
infringement court rendered a Decision, dated March 8, 1996, in Civil Case No. Q-91-
8476,19 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Developers Group of

Companies, Inc. and against defendants Shangri-La International Hotel Management,
Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc., and Kuok
Philippine Properties, Inc.

a) Upholding the validity of the registration of the service mark "Shangri-La" and "S-
Logo" in the name of plaintiff;

b) Declaring defendants' use of said mark and logo as an infringement of plaintiff's

right thereto;

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

persons acting under their authority and with their permission, to permanently
cease and desist from using and/or continuing to use said mark and logo, or any
copy, reproduction or colorable imitation thereof, in the promotion, advertisement,
rendition of their hotel and allied projects and services or in any other manner
whatsoever;

d) Ordering defendants to remove said mark and logo from any premises, objects,
materials and paraphernalia used by them and/or destroy any and all prints, signs,
advertisements or other materials bearing said mark and logo in their possession
and/or under their control; and
e) Ordering defendants, jointly and severally, to indemnify plaintiff in the amounts
of P2,000,000.00 as actual and compensatory damages, P500,000.00 as attorney's
fees and expenses of litigation.

Let a copy of this Decision be certified to the Director, Bureau of Patents,

Trademarks and Technology Transfer, for his information and appropriate action in
accordance with the provisions of Section 25, Republic Act No. 166.

Costs against defendants.

SO ORDERED.20

The said Decision is now on appeal with respondent Court of Appeals.21

Following both law and the jurisprudence enunciated in Conrad and Company, Inc.
v. Court of Appeals,22 the infringement case can and should proceed independently
from the cancellation case with the Bureau so as to afford the owner of certificates
of registration redress and injunctive writs. In the same light, so must the
cancellation case with the BPTTT (now the Bureau of Legal Affairs, Intellectual
Property Office) continue independently from the infringement case so as to
determine whether a registered mark may ultimately be cancelled. However, the
Regional Trial Court, in granting redress in favor of Developers Group, went further
and upheld the validity and preference of the latter's registration over that of the
Shangri-La Group.

There can be no denying that the infringement court may validly pass upon the right
of registration. Section 161 of Republic Act No. 8293 provides to wit

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

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

With the decision of the Regional Trial Court upholding the validity of the
registration of the service mark "Shangri-La" and "S" logo in the name of Developers
Group, the cancellation case filed with the Bureau hence becomes moot. To allow the
Bureau to proceed with the cancellation case would lead to a possible result
contradictory to that which the Regional Trial Court has rendered, albeit the same is
still on appeal. Such a situation is certainly not in accord with the orderly
administration of justice. In any event, the Court of Appeals has the competence and
jurisdiction to resolve the merits of the said RTC decision.
We are not unmindful of the fact that in G.R. No. 114802, the only issue submitted
for resolution is the correctness of the Court of Appeals' decision sustaining the
BPTTT's denial of the motion to suspend the proceedings before it. Yet, to provide a
judicious resolution of the issues at hand, we find it apropos to order the suspension
of the proceedings before the Bureau pending final determination of the
infringement case, where the issue of the validity of the registration of the subject
trademark and logo in the name of Developers Group was passed upon.

WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing G.R.

No. 111580 for being moot and academic, and ordering the Bureau of Legal Affairs,
Intellectual Property Office, to suspend further proceedings in Inter Partes Case No.
3145, to await the final outcome of the appeal in Civil Case No. Q-91-
8476.1wphi1.nt

SO ORDERED.

G.R. No. 132993 June 29, 2005

LEVI STRAUSS (PHILS.), INC., petitioner,

vs.
VOGUE TRADERS CLOTHING COMPANY, respondent.

This is a petition for review on certiorari seeking to annul the decision1 of the Court
of Appeals, dated August 13, 1997, which annulled and set aside the orders,2 dated
December 10, 1996 and April 11, 1997, issued by the Regional Trial Court of Manila,
Branch 1 and which directed the trial court to desist from proceeding with the said
case until the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) has
finally resolved Inter Partes Cases Nos. 4216 and 4217, and the resolution of the
Court of Appeals, dated March 5, 1998, denying petitioners motion for
reconsideration.

The factual antecedents are as follows:

In 1972, per "Trademark, Technical Data, and Technical Assistance Agreement,"3

Levi Strauss & Co., the principal based in Delaware, United States of America,
granted petitioner Levi Strauss (Phils.) a non-exclusive license to use LEVIS
trademark, design, and name in the manufacturing, marketing, distribution, and sale
of its clothing and other goods.4 The licensing agreement was renewed several
times, the recent one being under Certificate of Registration No. 1379-A.5 Levi
Strauss & Co. obtained certificates of registration from the BPTTT for the following
trademarks: "LEVIS"6; "501"7; "Two Horse Design"8; "Two Horse Label"9; "Two
Horse Patch"10; "Two Horse Label with Patterned Arcuate Design"11; "Arcuate
Design"12; and the composite trademarks,13 namely, "Arcuate," "Tab," and "Two
Horse Patch."
Petitioner discovered the existence of some trademark registrations belonging to
respondent which, in its view, were confusingly similar to its trademarks. Thus, it
instituted two cases before the BPTTT for the cancellation of respondents
trademark registrations, to wit: Inter Partes Case No. 4216, a petition for
cancellation of Certificate of Registration No. 53918 (for "LIVES") and Inter Partes
Case No. 4217, a petition for cancellation of Certificate of Registration No. 8868 (for
"LIVES" Label Mark).

Petitioner then applied for the issuance of a search warrant on the premises of
respondent Vogue Traders Clothing Company, owned by one Tony Lim, with the
Regional Trial Court of Manila, Branch 3. On December 12, 1995, said trial court
issued Search Warrant No. 95-75714 and Search Warrant No. 95-75815 based on its
finding of probable cause that the respondent had violated Article 189 of the
Revised Penal Code16 in manufacturing, selling, and incorporating designs or marks
in its jeans which were confusingly similar to petitioners "LEVIs jeans." These
search warrants commanded the seizure of certain goods bearing copies or
imitations of the trademarks which belonged to petitioner.17 On December 13,
1995, the search warrants were enforced and several goods belonging to
respondent were seized.18 Meanwhile, it appears that criminal charges were filed
against Tony Lim of respondent company in the Department of Justice,19 but the
same were eventually dismissed and the search warrants were quashed.

Consequently, on February 1, 1996, respondent filed a complaint20 for damages in

the Regional Trial Court of Manila, Branch 50, against petitioner. The complaint
alleged that since January 1, 1988, respondent, through Antonio Sevilla, with
business address at 1082 Carmen Planas Street, Tondo, Manila, had been a lawful
assignee and authorized user of: (a) the trademark "LIVES" under Certificate of
Registration No. 53918 issued by the BPTTT, (b) the trademark "LIVES LABEL
MARK" under Certificate of Registration No. SR 8868 issued by the BPTTT, and (c)
the copyright registrations of "LIVES ORIGINAL JEANS," its pocket design, and hand
tag; that the goods, articles, and effects seized from respondents establishment
were manufactured and used in its legitimate business of manufacturing and selling
of the duly registered trademark "LIVES" and "LIVES ORIGINAL JEANS;" and that
the trademarks of respondent did not have any deceptive resemblance with the
trademarks of petitioner. Respondent sought to recover the seized assorted sewing
materials, equipment, and finished products or the value thereof, in case the same
had been destroyed or impaired as a result of the seizure. Respondent also prayed
that, after due trial, judgment be rendered ordering the petitioner to pay
compensatory damages of P320,000 with an additional amount of damages of
P11,000 per day until the seized properties are restored; P2,000,000 as exemplary
damages; P100,000 for attorneys fees with an additional amount of P100,000 in the
event of an appeal plus P1,500 per court appearance and the costs of the suit.

In its amended answer with counterclaim,21 petitioner countered that respondents

LIVES brand infringed upon its licensed brand name LEVIS. It sought to cancel
respondents Copyright Registration No. I-3838 and enjoin the respondent from
further manufacturing, selling, offering for sale, and advertising the denim jeans or
slacks by using a design substantially, if not exactly similar to, or a colorable
imitation of the trademarks22 of petitioner.

Upon manifestation/motion23 by petitioner, the RTC of Manila, Branch 50 issued an

order dated May 9, 1996,24 forwarding the case to the Executive Judge (RTC of
Manila, Branch 23) for re-raffle among the courts designated as Special Courts to try
and decide cases involving violations of Intellectual Property Rights pursuant to
Administrative Order No. 113-95, dated October 2, 1995. On May 17, 1996, Branch
23 issued an order25 directing that the case be forwarded to Branch 1 (a designated
Special Court per said administrative order) for further proceedings.

On the scheduled hearing on December 4, 1996 in the RTC of Manila, Branch 1,

respondent (as therein plaintiff) failed to appear. Upon motion of petitioner, the
trial court declared respondent to have waived its right to present evidence to
controvert petitioners application for a writ of preliminary injunction.26

In an order dated December 10, 1996, the trial court found that the respondent
intended to appropriate, copy, and slavishly imitate the genuine appearance of
authentic LEVIs jeans and pass off its LIVEs jeans as genuine LEVIs jeans. Thus,

In opposing defendants application for preliminary in injunction, plaintiff alleges

that it has obtained Certificates of Registration for the trademarks "LIVE[]S,"
"LIVE[]S LABEL MARK," ["]LIVE[]S ORIGINAL JEANS["] as well as the patch pocket
design and hand tag. It did not, however, present any evidence to support the same.

In any event, plaintiffs backpocket design is not copyrightable, as it is neither an

original work nor a novel design. Rather it is a copy or slavish imitation of LS &
Co./LSPIs Arcuate trademark which was first used by LS & Co. worldwide in 1873
and the Philippines Registration of which is based on LS & Co.s US Certificate of
Registration No. 404243, issued on November 16, 1943. Thus, no rights attendant to
a copyright can ever attach to plaintiffs infringing backpocket design.

Also, it could not have been pure chance or coincidence that plaintiffs LIVES jeans
use a trademark, symbol or design which is substantially, if not exactly similar to, or
a colorable imitation of LS & CO./LSPI trademarks, since there is a practically
limitless array of other marks, words, numbers, devices, symbols and designs which
plaintiff could have used on its products to identify and distinguish them from those
of defendant and other manufacturers. All told, from the mass of evidence adduced,
plaintiffs intent to appropriate, copy, and slavishly imitate the genuine appearance
of authentic LEVIs jeans and pass off its LIVEs jeans as genuine LEVIS jeans in
much too stark.

