lip - cases 8

7/21/2019 LIP - Cases 8

http://slidepdf.com/reader/full/lip-cases-8 1/105

ECOLE DE CUISINE MANILLE (CORDON BLEU OF THEPHILIPPINES), INC., Petitioner,vs.RENAUD COINTREAU & CIE and LE CORDON BLEUINT'L., B.V., Respondents.

Assailed in this petition for review on certiorari

1

is theDecember 23, 2008 Decision2 of the Court of Appeals (CA)in CA-G.R. SP No. 104672 which affirmed in toto theIntellectual Property Office (IPO) Director General’s April 21,2008 Decision3 that declared respondent Renaud Cointreau& Cie (Cointreau) as the true and lawful owner of the mark"LE CORDON BLEU & DEVICE" and thus, is entitled toregister the same under its name.

The Facts

On June 21, 1990, Cointreau, a partnership registered underthe laws of France, filed before the (now defunct) Bureau ofPatents, Trademarks, and Technology Transfer (BPTTT) ofthe Department of Trade and Industry a trademarkapplication for the mark "LE CORDON BLEU & DEVICE" forgoods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30of the International Classification of Goods and Services forthe Purposes of Registrations of Marks ("NiceClassification") (subject mark). The application was filedpursuant to Section 37 of Republic Act No. 166, as amended(R.A. No. 166), on the basis of Home Registration No.1,390,912, issued on November 25, 1986 in France. BearingSerial No. 72264, such application was published foropposition in the March-April 1993 issue of the BPTTTGazette and released for circulation on May 31, 1993.4

On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc.(Ecole) filed an opposition to the subject application, averringthat: (a) it is the owner of the mark "LE CORDON BLEU,ECOLE DE CUISINE MANILLE," which it has been usingsince 1948 in cooking and other culinary activities, including

in its restaurant business; and (b) it has earned immenseand invaluable goodwill such that Cointreau’s use of thesubject mark will actually create confusion, mistake, anddeception to the buying public as to the origin andsponsorship of the goods, and cause great and irreparableinjury and damage to Ecole’s business reputation andgoodwill as a senior user of the same.5

On October 7, 1993, Cointreau filed its answer claiming to bethe true and lawful owner of the subject mark. It averred that:(a) it has filed applications for the subject mark’s registrationin various jurisdictions, including the Philippines; (b) LeCordon Bleu is a culinary school of worldwide acclaim whichwas established in Paris, France in 1895; (c) Le Cordon Bleuwas the first cooking school to have set the standard for theteaching of classical French cuisine and pastry making; and(d) it has trained students from more than eighty (80)nationalities, including Ecole’s directress, Ms. Lourdes L.Dayrit. Thus, Cointreau concluded that Ecole’s claim of beingthe exclusive owner of the subject mark is a fraudulentmisrepresentation.6

During the pendency of the proceedings, Cointreau wasissued Certificates of Registration Nos. 60631 and 54352 forthe marks "CORDON BLEU & DEVICE" and "LE CORDONBLEU PARIS 1895 & DEVICE" for goods and services underclasses 21 and 41 of the Nice Classification, respectively.7

The Ruling of the Bureau of Legal Affairs

In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecole’s opposition to thesubject mark, necessarily resulting in the rejection ofCointreau’s application.9 While noting the certificates ofregistration obtained from other countries and other pertinentmaterials showing the use of the subject mark outside thePhilippines, the BLA did not find such evidence sufficient toestablishCointreau’s claim of prior use of the same in the

7/21/2019 LIP - Cases 8


Philippines. It emphasized that the adoption and use oftrademark must be in commerce in the Philippines and notabroad. It then concluded that Cointreau has not establishedany proprietary right entitled to protection in the Philippine

jurisdiction because the law on trademarks rests upon thedoctrine of nationality or territoriality.10

On the other hand, the BLA found that the subject mark,which was the predecessor of the mark "LE CORDON BLEUMANILLE" has been known and used in the Philippinessince 1948 and registered under the name "ECOLE DECUISINE MANILLE (THE CORDON BLEU OF THEPHILIPPINES), INC." on May 9, 1980.11

Aggrieved, Cointreau filed an appeal with the IPO DirectorGeneral.

