against petitioner, praying that the latter cease and desist from respondent manifested that it was no longer

was no longer interested in

PROSOURCE INTERNATIONAL, INC., using
G.R. the
No.brand
180073
PCO-GENOLS for being confusingly similar with recovering actual damages, petitioner was made to answer only
Petitioner, respondents trademark PYCNOGENOL. It, likewise, prayed for for attorneys fees amounting to P50,000.00.[15] For lack of
actual and nominal damages, as well as attorneys fees.[11]
Present: sufficient factual and legal basis, the court dismissed petitioners
counterclaim. Petitioners motion for reconsideration was likewise
InCORONA,
its Answer, J.,[12] petitioner contended that respondent could not denied.
file
Chairperson,
the infringement case considering that the latter is not the
- versus - registered
CHICO-NAZARIO,
owner of the trademark PYCNOGENOL, but one On appeal to the CA, petitioner failed to obtain a favorable
Horphag
VELASCO, Research
JR., Limited. It, likewise, claimed that the two decision. The appellate court explained that under the Dominancy
marks
NACHURA, were and
not confusingly similar. Finally, it denied liability, or the Holistic Test, PCO-GENOLS is deceptively similar to
since
PERALTA,
it discontinued
JJ. the use of the mark prior to the institution of PYCNOGENOL. It also found just and equitable the award of
the infringement case. Petitioner thus prayed for the dismissal of attorneys fees especially since respondent was compelled to
HORPHAG RESEARCH MANAGEMENT SA, thePromulgated:
complaint. By way of counterclaim, petitioner prayed that litigate.[16]
Respondent. respondent be directed to pay exemplary damages and attorneys
[13]
fees.
November 25, 2009 Hence, this petition, assigning the following errors:

x------------------------------------------------------------------------------------x During the pre-trial, the parties admitted the following: I. THAT THE COURT OF
APPEALS ERRED IN AFFRIMING
1. Defendant [petitioner] is a corporation duly THE RULING OF THE LOWER
DECISION organized and existing under the laws of the [COURT] THAT RESPONDENTS
Republic of the Philippines with business TRADEMARK P[YC]NOGENOLS
NACHURA, J.: address at No. 7 Annapolis Street, (SIC) WAS INFRINGED BY
Greenhills, San Juan, Metro Manila; PETITIONERS PCO-GENOLS.

2. The trademark PYCNOGENOL of the II. THAT THE COURT OF APPEALS

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) Decision[1] dated July 27, 2007 and
Resolution[2] dated October 15, 2007 in CA-G.R. CV No.
87556. The assailed decision affirmed the Regional Trial Court
(RTC)[3] Decision[4] dated January 16, 2006 and Order[5] 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
owner[6] 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 Complaint [10] for
Infringement of Trademark with Prayer for Preliminary Injunction
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
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. 166[18] for the acts committed until
December 31, 1997, and R.A. No. 8293[19] 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]
1
 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]
2

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:
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;
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.
G.R. No. L-32747 November 29, 1984

The following random list of 4. In case of a clearly unfounded FRUIT OF THE LOOM, INC., petitioner,
confusingly similar sounds in the matter of civil action or proceeding vs.
trademarks, culled from Nims, Unfair against the plaintiff; COURT OF APPEALS and GENERAL GARMENTS
Competition and Trade Marks, 1947, Vol. 1, CORPORATION, respondents.
will reinforce our view that SALONPAS and 5. Where the defendant acted in
LIONPAS are confusingly similar in sound: gross and evident bad faith in Lichauco, Picazo & Agcaoli Law Office for petitioner.
Gold Dust and Gold Drop; Jantzen and Jass- refusing to satisfy the plaintiffs
Sea; Silver Flash and Supper Flash; plainly valid, just and
Cascarete and Celborite; Celluloid and demandable claim;
Cellonite; Chartreuse and Charseurs; Cutex
and Cuticlean; Hebe and Meje; Kotex and 6. In actions for legal support; MAKASIAR, J.:
3
This is a petition for review on certiorari of the decision dated
October 8, 1970 of the former Court of Appeals reversing the
decision of the defunct Court of First Instance of Manila, Branch
XIV, ordering the cancellation of private respondent's registration
of the trademark FRUIT FOR EVE, enjoining it permanently from
using trademark and ordering it to pay herein petitioner
P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under the
laws of the State of Rhode Island, United States of America, is
the registrant of a trademark, FRUIT OF THE LOOM, in the
Philippines Patent Office and was issued two Certificates of
Registration Nos. 6227 and 6680, on November 29, 1957 and
July 26, 1958, respectively. The classes of merchandise covered
by Registration Certificate No. 6227 are, among others, men's,
women's and children's underwear, which includes women's
panties and which fall under class 40 in the Philippine Patent
Office's classification of goods. Registration Certificate No. 6680
covers knitted, netted and textile fabrics.
Private respondent, a domestic corporation, is the registrant of a
trademark FRUIT FOR EVE in the Philippine Patent Office and
was issued a Certificate of Registration No. 10160, on January
10, 1963 covering garments similar to petitioner's products like
women's panties and pajamas.
On March 31, 1965 petitioner filed before the lower court, a
complaint for infringement of trademark and unfair competition
against the herein private respondent. Petitioner principally
alleged in the complaint that private respondent's trademark
FRUIT FOR EVE is confusingly similar to its trademark FRUIT OF
THE LOOM used also on women's panties and other textile
products. Furthermore, it was also alleged therein that the color
get-up and general appearance of private respondent's hang tag
consisting of a big red apple is a colorable imitation to the hang
tag of petitioner.
On April 19, 1965, private respondent filed an answer invoking
the special defense that its registered trademark is not
confusingly similar to that of petitioner as the latter alleged.
Likewise, private respondent stated that the trademark FRUIT
FOR EVE is being used on ladies' panties and pajamas only
whereas petitioner's trademark is used even on men's underwear
and pajamas.
At the pre-trial on May 5, 1965, the following admissions were
made: (1) That the trademark FRUIT OF THE LOOM has been
registered with the Bureau of Patents and it does not bear the
notice 'Reg. Phil. Patent Off.', and (2) That the trademark FRUIT
FOR EVE has been registered with the Bureau of Patents and it
bears the notice "Reg. Phil. Patent Off." and (3) That at the time
of its registration, plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in favor of
herein petitioner, the dispositive portion of which reads as follows:
Judgment is, therefore, rendered ordering the
Bureau of Patents to cancel the registration of
the Trademark "Fruit for Eve", permanently
enjoining Defendant from using the trademark
"Fruit for Eve", ordering Defendant to pay
plaintiff the sum of P10,000.00 as attorney's
fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein
petitioner's appeal being centered on the failure of the trial court
to award damages in its favor. Private respondent, on the other
hand, sought the reversal of the lower court's decision.
On October 8, 1970, the former Court of Appeals, as already
stated, rendered its questioned decision reversing the judgment
of the lower court and dismissing herein petitioner's complaint.
Petitioner's motion for reconsideration having been denied, the
present petition was filed before this Court.
The first and second arguments advanced by petitioner are that
the respondent court committed an error in holding that the word
FRUIT, being a generic word, is not capable of exclusive
appropriation by petitioner and that the registrant of a trademark
is not entitled to the exclusive use of every word of his mark.
Otherwise stated, petitioner argues that the respondent court
committed an error in ruling that petitioner cannot appropriate
exclusively the word FRUIT in its trademark FRUIT OF THE
LOOM.
The third and fourth arguments submitted by petitioner which We
believe is the core of the present controversy, are that the
respondent court erred in holding that there is no confusing
similarity in sound and appearance between the two trademarks
in question. According to petitioner, the prominent and dominant
features in both of petitioner's and private respondent's trademark
are the word FRUIT and the big red apple design; that ordinary or
average purchasers upon seeing the word FRUIT and the big red
apple in private respondent's label or hang tag would be led to
believe that the latter's products are those of the petitioner, The
resolution of these two assigned errors in the negative will lay to
rest the matter in litigation and there is no need to touch on the
other issues raised by petitioner. Should the said questions be
resolved in favor of petitioner, then the other matters may be
considered.
Petitioner, on its fifth assigned error, blames the former Court of
Appeals for not touching the question of the fraudulent
registration of private respondent's trademark FRUIT FOR EVE.
As may be gleaned from the questioned decision, respondent
court did not pass upon the argument of petitioner that private
respondent obtained the registration of its trademark thru fraud or
misrepresentation because of the said court's findings that there
is no confusing similarity between the two trademarks in question.
Hence, said court has allegedly nothing to determine as to who
has the right to registration because both parties have the right to
have their respective trademarks registered.
Lastly, petitioner asserts that respondent court should have
awarded damages in its favor because private respondent had
clearly profited from the infringement of the former's trademark.
The main issue involved in this case is whether or not private
respondent's trademark FRUIT FOR EVE and its hang tag are
confusingly similar to petitioner's trademark FRUIT OF THE
LOOM and its hang tag so as to constitute an infringement of the
latter's trademark rights and justify the cancellation of the former.
In cases involving infringement of trademark brought before this
Court it has been consistently held that there is infringement of
trademark when the use of the mark involved would be likely to
cause confusion or mistake in the mind of the public or to deceive
purchasers as to the origin or source of the commodity (Co Tiong
Sa vs. Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette
Co. vs. Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil.
705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to
whether there is a confusing similarity in the contesting
trademarks than the labels or hang tags themselves. A visual
presentation of the labels or hang tags is the best argument for
one or the other, hence, We are reproducing hereunder pictures
of the hang tags of the products of the parties to the case. The
pictures below are part of the documentary evidence appearing
on page 124 of the original records.
Petitioner asseverates in the third and fourth assignment of
errors, which, as We have said, constitute the main argument,
that the dominant features of both trademarks is the word FRUIT.
In determining whether the trademarks are confusingly similar, a
comparison of the words is not the only determinant factor. The
trademarks in their entirety as they appear in their respective
labels or hang tags must also be considered in relation to the
4
goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also
on the other features appearing in both labels in order that he
may draw his conclusion whether one is confusingly similar to the
other (Bristol Myers Co. vs. Director of Patents, 17 SCRA 131).
In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE,
the lone similar word is FRUIT. WE agree with the respondent
court that by mere pronouncing the two marks, it could hardly be
said that it will provoke a confusion, as to mistake one for the
other. Standing by itself, FRUIT OF THE LOOM is wholly different
from FRUIT FOR EVE. WE do not agree with petitioner that the
dominant feature of both trademarks is the word FRUIT for even
in the printing of the trademark in both hang tags, the word
FRUIT is not at all made dominant over the other words.
As to the design and coloring scheme of the hang tags, We
believe that while there are similarities in the two marks like the
red apple at the center of each mark, We also find differences or
dissimilarities which are glaring and striking to the eye such as:
1. The shape of petitioner's hang tag is round with a base that
looks like a paper rolled a few inches in both ends; while that of
private respondent is plain rectangle without any base.
2. The designs differ. Petitioner's trademark is written in almost
semi-circle while that of private respondent is written in straight
line in bigger letters than petitioner's. Private respondent's tag
has only an apple in its center but that of petitioner has also
clusters of grapes that surround the apple in the center.
3. The colors of the hang tag are also very distinct from each
other. Petitioner's hang tag is fight brown while that of respondent
is pink with a white colored center piece. The apples which are
the only similarities in the hang tag are differently colored.
Petitioner's apple is colored dark red, while that of private
respondent is light red.
The similarities of the competing trademarks in this case are
completely lost in the substantial differences in the design and
general appearance of their respective hang tags. WE have
examined the two trademarks as they appear in the hang tags
submitted by the parties and We are impressed more by the
dissimilarities than by the similarities appearing therein. WE hold
that the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE
do not resemble each other as to confuse or deceive an ordinary
purchaser. The ordinary purchaser must be thought of as having,
and credited with, at least a modicum of intelligence (Carnation
Co. vs. California Growers Wineries, 97 F. 2d 80; Hyram Walke
and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to be able to
see the obvious differences between the two trademarks in The Case
question. Furthermore, We believe that a person who buys
petitioner's products and starts to have a liking for it, will not get
confused and reach out for private respondent's products when
she goes to a garment store. This is a petition for review[1] of the Decision dated 26 November
1999 of the Court of Appeals[2] finding respondent L.C. Big Mak
These findings in effect render immaterial the other errors Burger, Inc. not liable for trademark infringement and unfair
assigned by petitioner which are premised on the assumption that competition and ordering petitioners to pay
private respondent's trademark FRUIT FOR EVE had infringed respondents P1,900,000 in damages, and of its Resolution dated
petitioner's trademark FRUIT OF THE LOOM. 11 July 2000 denying reconsideration. The Court of Appeals
Decision reversed the 5 September 1994 Decision[3] of the
Regional Trial Court of Makati, Branch 137, finding respondent
WHEREFORE, THE DECISION APPEALED FROM IS L.C. Big Mak Burger, Inc. liable for trademark infringement and
AFFIRMED. COSTS AGAINST PETITIONER.
unfair competition.
SO ORDERED.
The Facts
MCDONALDS CORPORATION and G.R. No. 143993 Petitioner McDonalds Corporation (McDonalds) is a
MCGEORGE FOOD INDUSTRIES, INC., corporation organized under the laws of Delaware, United
Petitioners, States. McDonalds operates, by itself or through its franchisees,
a globalP chain of fast-food restaurants. McDonalds[4] owns a
r family of marks[5] including the Big Mac mark for its double-decker
e
hamburger sandwich.[6] McDonalds registered this trademark with
s the United States Trademark Registry on 16 October
e 1979.[7] Based on this Home Registration, McDonalds applied
n for the registration of the same mark in the Principal Register of
t the then Philippine Bureau of Patents, Trademarks and
: Technology (PBPTT), now the Intellectual Property Office
Davide, Jr., C.J., (IPO). Pending approval of its application, McDonalds introduced
Chairman, its Big Mac hamburger sandwiches in the Philippine market in
- versus - Quisumbing, September 1981. On 18 July 1985, the PBPTT allowed
Ynares-Santiago, registration of the Big Mac mark in the Principal Register based
Carpio, and on its Home Registration in the United States.
Azcuna, JJ.
Like its other marks, McDonalds displays the Big Mac
L.C. BIG MAK BURGER, INC., mark in items[8] and paraphernalia[9] in its restaurants, and in its
FRANCIS B. DY, EDNA A. DY, outdoor and indoor signages. From 1982 to 1990, McDonalds
RENE B. DY, WILLIAM B. DY, spent P10.5 million in advertisement for Big Mac hamburger
JESUS AYCARDO, ARACELI Promulgated: sandwiches alone.[10]
AYCARDO, and GRACE HUERTO,
Respondents. August 18, 2004 Petitioner McGeorge Food Industries (petitioner
McGeorge), a domestic corporation, is McDonalds Philippine
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - franchisee.[11]
----x
Respondent L.C. Big Mak Burger, Inc. (respondent
corporation) is a domestic corporation which operates fast-food
DECISION outlets and snack vans in Metro Manila and nearby
provinces.[12] Respondent corporations menu includes hamburger
sandwiches and other food items.[13] Respondents Francis B. Dy,
CARPIO, J.: Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli
Aycardo, and Grace Huerto (private respondents) are the
5
incorporators, stockholders and directors of respondent
corporation.[14]
On 21 October 1988, respondent corporation applied with the
PBPTT for the registration of the Big Mak mark for its hamburger
sandwiches. McDonalds opposed respondent corporations
application on the ground that Big Mak was a colorable imitation
of its registered Big Mac mark for the same food products.
McDonalds 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.
Having received no reply from respondent Dy,
petitioners on 6 June 1990 sued respondents in the Regional
Trial Court of Makati, Branch 137 (RTC), for trademark
infringement and unfair competition. In its Order of 11 July 1990,
the RTC issued a temporary restraining order (TRO) against
respondents enjoining them from using the Big Mak mark
in the operation of their business in the National Capital
Region.[15] On 16 August 1990, the RTC issued a writ of
preliminary injunction replacing the TRO.[16]
In their Answer, respondents admitted that they have been using
the name Big Mak Burger for their fast-food business.
Respondents claimed, however, that McDonalds does not have
an exclusive right to the Big Mac mark or to any other similar
mark. Respondents point out that the Isaiyas Group of
Corporations (Isaiyas Group) registered the same mark for
hamburger sandwiches with the PBPTT on 31 March 1979. One
Rodolfo Topacio (Topacio) similarly registered the same mark on
24 June 1983, prior to McDonalds registration on 18 July
1985. Alternatively, respondents claimed that they are not liable
for trademark infringement or for unfair competition, as the Big
Mak mark they sought to register does not constitute a colorable
imitation of the Big Mac mark. Respondents asserted that they
did not fraudulently pass off their hamburger sandwiches as
those of petitioners Big Mac hamburgers. [17] Respondents sought
damages in their counterclaim.
In their Reply, petitioners denied respondents claim that
McDonalds is not the exclusive owner of the Big Mac mark.
Petitioners asserted that while the Isaiyas Group and Topacio did
register the Big Mac mark ahead of McDonalds, the Isaiyas
Group did so only in the Supplemental Register of the PBPTT
and such registration does not provide any protection. McDonalds
disclosed that it had acquired Topacios rights to his registration in
a Deed of Assignment dated 18 May 1981.[18]
The Trial Courts Ruling
On 5 September 1994, the RTC rendered judgment (RTC
Decision) finding respondent corporation liable for trademark
infringement and unfair competition. However, the RTC
dismissed the complaint against private respondents and the
counterclaim against petitioners for lack of merit and insufficiency
of evidence. The RTC held:
Undeniably, the mark B[ig] M[ac] is a registered trademark for
plaintiff McDonalds, and as such, it is entitled [to] protection
against infringement.
xxxx
There exist some distinctions between the names B[ig] M[ac] and
B[ig] M[ak] as appearing in the respective signages, wrappers
and containers of the food products of the parties.But
infringement goes beyond the physical features of the
questioned name and the original name. There are still other
factors to be considered.
xxxx
Significantly, the contending parties are both in the business of
fast-food chains and restaurants. An average person who is
hungry and wants to eat a hamburger sandwich may not be
discriminating enough to look for a McDonalds restaurant and buy
a B[ig] M[ac] hamburger. Once he sees a stall selling hamburger
sandwich, in all likelihood, he will dip into his pocket and order a
B[ig] M[ak] hamburger sandwich. Plaintiff McDonalds fast-food
chain has attained wide popularity and acceptance by the
consuming public so much so that its air-conditioned food outlets
and restaurants will perhaps not be mistaken by many to be the
same as defendant corporations mobile snack vans located along
busy streets or highways. But the thing is that what is being sold
by both contending parties is a food item a hamburger sandwich
which is for immediate consumption, so that a buyer may easily
be confused or deceived into thinking that the B[ig]
M[ak] hamburger sandwich he bought is a food-product of plaintiff
McDonalds, or a subsidiary or allied outlet thereof. Surely,
defendant corporation has its own secret ingredients to make its
hamburger sandwiches as palatable and as tasty as the other
brands in the market, considering the keen competition among
mushrooming hamburger stands and multinational fast-food
chains and restaurants. Hence, the trademark B[ig] M[ac]
has been infringed by defendant corporation when it used the
name B[ig] M[ak] in its signages, wrappers, and containers in
connection with its food business. xxxx
Did the same acts of defendants in using the name B[ig] M[ak] as
a trademark or tradename in their signages, or in causing the
name B[ig] M[ak] to be printed on the wrappers and containers of
their food products also constitute an act of unfair competition
under Section 29 of the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is
broader and more inclusive than the law concerning the
infringement of trademark, which is of more limited range, but
within its narrower range recognizes a more exclusive right
derived by the adoption and registration of the trademark by the
person whose goods or services are first associated therewith.
xxx Notwithstanding the distinction between an action for
trademark infringement and an action for unfair competition,
however, the law extends substantially the same relief to the
injured party for both cases. (See Sections 23 and 29 of Republic
Act No. 166)
Any conduct may be said to constitute unfair competition if the
effect is to pass off on the public the goods of one man as the
goods of another. The choice of B[ig] M[ak] as tradename by
defendant corporation is not merely for sentimental reasons but
was clearly made to take advantage of the reputation, popularity
and the established goodwill of plaintiff McDonalds. For, as stated
in Section 29, a person is guilty of unfair competition who in
selling his goods shall give them the general appearance, of
goods of another manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other
feature of their appearance, which would likely influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or
dealer. Thus, plaintiffs have established their valid cause of action
against the defendants for trademark infringement and unfair
competition and for damages.[19]
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs
McDonalds Corporation and McGeorge Food Industries, Inc. and
against defendant L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16
August 1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount of P400,000.00,
exemplary damages in the amount of P100,000.00, and attorneys
fees and expenses of litigation in the amount of P100,000.00;
6