As above-discussed, through more than a centurys use and continuous substantial

promotions and advertising of the LEVIs TRADEMARKS on its products on jeans
and trousers in particular LS & Co. has cultivated, gained and established an
invaluable goodwill in its name "LEVIs STRAUSS & COMPANY" and in the products
which carry such name and the LEVIs TRADEMARKS. Hence, unless plaintiff is
immediately enjoined from further manufacturing, selling, offering for sale and
advertising denims, jeans or slacks using a design substantially, if not exactly similar
to, or a colorable imitation of the LS & Co./LSPI trademarks, it will continue to have
a free ride on, and erode such invaluable goodwill and reputation by the mere
effortless expedient of imitating the overall visual impression of genuine LEVIs
JEANS on its own designs, employing minute points of distinction sufficient to
muddle the overall conclusion which is actually generated, but do not dispel the
similitude between the trademarks. Well has been said that the most successful
form of copying is to employ enough points of similarity to confuse the public with
enough points of difference to confuse the court. [(]Del Monte Corporation vs. Court
of Appeals, 181 SCRA 418[)].

There is no question that the above-discussed circumstances call for the

intervention of equity to prevent further irreparable harm to defendants goodwill
and reputation. In consonance with Section 3 (a), (b) and (c), Rule 58 of the Rules,
defendant is thus entitled to the ancillary relief demanded either for a limited period
or perpetually.

Corollarily, defendant is hereby directed to execute a bond to the party enjoined to

the effect that defendant will pay to plaintiff all damages it may sustain by reason of
the injunction if the court should finally decide that defendant is not entitled
thereto.

WHEREFORE, upon the filing of a bond in the sum of FIVE HUNDRED THOUSAND
PESOS (P500,000.00), let a writ of preliminary injunction issue restraining plaintiff,
its officers, employees, agents, representatives, dealers, retailers or assigns from
manufacturing, distributing, selling, offering for sale, advertising or otherwise using
denims or jeans with a design which is substantially, if not exactly similar to
defendants trademarks.

Meanwhile, the hearing on the main cause of action is hereby set on February 5 and
12, 1997, both at 9:00 a.m.

SO ORDERED.27

On motion for reconsideration, respondent prayed that the petitioners

counterclaim be dismissed and that the order dated December 10, 1996, be set
aside. In an order dated April 11, 1997, the trial court denied the motion, stating
that:

Considering:
(1) That the defendants application for injunctive relief was properly directed
against the real property in interest, the self-proclaimed lawful assignee and
authorized user of the subject trademarks, hence, the party who would be benefited
or injured by this courts final decision on the application;

(2) That the acts which plaintiff was enjoined from doing are within the scope of the
reliefs demanded by defendant;

(3) That the institution of defendants counterclaim for infringement and damages
does not amount to forum-shopping in that the elements of litis pendentia which
form the basis for a charge for forum-shopping are not all present in the instant
case;

(4) That the injunctive order sought to be reconsidered, by its very nature, is merely
provisional and does not dispose of the case on the merits. Hence, it would not
amount to a prejudgment considering that the defendant still has the burden of
proving during trial on the merits that it is entitled to protection and that confusion
does, in fact, or likely to exist, and, on the other hand, plaintiff would have its
opportunity to prove that confusion does not exist or is not likely to happen; and

(5) That the evidence on record justifies the injunctive relief granted by this court in
favor of defendant.

WHEREFORE, in view of all the foregoing, plaintiffs motion for reconsideration and
supplemental motion for reconsideration are DENIED for lack of merit.

SO ORDERED.28

Respondent took the matter to the Court of Appeals. On August 13, 1997, the Court
of Appeals rendered a decision in favor of the respondent, enjoining the trial court
from further proceeding with the case. The dispositive portion thereof reads:

WHEREFORE, the petition is GRANTED. The assailed Orders dated December 10,
1996 and April 11, 1997 are annulled and set aside for having been issued with
grave abuse of discretion and in excess of jurisdiction. Respondent court is ordered
to desist from proceeding with Civil Case No. 96-76944, entitled "Vogue Traders
Clothing Company, Plaintiff, versus Levi Strauss (Phil.), Inc., Defendant.", until the
Bureau of Patents, Trademarks and Technology Transfer has finally resolved Inter
Partes Cases Nos. 4216 and 4217.

No costs.

SO ORDERED.29

After its motion for reconsideration was denied, petitioner filed the present petition
for review on certiorari, raising the following assignment of errors:
I

THE COURT OF APPEALS COMMITTED CLEARLY REVERSIBLE ERROR IN HOLDING

THAT THE DOCTRINE OF PRIMARY JURISDICTION OPERATES TO SUSPEND ANY
AND ALL PROCEEDINGS IN CIVIL CASE NO. 96-76944, PARTICULARLY THE
ABILITY OF THE TRIAL COURT TO ISSUE PRELIMINARY INJUNCTIVE RELIEF, AND
THAT THE TRIAL COURT JUDGE THEREFORE COMMITTED ABUSE OF DISCRETION
IN GRANTING SUCH RELIEF.

II

THE COURT OF APPEALS ERRED IN FAILING TO HOLD THAT THE CERTIFICATION

AGAINST FORUM-SHOPPING ATTACHED BY RESPONDENT TO ITS PETITION FOR
CERTIORARI AND PROHIBITION IS FATALLY DEFECTIVE.

III

THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT JUDGE
COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING RESPONDENT TO
HAVE WAIVED ITS RIGHT TO ADDUCE EVIDENCE TO COUNTER PETITIONERS
EVIDENCE IN SUPPORT OF ITS APPLICATION FOR PRELIMINARY INJUNCTIVE
RELIEF.

IV

THE COURT OF APPEALS ERRED IN HOLDING THAT THE PRELIMINARY

INJUNCTIVE ORDER ISSUED IN CIVIL CASE NO. 96-76944 PREJUDGES THE CASE.30

The petition has merit.

First. Petitioner points out that while the Court of Appeals categorically stated that it
did not commit forum-shopping when it filed its counterclaim for infringement (to
the petitioners complaint for damages in the Regional Trial Court of Manila, Branch
1 Civil Case No. 96-76944) as the causes of action in the said civil case and the
two inter partes cases (Inter Partes Cases Nos. 4216 and 4217 pending before the
BPTTT) are different and do not involve the same subject matter and issues, it erred
in applying the "doctrine of primary jurisdiction." The appeals court declared that
the trial court never had the authority to hear and grant petitioners prayer for
injunctive relief nor to proceed with the hearing of the case in view of the pendency
of the two inter partes cases.

Petitioner is a holder of Certificate of Registration No. 1379-A for its Levis

trademarks. The registration gives rise to a presumption of its validity and the right
to the exclusive use of the same. As set forth in Section 17 of Republic Act (R.A.) No.
166 or "The Trademark Law," an entity having a duly registered trademark can file a
suit against another entity for the protection of its right:

Sec. 17. Grounds for cancellation. Any person, who believes that he is or will be
damaged by the registration of a mark or trade-name, may, upon the payment of the
prescribed fee, apply to cancel said registration upon any of the following grounds:

(a) That the registered mark or trade-name becomes the common descriptive name
of an article or substance on which the patent has expired;

(b) That it has been abandoned;

(c) That the registration was obtained fraudulently or contrary to the provisions of
section four, Chapter II hereof;

(d) That the registered mark or trade-name has been assigned, and is being used by,
or with the permission of, the assignee, so as to misrepresent the source of the
goods, business or services in connection with which the mark or trade-name is
used; or

(e) That cancellation is authorized by other provisions of this Act.

Section 27 thereof states that the proper Regional Trial Court shall have jurisdiction
over the damage suits.

In Conrad and Company, Inc. v. Court of Appeals,31 as reiterated in the case of

Shangri-La International Hotel Management Ltd. v. Court of Appeals,32 the Court
clarified that while an administrative cancellation of a registered trademark, on any
of the grounds under Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an
action for infringement or any other incidental remedy sought is within the
jurisdiction of the ordinary courts. Thus,

. . . It might be mentioned that while an application for the administrative

cancellation of a registered trademark on any of the grounds enumerated in Section
17 of Republic Act No. 166, as amended, otherwise known as the Trade-Mark Law,
falls under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action,
however, for infringement or unfair competition, as well as the remedy of injunction
and relief for damages, is explicitly and unquestionably within the competence and
jurisdiction of ordinary courts.

...

Surely, an application with BPTTT for an administrative cancellation of a registered

trade mark cannot per se have the effect of restraining or preventing the courts
from the exercise of their lawfully conferred jurisdiction. A contrary rule would
unduly expand the doctrine of primary jurisdiction which, simply expressed, would
merely behoove regular courts, in controversies involving specialized disputes, to
defer to the findings or resolutions of administrative tribunals on certain technical
matters. This rule, evidently, did not escape the appellate court for it likewise
decreed that for "good cause shown, the lower court, in its sound discretion, may
suspend the action pending outcome of the cancellation proceedings" before BPTTT.
(Underscoring supplied.)

The passage of Republic Act No. 8293, otherwise known as the "Intellectual
Property Code of the Philippines,"33 expanded the rights accorded to an owner of a
registered trademark. Sections 151 (2), 156, and 161 thereof state:

Section 151.2. Notwithstanding the foregoing provisions, the court or the

administrative agency vested with jurisdiction to hear and adjudicate any action to
enforce the rights to a registered mark shall likewise exercise jurisdiction to
determine whether the registration of said mark may be cancelled in accordance
with this Act. The filing of a suit to enforce the registered mark with the proper
court or agency shall exclude any other court or agency from assuming jurisdiction
over a subsequently filed petition to cancel the same mark. On the other hand, the
earlier filing of petition to cancel the mark with the Bureau of Legal Affairs
{formerly BPTTT] shall not constitute a prejudicial question that must be resolved
before an action to enforce the rights to same registered mark may be decided. (Sec.
17, R.A. No. 166a)

Section 156. Actions, and Damages and Injunction for Infringement. 156.1 The
owner of a registered mark may recover damages from any person who infringes his
rights, and the measure of the damages suffered shall be either the reasonable profit
which the complaining party would have made, had the defendant not infringed his
rights, or the profit which the defendant actually made out of the infringement, or in
the event such measure of damages cannot be readily ascertained with reasonable
certainty, then the court may award as damages a reasonable percentage based
upon the amount of gross sales of the defendant or the value of the services in
connection with which the mark or trade name was used in the infringement of the
rights of the complaining party (Sec. 23, first par., R.A. No. 166a).

156.2 On application of the complainant, the court may impound during the
pendency of the action, sales invoices and other documents evidencing sales. (n)

156.3. In cases where actual intent to mislead the public or to defraud the
complainant is shown, in the discretion of the court, the damages may be doubled.
(Sec. 23, first par., R.A. No. 166)

156.4 The complainant, upon proper showing, may also be granted injunction. (Sec.
23, second par., R.A. No. 166a)

Section 161. Authority to Determine Right to Registration. In any action involving

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

Sections 155 (2), 156, and 163 of the said law further provide for the remedy of an
owner of a registered mark to institute an action for infringement or damages
against a person or entity that may reproduce, counterfeit, copy or colorably imitate
a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or advertising of goods or
services on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive.

