1

In-N-Out Burger, Inc vs Sehwani, IncG.R. No. 179127 : December 24, 2008
Facts:
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of US, which is a signatory to the Convention
of Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).
Petitioner isengaged mainly in the restaurant business, but it has never engaged in business in the Philippines. Respondents
Sehwani, Incorporatedand Benita Frites, Inc. are corporations organized in the Philippines.On 2 June 1997, petitioner filed trademark
and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT"and "IN-N-OUT Burger & Arrow
Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000,that respondent Sehwani,
Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O"formed like a star)."
Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrativecomplaint against
respondents for unfair competition and cancellation of trademark registration. Respondents asserted therein that theyhad been using
the mark "IN N OUT" in the Philippines since 15 October 1982. Respondent then filed with the BPTTT an application for
theregistration of the mark. BPTTT approved its application and issued the corresponding certificate of registration in favor of the
respondent.On Dec 22, 2003, IPO Director of Legal Affairs rendered a decision in favor of petitioner stating petitioner had the right to
use itstradename and mark in the Philippines to the exclusion of others. However, the decision also includes that respondent is not
guilty of unfair competition. Upon appeal by petitioner, the new IPO Director General declared that respondents were guilty of unfair
competitionon December 23, 2005. On 18 July 2006, the Court of Appeals promulgated a Decision reversing the Decision dated 23
December 2005 of the IPO Director General. The appellate court declared that Section 163 of the Intellectual Property Code
specifically confers upon theregular courts, and not the BLA-IPO, sole jurisdiction to hear and decide cases involving provisions of
the Intellectual Property Code,particularly trademarks. Hence, the present petition.

Issue:
(1) Whether the IPO (administrative bodies) have jurisdiction to cases involving unfair competition
(2) Whether respondent Sehwani is liable of unfair competition
Held:
(1) Yes. Sec. 160 and 170, which are found under Part III of the IP Code, recognize the concurrent jurisdiction of civil courts and
theIPO over unfair competition cases. Therefore, the IPO Director of Legal Affairs have jurisdiction to decide the petitioner's
administrativecase against respondents and the IPO Director General have exclusive jurisdiction over the appeal of the judgment of
the IPO Director of Legal Affairs.
(2) Yes. The evidence on record shows that the respondents were not using their registered trademark but that of the petitioner.
Further,respondents are giving their products the general appearance that would likely influence purchasers to believe that these
products arethose of the petitioner. The intention to deceive may be inferred from the similarity of the goods as packed and offered
for sale, and, thus,
action will lie to restrain such unfair competition. Also, respondent’s use of IN
-N-OUT BURGER in busineses signages reveals fraudulentintent to deceive purchasers.
N.B.
The essential elements of an action for unfair competition are 1) confusing similarity in the general appearance of the goods and (2)
intentto deceive the public and defraud a competitor.
_______________________________________________________________________________________
G.R. No. 115758 March 19, 2002

ELIDAD C. KHO,
doing business under the name and style of
KEC COSMETICS LABORATORY petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING andCOMPANY,
and ANG TIAM CHAY,respondents.
FACTS:

The petitioner alleged that she is the registered owner of the copyrights
Chin Chun Su and OvalFacial Cream Container/Case
as evidenced by certificates of copyright registrations and patent rights on Chun Chun Su & Device and Chin
Chun Su (medicated cream) after she purchased it fromQuintin Cheng (previous registered owner in the
Philippine Patent Office [PPO]).
Meanwhile, there was a decline in the petitioner’s business income due to the advertisement andsale made by
Summerville on petitioner’s product
s under the same brand name and in similarcontainers. According to Summerville, they are the exclusive and
authorized importer, re-packerand distributor of Chin Chun Su products manufactured by Shun Yi Factory of
Taiwan and that said company authorized
them to register its trade name “Chin Chun Su Mediated Cream” with the
PPO.The application for preliminary injunction filed by petitioner was granted. Hence, respondentsmoved for
reconsideration, which was denied. The respondents then moved for nullification of said preliminary injunction
with the CA. The latter granted its petition.
ISSUE:
 2

WON the copyright and patent over the name and container of the beauty cream product entitle the registrant to
its EXCLUSIVE use and ownership.

HELD:

NO.