3. The complaint against defendants Francis B. Dy, Edna A. Dy,
Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and
Grace Huerto, as well as all counter-claims, are dismissed for
lack of merit as well as for insufficiency of evidence.[20]
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment
(Court of Appeals Decision) reversing the RTC Decision and
ordering McDonalds to pay respondents P1,600,000
as actual and compensatory damages and P300,000 as moral
damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on
this Court that the use of defendants-appellants of its corporate
name the whole L.C. B[ig] M[ak] B[urger], I[nc]. which appears on
their food packages, signages and advertisements is an
infringement of their trademark B[ig] M[ac] which they use to
identify [their] double decker sandwich, sold in a Styrofoam box
packaging material with the McDonalds logo of umbrella M
stamped thereon, together with the printed mark in red bl[o]ck
capital letters, the words being separated by a
single space. Specifically, plaintiffs-appellees argue that
defendants-appellants use of their corporate name is a colorable
imitation of their trademark Big Mac.
xxxx
To Our mind, however, this Court is fully convinced that no
colorable imitation exists. As the definition dictates, it is
not sufficient that a similarity exists in both names, but that more
importantly, the over-all presentation, or in their essential,
substantive and distinctive parts is such as would likely MISLEAD
or CONFUSE persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way the trademark
B[ig] M[ac] is being used by plaintiffs-appellees and corporate
name L.C. Big Mak Burger, Inc. by defendants-appellants, would
readily reveal that no confusion could take place, or that the
ordinary purchasers would be misled by it. As pointed out by
defendants-appellants, the plaintiffs-appellees trademark is used
to designate only one product, a double decker sandwich sold in
a Styrofoam box with the McDonalds logo. On the other
hand, what the defendants-appellants corporation is using is not a
trademark for its food product but a business or corporate
name. They use the business name L.C. Big Mak Burger, Inc. in
their restaurant business which serves diversified food items such
as siopao, noodles, pizza, and sandwiches such as hotdog, ham,
fish burger and hamburger. Secondly, defendants-appellants To constitute unfair competition therefore it
corporate or business name appearing in the food packages and must necessarily follow that there was malice and that the entity
signages are written in silhouette red-orange letters with the b concerned was in bad faith.
and m in upper case letters. Above the words Big Mak are the
upper case letter L.C.. Below the words Big Mak are the words In the case at bar, We find no sufficient evidence adduced by
Burger, Inc. spelled out in upper case letters. Furthermore, said plaintiffs-appellees that defendants-appellants deliberately tried to
corporate or business name appearing in such food packages pass off the goods manufactured by them for those of plaintiffs-
and signages is always accompanied by the company mascot, a appellees. The mere suspected similarity in the sound of the
young chubby boy named Maky who wears a red T-shirt with the defendants-appellants corporate name with the plaintiffs-
upper case m appearing therein and a blue lower appellees trademark is not sufficient evidence to conclude unfair
garment. Finally, the defendants-appellants food packages are competition. Defendants-appellants explained that the name
made of plastic material. M[ak] in their corporate name was derived from both the first
names of the mother and father of defendant Francis Dy, whose
xxxx names are Maxima and Kimsoy. With this explanation, it is up to
the plaintiffs-appellees to prove bad faith on the part
xxx [I]t is readily apparent to the naked eye that there appears a of defendants-appellants. It is a settled rule that the law always
vast difference in the appearance of the product and presumes good faith such that any person who seeks to be
the manner that the tradename Big Mak is being used and awarded damages due to acts of another has the burden
presented to the public. As earlier noted, there are glaring of proving that the latter acted in bad faith or with ill motive. [21]
dissimilarities between plaintiffs-appellees trademark and
defendants-appellants corporate name. Plaintiffs-appellees
product carrying the trademark B[ig] M[ac] is a double decker Petitioners sought reconsideration of the Court of Appeals
sandwich (depicted in the tray mat containing photographs of the Decision but the appellate court denied their motion in its
various food products xxx sold in a Styrofoam box with the Resolution of 11 July 2000.
McDonalds logo and trademark in red, bl[o]ck capital letters
printed thereon xxx at a price which is more expensive than the Hence, this petition for review.
defendants-appellants comparable food products. In order to buy
a Big Mac, a customer needs to visit an air-conditioned Petitioners raise the following grounds for their petition:
McDonalds restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the umbrella M, and I. THE COURT OF APPEALS ERRED IN
its mascot Ronald McDonald. A typical McDonalds restaurant FINDING THAT RESPONDENTS
boasts of a playground for kids, a second floor to CORPORATE NAME L.C. BIG MAK
accommodate additional customers, a drive-thru to allow BURGER, INC. IS NOT A COLORABLE
customers with cars to make orders without alighting from their IMITATION OF THE MCDONALDS
vehicles, the interiors of the building are well-lighted, distinctly TRADEMARK BIG MAC, SUCH
decorated and painted with pastel colors xxx. In buying a B[ig] COLORABLE IMITATION BEING
M[ac], it is necessary to specify it by its trademark. Thus, a AN ELEMENT OF TRADEMARK
customer needs to look for a McDonalds and enter it first before INFRINGEMENT.
he can find a hamburger sandwich which carry the mark Big
Mac. On the other hand, defendants-appellants sell their goods A. Respondents use the words
through snack vans xxxx Big Mak as trademark for their
products and not merely as their
Anent the allegation that defendants-appellants are guilty of unfair business or corporate name.
competition, We likewise find the same untenable.
B. As a trademark, respondents
Unfair competition is defined as the employment of deception Big Mak is undeniably and
or any other means contrary to good faith by which a unquestionably similar to
person shall pass off the goods manufactured by him or in which petitioners Big Mac trademark
he deals, or his business, or service, for those of another who has based on the dominancy test
already established good will for his similar good, business or and the idem sonans test
services, or any acts calculated to produce the same result (Sec. resulting inexorably in confusion
29, Rep. Act No. 166, as amended). on the part of the consuming
public.
7
 Here, petitioners raise questions of fact and law in assailing the
II. THE COURT OF APPEALS ERRED IN Court of Appeals findings on respondent corporations non-liability
REFUSING TO CONSIDER THE for trademark infringement and unfair competition. Ordinarily, the
INHERENT SIMILARITY BETWEEN THE Court can deny due course to such a petition. In view, however,
MARK BIG MAK AND THE WORD of the contradictory findings of fact of the RTC and Court of
MARK BIG MAC AS AN INDICATION OF Appeals, the Court opts to accept the petition, this being one of
RESPONDENTS INTENT TO DECEIVE the recognized exceptions to Section 1.[26] We took a similar
OR DEFRAUD FOR PURPOSES course of action in Asia Brewery, Inc. v. Court of
OF ESTABLISHING UNFAIR Appeals[27] which also involved a suit for trademark infringement
COMPETITION.[22] and unfair competition in which the trial court and the Court of
Appeals arrived at conflicting findings.
Petitioners pray that we set aside the Court of Appeals Decision
and reinstate the RTC Decision.
In their Comment to the petition, respondents question On the Manner Respondents Used
the propriety of this petition as it allegedly raises only questions of Big Mak in their Business
fact. On the merits, respondents contend that the Court of
Appeals committed no reversible error in finding them not liable
for trademark infringement and unfair competition and in ordering
petitioners to pay damages.
Petitioners contend that the Court of Appeals erred in ruling that
the corporate name L.C. Big Mak Burger, Inc. appears in the
The Issues packaging for respondents hamburger products and not the
words Big Mak only.
The issues are:
The contention has merit.
1. Procedurally, whether the questions raised in this
petition are proper for a petition for review under Rule 45. The evidence presented during the hearings on petitioners
motion for the issuance of a writ of preliminary injunction shows
2. On the merits, (a) whether respondents used the that the plastic wrappings and plastic bags used by respondents
words Big Mak not only as part of the corporate name L.C. Big for their hamburger sandwiches bore the words Big Mak. The
Mak Burger, Inc. but also as a trademark for their hamburger other descriptive words burger and 100% pure beef were set in
products, and (b) whether respondent corporation is liable for smaller type, along with the locations of
trademark infringement and unfair competition. [23] branches.[28] Respondents cash invoices simply refer to their
hamburger sandwiches as Big Mak.[29] It is respondents snack
The Courts Ruling vans that carry the words L.C. Big Mak Burger, Inc. [30]
It was only during the trial that respondents presented in
evidence the plastic wrappers and bags for their hamburger
The petition has merit. sandwiches relied on by the Court of Appeals.[31]Respondents
plastic wrappers and bags were identical with those petitioners
presented during the hearings for the injunctive writ except that
On Whether the Questions Raised in the Petition are the letters L.C. and the words Burger, Inc. in respondents
Proper for a Petition for Review evidence were added above and below the words Big
Mak, respectively. Since petitioners complaint was based on facts
existing before and during the hearings on the injunctive writ, the
A party intending to appeal from a judgment of the Court of facts established during those hearings are the proper factual
Appeals may file with this Court a petition for review under bases for the disposition of the issues raised in this petition.
Section 1 of Rule 45 (Section 1)[24] raising only questions of law.
A question of law exists when the doubt or difference arises on
what the law is on a certain state of facts. There is a question of On the Issue of Trademark Infringement
fact when the doubt or difference arises on the truth or falsity of
the alleged facts. [25]
Section 22 (Section 22) of Republic Act No. 166, as amended
(RA 166), the law applicable to this case, [32] defines trademark
infringement as follows:
Infringement, what constitutes. Any person
who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy
or colorable imitation of any registered mark or
trade-name in connection with the sale,
offering for sale, or advertising of any goods,
business or services on or in connection
with which such use is likely to cause
confusion or mistake or to deceive purchasers
or others as to the source or origin of such
goods or services, or identity of such
business; or [2] reproduce, counterfeit, copy,
or colorably imitate any such mark or trade-
name and apply such reproduction,
counterfeit, copy, or colorable imitation to
labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be
used upon or in connection with such goods,
business or services, shall be liable to a civil
action by the registrant for any or all of the
remedies herein provided.[33]
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 plaintiffs mark; (2) the
plaintiffs ownership of the mark; and (3) the use of the mark or its
colorable imitation by the alleged infringer results in likelihood of
confusion.[34] Of these, it is the element of likelihood of confusion
that is the gravamen of trademark infringement. [35]
On the Validity of the Big MacMark
and McDonalds Ownership of such Mark
A mark is valid if it is distinctive and thus not barred from
registration under Section 4[36] of RA 166 (Section 4). However,
once registered, not only the marks validity but also the
registrants ownership of the mark is prima facie presumed.[37]
Respondents contend that of the two words in the Big
Mac mark, it is only the word Mac that is valid because the word
8
Big is generic and descriptive (proscribed under Section 4[e]),
and thus incapable of exclusive appropriation. [38]
The contention has no merit. The Big Mac mark, which should be
treated in its entirety and not dissected word for word, [39] is
neither generic nor descriptive. Generic marks are commonly
used as the name or description of a kind of goods,[40] such as
Lite for beer[41] or Chocolate Fudge for chocolate soda
drink.[42] 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, [43] such as
Arthriticare for arthritis medication.[44] On the contrary, Big Mac
falls under the class of fanciful or arbitrary marks as it bears no
logical relation to the actualcharacteristics of the product it
represents.[45] As such, it is highly distinctive and thus valid.
Significantly, the trademark Little Debbie for snack cakes was
found arbitrary or fanciful.[46]
The Court also finds that petitioners have duly
established McDonalds exclusive ownership of the Big Mac
mark. Although Topacio and the Isaiyas Group registered the Big
Mac mark ahead of McDonalds, Topacio, as petitioners
disclosed, had already assigned his rights to McDonalds. The
Isaiyas Group, on the other hand, registered its trademark only in
the Supplemental Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no real
protection.[47] Indeed, we have held that registration in the
Supplemental Register is not even a prima facie evidence of the
validity of the registrants exclusive right to use the mark on the
goods specified in the certificate.[48]
On Types of Confusion
Section 22 covers two types of confusion arising from the use
of similar or colorable imitation marks, namely, confusion of
goods (product confusion) and confusion of business (source or
origin confusion). In Sterling Products International, Incorporated
v. Farbenfabriken Bayer Aktiengesellschaft, et al.,[49] the Court
distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion.
The first is the confusion of goods in which
event the ordinarily prudent purchaser would
be induced to purchase one product in the
belief that he was purchasing the other. xxx
The other is the confusion of business: Here
though the goods of the parties are different,
the defendants product is such as might
reasonably be assumed to originate with the
plaintiff, and the public would then be
deceived either into that belief or into the
belief that there is some connection between
the plaintiff and defendant which, in fact, does
not exist.
Under Act No. 666,[50] the first trademark law, infringement was
limited to confusion of goods only, when the infringing mark is
used on goods of a similar kind.[51]Thus, no relief was afforded to
the party whose registered mark or its colorable imitation is used
on different although related goods. To remedy this situation,
Congress enacted RA 166 on 20 June 1947. In defining
trademark infringement, Section 22 of RA 166 deleted the
requirement in question and expanded its scope to include such
use of the mark or its colorable imitation that is
likely to result in confusion on the
source or origin of such goods or services, or identity of such
business.[52] Thus, while there is confusion of goods when the
products are competing, confusion of business exists when the
products are non-competing but related enough to produce
confusion of affiliation.[53]
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents use of the Big Mak mark on
respondents hamburgers results in confusion of goods,
particularly with respect to petitioners hamburgers labeled Big
Mac. Thus, petitioners alleged in their complaint:
1.15. Defendants have unduly
prejudiced and clearly infringed upon the
property rights of plaintiffs in the McDonalds
Marks, particularly the mark B[ig]
M[ac]. Defendants unauthorized acts are
likely, and calculated, to confuse, mislead or
deceive the public into believing that
the products and services offered by
defendant Big Mak Burger, and the business it
is engaged in, are approved and sponsored
by, or affiliated with, plaintiffs.[54] (Emphasis
supplied)
Since respondents used the Big Mak mark on the same
goods, i.e. hamburger sandwiches, that petitioners Big Mac mark
is used, trademark infringement through confusion of goods is a
proper issue in this case.
Petitioners also claim that respondents use of the Big Mak mark
in the sale of hamburgers, the same business that petitioners are
engaged in, results in confusion of
business. Petitioners alleged in their complaint:
1.10. For some period of time, and
without the consent of plaintiff
McDonalds nor its licensee/franchisee, plaintiff
McGeorge, and in clear violation of plaintiffs
exclusive right to use and/or appropriate the
McDonalds marks, defendant Big Mak Burger
acting through individual defendants, has
been operating Big Mak Burger, a fast food
restaurant business dealing in the sale of
hamburger and cheeseburger sandwiches,
french fries and other food products, and has
caused to be printed on the wrapper
of defendants food products and incorporated
in its signages the name Big Mak Burger,
which is confusingly similar to and/or is a
colorable imitation of the plaintiff
McDonalds mark B[ig] M[ac], xxx. Defendant
Big Mak Burger has thus unjustly created the
impression that its business is approved and
sponsored by, or affiliated with, plaintiffs. xxxx
2.2 As a consequence of the acts
committed by defendants, which unduly
prejudice and infringe upon the property rights
of plaintiffs McDonalds and McGeorge as the
real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the
McDonalds marks, and which are likely to
have caused confusion or deceived the
public as to the true source, sponsorship or
affiliation of defendants food products and
restaurant business, plaintiffs have suffered
and continue to suffer actual damages in the
form of injuryto their business reputation and
goodwill, and of the dilution of the distinctive
quality of the McDonalds marks, in particular,
the mark B[ig] M[ac].[55] (Emphasis supplied)
Respondents admit that their business includes selling
hamburger sandwiches, the same food product that petitioners
sell using the Big Mac mark. Thus, trademark infringement
through confusion of business is also a proper issue in this case.
Respondents assert that their Big Mak hamburgers
cater mainly to the low-income group while petitioners Big Mac
hamburgers cater to the middle and upper income groups. Even if
this is true, the likelihood of confusion of business remains, since
the low-income group might be led to believe that the Big Mak
hamburgers are the low-end hamburgers marketed by
petitioners. After all, petitioners have the exclusive right to use
the Big Mac mark. On the other hand, respondents would benefit
by associating their low-end hamburgers, through the use of the
9
Big Mak mark, with petitioners high-end Big Mac hamburgers,
leading to likelihood of confusion in the identity of business.
Respondents further claim that petitioners use the Big
Mac mark only on petitioners double-decker hamburgers, while
respondents use the Big Mak mark on hamburgers and other
products like siopao, noodles and pizza. Respondents also point
out that petitioners sell their Big Mac double-deckers in a
styrofoam box with the McDonalds logo and trademark in red,
block letters at a price more expensive than the hamburgers of
respondents. In contrast, respondents sell their Big Mak
hamburgers in plastic wrappers and plastic bags. Respondents
further point out that petitioners restaurants are air-conditioned
buildings with drive-thru service, compared to respondents mobile
vans.
These and other factors respondents cite cannot negate
the undisputed fact that respondents use their Big Mak mark on
hamburgers, the same food product that petitioners sell with the
use of their registered mark Big Mac. Whether a hamburger is
single, double or triple-decker, and whether wrapped in plastic or
styrofoam, it remains the same hamburger food product. Even
respondents use of the Big Mak mark on non-hamburger food
products cannot excuse their infringement of petitioners
registered mark, otherwise registered marks will lose their
protection under the law.
The registered trademark owner may use his mark on
the same or similar products, in different segments of the market,
and at different price levels depending on variations of the
products for specific segments of the market. The Court has
recognized that the registered trademark owner enjoys protection
in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:
Modern law recognizes that the
protection to which the owner of a trademark
is entitled is not limited to guarding his goods
or business from actual market competition
with identical or similar products of the parties,
but extends to all cases in which the use by a
junior appropriator of a trade-mark or trade-
name is likely to lead to a confusion of source,
as where prospective purchasers would be
misled into thinking that the complaining party
has extended his business into the field (see
148 ALR 56 et seq; 53 Am Jur. 576) or is
in any way connected with the activities of the
infringer; or when it forestalls the normal
potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576,
577).[56](Emphasis supplied)
On Whether Respondents Use of the Big Mak
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic
test.[57] The dominancy test focuses on the similarity of
the prevalent features of the competing trademarks that might
cause confusion. 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.
The Court of Appeals, in finding that there is no
likelihood of confusion that could arise in the use of respondents
Big Mak mark on hamburgers, relied on the holistic test. Thus,
the Court of Appeals ruled that it is not sufficient that a similarity
exists in both name(s), but that more importantly,
the overall presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or CONFUSE
persons in the ordinary course of purchasing the genuine
article. The holistic test considers the two marks in their entirety,
as they appear on the goods with their labels and packaging. It is
not enough to consider their words and compare the spelling and
pronunciation of the words.[58]
Respondents now vigorously argue that the Court of
Appeals application of the holistic test to this case is correct and
in accord with prevailing jurisprudence.
This Court, however, 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.[59] Courts will consider more
the aural and visual impressions created by the marks in the
public mind, giving little weight to factors like prices, quality, sales
outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of
Patents,[60] the Court ruled:
xxx It has been consistently held that
the question of infringement of a trademark is
to be determined by the test of dominancy.
Similarity in size, form and color, while
relevant, is not conclusive. If the competing
trademark contains the main or essential or
dominant features of another, and confusion
and deception is likely to result, infringement
takes place. Duplication or imitation is
not necessary; nor is it necessary that the
infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495,
citing Eagle White Lead Co. vs. Pflugh (CC)
180 Fed. 579). The question at issue in cases
of infringement of trademarks is whether the
use of the marks involved would be likely to
cause confusion or mistakes in the mind of the
public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F.
2d 588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v.
Director of Patents,[61] Phil. Nut Industry, Inc. v. Standard Brands
Inc.,[62] Converse Rubber Corporation v. Universal Rubber
Products, Inc.,[63] and Asia Brewery, Inc. v. Court of Appeals.[64] In
the 2001 case of Societe Des Produits Nestl, S.A. v. Court of
Appeals,[65] the Court explicitly rejected the holistic test in this
wise:
[T]he totality or holistic test is contrary to the
elementary postulate of the law on trademarks
and unfair competition that confusing similarity
is to be determined on the basis of visual,
aural, connotative comparisons
and overall impressions engendered by the
marks in controversy as they
are encountered in the realities of the
marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into
law in Section 155.1 of the Intellectual Property Code which
defines infringement as the colorable imitation of a registered
mark xxx or a dominant feature thereof.
Applying the dominancy test, the Court finds that
respondents use of the Big Mak mark results in likelihood of
confusion. First, Big Mak sounds exactly the same as Big
Mac. Second, the first word in Big Mak is exactly the same as the
first word in Big Mac. Third, the first two letters in Mak are the
same as the first two letters in Mac. Fourth, the last letter in Mak
while a k sounds the same as c when the word Mak is
pronounced. Fifth, in Filipino, the letter k replaces c in spelling,
thus Caloocan is spelled Kalookan.
In short, aurally the two marks are the same, with the
first word of both marks phonetically the same, and the second
word of both marks also phonetically the same. Visually, the two
marks have both two words and six letters, with the first word
of both marks having the same letters and the second word
10
having the same first two letters. In spelling, considering the
Filipino language, even the last letters of both marks are the
same.
Clearly, respondents have adopted in Big Mak not only
the dominant but also almost all the features of Big Mac. Applied
to the same food product of hamburgers, the two marks will likely
result in confusion in the public mind.
The Court has taken into account the aural effects of the words
and letters contained in the marks in determining the issue
of confusing similarity. Thus, in Marvex Commercial Co., Inc. v.
Petra Hawpia & Co., et al.,[66] 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. (Emphasis supplied)
Certainly, Big Mac and Big Mak for hamburgers create even
greater confusion, not only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big
Mak by their sound. When one hears a Big Mac or Big Mak
hamburger advertisement over the radio, one would not know
whether the Mac or Mak ends with a c or a k.
Petitioners aggressive promotion of the Big Mac mark, as borne
by their advertisement expenses, has built goodwill and
reputation for such mark making it one of the easily recognizable
marks in the market today. This increases the likelihood that
consumers will mistakenly associate petitioners hamburgers and
business with those of respondents.
Respondents inability to explain sufficiently how and why they
came to choose Big Mak for their hamburger
sandwiches indicates their intent to imitate petitioners Big Mac On the Issue of Unfair Competition
mark. Contrary to the Court of Appeals finding, respondents claim
that their Big Mak mark was inspired by the first names of Section 29 (Section 29)[73] of RA 166 defines unfair competition,
respondent Dys mother (Maxima) and father (Kimsoy) is not thus:
credible. As petitioners well noted: xxxx
[R]espondents, particularly Respondent Mr. Any person who will employ deception
Francis Dy, could have arrived at a more or any other means contrary to good faith by
creative choice for a corporate name by using which he shall pass off the goods
the names of his parents, especially since he manufactured by him or in which he deals, or
was allegedly driven by sentimental his business, or services for those of the one
reasons. For one, he could have put his having established such goodwill, or
fathers name ahead of his mothers, as is who shall commit any acts calculated to
usually done in this patriarchal society, and produce said result, shall be guilty of unfair
derived letters from said names in that competition, and shall be subject to an
order. Or, he could have taken an action therefor.
equal number of letters (i.e., two) from each In particular, and without in any way limiting
name, as is the more usual thing done. Surely, the scope of unfair competition, the
the more plausible reason behind following shall be deemed guilty of unfair
Respondents choice of the word M[ak], competition:
especially when taken in conjunction with the (a) Any person, who in selling his
word B[ig], was their intent to take advantage goods shall give them the general appearance
of Petitioners xxx B[ig] M[ac] trademark, with of goods of another manufacturer or dealer,
their alleged sentiment-focused explanation either as to the goods themselves or in the
merely thought of as a wrapping of the packages in which they are
convenient, albeit unavailing, excuse or contained, or the devices or words thereon, or
defense for such an unfair choice of name.[67] in any feature of their appearance,
which would be likely to influence purchasers
to believe that the goods offered are those of
Absent proof that respondents adoption of the Big Mak a manufacturer or dealer, other
mark was due to honest mistake or was fortuitous,[68] the than the actual manufacturer or dealer, or who
inescapable conclusion is that respondents adopted the Big Mak otherwise clothes the goods with such
mark to ride on the coattails of the more established Big Mac appearance as shalldeceive the public and
mark.[69] This saves respondents much of the expense in defraud another of his legitimate trade,
advertising to create market recognition of their mark and or any subsequent vendor of such goods
hamburgers.[70] or any agent of any vendor engaged in selling
such goods with a like purpose;
Thus, we hold that confusion is likely to result in the (b) Any person who by any artifice, or device,
public mind. We sustain petitioners claim of trademark or who employs any other means calculated to
infringement. induce the false belief that such person is
offering the services of another who has
On the Lack of Proof of identified such services in the mind of the
Actual Confusion public; or
(c) Any person who shall make any false
statement in the course of trade or
Petitioners failure to present proof of actual confusion does not who shall commit any other act contrary to
negate their claim of trademark infringement. As noted good faith of a nature calculated to discredit
in American Wire & Cable Co. v. Director of Patents,[71] Section the goods, business or services of another.
22 requires the less stringent standard of likelihood of confusion (Emphasis supplied)
only. While proof of actual confusion is the best evidence of
infringement, its absence is inconsequential. [72]
11
 The essential elements of an action for unfair
competition are (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the public and
defraud a competitor.[74] The confusing similarity may or may not
result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the
goods. The intent to deceive and defraud may be inferred from
the similarity of the appearance of the goods as offered for sale to
the public.[75]Actual fraudulent intent need not be shown.[76]
Unfair competition is broader than trademark
infringement and includes passing off goods with or without
trademark infringement. Trademark infringement is a form of
unfair competition.[77] Trademark infringement constitutes unfair
competition when there is not merely likelihood of confusion, but
also actual or probable deception on the public because of the
general appearance of the goods. There can be trademark
infringement without unfair competition as when the infringer
discloses on the labels containing the mark that he manufactures
the goods, thus preventing the public from being deceived that
the goods originate from the trademark owner. [78]
To support their claim of unfair competition, petitioners
allege that respondents fraudulently passed off their hamburgers
as Big Mac hamburgers. Petitioners add that respondents
fraudulent intent can be inferred from the similarity of the marks in
question.[79]
Passing off (or palming off) takes place where the
defendant, by imitative devices on the general appearance of the
goods, misleads prospective purchasers into buying his
merchandise under the impression that they are buying that of his
competitors.[80] Thus, the defendant gives his goods the general
appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods
of petitioners and respondents in this wise:
The mark B[ig] M[ac] is used by
plaintiff McDonalds to identify its double
decker hamburger sandwich. The packaging
material is a styrofoam box with the
McDonalds logo and trademark in red with
block capital letters printed on it. All letters of
the B[ig] M[ac] mark are also in red and block
capital letters. On the other hand, defendants
B[ig] M[ak] script print is in orange with only
the letter B and M being capitalized and the
packaging material is plastic wrapper. xxxx
Further, plaintiffs logo and mascot are the
umbrella M and Ronald
McDonalds, respectively, compared to the
mascot of defendant Corporation which is a
chubby boy called Macky displayed or printed
between the words Big and Mak.[81](Emphasis
supplied)
Respondents point to these dissimilarities as proof that they did
not give their hamburgers the general appearance of petitioners
Big Mac hamburgers.
The dissimilarities in the packaging are minor compared
to the stark similarities in the words that give respondents Big
Mak hamburgers the general appearance of petitioners Big Mac
hamburgers. Section 29(a) expressly provides that the similarity
in the general appearance of the goods may be in the devices
or words used on the wrappings. Respondents have applied on
their plastic wrappers and bags almost the same words that
petitioners use on their styrofoam box. What attracts the attention
of the buying public are the words Big Mak which are almost the
same, aurally and visually, as the words Big Mac. The
dissimilarities in the material and other devices are insignificant
compared to the glaring similarity in the words used in the
wrappings.
Section 29(a) also provides that the defendant gives his
goods the general appearance of goods of another
manufacturer. Respondents goods are hamburgers which are
also the goods of petitioners. If respondents sold egg sandwiches
only instead of hamburger sandwiches, their use of the Big Mak
mark would not give their goods the general appearance of
petitioners Big Mac hamburgers. In such case, there is only
trademark infringement but no unfair competition. However, since
respondents chose to apply the Big Mak mark on hamburgers,
just like petitioners use of the Big Mac mark on hamburgers,
respondents have obviously clothed their goods with the general
appearance of petitioners goods.
Moreover, there is no notice to the public that the Big
Mak hamburgers are products of L.C. Big Mak Burger,
Inc. Respondents introduced during the trial plastic wrappers and
bags with the words L.C. Big Mak Burger, Inc. to inform the public
of the name of the seller of the hamburgers. However, petitioners
introduced during the injunctive hearings plastic wrappers and
bags with the Big Mak mark without the name L.C. Big Mak
Burger, Inc. Respondents belated presentation of plastic
wrappers and bags bearing the name of L.C. Big Mak Burger,
Inc. as the seller of the hamburgers is an after-thought designed
to exculpate them from their unfair business conduct. As earlier
stated, we cannot consider respondents evidence since
petitioners complaint was based on facts existing before and
during the injunctive hearings.
Thus, there is actually no notice to the public that the
Big Mak hamburgers are products of L.C. Big Mak Burger, Inc.
and not those of petitioners who have the exclusive right to the
Big Mac mark. This clearly shows respondents intent to deceive
the public. Had respondents placed a notice on their plastic
wrappers and bags that the hamburgers are sold by L.C. Big Mak
Burger, Inc., then they could validly claim that they did not intend
to deceive the public. In such case, there is only trademark
infringement but no unfair competition. [82] Respondents, however,
did not give such notice. We hold that as found by the RTC,
respondent corporation is liable for unfair competition.
The Remedies Available to Petitioners
Under Section 23[83] (Section 23) in relation to Section 29 of RA
166, a plaintiff who successfully maintains trademark
infringement and unfair competition claims is entitled to injunctive
and monetary reliefs. Here, the RTC did not err in issuing the
injunctive writ of 16 August 1990 (made permanent in its Decision
of 5 September 1994) and in ordering the payment
of P400,000 actual damages in favor of petitioners. The injunctive
writ is indispensable to prevent further acts of infringement by
respondent corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent corporations gross
sales for three (1988-1989 and 1991) of the six years (1984-
1990) respondents have used the Big Mak mark.[84]
The RTC also did not err in awarding exemplary
damages by way of correction for the public good[85] in view of the
finding of unfair competition where intent to deceive the public is
essential. The award of attorneys fees and expenses of litigation
is also in order.[86]
WHEREFORE, we GRANT the instant petition. We SET
ASIDE the Decision dated 26 November 1999 of the Court of
Appeals and its Resolution dated 11 July 2000
and REINSTATE the Decision dated 5 September 1994 of the
Regional Trial Court of Makati, Branch 137, finding respondent
L.C. Big Mak Burger, Inc. liable for trademark infringement and
unfair competition.
SO ORDERED.
G.R. No. L-20635 March 31, 1966
ETEPHA, A.G., petitioner,
vs.
DIRECTOR OF PATENTS and WESTMONT
PHARMACEUTICALS, INC., respondents.
McClure, Salas and Gonzalez, for petitioner.
Sycip, Salazar, Manalo, Luna and Associates, for respondent.
12
SANCHEZ, J.:
To the question: May trademark ATUSSIN be registered, given
the fact that PERTUSSIN, another trademark, had been
previously registered in the Patent Office? — the Director of
Patents answered affirmatively. Hence this appeal.
On April 23, 1959, respondent Westmont Pharmaceuticals, Inc., a
New York corporation, sought registration of trademark "Atussin"
placed on its "medicinal preparation of expectorant antihistaminic,
bronchodilator sedative, ascorbic acid (Vitamin C) used in the
treatment of cough". The trademark is used exclusively in the
Philippines since January 21, 1959.1
Petitioner, Etepha, A. G., a Liechtenstin (principality) corporation,
objected. Petitioner claims that it will be damaged because
Atussin is so confusedly similar to its Pertussin (Registration No.
6089, issued on September 25, 1957) used on a preparation for
the treatment of coughs, that the buying public will be misled into
believing that Westmont's product is that of petitioner's which
allegedly enjoys goodwill.
1. The objects of a trademark are "to point out distinctly
the origin or ownership of the articles to which it is
affixed, to secure to him who has been instrumental in
bringing into market a superior article or merchandise
the fruit of his industry and skill, and to prevent fraud
and imposition."2 Our over-all task then is to ascertain
whether or not Atussin so resembles Pertussin "as to be
likely, when applied to or used in connection with the
goods ... of the applicant, to cause confusion or mistake
or to deceive purchasers".3 And, we are to be guided by
the rule that the validity of a cause for infringement is
predicated upon colorable imitation. The phrase
"colorable imitation" denotes such a "close or ingenious
imitation as to be calculated to deceive ordinary
persons, or such a resemblance to the original as to
deceive an ordinary purchaser, giving such attention as
a purchaser usually gives, and to cause him to
purchase the one supposing it to be the other."4
2. That the word "tussin" figures as a component of both
trademarks is nothing to wonder at. The Director of
Patents aptly observes that it is "the common practice in
the drug and pharmaceutical industries to 'fabricate'
marks by using syllables or words suggestive of the
ailments for which they are intended and adding thereto
distinctive prefixes or suffixes".5 And appropriately to be
considered now is the fact that, concededly, the "tussin"
(in Pertussin and Atussin) was derived from the Latin
root-word "tussis" meaning cough.6
"Tussin" is merely descriptive; it is generic; it furnishes
to the buyer no indication of the origin of the goods; it is
open for appropriation by anyone. It is accordingly
barred from registration as trademark. With
jurisprudence holding the line, we feel safe in making
the statement that any other conclusion would result in
"appellant having practically a monopoly"7 of the word
"tussin" in a trademark.8
While "tussin" by itself cannot thus be used exclusively
to identify one's goods, it may properly become the
subject of a trademark "by combination with another
word or phrase".9 And this union of words is reflected in
petitioner's Pertussin and respondent's Atussin, the first
with prefix "Per" and the second with Prefix
"A".1äwphï1.ñët
3. A practical approach to the problem of similarity or
dissimilarity is to go into the whole of the two
trademarks pictured in their manner of display.
Inspection should be undertaken from the viewpoint of a
prospective buyer. The trademark complained of should
be compared and contrasted with the purchaser's
memory (not in juxtaposition) of the trademark said to
be infringed. 10 Some such factors as "sound;
appearance; form, style, shape, size or format; color;
ideas connoted by marks; the meaning, spelling, and
pronunciation, of words used; and the setting in which
the words appear" may be considered. 11 For, indeed,
trademark infringement is a form of unfair
competition. 12
We take a casual look at the two labels — without
spelling out the details — bearing in mind the easy-to-
remember earmarks thereof. Respondent's label
underscores the trademark Atussin in bold, block letters
horizontally written. In petitioner's, on the other hand,
Pertussin is printed diagonally upwards and across in
semiscript style with flourishes and with only the first
letter "P" capitalized. Each label plainly shows the
source of the medicine: petitioner's at the foot bears
"Etepha Ltd. Schaan Fl", and on top, "Apothecary E.
Taeschner's"; respondent's projects "Westmont
Pharmaceuticals, Inc. New York, USA" at the bottoms,
and on the lower left side the word "Westmont" upon a
white diamond shaped enclosure and in red ink — a
color different from that of the words above and below
it. Printed prominently along the left, bottom and right
edges of petitioner's label are indications of the use: "for
bronchial catarrh — whopping-cough — coughs and
asthma". Respondent's for its part briefly represents
what its produce actually is - a "cough syrup". The two
labels are entirely different in colors, contents,
arrangement of words thereon, sizes, shapes and
general appearance. The contrasts in pictorial effects
and appeals to the eye is so pronounced that the label
of one cannot be mistaken for that of the other, not even
by persons unfamiliar with the two trademarks. 13
On this point the following culled from a recent decision
of the United States Court of Customs and Patent
Appeals (June 15, 1956) is persuasive: 14
Confusion is likely between trademarks,
however, only if their over-all presentations in
any of the particulars of sound, appearance,
or meaning are such as would lead the
purchasing public into believing that the
products to which the marks are applied
emanated from the same source. In testing
this issue, fixed legal rules exist — if not in
harmony, certainly in abundance — but, in the
final analysis, the application of these rules in
any given situation necessarily reflects a
matter of individual judgment largely
predicated on opinion. There is, however, and
can be no disagreement with the rule that the
purchaser is confused, if at all, by the
marks as a whole.
4. We now consider exclusively the two words —
Pertussin and Atussin — as they appear on the
respective labels. As previously adverted to, these
words are presented to the public in different styles of
writing and methods of design. The horizontal plain,
block letters of Atussin and the diagonally and
artistically upward writing of Pertussin leave distinct
visual impressions. One look is enough to denude the
mind of that illuminating similarity so essential for a
trademark infringement case to prosper.
5. As we take up Pertussin and Atussin once again, we
cannot escape notice of the fact that the two words do
not sound alike — when pronounced. There is not much
phonetic similarity between the two. The Solicitor
General well-observed that in Pertussin the
pronunciation of the prefix "Per", whether correct or
incorrect, includes a combination of three letters
P, e and r; whereas, in Atussin the whole starts with the
single letter A added to suffix "tussin". Appeals to the
ear are disimilar. And this, because in a word
combination, the part that comes first is the most
13
 pronounced. An expositor of the applicable rule here is
the decision in the Syrocol-Cheracol
controversy. 15 There, the ruling is that trademark
Syrocol (a cough medicine preparation) is not
confusedly similar to trademark Cheracol (also a cough
medicine preparation). Reason: the two words "do not
look or sound enough alike to justify a holding of
trademark infringement", and the "only similarity is in
the last syllable, and that is not uncommon in names
given drug compounds".
6. In the solution of a trademark infringement problem,
regard too should be given to the class of persons who
buy the particular product and the circumstances
ordinarily attendant to its acquisition. 16 The medicinal
preparation clothed with the trademarks in question, are
unlike articles of everyday use such as candies, ice
cream, milk, soft drinks and the like which may be freely
obtained by anyone, anytime, anywhere. Petitioner's
and respondent's products are to be dispensed upon
medical prescription. The respective labels say so. An
intending buyer must have to go first to a licensed
doctor of medicine; he receives instructions as to what
to purchase; he reads the doctor's prescription; he
knows what he is to buy. He is not of the incautious,
unwary, unobservant or unsuspecting type; he
examines the product sold to him; he checks to find out
whether it conforms to the medical prescription. The
common trade channel is the pharmacy or the
drugstore. Similarly, the pharmacist or druggist verifies
the medicine sold. The margin of error in the acquisition
of one for the other is quite remote.
We concede the possibility that buyers might be able to obtain
Pertussin or Attusin without prescription. When this happens,
then the buyer must be one throughly familiar with what he
intends to get, else he would not have the temerity to ask for a
medicine — specifically needed to cure a given ailment. In which
case, the more improbable it will be to palm off one for the other.
For a person who purchases with open eyes is hardly the man to
be deceived.
For the reasons given, the appealed decision of the respondent
Director of Patents — giving due course to the application for the
registration of trademark ATTUSIN is hereby affirmed. Costa
against petitioner. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L.,
Barrera, Regala, Makalintal, Bengzon, J. P., and Zaldivar, JJ.,
concur.
Dizon, J., took no part.
G.R. No. L-19297 December 22, 1966
MARVEX COMMERCIAL CO., INC., petitioner,
vs.
PETRA HAWPIA and CO., and THE DIRECTOR OF
PATENTS, respondents.
Sta. Ana and Lasam for petitioner.
A.S. Donato for respondent Petra Hawpia and Co.
Office of the Solicitor General for respondent Director of Patents.
CASTRO, J.:
Petra Hawpia & Co., a partnership duly organized under the laws
of the Philippines and doing business at 543 M. de Santos
(Botica Divisoria), Manila (hereinafter referred to as the
applicant), on October 14, 1958 filed a petition for the registration
of the trademark "LIONPAS" used on medicated plaster, with the
Philippine Patent Office, asserting its continuous use in the
Philippines since June 9, 1958.1 The Marvex Commercial Co.,
Inc., a corporation also duly organized under the laws of the
Philippines (hereinafter referred to as the oppositor), on July 24,
1959 filed an opposition thereto, alleging that the registration of
such trademark would violate its right to and interest in the
trademark "SALONPAS" used on another medicated plaster,
which is registered in its name under Certificate of Registration
5486, issued by the Director of Patents on September 29, 1956,
and that both trademarks when used on medicated plaster would
mislead the public as they are confusingly similar.
After due hearing, the Director of Patents in his decision of
August 18, 1961 dismissed the opposition and gave due course
to the petition, stating in part that "confusion, mistake, or
deception among the purchasers will not likely and reasonably
occur" when both trademarks are applied to medicated plaster.
The oppositor moved to have the decision reconsidered. This
motion was denied in a resolution of November 27, 1961. The
oppositor then interposed the present appeal.
The issues stated by the Director of Patents in his decision are
the same ones now tendered by the oppositor for resolution,
namely, (1) Is the applicant the owner of the trademark
"LIONPAS"?; (2) Should the application be rejected on the
ground that the applicant made false representations in placing
the phrase "Reg. Phil. Pat. Off." below the trademark "LIONPAS"
on its cartons?, and (3) Is the trademark "LIONPAS" confusingly
similar to the trademark "SALONPAS"?
We do not consider the second issue of any importance; we will
thus proceed to resolve the first and third issues.
Is the applicant the owner of the trademark "LIONPAS?"
Under sections 2 and 2-A of the Trade Mark Law, as amended,
the right to register trademarks, tradenames and service marks
by any person, corporation, partnership or association domiciled
in the Philippines or in any foreign country, is based on
ownership, and the burden is upon the applicant to prove such
ownership (Operators, Inc. vs. The Director of Patents, et al., L-
17901, Oct. 29, 1965).
The Director of Patents found, on the strength of exhibits 5 and 6
for the applicant, that the latter has "satisfactorily shown" its
ownership of the trademark sought to be registered. Exhibit 5 is a
letter dated June 20, 1958, sent by "OSAKA BOEKI KAISHA,
LTD." to the applicant which tends to show that the former, for a
$1 consideration, has assigned, ceded, and conveyed all its
"rights, interests and goodwill in the tradename LIONPAS
Medicated Plaster . . ." in favor of the latter. Exhibit 6 is a joint
"SWORN STATEMENT" which appears to have been executed
by the presidents of "OSAKA BOEKI KAISHA, LTD." and
"ASUNARO PHARMACEUTICAL INDUSTRY CO.", and tends to
confirm the contents of exhibit 5.
A careful scrutiny of exh. 5 will reveal, however, that the sender
of the letter, "OSAKA BOEKI KAISHA LTD.", and which appears
to be the seller, is merely a representative of the manufacturer
"ASUNARO PHARMACEUTICAL INDUSTRY CO." There is no
proof that as such representative, the former has been authorized
by the latter to sell the trademark in question. Moreover, exh. 5
on its face appears to have been signed only by someone whose
position in the company's "Sundries Dept." is not described; the
signature is not legible. It is even contradicted by exh. 6. While
exh. 5 shows that "OSAKA BOEKI KAISHA, LTD." is a
representative of "ASUNARO PHARMACEUTICAL INDUSTRY
CO."; exh. 6 asserts that the former is not a representative of the
latter, but that it is the owner of the trademark "LIONPAS" (par. 2,
exh. 6). At all events, neither averment can be accorded the
weight of an assignment of ownership of the trademark in
question under the Trade Mark Law. Exh. 5 is not acknowledged.
Exh. 6 does not bear the acknowledgment contemplated by the
aforesaid law, particularly by the last paragraph of section 37 and
paragraph 2 of section 31 of R.A. 166, as amended, which
provide as follows:
The registration of a mark under the provisions of this
section shall be independent of the registration in the
country of origin and the duration, validity or transfer in
the Philippines of such registration shall be governed by
the provisions of this Act. (Sec. 37, last par.) (Emphasis
ours)
14
 The assignment must be in writing, acknowledged
before a notary public or other officer authorized to
administer oaths or perform other notarial acts and
certified under the hand and official seal of the notary or
other officer. (Sec. 31, par. 2)
In this case, although a sheet of paper is attached to exh. 6, on
which is typewritten a certification that the signatures of the
presidents of the two named companies (referring to the
signatures in exh. 6) "have been duly written by themselves", this
sheet is unmarked, unpaged, unsigned, undated and unsealed.
We have thumbed the record in quest of any definitive evidence
that it is a correct translation of the Japanese characters found on
another unmarked and unpaged sheet, and have found none.
It follows from the above disquisition that exhs. 5 and 6 are
legally insufficient to prove that the applicant is the owner of the
trademark in question.
As a matter of fact, the other evidence on record conclusively
belies the import of exh. 6. Thus exh. A states that the applicant
is merely the "exclusive distributor" in the Philippines of the
"LIONPAS" penetrative plaster; exh. A-1 describes the applicant
as the "Philippine sole distributor" of "LIONPAS"; exh. B simply
states that "LIONPAS" is "manufactured exclusively for Petra
Hawpia & Co. for distribution in the Philippines."
Not being the owner of the trademark "LIONPAS" but being
merely an importer and/or distributor of the said penetrative
plaster, the applicant is not entitled under the law to register it in
its name (Operators, Inc. vs. Director of Patents, supra).
Upon the third issue, the applicant preliminarily asserts that there
is no justification for this Court to disturb any finding made by the
Director of Patents on appeal. This assertion is not tenable.
Although the Director of Patents is the official vested by law with
the power to administer the registration of trademarks and
tradenames, his opinion on the matter of similarity or dissimilarity
of trademarks and tradenames is not conclusive upon this Court
which may pass upon such determination.
The "SALONPAS" mark is not before this Court. Our meticulous
examination of the entire record has failed to yield a sample of
such mark. We have therefore proceeded to analyze the two
marks, vis-a-vis each other, on the basis of what we can derive
from the record for a comparative study. And our conclusion, in
disagreement with that of the Director of Patents, is not based on
a comparison of the appearance, form, style, shape, size or
format of the trademarks, which we can not make because, as we
have already observed, the "SALONPAS" mark is not before us,
but on a comparison of the spelling, sound and pronunciation of
the two words.
It is our considered view that the trademarks "SALONPAS" and
"LIONPAS" are confusingly similar in sound.
Both these words have the same suffix, "PAS", which is used to
denote a plaster that adheres to the body with curative powers.
"Pas, being merely descriptive, furnishes no indication of the
origin of the article and therefore is open for appropriation by
anyone (Ethepa vs. Director of Patents, L-20635, March 31,
1966) and may properly become the subject of a trademark by
combination with another word or phrase.
Two letters of "SALONPAS" are missing in "LIONPAS"; the first
letter a and the letter s. Be that as it may, when the two words are
pronounced, the sound effects are confusingly similar. And where
goods are advertised over the radio, similarity in sound is of
especial significance (Co Tiong Sa vs. Director of Patents, 95
Phil. 1 citing Nims, The Law of Unfair Competition and
Trademarks, 4th ed., vol. 2, pp. 678-679). "The importance of this
rule is emphasized by the increase of radio advertising in which
we are deprived of help of our eyes and must depend entirely on
the ear" (Operators, Inc. vs. Director of Patents, supra).
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 "Jazz-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 "TradeMark Law
and Practice", pp. 419-421, cites, 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.
In the case at bar, "SALONPAS" and "LIONPAS", when spoken,
sound very much alike. Similarity of sound is sufficient ground for
this Court to rule that the two marks are confusingly similar when
applied to merchandise of the same descriptive properties (see
Celanese Corporation of America vs. E. I. Du Pont, 154 F. 2d.
146, 148).
The registration of "LIONPAS" cannot therefore be given due
course.
ACCORDINGLY, the decision of the respondent Director of
Patents is set aside, and the petition below of the respondent
Petra Hawpia & Co. is hereby dismissed, at the cost of the latter
respondent.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal,
Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.
SOCIETE DES PRODUITS G.R. No. 172276
NESTLE, S.A.,
Petitioner,
Present:
CARPIO, J., Chairperson,
NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.
MARTIN T. DY, JR., Promulgated:
Respondent. August 8, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
----x
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the
Rules of Court. The petition challenges the 1 September 2005
Decision and 4 April 2006 Resolution of the Court of Appeals in
CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy,
Jr.) not liable for trademark infringement. The Court of Appeals
reversed the 18 September 1998 Decision of the Regional Trial
Court (RTC), Judicial Region 7, Branch 9, Cebu City, in Civil
Case No. CEB-19345.
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign
corporation organized under the laws of Switzerland. It
manufactures food products and beverages. As evidenced by
Certificate of Registration No. R-14621 issued on 7 April 1969 by
the then Bureau of Patents, Trademarks and Technology
Transfer, Nestle owns the NAN trademark for its line of infant
15
powdered milk products, consisting of PRE-NAN, NAN-H.A.,
NAN-1, and NAN-2. NAN is classified under Class
6 diatetic preparations for infant feeding.
Nestle distributes and sells its NAN milk products all over the
Philippines. It has been investing tremendous amounts of
resources to train its sales force and to promote the NAN milk
products through advertisements and press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered
milk from Australia and repacks the powdered milk into three
sizes of plastic packs bearing the name NANNY. The packs
weigh 80, 180 and 450 grams and are sold for P8.90, P17.50
and P39.90, respectively. NANNY is is also classified under
Class 6 full cream milk for adults in [sic] all ages. Dy, Jr.
distributes and sells the powdered milk in Dumaguete, Negros
Oriental, Cagayan de Oro, and parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to
refrain from using NANNY and to undertake that he would stop
infringing the NAN trademark. Dy, Jr. did not act
on Nestles request. On 1 March 1990, Nestle filed before the
RTC, Judicial Region 7, Branch 31, Dumaguete City, a
complaint against Dy, Jr. for infringement.Dy, Jr. filed a motion to
dismiss alleging that the complaint did not state a cause of
action. In its 4 June 1990 order, the trial court dismissed the
complaint. Nestle appealed the 4 June 1990 order to the Court of
Appeals. In its 16 February 1993 Resolution, the Court of
Appeals set aside the 4 June 1990 order and remanded the case
to the trial court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95,
Nestle filed with the trial court a motion to transfer the case to the
RTC, Judicial Region 7, Branch 9, CebuCity, which was
designated as a special court for intellectual property rights.
The RTCs Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr.
liable for infringement. The trial court held:
If determination of infringement shall only be limited on whether or
not the mark used would likely cause confusion or mistake in the
minds of the buying public or deceive customers, such in [sic] the
most considered view of this forum would be highly unlikely to
happen in the instant case. This is because upon comparison of
the plaintiffs NAN and defendants NANNY, the following features
would reveal the absence of any deceptive tendency in
defendants NANNY: (1) all NAN products are contained tin cans
[sic], while NANNY are contained in plastic packs; (2) the
predominant colors used in the labels of NAN products
are blue and white, while the predominant colors in the
plastic packings of NANNY are blue and green; (3) the labels of
NAN products have at the bottom portion an elliptical shaped
figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name Nestle, while the plastic packs of
NANNY have a drawing of milking cows lazing on a vast green
field, back-dropped with snow covered mountains; (4) the word
NAN are [sic] all in large, formal and conservative-like block
letters, while the word NANNY are [sic] all in small and irregular
style of letters with curved ends; and (5) all NAN products are
milk formulas intended for use of [sic] infants, while NANNY is an
instant full cream powdered milk intended for use of [sic] adults.
The foregoing has clearly shown that infringement in the instant
case cannot be proven with the use of the test of dominancy
because the deceptive tendency of the unregistered trademark
NANNY is not apparent from the essential features of the
registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et
al. L-29971, Aug. 31, 1982, the Supreme Court took the occasion
of discussing what is implied in the definition of infringement when
it stated: Implicit in this definition is the concept that the goods
must be so related that there is likelihood either of confusion of
goods or business. x x x But as to whether trademark
infringement exists depends for the most part upon whether or not
the goods are so related that the public may be, or is actually,
deceived and misled that they came from the same maker or
manufacturer. For non-competing goods may be those which,
though they are not in actual competition, are so related to each
other that it might reasonably be assumed that they originate from
one manufacturer. Non-competing goods may also be those
which, being entirely unrelated, could not reasonably be assumed
to have a common source. In the former case of related goods,
confusion of business could arise out of the use of similar marks;
in the latter case of non-related goods, it could not.
Furthermore, in said case the Supreme Court as well discussed
on when goods may become so related for purposes of
infringement when it stated: Goods are related when they belong
to the same class or have same descriptive properties; when they
possess the same physical attributes or essential characteristics
with reference to their form, composition, texture or quality. They
may also be related because they serve the same purpose or are
sold in grocery stores. x x x
Considering that defendants NANNY belongs to the same class
as that of plaintiffs NAN because both are food products, the
defendants unregistered trade mark NANNY should be held an
infringement to plaintiffs registered trademark NAN because
defendants use of NANNY would imply that it came from the
manufacturer of NAN. Furthermore, since the word nanny means
a childs nurse, there might result the not so remote probability
that defendants NANNY may be confused with infant formula
NAN despite the aparent [sic] disparity between the features of
the two products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of
Appeals.
The Court of Appeals Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed
the trial courts 18 September 1998 Decision and found Dy,
Jr. not liable for infringement. The Court of Appeals held:
[T]he trial court appeared to have made a finding that there is no
colorable imitation of the registered mark NAN in Dys use of
NANNY for his own milk packs. Yet it did not stop there. It
continued on applying the concept of related goods.
The Supreme Court utlilized the concept of related goods in the
said case of Esso Standard Easter, Inc. versus Court of Appeals,
et al. wherein two contending parties used the same trademark
ESSO for two different goods, i.e. petroleum products and
cigarettes. It rules that there is infringement of trademark
involving two goods bearing the same mark or label, even if the
said goods are non-competing, if and only if they are so related
that the public may be, or is actually, deceived that they originate
from the one maker or manufacturer.Since petroleum products
and cigarettes, in kind and nature, flow through different trade
channels, and since the possibility of confusion is unlikely in the
general appearances of each mark as a whole, the Court held in
this case that they cannot be so related in the context of
infringement.
In applying the concept of related goods in the present case, the
trial court haphazardly concluded that since plaintiff-
appellees NAN and defendant-appellants NANNY belong to the
same class being food products, the unregistered NANNY should
be held an infringement of Nestles NAN because the use of
NANNY would imply that it came from the manufacturer of
NAN. Said court went on to elaborate further: since the word
NANNY means a childs nurse, there might result the not so
remote probability that defendants NANNY may be confused with
infant formula NAN despite the aparent (sic) disparity between the
features of the two products as discussed above.
The trial courts application of the doctrine laid down by the
Supreme Court in the Esso Standard case aforementioned and
the cases cited therein is quite misplaced. The goods of the two
contending parties in those cases bear similar marks or
labels: Esso for petroleum products and cigarettes, Selecta for
biscuits and milk, X-7 for soap and perfume, lipstick and nail
polish. In the instant case, two dissimilar marks are involved
plaintiff-appellees NAN and defendant-appellants
16
NANNY. Obviously, the concept of related goods cannot be
utilized in the instant case in the same way that it was used in
the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned
judges that in resolving infringement or trademark cases in the
Philippines, particularly in ascertaining whether one trademark is
confusingly similar to or is a colorable imitation of another,
precedent must be studied in the light of the facts of the particular
case. Each case must be decided on its own merits. In the more
recent case of Societe Des Produits Nestle S.A. Versus Court of
Appeals, the High Court further stressed that due to the
peculiarity of the facts of each infringement case, a judicial forum
should not readily apply a certain test or standard just because of
seeming similarities. The entire panoply of elements constituting
the relevant factual landscape should be comprehensively
examined.
While it is true that both NAN and NANNY are milk products and
that the word NAN is contained in the word NANNY, there are
more glaring dissimilarities in the entirety of their trademarks as
they appear in their respective labels and also in relation to the
goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also
on the other features appearing in both labels in order that he
may draw his conclusion whether one is confusingly similar to the
other. Even the trial court found these glaring dissimilarities as
above-quoted. We need not add more of these factual
dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and
NAN-2, are all infant preparations, while NANNY is a full cream
milk for adults in [sic] all ages. NAN milk products are sold in tin
cans and hence, far expensive than the full cream milk NANNY
sold in three (3) plastic packs containing 80, 180 and 450 grams
and worth P8.90, P17.50 and P39.90 per milk pack. The labels of
NAN products are of the colors blue and white and have at the
bottom portion an elliptical shaped figure containing inside it a
drawing of nestling birds, which is overlapped by the trade-name
Nestle. On the other hand, the plastic packs NANNY have a
drawing of milking cows lazing on a vast green field, back-
dropped with snow-capped mountains and using the predominant
colors of blue and green. The word NAN are [sic] all in large,
formal and conservative-like block letters, while the word NANNY
are [sic] all in small and irregular style of letters with curved
ends. With these material differences apparent in the packaging
of both milk products, NANNY full cream milk cannot possibly be
an infringement of NAN infant milk.
Moreover, NAN infant milk preparation is more expensive than
NANNY instant full cream milk. The cheaper price of NANNY
would give, at the very first instance, a considerable warning to
the ordinary purchaser on whether he is buying an infant milk or a
full cream milk for adults. A cursory examination of the packaging
would confirm the striking differences between the products in
question.
In view of the foregoing, we find that the mark NANNY is not
confusingly similar to NAN. Dy therefore cannot be held liable for
infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006
Resolution, the Court of Appeals denied the motion for lack of
merit. Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Courts Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
Infringement, what constitutes. Any person who shall use, without
the consent of the registrant, any reproduction, counterfeit, copy
or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any
goods, business or services on or in connection with which such
use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit,
copy or colorably imitate any such mark or trade-name and apply
such reproduction, counterfeit, copy, or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with
such goods, business or services, shall be liable to a civil action
by the registrant for any or all of the remedies herein provided.
Section 155 of R.A. No. 8293 states:
Remedies; Infringement. Any person who shall, without the
consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a
registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements
intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive, shall be liable in a
civil action for infringement by the registrant for the remedies
hereinafter set forth: Provided, That the infringement takes place
at the moment any of the acts stated in Subsection 155.1 or this
subsection are committed regardless of whether there is actual
sale of goods or services using the infringing material.
In Prosource International, Inc. v. Horphag Research
Management SA, the Court laid down the elements of
infringement under R.A. Nos. 166 and 8293:
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.
On the other hand, the elements of infringement under R.A. No.
8293 are as follows:
17