Finally, Rule 8, Section 7 of the Regulations on Inter Partes Proceedings, provides:

Section 7. Effect of filing of a suit before the Bureau or with the proper court. The
filing of a suit to enforce the registered mark with the proper court or Bureau shall
exclude any other court or agency from assuming jurisdiction over a subsequently
filed petition to cancel the same mark. On the other hand, the earlier filing of
petition to cancel the mark with the Bureau shall not constitute a prejudicial
question that must be resolved before an action to enforce the rights to same
registered mark may be decided. (Emphasis supplied)

It bears stressing that an action for infringement or unfair competition, including

the available remedies of injunction and damages, in the regular courts can proceed
independently or simultaneously with an action for the administrative cancellation
of a registered trademark in the BPTTT. As applied to the present case, petitioners
prior filing of two inter partes cases against the respondent before the BPTTT for
the cancellation of the latters trademark registrations, namely, "LIVES" and "LIVES
Label Mark," does not preclude petitioners right (as a defendant) to include in its
answer (to respondents complaint for damages in Civil Case No. No. 96-76944) a
counterclaim for infringement with a prayer for the issuance of a writ of preliminary
injunction.

Second. As to the procedural matter, petitioner argues that the Court of Appeals
erred in giving due course to the respondents petition for certiorari even if it was
the latters counsel, Atty. Danilo A. Soriano, not one of its duly authorized officers,
who executed the certification of non-forum shopping.

Section 5, Rule 7 of the Rules of Civil Procedure incorporating Administrative

Circular Nos. 28-91 (effective January 1, 1992) and 04-94 (effective April 1, 1994)
states the requirement of a plaintiff or petitioner to include in his initiatory pleading
or petition a certification of non-forum shopping. Thus,
Sec. 5. Certification against forum shopping. The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial agency and, to the
best of his knowledge, no such other action or claim is pending therein; (b) if there
is such other pending action or claim, a complete statement of the present status
thereof; and (c) if he should thereafter learn that the same or similar action or claim
has been filed or is pending, he shall report that fact within five (5) days therefrom
to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion
and after hearing. The submission of a false certification or non-compliance with
any of the undertakings therein shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping, the
same shall be ground for summary dismissal with prejudice and shall constitute
direct contempt, as well as a cause for administrative sanctions.

In Digital Microwave Corp. v. CA,34 this Court gave the rationale for this rule,
namely, that the certification against forum shopping is required to be accomplished
by petitioner himself because only the petitioner himself has actual knowledge of
whether or not he has initiated similar actions or proceedings in different courts or
agencies. Even his counsel may be unaware of such fact as he may only be aware of
the action for which he has been retained. As to corporations, the law requires that
the certification could be made by its duly authorized director or officer. The Court
also stresses that the petitioners non-compliance and utter disregard of the rules
cannot be rationalized by invoking the policy of liberal construction.

The requirement of certification against forum shopping under the Rules is to be

executed by the petitioner, or in the case of a corporation, its duly authorized
director or officer, but not petitioners counsel whose professional services have
been engaged to handle the subject case. The reason is that it is the petitioner who
has personal knowledge whether there are cases of similar nature pending with the
other courts, tribunals, or agencies. Thus, in the present case, the Court of Appeals
should have outrightly dismissed the petition for certiorari filed by the respondent
(as therein petitioner in the appeals court) due to the defective certification of non-
forum shopping. The certification made by Atty. Soriano, counsel for the respondent,
who is not one of its duly authorized directors or officers, is defective.Even if Atty.
Soriano was the "in-house counsel," the fact remains that no board resolution, or
even a Secretarys Certificate containing the board resolution, was submitted to
show that he was indeed authorized to file the said petition in the Court of Appeals.
Third. Petitioner avers that the Court of Appeals erred in finding that the
respondent was denied due process. It contends that the trial court had correctly
ruled that respondent was deemed to have waived its right to present evidence due
to its non-appearance at the scheduled hearing (to oppose the petitioners
application for the issuance of a writ of preliminary injunction) on December 4,
1996.

The records show that respondent, through its former counsel, Atty. Alfonso R.
Yatco, was present during the hearing on November 6, 1996 as reflected in the
minutes of the court proceedings that day. The counsels for both parties had been
duly notified in open court. The Branch Clerk of Court of RTC of Manila, Branch 1,
Atty. Joselito C. Frial, even made a notation in the minutes that respondent (as
oppositor) shall be given a period of 10 days to interpose its opposition to the
petitioners prayer for injunctive relief.35 The Order dated November 6, 1996
states:

After witness Atty. Gilbert Raymond T. Reyes [witness for the petitioner] had
finished his testimony, the counsel for defendant [herein petitioner] moved for and
was allowed ten (10) days from today within which to file a written formal offer of
exhibits, copy furnish[ed] the counsel for plaintiff [herein respondent] who is
allowed a similar period of time from receipt thereof within which to file comment
and/or objection.

In the meantime, let the hearing be continued on December 4 & 11, 1996, both at
9:00 a.m. as previously scheduled.

The counsels are notified of this order in open court.

SO ORDERED.36

However, on December 4, 1996, Atty. Yatco failed to appear without proferring any
valid reason which prompted the trial court to issue an order that respondent was
deemed to have waived its right to present evidence:

On call for hearing, only the counsel for defendant [herein petitioner] appeared.
There was no appearance for plaintiff [herein respondent] although its counsel was
duly notified. In view thereof, upon motion of counsel for defendant, plaintiff is
considered to have waived its right to present evidence to controvert defendants
application for a writ of preliminary injunction, which, consequently, is hereby
deemed submitted for resolution.

The counsel for defendant is notified in open court. Furnish the counsel for plaintiff
with a copy hereof.

SO ORDERED.37
Respondent explained to the trial court that its former counsel, Atty. Yatco, had
honestly thought that the December 4, 1996 hearing had been rescheduled to
December 11, 1996 per agreement with the petitioners counsel. This is not a
sufficient ground. It was correct for the trial court, upon motion of petitioner, to
consider the matter submitted for resolution on the basis of petitioners evidence.
Respondent cannot find solace in its lame excuse of honest mistake which was, in
fact, negligence and lack of vigilance.

Fourth. Petitioner claims that the assailed orders of the trial court, dated December
10, 1996 and April 11, 1997, did not prejudge the case. On the other hand,
respondent counters that the trial courts order dated December 10, 1996 amounted
to a prejudgment of the case, to wit: that its LIVEs backpocket design was not
copyrightable because it was neither an original work nor a novel design; that it was
a copy or slavish imitation of petitioners LEVIs Arcuate trademark; and that no
rights attendant to a copyright can ever attach to respondents backpocket design.

The trial court granted petitioners prayer for the issuance of a writ of preliminary
injunction in its answer with counterclaim (to respondents complaint for damages).
The writ did not have the effect of prejudging or disposing of the merits of the case,
but merely enjoined the respondents acts of manufacturing, distributing, selling, or
offering for sale the jeans which had allegedly incorporated exact or colorable
imitations of the products belonging to petitioner. The Order dated April 11, 1997 of
the trial court denying the respondents motion for reconsideration categorically
stated that the said Order did not amount to a prejudgment of the case. Petitioner
has yet to establish during the trial that it is entitled to a permanent injunction by
reason of respondents confusingly similar LIVES products. Otherwise, the trial
court could declare that the LIVES trademark belonging to respondent was not
confusingly similar with the LEVIs trademark of petitioner.

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

incomplete evidence adduced by the applicant (herein petitioner). The evidence
submitted during the hearing of the incident is not conclusive, for only a "sampling"
is needed to give the trial court an idea of the justification for its issuance pending
the decision of the case on the merits. As such, the findings of fact and opinion of a
court when issuing the writ of preliminary injunction are interlocutory in nature.
Moreover, the sole object of a preliminary injunction is to preserve the status quo
until the merits of the case can be heard. Since Section 4 of Rule 58 of the Rules of
Civil Procedure gives the trial courts sufficient discretion to evaluate the conflicting
claims in an application for a provisional writ which often involves a factual
determination, the appellate courts generally will not interfere in the absence of
manifest abuse of such discretion.38 A writ of preliminary injunction would become
a prejudgment of a case only when it grants the main prayer in the complaint or
responsive pleading, so much so that there is nothing left for the trial court to try
except merely incidental matters.39 Such fact does not obtain in the present case.
WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals
dated August 13, 1997 and its Resolution dated March 5, 1998 are REVERSED and
SET ASIDE. The Regional Trial Court of Manila, Branch 1 is ORDERED to proceed
with the hearing of Civil Case No. 96-76944 with dispatch.

No costs.

SO ORDERED.

G.R. No. 158589 June 27, 2006

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE
TABAC REUNIES, S.A., (now known as PHILIP MORRIS PRODUCTS S.A.),
Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.

Via this petition for review under Rule 45 of the Rules of Court, herein petitioners
Philip Morris, Inc., Benson & Hedges (Canada) Inc., and Fabriques de Tabac Reunies,
S.A. (now Philip Morris Products S.A.) seek the reversal and setting aside of the
following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:

1. Decision dated January 21, 20031 affirming an earlier decision of the Regional
Trial Court of Pasig City, Branch 166, in its Civil Case No. 47374, which dismissed
the complaint for trademark infringement and damages thereat commenced by the
petitioners against respondent Fortune Tobacco Corporation; and

2. Resolution dated May 30, 20032 denying petitioners motion for reconsideration.

Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of
Virginia, United States of America, is, per Certificate of Registration No. 18723
issued on April 26, 1973 by the Philippine Patents Office (PPO), the registered
owner of the trademark "MARK VII" for cigarettes. Similarly, petitioner Benson &
Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of
the trademark "MARK TEN" for cigarettes as evidenced by PPO Certificate of
Registration No. 11147. And as can be seen in Trademark Certificate of Registration
No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques
de Tabac Reunies, S.A., is the assignee of the trademark "LARK," which was
originally registered in 1964 by Ligget and Myers Tobacco Company. On the other
hand, respondent Fortune Tobacco Corporation, a company organized in the
Philippines, manufactures and sells cigarettes using the trademark "MARK."

The legal dispute between the parties started when the herein petitioners, on the
claim that an infringement of their respective trademarks had been committed, filed,
on August 18, 1982, a Complaint for Infringement of Trademark and Damages
against respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374
of the Regional Trial Court of Pasig, Branch 166.