The petitioner has no right for the EXCLUSIVE use of the trade name and its container.In order to be entitled to
its exclusive use, the user must sufficiently prove that she registered orused it before anybody else did. This,
petitioner failed to do.
“Trademark, copyright and patents are different intellectual property rights that cannot beinterchanged with one
another. Atrademark is any visible sign capable of distinguishing thegoods (trademark) or services (service mark)
of an enterprise and shall include a stamped ormarked container of goods. In relation thereto, atrade name
means the name or designationidentifying or distinguishing an enterprise.

Meanwhile, the scope of a copyright is confined toliterary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the moment of their creation.

Patentable inventions ,on the other hand,refer to any technical solution of a problem in any field of human activity
which is new, involves an inventive step and is industrially applicable”.
________________________________________________________________________________________
VENANCIO SAMBAR, doing business under the name and style of CVSGarment Enterprises, petitioner ,
Vs LEVI STRAUSS & CO., and LEVISTRAUSS (PHIL.), INC. respondents
.G.R. No. 132604. March 6, 2002Quisumbing, J.(Jeka)
Facts:
1.Levi Strauss & Co., and Levi Strauss Phil, Inc., through a letter from their legalofficer, demanded that CVS
Garment Enterprises (CVSGE) desist from using their stitched arcuate design on the Europress jeans which
CVSGE advertised in the Defense: Atty. Benjamin Gruba, counsel of CVSGE: the arcuate design on theback
pockets of Europress jeans was different from the design on the backpockets of Levi’s jeans.a.He further
asserted that his client had a copyright on the design it was using.
3.Private respondents filed a complaint against Sambar, doing business underthe name and style of
CVSGE.a.Private respondents also impleaded the Director of the National Library.b.Alleged in their complaint
that Levi Strauss and Co. (LS&Co.), aninternationally known clothing manufacturer, owns the arcuate
designtrademark which was registered under U.S. Trademark Registration No.404, 248 and in the Principal
Register of trademarks with the PhilippinePatent Office under Certificate of Registration No. 20240c.CVSGIC
and Venancio Sambar, without the consent and authority of private respondents and in infringement and unfair
competition, sold andadvertised, and despite demands to cease and desist, continued tomanufacture, sell and
advertise denim pants under the brand name“Europress” with back pockets bearing a design similar to the
arcuatetrademark of private respondents, thereby causing confusion on thebuying public, prejudicial to private
respondents’ goodwill and propertyright.
4.Answer: CVSGIC admitted it manufactured, sold and advertised and was stillmanufacturing and selling denim
pants under the brand name of “Europress”,bearing a back pocket design of two double arcs meeting in the
middle.a.However, it denied that there was infringement or unfair competitionbecause the display rooms of
department stores where Levi’s andEuropress jeans were sold, were distinctively segregated by billboards
andother modes of advertisement.b. CVSGIC avers that the public would not be confused on the ownership of
such known trademark as Levi’s, Jag, Europress, etc.. Also, CVSGICclaimed that it had its own original arcuate
design, as evidenced by
Copyright Registration No. 1-1998, which was very different and distinctfrom Levi’s design.
5. TC: issued a writ of preliminary injunction enjoining CVSGIC and petitionerfrom manufacturing, advertising
and selling pants with the arcuate design ontheir back pockets.
6.CA: affirmed
Issue:
WON there was an infringement of respondent’s arcuate mark.
Held:
 3

Europress’ use of the arcuate design was an infringement of the Levi’sdesign.