The trademark being infringed is registered in the
Intellectual Property Office; however, in infringement of trade
name, the same need not be registered;
The trademark or trade name is reproduced,
counterfeited, copied, or colorably imitated by the infringer;
The infringing mark or trade name is used in connection
with the sale, offering for sale, or advertising of any goods,
business or services; or the infringing mark or trade name is
applied to labels, signs, prints, packages, wrappers, receptacles
or advertisements intended to be used upon or in connection with
such goods, business or services;
The use or application of the infringing mark or trade
name is likely to cause confusion or mistake or to deceive
purchasers or others as to the goods or services themselves or
as to the source or origin of such goods or services or
the idenity of such business; and
It is without the consent of the trademark or trade name
owner or the assignee thereof.
Among the elements, the element of likelihood of confusion is the
gravamen of trademark infringement. There are two types of
confusion in trademark infringement: confusion of goods and
confusion of business. In Sterling Products International, Inc.
v. Farbenfabriken Bayer Aktiengesellschaft, the Court
distinguished the two types of confusion:
Callman notes two types of confusion. The first
is the confusion of goods in which event the
ordinarily prudent purchaser would be induced
to purchase one product in the belief that he
was purchasing the other. In which case,
defendants goods are then bought as the
plaintiffs, and the poorer quality of the former
reflects adversely on the plaintiffs
reputation. The other is the confusion of
business: Here though the goods of the
parties are different, the defendants product is
such as might reasonably be assumed to
originate with the plaintiff, and the public would
then be deceived either into that belief or into
the belief that there is some connection
between the plaintiff and defendant which, in
fact, does not exist.
There are two tests to determine likelihood of confusion: the
dominancy test and holistic test. The dominancy test focuses on
the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement
takes place when the competing trademark contains the essential
features of another. Imitation or an effort to imitate is
unnecessary. The question is whether the use of the marks is
likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including
labels and packaging, in determining confusing similarity. The
focus is not only on the predominant words but also on the other
features appearing on the labels.
In cases involving trademark infringement, no set of rules can be
deduced. Each case must be decided on its own
merits. Jurisprudential precedents must be studied in the light of
the facts of each particular case. In McDonalds Corporation
v. MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining
whether one trademark is confusingly similar
to another, no set rules can be deduced
because each case must be decided on its
merits.In such cases, even more than in any
other litigation, precedent must be studied in
the light of the facts of the particular
case. That is the reason why in trademark
cases, jurisprudential precedents should be
applied only to a case if they are specifically in
point.
In the light of the facts of the present case, the Court holds that
the dominancy test is applicable. In recent cases with similar
factual milieus, the Court has consistently applied the dominancy
test. In Prosource International, Inc., the Court applied the
dominancy test in holding that PCO-GENOLS is confusingly
similar to PYCNOGENOL. The Court held:
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 through
combination with another word or phrase such as
PYCNOGENOL, Exhibits A to A-3. Furthermore, although the
letters Y between P and C, N between O and C and S after L are
missing in the [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 is sounds as they were pronounced, clearly
indicates that purchasers could be misled into believing that they
are the same and/or originates from a common source and
manufacturer.
We find no cogent reason to depart from such conclusion.
This is not the first time the Court takes into account the aural
effects of the words and letters contained in the marks in
determining the issue of confusing
similarity. In MarvexCommercial Co., Inc. v. Petra Hawpia & Co.,
et al., cited in McDonalds Corporation v. L.C. Big Mak Burger,
Inc., 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 [sic], as
coming within the purview of the idem sonans rule, Yusea and U-
C-A, Steinway Pianos and Steinberg Pianos, and Seven-Up and
Lemon-Up. In Co Tiong vs. Director of Patents, this Court
unequivocally said that Celdura and Condura are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67
Phil. 795 that the name Lusolin is an infringement of the
18
trademark Sapolin, as the sound of the two names is almost the
same.
In McDonalds Corporation v. MacJoy Fastfood Corporation, the
Court applied the dominancy test in holding that MACJOY is
confusingly similar to MCDONALDS.The Court held:
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.
xxxx
Applying the dominancy test to the instant case, the Court finds
that herein petitioners MCDONALDS and respondents MACJOY
marks are are confusingly similar with each other that an ordinary
purchaser can conclude an association or relation between the
marks.
To begin with, both marks use the corporate M design logo and
the prefixes Mc and/or Mac as dominant features. x x x
For sure, it is the prefix Mc, and abbreviation of Mac, which
visually and aurally catches the attention of the consuming
public. Verily, the word MACJOY attracts attention the same way
as did McDonalds, MacFries, McSpaghetti, McDo, Big Mac and
the rest of the 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.
In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court
applied the dominancy test in holding that BIG MAK is confusingly
similar to BIG MAC. The Court held:
This Court x x x has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features
in the competing marks in determining whether they are
confusingly similar. Under the dominancy test, courts give greater
weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the
aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales
outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the
Court ruled:
x x x It has been consistently held that the question of
infringement of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication
or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. (G. HeilmanBrewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at
issue in cases of infringement of trademarks is whether the use of
the marks involved would be likely to cause confusion or mistakes
in the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; x x x)
xxxx
The test of dominancy is now explicitly incorporated into law in
Section 155.1 of the Intellectual Property Code which defines
infringement as the colorable imitation of a registered mark
x x x or a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use
of the Big Mak mark results in likelihood of confusion. First,
Big Mak sounds exactly the same as Big Mac.Second, the first
word in Big Mak is exactly the same as the first word in Big
Mac. Third, the first two letters in Mak are the same as the first
two letters in Mac. Fourth, the last letter Mak while a k sounds the
same as c when the word Mak is pronounced. Fifth, in Filipino,
the letter k replaces c in spelling, thus Caloocan is
spelled Kalookan.
In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court
applied the dominancy test in holding that FLAVOR MASTER is
confusingly similar to MASTER ROAST and MASTER
BLEND. The Court held:
While this Court agrees with the Court of Appeals detailed
enumeration of differences between the respective trademarks of
the two coffee products, this Court cannot agree that totality test
is the one applicable in this case. Rather, this Court believes that
the dominancy test is more suitable to this case in light of its
peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual,
aural, connotative comparisons and overall impressions
engendered by the marks in controversy as they are encountered
in the realities of the marketplace. The totality or holistic test only
relies on visual comparison between two trademarks whereas the
dominancy test relies not only on the visual but also on the aural
and connotative comparisons and overall impressions between
the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied
the test of dominancy and held that:
From the evidence at hand, it is sufficiently established that the
word MASTER is the dominant feature of opposers mark. The
word MASTER is printed across the middle portion of the label in
bold letters almost twice the size of the printed word
ROAST. Further, the word MASTER has always been given
emphasis in the TV and radio commercials and other
advertisements made in promoting the product. x x x In due time,
because of these advertising schemes the mind of the buying
public had come to learn to associate the word MASTER with
the opposers goods.
x x x. It is the observation of this Office that much of the
dominance which the word MASTER has acquired
through Opposers advertising schemes is carried over when the
same is incorporated into respondent-applicants trademark
19
FLAVOR MASTER. Thus, when one looks at the label bearing the
trademark FLAVOR MASTER (exh. 4) ones attention is easily
attracted to the word MASTER, rather than to the dissimilarities
that exist. Therefore, the possibility of confusion as to the goods
which bear the competing marks or as to the origins thereof is not
farfetched.
Applying the dominancy test in the present case, the Court finds
that NANNY is confusingly similar to NAN. NAN is the prevalent
feature of Nestles line of infant powdered milk products. It is
written in bold letters and used in all products. The line consists of
PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, NANNY
contains the prevalent feature NAN. The first three letters of
NANNY are exactly the same as the letters of NAN. When NAN
and NANNY are pronounced, the aural effect is confusingly
similar.
In determining the issue of confusing similarity, the Court takes
into account the aural effect of the letters contained in the
marks. In Marvex Commercial Company, Inc. v. Petra Hawpia &
Company, the Court held:
It is our considered view that the trademarks
SALONPAS and LIONPAS are confusingly
similar in sound.
Both these words have the same suffix, PAS,
which is used to denote a plaster that adheres
to the body with curative powers. PAS, being
merely descriptive, furnishes no indication of
the origin of the article and therefore is open
for appropriation by anyone
(Ethepa vs. Director of Patents, L-20635,
March 31, 1966) and may properly become
the subject of a trademark by combination with
another word or phrase.
xxxx
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 Amdu
r, in his book Trade-Mark Law and Practice,
pp. 419-421, cities [sic], as coming within the
purview of the idem sonans rule, Yusea and
U-C-A, Steinway Pianos and Steinberg
Pianos, and Seven-Up and Lemon-
Up. In Co Tiong vs. Director of Patents, this
Court unequivocally said
that Celdura and Condura are confusingly
similar in sound; this Court held in Sapolin Co.
vs. Balmaceda, 67 Phil. 795 that the
name Lusolin is an infringement of the
trademark Sapolin, as the sound of the two
names is almost the same.
The scope of protection afforded to registered trademark owners
is not limited to protection from infringers with identical
goods. The scope of protection extends to protection from
infringers with related goods, and to market areas that are the
normal expansion of business of the registered trademark
owners. Section 138 of R.A. No. 8293 states:
Certificates of Registration. A certificate of
registration of a mark shall be prima facie
evidence of validity of the registration, the
registrants ownership of the mark, and of the
registrants exclusive right to use the same in
connection with the goods or services and
those that are related thereto specified in the
certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery, the Court held that,
Non-competing goods may be those which, though they are not in
actual competition, are so related to each other that it can
reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise out
of the use of similar marks.In that case, the Court enumerated
factors in determining whether goods are related: (1) classification
of the goods; (2) nature of the goods; (3) descriptive properties,
physical attributes or essential characteristics of the goods, with
reference to their form, composition, texture or quality; and (4)
style of distribution and marketing of the goods, including how the
goods are displayed and sold.
NANNY and NAN have the same classification, descriptive
properties and physical attributes. Both are classified under Class
6, both are milk products, and both are in powder form. Also,
NANNY and NAN are displayed in the same section of stores the
milk section.
The Court agrees with the lower courts that there are differences
between NAN and NANNY: (1) NAN is intended for infants while
NANNY is intended for children past their infancy and for adults;
and (2) NAN is more expensive than NANNY. However, as the
registered owner of the NAN mark, Nestle should be free to use
its mark on similar products, in different segments of the market,
and at different price levels. In McDonalds Corporation v. L.C.
Big Mak Burger, Inc., the Court held that the scope of protection
afforded to registered trademark owners extends to market areas
that are the normal expansion of business:
xxx
Even respondents use of the Big Mak mark on
non-hamburger food products cannot excuse
their infringement of petitioners
registered mark, otherwise registered marks
will lose their protection under the law.
The registered trademark owner may use his
mark on the same or similar products, in
different segments of the market, and at
different price levels depending on variations
of the products for specific segments of the
market. The Court has recognized that the
registered trademark owner enjoys protection
in product and market areas that are
the normal potential expansion of his
business. Thus, the Court has declared:
Modern law recognizes that
the protection to which the
owner of a trademark is
entitled is not limited to
guarding his goods or
business from actual
market competition with
identical or similar products
of the parties, but extends
to all cases in which the
use by a junior appropriator
of a trade-mark or trade-
name is likely to lead to a
20
 confusion of source, as Upon the issues presented the lower court reached the
where prospective conclusion that the defendant was not guilty of a violation of said
purchasers would be Act and absolved it from all liability under the complaint, with
misled into thinking that the costs against the plaintiff. From that conclusion the plaintiff
complaining party has appealed to this court and made several assignments of error
extended his business into here.chanroblesvirtualawlibrary chanrobles virtual law library
the field (see 148 ALR
56 et sq; 53 Am. Jur. 576) An examination of the argument of the appellant with reference to
or is in any way connected said assignments of errors should that the observation made by
with the activities of the the appellee concerning the same in quite true. The appellee
infringer; or when it
says:
forestalls the normal
potential expansion of his
business (v. 148 ALR, 77, While the appellant has made an assignment of errors, it has
84; 52 Am. Jur. 576, practically abandoned them in its brief. There is no discussion of
577). (Emphasis supplied) any specific error. The argument is directed to the subject matter
in general. It is like discharging a shotgun loaded with birdshot. If
it scatters sufficiently something may be brought down. No
criticism of counsel is intended. It was practically the only course
WHEREFORE, we GRANT the petition. We SET ASIDE the 1 they had open. There was not error at which a rifle ball could be
September 2005 Decision and 4 April 2006 Resolution of the directed.
Court of Appeals in CA-G.R. CV No. 62730 and REINSTATE the
18 September 1998 Decision of the Regional Trial Court, Judicial
Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345. An examination of the record discloses the following facts: The
plaintiff and defendant are corporations engaged in
manufacturing products of tobacco in the city of Manila. The
SO ORDERED. plaintiff alleged that it had engaged in manufacturing a certain
brand of cigars which it named Especiales Alhambra, since the
year 1906; that these cigars are made of superior quality of
tobacco and wrapped with perfect leaves of Sumatra tobacco;
G.R. No. L-11490 October 14, 1916 that each cigar is encircled with a band of a brown color, on
which is imprinted in gold color the word Especiales
Alhambra; that the cigars are packed with distinguishable labels
THE ALHAMBRA CIGAR AND CIGARETTE MANUFACTURING
CO.,Plaintiff-Appellant, vs. COMPAÑIA GENERAL DE TABACOS and marks; that the cigars present a very definite appearance;
that the plaintiff had extensively advertised the said cigar as "The
DE FILIPINAS, Defendant-Appellee.
little brown label cigar." The plaintiff further alleged that the cigars
had acquired a reputation for their excellence and had been a
Rohde & Wright for appellant. source of great profit. It was alleged that three months preceding
Gilbert, Cohn & Fisher for appellee. the filing of the complaint (July 19, 1915) the defendant, "in
disregard of plaintiff's rights and with intent to deceive the public
JOHNSON, J.: and defraud the plaintiff," had soles and was selling a cigar
"made in similar form, size, and appearance and in simulation of
plaintiff's said cigar: that defendant's cigar was
The only question presented by this appeal is whether or not the named Especiales, and is "encircled with a brown collared band,
defendant is guilty of unfair competition in the manufacture and with the words ' Especiales Isabela,' printed in gold letters upon it,
sale of a certain cigar. The plaintiff attempted to show that the with the intent to thereby imitate plaintiff's said cigars; that the
defendant was guilty of a violation of section 7 of Act No. 666 of defendant had so packed and ornamented the receptacles and
the Philippine Commission, and claimed that it had been boxes containing its cigars, in colors and forms of devices, as to
damaged in the sum of P20,000, and prayed for a permanent give its said cigars, when offered for sale, the general
injunction to restrain the defendant from the further manufacture appearance of plaintiff's said brand of cigars." The plaintiff further
or sale of the cigars alleged to have been made in imitation of a
alleged that all of said acts of the defendant were done with the
cigar manufactured by the plaintiff, and for an
intent to deceive the public and to defraud the plaintiff and that
accounting.chanroblesvirtualawlibrary chanrobles virtual law such acts did actually deceive the buyers of plaintiff's cigars. To
library
the foregoing allegations of the plaintiff, the defendant appeared
and denied generally all of the allegations of plaintiff's petition.
Upon the issue presented by the petition and answer, the cause
was brought on for trial, with the result above
indicated.chanroblesvirtualawlibrary chanrobles virtual law library
Said section 7 of Act No. 666, for the alleged violation of which
the present action was instituted, provides:
Any person who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either in
the wrapping of the packages in which they are contained, or the
devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to
believe that the goods offered are those of a manufacturer or
dealer other than the actual manufacturer or dealer, and who
clothes the goods with such appearance for the purpose of
deceiving the public and defrauding another of his legitimate
trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose,
shall be guilty of unfair competition, and shall be liable to an
action for damages, in which the measure shall be the same as
that provided for a violation of trade-mark rights, together with
discretionary power in the court to impose double damages, if the
circumstances call for the same. The injured party may also have
a remedy by injunction similar to that provided for in cases of
violation of trade-marks. This section applies in cases where the
deceitful appearance of the goods, misleading as to origin or
ownership, is affected not by means of technical trademarks,
emblems, signs, or devices, but by the general appearance of the
package containing the goods, or by the devices or words
thereon, even though such packages, devices or words are not
by al capable of appropriation as trade-marks; and in order that
the action shall lie under this section, actual intent to deceive the
public and defraud a competitor shall affirmatively appear on the
part of the person sought to be made liable, but such intent may
be inferred from similarity in the appearance of the goods as
packed or offered for sale to those of the complaining party.
In addition to the oral testimony, the plaintiff presented Exhibits A
and B. Exhibit A is a box of cigars which the plaintiff claims the
defendant was attempting to imitate. Exhibit B is a box of cigars
which the plaintiff claims is an imitation of the cigars in Exhibit A
and constitutes the infringement or unfair competition complained
of. Exhibits A and B, including the size of the box, labels, etc., are
as follows:
Exhibit A.chanroblesvirtualawlibrary chanrobles virtual law
library
21
Exhibit A of the plaintiff was a box containing twenty-five cigars
and was 8 � inches long, by 5 1/4 inches wide and 1 3/8 inches
deep.
On the top of said box and in the center thereof there appeared
the following label:
On the inside of the top cover there appeared the following label:
On the loose leaf immediately over the cigars there was the
following label:
Over the end of the box and pasted on the outside thereof, there
appeared the following label:
On each cigar was the following band:
On the immediate front of the box there appeared the following
label:
The box contained twenty-five cigars, of which the following is
one:
Exhibit B.
Exhibit B of the defendant was a box containing fifty cigars and
was 7 3/1 inches long, by 5 1/8 inches wide, by 2 inches deep.
On the top of the said box and in the center thereof, there
appeared the following label:
On the inside of the cover there appeared the following label:
On the loose leaf immediately over the cigars there appeared the
following label:
Over the end of the box and pasted on the outside thereof, there
appeared the following label:
On each cigar was the following band:
On the immediate front of the box there appeared the following
label:
The box contained fifty cigars, of which the following is one:
chanrobles virtual law library
The lower court, after an examination of the evidence, states in
the course of his opinion:
There certainly is not sufficient similarity to justify the inference of
actual intent on defendant's part to deceive the public and
defraud a competitor, and this is an essential element of unfair
competition.
An action for unfair competition is distinguished from an action for
a violation of technical trade-marks and is based upon the
proposition that no dealer in merchandise should be allowed to
dress his goods in simulation of the goods of another dealer, so
that purchasers desiring to buy the goods of the latter would be
induced to buy the goods of the former. The policy of the law is
not to prevent competition but to prevent deceit and fraud. A
merchant is entitled to the fruits of his reputation and his ingenuity
and no other merchant will be allowed to simulate the
appearance of the goods of the former, for the purpose of taking
advantage his reputation and ingenuity in business. The law does
not, however pretend to prohibit or enjoin every similarity. The
similarity must be such that the ordinary purchaser will be
deceived into the belief that the goods are those of another. It
must be a "similarity in the general appearance," or in the goods
"taken as a whole." (Alhambra Cigar, etc., Co. vs. Mojica, 27 Phil.
Rep., 566; Coats vs. Merrick Thread Company, 149 U. U., 562;
Enoch Morgan's Sons Company vs. Peper, 86 Fed. REp., 956.) It
frequently happens that goods of a particular class are labeled by
all manufacturers in a common manner. In cases of that sort, no
manufacturer may appropriate to himself the method of labeling
or packing his merchandise and then enjoin other merchants from
using it. Instances of such articles are spools of thread, soap,
cigars, etc. Thread, for example, is commonly put up on wodden
spools of substantially the same size. That is a result of business
demands. Soap is commonly sold in a similar sort of wrapper.
Cigar, as a rule, have the same general shape and are usually
labeled with bands of somewhat similar color. They are generally
put up in packages or boxes of like shape, size, and form. A
manufacturer of any one of these articles may put up his
particular brand of goods in the common form, without running
the risk of being enjoined by another manufacturer. He will,
however, be enjoined if it clearly appears that there is a studied
attempt to imitate or simulate certain distinctive features, adopted
by one manufacturer, for the purpose of identifying or
distinguishing his goods from others of the same general class
and appearance.chanroblesvirtualawlibrary chanrobles virtual law
library
In the case of Coats vs. Merrick Thread Company, supra, the
question presented to the court was with regard to the similarity
of the labels on spools of thread. The labels of both parties were
black and gold, with the name of the manufacturer, kind of thread,
and the number of the thread stamped upon it. These labels were
small and were attached to the end of the spools. The court found
that the small black and gold labels was in common use among
manufacturers of that quality of thread. The court held, that in
view of the limited space upon the label, and in view of the
common right to use such label, the defendants were fully within
their rights.chanroblesvirtualawlibrary chanrobles virtual law
library
In the case of Enoch Morgan's Sons Company vs. Troxell.
supra. the question was raised with reference to the method of
packing and wrapping soap. In discussing that question, the court
said:
The only points of similarity between the two articles sold are that
they are both small cakes of soap covered with tin-foil or tinned
paper and having a blue band around them, with gilt lettering.
The cakes are not even of the same shape, one being nearly
square, and the other oblong. But we are of the opinion that this
form of package, with a blue band and gift lettering, can not be
appropriated by the plaintiff as a trade-mark. There is nothing
peculiar about it, it is an appropriate and usual form in which to
put up small cakes of soap and the law of trade-marks has not
yet gone so far as to enable a party to appropriate such a form of
package and fashion of label and exclude every one else from its
use, or from the use of anything resembling it.
(Fleischmann vs. Newman, 4 N. Y., Supp., 642.)
In the case of Fleischmann vs. Newman, supra, we have a further
discussion of the right of merchants to pack their merchandise in
the ordinary and usual form adopted by other. In the course of the
discussion, the court said:
The only point of similarity between the two (packages) is in the
shade of yellow which the groundwork of the labels has. In the
case of both plaintiffs and defendant the shade is lighter than that
used by other dealers for twelve years past, but each has its
distinctive characteristics, none of which would be liable to
mislead even a careless purchaser, as may plainly be seen by an
inspection of the labels contained in the preliminary statement.
Under these circumstances the defendant can not be deemed to
have simulated the design of the plaintiffs' package so as to give
a right of action against him, for the simple reason that he has
done no more than other dealers have done in putting up
packages of this description, which must necessarily be about of
a prescribed size in order to be marketable, and there is no law of
this state which prohibits a manufacturer or dealer from using the
words "Compressed Yeast." The manufacture of this article is
open to all competitors and they can not be held liable in any
action to restrain them where they plainly put ttheir name upon
the label, even though they do happen to use light yellow for the
background of the paper upon which the description of the
commodity is given.
With reference to Exhibits A and B, upon a close examination
some points of resemblance may possibly be found. A casual
examination, however, shows clearly that there is an essential
22
and marked difference. The allegation of unfair competition,
however, can not be based upon the fact that by a close
examination a similarity may be found. The similarity or
simulation must be use as to defraud and deceive the purchaser
into the belief that he is purchasing the goods of one person
believing them to be the goods of another. The question is
whether, taking the defendant's package and label as a whole, it
so far copies or resembles the plaintiff's package and label, that a
person of ordinary intelligence would be misled into buying the
one supposing he was buying the other. No inflexible definition
can be given as to what will constitute unfair competition. Each
case must depend upon its own particular facts. The rule which
we are discussing can not be better stated that the plaintiff
himself states it in his brief:
The resemblance spoken of in the law of unfair competition is a
resemblance in the general appearance of the goods, in the
wrapping of the packages, or in the devices or words thereon, or
in any other feature of their appearance which would be likely to
deceive purchasers. It is not enough for the plaintiff's cause that
in certain details there may be discovered something of similarity,
provided that in the general appearance there is a decided
dissimilarity. Nor is it enough to save the defendant that experts,
on examination, can point to differences in details of the
component parts of the markings or wrappings. Details may
present differences and yet the whole be very much alike and
very deceptive to the ordinary purchaser using ordinary care. . . .
An inspection of the cigars in question will afford the best test of
their likeness in general appearance.
The late Mr. Justice Brewer of the Supreme Court of the United
States, in the case of P. Lorillard Co. vs. Peper (86 Fed. REp.,
956), in discussing the general question of how unfair competition
may be determined, said:
Summing it all up, while there are certain minor points of
resemblance which have been forcibly urged upon our attention
by the counsel for plaintiff, yet, looking at the two packages with
their labels, - taking the tout ensemble- it appears to us clear that
they are so essentially different that no one of ordinary
intelligence, desiring to buy the one kind of tobacco, would be
misled into buying a package of the other. We shall not stop to
review the testimony which is offered upon the question whether
the resemblance between the two packages and labels were
calculated to mislead, or whether in fact they did operate to
mislead. It is enough to say that there was testimony on both
sides of these questions, and perhaps, looking at the matter of
the testimony alone, it might be difficult to say on which was the
preponderance; but such testimony, giving it all the weight that it
is entitled to, does not disturb the conclusions which we have
reached from an inspection of the packages and labels
themselves. We can not surrender our own judgment in this
matter because others may be of a different opinion, or because
it happens, in isolated instances, that some purchaser was so
careless as not to detect the differences.
In the present case there is no proof in the record that any
persons had been deceived into purchasing the cigars of the
defendant, believing that he was purchasing the cigars of the
plaintiff. There is no proof that any person or persons were
actually deceived. During the trial the plaintiff practically
abandoned its contention that there was any resemblance or any
attempt to simulate its cigars by the defendant, except in the color
of the band or ring used on said cigars. Marker, a witness called
by the plaintiff, testified:
Q. In what particular way do you think a man might get these
cigars mixed? - A. Well, they are both made with Sumatra
wrappers, the label being brown. It is true, so far as the shape of
the cigar is concerned, there is no
resemblance.chanroblesvirtualawlibrary chanrobles virtual law
library
Q. As an expert, Mr. Marker, do you think any person would be
likely to mistake the general appearance of the package or
container of the Alhambra cigar for that of the Tabacalera? - A.
The package, no; there would be no chance of his getting that
mixed.chanroblesvirtualawlibrary chanrobles virtual law library
Q. None whatever? - A. No.chanroblesvirtualawlibrary chanrobles
virtual law library
Q. Isn't it a fact, Mr. Marker, that the shapes of these two cigars
are what may be termed in trade as distinctive shapes? -A. Yes,
sir.chanroblesvirtualawlibrary chanrobles virtual law library
Q. They come under different distinctions? - A. Yes,
sir.chanroblesvirtualawlibrary chanrobles virtual law library
Q. And this is a very different shape, is it not? -- A. A very
different shape; yes, sir.chanroblesvirtualawlibrary chanrobles
virtual law library
Q. How many other factories manufacture Especiales? - A.
Probably four or five of them I should
think.chanroblesvirtualawlibrary chanrobles virtual law library
Q. And have been for many years? - A. Yes,
sir.chanroblesvirtualawlibrary chanrobles virtual law library
Q. You do not contend that the Alhambra were the first to use the
word Especial, by any means, do you? - A. No.
Strickler, testifying for the defendant states:
Q. I say, if you were looking for the cigar known as Especiales
Alhambra (Exhibit A) and were familiar with that cigar and liked it,
do you think you would be at all likely to take the cigar in Exhibit
B, a different shaped cigar and ring?- A. If I was familiar
with Especiales Alhambra, I would not take an Expeciales Flor de
Isabela for it.
From an examination on the band of the cigars of the plaintiff and
a comparison of it with the ring of the cigars of the defendant
(See Exhibits A and B above), it will at once be seen that there is
no similarity in the shape of the two. The color is not exactly the
same. The lettering is different; the names are different. It is
difficult to understand, as Strickler testified, how any person
familiar with the cigars of the plaintiff could be deceived into
accepting the cigars of the defendant. The shape of the band is
very different from the shape of the ring. There is also a marked
difference in the color of the two. A most casual examination of
the two will show a wide difference. The judgment of the eye
upon the two is more satisfactory than evidence from any other
source as to the possibility of parties being misled, so as to take
one of the cigars for the other; seeing in such cases is believing,
existing differences being at once perceived and remaining in the
mind of the careful observer. There is no evidence in the record
that any one was ever misled by the alleged resemblance
between the two cigars. (Liggett & Myers Tobacco Co. vs. Finzer,
128 U. S., 182.) chanrobles virtual law library
The plaintiff makes no pretention that it has any absolute
exclusive right to the use of the brown color or of the use of the
Sumatra wrapper, nor to any of the infinite shapes and cigars, nor
to any of the words of the alphabet. It does contend, however,
that when it has fashioned a special cigar, has clothed it in a
certain wrapper, has branded it with a brown ring with gold letter
and has named it Especiales, and has established a trade for that
cigar and made it popular and stylish because of its form, quality,
and attractive appearance, that no other manufacturer can
thereafter commence to make a similar cigar, resembling it in size
and shape, using the Sam Sumatra wrapper, using a similar
brown ring with equal gold letters, and with the identical name.
That contention of the appellant is certainly in conformity with the
provisions of the ale. The difficulty with it, however, is that the
cigars in the present case are not similar, either in size or shape.
The bands or rings are not similar, whether in their shape or the
lettering thereon; neither are the names found upon the different
bands or rings identically the same; neither are the colors exactly
the same.chanroblesvirtualawlibrary chanrobles virtual law library
23
As has been stated in effect, any one who sells goods packed, or
labeled, or otherwise prepared in such a manner to induce
intending purchasers to believe that the goods are of a make or
origin other than the true, or who clothes his goods with a certain
appearance for the purpose of deceiving the public, is deemed
guilty of unfair competition as defined in section 7 of Act No. 666.
(Brook Bros. vs.Froelich & Kuttner, 8 Phil. Rep., 580.) The true
test of unfair competition is whether certain goods have been
intentionally clothed with an appearance which is likely to deceive
the ordinary purchaser, exercising ordinary care, and not whether
a certain limited class of purchasers, with special knowledge not
possessed by the ordinary purchaser, could avoid a mistake by
the exercise of this special knowledge. (U. S. vs. Manuel, 7 Phil.
Rep., 221; Song Fo & Co. vs. Tiu Ca Siong, 13 Phil. Rep., 143;
Inchausti & Co. vs. Song Fo & Co., 21 Phil. Rep., 278; Baxter and
Baxter & Co. vs. Zuazua, 5 Phil. Rep., 160; Nelle vs. Baer, Senior
& Co., 5 Phil. Rep., 608.) chanrobles virtual law library
With reference to the similarity of bands or rings upon cigars, we
held in the case of Nelle vs. Baer, Senior & Co., supra, in the
absence of other proof, that the mere similarity in the appearance
of two cigars rings is not sufficient to show the actual intent to
deceive the public which is required by Act No. 666, section 7.
Facsimiles of the two rings are in the record before us, and they
are so nearly alike in general appearance that one might pass for
the other. These rings so used on cigars are, however, so small,
and are necessary so similar in design and appearance, that we
should hesitate to say that actual intent to deceive the public and
defraud a competitor . . . may be inferred from the similarity in the
goods.
In view of all of the foregoing and summing up all the arguments
pro and con, while there are certain minor prints of resemblance
in the bands of the two cigars presented, which have been
forcibly urged upon our attention by the respective counsel, yet,
looking at the two cigars, with special reference to the rings or
bands used by the plaintiff and the defendant, we are convinced
that the two cigars, including their rings or bands, are so
essentially different that no one of ordinary intelligence desiring to
buy one would be misled or deceived into buying the other. "It is
not enough fro plaintiff's cause that in certain details and upon a
close examination there may be discovered something of a
similarity in the general appearance of the cigars, or bands or
rings. The similarity must be such as to deceive and to defraud."
It must be such as to induce a person to buy the cigars of the
plaintiff, believing that he is buying the cigars of the defendant. In
our opinion no such similarity exists. The boxes in which the
cigars are packed are different. They are different in size and
color. One contains fifty cigars while the other contains but
twenty-five. The labels, as will appear from Exhibits A and B
above, are entirely different. There is no attempt on the part of
the defendant to simulate, in the slightest degree, the box or the
label used by the plaintiff. With reference to cigars, the slightest
examination discloses that they are of an entirely different shape.
One is thick and blunt. The other is much thinner, pointed, and
shorter. With reference to the bands or labels encircling the
cigars, from an examination of the same, it is found, by reference
to Exhibits A and B, that while both are of a brownish color they
are not of the same brown color. Neither are the bands of the
same shape. One is generally called a band while the other is a
ring. We are unable to see or to understand how a person with
reasonable or ordinary care, knowing and accustomed to use the
cigar of the plaintiff, could ever be deceived into purchasing the
cigar of the defendant.chanroblesvirtualawlibrary chanrobles
virtual law library
For all of the foregoing reasons, we are of the opinion that the
judgment of the lower court should be affirmed with costs. So
ordered.chanroblesvirtualawlibrary chanrobles virtual law library
Torres, Carson, Moreland, Trent and Araullo, JJ., concur.
THIRD DIVISION
G.R. No. 209843, March 25, 2015
TAIWAN KOLIN CORPORATION, LTD., Petitioner, v. KOLIN
ELECTRONICS CO., INC., Respondent.
DECISION
VELASCO JR., J.:
Nature of the Case
Before the Court is a petition for review under Rule 45 of the
Rules of Court interposed by petitioner Taiwan Kolin Corporation,
Ltd. (Taiwan Kolin), assailing the April 30, 2013 Decision 1 of the
Court of Appeals (CA) in CA-G.R. SP No. 122565 and its
subsequent November 6, 2013 Resolution.2 The assailed
issuances effectively denied petitioner’s trademark application for
the use of “KOLIN” on its television and DVD
players.chanroblesvirtuallawlibrary
The Facts
On February 29, 1996, Taiwan Kolin filed with the Intellectual
Property Office (IPO), then Bureau of Patents, Trademarks, and
Technology Transfer, a trademark application, docketed as
Application No. 4-1996-106310, for the use of “KOLIN” on a
combination of goods, including colored televisions, refrigerators,
window-type and split-type air conditioners, electric fans and
water dispensers. Said goods allegedly fall under Classes 9, 11,
and 21 of the Nice Classification (NCL).
Application No. 4-1996-106310 would eventually be considered
abandoned for Taiwan Kolin’s failure to respond to IPO’s Paper
No. 5 requiring it to elect one class of good for its coverage.
However, the same application was subsequently revived through
Application Serial No. 4-2002-011002,3 with petitioner electing
Class 9 as the subject of its application, particularly: television
sets, cassette recorder, VCD Amplifiers, camcorders and other
audio/video electronic equipment, flat iron, vacuum cleaners,
cordless handsets, videophones, facsimile machines, teleprinters,
cellular phones and automatic goods vending machine. The
application would in time be duly published. 4cralawred
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin
Electronics) opposed petitioner’s revived application, docketed as
Inter Partes Case No. 14-2006-00096. As argued, the mark
Taiwan Kolin seeks to register is identical, if not confusingly
similar, with its “KOLIN” mark registered on November 23, 2003,
covering the following products under Class 9 of the NCL:
automatic voltage regulator, converter, recharger, stereo booster,
AC-DC regulated power supply, step-down transformer, and PA
amplified AC-DC.5cralawred
To digress a bit, Kolin Electronics’ “KOLIN” registration was, as it
turns out, the subject of a prior legal dispute between the parties
in Inter Partes Case No. 14-1998-00050 before the IPO. In the
said case, Kolin Electronics’ own application was opposed by
Taiwan Kolin, being, as Taiwan Kolin claimed, the prior registrant
and user of the “KOLIN” trademark, having registered the same in
Taipei, Taiwan on December 1, 1988. The Bureau of Legal
Affairs of the IPO (BLA-IPO), however, did not accord priority
right to Taiwan Kolin’s Taipei registration absent evidence to
prove that it has already used the said mark in the Philippines as
early as 1988. On appeal, the IPO Director General affirmed the
BLA-IPO’s Decision. Taiwan Kolin elevated the case to the CA,
but without injunctive relief, Kolin Electronics was able to register
the “KOLIN” trademark on November 23, 2003 for its
products.6 Subsequently, the CA, on July 31, 2006, affirmed7 the
Decision of the Director General.
In answer to respondent’s opposition in Inter Partes Case No. 14-
2006-00096, petitioner argued that it should be accorded the
benefits of a foreign-registered mark under Secs. 3 and 131.1 of
Republic Act No. 8293, otherwise known as the Intellectual
Property Code of the Philippines (IP Code); 8 that it has already
registered the “KOLIN” mark in the People’s Republic of China,
Malaysia and Vietnam, all of which are parties to the Paris
Convention for the Protection of Industrial Property (Paris
24
Convention) and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS);and that benefits accorded to
a well-known mark should be accorded to petitioner. 9cralawred
Ruling of the BLA-IPO
By Decision10 dated August 16, 2007, the BLA-IPO denied
petitioner’s application disposing as
follows:chanRoblesvirtualLawlibrary
In view of all the foregoing, the instant Opposition is as, it is
hereby SUSTAINED. Accordingly, application bearing Serial No.
4-1996-106310 for the mark “KOLIN” filed in the name of
TAIWAN KOLIN., LTD. on February 29, 1996 for goods falling
under Class 09 of the International Classification of Goods such
as cassette recorder, VCD, woofer, amplifiers, camcorders and
other audio/video electronic equipment, flat iron, vacuum
cleaners, cordless handsets, videophones, facsimile machines,
teleprinters, cellular phones, automatic goods vending machines
and other electronic equipment is hereby REJECTED.
Let the file wrapper of “KOLIN”, subject of this case be forwarded
to the Bureau of Trademarks (BOT) for appropriate action in
accordance with this Decision.
SO ORDERED.cralawlawlibrary
Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark
cannot be registered if it is identical with a registered mark
belonging to a different proprietor in respect of the same or
closely-related goods. Accordingly, respondent, as the registered
owner of the mark “KOLIN” for goods falling under Class 9 of the
NCL, should then be protected against anyone who impinges on
its right, including petitioner who seeks to register an identical
mark to be used on goods also belonging to Class 9 of the
NCL.12 The BLA-IPO also noted that there was proof of actual
confusion in the form of consumers writing numerous e-mails to
respondent asking for information, service, and complaints about
petitioner’s products.13cralawred
Petitioner moved for reconsideration but the same was denied on
January 26, 2009 for lack of merit.14Thus, petitioner appealed the
above Decision to the Office of the Director General of the
IPO.chanroblesvirtuallawlibrary
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a
Decision15 reversing that of the BLA-IPO in the following
wise:chanRoblesvirtualLawlibrary
Wherefore, premises considered, the appeal is hereby
GRANTED. The Appellant’s Trademark Application No. 4-1996- Petitioner moved for reconsideration only to be denied by the CA
106310 is hereby GIVEN DUE COURSE subject to the use through its equally assailed November 6, 2013 Resolution.
limitation or restriction for the goods “television and DVD player”. Hence, the instant recourse.chanroblesvirtuallawlibrary
Let a copy of this Decision as well as the trademark application
and records be furnished and returned to the Director of the The Issue
Bureau of Legal Affairs for appropriate action. Further, let the
Director of the Bureau of Trademarks and the library of the The primordial issue to be resolved boils down to whether or not
Documentation, Information and Technology Transfer Bureau be petitioner is entitled to its trademark registration of “KOLIN” over
furnished a copy of this Decision for information, guidance, and its specific goods of television sets and DVD players. Petitioner
records purposes. postulates, in the main, that its goods are not closely related to
those of Kolin Electronics. On the other hand, respondent hinges
SO ORDERED.cralawlawlibrary its case on the CA’s findings that its and petitioner’s products are
closely-related. Thus, granting petitioner’s application for
In so ruling, the IPO Director General ratiocinated that product trademark registration, according to respondent, would cause
classification alone cannot serve as the decisive factor in the confusion as to the public.
resolution of whether or not the goods are related and that
emphasis should be on the similarity of the products involved and
The Court’s Ruling
not on the arbitrary classification or general description of their
properties or characteristics. As held, the mere fact that one
The petition is impressed with merit.
person has adopted and used a particular trademark for his
goods does not prevent the adoption and use of the same
Identical marks may be registered for
trademark by others on articles of a different
products from the same classification
description.16cralawred
To bolster its opposition against petitioner’s application to register
Aggrieved, respondent elevated the case to the
trademark “KOLIN,” respondent maintains that the element of
CA.chanroblesvirtuallawlibrary
mark identity argues against approval of such application,quoting
the BLA IPO’s ruling in this regard:21cralawred
Ruling of the Court of Appeals
Indubitably, Respondent-Applicant’s [herein petitioner] mark is
In its assailed Decision, the CA found for Kolin Electronics, on the
identical to the registered mark of herein Opposer [herein
strength of the following premises: (a) the mark sought to be
respondent] and the identical mark is used on goods belonging to
registered by Taiwan Kolin is confusingly similar to the one
Class 9 to which Opposer’s goods are also classified. On this
already registered in favor of Kolin Electronics; (b) there are no
point alone, Respondent-Applicant’s application should already
other designs, special shape or easily identifiable earmarks that
be denied.cralawlawlibrary
would differentiate the products of both competing
companies;17 and (c) the intertwined use of television sets with
The argument is specious.
amplifier, booster and voltage regulator bolstered the fact that
televisions can be considered as within the normal expansion of
The parties admit that their respective sets of goods belong to
Kolin Electronics,18 and is thereby deemed covered by its
Class 9 of the NCL, which includes the following: 22cralawred
trademark as explicitly protected under Sec. 13819 of the IP
Code.20 Resultantly, the CA granted respondent’s appeal
thusly:chanRoblesvirtualLawlibrary Class 9
Scientific, nautical, surveying, photographic, cinematographic,
WHEREFORE, the appeal is GRANTED. The November 23,
optical, weighing, measuring, signalling, checking (supervision),
2011 Decision of the Director General of the Intellectual Property
life-saving and teaching apparatus and instruments; apparatus
Office in Inter Partes Case No. 14-2006-0096
and instruments for conducting, switching, transforming,
is REVERSED and SET ASIDE. The September 17, 2007
accumulating, regulating or controlling electricity; apparatus for
Decision of the Bureau of Legal Affairs of the same office
recording, transmission or reproduction of sound or images;
is REINSTATED.
magnetic data carriers, recording discs; compact discs, DVDs
and other digital recording media; mechanisms for coin-operated
SO ORDERED.cralawlawlibrary
apparatus; cash registers, calculating machines, data processing
25
equipment, computers; computer software; fire-extinguishing
apparatus.cralawlawlibrary
But mere uniformity in categorization, by itself, does not
automatically preclude the registration of what appears to be an
identical mark, if that be the case. In fact, this Court, in a long line
of cases,has held that such circumstance does not necessarily
result in any trademark infringement. The survey of jurisprudence
cited in Mighty Corporation v. E. & J Gallo Winery23 is
enlightening on this point:chanRoblesvirtualLawlibrary
(a) in Acoje Mining Co., Inc. vs. Director of Patents,24 we ordered
the approval of Acoje Mining’s application for registration of
the trademark LOTUS for its soy sauce even though
Philippine Refining Company had prior registration and use of
such identical mark for its edible oil which, like soy sauce, also
belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of
Patents,25 we upheld the Patent Director’s registration of the
same trademark CAMIA for Ng Sam’s ham under Class 47,
despite Philippine Refining Company’s prior trademark
registration and actual use of such mark on its lard, butter,
cooking oil (all of which belonged to Class 47), abrasive
detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and
Santos Lim Bun Liong,26we dismissed Hickok’s petition to
cancel private respondent’s HICKOK trademark registration
for its Marikina shoes as against petitioner’s earlier
registration of the same trademark for handkerchiefs, briefs,
belts and wallets.
cralawlawlibrary
Verily, whether or not the products covered by the trademark
sought to be registered by Taiwan Kolin, on the one hand, and
those covered by the prior issued certificate of registration in
favor of Kolin Electronics, on the other, fall under the same
categories in the NCL is not the sole and decisive factor in
determining a possible violation of Kolin Electronics’ intellectual
property right should petitioner’s application be granted. It is
hornbook doctrine, as held in the above-cited cases, that
emphasis should be on the similarity of the products involved and
not on the arbitrary classification or general description of their
properties or characteristics. The mere fact that one person has
adopted and used a trademark on his goods would not, without
more, prevent the adoption and use of the same trademark by
others on unrelated articles of a different kind. 27cralawred
The CA erred in denying petitioner’s
registration application
Respondent next parlays the idea of relation between products as
a factor militating against petitioner’s application. Citing Esso
Standard Eastern, Inc. v. Court of Appeals,28 respondent argues “KOLIN” mark, the ordinary intelligent consumer would likely
that the goods covered by petitioner’s application and those assume that they are produced by the same manufacturer.
covered by its registration are actually related belonging as they
do to the same class or have the same physical characteristics In sum, the intertwined use, the same classification of the
with reference to their form, composition, texture, or quality, or if products as class 9 under the NICE Agreement, and the fact that
they serve the same purpose. Respondent likewise draws they generally flow through the same channel of trade clearly
parallelisms between the present controversy and the following establish that Taiwan Kolin’s television sets and DVD players are
cases:29cralawred closely related to Kolin Electronics’ goods. As correctly pointed
out by the BLA-IPO, allowing Taiwan Kolin’s registration would
(a) In Arce & Sons, Inc. vs. Selecta Biscuit Company,30 biscuits only confuse consumersas to the origin of the products they
were held related to milk because they were both food intend to purchase. Accordingly, protection should be afforded to
products; Kolin Electronics, as the registered owner of the “KOLIN”
(b) In Chua Che vs. Phil. Patents Office,31 soap and perfume, trademark.37(emphasis added)cralawlawlibrary
lipstick and nail polish are held to be similarly related because
they are common household items; The CA’s approach and reasoning to arrive at the assailed
(c) In Ang vs. Teodoro,32 the trademark “Ang Tibay” for shoes holding that the approval of petitioner’s application is likely to
and slippers was disallowed to be used for shirts and pants cause confusion or deceive fail to persuade.
because they belong to the same general class of goods; and
(d) In Khe vs. Lever Bros. Co.,33 soap and pomade, although non- The products covered by petitioner’s
competitive, were held to be similar or belong to the same application and respondent’s
class, since both are toilet articles. registration are unrelated
cralawlawlibrary A certificate of trademark registration confers upon the trademark
owner the exclusive right to sue those who have adopted a
Respondent avers that Kolin Electronics’ and Taiwan Kolin’s similar mark not only in connection with the goods or services
products are closely-related not only because both fall under specified in the certificate, but also with those that are related
Class 9 of the NCL, but mainly because they both relate to thereto.38cralawred
electronic products, instruments, apparatus, or
appliances.34 Pushing the point, respondent would argue that In resolving one of the pivotal issues in this case––whether or not
Taiwan Kolin and Kolin Electronics’ goods are inherently similar the products of the parties involved are related––the doctrine
in that they are all plugged into electric sockets and perform a in Mighty Corporation is authoritative. There, the Court held that
useful function.35 Furthermore, respondent echoes the appellate the goods should be tested against several factors before arriving
court’s ratiocination in denying petitioner’s application, at a sound conclusion on the question of relatedness. Among
viz:36cralawred these are:chanRoblesvirtualLawlibrary
Significantly, Kolin Electronics’ goods (automatic voltage (a) the business (and its location) to which the goods belong;
regulator; converter; recharger; stereo booster; AC-DC regulated (b) the class of product to which the goods belong;
power supply; step-down transformer; and PA amplified AC-DC) (c) the product’s quality, quantity, or size, including the nature of
and Taiwan Kolin’s television sets and DVD players are both the package, wrapper or container;
classified under class 9 of the NICE agreement. At first glance, it (d) the nature and cost of the articles;
is also evident that all these goods are generally described as (e) the descriptive properties, physical attributes or essential
electrical devices.x x x [T]he goods of both Kolin Electronics and characteristics with reference to their form, composition, texture
Taiwan Kolin will inevitably be introduced to the public as or quality;
“KOLIN” products and will be offered for sale in the same (f) the purpose of the goods;
channels of trade. Contrary to Taiwan Kolin’s claim, power supply (g) whether the article is bought for immediate consumption, that
as well as audio and stereo equipment like booster and amplifier is, day-to-day household items;
are not only sold in hardware and electrical shops. These (h) the fields of manufacture;
products are commonly found in appliance stores alongside (i) the conditions under which the article is usually purchased;
television sets and DVD players. With the present trend in today’s and
entertainment of having a home theater system, it is not unlikely (j) the channels of trade through which the goods flow, how they
to see a stereo booster, amplifier and automatic voltage regulator are distributed, marketed, displayed and sold. 39cralawlawlibrary
displayed together with the television sets and DVD players. With
the intertwined use of these products bearing the identical As mentioned, the classification of the products under the NCL is
26
merely part and parcel of the factors to be considered in
ascertaining whether the goods are related. It is not sufficient to
state that the goods involved herein are electronic products under
Class 9 in order to establish relatedness between the goods, for
this only accounts for one of many considerations enumerated
in Mighty Corporation. In this case, credence is accorded to
petitioner’s assertions that:40cralawred
a. Taiwan Kolin’s goods are classified as home appliances
as opposed to Kolin Electronics’ goods which are power
supply and audio equipment
accessories;ChanRoblesVirtualawlibrary
b. Taiwan Kolin’s television sets and DVD players perform
distinct function and purpose from Kolin Electronics’
power supply and audio equipment; and
c. Taiwan Kolin sells and distributes its various home
appliance products on wholesale and to accredited
dealers, whereas Kolin Electronics’ goods are sold and
flow through electrical and hardware stores.
Clearly then, it was erroneous for respondent to assume over the
CA to conclude that all electronic products are related and that
the coverage of one electronic product necessarily precludes the
registration of a similar mark over another. In this digital age
wherein electronic products have not only diversified by leaps
and bounds, and are geared towards interoperability, it is difficult
to assert readily, as respondent simplistically did, that all devices
that require plugging into sockets are necessarily related goods.
It bears to stress at this point that the list of products included in
Class 941 can be sub-categorized into five (5) classifications,
namely: (1) apparatus and instruments for scientific or research
purposes, (2) information technology and audiovisual equipment,
(3) apparatus and devices for controlling the distribution and use
of electricity, (4) optical apparatus and instruments, and (5) safety
equipment.42From this sub-classification, it becomes apparent
that petitioner’s products, i.e., televisions and DVD players,
belong to audiovisiual equipment, while that of respondent,
consisting of automatic voltage regulator, converter, recharger,
stereo booster, AC-DC regulated power supply, step-down
transformer, and PA amplified AC-DC, generally fall under
devices for controlling the distribution and use of electricity.
The ordinarily intelligent buyer
is not likely to be confused
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no rigid set rules can
plausible be formulated. Each case must be decided on its
merits, with due regard to the goods or services involved, the
usual purchaser’s character and attitude, among others. In such
cases, even more than in any other litigation, precedent must be
studied in the light of the facts of a particular case. That is the
reason why in trademark cases, jurisprudential precedents should
be applied only to a case if they are specifically in
point.43cralawred
For a clearer perspective and as matter of record, the following
image on the left44 is the trademark applied for by petitioner, while
the image juxtaposed to its right45 is the trademark registered by
respondent:
(please see image in G.R. No. 209843 page 10)
While both competing marks refer to the word “KOLIN” written in
upper case letters and in bold font, the Court at once notes the
distinct visual and aural differences between them: Kolin
Electronics’ mark is italicized and colored black while that of
Taiwan Kolin is white in pantone red color background. The
differing features between the two, though they may appear
minimal, are sufficient to distinguish one brand from the other.
It cannot be stressed enough that the products involved in the
case at bar are, generally speaking, various kinds of electronic
products. These are not ordinary consumable household items,
like catsup, soy sauce or soap which are of minimal cost.46 The
products of the contending parties are relatively luxury items not
easily considered affordable. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would
prefer to mull over his purchase. Confusion and deception, then,
is less likely.47 As further elucidated in Del Monte Corporation v.
Court of Appeals:48cralawred
x x x Among these, what essentially determines the attitudes of
the purchaser, specifically his inclination to be cautious, is the
cost of the goods. To be sure, a person who buys a box of
candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does not
exercise as much prudence in buying an article for which he pays
a few centavos as he does in purchasing a more valuable
thing. Expensive and valuable items are normally bought only
after deliberate, comparative and analytical investigation. But
mass products, low priced articles in wide use, and matters of
everyday purchase requiring frequent replacement are bought by
the casual consumer without great care x x x.(emphasis
added)cralawlawlibrary
Respondent has made much reliance on Arce & Sons, Chua
Che, Ang, and Khe, oblivious that they involved common
household items––i.e., biscuits and milk, cosmetics, clothes, and
toilet articles, respectively––whereas the extant case involves
luxury items not regularly and inexpensively purchased by the
consuming public. In accord with common empirical experience,
the useful lives of televisions and DVD players last for about five
(5) years, minimum, making replacement purchases very
infrequent. The same goes true with converters and regulators
that are seldom replaced despite the acquisition of new
equipment to be plugged onto it. In addition, the amount the
buyer would be parting with cannot be deemed minimal
considering that the price of televisions or DVD players can
exceed today’s monthly minimum wage.In light of these
circumstances, it is then expected that the ordinary intelligent
buyer would be more discerning when it comes to deciding which
electronic product they are going to purchase, and it is this
standard which this Court applies here in in determining the
likelihood of confusion should petitioner’s application be granted.
To be sure, the extant case is reminiscent of Emerald Garment
Manufacturing Corporation v. Court of Appeals, 49 wherein the
opposing trademarks are that of Emerald Garment Manufacturing
Corporation’s “Stylistic Mr. Lee” and H.D. Lee’s “LEE.” In the said
case, the appellate court affirmed the decision of the Director of
Patents denying Emerald Garment’s application for registration
due to confusing similarity with H.D. Lee’s trademark. This Court,
however, was of a different beat and ruled that there is no
confusing similarity between the marks, given that the products
covered by the trademark, i.e., jeans, were,at that time,
considered pricey, typically purchased by intelligent buyers
familiar with the products and are more circumspect, and,
therefore, would not easily be deceived. As
held:chanRoblesvirtualLawlibrary
Finally, in line with the foregoing discussions, more credit should
be given to the “ordinary purchaser.” Cast in this particular
controversy, the ordinary purchaser is not the “completely unwary
consumer” but is the “ordinarily intelligent buyer” considering the
type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok50is better
suited to the present case. There, the “ordinary purchaser” was
defined as one “accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the deception of
some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who
knows nothing about the design which has been counterfeited,
and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears
likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to
purchase.”51 (emphasis added)cralawlawlibrary
27

