Trademark Infringement
On December
G.R. No. L-46817 April 18, 1941
TEODORO KALAW NG KHE, trading as HOC CHUAN HO, recurrente,
vs.
LEVER BROTHER CO., recurrida.
Barrera and Reyes en representacion del recurrente.
J. A. Wolfson y De Witt. Perkins and Ponce Enrile en representacion de la recurrida.
IMPERIAL, J.:
La recurrida Lever Brothers Company inicio esta accion en el Juzgado de primera Instancia de
Manila (causa civil No. 48386) para que el recurrente Teodoro Kalaw Ng Khe, que negocia
como Hoc Chuan Ho, sea declaro culpable de infraccion de marcas industriales y de
competencia ilegal; para que las marcas industriales que uso ilegalmente sean canceladas y se
le prohiba continuar usandolas en el mercado, y para que sea obligado a rendir cuenta de las
ventas que hizo de los articulos que llevaban las mismas. El Director de la Oficina de Comercio
fue incluido como demandado con el fin de que cancele el registro en su oficina de las marcas
industriales del recurrente. El tribunal de Apelacion, decidiendo la apelacion interpuesta por la
recurrida, revoco la sentencia que dicto el Juzgado de Primera Instancia sobreseyendo la
demanda, con las costas. en su decision el Tribunal de Apelacion ordeno al Director de
Comercio que cancele las marcas industriales de Teodoro Kalaw Ng Khe, el recurrente, que
consisten en la palabra "Lux" yen un diseno, series No. 11348, Exhibit 1, registrados el 5 de
Mayo de 1933 y en las palabras "Lifebuoy Hair Pomade," serie No. 11377, Exhibit "2",
registradas el 3 de Junio de 1933 y prohibio a perpetuidad al recurrente el uso de dichas marcas
industriales en pomadas y otros articulos de semejante calidad, con las costas a su cargo. En
su resolucion que dicto a consecuencia de las mociones de reconsideracion que se presentaron
el Tribunal de Apelacion modifico su decision, eliminado de ella los pronunciamiento que
declaraban invalidas las marcas industriales de la recurrida Nos. 10357 y 10363 de la Oficina de
Comercio, Exhibits A y C; reafirmado en todo lo demas la citada decision. De la decision y
resolucion asi promulgadas el recurrente apelo y presento la consiguente solicitud de certiorari.
Los hechos del asunto se exponen en la decision del Tribunal de Apelacion * en estos terminos:
On December 24, 1930, the plaintiff, a corporation organized under the laws of the
State of Maine, and located and doing business at Cambridge, State of
Massachusetts, U. S. A., caused to be registered in the Bureau of Commerce the
word Lux as its trade-mark "for soap of all kinds; soap powder; soap flakes; soap in
paste and liquid form; saponaceous products; washing compounds; blueing; laundry
supplies; starch; bleaching preparations; detergents; cleaning, scoring and polishing
preparations; water softeners." In the declaration under oath filed by the plaintiff as
required in section 11 of Act 666, it stated that the trade-mark had been continuously
and exclusively used in its business since August 26, 1921; and that it had been
applied or affixed to the goods by means of a printed label on which the trade-mark
was shown. The trade-mark bears serial No. 10357 of the Bureau of Commerce
(exhibit A). On December 27, 1930, the plaintiff caused to be registered in the Bureau
of Commerce a trade-mark consisting of the word Lux, "a border of mosaic design the
representation of flowers, the words "toilet form" and the name and address of the
applicant, the whole within a rectangular frame," for the same goods or products as
those of the preceding trade-mark. In the declaration under oath filed by the plaintiff as
required by law, it stated that the trade-mark had been continuously and exclusively
used in its business since January 9, 1926; and that it had been applied or affixed to
the goods by means of a printed label on which the trade-mark was shown. This trade-
mark bears serial No. 10364 of the Bureau of Commerce (exhibit B).
27, 1930, the plaintiff caused to be registered in the same Bureau a trade-mark
consisting of the word Lifebuoy and a design representing it for similar goods or
products as those of the two preceding trade-marks. In the declaration under oath filed
by the plaintiff as required by law it stated that the trade-mark had been continuously
and exclusively used in its business since August 26, 1921; and that it had been
applied or affixed to the goods by means of a printed label on which the trade-mark
was shown. This trade-mark bears serial No. 10363 of the Bureau of Commerce
(Exhibit C).
On May 5, 1933, the defendant Teodoro Kalaw Ng Khe caused to be registered in the
Bureau of Commerce a trade-mark for hair pomade, consisting "of the word Lux, a
border of small squares, the representation of flowers, the words 'Hair Pomade' and
the initials 'N. K.' enclosed within a diamond, the whole design is within a rectangular
frame." In the declarations under oath filed by him as required in section 11 of Act 666,
he stated that the trade-mark had been continuously and exclusively used by him in
his business since 1932. The trade-mark bears the serial No. 11348 of the Bureau of
Commerce (Exhibit D of the plaintiff and Exhibit 1 of the defendant). On June 3, 1933
the same defendant caused to be registered in the Bureau of Commerce a trade-mark
for hair pomade, consisting of the words Lifebuoy Hair Pomade generally used upon a
rectangular label with a red background. The word Lifebuoy may be written in any
form or style without altering the essential feature of the trade-mark, being the word
Lifebuoy." In the declaration under oath filed by him as required by law, he stated that
the trade-mark had been continuously and exclusively used in his business since the
year 1932. This trade-mark bears serial No. 11377 of the Bureau of Commerce
(Exhibit E of the plaintiff and Exhibit 2 of the defendant).
On March 27, 1934, the plaintiff caused to be registered in the Bureau of Commerce a
trade-mark for soap of all kinds and toilet articles, consisting of the word Lifebuoy
printed, lithographed or painted in white letters and also the words Health Soap in
yellow letters on a red background with a fellow brand on the borders, and also the
word Lifebuoy printed, lithographed or painted in white letters on a red foundation on
two sides of said facsimile, as well as the words "For toilet and Bath" printed or
impressed in white letters on a red foundation, with a yellow band on the border. On
the back of the said facsimile, the following words appear:
Protection. — Its clean scent tells you.
Face. — Lifebuoy's gentle, soothing, protective lather deep cleanses pores
of waste matter. Aided by its bland oils of plum fruit and coconut, Lifebuoy
promotes radiant complexions. Fine as a shampoo, too.
Hands. — 27 germ diseases may be spread by hands. Clean hands are
great protection. Lifebuoy aids in removing germs. Wash hands, always with
Lifebuoy, especially before meals.
Body. — Pores are continuously giving off odor-causing waste — a quart
daily is normal. The same properties that have made LIfebuoy famous as a
health soap give you protection against offensive body and perspiration
odors, common to all people. To keep body always sweet, bathe daily with
Lifebuoy.

LEVER BROTHERS CO.
Cambridge, Massachusetts
Made in U. S. A.
In the declaration under oath filed by the plaintiff as required bylaw, it stated that "the
trade-mark is displayed on the wrappers, cardboard cartons, packages, containers
containing the goods, or it is painted, printed or lithographed or impressed on the
labels, packages or containers of the goods;" that "the trade-mark has been
continuously and exclusively used in the business of said corporation since August 26,
1921;" and that "the class of merchandise to which the trade-mark is appropriated is
class 4 of the classification of merchandise — chemicals, medicines and
pharmaceutical preparations, and the particular description of the goods comprised in
said class on which said trade-mark is used is pink carbolic soap, soap of all kinds,
toilet articles and other medicinal or pharmaceutical preparations, except hair
pomade." This trade-mark bears serial No. 11685 of the Bureau of Commerce (Exhibit
M). On April 10, 1934, the plaintiff caused to be registered in the Bureau of Commerce
a trade-mark for soap of all kinds and toilet articles, consisting "of the words Lux Toilet
Soapprinted in two colors of violet (dark and light), and surrounded by a floral design,
printed in green and violet. On the back of the wrapper is the name of the
manufacturer, in violet, i.e., "Lever Brothers Co., Cambridge, Mass.," and the word
"Made in U. S. A." also printed in violet, with the same floral design printed in green
and violet and yellow square dots. The wrapper consists of coated paper printed on a
background of buff colored squares. The words "Lux Toilet Soap" with a floral design
also appear on the tablet of soap and on the back of the tablet also appear the words
"Lever Brothers Company, Cambridge, Mass." in a rectangle." In the declaration filed
by the plaintiff as required by law, it stated that "the trade-mark is displayed on the
wrappers, cardboard cartons, packages, containers containing the goods, or it is
painted, printed or lithographed or impressed on the labels, packages or containers of
the goods;" that "the trade-mark has been continuously and exclusively used in its
business since August 26, 1921;" and that "the class of merchandise to which the
trade-mark is appropriated in class 4 of the classification of merchandise —
chemicals, medicines and pharmaceutical preparations, and the particular description
of the goods comprised in said class on which said trade-mark is used in while toilet
soap, soap of all kinds, toilet article and other medicinal and pharmaceutical
preparation, except hair pomade." This trade-mark bears serial No. 11689 of the
Bureau of Commerce (Exhibit N.).
On March 21, 1934, when the application for registration of the trade-mark "Lifebuoy
Health Soap," serial No. 11685 (Exhibit M),was filed in the Bureau of Commerce, there
was a trade-mark "Lifebuoy for Hair Pomade" already registered in the name of the
defendant Teodoro Kalaw Ng Khe, so the officer in charge of registration of trade-
marks called the attention of Attorney Trias representing the plaintiff who agreed to
write, as he did write, on the declaration of the words "except for hair pomade" and his
initials. In the application or declaration filed on march 27, 1934, for the registration of
the trade-mark "Lux Toilet Soap," serial No. 11689(Exhibit N), there were written
words "except for hair pomade." The amendments referred to were made by Attorney
Trias after consultation with Smith, Bell and Co., Ltd., which was the agent of the
plaintiff in the Philippines. Under the classification made by the Bureau of Commerce,
the plaintiff's products referred to in Exhibits A, B and C come under class No. 3 and
those of the defendant Teodoro Kalaw Ng Khe referred to in Exhibits D and E come
under class No. 4. The soaps bearing the trade-mark "Lifebuoy Health Soap" on the
container, are products of the plaintiff, of whom Smith, Bell and Co., Ltd. was the
exclusive agent since 1924, imported from the United States and sold in the
Philippines, through the agent's branches in Cebu, Iloilo, Legaspi, Tobacco and
Cagayan de Misamis. The volume of sales, wholesale and retail, of the "Lux" soap
from 1930 to 1934 in the Philippines was, as follows: Box of 500 cakes; 4,945 boxes in
1930; 8,049 in 1931; 8,979 in 1932; 10,441 in 1933; and 7,876 from January to
November, 1934. Box of 100 cakes; 6,744 boxes in 1930; 7,243 in 1931; 7,915 in
1932; 6,431 in 1933;; and 6,764 from January to November, 1934. The volume of
sales, wholesale and retail, of the "Lifebuoy" soap from 1930 to 1934 was, as follows:
Box of 500 cakes; 502 boxes in 1932; 1,025 in 1933; and 1,285 from January to
November, 1934. Box of 100 cakes: 3,732 boxes in 1930l 3,327 in 1931; 3,396 in
1932; 3,015 in 1933; and 2,757 from January to November, 1934. The advertisement
for the sale of these soaps was made in newspapers, sign boards, travelling trucks
which distributed the soaps, and by display thereof in show cases and shelves, the
cost of advertisement in 1934 amounting to P12,000. The majority of retailers of the
products were Chinese who owned stores on Calle Rosario, Comercio, Marcelino de
Santos, Tabora, Santo Cristo, and Rizal Avenue. The jars containing Lifebuoy and Lux
hair pomade of the defendant Teodoro Kalaw Ng Khe were also displayed side by
side with the soaps of the plaintiff and sold in the same stores where the soaps of the
plaintiff were sold, the jar of hair pomade manufactured by said defendant marked
Exhibit S having been purchased by the manager of the import department of Smith,
Bell and Co., Ltd., in the store at 147 Calle Rosario; the jar of hair pomade
manufactured by the said defendant marked Exhibit T, in the store at 139 Calle
Rosario; Exhibit U also manufactured by said defendant, at 127-129 Calle Rosario;
exhibits V and W also manufactured by said defendant, at 117-B Calle Rosario, all
said stores selling toilet articles, including the plaintiff's Lux and Lifebuoy soaps such
as those marked Exhibits X and Y.
Discutiendo la cuestion de si el recurrente infringio las marcas industriales de la recurrida, el
tribunal de Apelacion emitio la siguente interesante opinion.
The plaintiff contends that it is the first user of the trade-marks(Exhibit A, B and C);
that it had held registration thereof long before the defendant Teodoro Kalaw Ng Khe
used his; that the trade-marks of said defendant (Exhibits 1 and 2) should not have
been registered, because they were intended for use upon goods of the same
descriptive properties as those of the plaintiff' and that the classification by the Bureau
of Commerce is not controlling and creates no right as against the first user.
Section 3, Act 666, provides:
The ownership or possession of a trade-marked, heretofore or hereafter
appropriated, as in the foregoing section provided, shall be recognized and
protected in the same manner and to the same extent, as are other property
rights known to the law. To this end any person entitled to the exclusive use
of a trade-mark to designate the origin or ownership of goods he has made
or deals in may recover damages in a civil action from any person who has
sold goods of a similar kind, bearing such trade-mark, and the measure of
the damages suffered, at the option of the complaining party, shall be either
the reasonable profit which the complaining party would have made had the
defendant not sold the goods with the trade-mark aforesaid, or the profit
which the defendant actually made out of the sale of the goods with the
trade-mark, and in cases where actual intent to mislead the public or to
defraud the owner of the trade-mark shall be shown, in the discretion of the
court, the damages may be doubled. The complaining party, upon proper
showing, may have a preliminary injunction, restraining the defendant
temporarily from use of the trade-mark pending the hearing, to be granted or
dissolved in the manner provided in the Code of Civil Procedure, and such
injunction upon final hearing, if the complainant's property in the trade-mark
and the defendant's violation thereof shall be fully established, shall be
made perpetual, and this injunction shall be part of the judgment for
damages to be rendered in the same cause as above provided.
The above-quoted section corresponds to section 16 of the Act of Congress of By a comparison of the plaintiff's trade-mark consisting of the word Lux and a design,
February 20, 1905. serial No. 10364 (Exhibit B), registered on December 27, 1930, and the trade-mark of
the defendant Teodoro Kalaw Ng Khe consisting of the word Lux and a design, serial
No. 11348 (Exhibit 1), registered on May 5, 1933, it is apparent that the latter is a
A trade-mark is a property right. Unfair competition is a tort and strictly one of fraud.
colorable imitation of the former. In the case of E. Spinner & Co. vs. Neuss Hesslein
(E. Spinner & Co. vs. Neuss Hesslein Corporation, 54 Phil., 224, 231.) Under our
Corporation, supra, the Supreme Court said: "It has been held in the Supreme Court
statute, registration of a trade-mark is a prerequisite to an action for technical
of the United States that the use of only one of the words constituting a trade-mark
infringement (section 4, Act 666, as amended by Act 3332). To maintain an action
may be sufficient to constitute an infringement, and it is not necessary to this end that
arising from unfair competition no such registration is necessary, although unfair
all of the words comprising the trade-mark should be appropriated (Saxlehner vs.
competition may also be committed against the goods of another with a registered
Eisner & Mendelson, Co., 179 U. S., 20; 45 Law. ed. 60). (P. 234)
trade-mark. In the case of E. Spinner & Co. vs. Neuss Heeslein Corporation, supra, it
was said: "The law governing trade-mark rights as well as unfair competition in this
jurisdiction is found in Act 666 of the Philippine Commission, which is a reduction to Se habia suscitado igualmente la cuestion de si los articulos en que el recurrente habia usado
statutory form of the jurisprudence developed by the courts of England and the United las marcas industriales eran similares o parecidos a los que empleada la recurrida para sus
States in connection with the subjects mentioned; and to the summary of substantive marcas industriales, y sobre este extreme el Tribunal de Apelacion, resolviendo
law expressed in the statute are added the provisions relative to the registration of afirmativamente, dijo:
trade-marks." (pp. 230-231.)
The next point to be determined is whether pomade and soap are goods of similar
The use by one of a trade-mark identical with a registered trade-mark belonging to kind. We are of the opinion that they are. Both are toilet articles.
another seems necessary to constitute an infringement, for the law uses the phrase
"bearing such trade-mark." (La Insular vs. Jao Oge, 42 Phil., 366, 369.) But such was
Goods are in the same class when the general and essential characteristics
not the intent of the Philippine Commission that reduced to statutory form the
of the goods are the same, so that the general public would be likely to be
jurisprudence developed by the courts of England and the United States. A close
misled if the same mark were used, or whenever the use of a given trade-
resemblance between two trade-marks would be sufficient to constitute infringement
mark or name or symbol would enable an unscrupulous dealer to palm off
under section 3 of Act 666. (Inchausti & Co. vs. Song Fo & Co., 21 Phil., 278, 283.)
on unsuspecting customers spurious goods as being the genuine goods of
Colorable imitation is deemed sufficient for an infringement. (Clarke vs. Manila Candy
the proprietor of the trade-marl, or when, for any another reason, they are
Co., 36 Phil., 100, 113.) Under our law, an infringement of a trade-mark results from
so related or associated, either in fact or in the mind of the public, that a
fraudulent use of another's trade-mark or a colorable imitation thereof. Similarity is the
common trade-mark would probably lead purchasers to conclude that the
test of infringement of trade-mark, but this is not such similitude as amounts to
several articles have a common origin. In recent years the tendency has
identity. (Forbes, Munn & Co. vs. Ang San To, 40 Phil., 272, 274, 275.) If an exact
been to extend the protection given to the owner of a trade-mark so that,
reproduction, counterfeit, copy or imitation, of the genuine trade-mark be required, it
unless the use which another makes of it is so foreign to the owner's as to
would make the remedy available in very few cases, since most traders desirous of
insure against any identification of the two, it is unlawful. The owner of a
filching the trade of others in this way will use colorable imitations, or suggestive
trade-mark which is arbitrary, strange, and fanciful is entitled to a monopoly
reproductions of the trade-mark which they intend to appropriate rather than exact
of use for his mark in a wider field than is he who employs a mark not of that
counterfeits. (La Insular vs. Jao Oge, supra.) That such is the correct interpretation of
character. Also, the nature of the business in which the trade-mark is used
the law is confirmed by the provisions of section 13, Act 666, which in part provides:
is, in some measure, determinative of whether certain goods are within the
"But no alleged trade-mark or trade-name shall be registered . . . which is identical
general class. It has been said that classification depends more on
with a registered or known trade-mark owned by another and appropriate to the same
commercial custom than the inherent nature of the products. (63 C.J., 318-
class of merchandise, or which so nearly resembles another person's lawful trade-
319.)
mark or trade-name as to be likely to cause confusion or mistake in the mind of the
public, or to deceive purchasers." Under the previous as well as under the present law
of trade-marks in the United States (Acts of March 3, 1881 and February 20, 1905) The phrase "same descriptive properties" must be construed to effectuate
after which our law is patterned, a colorable imitation constitutes an infringement. the dominant purpose of a section to prevent confusion and deception, as
indicated by the first paragraph authorizing registration of a mark by which
the goods of the owner may be distinguished from other goods of the same
It results from the foregoing that there is an infringement of a registered trade-mark,
class, so that, whenever it appears that confusion might result, the goods
when a person, partnership, or corporation, other than the owner thereof, had used a
have the same descriptive properties. California Packing Corporation vs.
reproduction, counterfeit, copy, or spurious imitation of the genuine registered trade-
Price Booker Mfg. Co. (1923) 285 F. 993, 52 App. D. C. 259, holding that
mark, or a colorable imitation thereof, upon goods of similar kind to those
picks and condiments are goods of the same descriptive properties as
manufactured or dealt in by the lawful owner of the registered trade-mark, and said
canned fruits and vegetables, since they are sold in the same stores, put out
person, partnership, or corporation had sold the goods with said trade-mark. To entitle
in similar containers, and used in connection with each other, and a person
an owner of a registered trade-mark to restrain the use of his trade-mark upon goods
seeing a trade-mark on a container of pickles would be likely to assume
manufactured or dealt in by another, and to ask for accounting or recover damages for
they were produced by the same concern as that which produced canned
such infringement, three elements must concur: first, use by another person of a
fruit or vegetables bearing a similar mark.
reproduction, counterfeit, copy, or spurious imitation of the genuine registered trade-
mark or a colorable imitation thereof; second, similarity in kind of the goods
manufactured or dealt in by such person to which the trade-mark is attached, to those xxx xxx xxx
of the lawful owner of the registered trade-mark; and, third, sale by such person of
said goods with the trade-mark.
 If the use of the marks by the contending parties would be likely to lead the
public to believe that the goods to which they are applied were produced by
the same concern or person, the goods possess the "same descriptive
properties." Application of B. F. Goodrich Co., (1923) 285 F. 995, 52 App. D.
C., 261, holding that pneumatic tires for automobiles and rubber hose and
belting have the same descriptive properties.
Validity of a trade-mark cannot depend alone on classification or indexing by
the Patent Office, and a valid trade-mark cannot be obtained by two
different manufacturers for goods in the same general class, having the
same descriptive properties and similar essential characteristics, so that the
general public would be misled, though they are placed by the patent office
in different classes. Aluminum Cooking Utensil Co., vs. Sargoy Bros. & Co.,
(D. C. N. Y., 1921) 276 F. 447. (U. S. C. A., Title 15, section 85, pp. 92-93.)
In Kassman & Kessner, Inc., vs. Rosenberg Bros. Co., 10 F. (2d) 904-905, it
was held:
It is a well-established rule that, where doubt arises upon such a question,
the courts incline to resolve the doubt against the newcomer. The reason for
this rule is that the field from which a person may select a trade-mark is
practically unlimited, and hence there is no excuse for impinging upon or
even closely approaching the mark of a business rival. O. & W. Thom. Co.
vs. Dickenson, 46 App. D. C., 306; Lambert Pharmacia Co. vs. Mentho-
Listine Chemical Co., 47 App. D. C., 197; Waltke & Co. vs. Schafer & Co.,
263 F. 630, 49 App. D. C., 254.
The third element of infringement concurs in this case.
The defendant Teodoro Kalaw Ng Khe sold the goods with the limited trade-mark.
En relacion con la accion sobre competencia ilegal el Tribunal de Apelacion hizo las siguientes
consideraciones:
We now come to the question of unfair competition.
Section 7, Act 666, as amended by Act 3423, 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
the manner of their manufacture, 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 who holds a duly registered
patent therefor or who has long been accustomed to manufacture or sell
such goods and who is 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 effected not by means of technical trade-marks, 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 law 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 may be inferred from similarity
in the appearance of the goods as packed or offered for sale to those of the
complaining party.
Generally, the term "unfair competition" presupposes competition of some
kind. The doctrine is usually invoked when there is an actual market
competition between the analogous products of plaintiff and defendant; and
so it has been natural enough to speak of it as the doctrine of unfair
competition; and it has been held, that there must be actual competition
before there can be any unfair competition, and that there cannot be
competition unless there is something to compete with. However, the
tendency of the courts has been to widen the scope of protection in the field
of unfair competition. They have held that there is no fetish in the word
"competition," and that the invocation of equity rests more vitally on the
element of unfairness. Accordingly it is now held that the doctrine of unfair
competition is not confined to cases of actual market competition between
similar products of the parties, but that it extends to all cases in which one
party fraudulently seeks to sell his goods as those of another; that it does
not necessarily involve unfair competition in the sale of goods, but the unfair
appropriation and use of a competitor's mark, with the intention to profit in
the sale of goods of a related character. (63 C. J., 389-390.)
If a sufficient relationship or analogy exists between the goods to which the
marks are applied as to make it likely that an ordinary buyer at retail is likely
to assume from the marks upon them that they have a common source, the
defendant is guilty of infringement and unfair competition. It is confusion of
origin, not confusion of goods, which controls. Vick Chemical Co. vs. Vick
Medicine Co., 8 F. (2d) 49, 52 'aff. 11 F. (2d) 33. (63 C. J., 390, footnotes.)
There seems to be no question that under the law and jurisprudence the defendant is
guilty of unfair competition for having used the label consisting of the word "Lux" and a
design upon jars containing pomade manufactured and sold by him. The goods of the
plaintiff and the defendant are related goods, both being toilet articles; and the
ordinary buyer of plaintiff's and defendant's goods to which the trade-mark is applied
would likely assume from such mark that they have a common source, or that the
defendant's goods are in some way connected with the plaintiff. The instant case
involves an unfair appropriate and use by the defendant of the plaintiff's trade-mark
with the intention to profit by the sale of his goods which are related to those of the
plaintiff.
As regards the plaintiff's trade-mark consisting of the words "Lifebuoy Health Soap"
(Exhibit M), we have said that the plaintiff cannot maintain an action for infringement
for lack of registration prior to that of the defendant. But although prior registration of a
trade-mark is required in case of infringement, such registration is not necessary in
case of unfair competition. In an action for unfair competition, the trade-mark, emblem,
sign, device, or label attached to the goods, the appearance of the package or
wrappings containing the goods, or the devices or words thereon, must have been
known and in use. In the present case, although the alleged date of the use of the
trade-mark, as stated by the plaintiff in its verified declaration cannot be believed, for
 reasons hereinbefore stated, the evidence, however, shows that the sale of the
plaintiff's soap in the Philippines (Exhibit Y), the container of which bears its trade-
mark Exhibit M, began in 1924 (see testimony of Jose Javier, p. 31, t.s.n.). For that
reason, the plaintiff's trade-mark printed or lithographed on the container of its soap
was known and in use before the year 1932 when the defendant used his, and prior to
the date of the registration of his trade-mark (Exhibit 2) which was on June 3, 1933.
Under the rules and principles already set forth, the use by the defendant of the trade-
mark consisting of the words "Lifebuoy Hair Pomade," serial No. 11377 (Exhibit 2),
registered on June 3, 1933 upon pomade manufactured and sold by him, constitutes
an unfair competition.
Notwithstanding the finding that there had been an infringement of the plaintiff's trade-
mark (Exhibit B) by the defendant, and that the latter is guilty of unfair competition for
having used the trade-mark Exhibit 2 upon pomade manufactured and sold by him, no
damages can be awarded as none has been established.
En la decision de las mociones de reconsideracion que se habian presentado el Tribunal de
Apelacion, al sentar la conclusion de que el recurrente habia infringido igualmente la marca
"Lifebuoy" de la recurrida, se expreso en la forma siguiente:
As a result of further consideration of the case and review of authorities, we have
come to the conclusion that an arbitrary or fanciful word which is neither descriptive
nor deceptive may be adopted and used as a valid trade-mark.
A "fanciful and arbitrary" word is not only the safest, but also the strongest
mark, since every infringer is suspected of attempting to capitalize upon the
reputation and good-will of its owner. (Deremberg on Trade-Mark Protection
and Unfair Trading, pp. 315-316.)
General rules as to common words. — From these decisions we are able to
deduce a general rule as to the appropriation of words in common use, as
follows: Words in common use may be appropriated as trade-marks if they
are adopted originally, or by usage have come, to indicate primarily the
origin or ownership of a commercial article to which they are applied, and if
they are not geographical, in the sense of being the names of localities of
production, or not the generic name of the article, or merely descriptive of it,
or of its qualities, ingredients or characteristics. Another well-recognized rule
is that a trade-mark must not be deceptive. (Paul on The Law on Trade-
Marks, section 35, pp. 54-55.)
Words as trade-marks. — As stated by Judge Rapallo, "trade-marks . . may
consist . . simply of word or words." It is no objection to the appropriation of
a word as a trade-mark that it is "in common use." Of course the word so
adopted must neither be descriptive nor deceptive, or open to either of the
other disqualifications which prevent its serving as a proper indication of
origin or ownership. (Hopkins on The Law of Trade-Marks, Trade-names
and Unfair Competition, 3d. ed., section 56, pp. 141-142.)
Common words used in an arbitrary sense. — A word in common use but
applied to a product in an arbitrary or fanciful sense, may be good trade-
mark. (Nims of the Law on Unfair Competition and Trade-Marks, 3d. ed.,
section 203, p. 534.)
In Armour & Co. vs. Louisville Provision Co., 283 Fed., 42, 45, 47, although the Circuit
Court of appeals for the Sixth Circuit held that Armour & Co. had not satisfactorily
established the adoption and use of its alleged trade-mark "Star," except as part of a
trade-mark "Armour's Star," it also held that the word "Star," or a symbol thereof,
"should be regarded as fanciful and as suggestive, rather than as purely descriptive,
and thus as capable of being made the subject of a valid trade-mark, if not already
exclusively appropriated."
In Menendez et al., vs. Holt et al., 128 U. S., 514, 520, the words "La Favorita" as
applied to flour was held a valid trade-mark. The court said that the complainants used
"the words 'La Favorita' to designate flour selected by them, in the exercise of their
best judgment, as equal to a certain standard. The brand did not indicate by whom the
flour was manufactured, but it did indicate the origin of its selection and classification.
It was equivalent to the signature of Holt & Co., to a certificate that the flour was the
genuine article which had been determined by them to possess a certain degree of
excellence. It did not, of course, in itself indicate quality, for it was merely a fancy
name and in a foreign language, but it evidenced that the skill, knowledge, and
judgment of Holt & Co., had been exercised in ascertaining that the particular flour so
marked was possessed of a merit rendered definite by their examination and of a
uniformity rendered certain by their selection."
The Courts held that the doctrine of origin and ownership was not to be
interpreted as requiring that the buyer must deduce from the mark the
identity of the manufacturer. (Deremberg on Trade-Mark Protection and
Unfair Trading, p. 35.)
It is not necessary that a trade-mark should on its face show the origin,
manufacture or ownership of the article to which it is applied. It is sufficient
that by association with such article in trade it has acquired with the public
an understood reference to such origin etc. (Dennison Mfg. Co., vs. Thomas
Mfg. Co., 94 Fed., 651, 654.)
Accordingly, the words Lux and Lifebuoy adopted, used and registered by the
appellant are valid trade-marks and should be accorded protection. Their use by
another upon goods similar to those of the owner of the registered trade-marks should
be enjoined.
En su primer señalamiento de error el recurrente sostiene que no hubo infraccion de las marcas
industriales de la recurrida porque de acuerdo con las mismas conclusiones del Tribunal de
Apelacion dichas marcas industriales se han apropiado y usado para articulos que no
pertenecen a la misma clase de mercancias, y que las marcas industriales de ambas partes no
se compiten entre si.
En su segundo señalamiento de error el recurrente pretende que no existe competencia ilegal
porque de acuerdo con las mismas conclusiones del Tribunal de Apelacion las marcas
industriales en disputa fueron apropiadas y usadas para articulos que no pertenecen a la misma
clase de mercancias y que no se compiten entre si.
Ambos señalamientos de error quedan resueltos en sentido desfavorable a las pretensiones del
recurrente con solo recordar que el Tribunal de Apelacion, despues de considerar los hechos, la
ley y las autoridades aplicables, declaro que las pomadas en que el recurrente habia empleado
las marcas industriales discutidas pertenecen a la misma clase de mercancias usadas por la
recurrida para sus marcas industriales porque las pomadas son de todos modos articulos para
el tocador.
El recurrente sostiene que no pudo haber incurrido en infraccion ni en competencia ilegal de
marcas industriales puesto que el mismo Tribunal de Apelacion admitio que las pomadas en
que uso sus marcas industriales y los articulos de tocador en que la recurrida empleo las suyas
no son mercancias que se compiten entre si. Esta pretension queda refutada con lo que el
Tribunal de Apelacion dijo sobre el particular en su decision sobre las mociones de
reconsideracion:
Our attention has been called to the prayer of the complaint for accounting and not for
damages. We had not overlooked the prayer for accounting as basis of an award for
damages; but in holding that the appellant is not entitled to damages for the reason
above stated, we had in mind the fact that the goods of the appellant and those of the
appellee Teodoro Kalaw Ng Khe, though similar, are non-competing. Damage cannot
result in the sale of non-competing goods. Cases cited by counsel for the appellant in
which accounting had been directed or damages awarded, involved the sale of goods
competing with those of the owner of a registered trade-mark. In our reading of
American cases we have not run across a single case involving non-competing goods
wherein accounting had been ordered or damages awarded. The last holding may
appear inconsistent with our finding that the appellee Teodoro Kalaw Ng Khe is guilty
of unfair competition. But it must be recalled that the appellee is held guilty of unfair
competition on the ground of deception as to the origin of the goods sold by him, and
not of competition of goods. In other words, the unfair competition consists not in the
confusion of goods but of origin.
Se deniega la solicitud de certiorari, con las costas al recurrente. Asi se ordena.
G.R. No. 169974 April 20, 2010
SUPERIOR COMMERCIAL ENTERPRISES, INC., Petitioner,
vs.
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR,
INC., Respondents.
DECISION
BRION, J.:
We review in this petition for review on certiorari1 the (1) decision2 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 resolution4 that denied
SUPERIOR’s 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 ₱2,000,000.00 in damages, ₱500,000.00 as attorney’s fees, and costs
of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR5 filed a complaint for trademark infringement and unfair
competition with preliminary injunction against KUNNAN6 and SPORTS CONCEPT7 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 names8 "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 SUPERIOR’s 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.
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] KUNNAN’s 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 KUNNAN’s 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), SUPERIOR’s President and General Manager, misled KUNNAN’s
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.1avvphi1
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
Transfer19 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 Bulletin’s 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 decision23 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 KUNNAN’s express recognition of SUPERIOR’s ownership
of the KENNEX trademarks.24
KUNNAN and SPORTS CONCEPT appealed the RTC’s 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.25The 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 General’s decision on appeal dated December 8, 2004, denying SUPERIOR’s 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 General’s ruling before the
Court of Appeals on a petition for review under Rule 43 of the Rules of Court, docketed as CA–
G.R. SP No. 87928 (Registration Cancellation Case). On August 30, 2007, the CA rendered its
decision dismissing SUPERIOR’s petition.29 On December 3, 2007, the CA decision was
declared final and executory and entry of judgment was accordingly made. Hence, SUPERIOR’s
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 RTC’s decision of March 31, 1998.30 It dismissed SUPERIOR’s 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 SUPERIOR’s claim of ownership over the disputed trademarks.
The CA stressed that SUPERIOR’s 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 SUPERIOR’s
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
registrant’s 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 SUPERIOR’s evidence, the CA found that KUNNAN presented
sufficient evidence to rebut SUPERIOR’s presumption of ownership over the trademarks.
KUNNAN established that SUPERIOR, far from being the rightful owner of the disputed
trademarks, was merely KUNNAN’s 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 KUNNAN’s 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."
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 SUPERIOR’s 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
Diong’s signature in the Distributorship Agreement and the Assignment Agreement.
Third, the CA also took note of SUPERIOR’s 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. 16634 and established jurisprudence,35 the CA
held that SUPERIOR – as an exclusive distributor – did not acquire any proprietary interest in
the principal’s (KUNNAN’s) trademark.
The CA denied SUPERIOR’s 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 COURT’S 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 (Kunnan’s) 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.
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 withthe 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 16637terminates 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 SUPERIOR’s 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, SUPERIOR’s case for trademark infringement lost its legal basis and no
longer presented a valid cause of action.
Even assuming that SUPERIOR’s 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 principal’s 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 SUPERIOR’s 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
plaintiff’s mark; (2) the plaintiff’s ownership of the mark; and (3) the use of the mark or its
colorable imitation by the alleged infringer results in "likelihood of confusion." 44
Based on these elements, we find it immediately obvious that the second element – the plaintiff’s
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
Distributor’s 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 plaintiff’s
business and the defendant’s acts are likely to discredit the commercial activities and future
growth of plaintiff’s 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 competition47 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 McDonald’s 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, KUNNAN’s 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.]
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 SUPERIOR’s name, the latter is left with no effective right to make a claim. In other words,
with the CA’s final ruling in the Registration Cancellation Case, SUPERIOR’s case no longer
presents a valid cause of action. For this reason, the unfair competition aspect of the
SUPERIOR’s 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.
G.R. No. 158589 June 27, 2006
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC
REUNIES, S.A., (now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
DECISION
GARCIA, J.:
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris,
Inc., Benson & Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris
Products S.A.) seek the reversal and setting aside of the following issuances of the Court of
Appeals (CA) in CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial
Court of Pasig City, Branch 166, in its Civil Case No. 47374, which dismissed the
complaint for trademark infringement and damages thereat commenced by the
petitioners against respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 20032 denying petitioners’ motion for reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia,
United States of America, is, per Certificate of Registration No. 18723 issued on April 26, 1973
by the Philippine Patents Office (PPO), the registered owner of the trademark "MARK VII" for
cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris,
Inc., is the registered owner of the trademark "MARK TEN" for cigarettes as evidenced by PPO
Certificate of Registration No. 11147. And as can be seen in Trademark Certificate of
Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques
de Tabac Reunies, S.A., is the assignee of the trademark "LARK," which was originally
registered in 1964 by Ligget and Myers Tobacco Company. On the other hand, respondent
Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and sells
cigarettes using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on the claim that an
infringement of their respective trademarks had been committed, filed, on August 18, 1982, a
Complaint for Infringement of Trademark and Damages against respondent Fortune Tobacco
Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged
that they are foreign corporations not doing business in the Philippines and are suing on an
isolated transaction. xxx they averred that the countries in which they are domiciled grant xxx to
corporate or juristic persons of the Philippines the privilege to bring action for infringement, xxx
without need of a license to do business in those countries. [Petitioners] likewise manifested
[being registered owners of the trademark "MARK VII" and "MARK TEN" for cigarettes as
evidenced by the corresponding certificates of registration and an applicant for the registration of
the trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the
aforementioned trademarks in their respective countries of origin and that, by virtue of the long
and extensive usage of the same, these trademarks have already gained international fame and
acceptance. Imputing bad faith on the part of the [respondent], petitioners claimed that the
[respondent], without any previous consent from any of the [petitioners], manufactured and sold
cigarettes bearing the identical and/or confusingly similar trademark "MARK" xxx Accordingly,
they argued that [respondent’s] use of the trademark "MARK" in its cigarette products have
caused and is likely to cause confusion or mistake, or would deceive purchasers and the public
in general into buying these products under the impression and mistaken belief that they are that it deceives or is likely to deceive a customer exercising ordinary caution in his dealings and
buying [petitioners’] products. induces him to purchase the goods of one manufacturer in the belief that they are those of
another. xxx. The trial court ruled that the [petitioners] failed to pass these tests as it neither
presented witnesses or purchasers attesting that they have bought [respondent’s] product
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual
believing that they bought [petitioners’] "MARK VII", "MARK TEN" or "LARK", and have also
Property (Paris Convention, for brevity), to which the Philippines is a signatory xxx, [petitioners]
failed to introduce in evidence a specific magazine or periodical circulated locally, which
pointed out that upon the request of an interested party, a country of the Union may prohibit the
promotes and popularizes their products in the Philippines. It, moreover, elucidated that the
use of a trademark which constitutes a reproduction, imitation, or translation of a mark already
words consisting of the trademarks allegedly infringed by [respondent] failed to show that they
belonging to a person entitled to the benefits of the said Convention. They likewise argued that,
have acquired a secondary meaning as to identify them as [petitioners’] products. Hence, the
in accordance with Section 21-A in relation to Section 23 of Republic Act 166, as amended, they
court ruled that the [petitioners] cannot avail themselves of the doctrine of secondary meaning.
are entitled to relief in the form of damages xxx [and] the issuance of a writ of preliminary
injunction which should be made permanent to enjoin perpetually the [respondent] from violating
[petitioners’] right to the exclusive use of their aforementioned trademarks. As to the issue of damages, the trial court deemed it just not to award any to either party stating
that, since the [petitioners] filed the action in the belief that they were aggrieved by what they
perceived to be an infringement of their trademark, no wrongful act or omission can be attributed
[Respondent] filed its Answer xxx denying [petitioners’] material allegations and xxx averred
to them. xxx.3 (Words in brackets supplied)
[among other things] xxx that "MARK" is a common word, which cannot particularly identify a
product to be the product of the [petitioners] xxx
Maintaining to have the standing to sue in the local forum and that respondent has committed
trademark infringement, petitioners went on appeal to the CA whereat their appellate recourse
xxx xxx xxx.
was docketed as CA-G.R. CV No. 66619.
lawphil.net

Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the
matter of their legal capacity to sue in this country for trademark infringement, nevertheless
[petitioners’] prayer for the issuance of a writ of preliminary injunction was negatively resolved by
affirmed the trial court’s decision on the underlying issue of respondent’s liability for infringement
the court in an Order xxx dated March 28, 1973. [The incidental issue of the propriety of an
as it found that:
injunction would eventually be elevated to the CA and would finally be resolved by the Supreme
Court in its Decision dated July 16, 1993 in G.R. No. 91332]. xxx.
xxx the appellants’ [petitioners’] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not
qualify as well-known marks entitled to protection even without the benefit of actual use in the
xxx xxx xxx
local market and that the similarities in the trademarks in question are insufficient as to cause
deception or confusion tantamount to infringement. Consequently, as regards the third issue,
After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated there is likewise no basis for the award of damages prayed for by the appellants herein. 4 (Word
November 3, 1999 dismissing the complaint and counterclaim after making a finding that the in bracket supplied)
[respondent] did not commit trademark infringement against the [petitioners]. Resolving first the
issue of whether or not [petitioners] have capacity to institute the instant action, the trial court
With their motion for reconsideration having been denied by the CA in its equally challenged
opined that [petitioners’] failure to present evidence to support their allegation that their
Resolution of May 30, 2003, petitioners are now with this Court via this petition for review
respective countries indeed grant Philippine corporations reciprocal or similar privileges by law
essentially raising the following issues: (1) whether or not petitioners, as Philippine registrants of
xxx justifies the dismissal of the complaint xxx. It added that the testimonies of [petitioners’]
trademarks, are entitled to enforce trademark rights in this country; and (2) whether or not
witnesses xxx essentially declared that [petitioners] are in fact doing business in the Philippines,
respondent has committed trademark infringement against petitioners by its use of the mark
but [petitioners] failed to establish that they are doing so in accordance with the legal
"MARK" for its cigarettes, hence liable for damages.
requirement of first securing a license. Hence, the court declared that [petitioners] are barred
from maintaining any action in Philippine courts pursuant to Section 133 of the Corporation
Code. In its Comment,5 respondent, aside from asserting the correctness of the CA’s finding on its
liability for trademark infringement and damages, also puts in issue the propriety of the petition
as it allegedly raises questions of fact.
The issue of whether or not there was infringement of the [petitioners’] trademarks by the
[respondent] was likewise answered xxx in the negative. It expounded that "in order for a name,
symbol or device to constitute a trademark, it must, either by itself or by association, point The petition is bereft of merit.
distinctly to the origin or ownership of the article to which it is applied and be of such nature as to
permit an exclusive appropriation by one person". Applying such principle to the instant case, the
Dealing first with the procedural matter interposed by respondent, we find that the petition raises
trial court was of the opinion that the words "MARK", "TEN", "LARK" and the Roman Numerals
both questions of fact and law contrary to the prescription against raising factual questions in a
"VII", either alone or in combination of each other do not by themselves or by association point
petition for review on certiorari filed before the Court. A question of law exists when the doubt or
distinctly to the origin or ownership of the cigarettes to which they refer, such that the buying
difference arises as to what the law is on a certain state of facts; there is a question of fact when
public could not be deceived into believing that [respondent’s] "MARK" cigarettes originated
the doubt or difference arises as to the truth or falsity of alleged facts. 6
either from the USA, Canada, or Switzerland.

Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the
facts.7 Unless the factual findings of the appellate court are mistaken, absurd, speculative,
trial court stated that the general rule is that an infringement exists if the resemblance is so close
conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the court
of origin,8 we will not disturb them.
It is petitioners’ posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of
undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn
therefrom by the CA is correct is one of law.9 But, even if we consider and accept as pure
questions of law the issues raised in this petition, still, the Court is not inclined to disturb the
conclusions reached by the appellate court, the established rule being that all doubts shall be
resolved in favor of the correctness of such conclusions. 10
Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in
accordance with law and established jurisprudence in arriving at its assailed decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof adopted and used by a manufacturer or merchant on his goods to identify
and distinguish them from those manufactured, sold, or dealt in by others. 11 Inarguably, a
trademark deserves protection. For, as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co.
v. Kresge Co.:12
The protection of trademarks is the law’s recognition of the psychological function of symbols. If
it is true that we live by symbols, it is no less true that we purchase goods by them. A trade-mark
is a merchandising short-cut which induces a purchaser to select what he wants, or what he has
been led to believe what he wants. The owner of a mark exploits this human propensity by
making every effort to impregnate the atmosphere of the market with the drawing power of a
congenial symbol. Whatever the means employed, the aim is the same - to convey through the
mark, in the minds of potential customers, the desirability of the commodity upon which it
appears. Once this is attained, the trade-mark owner has something of value. If another poaches
upon the commercial magnetism of the symbol he has created, the owner can obtain legal
redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce
trademark rights in this country, specifically, the right to sue for trademark infringement in
Philippine courts and be accorded protection against unauthorized use of their Philippine-
registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate
nationals of member-countries of the Paris Union, they can sue before Philippine courts for
infringement of trademarks, or for unfair competition, without need of obtaining registration or a
license to do business in the Philippines, and without necessity of actually doing business in the
Philippines. To petitioners, these grievance right and mechanism are accorded not only by
Section 21-A of Republic Act (R.A.) No. 166, as amended, or the Trademark Law, but also by
Article 2 of the Paris Convention for the Protection of Industrial Property, otherwise known as the
Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines
as evidenced by the certificates of registration of their trademarks. The marks "MARK TEN" and
"LARK" were registered on the basis of actual use in accordance with Sections 2-A13 and
5(a)14 of R.A. No. 166, as amended, providing for a 2-month pre-registration use in local
commerce and trade while the registration of "MARK VII" was on the basis of registration in the
foreign country of origin pursuant to Section 37 of the same law wherein it is explicitly provided
that prior use in commerce need not be alleged.15
Besides, petitioners argue that their not doing business in the Philippines, if that be the case,
does not mean that cigarettes bearing their trademarks are not available and sold locally. Citing
Converse Rubber Corporation v. Universal Rubber Products, Inc.,16 petitioners state that such
availability and sale may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual
use of trademarks in the country in view of the Philippines’ adherence to the Trade Related
Aspects of Intellectual Property Rights or the TRIPS Agreement and the enactment of R.A. No.
8293, or the Intellectual Property Code (hereinafter the "IP Code"), both of which provide that the
fame of a trademark may be acquired through promotion or advertising with no explicit
requirement of actual use in local trade or commerce.
Before discussing petitioners’ claimed entitlement to enforce trademark rights in the Philippines,
it must be emphasized that their standing to sue in Philippine courts had been recognized, and
rightly so, by the CA. It ought to be pointed out, however, that the appellate court qualified its
holding with a statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court
of Appeals and Fortune Tobacco Corporation,17 that such right to sue does not necessarily mean
protection of their registered marks in the absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength
of registration of their trademarks in the Philippines.
As we ruled in G.R. No. 91332,18 supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages
denied non-registrants or ordinary users, like respondent. But while petitioners enjoy the
statutory presumptions arising from such registration, 19 i.e., as to the validity of the registration,
ownership and the exclusive right to use the registered marks, they may not successfully sue on
the basis alone of their respective certificates of registration of trademarks. For, petitioners are
still foreign corporations. As such, they ought, as a condition to availment of the rights and
privileges vis-à-vis their trademarks in this country, to show proof that, on top of Philippine
registration, their country grants substantially similar rights and privileges to Filipino citizens
pursuant to Section 21-A20 of R.A. No. 166.
In Leviton Industries v. Salvador,21 the Court further held that the aforementioned reciprocity
requirement is a condition sine qua non to filing a suit by a foreign corporation which, unless
alleged in the complaint, would justify dismissal thereof, a mere allegation that the suit is being
pursued under Section 21-A of R.A. No. 166 not being sufficient. In a subsequent
case,22 however, the Court held that where the complainant is a national of a Paris Convention-
adhering country, its allegation that it is suing under said Section 21-A would suffice, because
the reciprocal agreement between the two countries is embodied and supplied by the Paris
Convention which, being considered part of Philippine municipal laws, can be taken judicial
notice of in infringement suits.23
As well, the fact that their respective home countries, namely, the United States, Switzerland
and Canada, are, together with the Philippines, members of the Paris Union does not
automatically entitle petitioners to the protection of their trademarks in this country absent actual
use of the marks in local commerce and trade.
True, the Philippines’ adherence to the Paris Convention24 effectively obligates the country to
honor and enforce its provisions25 as regards the protection of industrial property of foreign
nationals in this country. However, any protection accorded has to be made subject to the
limitations of Philippine laws.26 Hence, despite Article 2 of the Paris Convention which
substantially provides that (1) nationals of member-countries shall have in this country rights
specially provided by the Convention as are consistent with Philippine laws, and enjoy the
privileges that Philippine laws now grant or may hereafter grant to its nationals, and (2) while no
domicile requirement in the country where protection is claimed shall be required of persons
entitled to the benefits of the Union for the enjoyment of any industrial property rights, 27 foreign
nationals must still observe and comply with the conditions imposed by Philippine law on its
nationals.
Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-A29 thereof,
mandates actual use of the marks and/or emblems in local commerce and trade before they may
be registered and ownership thereof acquired, the petitioners cannot, therefore, dispense with
the element of actual use. Their being nationals of member-countries of the Paris Union does
not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its rulings in
Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 31 Kabushi
Kaisha Isetan v. Intermediate Appellate Court,32 and Philip Morris v. Court of Appeals and
Fortune Tobacco Corporation33 on the importance of actual commercial use of a trademark in
the Philippines notwithstanding the Paris Convention:
The provisions of the 1965 Paris Convention … relied upon by private respondent and Sec. 21-A
of the Trademark Law were sufficiently expounded upon and qualified in the recent case of
Philip Morris, Inc., et. al. vs. Court of Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirements of actual use in the Philippines must subordinate an international agreement
inasmuch as the apparent clash is being decided by a municipal tribunal. Xxx. Withal, the fact
that international law has been made part of the law of the land does not by any means imply the
primacy of international law over national law in the municipal sphere. Under the doctrine of
incorporation as applied in most countries, rules of International Law are given a standing equal,
not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement … but the
question of whether they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the Philippines in line with
Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a
foreign corporation not licensed to do business in the Philippines files a complaint for
infringement, the entity need not be actually using its trademark in commerce in the Philippines.
Such a foreign corporation may have the personality to file a suit for infringement but it may not
necessarily be entitled to protection due to absence of actual use of the emblem in the local
market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive
as to the actual use of such trademark in local commerce. As it were, registration does not
confer upon the registrant an absolute right to the registered mark. The certificate of registration
merely constitutes prima facie evidence that the registrant is the owner of the registered mark.
Evidence of non-usage of the mark rebuts the presumption of trademark ownership, 34 as what
happened here when petitioners no less admitted not doing business in this country.35
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto
convey an absolute right or exclusive ownership thereof. To borrow from Shangri-La
International Hotel Management, Ltd. v. Development Group of Companies, Inc. 36 trademark is a
creation of use and, therefore, actual use is a pre-requisite to exclusive ownership; registration is
only an administrative confirmation of the existence of the right of ownership of the mark, but
does not perfect such right; actual use thereof is the perfecting ingredient.37
Petitioners’ reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast
in a different factual milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit
not licensed to do, and not so engaged in, business in the Philippines, may actually earn
reputation or goodwill for its goods in the country. But unlike in the instant case, evidence of
actual sales of Converse rubber shoes, such as sales invoices, receipts and the testimony of a
legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement
complaint herein having been filed in August 1982 and tried under the aegis of R.A. No. 166, as
amended. The IP Code, however, took effect only on January 1, 1998 without a provision as to
its retroactivity.39 In the same vein, the TRIPS Agreement was inexistent when the suit for
infringement was filed, the Philippines having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark
unaccompanied by actual use thereof in the country accords the registrant only the standing to
sue for infringement in Philippine courts. Entitlement to protection of such trademark in the
country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as
follows:
Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or
tradename in connection with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of
such business; or reproduce, counterfeit, copy of color ably imitate any such mark or tradename
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in connection
with such goods, business, or services, shall be liable to a civil action by the registrant for any or
all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondent’s mark "MARK" for
cigarettes is confusingly or deceptively similar with their duly registered "MARK VII," "MARK
TEN" and "LARK" marks likewise for cigarettes. To them, the word "MARK" would likely cause
confusion in the trade, or deceive purchasers, particularly as to the source or origin of
respondent’s cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement. 40 But likelihood of
confusion is a relative concept, the particular, and sometimes peculiar, circumstances of each
case being determinative of its existence. Thus, in trademark infringement cases, more than in
other kinds of litigation, precedents must be evaluated in the light of each particular case. 41
In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the
dominancy test and the holistic test.42 The dominancy test43 sets sight on the similarity of the
prevalent features of the competing trademarks that might cause confusion and deception, thus
constitutes infringement. Under this norm, the question at issue turns on whether the use of the
marks involved would be likely to cause confusion or mistake in the mind of the public or deceive
purchasers.44
In contrast, the holistic test45 entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the
likelihood of confusion resulting in infringement arising from the respondent’s use of the
trademark "MARK" for its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety
as they appear on the products,46 the striking dissimilarities are significant enough to warn any
purchaser that one is different from the other. Indeed, although the perceived offending word
"MARK" is itself prominent in petitioners’ trademarks "MARK VII" and "MARK TEN," the entire
marking system should be considered as a whole and not dissected, because a discerning eye
would focus not only on the predominant word but also on the other features appearing in the
labels. Only then would such discerning observer draw his conclusion whether one mark would
be confusingly similar to the other and whether or not sufficient differences existed between the
marks.47
This said, the CA then, in finding that respondent’s goods cannot be mistaken as any of the
three cigarette brands of the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind
that a trademark serves as a tool to point out distinctly the origin or ownership of the goods to
which it is affixed,48 the likelihood of confusion tantamount to infringement appears to be
farfetched. The reason for the origin and/or ownership angle is that unless the words or devices
do so point out the origin or ownership, the person who first adopted them cannot be injured by
any appropriation or imitation of them by others, nor can the public be deceived. 49
Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman
numeral "VII," does not point to the origin or ownership of the cigarettes to which they apply, the
local buying public could not possibly be confused or deceived that respondent’s "MARK" is the
product of petitioners and/or originated from the U.S.A., Canada or Switzerland. And lest it be
overlooked, no actual commercial use of petitioners’ marks in local commerce was proven.
There can thus be no occasion for the public in this country, unfamiliar in the first place with
petitioners’ marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the
appreciable circumstances in determining likelihood of confusion. Del Monte Corp. v. CA 50 dealt
with another, where we instructed to give due regard to the "ordinary purchaser," thus:
The question is not whether the two articles are distinguishable by their label when set side by
side but whether the general confusion made by the article upon the eye of the casual purchaser
who is unsuspicious and off his guard, is such as to likely result in his confounding it with the
original. As observed in several cases, the general impression of the ordinary purchaser, buying
under the normally prevalent conditions in trade and giving the attention such purchasers usually
give in buying that class of goods is the touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary
customer" but to the "ordinarily intelligent buyer" considering the type of product involved. 51
It cannot be over-emphasized that the products involved are addicting cigarettes purchased
mainly by those who are already predisposed to a certain brand. Accordingly, the ordinary buyer
thereof would be all too familiar with his brand and discriminating as well. We, thus, concur with
the CA when it held, citing a definition found in Dy Buncio v. Tan Tiao Bok, 52 that the "ordinary
purchaser" in this case means "one accustomed to buy, and therefore to some extent familiar
with, the goods in question."
Pressing on with their contention respecting the commission of trademark infringement,
petitioners finally point to Section 22 of R.A. No. 166, as amended. As argued, actual use of
trademarks in local commerce is, under said section, not a requisite before an aggrieved
trademark owner can restrain the use of his trademark upon goods manufactured or dealt in by
another, it being sufficient that he had registered the trademark or trade-name with the IP Office.
In fine, petitioners submit that respondent is liable for infringement, having manufactured and
sold cigarettes with the trademark "MARK" which, as it were, are identical and/or confusingly
similar with their duly registered trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following constitute the
elements of trademark infringement in accordance not only with Section 22 of R.A. No. 166, as
amended, but also Sections 2, 2-A, 9-A54and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in the
principal register of the Philippine Patent Office,
(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which such use is
likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied or colorably imitated by another person
and such reproduction, counterfeit, copy or colorable imitation is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services as to likely cause
confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or
assignee.lawphil.net
As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK
TEN" and "LARK" for cigarettes in the Philippines, prior actual commercial use thereof had not
been proven. In fact, petitioners’ judicial admission of not doing business in this country
effectively belies any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks
are well-known and/or have acquired goodwill in the Philippines so as to be entitled to protection
even without actual use in this country in accordance with Article 6bis 55 of the Paris Convention.
As correctly found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants’ [petitioners’] products are
indeed well-known in the Philippines, either through actual sale of the product or through
different forms of advertising. This finding is supported by the fact that appellants admit in their
Complaint that they are not doing business in the Philippines, hence, admitting that their
products are not being sold in the local market. We likewise see no cogent reason to disturb the
trial court’s finding that the appellants failed to establish that their products are widely known by
local purchasers as "(n)o specific magazine or periodical published in the Philippines, or in other
countries but circulated locally" have been presented by the appellants during trial. The
appellants also were not able to show the length of time or the extent of the promotion or
advertisement made to popularize their products in the Philippines.56
Last, but not least, we must reiterate that the issue of trademark infringement is factual, with
both the trial and appellate courts having peremptorily found allegations of infringement on the
part of respondent to be without basis. As we said time and time again, factual determinations of
the trial court, concurred in by the CA, are final and binding on this Court. 57
For lack of convincing proof on the part of the petitioners of actual use of their registered
trademarks prior to respondent’s use of its mark and for petitioners’ failure to demonstrate
confusing similarity between said trademarks, the dismissal of their basic complaint for
infringement and the concomitant plea for damages must be affirmed. The law, the surrounding
circumstances and the equities of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution
of the Court of Appeals are AFFIRMED.
Costs against the petitioners.
G.R. No. 75067 February 26, 1988
PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner
vs.
THE INTERMEDIATE APPELLATE COURT and MIL-ORO MANUFACTURING
CORPORATION, respondents.
GUTIERREZ, JR., J.:
This is a petition for review by way of certiorari of the Court of Appeals' decision which reversed
the order of the Regional Trial Court and dismissed the civil case filed by the petitioner on the
grounds of litis pendentia and lack of legal capacity to sue.
On July 25, 1985, the petitioner, a foreign corporation duly organized and existing under the
laws of the Federal Republic of Germany and the manufacturer and producer of "PUMA
PRODUCTS," filed a complaint for infringement of patent or trademark with a prayer for the
issuance of a writ of preliminary injunction against the private respondent before the Regional
Trial Court of Makati.
Prior to the filing of the said civil suit, three cases were pending before the Philippine Patent
Office, namely:
Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v.
MIL-ORO MANUFACTURING CORPORATION, respondent-applicant which
is an opposition to the registration of petitioner's trademark 'PUMA and
DEVICE' in the PRINCIPAL REGISTER;
Inter Partes Case No. 1675 similarly entitled, 'PUMA
SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner, versus
MIL-ORO MANUFACTURING CORPORATION, respondent-registrant,'
which is a case for the cancellation of the trademark registration of the
petitioner; and
Inter Partes Case No. 1945 also between the same parties this time the
petitioner praying for the cancellation of private respondent's Certificate of
Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51 -52, Rollo)
On July 31, 1985, the trial court issued a temporary restraining order, restraining the private
respondent and the Director of Patents from using the trademark "PUMA' or any reproduction,
counterfeit copy or colorable imitation thereof, and to withdraw from the market all products
bearing the same trademark.
On August 9, 1985, the private respondent filed a motion to dismiss on the grounds that the
petitioners' complaint states no cause of action, petitioner has no legal personality to sue,
and litis pendentia.
On August 19, 1985, the trial court denied the motion to dismiss and at the same time granted
the petitioner's application for a writ of injunction. The private respondents appealed to the Court
of Appeals.
On June 23, 1986, the Court of Appeals reversed the order of the trial court and ordered the
respondent judge to dismiss the civil case filed by the petitioner.
In reversing the order of the trial court, the Court of Appeals ruled that the requisites of lis
pendens as ground for the motion to dismiss have been met. It said:
Obviously, the parties are Identical. They are the same protagonists. As to
the second requisite, which is Identity of rights and reliefs prayed for, both
sides maintain that they are the rightful owners of the trademark "PUMA" for
socks and belts such that both parties seek the cancellation of the
trademark of the other (see prayer in private respondent's complaint, pp, 54-
55, Rollo, Annex "A" to the Petition). Inevitably, in either the lower court or in
the Patent Office, there is a need to resolve the issue as to who is the
rightful owner of the TRADEMARK 'PUMA' for socks and belts.After all,the
right to register a trademark must be based on ownership thereof
(Operators Inc. v. Director of Patents, L-17910, Oct. 29,1965,15 SCRA
147). Ownership of the trademark is an essential requisite to be proved by
the applicant either in a cancellation case or in a suit for infringement of
trademark. The relief prayed for by the parties in Inter Partes Cases Nos.
1259, 1675 and 1945 and Civil Case No. 11189 before respondent court
seek for the cancellation of usurper's trademark, and the right of the legal
owner to have exclusive use of said trademark. From the totality of the
obtaining circumstances, the rights of the respective parties are dependent
upon the resolution of a single issue, that is, the rightful ownership of the
trademark in question. The second requisite needed to justify a motion to
dismiss based on lis pendens is present.
As to the third requisite, the decisions and orders of administrative agencies
rendered pursuant to their quasi-judicial authority have upon their finality the
character of res judicata (Brilliantes v. Castro, 99 Phil. 497). The rule which
forbids the re-opening of a matter once judicially determined by competent
 authority applies as well to judicial acts of public executive and
administrative officers and boards acting within their jurisdiction as to the
judgments of Courts having general judicial powers (Brilliantes vs.
Castro, supra). It may be recalled that the resolution and determination of
the issue on ownership are both within the jurisdiction of the Director of
Patents and the Regional Trial Court (Sec 25, RA 166). It would thus be
confusing for two (2) different forums to hear the same case and resolve a
main and determinative issue with both forums risking the possibility of
arriving at different conclusions. In the construction of laws and statutes
regarding jurisdiction, one must interpret them in a complementary manner
for it is presumed that the legislature does not intend any absurdity in the
laws it makes (Statutory Construction, Martin, p. 133). Ms is precisely the
reason why both decisions of the Director of Patents and Regional Trial
Court are appealable to the Intermediate Appellate Court (Sec. 9, BP 129),
as both are co-equal in rank regarding the cases that may fall within their
jurisdiction.
The record reveals that on March 31, 1986, the Philippine Patent Office
rendered a decision in Inter Partes Cases Nos. 1259 and 1675 whereby it
concluded that petitioner is the prior and actual adaptor of the trademark
'PUMA and DEVICE used on sports socks and belts, and that MIL-ORO
CORPORATION is the rightful owner thereof. ... (pp. 6-7, CA — decision,
pp. 51-52, Rollo)
With regard to the petitioner's legal capacity to sue, the Court of Appeals likewise held that it had
no such capacity because it failed to allege reciprocity in its complaint:
As to private respondent's having no legal personality to sue, the record
discloses that private respondent was suing under Sec. 21-A of Republic
Act No. 166, as amended (p. 50, Annex "A", Petition). This is the exception
to the general rule that a foreign corporation doing business in the
Philippines must secure a license to do business before said foreign
corporation could maintain a court or administrative suit (Sec. 133,
Corporation Code, in relation to Sec. 21-A, RA 638, as amended). However,
there are some conditions which must be met before that exception could
be made to apply, namely: (a) the trademark of the suing corporation must
be registered in the Philippines, or that it be the assignee thereof: and (b)
that there exists a reciprocal treatment to Philippine Corporations either by
law or convention by the country of origin of the foreign corporation (Sec.
21-A Trademark Law). Petitioner recognizes that private respondent is the
holder of several certificates of registration, otherwise, the former would not
have instituted cancellation proceedings in the Patent's Office. Petitioner
actually zeroes on the second requisite provided by Section 21-A of the
Trademark Law which is the private respondent's failure to allege reciprocity
in the complaint. ...
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further ruled:
Failure to allege reciprocity, it being an essential fact under the trademark
law regarding its capacity to sue before the Philippine courts, is fatal to the
foreign corporations' cause. The Concurring Opinion of Chief Justice Aquino
on the same case is more emphatic when he said:
Respondent Leviton Manufacturing Co. Inc., alleged in
par. 2 of its complaint for unfair competition that its
action 'is being filed under the provisions of Section 21-
A of Republic Act No. 166, as amended.' Respondent is
bound by the allegation in its complaint. It cannot sue
under Section 21-A because it has not complied with
the requirements hereof that (1) its trademark Leviton
has been registered with the Patent Office and (2) that
it should show that the State of New York grants to
Philippine Corporations the privilege to bring an action
for unfair competition in that state. Respondent 'Leviton
has to comply with those requirements before it can be
allowed to maintain an action for unfair competition. (p.
9, CA — decision). (p. 55, Rollo).
The Court of Appeals further ruled that in issuing the writ of preliminary injunction, the trial court
committed grave abuse of discretion because it deprived the private respondent of its day in
court as the latter was not given the chance to present its counter-evidence.
In this petition for review, the petitioner contends that the Court of appeals erred in holding that:
(1) it had no legal capacity to sue; (2) the doctrine of lis pendens is applicable as a ground for
dismissing the case and (3) the writ of injunction was improperly issued.
Petitioner maintains that it has substantially complied with the requirements of Section 21-A of
Republic Act R.A. No. 166, as amended. According to the petitioner, its complaint specifically
alleged that it is not doing business in the Philippines and is suing under the said Repulbic Act;
that Section 21-A thereof provides that "the country of which the said corporation or juristic
person is a citizen, or in which it is domiciled, by treaty, convention or law, grants a similar
privilege to corporate or juristic persons of the Philippines" but does not mandatorily require that
such reciprocity between the Federal Republic of Germany and the Philippines be pleaded; that
such reciprocity arrangement is embodied in and supplied by the Union Convention for the
Protection of Industrial Property Paris Convention) to which both the Philippines and Federal
Republic of Germany are signatories and that since the Paris 'Convention is a treaty which,
pursuant to our Constitution, forms part of the law of the land, our courts are bound to take
judicial notice of such treaty, and, consequently, this fact need not be averred in the complaint.
We agree.
In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled:
But even assuming the truth of the private respondents allegation that the
petitioner failed to allege material facto in its petition relative to capacity to
sue, the petitioner may still maintain the present suit against respondent
Hernandes. As early as 1927, this Court was, and it still is, of the view that a
foreign corporation not doing business in the Philippines needs no license to
sue before Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil.
11 5), this Court held that a foreign corporation which has never done any
business in the Philippines and which is unlicensed and unregistered to do
business here, but is widely and favorably known in the Philippines through
the use therein of its products bearing its corporate and tradename, has a
legal right to maintain an action in the Philippines to restrain the residents
and inhabitants thereof from organizing a corporation therein bearing the
same name as the foreign corporation, when it appears that they have
personal knowledge of the existence of such a foreign corporation, and it is
apparent that the purpose of the proposed domestic corporation is to deal
and trade in the same goods as those of the foreign corporation.
Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton, Co. (234 F. 2d
633), this Court further said:
By the same token, the petitioner should be given the same treatment in the
Philippines as we make available to our own citizens. We are obligated to
assure to nationals of 'countries of the Union' an effective protection against
unfair competition in the same way that they are obligated to similarly
protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20,1980
issued a memorandum addressed to the Director of the Patents Office
directing the latter --
xxx xxx xxx
... [T]o reject all pending applications for Philippine registration of signature
and other world famous trademarks by applicants other than its original
owners or users.
The conflicting claims over internationally known trademarks involve such
name brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy,
Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of
such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.
The memorandum is a clear manifestation of our avowed adherence to a
policy of cooperation and amity with an nations. It is not, as wrongly alleged
by the private respondent, a personal policy of Minister Luis Villafuerte
which expires once he leaves the Ministry of trade. For a treaty or
convention is not a mere moral obligation to be enforced or not at the whims
of an incumbent head of a Ministry. It creates a legally binding obligation on
the parties founded on the generally accepted principle of international law
of pacta sunt servanda which has been adopted as part of the law of our
land. (Constitution, Art. II, Sec. 3). The memorandum reminds the Director
of Patents of his legal duty to obey both law and treaty. It must also be
obeyed. (at pp. 389-390, La Chemise Lacoste, S.A. v. Fernandez, supra).
In the case of of Cerverse Rubber Corporation V. Universal Rubber Products, Inc. (174 SCRA
165), we likewise re-aafirmed our adherence to the Paris Convention:
The ruling in the aforecited case is in consonance with the Convention of
Converse Rubber Corporation v. Universal Rubber Products, Inc. (I 47
SCRA 165), we likewise re-affirmed our adherence to the Paris Convention:
the Union of Paris for the Protection of Industrial Property to which the
Philippines became a party on September 27, 1965. Article 8 thereof
provides that 'a trade name [corporation name] shall be protected in all the
countries of the Union without the obligation of filing or registration, whether
or not it forms part of the trademark.'
The object of the Convention is to accord a national of a member nation
extensive protection 'against infringement and other types of unfair
competition [Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F. 2d 633]." (at p.
165)
The mandate of the aforementioned Convention finds implementation in
Section 37 of RA No. 166, otherwise known as the trademark Law:
Rights of Foreign Registrants. — Persons who are nationals of, domiciled
in, or have a bona fide or effective business or commercial establishment in
any foreign country, which is a party to an international convention or treaty
relating to marks or tradenames on the represssion of unfair competition to
which the Philippines may be party, shall be entitled to the benefits and
subject to the provisions of this Act ...
Tradenames of persons described in the first paragraph of this section shall
be protected without the obligation of filing or registration whether or not
they form part of marks.
We, therefore, hold that the petitioner had the legal capacity to file the action below.
Anent the issue of lis pendens as a ground for a motion to dismiss, the petitioner submits that
the relief prayed for in its civil action is different from the relief sought in the Inter Partes cases.
More important, however, is the fact that forlis pendens to be a valid ground for the dismissal of
a case, the other case pending between the same parties and having the same cause must be a
court action. As we have held in Solancho v. Ramos (19 SCRA 848):
As noted above, the defendants contend that the pendency of an
administrative between themselves and the plaintiff before the Bureau of
Lands is a sufficient ground to dismiss the action. On the other hand, the
plaintiff, believing that this ground as interposed by the defendants is a
sufficient ground for the dismissal of his complaint, filed a motion to
withdraw his free patent application No. 16649.
This is not what is contemplated under the law because under section 1(d),
Rule 16 (formerly Rule 8) of the Rules of Court, one of the grounds for the
dismissal of an action is that "there is another action pending between the
same parties for the same cause." Note that the Rule uses the phrase
another action. This phrase should be construed in line with Section 1 of
Rule 2, which defines the word action, thus--
Action means an ordinary suit in a court of justice by
which one party prosecutes another for the
enforcement or protection of alright, or the prevention or
redress of a wrong. Every other remedy is a special
proceeding.
It is,therefore,very clear that the Bureau of Land is not covered under the
aforementioned provisions of the Rules of Court. (at p. 851)
Thus, the Court of Appeals likewise erred in holding that the requisites of lis pendens were
present so as to justify the dismissal of the case below.
As regards the propriety of the issuance of the writ of preliminary injunuction, the records show
that herein private respondent was given the opportunity to present its counter-evidence against
the issuance thereof but it intentionally refused to do so to be consistent with its theory that the
civil case should be dismissed in the first place.
Considering the fact that "PUMA" is an internationally known brand name, it is pertinent to
reiterate the directive to lower courts, which equally applies to administrative agencies, found
in La Chemise Lacoste, S.A. v. Fernandez, supra):
One final point. It is essential that we stress our concern at the seeming
inability of law enforcement officials to stem the tide of fake and counterfeit
consumer items flooding the Philippine market or exported abroad from our
country. The greater victim is not so much the manufacturer whose product
is being faked but the Filipino consuming public and in the case of
exportations, our image abroad. No less than the President, in issuing
Executive Order No. 913 dated October 7, 1983 to strengthen the powers of
the Minister of Trade and Industry for the protection of consumers, stated
that, among other acts, the dumping of substandard, imitated, hazardous,
and cheap goods, the infringement of internationally known tradenames and
trademarks, and the unfair trade Practices of business firms have reached
such proportions as to constitute economic sabotage. We buy a kitchen
appliance, a household tool, perfume, face powder, other toilet articles,
watches, brandy or whisky, and items of clothing like jeans, T-shirts,
neckties, etc. — the list is quite lengthy — pay good money relying on the
brand name as guarantee of its quality and genuine nature only to explode
in bitter frustration and helpless anger because the purchased item turns out
to be a shoddy imitation, albeit a clever looking counterfeit, of the quality
product. Judges all over the country are well advised to remember that court
processes should not be used as instruments to, unwittingly or otherwise,
aid counterfeiters and intellectual pirates, tie the hands of the law as it seeks
to protect the Filipino consuming public and frustrate executive and
administrative implementation of solemn commitments pursuant to
international conventions and treaties. (at p. 403)
WHEREFORE, the appealed decision of the Court of Appeals dated June 23, 1986 is
REVERSED and SET ASIDE and the order of the Regional Trial Court of Makati is hereby
Reinstated.
G.R. No. 170891 November 24, 2009
MANUEL C. ESPIRITU, JR., AUDIE LLONA, FREIDA F. ESPIRITU, CARLO F. ESPIRITU,
RAFAEL F. ESPIRITU, ROLANDO M. MIRABUNA, HERMILYN A. MIRABUNA, KIM ROLAND
A. MIRABUNA, KAYE ANN A. MIRABUNA, KEN RYAN A. MIRABUNA, JUANITO P. DE
CASTRO, GERONIMA A. ALMONITE and MANUEL C. DEE, who are the officers and
directors of BICOL GAS REFILLING PLANT CORPORATION, Petitioners,
vs.
PETRON CORPORATION and CARMEN J. DOLOIRAS, doing business under the name
"KRISTINA PATRICIA ENTERPRISES," Respondents.
DECISION
ABAD, J.:
This case is about the offense or offenses that arise from the reloading of the liquefied petroleum
gas cylinder container of one brand with the liquefied petroleum gas of another brand.
The Facts and the Case
Respondent Petron Corporation (Petron) sold and distributed liquefied petroleum gas (LPG) in
cylinder tanks that carried its trademark "Gasul."1 Respondent Carmen J. Doloiras owned and
operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the
whole of Sorsogon.2 Jose Nelson Doloiras (Jose) served as KPE’s manager.
Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and
distributing LPGs in Sorsogon but theirs carried the trademark "Bicol Savers Gas." Petitioner
Audie Llona managed Bicol Gas.
In the course of trade and competition, any given distributor of LPGs at times acquired
possession of LPG cylinder tanks belonging to other distributors operating in the same area.
They called these "captured cylinders." According to Jose, KPE’s manager, in April 2001 Bicol
Gas agreed with KPE for the swapping of "captured cylinders" since one distributor could not
refill captured cylinders with its own brand of LPG. At one time, in the course of implementing
this arrangement, KPE’s Jose visited the Bicol Gas refilling plant. While there, he noticed several
Gasul tanks in Bicol Gas’ possession. He requested a swap but Audie Llona of Bicol Gas replied
that he first needed to ask the permission of the Bicol Gas owners. That permission was given
and they had a swap involving around 30 Gasul tanks held by Bicol Gas in exchange for
assorted tanks held by KPE.
KPE’s Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard. He
offered to make a swap for these but Llona declined, saying the Bicol Gas owners wanted to
send those tanks to Batangas. Later Bicol Gas told Jose that it had no more Gasul tanks left in
its possession. Jose observed on almost a daily basis, however, that Bicol Gas’ trucks which
plied the streets of the province carried a load of Gasul tanks. He noted that KPE’s volume of
sales dropped significantly from June to July 2001.
On August 4, 2001 KPE’s Jose saw a particular Bicol Gas truck on the Maharlika Highway.
While the truck carried mostly Bicol Savers LPG tanks, it had on it one unsealed 50-kg Gasul
tank and one 50-kg Shellane tank. Jose followed the truck and when it stopped at a store, he
asked the driver, Jun Leorena, and the Bicol Gas sales representative, Jerome Misal, about the
Gasul tank in their truck. They said it was empty but, when Jose turned open its valve, he noted
that it was not. Misal and Leorena then admitted that the Gasul and Shellane tanks on their truck
belonged to a customer who had them filled up by Bicol Gas. Misal then mentioned that his
manager was a certain Rolly Mirabena.
Because of the above incident, KPE filed a complaint3 for violations of Republic Act (R.A.) 623
(illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of
trade marks) and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293). The
complaint charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and
several John and Jane Does, described as the directors, officers, and stockholders of Bicol Gas.
These directors, officers, and stockholders were eventually identified during the preliminary
investigation.
Subsequently, the provincial prosecutor ruled that there was probable cause only for violation of
R.A. 623 (unlawfully filling up registered tanks) and that only the four Bicol Gas employees,
Mirabena, Misal, Leorena, and petitioner Llona, could be charged. The charge against the other
petitioners who were the stockholders and directors of the company was dismissed.
Dissatisfied, Petron and KPE filed a petition for review with the Office of the Regional State
Prosecutor, Region V, which initially denied the petition but partially granted it on motion for
reconsideration. The Office of the Regional State Prosecutor ordered the filing of additional
informations against the four employees of Bicol Gas for unfair competition. It ruled, however,
that no case for trademark infringement was present. The Secretary of Justice denied the appeal
of Petron and KPE and their motion for reconsideration.
Undaunted, Petron and KPE filed a special civil action for certiorari with the Court of
Appeals4 but the Bicol Gas employees and stockholders concerned opposed it, assailing the
inadequacy in its certificate of non-forum shopping, given that only Atty. Joel Angelo C. Cruz
signed it on behalf of Petron. In its Decision5 dated October 17, 2005, the Court of Appeals
ruled, however, that Atty. Cruz’s certification constituted sufficient compliance. As to the
substantive aspect of the case, the Court of Appeals reversed the Secretary of Justice’s ruling. It
held that unfair competition does not necessarily absorb trademark infringement. Consequently,
the court ordered the filing of additional charges of trademark infringement against the
concerned Bicol Gas employees as well.
Since the Bicol Gas employees presumably acted under the direct order and control of its
owners, the Court of Appeals also ordered the inclusion of the stockholders of Bicol Gas in the
various charges, bringing to 16 the number of persons to be charged, now including petitioners
Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M.
Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A.
Mirabuna, Juanito P. de Castro, Geronima A. Almonite, and Manuel C. Dee (together with Audie
Llona), collectively, petitioners Espiritu, et al. The court denied the motion for reconsideration of
these employees and stockholders in its Resolution dated January 6, 2006, hence, the present
petition for review6 before this Court.
The Issues Presented
The petition presents the following issues:
1. Whether or not the certificate of non-forum shopping that accompanied the petition
filed with the Court of Appeals, signed only by Atty. Cruz on behalf of Petron, complied
with what the rules require;
2. Whether or not the facts of the case warranted the filing of charges against the Bicol
Gas people for:
a) Filling up the LPG tanks registered to another manufacturer without the
latter’s consent in violation of R.A. 623, as amended;
b) Trademark infringement consisting in Bicol Gas’ use of a trademark that
is confusingly similar to Petron’s registered "Gasul" trademark in violation of
section 155 also of R.A. 8293; and
c) Unfair competition consisting in passing off Bicol Gas-produced LPGs for
Petron-produced Gasul LPG in violation of Section 168.3 of R.A. 8293.
The Court’s Rulings
First. Petitioners Espiritu, et al. point out that the certificate of non-forum shopping that
respondents KPE and Petron attached to the petition they filed with the Court of Appeals was
inadequate, having been signed only by Petron, through Atty. Cruz.
But, while procedural requirements such as that of submittal of a certificate of non-forum
shopping cannot be totally disregarded, they may be deemed substantially complied with under
justifiable circumstances.7 One of these circumstances is where the petitioners filed a collective
action in which they share a common interest in its subject matter or raise a common cause of
action. In such a case, the certification by one of the petitioners may be deemed sufficient.8
Here, KPE and Petron shared a common cause of action against petitioners Espiritu, et al.,
namely, the violation of their proprietary rights with respect to the use of Gasul tanks and
trademark. Furthermore, Atty. Cruz said in his certification that he was executing it "for and on
behalf of the Corporation, and co-petitioner Carmen J. Doloiras."9Thus, the object of the
requirement – to ensure that a party takes no recourse to multiple forums – was substantially
achieved. Besides, the failure of KPE to sign the certificate of non-forum shopping does not
render the petition defective with respect to Petron which signed it through Atty. Cruz. 10 The
Court of Appeals, therefore, acted correctly in giving due course to the petition before it.
Second. The Court of Appeals held that under the facts of the case, there is probable cause that
petitioners Espiritu, et al. committed all three crimes: (a) illegally filling up an LPG tank registered
to Petron without the latter’s consent in violation of R.A. 623, as amended; (b) trademark
infringement which consists in Bicol Gas’ use of a trademark that is confusingly similar to
Petron’s registered "Gasul" trademark in violation of Section 155 of R.A. 8293; and (c) unfair
competition which consists in petitioners Espiritu, et al. passing off Bicol Gas-produced LPGs for
Petron-produced Gasul LPG in violation of Section 168.3 of R.A. 8293.
Here, the complaint adduced at the preliminary investigation shows that the one 50-kg Petron
Gasul LPG tank found on the Bicol Gas’ truck "belonged to [a Bicol Gas] customer who had the
same filled up by BICOL GAS."11 In other words, the customer had that one Gasul LPG tank
brought to Bicol Gas for refilling and the latter obliged.
R.A. 623, as amended,12 punishes any person who, without the written consent of the
manufacturer or seller of gases contained in duly registered steel cylinders or tanks, fills the
steel cylinder or tank, for the purpose of sale, disposal or trafficking, other than the purpose for
which the manufacturer or seller registered the same. This was what happened in this case,
assuming the allegations of KPE’s manager to be true. Bicol Gas employees filled up with their
firm’s gas the tank registered to Petron and bearing its mark without the latter’s written authority.
Consequently, they may be prosecuted for that offense.
But, as for the crime of trademark infringement, Section 155 of R.A. 8293 (in relation to Section
17013 ) provides that it is committed by any person who shall, without the consent of the owner of
the registered mark:
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
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.
KPE and Petron have to show that the alleged infringer, the responsible officers and staff of
Bicol Gas, used Petron’s Gasul trademark or a confusingly similar trademark on Bicol Gas tanks
with intent to deceive the public and defraud its competitor as to what it is selling.14 Examples of
this would be the acts of an underground shoe manufacturer in Malabon producing "Nike"
branded rubber shoes or the acts of a local shirt company with no connection to La Coste,
producing and selling shirts that bear the stitched logos of an open-jawed alligator.
Here, however, the allegations in the complaint do not show that Bicol Gas painted on its own
tanks Petron’s Gasul trademark or a confusingly similar version of the same to deceive its
customers and cheat Petron. Indeed, in this case, the one tank bearing the mark of Petron Gasul
found in a truck full of Bicol Gas tanks was a genuine Petron Gasul tank, more of a captured
cylinder belonging to competition. No proof has been shown that Bicol Gas has gone into the
business of distributing imitation Petron Gasul LPGs.
As to the charge of unfair competition, Section 168.3 (a) of R.A. 8293 (also in relation to Section
170) describes the acts constituting the offense as follows:
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;
Essentially, what the law punishes is the act of giving one’s goods the general appearance of the
goods of another, which would likely mislead the buyer into believing that such goods belong to
the latter. Examples of this would be the act of manufacturing or selling shirts bearing the logo of
an alligator, similar in design to the open-jawed alligator in La Coste shirts, except that the jaw of
the alligator in the former is closed, or the act of a producer or seller of tea bags with red tags
showing the shadow of a black dog when his competitor is producing or selling popular tea bags
with red tags showing the shadow of a black cat.
Here, there is no showing that Bicol Gas has been giving its LPG tanks the general appearance
of the tanks of Petron’s Gasul. As already stated, the truckfull of Bicol Gas tanks that the KPE
manager arrested on a road in Sorsogon just happened to have mixed up with them one
authentic Gasul tank that belonged to Petron.
The only point left is the question of the liability of the stockholders and members of the board of
directors of Bicol Gas with respect to the charge of unlawfully filling up a steel cylinder or tank
that belonged to Petron. The Court of Appeals ruled that they should be charged along with the
Bicol Gas employees who were pointed to as directly involved in overt acts constituting the
offense.1avvphi1
Bicol Gas is a corporation. As such, it is an entity separate and distinct from the persons of its
officers, directors, and stockholders. It has been held, however, that corporate officers or
employees, through whose act, default or omission the corporation commits a crime, may
themselves be individually held answerable for the crime.15
Jose claimed in his affidavit that, when he negotiated the swapping of captured cylinders with
Bicol Gas, its manager, petitioner Audie Llona, claimed that he would be consulting with the
owners of Bicol Gas about it. Subsequently, Bicol Gas declined the offer to swap cylinders for
the reason that the owners wanted to send their captured cylinders to Batangas. The Court of
Appeals seized on this as evidence that the employees of Bicol Gas acted under the direct
orders of its owners and that "the owners of Bicol Gas have full control of the operations of the
business."16
The "owners" of a corporate organization are its stockholders and they are to be distinguished
from its directors and officers. The petitioners here, with the exception of Audie Llona, are being
charged in their capacities as stockholders of Bicol Gas. But the Court of Appeals forgets that in
a corporation, the management of its business is generally vested in its board of directors, not its
stockholders.17 Stockholders are basically investors in a corporation. They do not have a hand in
running the day-to-day business operations of the corporation unless they are at the same time
directors or officers of the corporation. Before a stockholder may be held criminally liable for acts
committed by the corporation, therefore, it must be shown that he had knowledge of the criminal
act committed in the name of the corporation and that he took part in the same or gave his
consent to its commission, whether by action or inaction.
The finding of the Court of Appeals that the employees "could not have committed the crimes
without the consent, [abetment], permission, or participation of the owners of Bicol Gas"18 is a
sweeping speculation especially since, as demonstrated above, what was involved was just one
Petron Gasul tank found in a truck filled with Bicol Gas tanks. Although the KPE manager heard
petitioner Llona say that he was going to consult the owners of Bicol Gas regarding the offer to
swap additional captured cylinders, no indication was given as to which Bicol Gas stockholders
Llona consulted. It would be unfair to charge all the stockholders involved, some of whom were
proved to be minors.19 No evidence was presented establishing the names of the stockholders
who were charged with running the operations of Bicol Gas. The complaint even failed to allege
who among the stockholders sat in the board of directors of the company or served as its
officers.
The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C. Espiritu,
Jr. as the registered owner of the truck that the KPE manager brought to the police for
investigation because that truck carried a tank of Petron Gasul. But the act that R.A. 623
punishes is the unlawful filling up of registered tanks of another. It does not punish the act of
transporting such tanks. And the complaint did not allege that the truck owner connived with
those responsible for filling up that Gasul tank with Bicol Gas LPG.
WHEREFORE, the Court REVERSES and SETS ASIDE the Decision of the Court of Appeals in
CA-G.R. SP 87711 dated October 17, 2005 as well as its Resolution dated January 6, 2006, the
Resolutions of the Secretary of Justice dated March 11, 2004 and August 31, 2004, and the
Order of the Office of the Regional State Prosecutor, Region V, dated February 19, 2003. The
Court REINSTATES the Resolution of the Office of the Provincial Prosecutor of Sorsogon in I.S.
2001-9231 (inadvertently referred in the Resolution itself as I.S. 2001-9234), dated February 26,
2002. The names of petitioners Manuel C. Espiritu, Jr., Freida F. Espititu, Carlo F. Espiritu,
Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye
Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P. De Castro, Geronima A. Almonite and
Manuel C. Dee are ORDERED excluded from the charge.
SO ORDERED.
G.R. No. 181571 December 16, 2009
JUNO BATISTIS, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
BERSAMIN, J.:
On January 23, 2006, the Regional Trial Court (RTC), Branch 24, in Manila convicted Juno
Batistis for violations of Section 155 (infringement of trademark) and Section 168 (unfair
competition) of the Intellectual Property Code (Republic Act No. 8293). 1
On September 13, 2007, the Court of Appeals (CA) affirmed the conviction for infringement of
trademark, but reversed the conviction for unfair competition for failure of the State to prove guilt
beyond reasonable doubt.2
Batistis now appeals via petition for review on certiorari to challenge the CA’s affirmance of his
conviction for infringement of trademark.
We affirm the conviction, but we modify the penalty by imposing an indeterminate sentence,
conformably with the Indeterminate Sentence Law and pertinent jurisprudence.
and Wines and Allied Domecq Philippines, Inc. represented by Atty. Leonardo P. Salvador, a
corporation duly organized and existing under the laws of the Republic of the Philippines and
engaged in manufacturing of Fundador Brandy under license of Pedro Domecq, S.A. Cadiz,
Spain, and/or copyright owner of the said product, did then and there wilfully, unlawfully and
feloniously reproduce, sell and offer for sale, without prior authority and consent of said
manufacturing company, the accused giving their own low quality product the general
appearance and other features of the original Fundador Brandy of the said manufacturing
company which would be likely induce the public to believe that the said fake Fundador Brandy
reproduced and/or sold are the real Fundador Brandy produced or distributed by the Allied
Domecq Spirits and Wines Limited, U.K. and Allied Domecq Philippines, Inc. to the damage and
prejudice of the latter and the public.
Contrary to law.12
With Batistis pleading not guilty on June 3, 2003,13 the RTC proceeded to trial. On January 23,
2006, the RTC found Batistis guilty beyond reasonable doubt of infringement of trademark and
unfair competition, viz:
ACCORDINGLY, this Court finds the accused JUNO BATISTIS Guilty Beyond Reasonable
Doubt of the crime of Violation of Section 155 of the Intellectual Property Code and hereby
sentences him to suffer the penalty of imprisonment of TWO (2) YEARS and to pay a fine of
FIFTY THOUSAND (P50,000.00) PESOS.