The decision under review summarized what happened next, as follows:

In the Complaint xxx with prayer for the issuance of a preliminary injunction,
[petitioners] alleged that they are foreign corporations not doing business in the
Philippines and are suing on an isolated transaction. xxx they averred that the
countries in which they are domiciled grant xxx to corporate or juristic persons of
the Philippines the privilege to bring action for infringement, xxx without need of a
license to do business in those countries. [Petitioners] likewise manifested [being
registered owners of the trademark "MARK VII" and "MARK TEN" for cigarettes as
evidenced by the corresponding certificates of registration and an applicant for the
registration of the trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they
have registered the aforementioned trademarks in their respective countries of
origin and that, by virtue of the long and extensive usage of the same, these
trademarks have already gained international fame and acceptance. Imputing bad
faith on the part of the [respondent], petitioners claimed that the [respondent],
without any previous consent from any of the [petitioners], manufactured and sold
cigarettes bearing the identical and/or confusingly similar trademark "MARK" xxx
Accordingly, they argued that [respondents] use of the trademark "MARK" in its
cigarette products have caused and is likely to cause confusion or mistake, or would
deceive purchasers and the public in general into buying these products under the
impression and mistaken belief that they are buying [petitioners] products.

Invoking the provisions of the Paris Convention for the Protection of Industrial and
Intellectual Property (Paris Convention, for brevity), to which the Philippines is a
signatory xxx, [petitioners] pointed out that upon the request of an interested party,
a country of the Union may prohibit the use of a trademark which constitutes a
reproduction, imitation, or translation of a mark already belonging to a person
entitled to the benefits of the said Convention. They likewise argued that, in
accordance with Section 21-A in relation to Section 23 of Republic Act 166, as
amended, they are entitled to relief in the form of damages xxx [and] the issuance of
a writ of preliminary injunction which should be made permanent to enjoin
perpetually the [respondent] from violating [petitioners] right to the exclusive use
of their aforementioned trademarks.

[Respondent] filed its Answer xxx denying [petitioners] material allegations and
xxx averred [among other things] xxx that "MARK" is a common word, which cannot
particularly identify a product to be the product of the [petitioners] xxx

xxx xxx xxx.

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

xxx xxx xxx

After the termination of the trial on the merits xxx trial court rendered its Decision
xxx dated November 3, 1999 dismissing the complaint and counterclaim after
making a finding that the [respondent] did not commit trademark infringement
against the [petitioners]. Resolving first the issue of whether or not [petitioners]
have capacity to institute the instant action, the trial court opined that [petitioners]
failure to present evidence to support their allegation that their respective countries
indeed grant Philippine corporations reciprocal or similar privileges by law xxx
justifies the dismissal of the complaint xxx. It added that the testimonies of
[petitioners] witnesses xxx essentially declared that [petitioners] are in fact doing
business in the Philippines, but [petitioners] failed to establish that they are doing
so in accordance with the legal requirement of first securing a license. Hence, the
court declared that [petitioners] are barred from maintaining any action in
Philippine courts pursuant to Section 133 of the Corporation Code.

The issue of whether or not there was infringement of the [petitioners] trademarks
by the [respondent] was likewise answered xxx in the negative. It expounded that
"in order for a name, symbol or device to constitute a trademark, it must, either by
itself or by association, point distinctly to the origin or ownership of the article to
which it is applied and be of such nature as to permit an exclusive appropriation by
one person". Applying such principle to the instant case, the trial court was of the
opinion that the words "MARK", "TEN", "LARK" and the Roman Numerals "VII",
either alone or in combination of each other do not by themselves or by association
point distinctly to the origin or ownership of the cigarettes to which they refer, such
that the buying public could not be deceived into believing that [respondents]
"MARK" cigarettes originated either from the USA, Canada, or Switzerland.

Emphasizing that the test in an infringement case is the likelihood of confusion or

deception, the trial court stated that the general rule is that an infringement exists if
the resemblance is so close that it deceives or is likely to deceive a customer
exercising ordinary caution in his dealings and induces him to purchase the goods of
one manufacturer in the belief that they are those of another. xxx. The trial court
ruled that the [petitioners] failed to pass these tests as it neither presented
witnesses or purchasers attesting that they have bought [respondents] product
believing that they bought [petitioners] "MARK VII", "MARK TEN" or "LARK", and
have also failed to introduce in evidence a specific magazine or periodical circulated
locally, which promotes and popularizes their products in the Philippines. It,
moreover, elucidated that the words consisting of the trademarks allegedly
infringed by [respondent] failed to show that they have acquired a secondary
meaning as to identify them as [petitioners] products. Hence, the court ruled that
the [petitioners] cannot avail themselves of the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either
party stating that, since the [petitioners] filed the action in the belief that they were
aggrieved by what they perceived to be an infringement of their trademark, no
wrongful act or omission can be attributed to them. xxx.3 (Words in brackets
supplied)

Maintaining to have the standing to sue in the local forum and that respondent has
committed trademark infringement, petitioners went on appeal to the CA whereat
their appellate recourse was docketed as CA-G.R. CV No. 66619.

Eventually, the CA, in its Decision dated January 21, 2003, while ruling for
petitioners on the matter of their legal capacity to sue in this country for trademark
infringement, nevertheless affirmed the trial courts decision on the underlying
issue of respondents liability for infringement as it found that:

xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN" and
"LARK", do not qualify as well-known marks entitled to protection even without the
benefit of actual use in the local market and that the similarities in the trademarks
in question are insufficient as to cause deception or confusion tantamount to
infringement. Consequently, as regards the third issue, there is likewise no basis for
the award of damages prayed for by the appellants herein.4 (Word in bracket
supplied)

With their motion for reconsideration having been denied by the CA in its equally
challenged Resolution of May 30, 2003, petitioners are now with this Court via this
petition for review essentially raising the following issues: (1) whether or not
petitioners, as Philippine registrants of trademarks, are entitled to enforce
trademark rights in this country; and (2) whether or not respondent has committed
trademark infringement against petitioners by its use of the mark "MARK" for its
cigarettes, hence liable for damages.

In its Comment,5 respondent, aside from asserting the correctness of the CAs
finding on its liability for trademark infringement and damages, also puts in issue
the propriety of the petition as it allegedly raises questions of fact.

The petition is bereft of merit.

Dealing first with the procedural matter interposed by respondent, we find that the
petition raises both questions of fact and law contrary to the prescription against
raising factual questions in a petition for review on certiorari filed before the Court.
A question of law exists when the doubt or difference arises as to what the law is on
a certain state of facts; there is a question of fact when the doubt or difference arises
as to the truth or falsity of alleged facts.6
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier
of facts.7 Unless the factual findings of the appellate court are mistaken, absurd,
speculative, conflicting, tainted with grave abuse of discretion, or contrary to the
findings culled by the court of origin,8 we will not disturb them.

It is petitioners posture, however, that their contentions should

be treated as purely legal since they are assailing erroneous conclusions deduced
from a set of undisputed facts.

Concededly, when the facts are undisputed, the question of whether or not the
conclusion drawn therefrom by the CA is correct is one of law.9 But, even if we
consider and accept as pure questions of law the issues raised in this petition, still,
the Court is not inclined to disturb the conclusions reached by the appellate court,
the established rule being that all doubts shall be resolved in favor of the
correctness of such conclusions.10

Be that as it may, we shall deal with the issues tendered and determine whether the
CA ruled in accordance with law and established jurisprudence in arriving at its
assailed decision.

A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof adopted and used by a manufacturer or merchant on his goods
to identify and distinguish them from those manufactured, sold, or dealt in by
others.11 Inarguably, a trademark deserves protection. For, as Mr. Justice
Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:12

The protection of trademarks is the laws recognition of the psychological function

of symbols. If it is true that we live by symbols, it is no less true that we purchase
goods by them. A trade-mark is a merchandising short-cut which induces a
purchaser to select what he wants, or what he has been led to believe what he
wants. The owner of a mark exploits this human propensity by making every effort
to impregnate the atmosphere of the market with the drawing power of a congenial
symbol. Whatever the means employed, the aim is the same - to convey through the
mark, in the minds of potential customers, the desirability of the commodity upon
which it appears. Once this is attained, the trade-mark owner has something of
value. If another poaches upon the commercial magnetism of the symbol he has
created, the owner can obtain legal redress.

It is thus understandable for petitioners to invoke in this recourse their entitlement

to enforce trademark rights in this country, specifically, the right to sue for
trademark infringement in Philippine courts and be accorded protection against
unauthorized use of their Philippine-registered trademarks.

In support of their contention respecting their right of action, petitioners assert that,
as corporate nationals of member-countries of the Paris Union, they can sue before
Philippine courts for infringement of trademarks, or for unfair competition, without
need of obtaining registration or a license to do business in the Philippines, and
without necessity of actually doing business in the Philippines. To petitioners, these
grievance right and mechanism are accorded not only by Section 21-A of Republic
Act (R.A.) No. 166, as amended, or the Trademark Law, but also by Article 2 of the
Paris Convention for the Protection of Industrial Property, otherwise known as the
Paris Convention.

In any event, petitioners point out that there is actual use of their trademarks in the
Philippines as evidenced by the certificates of registration of their trademarks. The
marks "MARK TEN" and "LARK" were registered on the basis of actual use in
accordance with Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing
for a 2-month pre-registration use in local commerce and trade while the
registration of "MARK VII" was on the basis of registration in the foreign country of
origin pursuant to Section 37 of the same law wherein it is explicitly provided that
prior use in commerce need not be alleged.15

Besides, petitioners argue that their not doing business in the Philippines, if that be
the case, does not mean that cigarettes bearing their trademarks are not available
and sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products,
Inc.,16 petitioners state that such availability and sale may be effected through the
acts of importers and distributors.

Finally, petitioners would press on their entitlement to protection even in the

absence of actual use of trademarks in the country in view of the Philippines
adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS
Agreement and the enactment of R.A. No. 8293, or the Intellectual Property Code
(hereinafter the "IP Code"), both of which provide that the fame of a trademark may
be acquired through promotion or advertising with no explicit requirement of actual
use in local trade or commerce.

Before discussing petitioners claimed entitlement to enforce trademark rights in

the Philippines, it must be emphasized that their standing to sue in Philippine courts
had been recognized, and rightly so, by the CA. It ought to be pointed out, however,
that the appellate court qualified its holding with a statement, following G.R. No.
91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune
Tobacco Corporation,17 that such right to sue does not necessarily mean protection
of their registered marks in the absence of actual use in the Philippines.

Thus clarified, what petitioners now harp about is their entitlement to protection on
the strength of registration of their trademarks in the Philippines.

As we ruled in G.R. No. 91332,18 supra, so it must be here.

Admittedly, the registration of a trademark gives the registrant, such as petitioners,

advantages denied non-registrants or ordinary users, like respondent. But while
petitioners enjoy the statutory presumptions arising from such registration,19 i.e.,
as to the validity of the registration, ownership and the exclusive right to use the
registered marks, they may not successfully sue on the basis alone of their
respective certificates of registration of trademarks. For, petitioners are still foreign
corporations. As such, they ought, as a condition to availment of the rights and
privileges vis--vis their trademarks in this country, to show proof that, on top of
Philippine registration, their country grants substantially similar rights and
privileges to Filipino citizens pursuant to Section 21-A20 of R.A. No. 166.