Consistent with the above ruling, this Court finds that the
differences between the two marks, subtle as they may be, are
sufficient to prevent any confusion that may ensue should
petitioner’s trademark application be granted.As held in Esso
Standard Eastern, Inc.:52cralawred
Respondent court correctly ruled that considering the general
appearances of each mark as a whole, the possibility of any
confusion is unlikely. A comparison of the labels of the samples
of the goods submitted by the parties shows a great many
differences on the trademarks used. As pointed out by
respondent court in its appealed decision, “(A) witness for the
plaintiff, Mr. Buhay, admitted that the color of the ‘ESSO’ used by
the plaintiff for the oval design where the blue word ESSO is
contained is the distinct and unique kind of blue. In his answer to
the trial court’s question, Mr. Buhay informed the court that the
plaintiff never used its trademark on any product where the
combination of colors is similar to the label of the Esso
cigarettes,” and “Another witness for the plaintiff, Mr. Tengco,
testified that generally, the plaintiff’s trademark comes all in either
red, white, blue or any combination of the three colors. It is to be
pointed out that not even a shade of these colors appears on the
trademark of the appellant’s cigarette. The only color that the
appellant uses in its trademark is green.”
Even the lower court, which ruled initially for petitioner, found that
a “noticeable difference between the brand ESSO being used by
the defendants and the trademark ESSO of the plaintiff is that the
former has a rectangular background, while in that of the plaintiff
the word ESSO is enclosed in an oval
background.”cralawlawlibrary
All told, We are convinced that petitioner’s trademark registration
not only covers unrelated good, but is also incapable of deceiving
the ordinary intelligent buyer. The ordinary purchaser must be
thought of as having, and credited with, at least a modicum of
intelligence to be able to see the differences between the two
trademarks in question.53cralawred
Questions of fact may still be entertained
On a final note, the policy according factual findings of courts a
quo great respect, if not finality, is not binding where they have
overlooked, misapprehended, or misapplied any fact or
circumstance of weight and substance.54 So it must be here; the
nature of the products involved materially affects the outcome of
the instant case. A reversal of the appellate court’s Decision is
then in order.
WHEREFORE, in view of the foregoing, the petition is
hereby GRANTED. The Decision and the Resolution of the Court
of Appeals in CA-G.R. SP No. 122565, dated April 30, 2013 and On October 27,1965, Del Monte authorized Philpack to register
November 6, 2013, respectively, are with the Philippine Patent Office the Del Monte catsup bottle
hereby REVERSED and SET ASIDE. Accordingly, the Decision configuration, for which it was granted Certificate of Trademark
of the Intellectual Property Office Director General in Inter Partes Registration No. SR-913 by the Philippine Patent Office under the
Case No. 14-2006-00096, dated November 23, 2011, is Supplemental Register. 1 On November 20, 1972, Del Monte also
hereby REINSTATED. obtained two registration certificates for its trademark "DEL
MONTE" and its logo. 2
SO ORDERED.cralawlawlibrary
Respondent Sunshine Sauce Manufacturing Industries was
UNFAIR COMPETITION issued a Certificate of Registration by the Bureau of Domestic
Trade on April 17,1980, to engage in the manufacture, packing,
distribution and sale of various kinds of sauce, identified by the
G.R. No. L-78325 January 25, 1990 logo Sunshine Fruit Catsup.3
DEL MONTE CORPORATION and PHILIPPINE PACKING This logo was registered in the Supplemental Register on
CORPORATION, petitioners, September 20, 1983. 4
vs.
COURT OF APPEALS and SUNSHINE SAUCE The product itself was contained in various kinds of bottles,
MANUFACTURING INDUSTRIES, respondents. including the Del Monte bottle, which the private respondent
bought from the junk shops for recycling.
Bito, Misa & Lozada for petitioners.
Reynaldo F. Singson for private respondent. Having received reports that the private respondent was using its
exclusively designed bottles and a logo confusingly similar to Del
Monte's, Philpack warned it to desist from doing so on pain of
legal action. Thereafter, claiming that the demand had been
ignored, Philpack and Del Monte filed a complaint against the
private respondent for infringement of trademark and unfair
CRUZ, J.: competition, with a prayer for damages and the issuance of a writ
of preliminary injunction. 5
The petitioners are questioning the decision of the respondent
court upholding the dismissal by the trial court of their complaint In its answer, Sunshine alleged that it had long ceased to use the
against the private respondent for infringement of trademark and
Del Monte bottle and that its logo was substantially different from
unfair competition. the Del Monte logo and would not confuse the buying public to
the detriment of the petitioners. 6
Petitioner Del Monte Corporation is a foreign company organized
under the laws of the United States and not engaged in business After trial, the Regional Trial Court of Makati dismissed the
in the Philippines. Both the Philippines and the United States are complaint. It held that there were substantial differences between
signatories to the Convention of Paris of September 27, 1965, the logos or trademarks of the parties; that the defendant had
which grants to the nationals of the parties rights and advantages ceased using the petitioners' bottles; and that in any case the
which their own nationals enjoy for the repression of acts of defendant became the owner of the said bottles upon its
infringement and unfair competition. purchase thereof from the junk yards. Furthermore, the
complainants had failed to establish the defendant's malice or
Petitioner Philippine Packing Corporation (Philpack) is a domestic bad faith, which was an essential element of infringement of
corporation duly organized under the laws of the Philippines. On trademark or unfair competition. 7
April 11, 1969, Del Monte granted Philpack the right to
manufacture, distribute and sell in the Philippines various
This decision was affirmed in toto by the respondent court, which
agricultural products, including catsup, under the Del Monte is now faulted in this petition for certiorari under Rule 45 of the
trademark and logo. Rules of Court.
28
Section 22 of R.A. No. 166, otherwise known as the Trademark
Law, provides in part 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 trade-name in connection with
the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which
such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin
of such goods or services or identity of such business;
or reproduce, counterfeit copy or colorably imitate any
such mark or trade name and apply such reproduction,
counterfeit copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services, shall
be liable to a civil action by the registrant for any or all
of the remedies herein provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and remedies. — A
person who has identified in the mind of the public the
goods he manufactures or deals in, his business or
services from those of others, whether or not a mark or
tradename is employed, has a property right in the
goodwill of the said goods, business or services so
identified, which will be protected in the same manner
as other property rights. Such a person shall have the
remedies provided in section twenty- three, Chapter V
hereof.
Any person who shall employ deception or any other
means contrary to good faith by which he shall pass off
the goods manufactured by him or in which he deals, or
his business, or services for those of the one having
established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
In particular, and without in any way limiting the scope
of unfair competition, the following shall be deemed
guilty of unfair competition:
(a) Any person, who in selling his goods shall
give them the general appearance of goods of
another manufacturer or dealer, either as to
the goods themselves or in the wrapping of
the packages in which they are contained, or
the devices or words thereon, or in any other
feature of their appearance, which would likely
influence purchasers to believe that the goods
offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer,
or who otherwise clothes the goods with such
appearance as shall deceive the public and
defraud another of his legitimate trade, or any
subsequent vendor of such goods or any
agent of any vendor engaged in selling such
goods with a like purpose;
(b) Any person who by any artifice, or device,
or who employs ally other means calculated to
induce the false belief that such person is
offering the services of another who has
identified such services in the mind of the
public; or
(c) Any person who shall make any false
statement in the course of trade or who shall
commit any other act contrary to good faith of
a nature calculated to discredit the goods,
business or services of another.
To arrive at a proper resolution of this case, it is
important to bear in mind the following distinctions
between infringement of trademark and unfair
competition.
(1) Infringement of trademark is the
unauthorized use of a trademark, whereas
unfair competition is the passing off of one's
goods as those of another.
(2) In infringement of trademark fraudulent
intent is unnecessary whereas in unfair
competition fraudulent intent is essential.
(3) In infringement of trademark the prior
registration of the trademark is a prerequisite
to the action, whereas in unfair competition
registration is not necessary. 8
In the challenged decision, the respondent court cited
the following test laid down by this Court in a number of
cases:
In determining whether two trademarks are
confusingly similar, the two marks in their
entirety as they appear in the respective labels
must be considered in relation to the goods to
which they are attached; the discerning eye of
the observer must focus not only on the
predorninant words but also on the other
features appearing on both labels. 9
and applying the same, held that there was no colorable
imitation of the petitioners' trademark and logo by the
private respondent. The respondent court agreed with
the findings of the trial court that:
In order to resolve the said issue, the Court now attempts to
make a comparison of the two products, to wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular with a crown or
tomato shape design on top of the rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed by
Sysu International, Inc., Q.C., Philippines.
Sunshine: Sunshine fruit catsup is clearly
indicated "made in the Philippines by
Sunshine Sauce Manufacturing Industries"
No. 1 Del Monte Avenue, Malabon, Metro
Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark
red, with words "Del Monte Quality" in white.
29
 Sunshine: White, light green and light red, with
words "Sunshine Brand" in yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the
neck of the bottle, with picture of tomatoes
with words "made from real tomatoes."
Sunshine: There is a label below the cap
which says "Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not
agree with the conclusion that there was no infringement or unfair
competition. It seems to us that the lower courts have been so
pre-occupied with the details that they have not seen the total
picture.
It has been correctly held that side-by-side comparison is not the
final test of similarity. 10 Such comparison requires a careful
scrutiny to determine in what points the labels of the products
differ, as was done by the trial judge. The ordinary buyer does not
usually make such scrutiny nor does he usually have the time to
do so. The average shopper is usually in a hurry and does not
inspect every product on the shelf as if he were browsing in a
library. Where the housewife has to return home as soon as
possible to her baby or the working woman has to make quick
purchases during her off hours, she is apt to be confused by
similar labels even if they do have minute differences. The male
shopper is worse as he usually does not bother about such
distinctions.
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. 11 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. 12
It has been held that in making purchases, the consumer must
depend upon his recollection of the appearance of the product
which he intends to purchase. 13 The buyer having in mind the
mark/label of the respondent must rely upon his memory of the
petitioner's mark. 14 Unlike the judge who has ample time to
minutely examine the labels in question in the comfort of his sala,
the ordinary shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether a
trademark has been infringed, we must consider the mark as a
whole and not as dissected. If the buyer is deceived, it is
attributable to the marks as a totality, not usually to any part of
it. 15 The court therefore should be guided by its first
impression, 16 for a buyer acts quickly and is governed by a
casual glance, the value of which may be dissipated as soon as
the court assumes to analyze carefully the respective features of
the mark. 17
It has also been held that it is not the function of the court in
cases of infringement and unfair competition to educate
purchasers but rather to take their carelessness for granted, and
to be ever conscious of the fact that marks need not be identical.
A confusing similarity will justify the intervention of equity. 18 The
judge must also be aware of the fact that usually a defendant in
cases of infringement does not normally copy but makes only
colorable changes. 19Well has it 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 courts. 20
We also note that the respondent court failed to take into
consideration several factors which should have affected its
conclusion, to wit: age, training and education of the usual
purchaser, the nature and cost of the article, whether the article is
bought for immediate consumption and also the conditions under
which it is usually purchased . 21Among these, what essentially
determines the attitude of the purchaser, specifically his
inclination to be cautious, is the cost of the goods. To be sure, a
person who buys a box of candies will not exercise as much care
as one who buys an expensive watch. As a general rule, an
ordinary buyer does not exercise as much prudence in buying an
article for which he pays a few centavos as he does in purchasing
a more valuable thing. 22 Expensive and valuable items are
normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use,
and matters of everyday purchase requiring frequent replacement
are bought by the casual consumer without great care. 23 In this
latter category is catsup.
At that, even if the labels were analyzed together it is not difficult
to see that the Sunshine label is a colorable imitation of the Del
Monte trademark. The predominant colors used in the Del Monte
label are green and red-orange, the same with Sunshine. The
word "catsup" in both bottles is printed in white and the style of
the print/letter is the same. Although the logo of Sunshine is not a
tomato, the figure nevertheless approximates that of a tomato.
As previously stated, the person who infringes a trade mark does
not normally copy out but only makes colorable changes,
employing enough points of similarity to confuse the public with
enough points of differences to confuse the courts. What is
undeniable is the fact that when a manufacturer prepares to
package his product, he has before him a boundless choice of
words, phrases, colors and symbols sufficient to distinguish his
product from the others. When as in this case, Sunshine chose,
without a reasonable explanation, to use the same colors and
letters as those used by Del Monte though the field of its
selection was so broad, the inevitable conclusion is that it was
done deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of
grave doubt is the rule that as between a newcomer who by the
confusion has nothing to lose and everything to gain and one who
by honest dealing has already achieved favor with the public, any
doubt should be resolved against the newcomer inasmuch as the
field from which he can select a desirable trademark to indicate
the origin of his product is obviously a large one. 25
Coming now to the second issue, we find that the private
respondent is not guilty of infringement for having used the Del
Monte bottle. The reason is that the configuration of the said
bottle was merely registered in the Supplemental Register. In the
case of Lorenzana v. Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a
presumption of the validity of the registration, the
registrant's ownership of the mark and his right to the
exclusive use thereof. There is no such presumption in
the registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to the
actual owner of the trademark and proceedings therein
on the issue of ownership which may be contested
30
 through opposition or interference proceedings or, after
registration, in a petition for cancellation.
Registration in the Principal Register is constructive
notice of the registrant's claim of ownership, while
registration in the Supplemental Register is merely
proof of actual use of the trademark and notice that the
registrant has used or appropriated it. It is not subject to
opposition although it may be cancelled after the
issuance. Corollarily, registration in the Principal
Register is a basis for an action for infringement while
registration in the Supplemental Register is not.
(3) In applications for registration in the Principal
Register, publication of the application is necessary.
This is not so in applications for registrations in the
Supplemental Register.
It can be inferred from the foregoing that although Del Monte has
actual use of the bottle's configuration, the petitioners cannot
claim exclusive use thereof because it has not been registered in
the Principal Register. However, we find that Sunshine, despite
the many choices available to it and notwithstanding that the
caution "Del Monte Corporation, Not to be Refilled" was
embossed on the bottle, still opted to use the petitioners' bottle to
market a product which Philpack also produces. This clearly
shows the private respondent's bad faith and its intention to
capitalize on the latter's reputation and goodwill and pass off its
own product as that of Del Monte.
The Court observes that the reasons given by the respondent
court in resolving the case in favor of Sunshine are untenable.
First, it declared that the registration of the Sunshine label belied
the company's malicious intent to imitate petitioner's product.
Second, it held that the Sunshine label was not improper because
the Bureau of Patent presumably considered other trademarks
before approving it. Third, it cited the case of Shell Co. v. Insular
Petroleum, 27 where this Court declared that selling oil in
containers of another with markings erased, without intent to
deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the
Sunshine label was registered not in the Principal Register but
only in the Supplemental Register where the presumption of the
validity of the trademark, the registrant's ownership of the mark
and his right to its exclusive use are all absent.
Anent the assumption that the Bureau of Patent had considered
other existing patents, it is reiterated that since registration was
only in the Supplemental Register, this did not vest the registrant
with the exclusive right to use the label nor did it give rise to the
presumption of the validity of the registration.
On the argument that no unfair competition was committed, the
Shell Case is not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was
supported by the fact that the respondent therein,
before marketing its product, totally obliterated and
erased the brands/mark of the different companies
stenciled on the containers thereof, except for a single
isolated transaction. The respondent in the present
case made no similar effort.
(2) In Shell, what was involved was a single isolated
transaction. Of the many drums used, there was only
one container where the Shell label was not erased,
while in the case at hand, the respondent admitted that
it made use of several Del Monte bottles and without
obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to
dealers, not to ultimate consumers. As a general rule,
dealers are well acquainted with the manufacturer from
whom they make their purchases and since they are
more experienced, they cannot be so easily deceived
like the inexperienced public. There may well be
similarities and imitations which deceive all, but
generally the interests of the dealers are not regarded
with the same solicitude as are the interests of the
ordinary consumer. For it is the form in which the wares
come to the final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's
trademark, law and equity call for the cancellation of the private
respondent's registration and withdrawal of all its products
bearing the questioned label from the market. With regard to the
use of Del Monte's bottle, the same constitutes unfair
competition; hence, the respondent should be permanently
enjoined from the use of such bottles.
The court must rule, however, that the damage prayed for cannot
be granted because the petitioner has not presented evidence to
prove the amount thereof. Section 23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for
infringement. — Any person entitled to the exclusive
use of a registered mark or trade name may recover
damages in a civil action 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 said 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 the court may
award as damages 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. In cases where actual intent to
mislead the public or to defraud the complaining party
shall be shown, in the discretion of the court, the
damages may be doubled.
The complaining party, upon proper showing may also
be granted injunction.1âwphi1
Fortunately for the petitioners, they may still find some small
comfort in Art. 2222 of the Civil Code, which provides:
Art. 2222. The court may award nominal damages in
every obligation arising from any source enumerated in
Art. 1157, or in every case where any property right has
been invaded.
Accordingly, the Court can only award to the petitioners, as it
hereby does award, nominal damages in the amount of
Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals dated December 24, 1986 and the Resolution
dated April 27,1987, are REVERSED and SET ASIDE and a new
judgment is hereby rendered:
(1) Canceling the private respondent's Certificate of
Register No. SR-6310 and permanently enjoining the
private respondent from using a label similar to that of
the petitioners.
(2) Prohibiting the private respondent from using the
empty bottles of the petitioners as containers for its own
products.
(3) Ordering the private respondent to pay the
petitioners nominal damages in the amount of
Pl,000.00, and the costs of the suit.
SO ORDERED.
31
COCA-COLA BOTTLERS, PHILS., INC. G.R. No. 154491 guard that Pepsi hoarded several Coke bottles; security
(CCBPI), Naga Plant, guard Edwin Lirio stated that he entered Pepsis yard on July 2, On September 19, 2001, the MTC issued the first
Petitioner, Present: 2001 at 4 p.m. and saw empty Coke bottles inside Pepsi shells or assailed order[6] denying the twin motions. It explained there was
cases.[2] an exhaustive examination of the applicant and its witnesses
*
QUISUMBING, J., through searching questions and that the Pepsi shells are prima
Chairperson, Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo facie evidence that the bottles were placed there by the
- versus - CARPIO MORALES, of Naga City, after taking the joint deposition of the witnesses, respondents.
TINGA, issued Search Warrant No. 2001-01[3]to seize 2,500 Litro and In their motion for reconsideration, the respondents
VELASCO, JR., and 3,000 eight and 12 ounces empty Coke bottles at Pepsis Naga argued for the quashal of the warrant as the MTC did not conduct
BRION, JJ. yard for violation of Section 168.3 (c) of the IP Code. [4] The local a probing and exhaustive examination; the applicant and its
police seized and brought to the MTCs custody 2,464 Litro and witnesses had no personal knowledge of facts surrounding the
QUINTIN J. GOMEZ, a.k.a. 4,036 eight and 12 ounces empty Coke bottles, 205 Pepsi shells hoarding; the court failed to order the return of the borrowed
KITGOMEZ and DANILO E. Promulgated: for Litro, and 168 Pepsi shells for smaller (eight and 12 ounces) shells; there was no crime involved; the warrant was issued
GALICIA, a.k.a. DANNY GALICIA, empty Coke bottles, and later filed with the Office of the City based on hearsay evidence; and the seizure of the shells was
Respondents. November 14, 2008 Prosecutor of Naga a complaint against two Pepsi officers for illegal because they were not included in the warrant.
violation of Section 168.3 (c) in relation to Section 170 of the IP
x ----------------------------------------------------------------------------------- Code.[5] The named respondents, also the respondents in this On November 14, 2001, the MTC denied the motion for
--------x petition, were Pepsi regional sales manager Danilo E. reconsideration in the second assailed order, [7] explaining that the
Galicia (Galicia)and its Naga general manager Quintin J. Gomez, issue of whether there was unfair competition can only be
DECISION Jr. (Gomez). resolved during trial.
The respondents responded by filing a petition for
BRION, J.: In their counter-affidavits, Galicia and Gomez claimed certiorari under Rule 65 of the Revised Rules of Court before the
that the bottles came from various Pepsi retailers and Regional Trial Court (RTC) of Naga City on the ground that the
Is the hoarding of a competitors product containers wholesalers who included them in their return to make up for subject search warrant was issued without probable cause and
punishable as unfair competition under the Intellectual Property shortages of empty Pepsi bottles; they had no way of that the empty shells were neither mentioned in the warrant nor
Code (IP Code, Republic Act No. 8293) that would entitle the ascertaining beforehand the return of empty Coke bottles as they the objects of the perceived crime.
aggrieved party to a search warrant against the hoarder? This is simply received what had been delivered; the presence of the
the issue we grapple with in this petition for review bottles in their yard was not intentional nor deliberate; Ponce and
on certiorari involving two rival multinational softdrink giants; Regaspis statements are hearsay as they had no personal
petitioner Coca-Cola Bottlers, Phils., Inc. (Coca-Cola) accuses knowledge of the alleged crime; there is no mention in the IP THE RTC RULINGS
Pepsi Cola Products Phils., Inc. (Pepsi), represented by the Code of the crime of possession of empty bottles; and that the
respondents, of hoarding empty Coke bottles in bad faith to ambiguity of the law, which has a penal nature, must be On May 8, 2002, the RTC voided the warrant for lack of
discredit its business and to sabotage its operation in Bicolandia. construed strictly against the State and liberally in their probable cause and the non-commission of the crime of unfair
favor. Pepsi security guards Eduardo E. Miral and Rene competition, even as it implied that other laws may have been
BACKGROUND Acebuche executed a joint affidavit stating that per their logbook, violated by the respondents. The RTC, though, found no grave
Lirio did not visit or enter the plant premises in the afternoon abuse of discretion on the part of the issuing MTC judge. [8] Thus,
The facts, as culled from the records, are summarized of July 2, 2001.
below. Accordingly, as prayed for, Search
The respondents also filed motions for the return of their Warrant No. 2001-02 issued by the Honorable
On July 2, 2001, Coca-Cola applied for a search warrant against shells and to quash the search warrant. They contended that no Judge Julian C. Ocampo III on July 2, 2001 is
Pepsi for hoarding Coke empty bottles in Pepsis yard in probable cause existed to justify the issuance of the search ANNULLED and SET ASIDE. The Orders
Concepcion Grande, Naga City, an act allegedly penalized as warrant; the facts charged do not constitute an offense; and their issued by the Pairing Judge of Br. 1, MTCC of
unfair competition under the IP Code. Coca-Cola claimed that the Naga plant was in urgent need of the shells. Naga City dated September 19,
bottles must be confiscated to preclude their illegal use, 2001 and November 14, 2001 are also
destruction or concealment by the respondents. [1] In support of Coca-Cola opposed the motions as the shells were part declared VOID and SET ASIDE. The City
the application, Coca-Cola submitted the sworn statements of of the evidence of the crime, arguing that Pepsi used the shells in Prosecutor of Naga City and SPO1 Ernesto
three witnesses: Naga plant representative Arnel John hoarding the bottles. It insisted that the issuance of warrant was Paredes are directed to return to the Petitioner
Ponce said he was informed that one of their plant security based on probable cause for unfair competition under the IP the properties seized by virtue of Search
guards had gained access into the Pepsi compound and had Code, and that the respondents violated R.A. 623, the law Warrant No. 2001-02. No costs.
seen empty Coke bottles; acting plant security officer Ylano A. regulating the use of stamped or marked bottles, boxes, and
Regaspi said he investigated reports that Pepsi was hoarding other similar containers. SO ORDERED.[9]
large quantities of Coke bottles by requesting their security guard
to enter the Pepsi plant and he was informed by the security THE MTC RULINGS
32
 In a motion for reconsideration, which the RTC denied
on July 12, 2002, the petitioner stressed that the decision of the
RTC was contradictory because it absolved Judge Ocampo of
grave abuse of discretion in issuing the search warrant, but at the
same time nullified the issued warrant. The MTC should have
dismissed the petition when it found out that Judge Ocampo did
not commit any grave abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us
through this petition for review on certiorari under Rule 45 of the
Rules of Court to reverse the decision of the RTC. Essentially,
the petition raises questions against the RTCs nullification of the
warrant when it found no grave abuse of discretion committed by
the issuing judge.
THE PETITION and
THE PARTIES POSITIONS
In its petition, the petitioner insists the RTC should have
dismissed the respondents petition for certiorari because it found
no grave abuse of discretion by the MTC in issuing the search
warrant. The petitioner further argues that the IP Code was
enacted into law to remedy various forms of unfair competition
accompanying globalization as well as to replace the inutile
provision of unfair competition under Article 189 of the Revised
Penal Code. Section 168.3(c) of the IP Code does not limit the
scope of protection on the particular acts enumerated as it
expands the meaning of unfair competition to include other acts
contrary to good faith of a nature calculated to discredit the
goods, business or services of another. The inherent element of
unfair competition is fraud or deceit, and that hoarding of large
quantities of a competitors empty bottles is necessarily
characterized by bad faith. It claims that its Bicol bottling
operation was prejudiced by the respondents hoarding and
destruction of its empty bottles.
The petitioner also argues that the quashal of the
search warrant was improper because it complied with all the
essential requisites of a valid warrant. The empty bottles were
concealed in Pepsi shells to prevent discovery while they were
systematically being destroyed to hamper the petitioners bottling
operation and to undermine the capability of its bottling
operations in Bicol.
The respondents counter-argue that although Judge
Ocampo conducted his own examination, he gravely erred and
abused his discretion when he ignored the rule on the need of
sufficient evidence to establish probable cause; satisfactory and
convincing evidence is essential to hold them guilty of unfair
competition; the hoarding of empty Coke bottles did not cause
actual or probable deception and confusion on the part of the
general public; the alleged criminal acts do not show conduct
aimed at deceiving the public; there was no attempt to use the
empty bottles or pass them off as the respondents goods.
The respondents also argue that the IP Code does not
criminalize bottle hoarding, as the acts penalized must always
involve fraud and deceit. The hoarding does not make them liable
for unfair competition as there was no deception or fraud on the
end-users.
THE ISSUE
Based on the parties positions, the basic issue
submitted to us for resolution is whether the Naga MTC was
correct in issuing Search Warrant No. 2001-01 for the seizure of
the empty Coke bottles from Pepsis yard for probable violation of
Section 168.3 (c) of the IP Code. This basic issue involves two
sub-issues, namely, the substantive issue of whether the
application for search warrant effectively charged an
offense, i.e., a violation of Section 168.3 (c) of the IP Code; and
the procedural issue of whether the MTC observed the
procedures required by the Rules of Court in the issuance of
search warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the
RTC decision, our agreement is more in the result than in the
reasons that supported it. The decision is correct in nullifying the
search warrant because it was issued on an invalid substantive
basis the acts imputed on the respondents do not violate Section
168.3 (c) of the IP Code.For this reason, we deny the present
petition.
The issuance of a search warrant[10] against a personal
property[11] is governed by Rule 126 of the Revised Rules of
Court whose relevant sections state:
Section 4. Requisites for issuing
search warrant. A search warrant shall not
issue except upon probable cause in
connection with one specific offense to be
determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may
produce, and particularly describing the place
to be searched and the things to be seized
which may be anywhere in the Philippines.
Section 5. Examination of
complainant; record. The judge must, before
issuing the warrant, personally examine in the
form of searching questions and answers, in
writing and under oath, the complainant and
the witnesses he may produce on facts
personally known to them and attach to the
record their sworn statements together with
the affidavits submitted.
Section 6. Issuance and form of search
warrant. If the judge is satisfied of the
existence of facts upon which the application
is based or that there is probable cause to
believe that they exist, he shall issue the
warrant, which must be substantially in the
form prescribed by these Rules. [Emphasis
supplied]
To paraphrase this rule, a search warrant may be
issued only if there is probable cause in connection with a
specific offense alleged in an application based on the personal
knowledge of the applicant and his or her witnesses. This is the
substantive requirement in the issuance of a search
warrant. Procedurally, the determination of probable cause is a
personal task of the judge before whom the application for search
warrant is filed, as he has to examine under oath or affirmation
the applicant and his or her witnesses in the form of searching
questions and answers in writing and under oath. The warrant, if
issued, must particularly describe the place to be searched and
the things to be seized.
We paraphrase these requirements to stress that they
have substantive and procedural aspects. Apparently, the RTC
recognized this dual nature of the requirements and, hence,
treated them separately; it approved of the way the MTC handled
the procedural aspects of the issuance of the search warrant but
found its action on the substantive aspect wanting. It therefore
resolved to nullify the warrant, without however expressly
declaring that the MTC gravely abused its discretion when it
issued the warrant applied for. The RTCs error, however, is in the
form rather than the substance of the decision as the nullification
of the issued warrant for the reason the RTC gave was equivalent
to the declaration that grave abuse of discretion was
committed. In fact, we so rule as the discussions below will show.
Jurisprudence teaches us that probable cause, as a
condition for the issuance of a search warrant, is such reasons
supported by facts and circumstances as will warrant a cautious
man in the belief that his action and the means taken in
prosecuting it are legally just and proper. Probable cause
requires facts and circumstances that would lead a reasonably
prudent man to believe that an offense has been committed and
the objects sought in connection with that offense are in the place
to be searched.[12] Implicit in this statement is the recognition that
an underlying offense must, in the first place, exist. In other
33
words, the acts alleged, taken together, must constitute an
offense and that these acts are imputable to an offender in
relation with whom a search warrant is applied for.
In the context of the present case, the question is
whether the act charged alleged to be hoarding of empty Coke
bottles constitutes an offense under Section 168.3 (c) of the IP
Code. Section 168 in its entirety states:
SECTION 168. Unfair Competition,
Rights, Regulation and Remedies.
168.1. A person who has identified in
the mind of the public the goods he
manufactures or deals in, his business or
services from those of others, whether or not a
registered mark is employed, has a property
right in the goodwill of the said goods,
business or services so identified, which will
be protected in the same manner as other
property rights.
168.2. Any person who shall employ
deception or any other means contrary to
good faith by which he shall pass off the
goods manufactured by him or in which he
deals, or his business, or services for those of
the one having established such goodwill, or
who shall commit any acts calculated to
produce said result, shall be guilty of unfair
competition, and shall be subject to an action
therefor.
168.3. In particular, and without in
any way limiting the scope of protection
against unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and
gives them the general appearance of goods
of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of
the packages in which they are contained, or
the devices or words thereon, or in any other
feature of their appearance, which would be
likely to influence purchasers to believe that
the goods offered are those of a manufacturer
or dealer, other than the actual manufacturer
or dealer, or who otherwise clothes the goods
with such appearance as shall deceive the
public and defraud another of his legitimate
trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in
selling such goods with a like purpose;
(b) Any person who by any artifice, or device,
or who employs any other means calculated to
induce the false belief that such person is
offering the services of another who has
identified such services in the mind of the
public; or
(c) Any person who shall make any false
statement in the course of trade or who shall
commit any other act contrary to good faith of
a nature calculated to discredit the goods,
business or services of another.
168.4. The remedies provided by
Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29, R.A. No. 166a)
The petitioner theorizes that the above section does not
limit the scope of protection on the particular acts enumerated as
it expands the meaning of unfair competition to include other acts
contrary to good faith of a nature calculated to discredit the
goods, business or services of another. Allegedly, the
respondents hoarding of Coca Cola empty bottles is one such
act.
We do not agree with the petitioners expansive interpretation of
Section 168.3 (c).
Unfair competition, previously defined in Philippine
jurisprudence in relation with R.A. No. 166 and Articles 188 and
189 of the Revised Penal Code, is now covered by Section 168 of
the IP Code as this Code has expressly repealed R.A. No. 165
and R.A. No. 166, and Articles 188 and 189 of the Revised Penal
Code.
Articles 168.1 and 168.2, as quoted above, provide the
concept and general rule on the definition of unfair
competition. The law does not thereby cover every unfair act
committed in the course of business; it covers only acts
characterized by deception or any other means contrary to good
faith in the passing off of goods and services as those of another
who has established goodwill in relation with these goods or
services, or any other act calculated to produce the same result.
What unfair competition is, is further particularized
under Section 168.3 when it provides specifics of what unfair
competition is without in any way limiting the scope of protection
against unfair competition. Part of these particulars is provided
under Section 168.3(c) which provides the general catch-all
phrase that the petitioner cites. Under this phrase, a person shall
be guilty of unfair competition who shall commit any other act
contrary to good faith of a nature calculated to discredit the
goods, business or services of another.
From jurisprudence, unfair competition has been
defined as the passing off (or palming off) or attempting to pass
off upon the public the goods or business of one person as the
goods or business of another with the end and probable effect of
deceiving the public. It formulated the true test of unfair
competition: whether the acts of defendant are such as are
calculated to deceive the ordinary buyer making his purchases
under the ordinary conditions which prevail in the particular trade
to which the controversy relates.[13] One of the essential
requisites in an action to restrain unfair competition is proof of
fraud; the intent to deceive must be shown before the right to
recover can exist.[14] The advent of the IP Code has not
significantly changed these rulings as they are fully in accord with
what Section 168 of the Code in its entirety provides. Deception,
passing off and fraud upon the public are still the key elements
that must be present for unfair competition to exist.
The act alleged to violate the petitioners rights under
Section 168.3 (c) is hoarding which we gather to be the collection
of the petitioners empty bottles so that they can be withdrawn
from circulation and thus impede the circulation of the petitioners
bottled products. This, according to the petitioner, is an act
contrary to good faith a conclusion that, if true, is indeed an unfair
act on the part of the respondents. The critical question, however,
is not the intrinsic unfairness of the act of hoarding; what is critical
for purposes of Section 168.3 (c) is to determine if the hoarding,
as charged, is of a nature calculated to discredit the goods,
business or services of the petitioner.
We hold that it is not. Hoarding as defined by the
petitioner is not even an act within the contemplation of the IP
Code.
The petitioners cited basis is a provision of the IP Code,
a set of rules that refer to a very specific subject intellectual
property. Aside from the IP Codes actual substantive contents
(which relate specifically to patents, licensing, trademarks, trade
names, service marks, copyrights, and the protection and
infringement of the intellectual properties that these protective
measures embody), the coverage and intent of the Code is
expressly reflected in its Declaration of State Policy which states:
Section 2. Declaration of State
Policy. The State recognizes that an
effective intellectual and industrial property
system is vital to the development of domestic
and creative activity, facilitates transfer of
technology, attracts foreign investments, and
ensures market access for our products. It
shall protect and secure the exclusive rights of
34
 scientists, inventors, artists and other gifted
citizens to their intellectual property and
creations, particularly when beneficial to the
people, for such periods as provided in this
Act.
The use of intellectual property
bears a social function. To this end, the State
shall promote the diffusion of knowledge and
information for the promotion of national
development and progress and the common
good.
It is also the policy of the State to
streamline administrative procedures of
registering patents, trademarks and copyright,
to liberalize the registration on the transfer of
technology, and to enhance the enforcement
of intellectual property rights in the Philippines.
(n)
Intellectual property rights have furthermore been defined under
Section 4 of the Code to consist of: a) Copyright and Related
Rights; b) Trademarks and Service Marks; c) Geographic
Indications; d) IndustrialDesigns; e) Patents; f) Layout-Designs
(Topographies) of Integrated Circuits; and g)Protection of
Undisclosed Information.
Given the IP Codes specific focus, a first test that
should be made when a question arises on whether a matter is
covered by the Code is to ask if it refers to an intellectual property
as defined in the Code. If it does not, then coverage by the Code
may be negated.
A second test, if a disputed matter does not expressly
refer to an intellectual property right as defined above, is whether
it falls under the general unfair competition concept and definition
under Sections 168.1 and 168.2 of the Code. The question then
is whether there is deception or any other similar act in passing
off of goods or services to be those of another who enjoys
established goodwill.
Separately from these tests is the application of the
principles of statutory construction giving particular attention, not
so much to the focus of the IP Code generally, but to the terms of
Section 168 in particular. Under the principle of noscitur a
sociis, when a particular word or phrase is ambiguous in itself or
is equally susceptible of various meanings, its correct
construction may be made clear and specific by considering the
company of words in which it is found or with which it is
associated.[15]
As basis for this interpretative analysis, we note
that Section 168.1 speaks of a person who has earned goodwill
with respect to his goods and services and who is entitled to
protection under the Code, with or without a registered
mark. Section 168.2, as previously discussed, refers to the
general definition of unfair competition. Section 168.3, on the
other hand, refers to the specific instances of unfair competition,
with Section 168.1 referring to the sale of goods given the
appearance of the goods of another; Section 168.2, to the
inducement of belief that his or her goods or services are that of
another who has earned goodwill; while the disputed Section
168.3 being a catch all clause whose coverage the parties now
dispute.
Under all the above approaches, we conclude that the
hoarding - as defined and charged by the petitioner does not fall
within the coverage of the IP Code and of Section 168 in
particular. It does not relate to any patent, trademark, trade name
or service mark that the respondents have invaded, intruded into
or used without proper authority from the petitioner. Nor are the
respondents alleged to be fraudulently passing off their products
or services as those of the petitioner. The respondents are not
also alleged to be undertaking any representation or
misrepresentation that would confuse or tend to confuse the
goods of the petitioner with those of the respondents, or vice
versa. What in fact the petitioner alleges is an act foreign to the
Code, to the concepts it embodies and to the acts it regulates; as
alleged, hoarding inflicts unfairness by seeking to limit the
oppositions sales by depriving it of the bottles it can use for these
sales.
In this light, hoarding for purposes of destruction is
closer to what another law - R.A. No. 623 covers, to wit:
SECTION 1. Persons engaged or
licensed to engage in the manufacture,
bottling or selling of soda water, mineral or
aerated waters, cider, milk, cream, or other
lawful beverages in bottles, boxes, casks,
kegs, or barrels, and other similar containers,
with their names or the names of their
principals or products, or other marks of
ownership stamped or marked thereon, may
register with the Philippine Patent Office a
description of the names or are used by them,
under the same conditions, rules, and
regulations, made applicable by law or
regulation to the issuance of trademarks.
SECTION 2. It shall be unlawful for
any person, without the written consent of the
manufacturer, bottler or seller who has
successfully registered the marks of
ownership in accordance with the provisions
of the next preceding section, to fill such
bottles, boxes, kegs, barrels, or other similar
containers so marked or stamped, for the
purpose of sale, or to sell, dispose of, buy, or
traffic in, or wantonly destroy the same,
whether filled or not, or to use the same for
drinking vessels or glasses or for any other
purpose than that registered by the
manufacturer, bottler or seller. Any violation of
this section shall be punished by a fine or not
more than one hundred pesos or
imprisonment of not more than thirty days or
both.
As its coverage is defined under Section 1, the Act
appears to be a measure that may overlap or be affected by the
provisions of Part II of the IP Code on The Law on Trademarks,
Service Marks and Trade Names. What is certain is that the IP
Code has not expressly repealed this Act. The Act appears, too,
to have specific reference to a special type of registrants the
manufacturers, bottlers or sellers of soda water, mineral or
aerated waters, cider, milk, cream, or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar
containers who are given special protection with respect to the
containers they use. In this sense, it is in fact a law of specific
coverage and application, compared with the general terms and
application of the IP Code. Thus, under its Section 2, it speaks
specifically of unlawful use of containers and even of the
unlawfulness of their wanton destruction a matter that escapes
the IP Codes generalities unless linked with the concepts of
deception and passing off as discussed above.
Unfortunately, the Act is not the law in issue in the
present case and one that the parties did not consider at all in the
search warrant application. The petitioner in fact could not have
cited it in its search warrant application since the one specific
offense that the law allows and which the petitioner used was
Section 168.3 (c). If it serves any purpose at all in our
discussions, it is to show that the underlying factual situation of
the present case is in fact covered by another law, not by the IP
Code that the petitioner cites. Viewed in this light, the lack of
probable cause to support the disputed search warrant at once
becomes apparent.
Where, as in this case, the imputed acts do not violate
the cited offense, the ruling of this Court penned by Mr. Justice
Bellosillo is particularly instructive:
In the issuance of search warrants,
the Rules of Court requires a finding of
probable cause in connection with one specific
offense to be determined personally by the
judge after examination of the complainant
35
 and the witnesses he may produce, and
particularly describing the place to be
searched and the things to be
seized. Hence, since there is no crime to
speak of, the search warrant does not even
begin to fulfill these stringent requirements
and is therefore defective on its face. The
nullity of the warrant renders moot and
academic the other issues raised in petitioners
Motion to Quash and Motion for
Reconsideration. Since the assailed search
warrant is null and void, all property seized by
virtue thereof should be returned to petitioners
in accordance with established
jurisprudence.[16]
Based on the foregoing, we conclude that the RTC
correctly ruled that the petitioners search warrant should properly
be quashed for the petitioners failure to show that the acts
imputed to the respondents do not violate the cited
offense. There could not have been any probable cause to
support the issuance of a search warrant because no crime in the
first place was effectively charged. This conclusion renders
unnecessary any further discussion on whether the search
warrant application properly alleged that the imputed act of
holding Coke empties was in fact a hoarding in bad faith aimed to
prejudice the petitioners operations, or whether the MTC duly
complied with the procedural requirements for the issuance of a
search warrant under Rule 126 of the Rules of Court.
WHEREFORE, we hereby DENY the petition for lack of
merit. Accordingly, we confirm that Search Warrant No. 2001-01,
issued by the Municipal Trial Court, Branch 1, Naga City,
is NULL and VOID. Costs against the petitioner.
SO ORDERED.
SUPERIOR COMMERCIAL ENTERPRISES, INC.,
Petitioner,
- versus -
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT &
DISTRIBUTOR, INC.,
April 20, 2010
DECISION
BRION, J.:
We review in this petition for review on certiorari[1] the (1)
decision[2] of the Court of Appeals (CA) in CA-G.R. CV No.
60777 that reversed the ruling of the Regional Trial Court of
Quezon City, Branch 85 (RTC),[3] and dismissed the petitioner
Superior Commercial Enterprises, Inc.s (SUPERIOR) complaint
for trademark infringement and unfair competition (with prayer for
preliminary injunction) against the respondents Kunnan
Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor,
Inc. (SPORTS CONCEPT); and (2) the CA resolution[4] that
denied SUPERIORs subsequent motion for reconsideration. The
RTC decision that the CA reversed found the respondents liable
for trademark infringement and unfair competition, and ordered
them to pay SUPERIOR P2,000,000.00 in damages,
P500,000.00 as attorneys fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR[5] filed a complaint for
trademark infringement and unfair competition with preliminary
injunction against KUNNAN[6] and SPORTS CONCEPT[7] with
the RTC, docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the
owner of the trademarks, trading styles, company names and
business names[8] KENNEX,[9] KENNEX & DEVICE,[10] PRO
KENNEX[11] and PRO-KENNEX (disputed trademarks).[12]
Second, it also asserted its prior use of these trademarks,
presenting as evidence of ownership the Principal and
Supplemental Registrations of these trademarks in its name.
Third, SUPERIOR also alleged that it extensively sold and
advertised sporting goods and products covered by its trademark
registrations. Finally, SUPERIOR presented as evidence of its
ownership of the disputed trademarks the preambular clause of
the Distributorship Agreement dated October 1, 1982
(Distributorship Agreement) it executed with KUNNAN, which
states:
Whereas, KUNNAN intends to acquire the ownership of KENNEX
trademark registered by the [sic] Superior in the Philippines.
Whereas, the [sic] Superior is desirous of having been appointed
[sic] as the sole distributor by KUNNAN in the territory of the
Philippines. [Emphasis supplied.][13]
In its defense, KUNNAN disputed SUPERIORs claim of
ownership and maintained that SUPERIOR as mere distributor
from October 6, 1982 until December 31, 1991 fraudulently
registered the trademarks in its name. KUNNAN alleged that it
was incorporated in 1972, under the name KENNEX Sports
Corporation for the purpose of manufacturing and selling
sportswear and sports equipment; it commercially marketed its
products in different countries, including the Philippines since
1972.[14] It created and first used PRO KENNEX, derived from
its original corporate name, as a distinctive trademark for its
products in 1976. KUNNAN also alleged that it registered the
PRO KENNEX trademark not only in the Philippines but also in
31 other countries, and widely promoted the KENNEX and PRO
KENNEX trademarks through worldwide advertisements in print
media and sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial distributorship
agreement with another company,[15] KUNNAN appointed
SUPERIOR as its exclusive distributor in the Philippines under a
Distributorship Agreement whose pertinent provisions state:[16]
Whereas, KUNNAN intends to acquire ownership of KENNEX
trademark registered by the Superior in the Philippines. Whereas,
the Superior is desirous of having been appointed [sic] as the
sole distributor by KUNNAN in the territory of the Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement, will appoint
the sole distributorship right to Superior in the Philippines, and
this Agreement could be renewed with the consent of both parties
upon the time of expiration.
2. The Superior, in accordance with this Agreement, shall
assign the ownership of KENNEX trademark, under the
registration of Patent Certificate No. 4730 dated 23 May 1980 to
KUNNAN on the effects [sic] of its ten (10) years contract of
distributorship, and it is required that the ownership of the said
trademark shall be genuine, complete as a whole and without any
defects.
36