Ratio:
1.The backpocket design of Europress jeans, a double arc intersecting in themiddle was the same as Levi’s’
mark, also a double arc intersecting at thecenter.
a.Although the trial court found differences in the two designs,these differences were not noticeable.
b. Further, private respondents said, infringement of trademark did notrequire exact similarity.c.Colorable
imitation enough to cause confusion among the public, wassufficient for a trademark to be infringed.d.Private
respondents explained that in a market research they conductedwith 600 respondents, the result showed that
the public was confused byEuropress trademark vis the Levi’s trademark.
2 .It must be stressed that it was immaterial whether or not petitioner wasconnected with CVSGIC.a.What is
relevant is that petitioner had a copyright over the design andthat he allowed the use of the same by CVSGIC.
3. Private respondents assert that the lower courts found that there wasinfringement and Levi’s was entitled to
damages based on Sections 22 and23 of RA No. 166 otherwise known as the Trade Mark Law, as amended,
whichwas the law then governing. Said sections define infringement and prescribethe remedies therefor.a.
Further, private respondents aver it was misleading for petitioner to claimthat the trial court ruled that private
respondents did not suffer pecuniaryloss, suggesting that the award of damages was improper.b.According to
the private respondents, the trial court did not make anysuch ruling. It simply stated that there was no evidence
that Levi’s hadsuffered decline in its sales because of the use of the arcuate design byEuropress jeans.
c. They offer that while there may be no direct proof that theysuffered a decline in sales, damages may still be
measured basedon a reasonable percentage of the gross sales of the respondents,pursuant to Section 23 of the
Trademark law.
4 The cancellation of petitioner’s copyright was justified becausepetitioner’s copyright cannot prevail over
respondents’ registrationin the Principal Register of Bureau of Patents, Trademarks, andTechnology Transfe
.a.According to private respondents, the essence of copyright registration isoriginality and a copied design is
inherently non-copyrightable.b. They insist that registration does not confer originality upon a copycatversion of
a prior design.
5.The award of damages and cancellation of petitioner’s copyright are appropriate.
a.Award of damages is clearly provided in Section 23, while cancellation of petitioner’s copyright finds basis on
the fact that the design was a mere copy of that of private respondents’ trademark.
b.To be entitled to copyright, the thing being copyrighted must beoriginal, created by the author through his own
skill, labor and judgment, without directly copying or evasively imitating thework of another
______________________________________________________________________________________

Case Title: MANOLO P. SAMSON, petitioner, vs. HON. REYNALDO B. DAWAY, in his capacityas Presiding
Judge, Regional Trial Court of Quezon City, Branch 90, PEOPLE OF THE PHILIPPINES and CATERPILLAR,
INC., respondents. (G.R. Nos. 160054-55, July 21, 2004)
Facts:
The petitioner, owner/proprietor of ITTI Shoes/Mano Shoes Manufactuirng Corporation,allegedly sold or offers
the sale of garment product using the trademark ³Caterpillar´ to the prejudice of Caterpillar, Inc., private
respondent in this case. The respondent filed the case withthe RTC. The petitioner questioned the jurisdiction of
the trial court over the offense chargedcontending that the case should be filed with the MTC because violation
of unfair competition is penalized with imprisonment not exceeding 6 years under RA 7691.
Issue: Which court has jurisdiction over criminal and civil cases for violation of intellectual propertyrights?
Ruling of the Court: The SC held that under Section 163 of the IPC, actions for unfair competition shall be
brought before the proper courts with appropriate jurisdiction under existing laws. The law contemplatedin
Section 163 of IPC is RA 166 otherwise known as the Trademark Law. Section 27 of theTrademark Law provides
that jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin
and false description or representation, is lodged with theCourt of First Instance (now Regional Trial Court).
Since RA 7691 is a general law and IPC inrelation to Trademark Law is a special law, the latter shall prevail.
Actions for unfair competitiontherefore should be filed with the RTC.
 4