This Court likewise finds accused JUNO BATISTIS Guilty Beyond Reasonable Doubt of the
Antecedents crime of Violation of Section 168 (sic) penalty of imprisonment of TWO (2) YEARS and to pay a
fine of FIFTY THOUSAND (Php50,000.00) PESOS.
The Fundador trademark characterized the brandy products manufactured by Pedro Domecq,
S.A. of Cadiz, Spain.3It was duly registered in the Principal Register of the Philippines Patent Accused is further ordered to indemnify the private complainant the sum of TWENTY-FIVE
Office on July 12, 1968 under Certificate of Registration No. 15987,4 for a term of 20 years from
(Php25,000.00) PESOS as actual damages.
November 5, 1970. The registration was renewed for another 20 years effective November 5,
1990.5
The following items recovered from the premises of the accused and subject of the case are
hereby ordered destroyed, pursuant to existing rules and regulations:
Allied Domecq Philippines, Inc., a Philippine corporation exclusively authorized6 to
distribute Fundador brandy products imported from Spain wholly in finished form, 7 initiated this
case against Batistis. Upon its request, agents of the National Bureau of Investigation (NBI) Twenty (20) empty Carlos 1 bottles
conducted a test-buy in the premises of Batistis, and thereby confirmed that he was actively
engaged in the manufacture, sale and distribution of counterfeit Fundador brandy
Ten (10) Black Label empty bottles
products.8Upon application of the NBI agents based on the positive results of the test-
buy,9 Judge Antonio M. Eugenio, Jr. of the Manila RTC issued on December 20, 2001 Search
Warrant No. 01-2576,10 authorizing the search of the premises of Batistis located at No.1664 Two (2) empty bottles of Jhonny (sic) Walker Swing
Onyx St., San Andres Bukid, Sta. Ana, Manila. The search yielded 20 empty Carlos I bottles, 10
empty bottles of Black Label whiskey, two empty bottles of Johnny Walker Swing, an empty
One(1) empty bottle of Remy Martin XO
bottle of Remy Martin XO, an empty bottle of Chabot, 241 empty Fundador bottles, 163 boxes of
Fundador, a half sack of Fundador plastic caps, two filled bottles of Fundador brandy, and eight
cartons of empty Jose Cuervo bottles.11 One (1) empty bottle of Chabot

The Office of the City Prosecutor of Manila formally charged Batistis in the RTC in Manila with Two hundred forty-one (241) empty Fundador bottles
two separate offenses, namely, infringement of trademark and unfair competition, through the
following information, to wit:
One hundred sixty-three (163) Fundador boxes