3. KUNNAN will guarantee to the Superior that no other third
parties will be permitted to supply the KENNEX PRODUCTS in
the Philippines except only to the Superior. If KUNNAN violates
this stipulation, the transfer of the KENNEX trademark shall be
null and void.
4. If there is a necessity, the Superior will be appointed, for the
protection of interest of both parties, as the agent in the
Philippines with full power to exercise and granted the power of
attorney, to pursue any case of Pirating, Infringement and
Counterfeiting the [sic] KENNEX trade mark in the Philippine
territory.
5. The Superior will be granted from [sic] KUNNANs approval
before making and selling any KENNEX products made in the
Philippines and the other countries, and if this is the situation,
KUNNAN is entitled to have a royalty of 5%-8% of FOB as the
right.
6. Without KUNNANs permission, the Superior cannot procure
other goods supply under KENNEX brand of which are not
available to supply [sic] by KUNNAN. However, in connection
with the sporting goods, it is permitted that the Superior can
procure them under KENNEX brand of which are not available to
be supplied by KUNNAN. [Emphasis supplied.]
Even though this Agreement clearly stated that SUPERIOR was
obligated to assign the ownership of the KENNEX trademark to
KUNNAN, the latter claimed that the Certificate of Registration for
the KENNEX trademark remained with SUPERIOR because
Mariano Tan Bon Diong (Mr. Tan Bon Diong), SUPERIORs
President and General Manager, misled KUNNANs officers into
believing that KUNNAN was not qualified to hold the same due to
the many requirements set by the Philippine Patent Office that
KUNNAN could not meet.[17] KUNNAN further asserted that
SUPERIOR deceived it into assigning its applications for
registration of the PRO KENNEX trademark in favor of
SUPERIOR, through an Assignment Agreement dated June 14,
1983 whose pertinent provisions state:[18]
1. In consideration of the distributorship relationship
between KUNNAN and Superior, KUNNAN, who is the seller in
the distributorship relationship, agrees to assign the following
trademark applications owned by itself in the Philippines to
Superior who is the buyer in the distributorship relationship.
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2. Superior shall acknowledge that KUNNAN is still the
real and truthful owner of the abovementioned trademarks, and
shall agree that it will not use the right of the abovementioned
trademarks to do anything which is unfavourable or harmful to
KUNNAN.
3. Superior agrees that it will return back the
abovementioned trademarks to KUNNAN without hesitation at the
request of KUNNAN at any time. KUNNAN agrees that the cost
for the concerned assignment of the abovementioned trademarks
shall be compensated by KUNNAN.
4. Superior agrees that the abovementioned
trademarks when requested by KUNNAN shall be clean and
without any incumbency.
5. Superior agrees that after the assignment of the
abovementioned trademarks, it shall have no right to reassign or
license the said trademarks to any other parties except KUNNAN.
[Emphasis supplied]
Prior to and during the pendency of the infringement and unfair
competition case before the RTC, KUNNAN filed with the now
defunct Bureau of Patents, Trademarks and Technology
Transfer[19] separate Petitions for the Cancellation of
Registration Trademark Nos. 41032, SR 6663, 40326, 39254,
4730 and 49998, docketed as Inter Partes Cases Nos. 3709,
3710, 3811, 3812, 3813 and 3814, as well as Opposition to
Application Serial Nos. 84565 and 84566, docketed as Inter
Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for
Cancellation) involving the KENNEX and PRO KENNEX
trademarks.[20] In essence, KUNNAN filed the Petition for
Cancellation and Opposition on the ground that SUPERIOR
fraudulently registered and appropriated the disputed trademarks;
as mere distributor and not as lawful owner, it obtained the
registrations and assignments of the disputed trademarks in
violation of the terms of the Distributorship Agreement and
Sections 2-A and 17 of Republic Act No. 166, as amended.[21]
On December 3, 1991, upon the termination of its distributorship
agreement with SUPERIOR, KUNNAN appointed SPORTS
CONCEPT as its new distributor. Subsequently, KUNNAN also
caused the publication of a Notice and Warning in the Manila
Bulletins January 29, 1993 issue, stating that (1) it is the owner of
the disputed trademarks; (2) it terminated its Distributorship
Agreement with SUPERIOR; and (3) it appointed SPORTS
CONCEPT as its exclusive distributor. This notice prompted
SUPERIOR to file its Complaint for Infringement of Trademark
and Unfair Competition with Preliminary Injunction against
KUNNAN.[22]
The RTC Ruling
On March 31, 1998, the RTC issued its decision[23] holding
KUNNAN liable for trademark infringement and unfair
competition. The RTC also issued a writ of preliminary injunction
enjoining KUNNAN and SPORTS CONCEPT from using the
disputed trademarks.
The RTC found that SUPERIOR sufficiently proved that it was the
first user and owner of the disputed trademarks in the Philippines,
based on the findings of the Director of Patents in Inter Partes
Case No. 1709 and 1734 that SUPERIOR was rightfully entitled
to register the mark KENNEX as user and owner thereof. It also
considered the Whereas clause of the Distributorship Agreement,
which categorically stated that KUNNAN intends to acquire
ownership of [the] KENNEX trademark registered by SUPERIOR
in the Philippines. According to the RTC, this clause amounts to
KUNNANs express recognition of SUPERIORs ownership of the
KENNEX trademarks.[24]
37