The Ruling of the IPO Director General

In his Decision dated April 21, 2008, the IPO DirectorGeneral reversed and set aside the BLA’s decision, thus,granting Cointreau’s appeal and allowing the registration ofthe subject mark.12 He held that while Section 2 of R.A. No.166 requires actual use of the subject mark in commerce inthe Philippines for at least two (2) months before the filingdate of the application, only the owner thereof has the rightto register the same, explaining that the user of a mark in thePhilippines is not ipso facto its owner. Moreover, Section 2-Aof the same law does not require actual use in thePhilippines to be able to acquire ownership of a mark.13

In resolving the issue of ownership and right to register thesubject mark in favor of Cointreau, he consideredCointreau’s undisputed use of such mark since 1895 for itsculinary school in Paris, France (in which petitioner’s owndirectress, Ms. Lourdes L. Dayrit, had trained in 1977).Contrarily, he found that while Ecole may have prior use ofthe subject mark in the Philippines since 1948, it failed to

explain how it came up with such name and mark. The IPODirector General therefore concluded that Ecole has unjustlyappropriated the subject mark, rendering it beyond themantle of protection of Section 4(d)14 of R.A. No. 166.15

Finding the IPO Director General’s reversal of the BLA’sDecision unacceptable, Ecole filed a Petition forReview16dated June 7, 2008 with the CA.

Ruling of the CA

In its Decision dated December 23, 2008, the CA affirmedthe IPO Director General’s Decision in toto.17 It declaredCointreau as the true and actual owner of the subject markwith a right to register the same in the Philippines underSection 37 of R.A. No. 166, having registered such mark inits country of origin on November 25, 1986.18

The CA likewise held that Cointreau’s right to register thesubject mark cannot be barred by Ecole’s prior use thereofas early as 1948 for its culinary school "LE CORDON BLEUMANILLE" in the Philippines because its appropriation of themark was done in bad faith. Further, Ecole had no certificateof registration that would put Cointreau on notice that theformer had appropriated or has been using the subject mark.In fact, its application for trademark registration for the samewhich was just filed on February 24, 1992 is still pending withthe IPO.19

Hence, this petition.

Issues Before the Court

The sole issue raised for the Court’s resolution is whetherthe CA was correct in upholding the IPO Director General’sruling that Cointreau is the true and lawful owner of thesubject mark and thus, entitled to have the same registeredunder its name.

7/21/2019 LIP - Cases 8


At this point, it should be noted that the instant case shall beresolved under the provisions of the old Trademark Law,R.A. No. 166, which was the law in force at the time ofCointreau’s application for registration of the subject mark.

The Court’s Ruling

The petition is without merit.

In the petition, Ecole argues that it is the rightful owner of thesubject mark, considering that it was the first entity that usedthe same in the Philippines. Hence, it is the one entitled to itsregistration and not Cointreau.

Petitioner’s argument is untenable.

Under Section 220 of R.A. No. 166, in order to register atrademark, one must be the owner thereof and must haveactually used the mark in commerce in the Philippines fortwo (2) months prior to the application for registration.Section 2-A21 of the same law sets out to define how onegoes about acquiring ownership thereof. Under Section 2-A,it is clear that actual use in commerce is also the test ofownership but the provision went further by saying that themark must not have been so appropriated by another.

Additionally, it is significant to note that Section 2-A does notrequire that the actual use of a trademark must be within thePhilippines. Thus, as correctly mentioned by the CA, underR.A. No. 166, one may be an owner of a mark due to itsactual use but may not yet have the right to register suchownership here due to the owner’s failure to use the same inthe Philippines for two (2) months prior to registration.22

Nevertheless, foreign marks which are not registered are stillaccorded protection against infringement and/or unfaircompetition. At this point, it is worthy to emphasize that thePhilippines and France, Cointreau’s country of origin, areboth signatories to the Paris Convention for the Protection of

Industrial Property (Paris Convention).23 Articles 6bis and 8of the Paris Convention state:

ARTICLE 6bis

(1) The countries of the Union undertake, ex officio if theirlegislation so permits, or at the request of an interestedparty, to refuse or to cancel the registration, and to prohibitthe use, of a trademark which constitutes a reproduction, animitation, or a translation, liable to create confusion, of amark considered by the competent authority of the country ofregistration or use to be well known in that country as beingalready the mark of a person entitled to the benefits of thisConvention and used for identical or similargoods.1âwphi1 These provisions shall also apply when theessential part of the mark constitutes a reproduction of anysuch well-known mark or an imitation liable to createconfusion therewith.