_______________________________________________________________________________________

104 Mighty Corporation vs. Gallo Winery

Topic: PropertyPonente: J. CoronaDate: 14 July 2004 Doctrine:
Following universal acquiescence and comity, in case of domestic legal disputes onany conflicting provisions
between the Paris Convention for the Protection of Industrial Property(which is an international agreement) and
Republic Act No. 166 or the Trademark Law (which isa municipal law), the latter will prevail. The fact that
international law has been made part of thelaw of the land does not by any means imply the primacy of
international law over national lawin the municipal sphere. Under the doctrine of incorporation as applied in most
countries, rulesof international law are given a standing equal, not superior, to national legislative enactments.
Quickfacts:
Gallo Winery, a foreign corporation engaged in the production and sale of wine and brandy products, sued Mighty
Corp. and its sister company, Tobacco Industries, for trademark infringement [and unfair competition]. Mighty
Corp. and Tobacco Industries manufactured,distributed, and sold tobacco products using the GALLO cigarette
trademark. The SupremeCourt denied the petition since the GALLO cigarette trademark was not being used for
identicalor similar goods.
Facts:
Gallo Winery was organized under the laws of the State of California where all itswineries are located. It sells its
products in different countries using various trademarks,including GALLO. The GALLO wine trademark was
registered with the Philippine PatentOffice in 1971. Despite said registration, GALLO wines were introduced in
the Philippines onlyin 1974 within the U.S. military facilities. In 1979, GALLO wines saw a bigger Philippinemarket
through distributors and independent outlets. However, in 1992, a distributor’s employeefound
GALLO cigaretteson display in the wine cellar section of a supermarket in Davao City.
GALLO cigarettes were products of Mighty Corp. and its sister company, Tobacco Industries,which have been
manufacturing, selling, and distributing GALLO cigarettes throughout thePhilippines since 1973. That same year,
the Bureau of Internal Revenue approved TobaccoIndustries’ use of the
GALLO 100’s cigarette mark , and three years later or in 1976, of the GALLO filter cigarette mark
. The GALLO cigarette trademark was registered with thePhilippine Patent Office in 1985.Gallo Winery filed suit
for trademark infringement [and unfair competition] against MightyCorp. and Tobacco Industries, claiming that
the use of GALLO cigarettes caused confusion onthe part of the purchasing public who had always associated
GALLO with Gallo Winery’s products, thus constituting a violation of the Paris Convention for the Protection of
IndustrialProperty
1 and Republic Act No. 166 or the Trademark Law
2.The RTC decided the case in favor of Gallo Winery, applying not only the Paris Convention andRepublic Act
No. 166, but also Republic Act No. 8293 or the Intellectual Property Code of thePhilippines, and reasoning that
GALLO cigarettesand GALLO wines were identical, similar or related goods since they were “forms of vice.” The
Court of Appeals affirmed the RTC decision.Mighty Corp. and Tobacco Industries elevated the matter to the
Supreme Court.
Issues:
(a)Whether or not Republic Act No. 8293 or the Intellectual Property Code is applicable. (NO,it is not applicable.)
(b)Whether the Paris Convention or Republic Act No. 166 governs as regards Gallo Winery’scapacity to sue.
(Republic Act No. 166 governs.)
(c)Whether or not Gallo Winery has exclusive right to use the trademark GALLO. (No, it doesnot have the
exclusive right to use said trademark. Hence, there was no trademark infringement.)
 5