KUNNAN and SPORTS CONCEPT appealed the RTCs decision
to the CA where the appeal was docketed as CA-G.R. CV No.
60777. KUNNAN maintained that SUPERIOR was merely its
distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based on
its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on December
19, 2003 a Manifestation and Motion praying that the decision of
the Bureau of Legal Affairs (BLA) of the Intellectual Property
Office (IPO), dated October 30, 2003, in the Consolidated
Petitions for Cancellation be made of record and be considered
by the CA in resolving the case.[25] The BLA ruled in this
decision
In the case at bar, Petitioner-Opposer (Kunnan) has
overwhelmingly and convincingly established its rights to the
mark PRO KENNEX. It was proven that actual use by
Respondent-Registrant is not in the concept of an owner but as a
mere distributor (Exhibits I, S to S-1, P and P-1 and Q and Q-2)
and as enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose
R. Perez, 50 SCRA 406, a mere distributor of a product bearing a
trademark, even if permitted to use said trademark has no right to
and cannot register the said trademark.
WHEREFORE, there being sufficient evidence to prove that the
Petitioner-Opposer (KUNNAN) is the prior user and owner of the
trademark PRO-KENNEX, the consolidated Petitions for
Cancellation and the Notices of Opposition are hereby
GRANTED. Consequently, the trademark PRO-KENNEX bearing
Registration Nos. 41032, 40326, 39254, 4730, 49998 for the
mark PRO-KENNEX issued in favor of Superior Commercial
Enterprises, Inc., herein Respondent-Registrant under the
Principal Register and SR No. 6663 are hereby CANCELLED.
Accordingly, trademark application Nos. 84565 and 84566,
likewise for the registration of the mark PRO-KENNEX are hereby
REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these
cases be forwarded to the Administrative Finance and Human
Resources Development Services Bureau (AFHRDSB) for
appropriate action in accordance with this Decision and a copy
thereof be furnished the Bureau of Trademarks (BOT) for
information and update of its record.[26]
On February 4, 2005, KUNNAN again filed another Manifestation
requesting that the IPO Director Generals decision on appeal
dated December 8, 2004, denying SUPERIORs appeal, be given
weight in the disposition of the case.[27] The dispositive portion
of the decision reads:[28]
WHEREFORE, premises considered, there is no cogent reason
to disturb Decision No. 2003-35 dated 30 October 2003 rendered
by the Director of the Bureau of Legal Affairs. Accordingly, the
instant appeal is DENIED and the appealed decision is hereby
AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO
Director Generals ruling before the Court of Appeals on a petition
for review under Rule 43 of the Rules of Court, docketed as
CAG.R. SP No. 87928 (Registration Cancellation Case). On
August 30, 2007, the CA rendered its decision dismissing
SUPERIORs petition.[29] On December 3, 2007, the CA decision
was declared final and executory and entry of judgment was
accordingly made. Hence, SUPERIORs registration of the
disputed trademarks now stands effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No.
60777, reversing and setting aside the RTCs decision of March
31, 1998.[30] It dismissed SUPERIORs Complaint for
Infringement of Trademark and Unfair Competition with
Preliminary Injunction on the ground that SUPERIOR failed to
establish by preponderance of evidence its claim of ownership
over the KENNEX and PRO KENNEX trademarks. The CA found
the Certificates of Principal and Supplemental Registrations and
the whereas clause of the Distributorship Agreement insufficient
to support SUPERIORs claim of ownership over the disputed
trademarks.
The CA stressed that SUPERIORs possession of the
aforementioned Certificates of Principal Registration does not
conclusively establish its ownership of the disputed trademarks
as dominion over trademarks is not acquired by the fact of
registration alone;[31] at best, registration merely raises a
presumption of ownership that can be rebutted by contrary
evidence.[32] The CA further emphasized that the Certificates of
Supplemental Registration issued in SUPERIORs name do not
even enjoy the presumption of ownership accorded to registration
in the principal register; it does not amount to a prima facie
evidence of the validity of registration or of the registrants
exclusive right to use the trademarks in connection with the
goods, business, or services specified in the certificate.[33]
In contrast with the failure of SUPERIORs evidence, the CA
found that KUNNAN presented sufficient evidence to rebut
SUPERIORs presumption of ownership over the trademarks.
KUNNAN established that SUPERIOR, far from being the rightful
owner of the disputed trademarks, was merely KUNNANs
exclusive distributor. This conclusion was based on three pieces
of evidence that, to the CA, clearly established that SUPERIOR
had no proprietary interest over the disputed trademarks.
First, the CA found that the Distributorship Agreement,
considered in its entirety, positively confirmed that SUPERIOR
sought to be the KUNNANs exclusive distributor. The CA based
this conclusion on the following provisions of the Distributorship
Agreement:
(1) that SUPERIOR was desirous of [being] appointed as the sole
distributor by KUNNAN in the territory of the Philippines;
(2) that KUNNAN will appoint the sole distributorship right to
Superior in the Philippines; and
(3) that no third parties will be permitted to supply KENNEX
PRODUCTS in the Philippines except only to Superior.
38