In Leviton Industries v. Salvador,21 the Court further held that the aforementioned
reciprocity requirement is a condition sine qua non to filing a suit by a foreign
corporation which, unless alleged in the complaint, would justify dismissal thereof, a
mere allegation that the suit is being pursued under Section 21-A of R.A. No. 166 not
being sufficient. In a subsequent case,22 however, the Court held that where the
complainant is a national of a Paris Convention- adhering country, its allegation that
it is suing under said Section 21-A would suffice, because the reciprocal agreement
between the two countries is embodied and supplied by the Paris Convention which,
being considered part of Philippine municipal laws, can be taken judicial notice of in
infringement suits.23

As well, the fact that their respective home countries, namely, the United States,
Switzerland and Canada, are, together with the Philippines, members of the Paris
Union does not automatically entitle petitioners to the protection of their
trademarks in this country absent actual use of the marks in local commerce and
trade.

True, the Philippines adherence to the Paris Convention24 effectively obligates the
country to honor and enforce its provisions25 as regards the protection of industrial
property of foreign nationals in this country. However, any protection accorded has
to be made subject to the limitations of Philippine laws.26 Hence, despite Article 2
of the Paris Convention which substantially provides that (1) nationals of member-
countries shall have in this country rights specially provided by the Convention as
are consistent with Philippine laws, and enjoy the privileges that Philippine laws
now grant or may hereafter grant to its nationals, and (2) while no domicile
requirement in the country where protection is claimed shall be required of persons
entitled to the benefits of the Union for the enjoyment of any industrial property
rights,27 foreign nationals must still observe and comply with the conditions
imposed by Philippine law on its nationals.

Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-A29
thereof, mandates actual use of the marks and/or emblems in local commerce and
trade before they may be registered and ownership thereof acquired, the petitioners
cannot, therefore, dispense with the element of actual use. Their being nationals of
member-countries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its
rulings in Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate Court,32 and
Philip Morris v. Court of Appeals and Fortune Tobacco Corporation33 on the
importance of actual commercial use of a trademark in the Philippines
notwithstanding the Paris Convention:

The provisions of the 1965 Paris Convention relied upon by private respondent
and Sec. 21-A of the Trademark Law were sufficiently expounded upon and qualified
in the recent case of Philip Morris, Inc., et. al. vs. Court of Appeals:

xxx xxx xxx

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

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for
infringement but the question of whether they have an exclusive right over their
symbol as to justify issuance of the controversial writ will depend on actual use of
their trademarks in the Philippines in line with Sections 2 and 2-A of the same law.
It is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement, the
entity need not be actually using its trademark in commerce in the Philippines. Such
a foreign corporation may have the personality to file a suit for infringement but it
may not necessarily be entitled to protection due to absence of actual use of the
emblem in the local market.

Contrary to what petitioners suggest, the registration of trademark cannot be

deemed conclusive as to the actual use of such trademark in local commerce. As it
were, registration does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration merely constitutes prima facie
evidence that the registrant is the owner of the registered mark. Evidence of non-
usage of the mark rebuts the presumption of trademark ownership,34 as what
happened here when petitioners no less admitted not doing business in this
country.35

Most importantly, we stress that registration in the Philippines of trademarks does

not ipso facto convey an absolute right or exclusive ownership thereof. To borrow
from Shangri-La International Hotel Management, Ltd. v. Development Group of
Companies, Inc.36 trademark is a creation of use and, therefore, actual use is a pre-
requisite to exclusive ownership; registration is only an administrative confirmation
of the existence of the right of ownership of the mark, but does not perfect such
right; actual use thereof is the perfecting ingredient.37

Petitioners reliance on Converse Rubber Corporation38 is quite misplaced, that

case being cast in a different factual milieu. There, we ruled that a foreign owner of a
Philippine trademark, albeit not licensed to do, and not so engaged in, business in
the Philippines, may actually earn reputation or goodwill for its goods in the
country. But unlike in the instant case, evidence of actual sales of Converse rubber
shoes, such as sales invoices, receipts and the testimony of a legitimate trader, was
presented in Converse.

This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the
infringement complaint herein having been filed in August 1982 and tried under the
aegis of R.A. No. 166, as amended. The IP Code, however, took effect only on January
1, 1998 without a provision as to its retroactivity.39 In the same vein, the TRIPS
Agreement was inexistent when the suit for infringement was filed, the Philippines
having adhered thereto only on December 16, 1994.

With the foregoing perspective, it may be stated right off that the registration of a
trademark unaccompanied by actual use thereof in the country accords the
registrant only the standing to sue for infringement in Philippine courts. Entitlement
to protection of such trademark in the country is entirely a different matter.

This brings us to the principal issue of infringement.

Section 22 of R.A. No. 166, as amended, defines what constitutes trademark

infringement, as follows:

Sec. 22. Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation
of any registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such
use is likely to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such business; or
reproduce, counterfeit, copy of color ably imitate any such mark or tradename and
apply such reproduction, counterfeit, copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.

Petitioners would insist on their thesis of infringement since respondents mark

"MARK" for cigarettes is confusingly or deceptively similar with their duly
registered "MARK VII," "MARK TEN" and "LARK" marks likewise for cigarettes. To
them, the word "MARK" would likely cause confusion in the trade, or deceive
purchasers, particularly as to the source or origin of respondents cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement.40 But
likelihood of confusion is a relative concept, the particular, and sometimes peculiar,
circumstances of each case being determinative of its existence. Thus, in trademark
infringement cases, more than in other kinds of litigation, precedents must be
evaluated in the light of each particular case.41

In determining similarity and likelihood of confusion, jurisprudence has developed

two tests: the dominancy test and the holistic test.42 The dominancy test43 sets
sight on the similarity of the prevalent features of the competing trademarks that
might cause confusion and deception, thus constitutes infringement. Under this
norm, the question at issue turns on whether the use of the marks involved would
be likely to cause confusion or mistake in the mind of the public or deceive
purchasers.44

In contrast, the holistic test45 entails a consideration of the entirety of the marks as
applied to the products, including the labels and packaging, in determining
confusing similarity.

Upon consideration of the foregoing in the light of the peculiarity of this case, we
rule against the likelihood of confusion resulting in infringement arising from the
respondents use of the trademark "MARK" for its particular cigarette product.

For one, as rightly concluded by the CA after comparing the trademarks involved in
their entirety as they appear on the products,46 the striking dissimilarities are
significant enough to warn any purchaser that one is different from the other.
Indeed, although the perceived offending word "MARK" is itself prominent in
petitioners trademarks "MARK VII" and "MARK TEN," the entire marking system
should be considered as a whole and not dissected, because a discerning eye would
focus not only on the predominant word but also on the other features appearing in
the labels. Only then would such discerning observer draw his conclusion whether
one mark would be confusingly similar to the other and whether or not sufficient
differences existed between the marks.47

This said, the CA then, in finding that respondents goods cannot be mistaken as any
of the three cigarette brands of the petitioners, correctly relied on the holistic test.

But, even if the dominancy test were to be used, as urged by the petitioners, but
bearing in mind that a trademark serves as a tool to point out distinctly the origin or
ownership of the goods to which it is affixed,48 the likelihood of confusion
tantamount to infringement appears to be farfetched. The reason for the origin
and/or ownership angle is that unless the words or devices do so point out the
origin or ownership, the person who first adopted them cannot be injured by any
appropriation or imitation of them by others, nor can the public be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN" and the
Roman numeral "VII," does not point to the origin or ownership of the cigarettes to
which they apply, the local buying public could not possibly be confused or deceived
that respondents "MARK" is the product of petitioners and/or originated from the
U.S.A., Canada or Switzerland. And lest it be overlooked, no actual commercial use of
petitioners marks in local commerce was proven. There can thus be no occasion for
the public in this country, unfamiliar in the first place with petitioners marks, to be
confused.

For another, a comparison of the trademarks as they appear on the goods is just one
of the appreciable circumstances in determining likelihood of confusion. Del Monte
Corp. v. CA50 dealt with another, where we instructed to give due regard to the
"ordinary purchaser," thus:

The question is not whether the two articles are distinguishable by their label when
set side by side but whether the general confusion made by the article upon the eye
of the casual purchaser who is unsuspicious and off his guard, is such as to likely
result in his confounding it with the original. As observed in several cases, the
general impression of the ordinary purchaser, buying under the normally prevalent
conditions in trade and giving the attention such purchasers usually give in buying
that class of goods is the touchstone.

When we spoke of an "ordinary purchaser," the reference was not to the

"completely unwary customer" but to the "ordinarily intelligent buyer" considering
the type of product involved.51

It cannot be over-emphasized that the products involved are addicting cigarettes

purchased mainly by those who are already predisposed to a certain brand.
Accordingly, the ordinary buyer thereof would be all too familiar with his brand and
discriminating as well. We, thus, concur with the CA when it held, citing a definition
found in Dy Buncio v. Tan Tiao Bok,52 that the "ordinary purchaser" in this case
means "one accustomed to buy, and therefore to some extent familiar with, the
goods in question."

Pressing on with their contention respecting the commission of trademark

infringement, petitioners finally point to Section 22 of R.A. No. 166, as amended. As
argued, actual use of trademarks in local commerce is, under said section, not a
requisite before an aggrieved trademark owner can restrain the use of his
trademark upon goods manufactured or dealt in by another, it being sufficient that
he had registered the trademark or trade-name with the IP Office. In fine,
petitioners submit that respondent is liable for infringement, having manufactured
and sold cigarettes with the trademark "MARK" which, as it were, are identical
and/or confusingly similar with their duly registered trademarks "MARK VII,"
"MARK TEN" and "LARK".

This Court is not persuaded.

In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following
constitute the elements of trademark infringement in accordance not only with
Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54 and 20
thereof:

(a) a trademark actually used in commerce in the Philippines and registered in the
principal register of the Philippine Patent Office,

(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation is applied to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to
be used upon or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers,

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

(d) such act is done without the consent of the trademark registrant or
assignee.lawphil.net

As already found herein, while petitioners have registered the trademarks "MARK
VII," "MARK TEN" and "LARK" for cigarettes in the Philippines, prior actual
commercial use thereof had not been proven. In fact, petitioners judicial admission
of not doing business in this country effectively belies any pretension to the
contrary.