That on or about December 20, 2001, in the City of Manila, Philippines, the said accused, being
then in possession of two hundred forty one (241) empty Fundador bottles, one hundred sixty One half (1/2 sack of Fundador plastic caps, and
three Fundador boxes, one half (1/2) sack of Fundador plastic caps, and two (2) Fundador
bottles with intention of deceiving and defrauding the public in general and Allied Domecq Spirits Two (2) filled Fundador bottles
 Eight (8) boxes of empty Jose Cuervo bottles
WITH COSTS AGAINST ACCUSED
SO ORDERED.14
Batistis appealed to the CA, which, on September 13, 2007, affirmed his conviction for
infringement of trademark, but acquitted him of unfair competition, 15 disposing:
WHEREFORE, premises considered, the Appeal of Appellant JUNO BATISTIS is hereby
PARTIALLY GRANTED. The challenged Decision is AFFIRMED in so far as the charge against
him for Violation of Section 155 of the Intellectual Property Code is concerned.
However, for failure of the prosecution to prove to a moral certainty the guilt of the said
Appellant, for violation of Section 168 of the same code a judgment of ACQUITTAL is hereby
rendered in his favor.
SO ORDERED.16
After the CA denied his motion for reconsideration, Batistis brought this appeal.
Issue
Batistis contends that:
THE REGIONAL TRIAL COURT ERRED IN CONVICTING THE ACCUSED ON THE BASIS OF
THE SELF-SERVING AFFIDAVITS AND TESTIMONIES OF THE POLICE OFFICERS WHO
CONDUCTED THE RAID ON THE HOUSE OF THE ACCUSED.
He submits that the only direct proofs of his guilt were the self-serving testimonies of the NBI
raiding team; that he was not present during the search; that one of the NBI raiding agents failed
to immediately identify him in court; and that aside from the two bottles of Fundador brandy, the
rest of the confiscated items were not found in his house.
Ruling
The petition for review has no merit.
1.
Appeal confined only to Questions of Law
Pursuant to Section 3,17 Rule 122, and Section 9,18 Rule 45, of the Rules of Court, the review on
appeal of a decision in a criminal case, wherein the CA imposes a penalty other than death,
reclusion perpetua, or life imprisonment, is by petition for review on certiorari.
A petition for review on certiorari raises only questions of law. Sec. 1, Rule 45, Rules of Court,
explicitly so provides, viz:
Section 1. Filing of petition with Supreme Court.—A party desiring to appeal by certiorari from a
judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an application
for a writ of preliminary injunction or other provisional remedies and shall raise only questions of
law, which must be distinctly set forth. The petitioner may seek the same provisional remedies
by verified motion filed in the same action or proceeding at any time during its pendency.
Accordingly, we reject the appeal for the following reasons:
Firstly: The petition for review replicates Batistis’ appellant's brief filed in the CA, 19 a true
indication that the errors he submits for our review and reversal are those he had attributed to
the RTC. He thereby rests his appeal on his rehashed arguments that the CA already discarded.
His appeal is, therefore, improper, considering that his petition for review on certiorari should
raise only the errors committed by the CA as the appellate court, not the errors of the RTC.
Secondly: Batistis’ assigned errors stated in the petition for review on certiorari require a re-
appreciation and re-examination of the trial evidence. As such, they raise issues evidentiary and
factual in nature. The appeal is dismissible on that basis, because, one, the petition for review
thereby violates the limitation of the issues to only legal questions, and, two, the Court, not being
a trier of facts, will not disturb the factual findings of the CA, unless they were mistaken, absurd,
speculative, conflicting, tainted with grave abuse of discretion, or contrary to the findings
reached by the court of origin.20
Whether a question of law or a question of fact is involved is explained in Belgica v. Belgica:21
xxx [t]here exists a question of law when there is doubt on what the law applicable to a certain
set of facts is. Questions of fact, on the other hand, arise when there is an issue regarding the
truth or falsity of the statement of facts. Questions on whether certain pieces of evidence should
be accorded probative value or whether the proofs presented by one party are clear, convincing
and adequate to establish a proposition are issues of fact. Such questions are not subject to
review by this Court. As a general rule, we review cases decided by the CA only if they involve
questions of law raised and distinctly set forth in the petition. 22
Thirdly: The factual findings of the RTC, its calibration of the testimonies of the witnesses, and
its assessment of their probative weight are given high respect, if not conclusive effect, unless
cogent facts and circumstances of substance, which if considered, would alter the outcome of
the case, were ignored, misconstrued or misinterpreted. 23
To accord with the established doctrine of finality and bindingness of the trial court’s findings of
fact, we do not disturb such findings of fact of the RTC, particularly after their affirmance by the
CA, for Batistis, as appellant, did not sufficiently prove any extraordinary circumstance justifying
a departure from such doctrine.
2.
Findings of fact were even correct
A review of the decision of the CA, assuming that the appeal is permissible, even indicates that
both the RTC and the CA correctly appreciated the evidence against the accused, and correctly
applied the pertinent law to their findings of fact.
Article 155 of the Intellectual Property Code identifies the acts constituting infringement of
trademark, viz:
Section 155. Remedies; Infringement. — Any person who shall, without the consent of the owner
of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or services including other preparatory
steps necessary to carry out the sale of any goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature
thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used in commerce
upon or in connection with the sale, offering for sale, distribution, or advertising of goods or
services on or in connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the
remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of
the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there
is actual sale of goods or services using the infringing material.
Harvey Tan, Operations Manager of Pedro Domecq, S.A. whose task involved the detection of
counterfeit products in the Philippines, testified that the seized Fundador brandy, when
compared with the genuine product, revealed several characteristics of counterfeiting, namely:
(a) the Bureau of Internal Revenue (BIR) seal label attached to the confiscated products did not
reflect the word tunay when he flashed a black light against the BIR label; (b) the "tamper
evident ring" on the confiscated item did not contain the word Fundador; and (c) the word
Fundador on the label was printed flat with sharper edges, unlike the raised, actually embossed,
and finely printed genuine Fundador trademark.24
There is no question, therefore, that Batistis exerted the effort to make the counterfeit products
look genuine to deceive the unwary public into regarding the products as genuine. The buying
public would be easy to fall for the counterfeit products due to their having been given the
appearance of the genuine products, particularly with the difficulty of detecting whether the
products were fake or real if the buyers had no experience and the tools for detection, like black
light. He thereby infringed the registered Fundador trademark by the colorable imitation of it
through applying the dominant features of the trademark on the fake products, particularly the
two bottles filled with Fundador brandy.25 His acts constituted infringement of trademark as set
forth in Section 155, supra.
3.
Penalty Imposed should be an
Indeterminate Penalty and Fine
Section 170 of the Intellectual Property Code provides the penalty for infringement of trademark,
to wit:
Section 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a
criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty
thousand pesos (P50,000) to Two hundred thousand pesos(P200,000), shall be imposed on any
person who is found guilty of committing any of the acts mentioned in Section 155, Section 168
and Subsection 169.1. (Arts. 188 and 189, Revised Penal Code).
The CA affirmed the decision of the RTC imposing the "the penalty of imprisonment of TWO (2)
YEARS and to pay a fine of FIFTY THOUSAND (₱50,000.00) PESOS."
We rule that the penalty thus fixed was contrary to the Indeterminate Sentence Law, 26 as
amended by Act No. 4225. We modify the penalty.
Section 1 of the Indeterminate Sentence Law, as amended, provides:
Section 1. Hereafter, in imposing a prison sentence for an offense punished by the Revised
Penal Code, or its amendments, the court shall sentence the accused to an indeterminate
sentence the maximum term of which shall be that which, in view of the attending
circumstances, could be properly imposed under the rules of the said Code, and the minimum
which shall be within the range of the penalty next lower to that prescribed by the Code for the
offense; and if the offense is punished by any other law, the court shall sentence the accused to
an indeterminate sentence, the maximum term of which shall not exceed the maximum fixed by
said law and the minimum shall not be less than the minimum term prescribed by the same.
The straight penalty the CA imposed was contrary to the Indeterminate Sentence Law, whose
Section 1 requires that the penalty of imprisonment should be an indeterminate sentence.
According to Spouses Bacar v. Judge de Guzman,Jr.,27 the imposition of an indeterminate
sentence with maximum and minimum periods in criminal cases not excepted from the coverage
of the Indeterminate Sentence Law pursuant to its Section 228 is mandatory, viz:
The need for specifying the minimum and maximum periods of the indeterminate sentence is to
prevent the unnecessary and excessive deprivation of liberty and to enhance the economic
usefulness of the accused, since he may be exempted from serving the entire sentence,
depending upon his behavior and his physical, mental, and moral record. The requirement of
imposing an indeterminate sentence in all criminal offenses whether punishable by the Revised
Penal Code or by special laws, with definite minimum and maximum terms, as the Court deems
proper within the legal range of the penalty specified by the law must, therefore, be deemed
mandatory.
Indeed, the imposition of an indeterminate sentence is mandatory. For instance, in Argoncillo v.
Court of Appeals,29three persons were prosecuted for and found guilty of illegal fishing (with the
use of explosives) as defined in Section 33, Presidential Decree No. 704, as amended by
Presidential Decree No. 1058, for which the prescribed penalty was imprisonment from 20 years
to life imprisonment. The trial court imposed on each of the accused a straight penalty of 20
years imprisonment, and the CA affirmed the trial court. On appeal, however, this Court declared
the straight penalty to be erroneous, and modified it by imposing imprisonment ranging from 20
years, as minimum, to 25 years, as maximum.
We are aware that an exception was enunciated in People v. Nang Kay,30 a prosecution for
illegal possession of firearms punished by a special law (that is, Section 2692, Revised
Administrative Code, as amended by Commonwealth Act 56 and Republic Act No. 4) with
imprisonment of not less than five years nor more than ten years. There, the Court sustained the
straight penalty of five years and one day imposed by the trial court (Court of First Instance of
Rizal) because the application of the Indeterminate Sentence Law would be unfavorable to the
accused by lengthening his prison sentence. Yet, we cannot apply the Nang Kay exception
herein, even if this case was a prosecution under a special law like that in Nang Kay. Firstly, the
trial court in Nang Kay could well and lawfully have given the accused the lowest prison
sentence of five years because of the mitigating circumstance of his voluntary plea of guilty, but,
herein, both the trial court and the CA did not have a similar circumstance to justify the lenity
towards the accused. Secondly, the large number of Fundador articles confiscated from his
house (namely, 241 empty bottles of Fundador, 163 Fundador boxes, a half sack full of
Fundador plastic caps, and two filled bottles of Fundador Brandy) clearly demonstrated that
Batistis had been committing a grave economic offense over a period of time, thereby deserving
for him the indeterminate, rather than the straight and lower, penalty.
ACCORDINGLY, we affirm the decision dated September 13, 2007 rendered in C.A.-G.R. CR
No. 30392 entitled People of the Philippines v. Juno Batistis, but modify the penalty to
imprisonment ranging from two years, as minimum, to three years, as maximum, and a fine of
₱50,000.00.
The accused shall pay the costs of suit.
G.R. No. 100098 December 29, 1995
EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER and H.D. LEE COMPANY, INC., respondents.
KAPUNAN, J.:
In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald
Garment Manufacturing Corporation seeks to annul the decision of the Court of Appeals dated
29 November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly
similar to that of private respondent and the resolution dated 17 May 1991 denying petitioner's
motion for reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation organized
under the laws of Delaware, U.S.A., filed with the Bureau of Patents, Trademarks & Technology
Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054 (Supplemental
Register) for the trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs,
jackets, jogging suits, dresses, shorts, shirts and lingerie under Class 25, issued on 27 October
1980 in the name of petitioner Emerald Garment Manufacturing Corporation, a domestic
corporation organized and existing under Philippine laws. The petition was docketed as Inter
Partes Case No. 1558.1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the Paris
Convention for the Protection of Industrial Property, averred that petitioner's trademark "so
closely resembled its own trademark, 'LEE' as previously registered and used in the Philippines,
and not abandoned, as to be likely, when applied to or used in connection with petitioner's
goods, to cause confusion, mistake and deception on the part of the purchasing public as to the
origin of the goods."2
In its answer dated 23 March 1982, petitioner contended that its trademark was entirely and
unmistakably different from that of private respondent and that its certificate of registration was
legally and validly granted.3
On 20 February 1984, petitioner caused the publication of its application for registration of the
trademark "STYLISTIC MR. LEE" in the Principal Register." 4
On 27 July 1984, private respondent filed a notice of opposition to petitioner's application for
registration also on grounds that petitioner's trademark was confusingly similar to its "LEE"
trademark.5 The case was docketed as Inter Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15 May
1985, issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on grounds that a
common question of law was involved.6
On 19 July 1988, the Director of Patents rendered a decision granting private respondent's
petition for cancellation and opposition to registration.
The Director of Patents found private respondent to be the prior registrant of the trademark
"LEE" in the Philippines and that it had been using said mark in the Philippines. 7
Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's
trademark was confusingly similar to private respondent's mark because "it is the word 'Lee'
which draws the attention of the buyer and leads him to conclude that the goods originated from
the same manufacturer. It is undeniably the dominant feature of the mark." 8
On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it filed
with the BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the Director of
Patents on grounds that the same would cause it great and irreparable damage and injury.
Private respondent submitted its opposition on 22 August 1988. 9
On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's motion to
stay execution subject to the following terms and conditions:
1. That under this resolution, Respondent-Registrant is authorized only to
dispose of its current stock using the mark "STYLISTIC MR. LEE";
2. That Respondent-Registrant is strictly prohibited from further production,
regardless of mode and source, of the mark in question (STYLISTIC MR.
LEE) in addition to its current stock;
3. That this relief Order shall automatically cease upon resolution of the
Appeal by the Court of Appeals and, if the Respondent's appeal loses, all
goods bearing the mark "STYLISTIC MR. LEE" shall be removed from the
market, otherwise such goods shall be seized in accordance with the law.
SO ORDERED.10
On 29 November 1990, the Court of Appeals promulgated its decision affirming the decision of
the Director of Patents dated 19 July 1988 in all respects.11
In said decision the Court of Appeals expounded, thus:
xxx xxx xxx
Whether or not a trademark causes confusion and is likely to deceive the
public is a question of fact which is to be resolved by applying the "test of
dominancy", meaning, if the competing trademark contains the main or
 essential or dominant features of another by reason of which confusion and
deception are likely to result, then infringement takes place; that duplication
or imitation is not necessary, a similarity in the dominant features of the
trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the
appellant's trademark and all of the appellee's "LEE" trademarks. It is the
mark which draws the attention of the buyer and leads him to conclude that
the goods originated from the same manufacturer. While it is true that there
are other words such as "STYLISTIC", printed in the appellant's label, such
word is printed in such small letters over the word "LEE" that it is not
conspicuous enough to draw the attention of ordinary buyers whereas the
word "LEE" is printed across the label in big, bold letters and of the same
color, style, type and size of lettering as that of the trademark of the
appellee. The alleged difference is too insubstantial to be noticeable. Even
granting arguendo that the word "STYLISTIC" is conspicuous enough to
draw attention, the goods may easily be mistaken for just another variation
or line of garments under the ap appelle's "LEE" trademarks in view of the
fact that the appellee has registered trademarks which use other words in
addition to the principal mark "LEE" such as "LEE RIDERS", "LEESURES"
and "LEE LEENS". The likelihood of confusion is further made more
probable by the fact that both parties are engaged in the same line of
business. It is well to reiterate that the determinative factor in ascertaining
whether or not the marks are confusingly similar to each other is not
whether the challenged mark would actually cause confusion or deception
of the purchasers but whether the use of such mark would likely cause
confusion or mistake on the part of the buying public.
xxx xxx xxx
The appellee has sufficiently established its right to prior use and
registration of the trademark "LEE" in the Philippines and is thus entitled to
protection from any infringement upon the same. It is thus axiomatic that
one who has identified a peculiar symbol or mark with his goods thereby
acquires a property right in such symbol or mark, and if another infringes the
trademark, he thereby invokes this property right.
The merchandise or goods being sold by the parties are not that expensive
as alleged to be by the appellant and are quite ordinary commodities
purchased by the average person and at times, by the ignorant and the
unlettered. Ordinary purchasers will not as a rule examine the small
letterings printed on the label but will simply be guided by the presence of
the striking mark "LEE". Whatever difference there may be will pale in
insignificance in the face of an evident similarity in the dominant features
and overall appearance of the labels of the parties.12
xxx xxx xxx
On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned
decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and unrelated
arguments and defenses not previously raised in the proceedings below such as laches and a
claim that private respondent appropriated the style and appearance of petitioner's trademark
when it registered its "LEE" mark under Registration No. 44220. 13
On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for
reconsideration and ruled thus:
xxx xxx xxx
A defense not raised in the trial court cannot be raised on appeal for the first
time. An issue raised for the first time on appeal and not raised timely in the
proceedings in the lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the
lower court before they can be presented to this Court is to have the lower
court rule upon them, so that this Court on appeal may determine whether
or not such ruling was erroneous. The purpose is also in furtherance of
justice to require the party to first present the question he contends for in the
lower court so that the other party may not be taken by surprise and may
present evidence to properly meet the issues raised.
Moreover, for a question to be raised on appeal, the same must also be
within the issues raised by the parties in their pleadings. Consequently,
when a party deliberately adopts a certain theory, and the case is tried and
decided based upon such theory presented in the court below, he will not be
permitted to change his theory on appeal. To permit him to do so would be
unfair to the adverse party. A question raised for the first time on appeal,
there having opportunity to raise them in the court of origin constitutes a
change of theory which is not permissible on appeal.
In the instant case, appellant's main defense pleaded in its answer dated
March 23, 1982 was that there was "no confusing similarity between the
competing trademark involved. On appeal, the appellant raised a single
issue, to wit:
The only issue involved in this case is whether or not
respondent-registrant's trademark "STYLISTIC MR.
LEE" is confusingly similar with the petitioner's
trademarks "LEE or LEERIDERS, LEE-LEENS and
LEE-SURES."
Appellant's main argument in this motion for reconsideration on the other
hand is that the appellee is estopped by laches from asserting its right to its
trademark. Appellant claims although belatedly that appellee went to court
with "unclean hands" by changing the appearance of its trademark to make
it identical to the appellant's trademark.
Neither defenses were raised by the appellant in the proceedings before the
Bureau of Patents. Appellant cannot raise them now for the first time on
appeal, let alone on a mere motion for reconsideration of the decision of this
Court dismissing the appellant's appeal.
While there may be instances and situations justifying relaxation of this rule,
the circumstance of the instant case, equity would be better served by
 applying the settled rule it appearing that appellant has not given any
reason at all as to why the defenses raised in its motion for reconsideration
was not invoked earlier.14
xxx xxx xxx
Twice rebuffed, petitioner presents its case before this Court on the following assignment of
errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT CAUSED THE ISSUANCE OF A FOURTH "LEE"
TRADEMARK IMITATING THAT OF THE PETITIONER'S ON MAY 5,
1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF
PATENT'S DECISION DATED JULY 19, 1988.
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE
OF ESTOPPEL BY LACHES MUST BE RAISED IN THE PROCEEDINGS
BEFORE THE BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER.
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE
RESPONDENT'S PRIOR REGISTRATION OF ITS TRADEMARK AND
DISREGARDED THE FACT THAT PRIVATE RESPONDENT HAD FAILED
TO PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR
REGISTRATION.15
In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT
PETITIONER'S TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY
SIMILAR WITH THE PRIVATE RESPONDENT'S TRADEMARK LEE OR
LEE-RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW
THAT IT IS THE PRIOR USER AND ITS TRADEMARK IS DIFFERENT
FROM THAT OF THE PRIVATE RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE
PRIVATE RESPONDENT'S AND THE REGISTRATION OF ITS
TRADEMARK IS PRIMA FACIE EVIDENCE OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE
CONFUSED WITH PRIVATE RESPONDENT'S LEE TRADEMARK.16
Petitioner contends that private respondent is estopped from instituting an action for
infringement before the BPTTT under the equitable principle of laches pursuant to Sec. 9-A of
R.A. No. 166, otherwise known as the Law on Trade-marks, Trade-names and Unfair
Competition:
Sec. 9-A. Equitable principles to govern proceedings. — In opposition
proceedings and in all other inter partes proceedings in the patent office
under this act, equitable principles of laches, estoppel, and acquiescence,
where applicable, may be considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May 1975,
yet, it was only on 18 September 1981 that private respondent filed a petition for cancellation of
petitioner's certificate of registration for the said trademark. Similarly, private respondent's notice
of opposition to petitioner's application for registration in the principal register was belatedly filed
on 27 July 1984.17
Private respondent counters by maintaining that petitioner was barred from raising new issues
on appeal, the only contention in the proceedings below being the presence or absence of
confusing similarity between the two trademarks in question.18
We reject petitioner's contention.
Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A. No.
166) provides that "marks and tradenames for the supplemental register shall not be published
for or be subject to opposition, but shall be published on registration in the Official
Gazette."19 The reckoning point, therefore, should not be 1 May 1975, the date of alleged use by
petitioner of its assailed trademark but 27 October 1980,20 the date the certificate of registration
SR No. 5054 was published in the Official Gazette and issued to petitioner.
It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered "officially" put on notice that petitioner has appropriated or is
using said mark, which, after all, is the function and purpose of registration in the supplemental
register.21 The record is bereft of evidence that private respondent was aware of petitioner's
trademark before the date of said publication and issuance. Hence, when private respondent
instituted cancellation proceedings on 18 September 1981, less than a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable delay in filing its notice of
opposition to petitioner's application for registration in the principal register since said application
was published only on 20 February 1984.22 From the time of publication to the time of filing the
opposition on 27 July 1984 barely five (5) months had elapsed. To be barred from bringing suit
on grounds of estoppel and laches, the delay must be
lengthy.23
More crucial is the issue of confusing similarity between the two trademarks. Petitioner
vehemently contends that its trademark "STYLISTIC MR. LEE" is entirely different from and not
confusingly similar to private respondent's "LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's trademark tends to mislead
and confuse the public and thus constitutes an infringement of its own mark, since the dominant
feature therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
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 imitable any such mark or trade-name and apply such As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, competing trademarks which might cause confusion or deception and thus constitutes
packages, wrappers, receptacles or advertisements intended to be used infringement.
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
xxx xxx xxx
provided.

. . . If the competing trademark contains the main or essential or dominant

Practical application, however, of the aforesaid provision is easier said than done. In the history
of trademark cases in the Philippines, particularly in ascertaining whether one trademark is
confusingly similar to or is a colorable imitation of another, no set rules can be deduced. Each
case must be decided on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals,24 we held:
. . . But likelihood of confusion is a relative concept; to be determined only
according to the particular, and sometimes peculiar, circumstances of each
case. It is unquestionably true that, as stated in Coburn vs. Puritan Mills,
Inc.: "In trademark cases, even more than in other litigation, precedent must
be studied in the light of the facts of the particular case."
xxx xxx xxx
features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor it is
necessary that the infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. v. 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; . . .)32
xxx xxx xxx
On the other side of the spectrum, the holistic test mandates that the entirety of the marks in
question must be considered in determining confusing similarity.

Likewise, it has been observed that: xxx xxx xxx

In determining whether a particular name or mark is a "colorable imitation"
of another, no all-embracing rule seems possible in view of the great
number of factors which must necessarily be considered in resolving this
question of fact, such as the class of product or business to which the article
belongs; the product's quality, quantity, or size, including its wrapper or
container; the dominant color, style, size, form, meaning of letters, words,
designs and emblems used; the nature of the package, wrapper or
container; the character of the product's purchasers; location of the
business; the likelihood of deception or the mark or name's tendency to
confuse;
etc.25
In determining whether the trademarks are confusingly similar, a
comparison of the words is not the only determinant factor. The trademarks
in their entirety as they appear in their respective labels or hang tags must
also be considered in relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the predominant
words but also on the other features appearing in both labels in order that
he may draw his conclusion whether one is confusingly similar to the
other.33
xxx xxx xxx

Applying the foregoing tenets to the present controversy and taking into account the factual
Proceeding to the task at hand, the essential element of infringement is colorable imitation. This
circumstances of this case, we considered the trademarks involved as a whole and rule that
term has been defined as "such a close or ingenious imitation as to be calculated to deceive
petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's "LEE"
ordinary purchasers, or such resemblance of the infringing mark to the original as to deceive an
trademark.
ordinary purchaser giving such attention as a purchaser usually gives, and to cause him to
purchase the one supposing it to be the other."26
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word "LEE"
is prominent, the trademark should be considered as a whole and not piecemeal. The
Colorable imitation does not mean such similitude as amounts to identity.
dissimilarities between the two marks become conspicuous, noticeable and substantial enough
Nor does it require that all the details be literally copied. Colorable imitation
to matter especially in the light of the following variables that must be factored in.
refers to such similarity in form, content, words, sound, meaning, special
arrangement, or general appearance of the trademark or tradename with
that of the other mark or tradename in their over-all presentation or in their First, the products involved in the case at bar are, in the main, various kinds of jeans. These are
essential, substantive and distinctive parts as would likely mislead or not your ordinary household items like catsup, soysauce or soap which are of minimal cost.
confuse persons in the ordinary course of purchasing the genuine article.27 Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be
more cautious and discriminating in and would prefer to mull over his purchase. Confusion and
deception, then, is less likely. In Del Monte Corporation v. Court of Appeals, 34 we noted that:
In determining whether colorable imitation exists, jurisprudence has developed two kinds of tests
— the Dominancy Test applied in Asia Brewery, Inc. v. Court of Appeals 28 and other
cases 29 and the Holistic Test developed in Del Monte Corporation v. Court of Appeals 30 and its
proponent cases.31
 . . . Among these, what essentially determines the attitudes of the
purchaser, specifically his inclination to be cautious, is the cost of the goods.
To be sure, a person who buys a box of candies will not exercise as much
care as one who buys an expensive watch. As a general rule, an ordinary
buyer does not exercise as much prudence in buying an article for which he
pays a few centavos as he does in purchasing a more valuable thing.
Expensive and valuable items are normally bought only after deliberate,
comparative and analytical investigation. But mass products, low priced
articles in wide use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great
care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does
not ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an
Armani. He is, therefore, more or less knowledgeable and familiar with his preference and will
not easily be distracted.
Finally, in line with the foregoing discussions, more credit should be given to the "ordinary
purchaser." Cast in this particular controversy, the ordinary purchaser is not the "completely
unwary consumer" but is the "ordinarily intelligent buyer" considering the type of product
involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited to the present case.
There, the "ordinary purchaser" was defined as one "accustomed to buy, and therefore to some
extent familiar with, the goods in question. The test of fraudulent simulation is to be found in the
likelihood of the deception of some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that design has been associated.
The test is not found in the deception, or the possibility of deception, of the person who knows
nothing about the design which has been counterfeited, and who must be indifferent between
that and the other. The simulation, in order to be objectionable, must be such as appears likely
to mislead the ordinary intelligent buyer who has a need to supply and is familiar with the article
that he seeks to purchase."
There is no cause for the Court of Appeal's apprehension that petitioner's products might be
mistaken as "another variation or line of garments under private respondent's 'LEE'
trademark".36 As one would readily observe, private respondent's variation follows a standard
format "LEERIDERS," "LEESURES" and "LEELEENS." It is, therefore, improbable that the
public would immediately and naturally conclude that petitioner's "STYLISTIC MR. LEE" is but
another variation under private respondent's "LEE" mark.
As we have previously intimated the issue of confusing similarity between trademarks is
resolved by considering the distinct characteristics of each case. In the present controversy,
taking into account these unique factors, we conclude that the similarities in the trademarks in
question are not sufficient as to likely cause deception and confusion tantamount to
infringement.
Another way of resolving the conflict is to consider the marks involved from the point of view of
what marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly paragraph 4 (e):
CHAPTER II-A.— The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
Sec. 4. Registration of trade-marks, trade-names and service-marks on the
principal register. — There is hereby established a register of trade-marks,
trade-names and service-marks which shall be known as the principal
register. The owner of a trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or
services of others shall have the right to register the same on the principal
register, unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or
used in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them, or
is primarily merely a surname; (Emphasis ours.)
xxx xxx xxx
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership
over and singular use of said term.
. . . It has been held that a personal name or surname may not be
monopolized as a trademark or tradename as against others of the same
name or surname. For in the absence of contract, fraud, or estoppel, any
man may use his name or surname in all legitimate ways. Thus,
"Wellington" is a surname, and its first user has no cause of action against
the junior user of "Wellington" as it is incapable of exclusive appropriation. 37
In addition to the foregoing, we are constrained to agree with petitioner's contention that private
respondent failed to prove prior actual commercial use of its "LEE" trademark in the Philippines
before filing its application for registration with the BPTTT and hence, has not acquired
ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A.
No. 166) which explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
Sec. 2. What are registrable. — Trade-marks, trade-names, and service
marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships, or
associations domiciled in any foreign country may be registered in
accordance with the provisions of this act: Provided, That said trade-
marks, trade-names, or service marks are actually in use in commerce and
services not less than two months in the Philippines before the time the
applications for registration are filed: And Provided, further, That the country
of which the applicant for registration is a citizen grants by law substantially
similar privileges to citizens of the Philippines, and such fact is officially
certified, with a certified true copy of the foreign law translated into the
English language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended.) (Emphasis
ours.)
 Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how
acquired. — Anyone who lawfully produces or deals in merchandise of any
kind or who engages in lawful business, or who renders any lawful service
in commerce, by actual use hereof in manufacture or trade, in business, and
in the service rendered; may appropriate to his exclusive use a trade-mark,
a trade-name, or a service-mark not so appropriated by another, to
distinguish his merchandise, business or services from others. The
ownership or possession of trade-mark, trade-name, service-mark,
heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as
are other property rights to the law. (As amended.) (Emphasis ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38 relied
upon by private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166)39 were
sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of
Appeals:40
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines must
subordinate an international agreement inasmuch as the apparent clash is
being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain,
High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the fact
that international law has been made part of the law of the land does not by
any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not superior,
to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines on
account of Section 21-A of the Trademark Law but the question of whether
they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the
Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement,
the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a
suit for infringement but it may not necessarily be entitled to protection due
to absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several registration
certificates for its various trademarks "LEE," "LEERIDERS," and "LEESURES" in both the
supplemental and principal registers, as early as 1969 to 1973.41 However, registration alone will
not suffice. In Sterling Products International, Inc. v.Farbenfabriken Bayer
Aktiengesellschaft,42 we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down
through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a trademark.
xxx xxx xxx
It would seem quite clear that adoption alone of a trademark would not give
exclusive right thereto. Such right "grows out of their actual use." Adoption is
not use. One may make advertisements, issue circulars, give out price lists
on certain goods; but these alone would not give exclusive right of use. For
trademark is a creation of use. The underlying reason for all these is that
purchasers have come to understand the mark as indicating the origin of the
wares. Flowing from this is the trader's right to protection in the trade he has
built up and the goodwill he has accumulated from use of the trademark.
Registration of a trademark, of course, has value: it is an administrative act
declaratory of a pre-existing right. Registration does not, however, perfect a
trademark right. (Emphasis ours.)
xxx xxx xxx
To augment its arguments that it was, not only the prior registrant, but also the prior user, private
respondent invokes Sec. 20 of the Trademark Law, thus:
Sec. 20. Certificate of registration prima facie evidence of validity. — A
certificate of registration of a mark or tradename shall be a prima
facie evidence of the validity of the registration, the registrant's ownership of
the mark or trade-name, and of the registrant's exclusive right to use the
same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein.
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence
of validity, ownership and exclusive use, is qualified. A registration certificate serves merely
as prima facie evidence. It is not conclusive but can and may be rebutted by controverting
evidence.
Moreover, the aforequoted provision applies only to registrations in the principal
register.43 Registrations in the supplemental register do not enjoy a similar privilege. A
supplemental register was created precisely for the registration of marks which are not
registrable on the principal register due to some defects. 44
The determination as to who is the prior user of the trademark is a question of fact and it is this
Court's working principle not to disturb the findings of the Director of Patents on this issue in the
absence of any showing of grave abuse of discretion. The findings of facts of the Director of
Patents are conclusive upon the Supreme Court provided they are supported by substantial
evidence.45
In the case at bench, however, we reverse the findings of the Director of Patents and the Court
of Appeals. After a meticulous study of the records, we observe that the Director of Patents and
the Court of Appeals relied mainly on the registration certificates as proof of use by private
respondent of the trademark "LEE" which, as we have previously discussed are not sufficient.
We cannot give credence to private respondent's claim that its "LEE" mark first reached the
Philippines in the 1960's through local sales by the Post Exchanges of the U.S. Military Bases in VITUG, J.:
the Philippines46 based as it was solely on the self-serving statements of Mr. Edward Poste,
General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc.,
In an Amended Decision, dated 20 April 1994, the Court of Appeals reversed an order of the
U.S.A., herein private respondent. 47Similarly, we give little weight to the numerous
Regional Trial Court ("RTC") which dismissed Civil Case No. 91-3119 for "Injunction with
vouchers representing various advertising expenses in the Philippines for "LEE" products. 48 It is
Damages with Prayer for Preliminary Injunction" filed by herein private respondents Fitrite, Inc.,
well to note that these expenses were incurred only in 1981 and 1982 by LEE (Phils.), Inc. after
and Victoria Biscuits Co., Inc., against petitioner Conrad and Company, Inc.
it entered into a licensing agreement with private respondent on 11 May 1981. 49

The RTC, acting on a motion to dismiss filed by petitioner, ordered the dismissal of the
On the other hand, petitioner has sufficiently shown that it has been in the business of selling
complaint. Accordingly, for purposes of this review, the facts alleged in the complaint, narrated
jeans and other garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as
by the appellate court and hereunder reproduced, should be deemed hypothetically admitted.
evidenced by appropriate sales invoices to various stores and retailers. 50

. . . Plaintiffs appellants FITRITE, INC. and VICTORIA BISCUIT CO., INC.

Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber
Corp. v. Universal Rubber Products, Inc.,52respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the
mark prior to its registration. There is no dispute that respondent corporation
was the first registrant, yet it failed to fully substantiate its claim that it used
in trade or business in the Philippines the subject mark; it did not present
proof to invest it with exclusive, continuous adoption of the trademark which
should consist among others, of considerable sales since its first use. The
invoices submitted by respondent which were dated way back in 1957 show
that the zippers sent to the Philippines were to be used as "samples" and "of
no commercial value." The evidence for respondent must be clear, definite
and free from inconsistencies. "Samples" are not for sale and therefore, the
fact of exporting them to the Philippines cannot be considered to be
equivalent to the "use" contemplated by law. Respondent did not expect
income from such "samples." There were no receipts to establish sale, and
no proof were presented to show that they were subsequently sold in the
Philippines.
xxx xxx xxx
The sales invoices provide the best proof that there were actual sales of
petitioner's product in the country and that there was actual use for a
protracted period of petitioner's trademark or part thereof through these
sales.
For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's
use of its own mark and for failure to establish confusing similarity between said trademarks,
private respondent's action for infringement must necessarily fail.
WHEREFORE, premises considered, the questioned decision and resolution are hereby
REVERSED and SET ASIDE.
[private respondents here], both domestic corporations, are engaged in the
business of manufacturing, selling and distributing biscuits and cookies
bearing the trademark "SUNSHINE" in the Philippines. Defendant CONRAD
AND COMPANY [petitioner here] is also engaged in the business of
importing, selling and distributing biscuits and cookies in the Philippines.
Sometime in April 1982, plaintiff FITRITE filed in the Bureau of Patents,
Trademarks and Technology Transfer (hereto referred as BPTTT)
applications for registration of the trademark "SUNSHINE," both in the
Supplemental and Principal Registers, to be used on biscuits and cookies.
Since March 31, 1981 FITRITE had exclusively used this trademark in the
concept of owner on its biscuits and cookies. On May 20, 1983
FITRITE's application for this trademark in the Supplemental Register was
approved by the BPTTT and FITRITE was issued a Certificate of
Registration No. SR-6217 for a term of 20 years from the date of approval.
On March 22, 1990 FITRITE's application for the same trademark in
the Principal Registerwas approved by BPTTT and FITRITE was issued a
Certificate of Registration No. 47590 for a term of 20 years from said date of
approval. On June 28, 1984 FITRITE authorized its sister company, co-
plaintiff VICTORIA BISCUIT CO., to use this trademark on its biscuits and
cookies, as well as to manufacture, promote, sell and distribute products
bearing said trademark.
On September 7, 1990, FITRITE assigned its trademark "SUNSHINE AND
DEVICE LABEL," together with its interest and business goodwill to said
VICTORIA BISCUIT. From the time FITRITE was issued the Certificate of
Registration for this trademark on May 20, 1983 up to the filing of the
complaint a quoFITRITE and VICTORIA BISCUIT have been
manufacturing, selling and distributing on a massive scale biscuits and
cookies bearing this trademark; so that through the years of extensive
marketing of plaintiffs' biscuits and cookies with this trademark, their
products have become popularly known and enjoyed wide acceptability in
Metro Manila and in the provinces.