The CA thus emphasized that the RTC erred in unduly relying on
the first whereas clause, which states that KUNNAN intends to
acquire ownership of [the] KENNEX trademark registered by
SUPERIOR in the Philippines without considering the entirety of
the Distributorship Agreement indicating that SUPERIOR had
been merely appointed by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express
undertaking in the Assignment Agreement to acknowledge that
KUNNAN is still the real and truthful owner of the [PRO KENNEX]
trademarks, and that it shall agree that it will not use the right of
the abovementioned trademarks to do anything which is
unfavourable or harmful to KUNNAN. To the CA, these provisions
are clearly inconsistent with SUPERIORs claim of ownership of
the disputed trademarks. The CA also observed that although the
Assignment Agreement was a private document, its authenticity
and due execution was proven by the similarity of Mr. Tan Bon
Diongs signature in the Distributorship Agreement and the
Assignment Agreement.
Third, the CA also took note of SUPERIORs Letter dated
November 12, 1986 addressed to Brig. Gen. Jose Almonte,
identifying itself as the sole and exclusive licensee and distributor
in the Philippines of all its KENNEX and PRO-KENNEX products.
Attached to the letter was an agreement with KUNNAN,
identifying the latter as the foreign manufacturer of all KENNEX
products. The CA concluded that in this letter, SUPERIOR
acknowledged its status as a distributor in its dealings with
KUNNAN, and even in its transactions with third persons.
Based on these reasons, the CA ruled that SUPERIOR was a
mere distributor and had no right to the registration of the
disputed trademarks since the right to register a trademark is
based on ownership. Citing Section 4 of Republic Act No. 166[34]
and established jurisprudence,[35] the CA held that SUPERIOR
as an exclusive distributor did not acquire any proprietary interest
in the principals (KUNNANs) trademark.
The CA denied SUPERIORs motion for reconsideration for lack
of merit in its Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
HOLDING THAT PETITIONER SUPERIOR IS NOT THE TRUE
AND RIGHTFUL OWNER OF THE TRADEMARKS KENNEX
AND PRO-KENNEX IN THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT PETITIONER SUPERIOR IS A
MERE DISTRIBUTOR OF RESPONDENT KUNNAN IN THE
PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
ERRED IN REVERSING AND SETTING ASIDE THE DECISION
OF THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL
CASE NO. Q-93-14888, LIFTING THE PRELIMINARY
INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN
AND SPORTS CONCEPT AND DISMISSING THE COMPLAINT
FOR INFRINGEMENT OF TRADEMARK AND UNFAIR
COMPETITION WITH PRELIMINARY INJUNCTION
THE COURTS RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in
the Registration Cancellation Case on the present case. This
decision - rendered after the CA decision for trademark
infringement and unfair competition in CA-G.R. CV No. 60777
(root of the present case) - states:
As to whether respondent Kunnan was able to overcome the
presumption of ownership in favor of Superior, the former
sufficiently established the fraudulent registration of the
questioned trademarks by Superior. The Certificates of
Registration No. SR-4730 (Supplemental Register) and 33487
(Principal Register) for the KENNEX trademark were fraudulently
obtained by petitioner Superior. Even before PROKENNEX
products were imported by Superior into the Philippines, the
same already enjoyed popularity in various countries and had
been distributed worldwide, particularly among the sports and
tennis enthusiasts since 1976. Riding on the said popularity,
Superior caused the registration thereof in the Philippines under
its name when it knew fully well that it did not own nor did it
manufacture the PROKENNEX products. Superior claimed
ownership of the subject marks and failed to disclose in its
application with the IPO that it was merely a distributor of
KENNEX and PROKENNEX products in the Philippines.
While Superior accepted the obligation to assign Certificates of
Registration Nos. SR-4730 and 33487 to Kunnan in exchange for
the appointment by the latter as its exclusive distributor, Superior
however breached its obligation and failed to assign the same to
Kunnan. In a letter dated 13 February 1987, Superior, through
Mr. Tan Bon Diong, misrepresented to Kunnan that the latter
cannot own trademarks in the Philippines. Thus, Kunnan was
misled into assigning to Superior its (Kunnans) own application
for the disputed trademarks. In the same assignment document,
however. Superior was bound to ensure that the PROKENNEX
trademarks under Registration Nos. 40326, 39254, and 49998
shall be returned to Kunnan clean and without any incumbency
when requested by the latter.
In fine, We see no error in the decision of the Director General of
the IPO which affirmed the decision of the Director of the Bureau
of Legal Affairs canceling the registration of the questioned marks
in the name of petitioner Superior and denying its new application
for registration, upon a finding that Superior is not the rightful
owner of the subject marks.
39

WHEREFORE, the foregoing considered, the petition is
DISMISSED.
The CA decided that the registration of the KENNEX and PRO
KENNEX trademarks should be cancelled because SUPERIOR
was not the owner of, and could not in the first place have validly
registered these trademarks. Thus, as of the finality of the CA
decision on December 3, 2007, these trademark registrations
were effectively cancelled and SUPERIOR was no longer the
registrant of the disputed trademarks.
Section 22 of Republic Act No. 166, as amended (RA 166),[36]
the law applicable to this case, defines trademark infringement as
follows:
Section 22. Infringement, what constitutes. Any person who [1]
shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or
[2] reproduce, counterfeit, copy, or colorably imitate any such
mark or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services,
shall be liable to a civil action by the registrant for any or all of the
remedies herein provided. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a
mark can file a case for infringement. Corollary to this, Section 19
of RA 166 provides that any right conferred upon the registrant
under the provisions of RA 166[37] terminates when the judgment
or order of cancellation has become final, viz:
Section 19. Cancellation of registration. - If the Director finds that
a case for cancellation has been made out he shall order the
cancellation of the registration. The order shall not become
effective until the period for appeal has elapsed, or if appeal is
taken, until the judgment on appeal becomes final. When the
order or judgment becomes final, any right conferred by such
registration upon the registrant or any person in interest of record
shall terminate. Notice of cancellation shall be published in the
Official Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration
of a trademark has the effect of depriving the registrant of
protection from infringement from the moment judgment or order
of cancellation has become final.[38]
In the present case, by operation of law, specifically Section 19 of
RA 166, the trademark infringement aspect of SUPERIORs case
has been rendered moot and academic in view of the finality of
the decision in the Registration Cancellation Case. In short,
SUPERIOR is left without any cause of action for trademark
infringement since the cancellation of registration of a trademark
deprived it of protection from infringement from the moment
judgment or order of cancellation became final. To be sure, in a
trademark infringement, title to the trademark is indispensable to
a valid cause of action and such title is shown by its certificate of
registration.[39] With its certificates of registration over the
disputed trademarks effectively cancelled with finality,
SUPERIORs case for trademark infringement lost its legal basis
and no longer presented a valid cause of action.
Even assuming that SUPERIORs case for trademark
infringement had not been rendered moot and academic, there
can be no infringement committed by KUNNAN who was
adjudged with finality to be the rightful owner of the disputed
trademarks in the Registration Cancellation Case. Even prior to
the cancellation of the registration of the disputed trademarks,
SUPERIOR as a mere distributor and not the owner cannot
assert any protection from trademark infringement as it had no
right in the first place to the registration of the disputed
trademarks. In fact, jurisprudence holds that in the absence of
any inequitable conduct on the part of the manufacturer, an
exclusive distributor who employs the trademark of the
manufacturer does not acquire proprietary rights of the
manufacturer, and a registration of the trademark by the
distributor as such belongs to the manufacturer, provided the
fiduciary relationship does not terminate before application for
registration is filed.[40] Thus, the CA in the Registration
Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no
right to register the questioned mark in its name. Well-entrenched
in our jurisdiction is the rule that the right to register a trademark
should be based on ownership. When the applicant is not the
owner of the trademark being applied for, he has no right to apply
for the registration of the same. Under the Trademark Law, only
the owner of the trademark, trade name or service mark used to
distinguish his goods, business or service from the goods,
business or service of others is entitled to register the same. An
exclusive distributor does not acquire any proprietary interest in
the principals trademark and cannot register it in his own name
unless it is has been validly assigned to him.
In addition, we also note that the doctrine of res judicata bars
SUPERIORs present case for trademark infringement. The
doctrine of res judicata embraces two (2) concepts: the first is
"bar by prior judgment" under paragraph (b) of Rule 39, Section
47, and the second is "conclusiveness of judgment" under
paragraph (c) thereof.
In the present case, the second concept conclusiveness of
judgment applies. Under the concept of res judicata by
conclusiveness of judgment, a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the
rights of the parties or their privies in all later suits on points and
matters determined in the former suit.[41] Stated differently, facts
and issues actually and directly resolved in a former suit cannot
again be raised in any future case between the same parties,
even if the latter suit may involve a different cause of action.[42]
This second branch of the principle of res judicata bars the re-
litigation of particular facts or issues in another litigation between
the same parties on a different claim or cause of action.[43]
Because the Registration Cancellation Case and the present
case involve the same parties, litigating with respect to and
disputing the same trademarks, we are bound to examine how
one case would affect the other. In the present case, even if the
causes of action of the Registration Cancellation Case (the
cancellation of trademark registration) differs from that of the
present case (the improper or unauthorized use of trademarks),
the final judgment in the Registration Cancellation Case is
nevertheless conclusive on the particular facts and issues that
are determinative of the present case.
To establish trademark infringement, the following elements must
be proven: (1) the validity of plaintiffs mark; (2) the plaintiffs
ownership of the mark; and (3) the use of the mark or its
40
colorable imitation by the alleged infringer results in likelihood of
confusion.[44]
Based on these elements, we find it immediately obvious that the
second element the plaintiffs ownership of the mark was what the
Registration Cancellation Case decided with finality. On this
element depended the validity of the registrations that, on their
own, only gave rise to the presumption of, but was not conclusive
on, the issue of ownership.[45]
In no uncertain terms, the appellate court in the Registration
Cancellation Case ruled that SUPERIOR was a mere distributor
and could not have been the owner, and was thus an invalid
registrant of the disputed trademarks. Significantly, these are the
exact terms of the ruling the CA arrived at in the present petition
now under our review. Thus, whether with one or the other, the
ruling on the issue of ownership of the trademarks is the same.
Given, however, the final and executory ruling in the Registration
Cancellation Case on the issue of ownership that binds us and
the parties, any further discussion and review of the issue of
ownership although the current CA ruling is legally correct and
can stand on its own merits becomes a pointless academic
discussion.
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor the
CA made any factual findings with respect to the issue of unfair
competition. In its Complaint, SUPERIOR alleged that:[46]
17. In January 1993, the plaintiff learned that the defendant
Kunnan Enterprises, Ltd., is intending to appoint the defendant
Sports Concept and Distributors, Inc. as its alleged distributor for
sportswear and sporting goods bearing the trademark PRO-
KENNEX. For this reason, on January 20, 1993, the plaintiff,
through counsel, wrote the defendant Sports Concept and
Distributors Inc. advising said defendant that the trademark PRO-
KENNEX was registered and owned by the plaintiff herein.
18. The above information was affirmed by an announcement
made by the defendants in The Manila Bulletin issue of January
29, 1993, informing the public that defendant Kunnan
Enterprises, Ltd. has appointed the defendant Sports Concept
and Distributors, Inc. as its alleged distributor of sportswear and
sporting goods and equipment bearing the trademarks KENNEX
and PRO-KENNEX which trademarks are owned by and
registered in the name of plaintiff herein as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained herein,
were designed to and are of the nature so as to create confusion
with the commercial activities of plaintiff in the Philippines and is
liable to mislead the public as to the nature and suitability for their
purposes of plaintiffs business and the defendants acts are likely
to discredit the commercial activities and future growth of
plaintiffs business.
From jurisprudence, unfair competition has been defined as the
passing off (or palming off) or attempting to pass off upon the
public of the goods or business of one person as the goods or
business of another with the end and probable effect of deceiving
the public. The essential elements of unfair competition[47] are
(1) confusing similarity in the general appearance of the goods;
and (2) intent to deceive the public and defraud a competitor.[48]
Jurisprudence also formulated the following true test of unfair
competition: whether the acts of the defendant have the intent of
deceiving or are calculated to deceive the ordinary buyer making
his purchases under the ordinary conditions of the particular trade
to which the controversy relates. One of the essential requisites
in an action to restrain unfair competition is proof of fraud; the
intent to deceive, actual or probable must be shown before the
right to recover can exist.[49]
In the present case, no evidence exists showing that KUNNAN
ever attempted to pass off the goods it sold (i.e. sportswear,
sporting goods and equipment) as those of SUPERIOR. In
addition, there is no evidence of bad faith or fraud imputable to
KUNNAN in using the disputed trademarks. Specifically,
SUPERIOR failed to adduce any evidence to show that KUNNAN
by the above-cited acts intended to deceive the public as to the
identity of the goods sold or of the manufacturer of the goods
sold. In McDonalds Corporation v. L.C. Big Mak Burger, Inc.,[50]
we held that there can be trademark infringement without unfair
competition such as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus
preventing the public from being deceived that the goods
originate from the trademark owner. In this case, no issue of
confusion arises because the same manufactured products are
sold; only the ownership of the trademarks is at issue.
Furthermore, KUNNANs January 29, 1993 notice by its terms
prevents the public from being deceived that the goods originated
from SUPERIOR since the notice clearly indicated that KUNNAN
is the manufacturer of the goods bearing the trademarks
KENNEX and PRO KENNEX. This notice states in full:[51]
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the
internationally-renowned trademarks KENNEX and PRO
KENNEX for sportswear and sporting goods and equipment.
Kunnan Enterprises Ltd. has registered the trademarks KENNEX
and PRO KENNEX in the industrial property offices of at least 31
countries worldwide where KUNNAN Enterprises Ltd. has been
selling its sportswear and sporting goods and equipment bearing
the KENNEX and PRO KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had
terminated its Distributorship Agreement with Superior
Commercial Enterprises, Inc. on December 31, 1991. As a result,
Superior Commercial Enterprises, Inc. is no longer authorized to
sell sportswear and sporting goods and equipment manufactured
by Kunnan Enterprises Ltd. and bearing the trademarks KENNEX
and PRO KENNEX.
xxxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND
DISTRIBUTORS, INC. as its exclusive Philippine distributor of
sportswear and sporting goods and equipment bearing the
trademarks KENNEX and PRO KENNEX. The public is advised
to buy sporting goods and equipment bearing these trademarks
only from SPORTS CONCEPT AND DISTRIBUTORS, INC. to
ensure that the products they are buying are manufactured by
Kunnan Enterprises Ltd. [Emphasis supplied.]
41