Likewise, we note that petitioners even failed to support their claim that their
respective marks are well-known and/or have acquired goodwill in the Philippines
so as to be entitled to protection even without actual use in this country in
accordance with Article 6bis55 of the Paris Convention. As correctly found by the
CA, affirming that of the trial court:

xxx the records are bereft of evidence to establish that the appellants [petitioners]
products are indeed well-known in the Philippines, either through actual sale of the
product or through different forms of advertising. This finding is supported by the
fact that appellants admit in their Complaint that they are not doing business in the
Philippines, hence, admitting that their products are not being sold in the local
market. We likewise see no cogent reason to disturb the trial courts finding that the
appellants failed to establish that their products are widely known by local
purchasers as "(n)o specific magazine or periodical published in the Philippines, or
in other countries but circulated locally" have been presented by the appellants
during trial. The appellants also were not able to show the length of time or the
extent of the promotion or advertisement made to popularize their products in the
Philippines.56

Last, but not least, we must reiterate that the issue of trademark infringement is
factual, with both the trial and appellate courts having peremptorily found
allegations of infringement on the part of respondent to be without basis. As we said
time and time again, factual determinations of the trial court, concurred in by the
CA, are final and binding on this Court.57

For lack of convincing proof on the part of the petitioners of actual use of their
registered trademarks prior to respondents use of its mark and for petitioners
failure to demonstrate confusing similarity between said trademarks, the dismissal
of their basic complaint for infringement and the concomitant plea for damages
must be affirmed. The law, the surrounding circumstances and the equities of the
situation call for this disposition.

WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and
resolution of the Court of Appeals are AFFIRMED.

Costs against the petitioners.

SO ORDERED.

G.R. No. 166115 February 2, 2007

McDONALDS CORPORATION, Petitioner,

vs.
MACJOY FASTFOOD CORPORATION, Respondent.

In this petition for review on certiorari under Rule 45 of the Rules of Court, herein
petitioner McDonalds Corporation seeks the reversal and setting aside of the
following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to wit:

1. Decision dated 29 July 20041 reversing an earlier decision of the Intellectual

Property Office (IPO) which rejected herein respondent MacJoy FastFood
Corporations application for registration of the trademark "MACJOY & DEVICE";
and

2. Resolution dated 12 November 20042 denying the petitioners motion for

reconsideration.

As culled from the record, the facts are as follows:

On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic
corporation engaged in the sale of fast food products in Cebu City, filed with the then
Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the
Intellectual Property Office (IPO), an application, thereat identified as Application
Serial No. 75274, for the registration of the trademark "MACJOY & DEVICE" for fried
chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches,
halo-halo and steaks under classes 29 and 30 of the International Classification of
Goods.

Petitioner McDonalds Corporation, a corporation duly organized and existing under

the laws of the State of Delaware, USA, filed a verified Notice of Opposition3 against
the respondents application claiming that the trademark "MACJOY & DEVICE" so
resembles its corporate logo, otherwise known as the Golden Arches or "M" design,
and its marks "McDonalds," McChicken," "MacFries," "BigMac," "McDo,"
"McSpaghetti," "McSnack," and "Mc," (hereinafter collectively known as the
MCDONALDS marks) such that when used on identical or related goods, the
trademark applied for would confuse or deceive purchasers into believing that the
goods originate from the same source or origin. Likewise, the petitioner alleged that
the respondents use and adoption in bad faith of the "MACJOY & DEVICE" mark
would falsely tend to suggest a connection or affiliation with petitioners restaurant
services and food products, thus, constituting a fraud upon the general public and
further cause the dilution of the distinctiveness of petitioners registered and
internationally recognized MCDONALDS marks to its prejudice and irreparable
damage. The application and the opposition thereto was docketed as Inter Partes
Case No. 3861.

Respondent denied the aforementioned allegations of the petitioner and averred

that it has used the mark "MACJOY" for the past many years in good faith and has
spent considerable sums of money for said marks extensive promotion in tri-media,
especially in Cebu City where it has been doing business long before the petitioner
opened its outlet thereat sometime in 1992; and that its use of said mark would not
confuse affiliation with the petitioners restaurant services and food products
because of the differences in the design and detail of the two (2) marks.

In a decision4 dated December 28, 1998, the IPO, ratiocinating that the
predominance of the letter "M," and the prefixes "Mac/Mc" in both the "MACJOY"
and the "MCDONALDS" marks lead to the conclusion that there is confusing
similarity between them especially since both are used on almost the same products
falling under classes 29 and 30 of the International Classification of Goods, i.e., food
and ingredients of food, sustained the petitioners opposition and rejected the
respondents application, viz:

WHEREFORE, the Opposition to the registration of the mark MACJOY & DEVICE for
use in fried chicken and chicken barbecue, burgers, fries, spaghetti, palabok, tacos,
sandwiches, halo-halo, and steaks is, as it is hereby, SUSTAINED. Accordingly,
Application Serial No. 75274 of the herein Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be sent to the
Administrative, Financial and Human Resources Development Bureau for
appropriate action in accordance with this Decision, with a copy to be furnished the
Bureau of Trademarks for information and to update its record.

SO ORDERED.

In time, the respondent moved for a reconsideration but the IPO denied the motion
in its Order5 of January 14, 2000.

Therefrom, the respondent went to the CA via a Petition for Review with prayer for
Preliminary Injunction6 under Rule 43 of the Rules of Court, whereat its appellate
recourse was docketed as CA-G.R. SP No. 57247.

Finding no confusing similarity between the marks "MACJOY" and "MCDONALDS,"

the CA, in its herein assailed Decision7 dated July 29, 2004, reversed and set aside
the appealed IPO decision and order, thus:

WHEREFORE, in view of the foregoing, judgment is hereby rendered by us

REVERSING and SETTING ASIDE the Decision of the IPO dated 28 December 1998
and its Order dated 14 January 2000 and ORDERING the IPO to give due course to
petitioners Application Serial No. 75274.

SO ORDERED.

Explains the CA in its decision:

xxx, it is clear that the IPO brushed aside and rendered useless the glaring and
drastic differences and variations in style of the two trademarks and even decreed
that these pronounced differences are "miniscule" and considered them to have
been "overshadowed by the appearance of the predominant features" such as "M,"
"Mc," and "Mac" appearing in both MCDONALDS and MACJOY marks. Instead of
taking into account these differences, the IPO unreasonably shrugged off these
differences in the device, letters and marks in the trademark sought to be registered.
The IPO brushed aside and ignored the following irrefutable facts and circumstances
showing differences between the marks of MACJOY and MCDONALDS. They are, as
averred by the petitioner [now respondent]:

1. The word "MacJoy" is written in round script while the word "McDonalds" is
written in single stroke gothic;

2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie
and wings sprouting on both sides, while the word "McDonalds" comes with an
arches "M" in gold colors, and absolutely without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while "McDonalds"
is written in red, yellow and black color combination;

4. The faade of the respective stores of the parties are entirely different. Exhibits 1
and 1-A, show that [respondents] restaurant is set also in the same bold, brilliant
and noticeable color scheme as that of its wrappers, containers, cups, etc., while
[petitioners] restaurant is in yellow and red colors, and with the mascot of "Ronald
McDonald" being prominently displayed therein." (Words in brackets supplied.)

Petitioner promptly filed a motion for reconsideration. However, in its similarly

challenged Resolution8 of November 12, 2004, the CA denied the motion, as it
further held:

Whether a mark or label of a competitor resembles another is to be determined by

an inspection of the points of difference and resemblance as a whole, and not merely
the points of resemblance. The articles and trademarks employed and used by the
[respondent] Macjoy Fastfood Corporation are so different and distinct as to
preclude any probability or likelihood of confusion or deception on the part of the
public to the injury of the trade or business of the [petitioner] McDonalds
Corporation. The "Macjoy & Device" mark is dissimilar in color, design, spelling, size,
concept and appearance to the McDonalds marks. (Words in brackets supplied.)

Hence, the petitioners present recourse on the following grounds:

I.

THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS "MACJOY &

DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO PETITIONERS "McDONALDS
MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY TEST WHICH HAS
BEEN CONSISTENTLY APPLIED BY THIS HONORABLE COURT IN DETERMINING
THE EXISTENCE OF CONFUSING SIMILARITY BETWEEN COMPETING MARKS.

A. The McDonalds Marks belong to a well-known and established "family of marks"

distinguished by the use of the prefix "Mc" and/or "Mac" and the corporate "M" logo
design.

B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioners
McDonalds Marks and the Respondents "Macjoy & Device" mark. As such, the
marks are confusingly similar under the Dominancy Test.

C. Petitioners McDonalds Marks are well-known and world-famous marks which

must be protected under the Paris Convention.

II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO
DATED 28 DECEMBER 1998 AND ITS ORDER DATED 14 JANUARY 2000 WERE NOT
BASED ON SUBSTANTIAL EVIDENCE.

In its Comment,9 the respondent asserts that the petition should be dismissed
outright for being procedurally defective: first, because the person who signed the
certification against forum shopping in behalf of the petitioner was not specifically
authorized to do so, and second, because the petition does not present a reviewable
issue as what it challenges are the factual findings of the CA. In any event, the
respondent insists that the CA committed no reversible error in finding no confusing
similarity between the trademarks in question.

The petition is impressed with merit.

Contrary to respondents claim, the petitioners Managing Counsel, Sheila Lehr, was
specifically authorized to sign on behalf of the petitioner the Verification and
Certification10 attached to the petition. As can be gleaned from the petitioners
Board of Directors Resolution dated December 5, 2002, as embodied in the
Certificate of the Assistant Secretary dated December 21, 2004,11 Sheila Lehr was
one of those authorized and empowered "to execute and deliver for and on behalf of
[the petitioner] all documents as may be required in connection with x x x the
protection and maintenance of any foreign patents, trademarks, trade-names, and
copyrights owned now or hereafter by [the petitioner], including, but not limited to,
x x x documents required to institute opposition or cancellation proceedings against
conflicting trademarks, and to do such other acts and things and to execute such
other documents as may be necessary and appropriate to effect and carry out the
intent of this resolution." Indeed, the afore-stated authority given to Lehr
necessarily includes the authority to execute and sign the mandatorily required
certification of non-forum shopping to support the instant petition for review which
stemmed from the "opposition proceedings" lodged by the petitioner before the IPO.
Considering that the person who executed and signed the certification against forum
shopping has the authority to do so, the petition, therefore, is not procedurally
defective.

As regards the respondents argument that the petition raises only questions of fact
which are not proper in a petition for review, suffice it to say that the contradictory
findings of the IPO and the CA constrain us to give due course to the petition, this
being one of the recognized exceptions to Section 1, Rule 45 of the Rules of Court.
True, this Court is not the proper venue to consider factual issues as it is not a trier
of facts.12 Nevertheless, when the factual findings of the appellate court are
mistaken, absurd, speculative, conjectural, conflicting, tainted with grave abuse of
discretion, or contrary to the findings culled by the court of origin,13 as here, this
Court will review them.