Ratio:
(a)Republic Act No. 8293 is not applicable: Republic Act No. 8293 or the Intellectual Property Code, which
repealed Republic Act No. 166 or the Trademark Law, took effectabout five years after the filing of the complaint.
The RTC and the CA should have limited theconsideration of the case within the parameters of the Trademark
Law and the Paris Convention, the laws in force at the time of the filing of the complaint.
(b)Gallo Winery has capacity to sue: Article 6 bis
of the Paris Convention, an international agreement binding on the Philippines and the United States (Gallo
Winery’s country of domicile and origin) prohibits “the [registration] or use of a trademark which constitutes are
production, 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 asbeing already the mark of a person entitled
to the benefits of the [Paris] Convention and used for identical or similar goods.”
GALLO cannot be considered a well-known mark within the contemplation and protection of the Paris
Convention. “[T]he GALLO trademark cannot be considered a strong and distinctmark in the Philippines. [Gallo
Winery does] not dispute the documentary evidence that asidefrom Gallo Winery’s GALLO trademark
registration, the Bureau of Patents, Trademarks andTechnology Transfer also issued on September 4, 1992
Certificate of Registration No. 53356under the Principal Register approving Productos Alimenticios Gallo, S.A’s
April 19, 1990application for GALLO trademark registration and use for its ‘noodles, prepared food or
1CONVENTION OF PARIS FOR THE PROTECTION OF INDUSTRIAL PROPERTY
of 20th March, 1883, revisedat BRUSSELS on 14th December, 1900, at WASHINGTON on 2nd June, 1911, at
THE HAGUE on 6th November, 1925,at LONDON on 2nd June, 1934, and at Lisbon on 31stOctober, 1958.
2An Act To Provide For The Registration And Protection Of Trademarks, Trade Names And Servicemarks,
Defining Unfair Competition And False Marking And Providing Remedies Against The Same, And For Other
Purposes.canned noodles, ready or canned sauces for noodles, semolina, wheat flour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard,vinegar, species and
ice.’”However, while the Paris Convention protects well-known trademarks only, the Trademark Law protects all
trademarks, whether well-known or not, provided that they have beenregistered and are in actual commercial
use in the Philippines. Following universalacquiescence and comity,in case of domestic legal disputes on any
conflicting provisions between the Paris Convention (which is an international agreement) and the Trademark
law(which is a municipal law), the latter will prevail. Thus, even if the GALLO wine trademark isnot considered
well-known, it may still be the proper subject of trademark infringement byvirtue of its registration and actual
commercial use in the Philippines. Gallo Winery may suefor trademark infringement.
(c)Gallo Winery does not have the exclusive right to use the GALLO trademark:The provisions of the Paris
Convention and Republic Act No. 166 were sufficientlyexpounded upon and qualified in Philip Morris, Inc. v.
Court of Appeals
(224 SCRA 576[1993]):Following universal acquiescence and comity, our municipal law on trademarksregarding
the requirement of actual use in the Philippines must subordinate aninternational agreement inasmuch as the
apparent clash is being decided by amunicipal tribunal. 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 lawover national law in the
municipal sphere. Under the doctrine of incorporation asapplied in most countries, rules of international law are
given a standing equal,not superior, to national legislative enactments.In other words, (a foreign corporation)
may have the capacity to sue for infringement irrespective of lack of business activity in the country but
thequestion of whether they have an exclusive right over their symbol will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A
3 of Republic Act No. 166.A rule widely accepted and firmly entrenched because it has come down throughthe
years is that actual use in commerce or business is a prerequisite in theacquisition of the right of ownership over
a trademark.In view of the foregoing jurisprudence and Gallo Winery’s judicial admission that the actual
commercial use of the GALLO wine trademark was subsequent to its registration in 1971 andto Tobacco
Industries’ commercial use of the GALLO cigarette trademark in 1973, we rulethat, on this account, Gallo Winery
never enjoyed the exclusive right to use the GALLO winetrademark to the prejudice of Tobacco Industries and
its successors-in-interest. Also, GALLOtrademark registration certificates in the Philippines and in other countries
expressly state that they cover wines only, without any evidence or indication that registrant Gallo
Wineryexpanded or intended to expand its business to cigarettes. Thus, by strict application of Section20
4 of the Trademark Law, Gallo Winery’s exclusive right to use the GALLO trademark should be limited to wines,
the only product indicated in its registration certificates.
 6

_________________________________________________________________________________
1. Mc Donald Corp. vs. L. C. Big Mak Burger Gr. No. 143993 August 18, 2004

Facts: Petitioner McDonald's Corporation ("McDonald's") is a corporation organized under the laws of
Delaware, United States. McDonald's operates, by itself or through its franchisees, a global chain of fast-food
restaurants. McDonald's owns a family of marks including the "Big Mac" mark for its "double-decker hamburger
sandwich." McDonald's registered this trademark with the United States Trademark Registry on 16 October 1979.
Based on this Home Registration, McDonald's applied for the registration of the same mark in
the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology ("PBPTT"), now the
Intellectual Property Office ("IPO"). Pending approval of its application, McDonald's introduced its "Big Mac"
hamburger sandwiches in the Philippine market in September 1981. On 18 July 1985, the PBPTT allowed
registration of the "Big Mac" mark in the Principal Register based on its Home Registration in the United States.

Like its other marks, McDonald's displays the "Big Mac" mark in items and paraphernalia in its restaurants,
and in its outdoor and indoor signages. From 1982 to 1990, McDonald's spent P10.5 million in advertisement for
"Big Mac" hamburger sandwiches alone. Petitioner McGeorge Food Industries ("petitioner McGeorge"), a
domestic corporation, is McDonald's Philippine franchisee.

Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a domestic corporation which
operates fast-food outlets and snack vans in Metro Manila and nearby provinces. Respondent corporation's menu
includes hamburger sandwiches and other food items. Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William
B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto ("private respondents") are the incorporators,
stockholders and directors of respondent corporation. On 21 October 1988, respondent corporation applied with
the PBPTT for the registration of the "Big Mak" mark for its hamburger sandwiches. McDonald's opposed
respondent corporation's application on the ground that "Big Mak" was a colorable imitation of its registered "Big
Mac" mark for the same food products. McDonald's also informed respondent Francis Dy ("respondent Dy"), the
chairman of the Board of Directors of respondent corporation, of its exclusive right to the "Big Mac" mark and
requested him to desist from using the "Big Mac" mark or any similar mark.

Issue: whether respondents used the words "Big Mak" not only as part of the corporate name "L.C. Big
Mak Burger, Inc." but also as a trademark for their hamburger products, and whether respondent corporation is
liable for trademark infringement and unfair competition..

Held: Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly
used, without petitioners' consent, a colorable imitation of the "Big Mac" mark in advertising and selling
respondents' hamburger sandwiches. This likely caused confusion in the mind of the purchasing public on the
source of the hamburgers or the identity of the business. To establish trademark infringement, the following
elements must be shown: (1) the validity of plaintiff's mark; (2) the plaintiff's ownership of the mark; and (3) the
use of the mark or its colorable imitation by the alleged infringer results in "likelihood of confusion." Of these, it
is the element of likelihood of confusion that is the gravamen of trademark infringement.

A mark is valid if it is "distinctive" and thus not barred from registration under Section 4 of RA 166
("Section 4").However, once registered, not only the mark's validity but also the registrant's ownership of the mark
is prima facie presumed. Respondents contend that of the two words in the "Big Mac" mark, it is only the word
"Mac" that is valid because the word "Big" is generic and descriptive (proscribed under Section 4[e]), and thus
"incapable of exclusive appropriation." The contention has no merit. The "Big Mac" mark, which should be treated
in its entirety and not dissected word for word, is neither generic nor descriptive. Generic marks are commonly
used as the name or description of akind of goods, such as "Lite" for beer or "Chocolate Fudge" for chocolate soda
drink. Descriptive marks, on the other hand, convey the characteristics, functions, qualities or ingredients of a
product to one who has never seen it or does not know it exists, such as "Arthriticare" for arthritis medication. On
the contrary, "Big Mac" falls under the class of fanciful or arbitrary marks as it bears no logical relation to
the actual characteristics of the product it represents. As such, it is highly distinctive and thus valid. Significantly,
the trademark "Little Debbie" for snack cakes was found arbitrary or fanciful.

The Court also finds that petitioners have duly established McDonald's exclusive ownership of the "Big
Mac" mark. Although Topacio and the Isaiyas Group registered the "Big Mac" mark ahead of McDonald's, Topacio,
as petitioners disclosed, had already assigned his rights to McDonald's. The Isaiyas Group, on the other hand,
registered its trademark only in the Supplemental Register. A mark which is not registered in the PrincipalRegister,
and thus not distinctive, has no real protection. Indeed, we have held that registration in the Supplemental
 7

Register is not even a prima facie evidence of the validity of the registrant's exclusive right to use the mark on the
goods specified in the certificate.

_____________________________________________________________________________________
PHILIP MORRIS, INC. VS. FORTUNE TOBACCO CORPORATION (Equal Standing of International Law and Municipal Law)

Penned by: GARCIA, J.:

Petition for review under Rule 45 of the Rules of Court, 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: PETITION DENIED

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
 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.

FACTS OF THE CASE:

 Petitioner Philip Morris, Inc., a corporation (State of Virginia, U.S.A), is the registered owner of the trademark
“MARK VII” for cigarettes. (per Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine
Patents Office (PPO)
 Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner
of the trademark “MARK TEN” for cigarettes (PPO Certificate of Registration No. 11147)
 Fabriques de Tabac Reunies, S.A. (Swiss company), another subsidiary of Philip Morris, Inc., is the assignee of
the trademark “LARK,” (Trademark Certificate of Registration No. 19053) (originally registered in 1964 by Ligget
and Myers Tobacco Company)
 Respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and sells
cigarettes using the trademark “MARK.”

 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.

ISSUES
 Petitioners seek petition for review (Court of Appeals):
o (1) whether or not petitioners, as Philippine registrants of trademarks, are entitled to enforce
trademark rights in this country;
o (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.