ARTICLE 8

A trade name shall be protected in all the countries of theUnion without the obligation of filing or registration, whetheror not it forms part of a trademark. (Emphasis andunderscoring supplied)

In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to wit:

Section 37. Rights of foreign registrants. - Persons who arenationals of, domiciled in, or have a bona fide or effectivebusiness or commercial establishment in any foreigncountry, which is a party to any international convention ortreaty relating to marks or trade-names, or the repression ofunfair competition to which the Philippines may be a party,shall be entitled to the benefits and subject to the provisionsof this Act to the extent and under the conditions essential togive effect to any such convention and treaties so long as

7/21/2019 LIP - Cases 8


the Philippines shall continue to be a party thereto, except asprovided in the following paragraphs of this section.

x x x x

Trade-names of persons described in the first paragraph ofthis section shall be protected without the obligation of filingor registration whether or not they form parts of marks.

x x x x

In view of the foregoing obligations under the ParisConvention, the Philippines is obligated to assure nationalsof the signatory-countries that they are afforded an effectiveprotection against violation of their intellectual property rightsin the Philippines in the same way that their own countriesare obligated to accord similar protection to Philippinenationals.24 "Thus, under Philippine law, a trade name of anational of a State that is a party to the Paris Convention,whether or not the trade name forms part of a trademark, isprotected "without the obligation of filing or registration.’"25

In the instant case, it is undisputed that Cointreau has beenusing the subject mark in France since 1895, prior to Ecole’saverred first use of the same in the Philippines in 1948, ofwhich the latter was fully aware thereof. In fact, Ecole’spresent directress, Ms. Lourdes L. Dayrit (and even itsfoundress, Pat Limjuco Dayrit), had trained in Cointreau’s LeCordon Bleu culinary school in Paris, France. Cointreau waslikewise the first registrant of the said mark under variousclasses, both abroad and in the Philippines, having securedHome Registration No. 1,390,912 dated November 25, 1986from its country of origin, as well as several trademarkregistrations in the Philippines.26

On the other hand, Ecole has no certificate of registrationover the subject mark but only a pending applicationcovering services limited to Class 41 of the Nice

Classification, referring to the operation of a culinary school.Its application was filed only on February 24, 1992, or afterCointreau filed its trademark application for goods andservices falling under different classes in 1990. Under theforegoing circumstances, even if Ecole was the first to usethe mark in the Philippines, it cannot be said to have validlyappropriated the same.

It is thus clear that at the time Ecole started using the subjectmark, the same was already being used by Cointreau, albeitabroad, of which Ecole’s directress was fully aware, being analumna of the latter’s culinary school in Paris, France.Hence, Ecole cannot claim any tinge of ownershipwhatsoever over the subject mark as Cointreau is the trueand lawful owner thereof. As such, the IPO Director Generaland the CA were correct in declaring Cointreau as the trueand lawful owner of the subject mark and as such, is entitledto have the same registered under its name.

In any case, the present law on trademarks, Republic ActNo. 8293, otherwise known as the Intellectual Property Codeof the Philippines, as amended, has already dispensed withthe requirement of prior actual use at the time ofregistration.27 Thus, there is more reason to allow theregistration of the subject mark under the name of Cointreauas its true and lawful owner.

As a final note, "the function of a trademark is to point outdistinctly the origin or ownership of the goods (or services) towhich it is affixed; to secure to him, who has beeninstrumental in bringing into the market a superior article ofmerchandise, the fruit of his industry and skill; to assure thepublic that they are procuring the genuine article; to preventfraud and imposition; and to protect the manufacturer againstsubstitution and sale of an inferior and different article as hisproduct."28 As such, courts will protect trade names ormarks, although not registered or properly selected as

7/21/2019 LIP - Cases 8


trademarks, on the broad ground of enforcing justice andprotecting one in the fruits of his toil.29

WHEREFORE, the petition is DENIED. Accordingly, theDecember 23, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 104672 is hereby AFFIRMED in toto.

SO ORDERED.

7/21/2019 LIP - Cases 8


REPUBLIC GAS CORPORATION, ARNEL U. TY, MARIANTONETTE N. TY, ORLANDO REYES, FERRER SUAZOand ALVIN U. TV, Petitioners,vs.PETRON CORPORATION, PILIPINAS SHELLPETROLEUM CORPORATION, and SHELLINTERNATIONAL PETROLEUM COMPANYLIMITED, Respondents.

This resolves the Petition for Review on Certiorari underRule 45 of the Rules of Court filed by petitioners seeking thereversal of the Decision1 dated July 2, 2010, andResolution2 dated October 11, 2010 of the Court of Appeals(CA) in CA-G.R. SP No. 106385.