Finally, with the established ruling that KUNNAN is the rightful
owner of the trademarks of the goods that SUPERIOR asserts
are being unfairly sold by KUNNAN under trademarks registered
in SUPERIORs name, the latter is left with no effective right to
make a claim. In other words, with the CAs final ruling in the
Registration Cancellation Case, SUPERIORs case no longer
presents a valid cause of action. For this reason, the unfair
competition aspect of the SUPERIORs case likewise falls.
WHEREFORE, premises considered, we DENY Superior
Commercial Enterprises, Inc.s petition for review on certiorari for
lack of merit. Cost against petitioner Superior Commercial
Enterprises, Inc.
SO ORDERED.
G.R. No. L-19441 June 30, 1964
SHELL COMPANY OF THE PHILIPPINES, LTD., Petitioner,
vs. INSULAR PETROLEUM REFINING CO., LTD., and COURT
OF APPEALS, Respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Paredes, Poblador, Cruz & Nazareno for respondents.
PAREDES, J.:chanrobles virtual law library
Petitioner, Shell Co. of the Phil., Ltd. (Shell for short), is a
corporation engaged in the sale of petroleum products, including
lubricating oil. The packages and containers of its goods bear its
trademark, labeled or stenciled thereon. Defendant Insular
Petroleum Refining Co., Ltd. (Insular for short), is a registered
limited partnership, whose principal business is collecting used
lubricating oil which, thru a scientific process, is refined and
marketed to the public at a price much lower than that of new
lubricating oil. From the used oil, respondent produces two types
of lubricating oil one, a straight mineral oil classified as second
grade or low-grade oil; and another, a first grade or high-grade
oil. The essential difference between the two types lies in the fact
that the high-grade oil contains an additive element which is not
found in the other type. In marketing these two types of oil,
respondent, as a practice, utilizes for the high grade oil
containers, painted black on the sides and yellow on top and on
the bottom with its tradename stenciled thereon, with a special
sealing device at its opening which cannot be removed unless the
oil is used. In selling its low-grade oil, respondent use
miscellaneous containers, which its general manager Donald
Mead describes, "generally, we used miscellaneous containers
which we have on hand, several drums, may be all drums, with
marks, on them, we have several used drums may be belonging
to the U.S. Army or other drums may be belonging to the Caltex,
or the Stanvac we have some that belonged to the Union,
miscellaneous drums of other companies, but they are used
drums. ... And some of those miscellaneous containers are the
Shell containers. ... but before filling the empty drums we
obliterate the markings of the drums, whether it is army type
drums or whether it is a Union brand or whether it is a Valvoline
or Caltex or Shell or Standard Vacuum drum". In one transaction,
however, which was consummated with Conrado Uichangco a
dealer of petitioner's gasoline and lubricating oil, the low-grade oil
that was sold to said operator was contained in a drum with the
petitioner's mark or brand "Shell" still stenciled without having
been erased. The circumstances leading to the consummation of
this isolated transaction, have been summed, up by the Court of
Appeals as follows:
This single transaction between plaintiff and defendant was
effected, according to Conrado Uichangco an operator of a Shell
service station at the corner of San Andres and Tuason Privado
Streets, Manila, and who has been losing during the first eight
and ten months of operation of his station, although he had
money to back up his losses, when a certain F. Pecson Lozano,
in agent of the defendant, repaired at his station and "tried to
convince me that Insoil is a good oil". As a matter of fact, he tried
to show me a chemical analysis of Insoil which he claimed was
very close to the analysis of Shell oil; and he also told me that he
could sell this kind of oil (Insoil) to me at a much cheaper price so
that I could make a bigger margin of profits Q. What did you
reply? A. I told Mr. F. Pecson Lozano that if his intention was to
sell me Insoil for me to pass as any of the Shell oils, I was not
agreeable because I did not want to cheat my customers. ... . Q.
You ordered a Shell drum from Mr. Lozano on your own volition
or on orders of the Shell management? A. Well, this is the story
as to how I happened to order that one drum of Insoil oil that was
inside that Shell drum. When Mr. Lozano was insistent that I buy
Insoil package in a Shell drum I called up Mr. Crespo and I risked
him in effect why we have to kill ourselves when there is a man
here who came to my station and told me that he has oil that
approximates the analysis of Shell oil which he could sell to me at
a very much cheaper price, and Mr. Crespo told me "that is not
true", and then he further added, "can you order one drum of that
oil for me. Charge it against me." I told him "Yes I will." So I
ordered that one drum of Insoil from Mr. F. Pecson Lozano. Q.
Do you know whether that one drum of oil was ever sold by you
or by the Shell company to the public? A. It was never re-sold to
the public. I re-sold it to the Shell Company of the Philippines. Q.
You mean you bought in your own name and you sold it to the
Shell company at a profit? A. I sold it to the Shell company
because it was an order of Mr. Crespo. I did not profit anything
from it, I just charged them the invoice price. ... . Q. My question
to you is: He never made any misrepresentation to you that he
was selling you any oil other than Insoil Motor oil, straight mineral
SAE No. 30? A. That is what he told me. ... . Q. And it is also a
fact that you stated in the Fiscal's Office and in the Court of First
Instance during the trial there that there was no seal whatsoever
appearing in the opening of the drum; is that correct? A. There
was no seal by the Insoil or by the Shell Company.
The evidence of the above transaction was an Invoice issued by
the defendant's agent, describing the goods sold as "Insoil Motor
Oil (straight mineral) SAE 30 - 1 drum - P76.00 - (seller's
drum)." chanrobles virtual law library
The incident between petitioner's operator and respondent's
agent, brought about the presentation with the Manila CFI, a case
for damages on the allegation of unfair competition and a
Criminal Case No. 42020 under the Revised Penal Code (Art.
189) against Donald Mead, Manager, Pedro Kayanan and F.
Tecson Lozano. In the criminal case, the accused therein were
acquitted, the Court having found that the element of deceit was
absent.chanroblesvirtualawlibrarychanrobles virtual law library
In the civil case, petitioner herein invoked two causes of action:
(1) that respondent in selling its low-grade oil in Shell containers,
without erasing the marks or brands labeled or stencilled thereon,
intended to mislead the buying public to the prejudice of petitioner
and the general public; and (2) defendant had attempted to
persuade Shell dealers to purchase its low-grade oil and to pass
the same to the public as Shell oil, by reason of which petitioner
bad suffered damages in the form of decrease in sales, estimated
at least P10,000.00. A prayer for double the actual damages was
made, pursuant to section 23 of Republic Act 166, P5,000.00 for
attorneys fees, P1,000.00 for legal expenses and P25,000.00 for
exemplary damages. A writ of preliminary injunction was
requested to enjoin respondent herein to cease and desist from
using for the sale of any of its products and more particularly for
the sale of its low-grade lubricating oil. Shell containers with Shell
markings still on them. The motion to dissolve the injunction
granted, was denied by the court a
quo.chanroblesvirtualawlibrarychanrobles virtual law library
Respondent Insular answering the complaint, after the usual
admissions and denials, alleged that it "has never attempted to
pass off its products as that of another nor to persuade anyone to
do the same", and that the action is barred by the decision in the
criminal case No. 42020. A counterclaim for P81,000.00 for
42
actual, moral and exemplary damages, P4,000.00 for attorney's
fees and P5,000.00 for legal expenses with interposed by
respondent.chanroblesvirtualawlibrarychanrobles virtual law
library
After trial, the CFI found for Shell and ordered respondent to pay
P20,000.00 for actual damages, P5,000.00 for attorney's fees,
P1,000.00 for legal expenses and P10,000.00 by way of
exemplary damages and the
costs.chanroblesvirtualawlibrarychanrobles virtual law library
In reversing the above judgment, the Court of Appeals,
disquisitioned:
On the question of whether or not, as a matter of fact, the
defendant is guilty of unfair competition in the conduct of its trade
or business in the marketing of its low-grade oil, particularly in
the single transaction between defendant's agent and plaintiff's
dealer, as hereinabove narrated, we deem it wise to preface the
discussion by citing certain passages in the decision of the
Supreme Court in the case of Alhambra Cigar, etc. v. Mojica, 27
Phil. Rep. 266, thus:
"No inflexible rule can be laid down as to what will constitute
unfair competition. Each case is, in a measure, a law unto itself.
Unfair competition is dumps a question of fact. The question to be
determined in every case is whether or not, as a matter of fact,
the name or mark used by the defendant has previously come to
indicate and designate plaintiffs goods, or, to state it in another
way, whether defendant, as a matter of fact, is, by his conduct,
passing off defendant's goods as plaintiffs goods or his business
as plaintiff's business. The universal test question is whether the
public is likely to be deceived. ... . Nothing less than conduct
tending to pass off one man's goods or business as that of
another will constitute unfair competition. Actual or probable
deception and confusion on the part of the customers by reason
of defendant's practices must always appear."
Encompassing the facts of the case to the foregoing ruling in the
Alhambra case, it clearly appears that defendant's practices in
marketing its low-grade oil did not cause actual or probable
deception and confusion on the part of the general public,
because, as shown from the established facts, with the exception
of that single transaction regarding the one drum of oil sold by the
defendant's agent to the plaintiff's dealer, as aforesaid, before
marketing to the public its low-grade oil in containers the brands
or marks of the different companies stenciled on the containers
are totally obliterated and erased. The defendant did not pass off
or attempt to pass off upon the public its goods as the goods of
another. There is neither express nor implied representation to
that effect. The practices do not show a conduct to the end and
probable effect to which is to deceive the public, or pass off its
goods as those of another. Proof of this may be clearly deduced
from the fact that, with the exception of the sale of one drum of
low-grade oil by defendant's agent to Uichangco no other
companies whose drums or containers have been used by the
defendant in its business have filed any complaint to protect
against the practices of the defendant. ...
.chanroblesvirtualawlibrarychanrobles virtual law library
Now we shall dwell on the transaction between defendant's agent
and plaintiff's dealer, Uichangco to determine whether or not, as a
matter of fact, the defendant is guilty of unfair competition. There
is evidence showing that the use of the defendant of the drum or
container with the Shell brand stenciled thereon was with the
knowledge and consent of Uichangco. There is also the
categorical testimony of Uichangco that defendant's agent did not
make any representation that said agent was selling any oil other
than Insoil motor oil. The sales invoice states that Insoil Oil was
sold. True, that a drum with the brand Shell remaining unerased
was used by the defendant. But, Uichangco was apprised
beforehand that a Shell drum would be used, and in fact the
instruction of Crespo to Uichangco could mean - to buy Insoil oil
contained in a Shell drum. The buyer could not have been
deceived or confused that he was not buying Insoil Oil. There is
reason to believe that the transaction was consummated in
pursuance of a plan of Mr. Crespo to obtain evidence for the filing
of a case. The oil was never sold to the public because the
plaintiff never intended or contemplated doing so.
The other issue discussed by the Court of Appeals, that is,
whether the acquittal of the officers and employees of the
respondent in the criminal case (supra), constituted a bar to the
filing of the civil case or amounted to res judicata, is, to our mind,
not necessary to resolve in the instant appeal. However, We
agree with the appellate court that there is no res
judicata.chanroblesvirtualawlibrarychanrobles virtual law library
In the petition, Shell claims three (3) errors allegedly committed
by the Court of Appeals, all of which pose the singular issue of
whether respondent in the isolated transaction, stated elsewhere
in this opinion, committed an act of unfair competition and should
be held liable.chanroblesvirtualawlibrarychanrobles virtual law
library
The complaint was predicated on section 29 of Rep. Act No. 166,
defining unfair competition, to wit:
Any person who shall employ deception or any other means
contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, ... for those of the one
having established such goodwill, or who shall commit any act
calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
From the above definition and authorities interpretative of the
same, it is seen that to hold a defendant guilty of unfair
competition, no less than satisfactory and convincing evidence is
essential, showing that the defendant has passed of or attempted
to pass off his own goods as those of another and that the
customer was deceived with respect to the origin of the goods. In
other words, the inherent element of unfair competition is fraud or
deceit. (I Nim's The Law of Unfair Competition and Trademarks,
4th ed. pp. 52-53, and cases cited therein; U. S. v. Kyburz, 28
Phil. 475, citing Paul on Trademarks, sec. 209; I Callman's, The
Law of Unfair Competition and Trademarks, 329; Roger's New
Directions in the Law of Unfair Competition, (1940) N. Y. L. Rev.
317, 320; Alhambra Cigar, etc. v. Mojica, 29 Phil. 266, refer to
passage quoted in the decision of
C.A. supra).chanroblesvirtualawlibrarychanrobles virtual law
library
As no inflexible rule can be laid down as to what will constitute
unfair competition; as each case is, in a measure, a law unto
itself and as unfair competition is always a question of fact, the
determination of whether unfair competition was committed in the
case at bar, must have to depend upon the fact as found by the
Court of Appeals, to the definitiveness of which We are bound (I
Moran's Rules of Court, 1957 Ed. p. 699 & cases cited therein).
"... The Supreme Court can not examine the question of whether
or not the Court of Appeals was right when that tribunal
concluded from the uncontroverted evidence that there had been
no deceit." (De Luna, et al. v. Linatoc, 74 Phil. 15). And the facts
of the case at bar, are, as found and exposed by the Court of
Appeals in the portion of its decision above-
quoted.chanroblesvirtualawlibrarychanrobles virtual law library
Not just because a manufacturer used a container still bearing a
competitor's marking in the sale of one's products, irrespective of
to whom and how the sale is made, can there be a conclusion
that the buying public has been misled or will be misled, and,
therefore, unfair competition is born. The single transaction at bar
will not render defendant's act an unfair competition, much in the
same way that the appearance of one swallow does not make a
season, summer.chanroblesvirtualawlibrarychanrobles virtual law
library
It was found by the Court of Appeals that in all transactions of the
low-grade Insoil, except the present one, all the marks and
brands on the containers used were erased or obliterated. The
drum in question did not reach the buying public. It was merely a
shell dealer or an operator of a Shell Station who purchased the
drum not to be resold to the public, but to be sold to the petitioner
43
company, with a view of obtaining evidence against someone
who might have been committing unfair business practices, for
the dealer had found that his income was dwindling in his
gasoline station. Uichangco the Shell dealer, testified that Lozano
(respondent's agent) did not all make any representation that he
(Lozano) was selling any oil other than Insoil motor oil, a fact
which finds corroboration in the receipt issued for the sale of the
drum. Uichangco was apprised beforehand that Lozano would
sell Insoil oil in a Shell drum. There was no evidence that
defendant or its agent attempted to persuade Uichangco or any
Shell dealer, for that matter, to purchase its low-grade oil and to
pass the same to the public as Shell oil. It was shown that Shell
and other oil companies, deliver oil to oil dealers or gasoline
stations in drums, these dealers transfer the contents of the
drums to retailing dispensers known as "tall boys", from which the
oil is retailed to the public by
liters.chanroblesvirtualawlibrarychanrobles virtual law library
This Court is not unaware of the decisions cited by petitioner to
bolster its contention. We find those cases, however, not
applicable to the one at bar. Those cases were predicated on
facts and circumstances different from those of the present. In
one case, the trade name of plaintiff was stamped on the goods
of defendant and they were being passed as those of the plaintiff.
This circumstance does not obtain here. From these cases, one
feature common to all comes out in bold relief and that is, the
competing products involving the offending bottles, wrappers,
packages or marks reached, the hands of the ultimate consumer,
so bottled, wrapped, package or marked. In other words, it is the
form in which the wares or products come to the ultimate
consumer that was significant; for, as has been well said, the law
of unfair competition does not protect purchasers against
falsehood which the tradesman may tell; the falsehood must be
told by the article itself in order to make the law of unfair
competition applicable.chanroblesvirtualawlibrarychanrobles
virtual law library
Petitioner contends that there had been a marked decrease in the
volume of sales of low-grade oil of the company, for which reason
it argues that the sale of respondent's low-grade oil in Shell
containers was the cause. We are reluctant to share the logic of
the argument. We are more inclined to believe that several
factors contributed to the decrease of such sales. But let us
assume, for purposes of argument, that the presence of
respondent's low-grade oil in the market contributed to such
decrease. May such eventuality make respondent liable for unfair
competition? There is no prohibition for respondent to sell its
goods, even in places where the goods of petitioner had long
been sold or extensively advertised. Respondent should not be
blamed if some petitioner's dealers by Insoil oil, as long as
respondent does not deceive said dealers. If petitioner's dealers
pass off Insoil oil as Shell oil, that is their responsibility. If there
was any such effort to deceive the public, the dealers to whom
the defendant (respondent) sold its products and not the latter,
were. legally responsible for such deception. The passing of said
oil, therefore, as product of Shell was not performed by the
respondent or its agent, but petitioner's dealers, which act
respondent had no control whatever. And this could easily be
done, for, as respondents' counsel put it -
The point we would like to drive home is that if a SHELL dealer
wants to fool the public by passing off INSOIL as SHELL oil he
could do this by the simple expedient of placing the INSOIL oil or
any other oil for that matter in the "tall boys" and dispense it to the
public as SHELL oil. Whatever container INSOIL uses would be
of no moment. ... absence of a clear showing, that INSOIL and
the SHELL dealer connived or conspired, we respectfully
maintain that the responsibility of INSOIL ceases from the
moment its oil, if ever it has ever been done, is transferred by a
SHELL dealer to a SHELL "tall boy".
And the existence of connivance or conspiracy, between dealer
Uichangco and Agent Lozano has not in the least been
insinuated.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner submits the adoption in the case at bar of the "service
station is package theory" - that the service stations of oil
companies are packages in themselves, such that all products
emanating therefrom are expected to be those of the company
whose marks the station bear, that when a motorist drives to a
Shell station, he does so with the intention of buying Shell
products and that he is naturally guided by the marking of the
station itself. Hence, it constitutes a deceit on the buying public,
to sell to said motorist any other kind of products without
apprising them beforehand that they are not Shell products.
(Third assignment of error). In view, however, of the findings and
conclusions reached, there seem to be no need of discussing the
merits and demerits of the theory, or whether the same is
applicable or not, to the present
case.chanroblesvirtualawlibrarychanrobles virtual law library
CONFORMABLY WITH ALL THE FOREGOING, We find that the
decision of the Court of Appeals appealed from, is in accordance
with the fact, the law and jurisprudence on the matter. The same
is affirmed, with costs against petitioner, in both instances.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., Regala and Makalintal, JJ., concur.
Barrera and Dizon, JJ., took no part.
[G.R. No. 118192. October 23, 1997]
PRO LINE SPORTS CENTER, INC., and QUESTOR
CORPORATION, petitioners, vs. COURT OF APPEALS,
UNIVERSAL ATHLETICS INDUSTRIAL PRODUCTS, INC., and
MONICO SEHWANI, respondents.
DECISION
BELLOSILLO, J.:
This case calls for a revisit of the demesne of malicious
prosecution and its implications.
This petition stemmed from a criminal case for unfair
competition filed by Pro Line Sports Center, Inc. (PRO LINE) and
Questor Corporation (QUESTOR) against Monico Sehwani,
president of Universal Athletics and Industrial Products, Inc.
(UNIVERSAL). In that case Sehwani was exonerated. As a
retaliatory move, Sehwani and UNIVERSAL filed a civil case for
damages against PRO LINE and QUESTOR for what they
perceived as the wrongful and malicious filing of the criminal
action for unfair competition against them.
But first, the dramatis personae. By virtue of its merger with
A.G. Spalding Bros., Inc., on 31 December 1971,[1] petitioner
QUESTOR, a US-based corporation, became the owner of the
trademark "Spalding" appearing in sporting goods, implements
and apparatuses. Co-petitioner PRO LINE, a domestic
corporation, is the exclusive distributor of "Spalding" sports
products in the Philippines.[2] Respondent UNIVERSAL, on the
other hand, is a domestic corporation engaged in the sale and
manufacture of sporting goods while co-respondent Monico
Sehwani is impleaded in his capacity as president of the
corporation.
On 11 February 1981, or sixteen years ago, Edwin Dy
Buncio, General Manager of PRO LINE, sent a letter-complaint to
the National Bureau of Investigation (NBI) regarding the alleged
manufacture of fake "Spalding" balls by UNIVERSAL. On 23
February 1981 the NBI applied for a search warrant with the then
Court of First Instance, Br. 23, Pasig, Rizal, then presided over by
Judge Rizalina Bonifacio Vera. On that same day Judge Vera
issued Search Warrant No. 2-81 authorizing the search of the
premises of UNIVERSAL in Pasig. In the course of the search,
some 1,200 basketballs and volleyballs marked "Spalding" were
seized and confiscated by the NBI. Three (3) days later, on
motion of the NBI, Judge Vera issued another order, this time to
44
seal and padlock the molds, rubber mixer, boiler and other
instruments at UNIVERSAL's factory. All these were used to
manufacture the fake "Spalding" products, but were simply too
heavy to be removed from the premises and brought under the
actual physical custody of the court. However, on 28 April 1981,
on motion of UNIVERSAL, Judge Vera ordered the lifting of the
seal and padlock on the machineries, prompting the People of the
Philippines, the NBI, together with PRO LINE and QUESTOR, to
file with the Court of Appeals a joint petition for certiorari and
prohibition with preliminary injunction (CA G.R. No. 12413)
seeking the annulment of the order of 28 April 1981. On 18 May
1981, the appellate court issued a temporary restraining order
enjoining Judge Vera from implementing her latest order.
Meanwhile, on 26 February 1981, PRO LINE and
QUESTOR filed a criminal complaint for unfair competition
against respondent Monico Sehwani together with Robert, Kisnu,
Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los
Reyes before the Provincial Fiscal of Rizal (I. S. No. 81-
2040). The complaint was dropped on 24 June 1981 for the
reason that it was doubtful whether QUESTOR had indeed
acquired the registration rights over the mark "Spalding" from A.
G. Spalding Bros., Inc., and complainants failed to adduce an
actual receipt for the sale of "Spalding" balls by UNIVERSAL.[3]
On 9 July 1981 a petition for review seeking reversal of the
dismissal of the complaint was filed with the Ministry of
Justice. While this was pending, the Court of Appeals rendered
judgment on 4 August 1981 in CA G.R. No. 12413 affirming the
order of Judge Vera which lifted the seal and padlock on the
machineries of UNIVERSAL. The People, NBI, PRO LINE and
QUESTOR challenged the decision of the appellate court before
this Court in G.R. No. 57814. On 31 August 1981 we issued a
temporary restraining order against the Court of Appeals vis-a-vis
the aforesaid decision.
In connection with the criminal complaint for unfair
competition, the Minister of Justice issued on 10 September 1981
a Resolution overturning the earlier dismissal of the complaint
and ordered the Provincial Fiscal of Rizal to file an Information for
unfair competition against Monico Sehwani. The Information was
accordingly filed on 29 December 1981 with then Court of First
Instance of Rizal, docketed as Crim. Case No. 45284, and raffled
to Br. 21 presided over by Judge Gregorio Pineda.
Sehwani pleaded not guilty to the charge. But, while he
admitted to having manufactured "Spalding" basketballs and
volleyballs, he nevertheless stressed that this was only for the
purpose of complying with the requirement of trademark
registration with the Philippine Patent Office. He cited Chapter 1,
Rule 43, of the Rules of Practice on Trademark Cases, which
requires that the mark applied for be used on applicant's goods
for at least sixty (60) days prior to the filing of the trademark
application and that the applicant must show substantial
investment in the use of the mark. He also disclosed that
UNIVERSAL applied for registration with the Patent Office on 20
February 1981.
After the prosecution rested its case, Sehwani filed a
demurrer to evidence arguing that the act of selling the
manufactured goods was an essential and constitutive element of
the crime of unfair competition under Art. 189 of the Revised
Penal Code, and the prosecution was not able to prove that he
sold the products. In its Order of 12 January 1981 the trial court
granted the demurrer and dismissed the charge against Sehwani.
PRO LINE and QUESTOR impugned before us in G.R. No.
63055 the dismissal of the criminal case. In our Resolution of 2
March 1983 we consolidated G.R. No. 63055 with G.R. No.
57814 earlier filed. On 20 April 1983 we dismissed the petition in
G.R. No. 63055 finding that the dismissal by the trial court of
Crim. Case No. 45284 was based on the merits of the case which
amounted to an acquittal of Sehwani. Considering that the issue
raised in G.R. No. 58714 had already been rendered moot and
academic by the dismissal of Crim. Case No. 45284 and the fact
that the petition in G.R. No. 63055 seeking a review of such
dismissal had also been denied, the Court likewise dismissed the
petition in G.R. No. 58714. The dismissal became final and
executory with the entry of judgment made on 10 August 1983.
Thereafter, UNIVERSAL and Sehwani filed a civil case for
damages with the Regional Trial Court of Pasig[4] charging that
PRO LINE and QUESTOR maliciously and without legal basis
committed the following acts to their damage and prejudice: (a)
procuring the issuance by the Pasig trial court of Search Warrant
No. 2-81 authorizing the NBI to raid the premises of UNIVERSAL;
(b) procuring an order from the same court authorizing the
sealing and padlocking of UNIVERSAL's machineries and
equipment resulting in the paralyzation and virtual closure of its
operations; (c) securing a temporary restraining order from the
Court of Appeals to prevent the implementation of the trial court's
order of 28 April 1981 which authorized the lifting of the seal and
padlock on the subject machineries and equipment to allow
UNIVERSAL to resume operations; (d) securing a temporary
restraining order from the High Tribunal against the Court of
Appeals and charging the latter with grave abuse of discretion for
holding that the order of 28 April 1981 was judiciously issued,
thus prolonging the continued closure of UNIVERSAL's business;
(e) initiating the criminal prosecution of Monico Sehwani for unfair
competition under Art. 189 of the Penal Code; and, (g) appealing
the order of acquittal in Crim. Case No. 45284 directly to the
Supreme Court with no other purpose than to delay the
proceedings of the case and prolong the wrongful invasion of
UNIVERSAL's rights and interests.
Defendants PRO LINE and QUESTOR denied all the
allegations in the complaint and filed a counterclaim for damages
based mainly on the unauthorized and illegal manufacture by
UNIVERSAL of athletic balls bearing the trademark "Spalding."
The trial court granted the claim of UNIVERSAL declaring
that the series of acts complained of were "instituted with
improper, malicious, capricious motives and without sufficient
justification." It ordered PRO LINE and QUESTOR jointly and
severally to pay UNIVERSAL and Sehwani P676,000.00 as
actual and compensatory damages, P250,000.00 as moral
damages, P250,000.00 as exemplary
damages.[5] and P50,000.00 as attorney's fees. The trial court at
the same time dismissed the counterclaim of PRO LINE and
QUESTOR.
The Court of Appeals affirmed the decision of the lower
court but reduced the amount of moral damages to P150,000.00
and exemplary damages to P100,000.00.
Two (2) issues are raised before us: (a) whether private
respondents Sehwani and UNIVERSAL are entitled to recover
damages for the alleged wrongful recourse to court proceedings
by petitioners PRO LINE and QUESTOR; and, (b) whether
petitioners' counterclaim should be sustained.
PRO LINE and QUESTOR cannot be adjudged liable for
damages for the alleged unfounded suit. The complainants were
unable to prove two (2) essential elements of the crime of
malicious prosecution, namely, absence of probable cause and
legal malice on the part of petitioners.
UNIVERSAL failed to show that the filing of Crim. Case No.
45284 was bereft of probable cause. Probable cause is the
existence of such facts and circumstances as would excite the
belief in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty
of the crime for which he was prosecuted. [6] In the case before us,
then Minister of Justice Ricardo C. Puno found probable cause
when he reversed the Provincial Fiscal who initially dismissed the
complaint and directed him instead to file the corresponding
Information for unfair competition against private respondents
herein.[7] The relevant portions of the directive are quoted
hereunder:
The intent on the part of Universal Sports to deceive the public
and to defraud a competitor by the use of the trademark
"Spalding" on basketballs and volleyballs seems apparent. As
President of Universal and as Vice President of the Association of
Sporting Goods Manufacturers, Monico Sehwani should have
known of the prior registration of the trademark "Spalding" on
basketballs and volleyballs when he filed the application for
registration of the same trademark on February 20, 1981, in
behalf of Universal, with the Philippine Patent Office. He was
even notified by the Patent Office through counsel on March 9,
1981, that "Spalding" was duly registered with said office in
45
connection with sporting goods, implements and apparatus by
A.G. Spalding & Bros., Inc. of the U.S.A.
That Universal has been selling these allegedly misbranded
"Spalding" balls has been controverted by the firms allegedly
selling the goods. However, there is sufficient proof that Universal
manufactured balls with the trademark "Spalding" as admitted by
Monico himself and as shown by the goods confiscated by virtue
of the search warrant.
Jurisprudence abounds to the effect that either a seller or a
manufacturer of imitation goods may be liable for violation of
Section 29 of Rep. Act No. 166 (Alexander v. Sy Bok, 97 Phil.
57). This is substantially the same rule obtaining in statutes and
judicial construction since 1903 when Act No. 666 was approved
(Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) x x x x[8]
The existence of probable cause for unfair competition by
UNIVERSAL is derivable from the facts and circumstances of the
case. The affidavit of Graciano Lacanaria, a former employee of
UNIVERSAL, attesting to the illegal sale and manufacture of
"Spalding" balls and seized "Spalding" products and instruments
from UNIVERSAL's factory was sufficient prima facie evidence to
warrant the prosecution of private respondents. That a
corporation other than the certified owner of the trademark is
engaged in the unauthorized manufacture of products bearing the
same trademark engenders a reasonable belief that a criminal
offense for unfair competition is being committed.
Petitioners PRO LINE and QUESTOR could not have been
moved by legal malice in instituting the criminal complaint for
unfair competition which led to the filing of the Information against
Sehwani. Malice is an inexcusable intent to injure, oppress, vex,
annoy or humiliate. We cannot conclude that petitioners were
impelled solely by a desire to inflict needless and unjustified
vexation and injury on UNIVERSAL's business interests. A resort
to judicial processes is not per se evidence of ill will upon which a
claim for damages may be based. A contrary rule would
discourage peaceful recourse to the courts of justice and induce
resort to methods less than legal, and perhaps even violent.[9]
We are more disposed, under the circumstances, to hold
that PRO LINE as the authorized agent of QUESTOR exercised
sound judgment in taking the necessary legal steps to safeguard
the interest of its principal with respect to the trademark in
question. If the process resulted in the closure and padlocking of
UNIVERSAL's factory and the cessation of its business
operations, these were unavoidable consequences of petitioners'
valid and lawful exercise of their right. One who makes use of his
own legal right does no injury.Qui jure suo utitur nullum damnum
facit. If damage results from a person's exercising his legal rights,
it is damnum absque injuria.[10]
Admittedly, UNIVERSAL incurred expenses and other costs
in defending itself from the accusation. But, as Chief Justice
Fernando would put it, "the expenses and annoyance of litigation
form part of the social burden of living in a society which seeks to
attain social control through law."[11] Thus we see no cogent
reason for the award of damages, exorbitant as it may seem, in
favor of UNIVERSAL. To do so would be to arbitrarily impose a
penalty on petitioners' right to litigate.
The criminal complaint for unfair competition, including all
other legal remedies incidental thereto, was initiated by
petitioners in their honest belief that the charge was
meritorious. For indeed it was. The law brands business practices
which are unfair, unjust or deceitful not only as contrary to public
policy but also as inimical to private interests.In the instant case,
we find quite aberrant Sehwani's reason for the manufacture of
1,200 "Spalding" balls, i.e., the pending application for trademark
registration of UNIVERSAL with the Patent Office, when viewed
in the light of his admission that the application for registration
with the Patent Office was filed on 20 February 1981, a good nine
(9) days after the goods were confiscated by the NBI. This
apparently was an afterthought but nonetheless too late a
remedy. Be that as it may, what is essential for registrability is
proof of actual use in commerce for at least sixty (60) days and
not the capability to manufacture and distribute samples of the
product to clients.
Arguably, respondents' act may constitute unfair
competition even if the element of selling has not been
proved. To hold that the act of selling is an indispensable element
of the crime of unfair competition is illogical because if the law
punishes the seller of imitation goods, then with more reason
should the law penalize the manufacturer. In U. S. v.
Manuel,[12] the Court ruled that the test of unfair competition is
whether certain goods have been intentionally clothed with an
appearance which is likely to deceive the ordinary purchasers
exercising ordinary care. In this case, it was observed by the
Minister of Justice that the manufacture of the "Spalding" balls
was obviously done to deceive would-be buyers. The projected
sale would have pushed through were it not for the timely seizure
of the goods made by the NBI. That there was intent to sell or
distribute the product to the public cannot also be disputed given
the number of goods manufactured and the nature of the
machinery and other equipment installed in the factory.
We nonetheless affirm the dismissal of petitioners'
counterclaim for damages. A counterclaim partakes of the nature
of a complaint and/or a cause of action against the plaintiffs. [13] It
is in itself a distinct and independent cause of action, so that
when properly stated as such, the defendant becomes, in respect
to the matter stated by him, an actor, and there are two
simultaneous actions pending between the same parties, where
each is at the same time both a plaintiff and defendant. [14] A
counterclaim stands on the same footing and is to be tested by
the same rules, as if it were an independent action. [15]
Petitioners' counterclaim for damages based on the illegal
and unauthorized manufacture of "Spalding" balls certainly
constitutes an independent cause of action which can be the
subject of a separate complaint for damages against
UNIVERSAL. However, this separate civil action cannot anymore
be pursued as it is already barred by res judicata, the judgment in
the criminal case (against Sehwani) involving both the criminal
and civil aspects of the case for unfair competition. [16] To recall,
petitioners PRO LINE and QUESTOR, upon whose initiative the
criminal action for unfair competition against respondent
UNIVERSAL was filed, did not institute a separate civil action for
damages nor reserve their right to do so. Thus the civil aspect for
damages was deemed instituted in the criminal case. No better
manifestation of the intent of petitioners to recover damages in
the criminal case can be expressed than their active participation
in the prosecution of the civil aspect of the criminal case through
the intervention of their private prosecutor. Obviously, such
intervention could only be for the purpose of recovering damages
or indemnity because the offended party is not entitled to
represent the People of the Philippines in the prosecution of a
public offense.[17] Section 16, Rule 110, of the Rules of Court
requires that the intervention of the offended party in the criminal
action can be made only if he has not waived the civil action nor
expressly reserved his right to institute it separately. [18] In an
acquittal on the ground that an essential element of the crime
was not proved, it is fundamental that the accused cannot be held
criminally nor civilly liable for the offense. Although Art. 28 of the
New Civil Code[19] authorizes the filing of a civil action separate
and distinct from the criminal proceedings, the right of petitioners
to institute the same is not unfettered. Civil liability arising from
the crime is deemed instituted and determined in the criminal
proceedings where the offended party did not waive nor reserve
his right to institute it separately. [20] This is why we now hold that
the final judgment rendered therein constitutes a bar to the
present counterclaim for damages based upon the same
cause.[21]
WHEREFORE, the petition is partly GRANTED. The
decision of respondent Court of Appeals is MODIFIED by deleting
the award in favor of private respondents UNIVERSAL and
Monico Sehwani of actual, moral and exemplary damages as well
as attorney's fees.
The dismissal of petitioners' counterclaim is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
46