 Respondent: issue the propriety of the petition as it allegedly raises questions of fact.
 The petition is bereft of merit.
 Petition raises both questions of fact and law
o question of law exists when the doubt or difference arises as to what the law is on a certain state of facts
o question of fact when the doubt or difference arises as to the truth or falsity of alleged facts
 Court is not the proper venue to consider factual issues as it is not a trier of facts
 Unless the factual findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with grave
abuse of discretion, or contrary to the findings culled by the court of origin, we will not disturb them
 Petitioners: contentions should be treated as purely legal since they are assailing erroneous conclusions deduced from a set of
undisputed facts

 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.
o A trademark deserves protection.

HELD/RATIO:
As we ruled in G.R. No. 91332,18 :

1. RECIPROCITY REQUIREMENT
 8

 Registration of a trademark gives the registrant (petitioners) advantages denied non-registrants or

ordinary users (respondent)
o validity of the registration
o 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.
o Petitioners: still foreign corporations
o condition to availment of the rights and privileges & their trademarks in this country:
 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
o Court: reciprocity requirement is a condition sine qua non to filing a suit by a foreign corporation
 Unless alleged in the complaint, would justify dismissal
o 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
 being considered part of Philippine municipal laws, can be taken judicial notice of in
infringement suits.

2. REGISTRATION VERSUS ACUAL USE!!

 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.

 Philippines’ adherence to the Paris Convention effectively obligates the country to honor and enforce its
provisions( as regards the protection of industrial property of foreign nationals in this country)
o However, any protection accorded has to be made subject to the limitations of Philippine laws.
o 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 national
 (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
 foreign nationals must still observe and comply with the conditions imposed by
Philippine law on its nationals.

 R.A. No. 166 (as amended, specifically Sections 228 and 2-A29), mandates actual use of the marks and/or
emblems in local commerce and trade before they may be registered and ownership thereof acquired
o the petitioners cannot, therefore, dispense with the element of actual use.
o 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, the Court reiterated its rulings in Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan v. Intermediate Appellate
Court, and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation on the importance of
ACTUAL COMMERCIAL USE OF A TRADEMARK in the Philippines notwithstanding the Paris
Convention:
o 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:
 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.
 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.
 9

 A foreign corporation) may have the capacity to sue for infringement … but 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.

 Registration of trademark cannot be deemed conclusive as to the actual use of such trademark in local
commerce.
o registration does not confer upon the registrant an absolute right to the registered mark.
o merely constitutes prima facie evidence that the registrant is the owner of the registered mark.
o Evidence of non-usage of the mark rebuts the presumption of trademark ownership
 We stress that registration in the Philippines of trademarks does not ipso facto convey an absolute right or
exclusive ownership thereof.
o Shangri-La International Hotel Management, Ltd. v. Development Group of Companies, Inc.
 Trademark is a creation of use
 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
 does not perfect such right; actual use thereof is the perfecting ingredient.

 Petitioners’ reliance on Converse Rubber Corporation is quite misplaced

o different factual milieu
o 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.
o 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
o the infringement complaint filed in August 1982 and tried under the aegis of R.A. No. 166, as amended.
o The IP Code (January 1, 1998) no provision on retroactivity; TRIPS Agreement (December 16, 1994)
 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.
________________________________________________________________________________________

SUMMERVILLE GENERAL MERCHANDISING CO.

VS.
COURT OF APPEALS, HON. JUDGE ANTONIO EUGENIO, CHANG YU SHUI and JULIET LOPEZ
G. R. No. 158767, June 26, 2007

FACTS:
Petitioner Summerville is a corporation engaged in the business of trading, retailing and exporting/importing a
variety of merchandise. It is a holder of a Deed of Assignment executed in its favor by one Norma C. Gabriel,
owner/holder of several copyrights and patents over the Royal playing cards, Royal brand playing cards case,
design for the case and packaging of a deck of Royal playing cards.
Ang, President and General Manager of petitioner Summerville, personally appeared at the office of the Criminal
Investigation and Detective Division (CIDD) of the CIDG, PNP, in Camp Crame, Quezon City, to personally
complain and file a letter-complaint against several persons or establishments engaged in the unauthorized
manufacturing, distribution and sale of Royal brand playing cards, the design and mark of which are claimed to
have been duly patented/copyrighted and registered. Specifically, complainant Ang alleged that the aforesaid
actions were violative of Sec. 155 in relation to Sec. 170, both of Republic Act No. 829, otherwise known as the
 10