Stripped of non-essentials, the facts of the case, assummarized by the CA, are as follows:

Petitioners Petron Corporation ("Petron" for brevity) andPilipinas Shell Petroleum Corporation ("Shell" for brevity) aretwo of the largest bulk suppliers and producers of LPG in thePhilippines. Petron is the registered owner in the Philippinesof the trademarks GASUL and GASUL cylinders used for itsLGP products. It is the sole entity in the Philippinesauthorized to allow refillers and distributors to refill, use, sell,and distribute GASUL LPG containers, products and itstrademarks.

Pilipinas Shell, on the other hand, is the authorized user inthe Philippines of the tradename, trademarks, symbols ordesigns of its principal, Shell International PetroleumCompany Limited, including the marks SHELLANE andSHELL device in connection with the production, sale anddistribution of SHELLANE LPGs. It is the only corporation inthe Philippines authorized to allow refillers and distributors torefill, use, sell and distribute SHELLANE LGP containers andproducts. Private respondents, on the other hand, are the

directors and officers of Republic Gas Corporation

("REGASCO" for brevity), an entity duly licensed to engagein, conduct and carry on, the business of refilling, buying,selling, distributing and marketing at wholesale and retail ofLiquefied Petroleum Gas ("LPG").

LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc. andTotalgaz Dealers Association, received reports that certainentities were engaged in the unauthorized refilling, sale anddistribution of LPG cylinders bearing the registeredtradenames and trademarks of the petitioners. As aconsequence, on February 5, 2004, Genesis Adarlo(hereinafter referred to as Adarlo), on behalf of theaforementioned dealers associations, filed a letter-complaintin the National Bureau of Investigation ("NBI") regarding thealleged illegal trading of petroleum products and/orunderdelivery or underfilling in the sale of LPG products.

Acting on the said letter-complaint, NBI Senior Agent MarvinE. De Jemil (hereinafter referred to as "De Jemil") wasassigned to verify and confirm the allegations contained inthe letter-complaint. An investigation was thereafterconducted, particularly within the areas of Caloocan,Malabon, Novaliches and Valenzuela, which showed thatseveral persons and/or establishments, includingREGASCO, were suspected of having violated provisions ofBatas Pambansa Blg. 33 (B.P. 33). The surveillancerevealed that REGASCO LPG Refilling Plant in Malabon wasengaged in the refilling and sale of LPG cylinders bearing theregistered marks of the petitioners without authority from thelatter. Based on its General Information Sheet filed in theSecurities and Exchange Commission, REGASCO’smembers of its Board of Directors are: (1) Arnel U. Ty –President, (2) Marie Antoinette Ty – Treasurer, (3) OrlandoReyes – Corporate Secretary, (4) Ferrer Suazo and (5) AlvinTy (hereinafter referred to collectively as privaterespondents).

7/21/2019 LIP - Cases 8


De Jemil, with other NBI operatives, then conducted a test-buy operation on February 19, 2004 with the former and aconfidential asset going undercover. They brought with themfour (4) empty LPG cylinders bearing the trademarks ofSHELLANE and GASUL and included the same with thepurchase of J&S, a REGASCO’s regular customer. InsideREGASCO’s refilling plant, they witnessed that REGASCO’semployees carried the empty LPG cylinders to a refillingstation and refilled the LPG empty cylinders. Money wasthen given as payment for the refilling of the J&S’s emptycylinders which included the four LPG cylinders brought in byDe Jemil and his companion. Cash Invoice No. 191391dated February 19, 2004 was issued as evidence for theconsideration paid.

After leaving the premises of REGASCO LPG Refilling Plantin Malabon, De Jemil and the other NBI operativesproceeded to the NBI headquarters for the proper marking ofthe LPG cylinders. The LPG cylinders refilled by REGASCOwere likewise found later to be underrefilled.

Thus, on March 5, 2004, De Jemil applied for the issuance ofsearch warrants in the Regional Trial Court, Branch 24, inthe City of Manila against the private respondents and/oroccupants of REGASCO LPG Refilling Plant located at

Asucena Street, Longos, Malabon, Metro Manila for allegedviolation of Section 2 (c), in relation to Section 4, of B.P. 33,as amended by PD 1865. In his sworn affidavit attached tothe applications for search warrants, Agent De Jemil allegedas follows:

"4. Respondent’s REGASCO LPG Refilling Plant-Malabon isnot one of those entities authorized to refill LPG cylindersbearing the marks of PSPC, Petron and Total PhilippinesCorporation. A Certification dated February 6, 2004confirming such fact, together with its supporting documents,are attached as Annex "E" hereof.