The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a
"trademark" as any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof adopted and used by a manufacturer or merchant on his goods
to identify and distinguish them from those manufactured, sold, or dealt in by
others.14

Under the same law, the registration of a trademark is subject to the provisions of
Section 4 thereof, paragraph (d) of which is pertinent to this case. The provision
reads:

Section 4. Registration of trademarks, trade-names and service-marks on the

principal register. There is hereby established a register of trademarks,
tradenames and service-marks which shall be known as the principal register. The
owner of the trade-mark, trade-name or service-mark used to distinguish his goods,
business or services of others shall have the right to register the same on the
principal register, unless it:

xxx xxx xxx

(d) Consists of or comprises a mark or trade-name which so resembles a mark or

trade-name registered in the Philippines or a mark or trade-name previously used
in the Philippines by another and not abandoned, as to be likely, when applied to or
used in connection with the goods, business or services of the applicant, to cause
confusion or mistake or to deceive purchasers;

xxx xxx xxx

Essentially, the issue here is whether there is a confusing similarity between the
MCDONALDS marks of the petitioner and the respondents "MACJOY & DEVICE"
trademark when applied to Classes 29 and 30 of the International Classification of
Goods, i.e., food and ingredients of food.

In determining similarity and likelihood of confusion, jurisprudence has developed

two tests, the dominancy test and the holistic test.15 The dominancy test focuses on
the similarity of the prevalent features of the competing trademarks that might
cause confusion or deception.16 In contrast, the holistic test requires the court to
consider the entirety of the marks as applied to the products, including the labels
and packaging, in determining confusing similarity.17 Under the latter test, a
comparison of the words is not the only determinant factor.18 1awphi1.net

Here, the IPO used the dominancy test in concluding that there was confusing
similarity between the two (2) trademarks in question as it took note of the
appearance of the predominant features "M", "Mc" and/or "Mac" in both the marks.
In reversing the conclusion reached by the IPO, the CA, while seemingly applying the
dominancy test, in fact actually applied the holistic test. The appellate court ruled in
this wise:
Applying the Dominancy test to the present case, the IPO should have taken into
consideration the entirety of the two marks instead of simply fixing its gaze on the
single letter "M" or on the combinations "Mc" or "Mac". A mere cursory look of the
subject marks will reveal that, save for the letters "M" and "c", no other similarity
exists in the subject marks.

We agree with the [respondent] that it is entirely unwarranted for the IPO to
consider the prefix "Mac" as the predominant feature and the rest of the designs in
[respondents] mark as details. Taking into account such paramount factors as color,
designs, spelling, sound, concept, sizes and audio and visual effects, the prefix "Mc"
will appear to be the only similarity in the two completely different marks; and it is
the prefix "Mc" that would thus appear as the miniscule detail. When pitted against
each other, the two marks reflect a distinct and disparate visual impression that
negates any possible confusing similarity in the mind of the buying public. (Words in
brackets supplied.)

Petitioner now vigorously points out that the dominancy test should be the one
applied in this case.

We agree.

In trademark cases, particularly in ascertaining whether one trademark is

confusingly similar to another, no set rules can be deduced because each case must
be decided on its merits.19 In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case.20 That is
the reason why in trademark cases, jurisprudential precedents should be applied
only to a case if they are specifically in point.21

While we agree with the CAs detailed enumeration of differences between the two
(2) competing trademarks herein involved, we believe that the holistic test is not the
one applicable in this case, the dominancy test being the one more suitable. In
recent cases with a similar factual milieu as here, the Court has consistently used
and applied the dominancy test in determining confusing similarity or likelihood of
confusion between competing trademarks.22

Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where the
trademark "Big Mak" was found to be confusingly similar with the "Big Mac" mark of
the herein the petitioner, the Court explicitly held:

This Court, xxx, has relied on the dominancy test rather than the holistic test. The
dominancy test considers the dominant features in the competing marks in
determining whether they are confusingly similar. Under the dominancy test, courts
give greater weight to the similarity of the appearance of the product arising from
the adoption of the dominant features of the registered mark, disregarding minor
differences. Courts will consider more the aural and visual impressions created by
the marks in the public mind, giving little weight to factors like prices, quality, sales
outlets and market segments.

Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying the
dominancy test, concluded that the use by the respondent therein of the word
"MASTER" for its coffee product "FLAVOR MASTER" was likely to cause confusion
with therein petitioners coffee products "MASTER ROAST" and "MASTER BLEND"
and further ruled:

xxx, the totality or holistic test is contrary to the elementary postulate of the law on
trademarks and unfair competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and overall impressions
engendered by the marks in controversy as they are encountered in the
marketplace. The totality or holistic test only relies on visual comparisons between
two trademarks whereas the dominancy test relies not only on the visual but also on
the aural and connotative comparisons and overall impressions between the two
trademarks.

Applying the dominancy test to the instant case, the Court finds that herein
petitioners "MCDONALDS" and respondents "MACJOY" marks are confusingly
similar with each other such that an ordinary purchaser can conclude an association
or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Mc"
and/or "Mac" as dominant features. The first letter "M" in both marks puts emphasis
on the prefixes "Mc" and/or "Mac" by the similar way in which they are depicted i.e.
in an arch-like, capitalized and stylized manner.25

For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally
catches the attention of the consuming public. Verily, the word "MACJOY" attracts
attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo," "Big
Mac" and the rest of the MCDONALDS marks which all use the prefixes Mc and/or
Mac.

Besides and most importantly, both trademarks are used in the sale of fastfood
products. Indisputably, the respondents trademark application for the "MACJOY &
DEVICE" trademark covers goods under Classes 29 and 30 of the International
Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries,
spaghetti, etc. Likewise, the petitioners trademark registration for the
MCDONALDS marks in the Philippines covers goods which are similar if not
identical to those covered by the respondents application.

Thus, we concur with the IPOs findings that:

In the case at bar, the predominant features such as the "M," "Mc," and "Mac"
appearing in both McDonalds marks and the MACJOY & DEVICE" easily attract the
attention of would-be customers. Even non-regular customers of their fastfood
restaurants would readily notice the predominance of the "M" design, "Mc/Mac"
prefixes shown in both marks. Such that the common awareness or perception of
customers that the trademarks McDonalds mark and MACJOY & DEVICE are one and
the same, or an affiliate, or under the sponsorship of the other is not far-fetched.

The differences and variations in styles as the device depicting a head of chicken
with cap and bowtie and wings sprouting on both sides of the chicken head, the
heart-shaped "M," and the stylistic letters in "MACJOY & DEVICE;" in contrast to the
arch-like "M" and the one-styled gothic letters in McDonalds marks are of no
moment. These minuscule variations are overshadowed by the appearance of the
predominant features mentioned hereinabove.

Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in both
marks, the inevitable conclusion is there is confusing similarity between the
trademarks Mc Donalds marks and "MACJOY AND DEVICE" especially considering
the fact that both marks are being used on almost the same products falling under
Classes 29 and 30 of the International Classification of Goods i.e. Food and
ingredients of food.

With the existence of confusing similarity between the subject trademarks, the
resulting issue to be resolved is who, as between the parties, has the rightful claim
of ownership over the said marks.

We rule for the petitioner.

A mark is valid if it is distinctive and hence not barred from registration under the
Trademark Law. However, once registered, not only the marks validity but also the
registrants ownership thereof is prima facie presumed.26

Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision
regarding the protection of industrial property of foreign nationals in this country as
embodied in the Paris Convention28 under which the Philippines and the
petitioners domicile, the United States, are adherent-members, the petitioner was
able to register its MCDONALDS marks successively, i.e., "McDonalds" in 04
October, 197129 ; the corporate logo which is the "M" or the golden arches design
and the "McDonalds" with the "M" or golden arches design both in 30 June 197730 ;
and so on and so forth.31

On the other hand, it is not disputed that the respondents application for
registration of its trademark "MACJOY & DEVICE" was filed only on March 14, 1991
albeit the date of first use in the Philippines was December 7, 1987.32

Hence, from the evidence on record, it is clear that the petitioner has duly
established its ownership of the mark/s.
Respondents contention that it was the first user of the mark in the Philippines
having used "MACJOY & DEVICE" on its restaurant business and food products since
December, 1987 at Cebu City while the first McDonalds outlet of the petitioner
thereat was opened only in 1992, is downright unmeritorious. For the requirement
of "actual use in commerce x x x in the Philippines" before one may register a
trademark, trade-name and service mark under the Trademark Law33 pertains to
the territorial jurisdiction of the Philippines and is not only confined to a certain
region, province, city or barangay.

Likewise wanting in merit is the respondents claim that the petitioner cannot
acquire ownership of the word "Mac" because it is a personal name which may not
be monopolized as a trademark as against others of the same name or surname. As
stated earlier, once a trademark has been registered, the validity of the mark is
prima facie presumed. In this case, the respondent failed to overcome such
presumption. We agree with the observations of the petitioner regarding the
respondents explanation that the word "MACJOY" is based on the name of its
presidents niece, Scarlett Yu Carcell. In the words of the petitioner:

First of all, Respondent failed to present evidence to support the foregoing claim
which, at best, is a mere self-serving assertion. Secondly, it cannot be denied that
there is absolutely no connection between the name "Scarlett Yu Carcel" and
"MacJoy" to merit the coinage of the latter word. Even assuming that the word
"MacJoy" was chosen as a term of endearment, fondness and affection for a certain
Scarlett Yu Carcel, allegedly the niece of Respondents president, as well as to
supposedly bring good luck to Respondents business, one cannot help but wonder
why out of all the possible letters or combinations of letters available to
Respondent, its president had to choose and adopt a mark with the prefix "Mac" as
the dominant feature thereof. A more plausible explanation perhaps is that the niece
of Respondents president was fond of the food products and services of the
Respondent, but that is beside the point." 34

By reason of the respondents implausible and insufficient explanation as to how

and why out of the many choices of words it could have used for its trade-name
and/or trademark, it chose the word "MACJOY," the only logical conclusion
deducible therefrom is that the respondent would want to ride high on the
established reputation and goodwill of the MCDONALDs marks, which, as applied to
petitioners restaurant business and food products, is undoubtedly beyond question.

Thus, the IPO was correct in rejecting and denying the respondents application for
registration of the trademark "MACJOY & DEVICE." As this Court ruled in Faberge
Inc. v. IAC,35 citing Chuanchow Soy & Canning Co. v. Dir. of Patents and
Villapanta:36

When one applies for the registration of a trademark or label which is almost the
same or very closely resembles one already used and registered by another, the
application should be rejected and dismissed outright, even without any opposition
on the part of the owner and user of a previously registered label or trademark, this
not only to avoid confusion on the part of the public, but also to protect an already
used and registered trademark and an established goodwill.

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed Decision

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

No pronouncement as to costs.

SO ORDERED.

G.R. No. 180073 November 25, 2009

PROSOURCE INTERNATIONAL, INC., Petitioner,

vs.
HORPHAG RESEARCH MANAGEMENT SA, Respondent.