Intellectual Property Code of the Philippines. Among the establishments identified to be manufacturing and
selling playing cards using petitioner Summerville’s patented Joker design and plastic container was Arotech
International Corporation, owned by private respondents Chang Yu Shui, Juliet B. Lopes (a.k.a. Veronica Lopez),
and several John Does.
In consideration of the aforementioned letter-complaint, on 18 January 2002, P/INSP. Romualdo B. Cruz, Team
Leader, TM III-CIDD-CIDG, PNP, applied for a search warrant against private respondents, particularly Lilian D.
Rosales, Marivic Lim, Andy Tang, Chang Yu Shui, Huang Tsung Lian, Ramon Cheng, Diana Lusuan, Mary Chong
and Victor Uy, all of Arotech International Corporation.
The trial court conducted a clarificatory hearing and required the parties to submit their respective position
papers.

On 10 June 2004, the RTC-Manila, Branch 24, issued an Order partially granting the omnibus motion. It ordered
that the seized Crown brand playing cards and the three printing machines be released and returned to private
respondents; hence, only the containers of the playing cards were left in the custody of the petitioner
Summerville. According to the trial court, from a perusal of both parties container cases, it would appear that
they are practically the same in all aspects with the exception of the brand name ARO TECH etched in the dorsal
portion of respondents container.
Motion for reconsideration and the partial motion for reconsideration of petitioner Summerville and private
respondents respectively, were denied by the trial court.
The court of appeals also denied and dismissed the petition of Summerville, hence, this petition for review on
certiorari.
ISSUE:
Whether or not the seized playing cards inside the infringing plastic container cases may legally be considered
subject of the offense for infringement and unfair competition, and hence may be subject to seizure under a
search warrant under Section 3, Rule 126 of the 2000 Rules of Criminal Procedure.
RULING:
No. Certainly, the seized Crown playing cards are not the subject of the offense, fruits of the offense or used or
intended to be used as means of committing an offense. Said seized Crown playing cards are genuine and the
trademark is registered and owned by private respondents. There is no reason to justify their seizure just
because the same are inside the alleged infringed plastic container case.
Petitioners allegation of the indivisibility of the Crown playing cards and the alleged infringed plastic container
case is absurd. To assent to the said theory will be tantamount to taking of ones property without due process
of law. Under the circumstances of the case, the law permits the seizure of a personal property if the same is
the subject of the offense, fruit of the offense, or used or about to be used in committing an offense. Insofar as
the Crown playing cards are concerned, the private respondents are very much entitled to the recovery of the
same.
In the matter of the three (3) printing machines seized, there was no grave abuse of discretion in quashing the
warrant insofar as these machines are concerned.

The use of the printing machines in the manufacture or printing of fake Joker, is unsubstantiated. Since the
private respondents are engaged in the printing and manufacture of Crown playing cards, it is only normal and
expected that printing machines be found in their possession.
The facts presented in the application of the search warrant of the printing machines character in the offense
of unfair competition, is wanting. This is obviously the absence of personal knowledge on the part of the
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applicant regarding the use of the printing machines in the commission of the offense. Competent proof of the
printing machines use in the commission of the offense must be made in order to ascertain probable cause.
In the case at bar, petitioner Summerville does not dispute that the design and/or mark of the Crown brand
playing cards is owned by private respondents. In fact, there is no allegation that the design and/or mark of such
Crown brand playing cards is a reproduction, counterfeit, copy, or colorable imitation of another registered
mark legally owned by another; hence, no crime of trademark infringement appears to have been committed
or perpetrated to warrant the inference that the Crown brand playing cards are subject of the offense as
contemplated by Sec. 4 of Rule 126 of the Rules of Court. All the more telling is the contention of petitioner
Summerville that it is the plastic container/case and its marking that bear the reproduction, counterfeit, copy,
or colorable imitation of its registered mark. In other words, it is the design of the plastic container/case that is
alleged to have been utilized by private respondents to deceive the public into believing that their Crown brand
playing cards are the same as those manufactured by petitioner Summerville.