G.R. No. 115115 July 18, 1995 Then sometime in June 1990, through the affidavit executed on May 30,
1990 by defendant CONRAD's own Import Manager and Executive
Assistant by the name of Raul Olaya, plaintiffs succeeded in tracing and
CONRAD AND COMPANY, INC., petitioner,
discovered that CONRAD had been importing, selling and distributing
vs. biscuits and cookies, and other food items bearing this trademark in the
HON. COURT OF APPEALS, FITRITE INC., and VICTORIA BISCUITS CO.,
Philippines. Although CONRAD had never before been engaged in the
INC., respondents.
importation, sale and distribution of products similar to those of plaintiffs, on
April 18, 1988 CONRAD was suddenly designated exclusive importer and
dealer of the products of "Sunshine Biscuits, Inc." for sale in the Philippine
 market; and on April 21, 1988, per the affidavit of said Raul Olaya, In an amended decision, dated 20 April 1994, the appellate court reversed the order of the trial
CONRAD made its first importation, which was continuously repeated up to court and ordered the reinstatement of the case, holding, in part, thusly:
the present (May 30, 1990 [date of the affidavit]), altogether consisting of
51,575 cartons and amounting to $579,224.35.
1. It was a motion to dismiss that
CONRAD filed instead of an
Those acts of CONRAD, done without plaintiffs' consent, were deliberately answer where its "affirmative
calculated to mislead and deceive the purchasers by making them believe defense" could have been alleged
that its (CONRAD'S) "Sunshine" products had originated from plaintiffs and and later raised in a motion for
thereby inducing them to patronize those products, all to the damage and preliminary hearing for reception of
prejudice of both the purchasing public and plaintiffs. Through their counsel, evidence and not, as CONRAD did,
plaintiffs addressed a letter to CONRAD demanding, among other things, raise such defense in a mere
that it cease and desist from continuing with those acts, but the demand motion to dismiss, although such
was ignored. Being acts of infringement and unfair competition in violation of defense involved factual matters
plaintiffs' rights, plaintiffs can validly avail themselves of the remedies outside of the allegations contained
against infringement under Sec. 23 of Republic Act No. 166, as amended, in the complaint;
as well as of the remedies against unfair competition under
Sec. 29 of the same statute.1
2. No evidence whatever had been
introduced before the outright
In seeking the dismissal of the complaint filed by private respondents with the trial court, dismissal, despite the fact that the
petitioner invoked, among other grounds, litis pendentia, the doctrine of primary jurisdiction and factual issues involved in
failure to state a cause of action. CONRAD's "affirmative defense"
were whether the "SUNSHINE"
trademark has been registered in
The trial court, agreeing with petitioner, granted the motion to dismiss the complaint in an Order,
the United States of America as
dated 26 February 1992, reading thusly:
claimed by CONRAD; if so
registered, whether such
The Court agrees with defendant that internationally accepted trademarks registration antedated the
enjoy protection under Philippine laws. Defendant having been granted registered trademark of FITRITE in
distributorship by Sunshine Biscuits USA over Philippine territory it follows the Philippines; whether Sunshine
that the resolution of the issue with respect to the ownership of Sunshine Biscuits, Inc., CONRAD's principal,
Biscuits which is the basis of plaintiffs' claim is lodged under the exclusive is the actual registrant thereof; and
jurisdiction of the BPTTT.The action filed by defendant's principal in whose whether CONRAD is truly an agent
name the trademark "SUNSHINE BISCUITS" is of Sunshine Biscuits, Inc. who is
alleged to be registered in the United States should be considered as protected by the alleged American
including defendant Conrad and Company, Inc., it being the "SUNSHINE" trademark and
beneficiary/agent/assignee of said Sunshine Biscuits, Inc. Thus, the Court therefore vested with the legal
finds the ground of forum shopping applicable to the case at bar. It cannot capacity to raise such "affirmative
also be denied that there is another action pending between the same defense" in the action a quo; etc.;
parties for the same cause. Plaintiffs, therefore, should not have filed this and
case with this court. It must, therefore, be summarily dismissed. The ground
of
3. Unless and until FITRITE's
litis pendentia is no doubt meritorious. The doctrine of primary jurisdiction
certificates both in the
should be made to apply in this case considering that the BPTTT had
Supplemental and Principal
already acquired jurisdiction over the suit brought by defendant's principal
Registers as registrant of said
against the plaintiffs involving the right of plaintiffs to use said trademark. No
"SUNSHINE" trademark are
doubt the BPTTT is better situated, considering its experience and special
cancelled by BPTTT, or so long as
knowledge to determine the matters of fact involved. Indeed, the rulings laid
said "SUNSHINE" trademark has
down by the Supreme Court on the point is along this trend.
not been successfully proved by
CONRAD in the action
WHEREFORE, premises considered, the Motion To Dismiss filed by a quo as belonging to Sunshine
defendant is hereby GRANTED. The instant case filed by plaintiffs is hereby Biscuits, Inc. or so long as said
ordered DISMISSED.2 (Emphasis ours) trademark has not been
successfully proved by Sunshine
Biscuits, Inc. in the cancellation
Unsuccessful in their attempt to have the order reconsidered, private respondents brought the
proceeding before BPTTT as
case to the Court of Appeals (CA-G.R. CV No. 38822). belonging to it (Sunshine Biscuits),
for all legal intents and purposes
 the trademark belongs to FITRITE
and all those acts of importing,
selling and distributing by
CONRAD constitute infringement
as defined in said Sec. 22 of
Republic Act No. 166, as amended.
xxx xxx xxx
In sum, we find the appeal impressed with merit, considering that FITRITE
is the registrant of the "SUNSHINE" trademark in the Philippines; that
CONRAD's claim that its principal, Sunshine Biscuits, Inc., is the registrant
of a "SUNSHINE" trademark in the United States of America is a mere
allegation still subject to proof; that there is no identity of causes of action
and because the cause before BPTTT is the cancellability of FITRITE's
registration while the cause in the case a quo is infringement by CONRAD
of said "SUNSHINE" trademark of FITRITE; that there is implied admission
that CONRAD has been importing, selling and distributing biscuits, cookies
and other food items bearing said "SUNSHINE" trademark without
FITRITE's consent; that so long as the cancellation proceeding remains
pending in BPTTT, said "SUNSHINE" trademark belongs exclusively to
FITRITE in the Philippines, and any person using it without FITRITE's
consent is guilty of infringement.
WHEREFORE, the Court hereby:
(1) SETS ASIDE the appealed order dated February 26, 1992 dismissing
the complaint a quo;
(2) REINSTATES the complaint;
(3) ORDERS defendant Conrad and Company, Inc. to file its answer within
the reglementary period from receipt hereof;
(4) ORDERS the lower court to proceed with the action a quo, although for a
good cause shown the lower court, in its sound discretion, may suspend the
action pending outcome of the cancellation proceeding between Sunshine
Biscuits, Inc. and Fitrite, Inc. in Inter Partes Case
No. 3397 before BPTTT, subject to the condition provided for in No. (5)
below;
(5) ORDERS defendant-appellee Conrad and Company, Inc. to desist and
refrain from importing, manufacturing, selling and distributing in the
Philippines any goods bearing the trademark "SUNSHINE & DEVICE
LABEL" registered in FITRITE's name pending final decision in the action a
quo, it being understood that this order, to effect such desistance and enjoin
defendant-appellee from the aforesaid activities, shall be considered as the
Writ of Injunction itself and an integral part of this Amended Decision.
No pronouncement as to costs.
SO ORDERED.3 (Emphasis ours.)
In the instant petition for review, which has additionally prayed for a writ of preliminary injunction
or for a temporary restraining order, petitioner tells us that the appellate court has erred —
1. When it ordered the issuance of a writ of preliminary injunction, upon
private respondents, posting of a bond in the sum of P10,000.00, despite
the pendency of the cancellation proceedings in Inter Partes case Nos.
3397 and 3739, and in subsequently amending its decision by issuing the
writ of preliminary injunction itself.
2. When respondent court failed to apply and totally disregarded the
provisions of the Paris Convention for the protection of industrial property,
as well as the memorandum of the Minister of Trade, dated November 20,
1980.
3. In holding that the doctrine of primary jurisdiction by the Bureau of
Patents, Trademarks and Technology Transfer (BPTTT) is not applicable in
this case, and in further holding that the issues involved in this case is not
whether the "SUNSHINE" trademark in question is registerable or
cancellable.
4. Respondent court erred in holding that the ground of litis pendentia under
the Rules of Court does not apply in this case for the reason that the cause
of action in the cancellation proceedings before the BPTTT is not the same
as the cause of action in the case a quo.
5. In ordering the lower court to proceed with the action a quo, although for
a good cause shown the lower court, in its sound discretion, may suspend
the action pending outcome of the cancellation proceeding between
Sunshine Biscuits, Inc. and Fitrite, Inc. in inter partes Case No. 3397 and
3739 before BPTTT.4
The petition was given due course; however, neither a writ of preliminary injunction nor a
restraining order was issued by this Court.
Unadorned, the issues would revolve simply around the question of whether or not the Court of
Appeals committed reversible error (1) in allowing the trial court to proceed with the case for
"injunction with damages" filed by private respondents notwithstanding the pendency of an
administrative case for the cancellation of the former's trademark filed by supposedly
"petitioner's principal" with the Bureau of Patents, Trademarks and Technology Transfer
("BPTTT"); and (2) in meanwhile issuing an injunction order against petitioner.
We find for private respondents.
The assailed amended decision of the appellate court reinstated the complaint for "Injunction
with Damages with Prayer for Preliminary Injunction" filed by private respondents with the trial
court and ordered petitioner to file its answer. The appellate court enjoined petitioner in the
meantime from importing, manufacturing, selling and distributing in the Philippines goods
bearing the trademark "Sunshine and Device Label" duly registered with BPTTT in private
respondents' name.
Petitioner, invoking the case of Developers Group of Companies vs. Court of Appeals (219
SCRA 715), contends that the "Petitions for Cancellation" of Fitrite's Certificate of Registration
No. SR-6217 and No. 47590 in the Supplemental Register and the Principal Register,
respectively, which Sunshine Biscuits, Inc., of the United States of America filed in 1989 and in registration in the Principal Register gives rise to a presumption of validity of the registration and
1990 (docketed Inter Partes Case No. 3397 and 3739) with BPTTT cast a cloud of doubt on of the registrant's ownership and right to the exclusive use of the mark. It is precisely such a
private respondents' claim of ownership and exclusive right to the use of the trademark registration that can serve as the basis for an action for infringement.7 An invasion of this right
"Sunshine." Considering that this matter is at issue before the BPTTT, which has primary entitles the registrant to court protection and relief. Section 23 and Section 27, Chapter V, of the
jurisdiction over the case, petitioner argues, an injunctive relief from any court would be Trade-Mark Law provides:
precipitate and improper.
Sec. 23. Actions, and damages and injunction for infringement. — Any
The appellate court, in disposing of petitioner's argument, points out: 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
Notwithstanding those provisions, it is CONRAD's contention — relying on
profit which the complaining party would have made, had the defendant not
the ruling in Industrial Enterprises, Inc. vs. Court of Appeals (G.R. No.
infringe his said rights, or the profit which the defendant actually made out of
88550, 184 SCRA 426 [1990]) — that, because technical matters or intricate
the infringement, or in the event such measure of damages cannot be
issues of fact regarding the ownership of the trademark in question are
readily ascertained with reasonable certainty, then the court may award as
involved, its determination requires the expertise, specialized skills and
damages a reasonable percentage based upon the amount of gross sales
knowledge of the proper administrative body, which is BPTTT, which has
of the defendant or the value of the services in connection with which the
the primary jurisdiction over the action a quo; and therefore the trial court
mark or trade-name was used in the infringement of the rights of the
should, and as it correctly did, yield its jurisdiction to BPTTT.
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 trial court erred in adopting such fallacious argument. The issue the damages may be doubled.
involved in the action a quo is not whether the "SUNSHINE" trademark in
question is registerable or cancellable — which is the issue pending in
The complaining party, upon proper showing, may also be granted
BPTTT that may be technical in nature requiring "expertise, specialized
injunction.
skills and knowledge" — since the trademark has already been registered in
both the Supplemental and Principal Registers of BPTTT in the name of
FITRITE; actually, the issue involved in the action a quo is whether Sec. 27. Jurisdiction of [Regional Trial Court]. All actions under this Chapter
CONRAD's acts of importing, selling and distributing biscuits, cookies and and Chapters VI and VII hereof shall be brought before the proper [Regional
other food items bearing said registered "SUNSHINE" trademark in the Trial Court].
Philippines without the consent of its registrant (FITRITE) constitute
infringement thereof in contemplation of Sec. 22 of Republic Act No. 166, as
Surely, an application with BPTTT for an administrative cancellation of a registered trade mark
amended. Under Sec. 22, the elements that constitute infringement are
cannot per se have the effect of restraining or preventing the courts from the exercise of their
simply (1) the use by any person, without the consent of the registrant, (2) of
lawfully conferred jurisdiction. A contrary rule would unduly expand the doctrine of primary
any registered mark or trade-name in connection with the sale, business or
jurisdiction which, simply expressed, would merely behoove regular courts, in controversies
services, among other things, bearing such registered mark or trade-name.
involving specialized disputes, to defer to the findings of resolutions of administrative tribunals
This, clearly, is a factual question that does not require any specialized skill
on certain technical matters. This rule, evidently, did not escape the appellate court for it likewise
and knowledge for resolution to justify the exercise of primary jurisdiction by
decreed that for "good cause shown, the lower court, in its sound discretion, may suspend the
BPTTT.
action pending outcome of the cancellation proceedings" before BPTTT.

But, even assuming — which is not the case — that the issue involved here
Needless to say, we cannot at this stage delve into the merits of the cancellation case.
is technical in nature requiring specialized skills and knowledge,
In this instance, the sole concern, outside of the jurisdictional aspect of the petition
still Industrialized Enterprises does not authorize the outright dismissal of a
hereinbefore discussed, would be that which focuses on the propriety of the injunction
case originally cognizable in the courts; what it says is where primary
order of the appellate court. On this score, the appellate court has said:
jurisdiction comes into play in a case "the judicial process is suspended
pending referral of such issues to the administrative body for its view.5
Thus, having the exclusive right over said trademark, FITRITE should be
protected in the use thereof (Philips Export B.V. vs. Court of Appeals, G.R.
We cannot see any error in the above disquisition. It might be mentioned that while an
No. 96161, 206 SCRA 457 [1992]); and considering that it is apparent from
application for the administrative cancellation of a registered trademark on any of the grounds
the record that the invasion of the right FITRITE sought to protect is material
enumerated in Section 176 of Republic Act No. 166, as amended, otherwise known as the
and substantial; that such right of FITRITE is clear and unmistakable; and
Trade-Mark Law, falls under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an
that there is an urgent necessity to prevent serious damage to FITRITE's
action, however, for infringement or unfair competition, as well as the remedy of injunction and
business interest, goodwill and profit, thus under the authority of Sec. 23 of
relief for damages, is explicitly and unquestionably within the competence and jurisdiction of
said Republic Act No. 166, as amended, a preliminary injunction may be
ordinary courts.
issued in favor of FITRITE to maintain the status quo pending trial of the
action a quo on the merits without prejudice to the suspension of such
Private respondents are the holder of Certificate of Registration No. 47590 (Principal Register) action if the aforesaid cancellation proceeding before the BPTTT has not
for the questioned trademark. In Lorenzana vs. Macagba, 154 SCRA 723, cited with approval been concluded. 8 (Emphasis supplied.)
in Del Monte Corporation vs. Court of Appeals, 181 SCRA 410, we have declared that
The appellate court's finding that there is an urgent necessity for the issuance of the writ of
preliminary injunction pending resolution by BPTTT of the petition for cancellation filed by
Sunshine USA in Inter Partes Case No. 3397 would indeed appear to have merit. The
prematurity of petitioner's motion to dismiss places the case at bench quite apart from that
of Developers Group of Companies, Inc. vs. Court of Appeals, 219 SCRA 715. The allegations
of the complaint, perforced hypothetically deemed admitted by petitioner, would here justify the
issuance by appellate court of its injunction order. Petitioner, itself, does not even appear to be a
party in the administrative case (Inter Partes Case No. 3397). The averment that Sunshine USA
is petitioner's principal, and that it has a prior foreign registration that should be respected
conformably with the Convention of the Union of Paris for the Protection of Industrial Property
are mere asseverations in the motion to dismiss which, along with some other factual assertions,
are yet to be established.
All given, we find no reversible error on the part of the appellate court in its appealed decision.
In closing, the Court would urge the Bureau of Patents, Trademarks and Technology Transfer to
resolve with dispatch the administrative cases (Inter Partes Case No. 3397 and No. 3739)
referred to in this decision.
WHEREFORE, the petition for review is DENIED for lack of merit, and the questioned amended
decision of the Court of Appeals is AFFIRMED. Costs against petitioner.
G.R. No. 154342 July 14, 2004
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., petitioner,
vs.
E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners Mighty Corporation and La
Campana Fabrica de Tabaco, Inc. (La Campana) seek to annul, reverse and set aside: (a) the
November 15, 2001 decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming
the November 26, 1998 decision,2 as modified by the June 24, 1999 order,3 of the Regional Trial
Court of Makati City, Branch 57 (Makati RTC) in Civil Case No. 93-850, which held petitioners
liable for, and permanently enjoined them from, committing trademark infringement and unfair
competition, and which ordered them to pay damages to respondents E. & J. Gallo Winery
(Gallo Winery) and The Andresons Group, Inc. (Andresons); (b) the July 11, 2002 CA resolution
denying their motion for reconsideration4and (c) the aforesaid Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but
organized and existing under the laws of the State of California, United States of America (U.S.),
where all its wineries are located. Gallo Winery produces different kinds of wines and brandy
products and sells them in many countries under different registered trademarks, including the
GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winery’s exclusive wine importer
and distributor in the Philippines since 1991, selling these products in its own name and for its
own account.5
Gallo Winery’s GALLO wine trademark was registered in the principal register of the Philippine
Patent Office (now Intellectual Property Office) on November 16, 1971 under Certificate of
Registration No. 17021 which was renewed on November 16, 1991 for another 20 years. 6 Gallo
Winery also applied for registration of its ERNEST & JULIO GALLO wine trademark on October
11, 1990 under Application Serial No. 901011-00073599-PN but the records do not disclose if it
was ever approved by the Director of Patents.7
On the other hand, petitioners Mighty Corporation and La Campana and their sister company,
Tobacco Industries of the Philippines (Tobacco Industries), are engaged in the cultivation,
manufacture, distribution and sale of tobacco products for which they have been using the
GALLO cigarette trademark since 1973. 8
The Bureau of Internal Revenue (BIR) approved Tobacco Industries’ use of GALLO 100’s
cigarette mark on September 14, 1973 and GALLO filter cigarette mark on March 26, 1976, both
for the manufacture and sale of its cigarette products. In 1976, Tobacco Industries filed its
manufacturer’s sworn statement as basis for BIR’s collection of specific tax on GALLO
cigarettes.9
On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the
registration of the GALLO cigarette trademark in the principal register of the then Philippine
Patent Office.10
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana
which, on July 16, 1985, applied for trademark registration in the Philippine Patent Office.11 On
July 17, 1985, the National Library issued Certificate of Copyright Registration No. 5834 for La
Campana’s lifetime copyright claim over GALLO cigarette labels.12
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13 BIR approved Mighty Corporation’s use of GALLO 100’s
cigarette brand, under licensing agreement with Tobacco Industries, on May 18, 1988, and
GALLO SPECIAL MENTHOL 100’s cigarette brand on April 3, 1989.14
Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by
Tobacco Industries, then by La Campana and finally by Mighty Corporation. 15
On the other hand, although the GALLO wine trademark was registered in the Philippines in
1971, respondents claim that they first introduced and sold the GALLO and ERNEST & JULIO
GALLO wines in the Philippines circa1974 within the then U.S. military facilities only. By 1979,
they had expanded their Philippine market through authorized distributors and independent
outlets.16
Respondents claim that they first learned about the existence of GALLO cigarettes in the latter
part of 1992 when an Andresons employee saw such cigarettes on display with GALLO wines in
a Davao supermarket wine cellar section.17 Forthwith, respondents sent a demand letter to On February 20, 1995, the CA likewise dismissed respondents’ petition for review on certiorari,
petitioners asking them to stop using the GALLO trademark, to no avail. docketed as CA-G.R. No. 32626, thereby affirming the Makati RTC’s denial of the application for
issuance of a writ of preliminary injunction against petitioners. 28
II.
After trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable
for, and permanently enjoined them from, committing trademark infringement and unfair
The Legal Dispute
competition with respect to the GALLO trademark:

On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the
tradename infringement and unfair competition, with a prayer for damages and preliminary
defendant (sic), to wit:
injunction.

a. permanently restraining and enjoining defendants, their distributors, trade

Respondents charged petitioners with violating Article 6bis of the Paris Convention for the
outlets, and all persons acting for them or under their instructions, from (i)
Protection of Industrial Property (Paris Convention)18 and RA 166 (Trademark
using E & J’s registered trademark GALLO or any other reproduction,
Law),19 specifically, Sections 22 and 23 (for trademark infringement),20 29 and 3021 (for unfair
counterfeit, copy or colorable imitation of said trademark, either singly or in
competition and false designation of origin) and 37 (for tradename infringement). 22 They claimed
conjunction with other words, designs or emblems and other acts of similar
that petitioners adopted the GALLO trademark to ride on Gallo Winery’s GALLO and ERNEST &
nature, and (ii) committing other acts of unfair competition against plaintiffs
JULIO GALLO trademarks’ established reputation and popularity, thus causing confusion,
by manufacturing and selling their cigarettes in the domestic or export
deception and mistake on the part of the purchasing public who had always associated GALLO
markets under the GALLO trademark.
and ERNEST & JULIO GALLO trademarks with Gallo Winery’s wines. Respondents prayed for
the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2 million as
actual and compensatory damages, at least P500,000 as exemplary and moral damages, and at b. ordering defendants to pay plaintiffs –
least P500,000 as attorney’s fees and litigation expenses.23
(i) actual and compensatory damages for the injury and prejudice
In their answer, petitioners alleged, among other affirmative defenses, that: petitioner’s GALLO and impairment of plaintiffs’ business and goodwill as a result of
cigarettes and Gallo Winery’s wines were totally unrelated products; Gallo Winery’s GALLO the acts and conduct pleaded as basis for this suit, in an amount
trademark registration certificate covered wines only, not cigarettes; GALLO cigarettes and equal to 10% of FOURTEEN MILLION TWO HUNDRED THIRTY
GALLO wines were sold through different channels of trade; GALLO cigarettes, sold at P4.60 for FIVE THOUSAND PESOS (PHP14,235,000.00) from the filing of
GALLO filters and P3 for GALLO menthols, were low-cost items compared to Gallo Winery’s the complaint until fully paid;
high-priced luxury wines which cost between P98 to P242.50; the target market of Gallo
Winery’s wines was the middle or high-income bracket with at least P10,000 monthly income
(ii) exemplary damages in the amount of PHP100,000.00;
while GALLO cigarette buyers were farmers, fishermen, laborers and other low-income workers;
the dominant feature of the GALLO cigarette mark was the rooster device with the
manufacturer’s name clearly indicated as MIGHTY CORPORATION while, in the case of Gallo (iii) attorney’s fees and expenses of litigation in the amount of
Winery’s wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or just PHP1,130,068.91;
their surname GALLO; by their inaction and conduct, respondents were guilty of laches and
estoppel; and petitioners acted with honesty, justice and good faith in the exercise of their right
(iv) the cost of suit.
to manufacture and sell GALLO cigarettes.