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to reverse and set aside the Court of Appeals (CA) Decision1 dated July 27, 2007 and
Resolution2 dated October 15, 2007 in CA-G.R. CV No. 87556. The assailed decision
affirmed the Regional Trial Court (RTC)3 Decision4 dated January 16, 2006 and
Order5 dated May 3, 2006 in Civil Case No. 68048; while the assailed resolution
denied petitioners motion for reconsideration.

The facts are as follows:

Respondent Horphag Research Management SA is a corporation duly organized and

existing under the laws of Switzerland and the owner6 of trademark PYCNOGENOL,
a food supplement sold and distributed by Zuellig Pharma Corporation. Respondent
later discovered that petitioner Prosource International, Inc. was also distributing a
similar food supplement using the mark PCO-GENOLS since 1996.7 This prompted
respondent to demand that petitioner cease and desist from using the aforesaid
mark.8

Without notifying respondent, petitioner discontinued the use of, and withdrew
from the market, the products under the name PCO-GENOLS as of June 19, 2000. It,
likewise, changed its mark from PCO-GENOLS to PCO-PLUS.9

On August 22, 2000, respondent filed a Complaint10 for Infringement of Trademark

with Prayer for Preliminary Injunction against petitioner, praying that the latter
cease and desist from using the brand PCO-GENOLS for being confusingly similar
with respondents trademark PYCNOGENOL. It, likewise, prayed for actual and
nominal damages, as well as attorneys fees.11

In its Answer,12 petitioner contended that respondent could not file the
infringement case considering that the latter is not the registered owner of the
trademark PYCNOGENOL, but one Horphag Research Limited. It, likewise, claimed
that the two marks were not confusingly similar. Finally, it denied liability, since it
discontinued the use of the mark prior to the institution of the infringement case.
Petitioner thus prayed for the dismissal of the complaint. By way of counterclaim,
petitioner prayed that respondent be directed to pay exemplary damages and
attorneys fees.13

During the pre-trial, the parties admitted the following:

1. Defendant [petitioner] is a corporation duly organized and existing under the

laws of the Republic of the Philippines with business address at No. 7 Annapolis
Street, Greenhills, San Juan, Metro Manila;

2. The trademark PYCNOGENOL of the plaintiff is duly registered with the

Intellectual Property Office but not with the Bureau of Food and Drug (BFAD).

3. The defendants product PCO-GENOLS is duly registered with the BFAD but not
with the Intellectual Property Office (IPO).

4. The defendant corporation discontinued the use of and had withdrawn from the
market the products under the name of PCO-GENOLS as of June 19, 2000, with its
trademark changed from PCO-GENOLS to PCO-PLUS.

5. Plaintiff corporation sent a demand letter to the defendant dated 02 June 2000.14

On January 16, 2006, the RTC decided in favor of respondent. It observed that
PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which appears to be
merely descriptive and thus open for trademark registration by combining it with
other words. The trial court, likewise, concluded that the marks, when read, sound
similar, and thus confusingly similar especially since they both refer to food
supplements. The court added that petitioners liability was not negated by its act of
pulling out of the market the products bearing the questioned mark since the fact
remains that from 1996 until June 2000, petitioner had infringed respondents
product by using the trademark PCO-GENOLS. As respondent manifested that it was
no longer interested in recovering actual damages, petitioner was made to answer
only for attorneys fees amounting to P50,000.00.15 For lack of sufficient factual and
legal basis, the court dismissed petitioners counterclaim. Petitioners motion for
reconsideration was likewise denied.

On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate
court explained that under the Dominancy or the Holistic Test, PCO-GENOLS is
deceptively similar to PYCNOGENOL. It also found just and equitable the award of
attorneys fees especially since respondent was compelled to litigate.16

Hence, this petition, assigning the following errors:

I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING THE RULING OF THE

LOWER [COURT] THAT RESPONDENTS TRADEMARK P[YC]NOGENOLS (SIC) WAS
INFRINGED BY PETITIONERS PCO-GENOLS.

II. THAT THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF

ATTORNEYS FEES IN FAVOR OF RESPONDENT HORPHAG RESEARCH
MANAGEMENT S.A. IN THE AMOUNT OF Php50,000.00.17

The petition is without merit.

It must be recalled that respondent filed a complaint for trademark infringement

against petitioner for the latters use of the mark PCO-GENOLS which the former
claimed to be confusingly similar to its trademark PYCNOGENOL. Petitioners use of
the questioned mark started in 1996 and ended in June 2000. The instant case
should thus be decided in light of the provisions of Republic Act (R.A.) No. 16618 for
the acts committed until December 31, 1997, and R.A. No. 829319 for those
committed from January 1, 1998 until June 19, 2000.

A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof, adopted and used by a manufacturer or merchant on his goods
to identify and distinguish them from those manufactured, sold, or dealt by others.
Inarguably, a trademark deserves protection.20

Section 22 of R.A. No. 166, as amended, and Section 155 of R.A. No. 8293 define what
constitutes trademark infringement, as follows:

Sec. 22. Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation
of any registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such
use is likely to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such business; or
reproduce, counterfeit, copy of colorably imitate any such mark or tradename and
apply such reproduction, counterfeit, copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.

Sec. 155. Remedies; Infringement. Any person who shall, without the consent of
the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation
of a registered mark or the same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a

dominant feature thereof and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or
to deceive, shall be liable in a civil action for infringement by the registrant for the
remedies hereinafter set forth: Provided, That infringement takes place at the
moment any of the acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using the infringing
material.

In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20
thereof, the following constitute the elements of trademark infringement:

(a) A trademark actually used in commerce in the Philippines and registered in the
principal register of the Philippine Patent Office[;]

(b) [It] is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation is applied to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to
be used upon or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers[;]

(c) [T]he trademark is used for identical or similar goods[;] and

(d) [S]uch act is done without the consent of the trademark registrant or
assignee.21

On the other hand, the elements of infringement under R.A. No. 8293 are as follows:

(1) The trademark being infringed is registered in the Intellectual Property Office;
however, in infringement of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably
imitated by the infringer;

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

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

(5) It is without the consent of the trademark or trade name owner or the assignee
thereof.22

In the foregoing enumeration, it is the element of "likelihood of confusion" that is

the gravamen of trademark infringement. But "likelihood of confusion" is a relative
concept. The particular, and sometimes peculiar, circumstances of each case are
determinative of its existence. Thus, in trademark infringement cases, precedents
must be evaluated in the light of each particular case.23

In determining similarity and likelihood of confusion, jurisprudence has developed

two tests: the Dominancy Test and the Holistic or Totality Test. The Dominancy Test
focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion and deception, thus constituting infringement.24 If the
competing trademark contains the main, essential and dominant features of
another, and confusion or deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the infringing label
should suggest an effort to imitate. The question is whether the use of the marks
involved is likely to cause confusion or mistake in the mind of the public or to
deceive purchasers.25 Courts will consider more the aural and visual impressions
created by the marks in the public mind, giving little weight to factors like prices,
quality, sales outlets, and market segments.26

In contrast, the Holistic Test entails a consideration of the entirety of the marks as
applied to the products, including the labels and packaging, in determining
confusing similarity.27 The discerning eye of the observer must focus not only on
the predominant words but also on the other features appearing on both labels in
order that the observer may draw his conclusion whether one is confusingly similar
to the other.28

The trial and appellate courts applied the Dominancy Test in determining whether
there was a confusing similarity between the marks PYCNOGENOL and PCO-GENOL.
Applying the test, the trial court found, and the CA affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL"
which on evidence, appears to be merely descriptive and furnish no indication of the
origin of the article and hence, open for trademark registration by the plaintiff thru
combination with another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-
3." Furthermore, although the letters "Y" between P and C, "N" between O and C and
"S" after L are missing in the [petitioners] mark PCO-GENOLS, nevertheless, when
the two words are pronounced, the sound effects are confusingly similar not to
mention that they are both described by their manufacturers as a food supplement
and thus, identified as such by their public consumers. And although there were
dissimilarities in the trademark due to the type of letters used as well as the size,
color and design employed on their individual packages/bottles, still the close
relationship of the competing products name in sounds as they were pronounced,
clearly indicates that purchasers could be misled into believing that they are the
same and/or originates from a common source and manufacturer.29

We find no cogent reason to depart from such conclusion.

This is not the first time that the Court takes into account the aural effects of the
words and letters contained in the marks in determining the issue of confusing
similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,30 cited in
McDonalds Corporation v. L.C. Big Mak Burger, Inc.,31 the Court held:

The following random list of confusingly similar sounds in the matter of trademarks,
culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce
our view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold
Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper Flash";
"Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and
"Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex";
"Zuso" and "Hoo Hoo." Leon Amdur, in his book "Trade-Mark Law and Practice," pp.
419-421, cities, as coming within the purview of the idem sonans rule, "Yusea" and
"U-C-A," "Steinway Pianos" and "Steinberg Pianos," and "Seven-Up" and "Lemon-
Up." In Co Tiong vs. Director of Patents, this Court unequivocally said that "Celdura"
and "Cordura" are confusingly similar in sound; this Court held in Sapolin Co. vs.
Balmaceda, 67 Phil. 795 that the name "Lusolin" is an infringement of the trademark
"Sapolin," as the sound of the two names is almost the same.32

Finally, we reiterate that the issue of trademark infringement is factual, with both
the trial and appellate courts finding the allegations of infringement to be
meritorious. As we have consistently held, factual determinations of the trial court,
concurred in by the CA, are final and binding on this Court.33 Hence, petitioner is
liable for trademark infringement.

We, likewise, sustain the award of attorneys fees in favor of respondent. Article
2208 of the Civil Code enumerates the instances when attorneys fees are awarded,
viz.:
Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:

1. When exemplary damages are awarded;

2. When the defendants act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;

3. In criminal cases of malicious prosecution against the plaintiff;

4. In case of a clearly unfounded civil action or proceeding against the plaintiff;

5. Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff"s plainly valid, just and demandable claim;

6. In actions for legal support;

7. In actions for the recovery of wages of household helpers, laborers and skilled
workers;

8. In actions for indemnity under workmens compensation and employers liability

laws;

9. In a separate civil action to recover civil liability arising from a crime;

10. When at least double judicial costs are awarded;

11. In any other case where the court deems it just and equitable that attorneys fees
and expenses of litigation should be recovered.

In all cases, the attorneys fees and expenses of litigation must be reasonable.

As a rule, an award of attorneys fees should be deleted where the award of moral
and exemplary damages is not granted.34 Nonetheless, attorneys fees may be
awarded where the court deems it just and equitable even if moral and exemplary
damages are unavailing.35 In the instant case, we find no reversible error in the
grant of attorneys fees by the CA.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The
Court of Appeals Decision dated July 27, 2007 and its Resolution dated October 15,
2007 in CA-G.R. CV No. 87556 are AFFIRMED.

SO ORDERED.