In an order dated April 21, 1993,24 the Makati RTC denied, for lack of merit, respondent’s prayer SO ORDERED."29
for the issuance of a writ of preliminary injunction,25 holding that respondent’s GALLO trademark
registration certificate covered wines only, that respondents’ wines and petitioners’ cigarettes On June 24, 1999, the Makati RTC granted respondent’s motion for partial reconsideration and
were not related goods and respondents failed to prove material damage or great irreparable increased the award of actual and compensatory damages to 10% of P199,290,000
injury as required by Section 5, Rule 58 of the Rules of Court.26 or P19,929,000.30

On August 19, 1993, the Makati RTC denied, for lack of merit, respondents’ motion for
reconsideration. The court reiterated that respondents’ wines and petitioners’ cigarettes were not
related goods since the likelihood of deception and confusion on the part of the consuming
public was very remote. The trial court emphasized that it could not rely on foreign rulings cited
by respondents "because the[se] cases were decided by foreign courts on the basis of unknown
facts peculiar to each case or upon factual surroundings which may exist only within their
jurisdiction. Moreover, there [was] no showing that [these cases had] been tested or found
applicable in our jurisdiction."27
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioner’s
motion for reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that the CA did not follow prevailing laws
and jurisprudence when it held that: [a] RA 8293 (Intellectual Property Code of the Philippines
[IP Code]) was applicable in this case; [b] GALLO cigarettes and GALLO wines were identical,
similar or related goods for the reason alone that they were purportedly forms of vice; [c] both
goods passed through the same channels of trade and [d] petitioners were liable for trademark
infringement, unfair competition and damages.31
Respondents, on the other hand, assert that this petition which invokes Rule 45 does not involve
pure questions of law, and hence, must be dismissed outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only "questions of
law"32 (that is, the doubt pertains to the application and interpretation of law to a certain set of
facts) and not "questions of fact" (where the doubt concerns the truth or falsehood of alleged
facts),33 otherwise, the petition will be denied. We are not a trier of facts and the Court of
Appeals’ factual findings are generally conclusive upon us.34
This case involves questions of fact which are directly related and intertwined with questions of
law. The resolution of the factual issues concerning the goods’ similarity, identity, relation,
channels of trade, and acts of trademark infringement and unfair competition is greatly
dependent on the interpretation of applicable laws. The controversy here is not simply the
identity or similarity of both parties’ trademarks but whether or not infringement or unfair
competition was committed, a conclusion based on statutory interpretation. Furthermore, one or
more of the following exceptional circumstances oblige us to review the evidence on record:35
(1) the conclusion is grounded entirely on speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals from its findings of fact is manifestly
mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the case, and
the same are contrary to the admissions of both the appellant and the appellee;
(6) the findings are without citation of specific evidence on which they are based;
(7) the facts set forth in the petition as well as in the petitioner's main and reply briefs
are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence of
evidence and are contradicted [by the evidence] on record.36
In this light, after thoroughly examining the evidence on record, weighing, analyzing and
balancing all factors to determine whether trademark infringement and/or unfair competition has
been committed, we conclude that both the Court of Appeals and the trial court veered away
from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark infringement and
unfair competition committed during the effectivity of the Paris Convention and the Trademark
Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only
under the aforesaid governing laws but also under the IP Code which took effect only on
January 1, 1998,37 or about five years after the filing of the complaint:
Defendants’ unauthorized use of the GALLO trademark constitutes trademark
infringement pursuant to Section 22 of Republic Act No. 166, Section 155 of the IP
Code, Article 6bis of the Paris Convention, and Article 16 (1) of the TRIPS Agreement
as it causes confusion, deception and mistake on the part of the purchasing
public.38 (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati RTC decision:
In the light of its finding that appellants’ use of the GALLO trademark on its cigarettes
is likely to create confusion with the GALLO trademark on wines previously registered
and used in the Philippines by appellee E & J Gallo Winery, the trial court thus did
not err in holding that appellants’ acts not only violated the provisions of the our
trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293) but also Article 6bis of the
Paris Convention.39 (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed from the fact
that it has first been promulgated. A law that is not yet effective cannot be considered as
conclusively known by the populace. To make a law binding even before it takes effect may lead
to the arbitrary exercise of the legislative power.40 Nova constitutio futuris formam imponere
debet non praeteritis. A new state of the law ought to affect the future, not the past. Any doubt
must generally be resolved against the retroactive operation of laws, whether these are original
enactments, amendments or repeals.41 There are only a few instances when laws may be given
retroactive effect,42 none of which is present in this case.
The IP Code, repealing the Trademark Law,43 was approved on June 6, 1997. Section 241
thereof expressly decreed that it was to take effect only on January 1, 1998, without any
provision for retroactive application. Thus, the Makati RTC and the CA should have limited the
consideration of the present case within the parameters of the Trademark Law and the Paris
Convention, the laws in force at the time of the filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a common conception
at their root, that is, a person shall not be permitted to misrepresent his goods or his business as
the goods or business of another, the law on unfair competition is broader and more inclusive
than the law on trademark infringement. The latter is more limited but it recognizes a more
exclusive right derived from the trademark adoption and registration by the person whose goods
or business is first associated with it. The law on trademarks is thus a specialized subject distinct
from the law on unfair competition, although the two subjects are entwined with each other and
are dealt with together in the Trademark Law (now, both are covered by the IP Code). Hence,
even if one fails to establish his exclusive property right to a trademark, he may still obtain relief
on the ground of his competitor’s unfairness or fraud. Conduct constitutes unfair competition if
the effect is to pass off on the public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end. 44
In Del Monte Corporation vs. Court of Appeals,45 we distinguished trademark infringement from
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.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international agreement binding on the Philippines and
the United States (Gallo Winery’s country of domicile and origin) prohibits "the [registration] or
use of a trademark which constitutes a reproduction, imitation or translation, liable to create
confusion, of a mark considered by the competent authority of the country of registration or use
to be well-known in that country as being already the mark of a person entitled to the benefits of
the [Paris] Convention and used for identical or similar goods. [This rule also applies] when the
essential part of the mark constitutes a reproduction of any such well-known mark or an
imitation liable to createconfusion therewith." There is no time limit for seeking the prohibition of
the use of marks used in bad faith.47
Thus, under Article 6bis of the Paris Convention, the following are the elements of trademark
infringement:
(a) registration or use by another person of a trademark which is a reproduction,
imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or
use48 to be well-known in that country and is already the mark of a person entitled to
the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for infringement
when, among others, he "uses 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 or in connection with
which such use is likely to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitate any such mark or tradename and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles
or advertisements intended to be used upon or in connection with such goods, business or
services."49 Trademark registration and actual use are material to the complaining party’s cause
of action.
Corollary to this, Section 20 of the Trademark Law50 considers the trademark registration
certificate as prima facieevidence of the validity of the registration, the registrant’s ownership
and exclusive right to use the trademark in connection with the goods, business or services as
classified by the Director of Patents51 and as specified in the certificate, subject to the conditions
and limitations stated therein. Sections 2 and 2-A52 of the Trademark Law emphasize the
importance of the trademark’s actual use in commerce in the Philippines prior to its registration.
In the adjudication of trademark rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered and applied.53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, 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) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied or colorably imitated by another person
and such reproduction, counterfeit, copy or colorable imitation is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services as to likely cause
confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by
domestic authorities), while the Trademark Law protects all trademarks, whether well-known or
not, provided that they have been registered and are in actual commercial use in the Philippines.
Following universal acquiescence and comity, in case of domestic legal disputes on any
conflicting provisions between the Paris Convention (which is an international agreement) and
the Trademark law (which is a municipal law) the latter will prevail.54
Under both the Paris Convention and the Trademark Law, the protection of a registered
trademark is limited only to goods identical or similar to those in respect of which such trademark
is registered and only when there is likelihood of confusion. Under both laws, the time element in
commencing infringement cases is material in ascertaining the registrant’s express or implied
consent to another’s use of its trademark or a colorable imitation thereof. This is why
acquiescence, estoppel or laches may defeat the registrant’s otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent to any
finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO wine trademark was registered in the
Philippines in November 1971 but the wine itself was first marketed and sold in the country only
in 1974 and only within the former U.S. military facilities, and outside thereof, only in 1979. To
prove commercial use of the GALLO wine trademark in the Philippines, respondents presented
sales invoice no. 29991 dated July 9, 1981 addressed to Conrad Company Inc., Makati,
Philippines and sales invoice no. 85926 dated March 22, 1996 addressed to Andresons Global,
Inc., Quezon City, Philippines. Both invoices were for the sale and shipment of GALLO wines to
the Philippines during that period.55 Nothing at all, however, was presented to evidence the
alleged sales of GALLO wines in the Philippines in 1974 or, for that matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and
manufacturer’s sworn statement, it appears that petitioners and its predecessor-in-interest,
Tobacco Industries, have indeed been using and selling GALLO cigarettes in the Philippines
since 1973 or before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we reiterated our rulings
in Pagasa Industrial Corporation vs. Court of Appeals,58 Converse Rubber Corporation vs.
Universal Rubber Products, Inc.,59 Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,60 Kabushi Kaisha Isetan vs. Intermediate Appellate Court,61 and Philip Morris
vs. Court of Appeals,62 giving utmost importance to the actual commercial useof a trademark in
the Philippines prior to its registration, notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's contention
that private respondent failed to prove prior actual commercial use of its "LEE"
trademark in the Philippines before filing its application for registration with the
BPTTT and hence, has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial
Property relied upon by private respondent and Sec. 21-A of the Trademark Law (R.A.
No. 166) were sufficiently expounded upon and qualified in the recent case of Philip
Morris, Inc. v. Court of Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the
apparent clash is being decided by a municipal tribunal (Mortisen vs.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions,
93; Paras, International Law and World Organization, 1971 Ed., p. 20).
Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given a standing
equal, not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines
on account of Section 21-A of the Trademark Law but the question of
whether they have an exclusive right over their symbol as to justify
issuance of the controversial writ will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A of the
same law. It is thus incongruous for petitioners to claim that when a foreign
corporation not licensed to do business in the Philippines files a complaint
for infringement, the entity need not be actually using the trademark in
commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be
entitled to protection due to absence of actual use of the emblem in the local
market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several
registration certificates for its various trademarks "LEE," "LEE RIDERS," and
"LEESURES" in both the supplemental and principal registers, as early as 1969 to
1973. However, registration alone will not suffice. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214
[1969]; Reiterated inKabushi Isetan vs. Intermediate Appellate Court (203 SCRA 583
[1991]) we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down
through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or its weight as
evidence of validity, ownership and exclusive use, is qualified. A registration
certificate serves merely as prima facieevidence. It is not conclusive but can
and may be rebutted by controverting evidence.
xxx xxx xxx
 In the case at bench, however, we reverse the findings of the Director of Patents and
the Court of Appeals. After a meticulous study of the records, we observe that the
Director of Patents and the Court of Appeals relied mainly on the registration
certificates as proof of use by private respondent of the trademark "LEE" which,
as we have previously discussed are not sufficient. We cannot give credence to
private respondent's claim that its "LEE" mark first reached the Philippines in
the 1960's through local sales by the Post Exchanges of the U.S. Military Bases
in the Philippines (Rollo, p. 177) based as it was solely on the self-serving
statements of Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a wholly
owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private respondent.
(Original Records, p. 52) Similarly, we give little weight to the numerous
vouchers representing various advertising expenses in the Philippines for
"LEE" products. It is well to note that these expenses were incurred only in 1981
and 1982 by LEE (Phils.), Inc. after it entered into a licensing agreement with
private respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the
business of selling jeans and other garments adopting its "STYLISTIC MR. LEE"
trademark since 1975 as evidenced by appropriate sales invoices to various stores
and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526
[1982]) and Converse Rubber Corp. v. Universal Rubber Products, Inc., (147 SCRA
154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the
mark prior to its registration. There is no dispute that respondent
corporation was the first registrant, yet it failed to fully substantiate its
claim that it used in trade or business in the Philippines the subject
mark; it did not present proof to invest it with exclusive, continuous
adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices submitted by
respondent which were dated way back in 1957 show that the zippers
sent to the Philippines were to be used as "samples" and "of no
commercial value." The evidence for respondent must be clear, definite
and free from inconsistencies. "Samples" are not for sale and therefore, the
fact of exporting them to the Philippines cannot be considered to be
equivalent to the "use" contemplated by law. Respondent did not expect
income from such "samples." There were no receipts to establish sale, and
no proof were presented to show that they were subsequently sold in the
Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines prior
to petitioner's use of its own mark and for failure to establish confusing
similarity between said trademarks, private respondent's action for infringement
must necessarily fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents’ judicial admission that the actual
commercial use of the GALLO wine trademark was subsequent to its registration in 1971 and to
Tobacco Industries’ commercial use of the GALLO cigarette trademark in 1973, we rule that, on
this account, respondents never enjoyed the exclusive right to use the GALLO wine trademark to
the prejudice of Tobacco Industries and its successors-in-interest, herein petitioners, either
under the Trademark Law or the Paris Convention.
Respondents’ GALLO trademark
registration is limited to wines only
We also note that the GALLO trademark registration certificates in the Philippines and in other
countries expressly state that they cover wines only, without any evidence or indication that
registrant Gallo Winery expanded or intended to expand its business to cigarettes. 63
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery’s exclusive right to
use the GALLO trademark should be limited to wines, the only product indicated in its
registration certificates. This strict statutory limitation on the exclusive right to use trademarks
was amply clarified in our ruling in Faberge, Inc. vs. Intermediate Appellate Court:64
Having thus reviewed the laws applicable to the case before Us, it is not difficult to
discern from the foregoing statutory enactments that private respondent may be
permitted to register the trademark "BRUTE" for briefs produced by it notwithstanding
petitioner's vehement protestations of unfair dealings in marketing its own set of items
which are limited to: after-shave lotion, shaving cream, deodorant, talcum powder and
toilet soap. Inasmuch as petitioner has not ventured in the production of briefs,
an item which is not listed in its certificate of registration, petitioner cannot and
should not be allowed to feign that private respondent had invaded petitioner's
exclusive domain. To be sure, it is significant that petitioner failed to annex in its Brief
the so-called "eloquent proof that petitioner indeed intended to expand its mark
‘BRUT’ to other goods" (Page 27, Brief for the Petitioner; page 202, Rollo). Even then,
a mere application by petitioner in this aspect does not suffice and may not vest an
exclusive right in its favor that can ordinarily be protected by the Trademark Law. In
short, paraphrasing Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate of registration
issued by the Director of Patents can confer upon petitioner the exclusive right
to use its own symbol only to those goods specified in the certificate, subject to
any conditions and limitations stated therein. This basic point is perhaps the
unwritten rationale of Justice Escolin in Philippine Refining Co., Inc. vs. Ng
Sam (115 SCRA 472 [1982]), when he stressed the principle enunciated by the United
States Supreme Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70 L
ed 317, 46 Sct. 160) that one who has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by others
for products which are of a different description. Verily, this Court had the
occasion to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18
SCRA 944 [1966]) that no serious objection was posed by the petitioner therein since
the applicant utilized the emblem "Tango" for no other product than hair pomade in
which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private
respondent sought to belie as regards petitioner's alleged expansion of its business. It
may be recalled that petitioner claimed that it has a pending application for registration
of the emblem "BRUT 33" for briefs (page 25, Brief for the Petitioner; page 202, Rollo)
to impress upon Us the Solomonic wisdom imparted by Justice JBL Reyes in Sta. Ana
vs. Maliwat (24 SCRA 1018 [1968]), to the effect that dissimilarity of goods will
not preclude relief if the junior user's goods are not remote from any other
product which the first user would be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the Trademark Law now embodied
substantially under Section 4(d) of Republic Act No. 166, as amended, the erudite
jurist opined that the law in point "does not require that the articles of manufacture of
the previous user and late user of the mark should possess the same descriptive
properties or should fall into the same categories as to bar the latter from registering
his mark in the principal register." (supra at page 1026).
 Yet, it is equally true that as aforesaid, the protective mantle of the Trademark
Law extends only to the goods used by the first user as specified in the
certificate of registration following the clear message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which was
relied upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It would
seem that Section 4(d) does not require that the goods manufactured by the
second user be related to the goods produced by the senior user while Section
20 limits the exclusive right of the senior user only to those goods specified in
the certificate of registration. But the rule has been laid down that the clause which
comes later shall be given paramount significance over an anterior proviso upon the
presumption that it expresses the latest and dominant purpose. (Graham Paper Co.
vs. National Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's L.
Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061; cited
by Martin, Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably
follows that Section 20 is controlling and, therefore, private respondent can
appropriate its symbol for the briefs it manufactures because as aptly remarked
by Justice Sanchez in Sterling Products International Inc. vs. Farbenfabriken
Bayer(27 SCRA 1214 [1969]):
"Really, if the certificate of registration were to be deemed as including
goods not specified therein, then a situation may arise whereby an
applicant may be tempted to register a trademark on any and all goods
which his mind may conceive even if he had never intended to use the
trademark for the said goods. We believe that such omnibus registration
is not contemplated by our Trademark Law." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS’ AND RESPONDENTS’
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or
deceit as to the identity, source or origin of the goods or identity of the business as a
consequence of using a certain mark. Likelihood of confusion is admittedly a relative term, to be
determined rigidly according to the particular (and sometimes peculiar) circumstances of each
case. Thus, in trademark cases, more than in other kinds of litigation, precedents must be
studied in the light of each particular case. 65
There are two types of confusion in trademark infringement. The first is "confusion of goods"
when an otherwise prudent purchaser is induced to purchase one product in the belief that he is
purchasing another, in which case defendant’s goods are then bought as the plaintiff’s and its
poor quality reflects badly on the plaintiff’s reputation. The other is "confusion of
business" wherein the goods of the parties are different but the defendant’s product can
reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the
public into believing that there is some connection between the plaintiff and defendant which, in
fact, does not exist.66
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between
the trademarks; [b] the similarity of the goods to which the trademarks are attached; [c] the likely
effect on the purchaser and [d] the registrant’s express or implied consent and other fair and
equitable considerations.
Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and
wine products. But, as held in the following cases, the use of an identical mark does not, by
itself, lead to a legal conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 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,68 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,69 we 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;
(d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute resolution,
we dismissed the petition for review for lack of merit and affirmed the Patent Office’s
registration of the trademark SHELL used in the cigarettes manufactured by
respondent Fortune Tobacco Corporation, notwithstanding Shell Company’s
opposition as the prior registrant of the same trademark for its gasoline and other
petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we dismissed ESSO’s
complaint for trademark infringement against United Cigarette Corporation and
allowed the latter to use the trademark ESSO for its cigarettes, the same trademark
used by ESSO for its petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,72 we
affirmed the rulings of the Patent Office and the CA that NSR Rubber Corporation
could use the trademark CANON for its sandals (Class 25) despite Canon Kabushiki
Kaisha’s prior registration and use of the same trademark for its paints, chemical
products, toner and dyestuff (Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable
imitation"73 which has been defined as "such similarity in form, content, words, sound, meaning,
special arrangement or general appearance of the trademark or tradename in their overall
presentation or in their essential and substantive and distinctive parts as would likely mislead or
confuse persons in the ordinary course of purchasing the genuine article." 74
Jurisprudence has developed two tests in determining similarity and likelihood of confusion in
trademark resemblance:75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals 76 and other
cases,77 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals78 and its preceding cases.79
The Dominancy Test focuses on the similarity of the prevalent features of the competing WINES AND CIGARETTES ARE NOT
trademarks which might cause confusion or deception, and thus infringement. If the competing IDENTICAL, SIMILAR, COMPETING OR
trademark contains the main, essential or dominant features of another, and confusion or RELATED GOODS
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
Confusion of goods is evident where the litigants are actually in competition; but confusion of
whether the use of the marks involved is likely to cause confusion or mistake in the mind of the
business may arise between non-competing interests as well.90
public or deceive purchasers.80

Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6bis of the
On the other hand, the Holistic Test requires that the entirety of the marks in question be
Paris Convention which proscribe trademark infringement not only of goods specified in the
considered in resolving confusing similarity. Comparison of words is not the only determining
certificate of registration but also of identical or similar goods, we have also uniformly recognized
factor. The trademarks in their entirety as they appear in their respective labels or hang tags
and applied the modern concept of "related goods."91Simply stated, when goods are so related
must also be considered in relation to the goods to which they are attached. The discerning eye
that the public may be, or is actually, deceived and misled that they come from the same maker
of the observer must focus not only on the predominant words but also on the other features
or manufacturer, trademark infringement occurs.92
appearing in both labels in order that he may draw his conclusion whether one is confusingly
similar to the other.81
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
In comparing the resemblance or colorable imitation of marks, various factors have been
manufacturer, in which case, confusion of business can arise out of the use of similar
considered, such as the dominant color, style, size, form, meaning of letters, words, designs and
marks.93 They may also be those which, being entirely unrelated, cannot be assumed to have a
emblems used, the likelihood of deception of the mark or name's tendency to confuse 82 and the
common source; hence, there is no confusion of business, even though similar marks are
commercial impression likely to be conveyed by the trademarks if used in conjunction with the
used.94 Thus, there is no trademark infringement if the public does not expect the plaintiff to
respective goods of the parties.83
make or sell the same class of goods as those made or sold by the defendant. 95

Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO
In resolving whether goods are related,96 several factors come into play:
cigarette trademark is the device of a large rooster facing left, outlined in black against a gold
background. The rooster’s color is either green or red – green for GALLO menthols and red for
GALLO filters. Directly below the large rooster device is the word GALLO. The rooster device is (a) the business (and its location) to which the goods belong
given prominence in the GALLO cigarette packs in terms of size and location on the labels. 84
(b) the class of product to which the goods belong
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no
relation at all to the product but was chosen merely as a trademark due to the fondness for
fighting cocks of the son of petitioners’ president. Furthermore, petitioners adopted GALLO, the (c) the product's quality, quantity, or size, including the nature of the package, wrapper or
Spanish word for rooster, as a cigarette trademark to appeal to one of their target markets, container 97
the sabungeros (cockfight aficionados).85
(d) the nature and cost of the articles98
86
Also, as admitted by respondents themselves, on the side of the GALLO cigarette packs are
the words "MADE BY MIGHTY CORPORATION," thus clearly informing the public as to the (e) the descriptive properties, physical attributes or essential characteristics with reference to
identity of the manufacturer of the cigarettes. their form, composition, texture or quality

On the other hand, GALLO Winery’s wine and brandy labels are diverse. In many of them, the (f) the purpose of the goods99
labels are embellished with sketches of buildings and trees, vineyards or a bunch of grapes
while in a few, one or two small roosters facing right or facing each other (atop the EJG crest,
surrounded by leaves or ribbons), with additional designs in green, red and yellow colors, appear (g) whether the article is bought for immediate consumption, 100 that is, day-to-day household
as minor features thereof.87 Directly below or above these sketches is the entire printed name of items101
the founder-owners, "ERNEST & JULIO GALLO" or just their surname "GALLO,"88which appears
in different fonts, sizes, styles and labels, unlike petitioners’ uniform casque-font bold-lettered (h) the fields of manufacture102
GALLO mark.
(i) the conditions under which the article is usually purchased103 and
Moreover, on the labels of Gallo Winery’s wines are printed the words "VINTED AND BOTTLED
BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA."89
(j) the channels of trade through which the goods flow,104 how they are distributed, marketed,
displayed and sold.105
The many different features like color schemes, art works and other markings of both products drown out
the similarity between them – the use of the word “GALLO” ― a family surname for the Gallo Winery’s
wines and a Spanish word for rooster for petitioners’ cigarettes. The wisdom of this approach is its recognition that each trademark infringement case presents
its own unique set of facts. No single factor is preeminent, nor can the presence or absence of
one determine, without analysis of the others, the outcome of an infringement suit. Rather, the
court is required to sift the evidence relevant to each of the criteria. This requires that the entire
panoply of elements constituting the relevant factual landscape be comprehensively
examined.106 It is a weighing and balancing process. With reference to this ultimate question,
and from a balancing of the determinations reached on all of the factors, a conclusion is reached
whether the parties have a right to the relief sought.107
A very important circumstance though is whether there exists a likelihood that an appreciable
number of ordinarily prudent purchasers will be misled, or simply confused, as to the source of
the goods in question.108 The "purchaser" is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product involved. 109 He is "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." 110
Hence, in the adjudication of trademark infringement, we give due regard to the goods’ usual
purchaser’s character, attitude, habits, age, training and education. 111
Applying these legal precepts to the present case, petitioner’s use of the GALLO cigarette
trademark is not likely to cause confusion or mistake, or to deceive the "ordinarily intelligent
buyer" of either wines or cigarettes or both as to the identity of the goods, their source and
origin, or identity of the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither do they belong
to the same class of goods. Respondents’ GALLO wines belong to Class 33 under Rule 84[a]
Chapter III, Part II of the Rules of Practice in Trademark Cases while petitioners’ GALLO
cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the decisive factor in the
resolution of whether or not wines and cigarettes are related goods. Emphasis should be on the
similarity of the products involved and not on the arbitrary classification or general description of
their properties or characteristics. But the mere fact that one person has adopted and used a
particular trademark for his goods does not prevent the adoption and use of the same trademark
by others on articles of a different description. 112
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated
products and the goods here involved, wines and cigarettes, have nothing whatsoever in
common with respect to their essential characteristics, quality, quantity, size, including the
nature of their packages, wrappers or containers.113
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that
goods are sold in one store under the same roof does not automatically mean that buyers are
likely to be confused as to the goods’ respective sources, connections or sponsorships. The fact
that different products are available in the same store is an insufficient standard, in and of itself,
to warrant a finding of likelihood of confusion.114
In this regard, we adopted the Director of Patents’ finding in Philippine Refining Co., Inc. vs. Ng
Sam and the Director of Patents:115
In his decision, the Director of Patents enumerated the factors that set respondent’s
products apart from the goods of petitioner. He opined and we quote:
"I have taken into account such factors as probable purchaser attitude and
habits, marketing activities, retail outlets, and commercial impression likely
to be conveyed by the trademarks if used in conjunction with the respective
goods of the parties, I believe that ham on one hand, and lard, butter, oil,
and soap on the other are products that would not move in the same
manner through the same channels of trade. They pertain to unrelated
fields of manufacture, might be distributed and marketed under
dissimilar conditions, and are displayed separately even though they
frequently may be sold through the same retail food
establishments. Opposer’s products are ordinary day-to-day household
items whereas ham is not necessarily so. Thus, the goods of the parties are
not of a character which purchasers would likely attribute to a common
origin.
The observations and conclusion of the Director of Patents are correct. The particular
goods of the parties are so unrelated that consumers, would not, in any probability
mistake one as the source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing and are totally
unrelated products not likely to cause confusion vis-à-vis the goods or the business of the
petitioners and respondents.

Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages
Both the Makati RTC and the CA held that wines and cigarettes are related products because:
and smoked. There is a whale of a difference between their descriptive properties, physical
(1) "they are related forms of vice, harmful when taken in excess, and used for pleasure and
attributes or essential characteristics like form, composition, texture and quality.
relaxation" and (2) "they are grouped or classified in the same section of supermarkets and
groceries."
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are
patronized by middle-to-high-income earners while GALLO cigarettes appeal only to simple folks
We find these premises patently insufficient and too arbitrary to support the legal conclusion that
like farmers, fishermen, laborers and other low-income workers.116 Indeed, the big price
wines and cigarettes are related products within the contemplation of the Trademark Law and
difference of these two products is an important factor in proving that they are in fact unrelated
the Paris Convention.
and that they travel in different channels of trade. There is a distinct price segmentation based
on vastly different social classes of purchasers.117
First, anything –- not only wines and cigarettes ― can be used for pleasure and relaxation and can be
harmful when taken in excess. Indeed, it would be a grave abuse of discretion to treat wines and cigarettes
GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO
as similar or related products likely to cause confusion just because they are pleasure-giving, relaxing or
cigarettes are Philippine-made and petitioners neither claim nor pass off their goods as imported
potentially harmful. Such reasoning makes no sense.
or emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through
ambulant and sidewalk vendors, small local sari-saristores and grocery stores in Philippine rural
areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu. 118 On the other hand, GALLO promotional materials presented a trial in this action demonstrate a complete lack of
wines are imported, distributed and sold in the Philippines through Gallo Winery’s exclusive affiliation between the tobacco and liqueur products bearing the marks here at issue.
contracts with a domestic entity, which is currently Andresons. By respondents’ own testimonial
evidence, GALLO wines are sold in hotels, expensive bars and restaurants, and high-end
xxx xxx xxx
grocery stores and supermarkets, not through sari-sari stores or ambulant vendors.119

Of equal significance, it is undisputed that S & M Brands had no intent, by adopting

Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip
the family name ‘Bailey’s’ as the mark for its cigarettes, to capitalize upon the fame of
Morris, Inc.120 to support its finding that GALLO wines and GALLO cigarettes are related goods.
the ‘BAILEYS’ mark for liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will
The courts a quo should have taken into consideration the subsequent case of IDV North
be discussed below, and as found in Mckesson & Robbins, the survey evidence
America, Inc. and R & A Bailey Co. Limited vs. S & M Brands, Inc.: 121
refutes the contention that cigarettes and alcoholic beverages are so intimately
associated in the public mind that they cannot under any circumstances be sold
IDV correctly acknowledges, however, that there is no per se rule that the use of the under the same mark without causing confusion. See Mckesson & Robbins, 120
same mark on alcohol and tobacco products always will result in a likelihood of U.S.P.Q. at 308.
confusion. Nonetheless, IDV relies heavily on the decision in John Walker & Sons,
Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), aff’d, 222 F. 2d 460
Taken as a whole, the evidence here demonstrates the absence of the ‘special
(5th Cir. 1955), wherein the court enjoined the use of the mark "JOHNNIE WALKER"
circumstances’ in which courts have found a relationship between tobacco and alcohol
on cigars because the fame of the plaintiff’s mark for scotch whiskey and because the
products sufficient to tip the similarity of goods analysis in favor of the protected mark
plaintiff advertised its scotch whiskey on, or in connection with tobacco products. The
and against the allegedly infringing mark. It is true that BAILEYS liqueur, the
court, in John Walker & Sons, placed great significance on the finding that the
world’s best selling liqueur and the second best selling in the United States, is a
infringers use was a deliberate attempt to capitalize on the senior marks’
well-known product. That fact alone, however, is insufficient to invoke the
fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip Morris, Inc., 297
special circumstances connection here where so much other evidence and so
F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the defendant’s
many other factors disprove a likelihood of confusion. The similarity of products
use of the mark "BLACK LABEL" for cigarettes because it was likely to cause
analysis, therefore, augers against finding that there is a likelihood of
confusion with the plaintiff’s well-known mark "BLACK LABEL" for beer.
confusion. (Emphasis supplied).

xxx xxx xxx

Those decisions, however, must be considered in perspective of the principle
that tobacco products and alcohol products should be considered related only
in cases involving special circumstances.Schenley Distillers, Inc. v. General
Cigar Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of special
circumstances has been found to exist where there is a finding of unfair
competition or where a ‘famous’ or ‘well-known mark’ is involved and there is a
demonstrated intent to capitalize on that mark. For example, in John Walker &
Sons, the court was persuaded to find a relationship between products, and hence a
likelihood of confusion, because of the plaintiff’s long use and extensive advertising of
its mark and placed great emphasis on the fact that the defendant used the trademark
‘Johnnie Walker with full knowledge of its fame and reputation and with the intention of
taking advantage thereof.’ John Walker & Sons, 124 F. Supp. At 256; see Mckesson &
Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894, 120 U.S.P.Q. 306, 307 (1959)
(holding that the decision in John Walker & Sons was ‘merely the law on the particular
case based upon its own peculiar facts’); see also Alfred Dunhill, 350 F. Supp. At 1363
(defendant’s adoption of ‘Dunhill’ mark was not innocent). However, in Schenley, the
court noted that the relation between tobacco and whiskey products is significant
where a widely known arbitrary mark has long been used for diversified products
emanating from a single source and a newcomer seeks to use the same mark on
unrelated goods. Schenley, 427 F.2d. at 785. Significantly, in Schenley, the court
looked at the industry practice and the facts of the case in order to determine the
nature and extent of the relationship between the mark on the tobacco product and the
mark on the alcohol product.
The record here establishes conclusively that IDV has never advertised BAILEYS
liqueurs in conjunction with tobacco or tobacco accessory products and that IDV has
no intent to do so. And, unlike the defendant in Dunhill, S & M Brands does not market
bar accessories, or liqueur related products, with its cigarettes. The advertising and
In short, tobacco and alcohol products may be considered related only in cases involving special
circumstanceswhich exist only if a famous mark is involved and there is a demonstrated intent to
capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in the late 1980s
and the 1990s, that is, after Tobacco Industries’ use of the GALLO cigarette trademark in 1973
and petitioners’ use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods,
a requisite elementunder both the Trademark Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in the
Philippines. Respondents do not dispute the documentary evidence that aside from Gallo
Winery’s GALLO trademark registration, the Bureau of Patents, Trademarks and Technology
Transfer also issued on September 4, 1992 Certificate of Registration No. 53356 under the
Principal Register approving Productos Alimenticios Gallo, S.A’s April 19, 1990 application for
GALLO trademark registration and use for its "noodles, prepared food or canned noodles, ready
or canned sauces for noodles, semolina, wheat flour and bread crumbs, pastry, confectionery,
ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species and
ice."122
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals
and NSR Rubber Corporation,123 "GALLO" cannot be considered a "well-known" mark within the
contemplation and protection of the Paris Convention in this case since wines and cigarettes are
not identical or similar goods:
We agree with public respondents that the controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention is that established in Kabushi Kaisha
Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As pointed out by the
BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this
Office believes that there is no automatic protection afforded an entity
whose tradename is alleged to have been infringed through the use of
that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al.,
G.R. No. 75420, 15 November 1991, the Honorable Supreme Court held
that:
‘The Paris Convention for the Protection of Industrial
Property does not automatically exclude all countries of the
world which have signed it from using a tradename which
happens to be used in one country. To illustrate — if a
taxicab or bus company in a town in the United Kingdom or
India happens to use the tradename ‘Rapid Transportation,’ it
does not necessarily follow that ‘Rapid’ can no longer be
registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection
of Intellectual Property regarding well-known marks and possible application
thereof in this case. Petitioner, as this office sees it, is trying to seek refuge
under its protective mantle, claiming that the subject mark is well known in
this country at the time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V.
Ongpin, issued a memorandum dated 25 October 1983 to the Director of
Patents, a set of guidelines in the implementation of Article 6bis of the
Treaty of Paris. These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the same or similar kinds of
goods; and
d) the person claiming must be the owner of the mark (The
Parties Convention Commentary on the Paris Convention. Article
by Dr. Bogsch, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)’
From the set of facts found in the records, it is ruled that the Petitioner
failed to comply with the third requirement of the said memorandum
that is the mark must be for use in the same or similar kinds of goods.
The Petitioner is using the mark "CANON" for products belonging to
class 2 (paints, chemical products) while the Respondent is using the
same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time
the Respondent filed its application for the same mark should
fail." (Emphasis supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique problem which must be answered by
weighing the conflicting interests of the litigants.124
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of
trade, that is, retail trade. If respondents’ assertion is true, then both goods co-existed peacefully
for a considerable period of time. It took respondents almost 20 years to know about the
existence of GALLO cigarettes and sue petitioners for trademark infringement. Given, on one
hand, the long period of time that petitioners were engaged in the manufacture, marketing,
distribution and sale of GALLO cigarettes and, on the other, respondents’ delay in enforcing their
rights (not to mention implied consent, acquiescence or negligence) we hold that equity, justice
and fairness require us to rule in favor of petitioners. The scales of conscience and reason tip far
more readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that
they intended to capitalize on respondents’ goodwill in adopting the GALLO mark for their
cigarettes which are totally unrelated to respondents’ GALLO wines. Thus, we rule out
trademark infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE
FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or any other
means contrary to good faith by which he passes 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 commits any acts calculated to produce said result, is guilty of unfair competition. It includes
the following acts:
(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 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;
 (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.
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 constitutes unfair
competition. Actual or probable deception and confusion on the part of customers by reason of
defendant’s practices must always appear.125 On this score, we find that petitioners never
attempted to pass off their cigarettes as those of respondents. There is no evidence of bad faith
or fraud imputable to petitioners in using their GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as well as those recognized
by jurisprudence, we conclude that petitioners are not liable for trademark infringement, unfair
competition or damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court of Appeals in CA-G.R. CV No. 65175 and the
November 26, 1998 decision and the June 24, 1999 order of the Regional Trial Court of Makati,
Branch 57 in Civil Case No. 93-850 are hereby REVERSED and SET ASIDE and the complaint
against petitioners DISMISSED.
Costs against respondents.
SO ORDERED.
G.R. No. 76193 November 9, 1989
UNITED FEATURE SYNDICATE, INC., petitioner,
vs.
MUNSINGWEAR CREATION MANUFACTURING COMPANY, respondent.
Quasha, Asperilla, Ancheta, Pena and Nolasco for petitioner.
Jaime G. Manzano for private respondent.
PARAS, J.:
This is a petition for review on certiorari filed by United Feature Syndicate Inc., seeking to set
aside the Resolution of the Seventh Division of the Court of Appeals * dated September 16,
1986 dismissing the appeal of petitioner-appellant for having been filed out of time and denying
its Motion for Reconsideration for lack of merit in its Resolution dated October 14, 1986.
The Resolution dismissing the appeal, reads as follows:
We agree with the Philippine Patent Office and respondent appellee that the
decision of the aforementioned office dated October 2, 1984 had already
become final and executory at the time the Notice of Appeal was filed.
Our reasons for this conclusions are borne out by the following facts:
a) On October 2, 1984, the decision sought to be
appealed was rendered by the Philippine Patent Office
and a copy thereof was received by counsel for
petitioner-appellant on October 3, 1984 — not October
9, 1984 as stated in the Notice of Appeal. There can be
no doubt about the decision having been received by
petitioner-appellant's counsel on October 3, 1984 for
this is clearly written in the Notice of Decision (p. 61,
Original Record), and in point of fact the date of receipt
cannot be October 9, 1984, as declared in the Notice of
Appeal (p. 1, Rollo), because in the motion for
reconsideration subsequently filed by petitioner-
appellant it was stated that a copy of the decision was
received on October 4, 1984 (p. 80, Original Record).
b) On October 18, 1984 — as shown in the stamp mark
of the Philippine Patent Office (p. 80, Original Record)
or on the 15th and last day either for appealing or for
moving for reconsideration, petitioner-appellant filed a
motion for reconsideration.
Sadly and unexplainably for a veteran law office, said motion did not contain
or incorporate a notice of hearing.
c) Possibly realizing the fatal defect in its motion for
reconsideration, petitioner-appellant subsequently filed
a motion to set for hearing its motion for
reconsideration. This was done, however, only on
October 31, 1984 (p. 162, Original Record).
The motion for reconsideration filed on the last day, fatally failing as it did to
contain a notice of hearing, said pleading did not interrupt the period for
appealing, for the motion was nothing but a piece of scrap
paper (Agricultural and Industrial Marketing, Inc. v. Court of Appeals, 118
SCRA [1982] 492; Republic Planters Bank v. Intermediate Appellate Court,
13 SCRA [1984] 631).
This deadly and moral deficiency in the motion for reconsideration,
therefore, resulted in the decision of the Philippine Patent Office being final
and executory on October 19, 1984, the day after the motion for
reconsideration was filed, said motion having been filed on the 15th and last
day for appealing.
WHEREFORE, the motion of respondent appellee is hereby granted and
the appeal dismissed.
SO ORDERED. (Rollo 42-43)
This case arose from petition filed by petitioner for the cancellation of the registration of
trademark CHARLIE BROWN (Registration No. SR. 4224) in the name of respondent
MUNSINGWEAR in Inter Partes Case No. 1350 entitled "United Feature Syndicate, Inc. v.
Munsingwear Creation Mfg. Co.", with the Philippine Patent Office alleging that petitioner is
damaged by the registration of the trademark CHARLIE BROWN of T-Shirts under Class 25 with
the Registration No. SR-4224 dated September 12, 1979 in the name of Munsingwear Creation
Manufacturing Co., Inc., on the following grounds: (1) that respondent was not entitled to the
registration of the mark CHARLIE BROWN, & DEVICE at the time of application for registration;
(2) that CHARLIE BROWN is a character creation or a pictorial illustration, the copyright to which
is exclusively owned worldwide by the petitioner; (3) that as the owner of the pictorial illustration
CHARLIE BROWN, petitioner has since 1950 and continuously up to the present, used and
reproduced the same to the exclusion of others; (4) that the respondent-registrant has no bona
fide use of the trademark in commerce in the Philippines prior to its application for registration.
(Petition, p. 2, Rollo, p. 8)
On October 2, 1984 the Director of the Philippine Patent Office rendered a decision in this case
holding that a copyright registration like that of the name and likeness of CHARLIE BROWN may
not provide a cause of action for the cancellation of a trademark registration, (Petition, p. 4;
Rollo, p. 10 )
Petitioner filed a motion for reconsideration of the decision rendered by the Philippine Patent
Office which was denied by the Director of said office on the ground that the Decision No. 84-83
was already final and executory (Petition, Rollo, pp. 11-12).
From this decision, petitioner-appellant appealed to the Court of Appeals and respondent court
in its resolution dated September 16, 1986 denied the appeal. While the Motion for
Reconsideration was filed on time, that is, on the last day within which to appeal, still it is a mere
scrap of paper because there was no, date, of hearing stated therein.
Subsequently, petitioner-appellant filed a motion for reconsideration which public respondent
denied for lack of merit( Annex "B", Rollo p. 45)..
Hence this petition for review on certiorari.
In the resolution of April 6, 1987, the petition was given due course.
In its petition (Rollo, p. 10) and in its memorandum (Rollo, p. 97), petitioner-appellant raised the
following legal issues:
I
WHETHER THE RESPONDENT COURT OF APPEALS ACTED IN
EXCESS OF JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT BASED ITS RESOLUTION IN DISMISSING ITS
APPEAL ON STRICT TECHNICAL RULES OF PROCEDURE AS
ENUNCIATED IN RULE 15 OF THE RULES OF COURT INSTEAD OF
RELYING ON THE POLICY OF THE PHILIPPINE PATENT OFFICE AS
STRESSED IN RULE 169, AS AMENDED, OF THE RULES OF PRACTICE
IN TRADEMARK CASES.
II
WHETHER THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF
JURISDICTION WHEN BY DISMISSING THE APPEAL TO IT FROM THE
DECISION OF THE DIRECTOR OF PATENTS, IT KNOWINGLY
DISREGARDED ITS OWN DECISION IN AC-GR. SP. NO. 0342, WHICH
WAS AFFIRMED BY THIS HONORABLE SUPREME COURT TO THE
EFFECT THAT A COPYRIGHTED CHARACTER MAY NOT BE
APPROPRIATED AS A TRADEMARK BY ANOTHER UNDER
PRESIDENTIAL DECREE NO. 49.
III
WHETHER, ASSUMING ARGUENDO, BUT ONLY ASSUMING, THAT THE
DECISION OF THE DIRECTOR OF PATENTS IN THE CASE AT BAR HAD
ALREADY BECOME FINAL WHEN IT WAS APPEALED TO THE COURT
OF APPEALS, THE LATTER, BY REASON OF THE SUPERVENING
FACTS AFTER THE DECISION APPEALED FROM WAS RENDERED,
SHOULD HAVE HARMONIZED THE DECISION WITH LAW, THE
DEMANDS OF JUSTICE AND EQUITY.
The petitioner is impressed with merit.
Petitioner's contention that the purpose of a notice of hearing to the adverse party is to afford
him an opportunity to resist the motion, more particularly the motion for reconsideration filed by
its company is well taken. Said purpose was served when Munsingwear filed its opposition
thereto on November 20, 1984 and cured the technical defect of lack of notice of hearing
complained of (Rollo, p. 52). Otherwise stated such shortcomings of petitioner as to compliance
with procedural requirements in taking its appeal cannot be deemed sufficient to deprive it of a
chance to secure a review by this court in order to obtain substantial justice; more so where
liverality accorded to the petitioner becomes compelling because of the ostensible merit of
petitioner's case (Olango v. Court of First Instance of Misamis Oriental, 121 SCRA 338 [1983]).
Moreover, in Siguenza v. Court of Appeals, (137 SCRA 570 [1985]) the Court stressed that the
right to appeal should not be lightly disregarded by a stringent application of rules of procedure
especially where the appeal is on its face meritorious and the interest of substantial justice would
be served by permitting the appeal.
As enunciated in the case of Castro v. Court of Appeals (123 SCRA 782, [1983]) the importance
and real purpose of the remedy of appeal was stressed as follows:
An appeal is an essential part of oar judicial system. We have advised the
courts to proceed with caution so as not to deprive a party of the right to
appeal. (National Waterworks and Sewerage Authority v. Municipality of
Libmanan, 97 SCRA 138) and instructed that every party-litigant should
beafforded the amplest opportunity for the proper and just disposition of his
cause, freed from the constraints of technicalities. (A-One Feeds, Inc. v.
Court of Appeals, 100 SCRA 590).
The rules of procedure are not to be applied in a very rigid and technical
sense. The rules of procedure are used only to help secure not override
substantial justice. (Gregorio v. Court of Appeals, 72 SCRA 120), therefore,
we ruled in Republic v. Court of Appeals (83 SCRA 453) that a six day
delay in the perfection of the appeal does not warrant its dismissal. And
again in Ramos v. Bagaso, 96 SCRA 395, this Court held that the delay of
four (4) days in filing a notice of appeal and a motion for extension of time to
file a record on appeal can be excused on the basis of equity.
It was further emphasized that we allowed the filing of an appeal in some cases where a
stringent application of the rules would have denied it, or when to do so would serve the
demands of substantial justice and in the exercise of our equity jurisdiction (Serrano v. Court of
Appeals, 139 SCRA 179 [1085].)
In the case at bar, the petitioner's delay in filing their record on appeal should not be strictly
construed as to deprive them of the right to appeal especially since on its face the appeal
appears to be impressed with merit. (Emphasis supplied). All aforementioned cases are cited in
G.R. No. 76595, Pacific Asia Overseas Shipping Corporation v. NLRC, et al., May 6, 1988.
Procedural technicality should not prevail over substantive rights of a party to appeal (NEA v.
CA, 126 SCRA 394).
Moreover, a judgment of the Court of Appeals that become final by reason of the mistake of the
herein petitioner's lawyer may still be reviewed on appeal by the Supreme Court particularly
where the Supreme Court already gave due course to the petition for review (Ernesto v. Court of
Appeals, 116 SCRA 755 [1982]).
Where strong considerations of substantial justice are manifest in the petition, this Court may
relax the stringent application of technical rules in the exercise of equity jurisdiction. In addition
to the basic merits of the main case, such petition usually embodies justifying circumstances
which warrant our heeding the petitioner's cry for justice, inspite of the earlier negligence of
counsel (Serrano v. Court of Appeals et al., 139 SCRA 179 [1985]).
In a number of cases, this Court in the exercise of equity jurisdiction decided to disregard
technicalities in order to resolve the case on its merits based on the evidence (St. Peter
Memorial Park, Inc. et al. v. Cleofas, 121 SCRA 287, [1983]; Helmuth, Jr. v. People of the
Philippines, 112 SCRA 573 [1983]).
This case was brought before this Court for the resolution of the dismissal of the appeal filed by
petitioner-appellant from the decision of the Director of the Philippines Patent Office for being
filed out of time. The normal action to take thereafter, would be to remand this case to the Court
of Appeals for further proceedings. However, in line with jurisprudence, such time consuming
procedure may be properly dispensed with to resolve the issue (Quisumbing v. Court of Appeals,
122 SCRA 709 [1983]) where there is enough basis to end the basic controversy between the
parties here and now. In the case at bar dispensing with such procedural steps would not
anyway affect substantially the merits of their respective claims as held in Velasco v. Court of
Appeals, (95 SCRA 621 [1980] cited in Ortigas & Co. Ltd. v. Ruiz, 148 SCRA [1987] hence the
need for this Court to broaden its inquiry in this case land decide the same on the merits rather
than merely resolve the procedural question raised (Dorado v. Court of Appeals, 153 SCRA 420
[1987]; De Lima v. Laguna Tayabas Co., 160 SCRA 70 [1988]).
Petitioner contends that it will be damaged by the registration of the trademark CHARLIE
BROWN & DEVICE in favor of private respondent and that it has a better right to CHARLIE
BROWN & DEVICE since the likeness of CHARLIE BROWN appeared in periodicals having
worldwide distribution and covered by copyright registration in its name which antedates the
certificate of registration of respondent issued only on September 12, 1979. (Petition, Rollo, p.
21).
Petitioner further stresses that Decision No. 84-83 (TM) promulgated by the Philippine Patent
Office on October 2, 1984 which held that "the name likeness of CHARLIE BROWN may not
provide a cause of action for the cancellation of a trademark registration," was based in the
conclusion made in the case of "Children's Television Workshop v. touch of Class" earlier
decided by the Director of Patent Office on May 10, 1984. However, when the latter case was
appealed to the then Intermediate Appellate Court, docketed as A.C. G.R. SP No. 03432, the
appellate court reversed the decision of the Director holding said appealed decision as illegal
and contrary to law. this reversal was affirmed by this Court on August 7, 1985 in G.R. No.
71210 by denying the petition of respondent Touch of Class.
The Court of Appeals in reversing the Director of Patent's decision in Touch of Class, Inc.
succintly said:
The Patents Office ruled that a trademark, unlike a label, cannot be
copyrighted. The "Cookie Monster" is not, however, a trademark. It is a
character in a TV series entitled "Sesame Street." It was respondent which
appropriated the "Cookie Monster" as a trademark, after it has been
copyrighted. We hold that the exclusive right secured by PD 49 to the
petitioner precludes the appropriation of the "Cookie Monster" by the
respondent.
Pertinently, Section 2 of Presidential Decree No. 49, otherwise known as the "Decree on
Intellectual Property", provides:
Section 2. The rights granted by this Decree shall, from the moment of
creation, subsist with respect to any of the following classes of works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags and box
wraps. ...
Therefore, since the name "CHARLIE BROWN" and its pictorial representation were covered by
a copyright registration way back in 1950 the same are entitled to protection under PD No. 49.
Aside from its copyright registration, petitioner is also the owner of several trademark
registrations and application for the name and likeness of "CHARLIE BROWN" which is the duly
registered trademark and copyright of petitioner United Feature Syndicate Inc. as early as 1957
and additionally also as TV SPECIALS featuring the "PEANUTS" characters "CHARLIE
BROWN" (Memorandum, Rollo p. 97 [211]).
An examination of the records show that the only appreciable defense of respondent-registrant
is embodied in its answer, which reads:
It uses, the trademark "CHARLIE BROWN" & "DEVICE" on children's wear
such as T-shirts, undershirts, sweaters, brief and sandos, in class 25;
whereas "CHARLIE BROWN" is used only by petitioner as character, in a
pictorial illustration used in a comic strip appearing in newspapers and
magazines. It has no trademark significance and therefore respondent-
registrant's use of "CHARLIE BROWN" & "DEVICE" is not in conflict with
the petitioner's use of "CHARLIE BROWN" (Rollo, p. 97 [21]).
It is undeniable from the records that petitioner is the actual owner of said trademark due to its
prior registration with the Patent's Office.
Finally, in La Chemise Lacoste S.A. v. Hon. Oscar Fernandez & Gobindram Hemandas Sujanani
v. Hon. Roberto V. Ongpin, et al. 129 SCRA 373 [1984]), the Court declared.
 In upholding the right of the petitioner to maintain the present suit before our
courts for unfair competition or infringement of trademarks of a foreign
corporation, we are moreover recognizing our duties and the rights of
foregoing states under the Paris Convention for the Protection of Industrial
Property to which the Philippines and (France) U.S. are parties. We are
simply interpreting a solemn international commitment of the Philippines
embodied in a multilateral treaty to which we are a party and which we
entered into because it is in our national interest to do so.

PREMISES CONSIDERED, the Resolutions of the Court of Appeals dated September 16, 1985
and October 14, 1986 dismissing petitioner's appeal are hereby SET ASIDE and Certificate of
Registration no. SR-424 issued to private respondent dated September 12, 1979 is hereby
CANCELLED.