6. For several days in the month of February 2004, the otherNBI operatives and I conducted surveillance andinvestigation on respondents’ REGASCO LPG refilling Plant-Malabon. Our surveillance and investigation revealed thatrespondents’ REGASCO LPG Refilling Plant-Malabon isengaged in the refilling and sale of LPG cylinders bearing themarks of Shell International, PSPC and Petron.

8. The confidential asset and I, together with the otheroperatives of the NBI, put together a test-buy operation. OnFebruary 19, 2004, I, together with the confidential asset,went undercover and executed our testbuy operation. Boththe confidential assets and I brought with us four (4) emptyLPG cylinders branded as Shellane and Gasul. x x x in orderto have a successful test buy, we decided to "ride-on" ourpurchases with the purchase of Gasul and Shellane LPG byJ & S, one of REGASCO’s regular customers.

9. We proceeded to the location of respondents’ REGASCOLPG Refilling Plant-Malabon and asked from an employee ofREGASCO inside the refilling plant for refill of the emptyLPG cylinders that we have brought along, together with theLPG cylinders brought by J & S. The REGASCO employee,with some assistance from other employees, carried theempty LPG cylinders to a refilling station and we witnessedthe actual refilling of our empty LPG cylinders.

10. Since the REGASCO employees were under theimpression that we were together with J & S, they made thenecessary refilling of our empty LPG cylinders alongside theLPG cylinders brought by J & S. When we requested for areceipt, the REGASCO employees naturally counted ourLPG cylinders together with the LPG cylinders brought by J& S for refilling. Hence, the amount stated in Cash InvoiceNo. 191391 dated February 19, 2004, equivalent to SixteenThousand Two Hundred Eighty-Six and 40/100(Php16,286.40), necessarily included the amount for the

refilling of our four (4) empty LPG cylinders. x x x.

7/21/2019 LIP - Cases 8


11. After we accomplished the purchase of the illegallyrefilled LPG cylinders from respondents’ REGASCO LPGRefilling Plant-Malabon, we left its premises bringing with usthe said LPG cylinders. Immediately, we proceeded to ourheadquarters and made the proper markings of the illegallyrefilled LPG cylinders purchased from respondents’REGASCO LPG Refilling Plant-Malabon by indicating thereinwhere and when they were purchased. Since REGASCO isnot an authorized refiller, the four (4) LPG cylinders illegallyrefilled by respondents’ REGASCO LPG Refilling Plant-Malabon, were without any seals, and when weighed, wereunderrefilled. Photographs of the LPG cylinders illegallyrefilled from respondents’ REGASCO LPG Refilling Plant-Malabon are attached as Annex "G" hereof. x x x."

After conducting a personal examination under oath of AgentDe Jemil and his witness, Joel Cruz, and upon reviewingtheir sworn affidavits and other attached documents, Judge

Antonio M. Eugenio, Presiding Judge of the RTC, Branch 24,in the City of Manila found probable cause andcorrespondingly issued Search Warrants Nos. 04-5049 and04-5050.

Upon the issuance of the said search warrants, SpecialInvestigator Edgardo C. Kawada and other NBI operativesimmediately proceeded to the REGASCO LPG RefillingStation in Malabon and served the search warrants on the

private respondents. After searching the premises ofREGASCO, they were able to seize several empty and filledShellane and Gasul cylinders as well as other alliedparaphernalia.

Subsequently, on January 28, 2005, the NBI lodged acomplaint in the Department of Justice against the privaterespondents for alleged violations of Sections 155 and 168of Republic Act (RA) No. 8293, otherwise known as theIntellectual Property Code of the Philippines.

On January 15, 2006, Assistant City Prosecutor Armando C.Velasco recommended the dismissal of the complaint. Theprosecutor found that there was no proof introduced by thepetitioners that would show that private respondentREGASCO was engaged in selling petitioner’s products orthat it imitated and reproduced the registered trademarks ofthe petitioners. He further held that he saw no deception onthe part of REGASCO in the conduct of its business ofrefilling and marketing LPG. The Resolution issued by

Assistant City Prosecutor Velasco reads as follows in itsdispositive portion:

"WHEREFORE, foregoing considered, the undersigned findsthe evidence against the respondents to be insufficient toform a well-founded belief that they have probably committedviolations of Republic Act No. 9293. The DISMISSAL of thiscase is hereby respectfully recommended for insufficiency ofevidence."

On appeal, the Secretary of the Department of Justiceaffirmed the prosecutor’s dismissal of the complaint in aResolution dated September 18, 2008, reasoning thereinthat:

"x x x, the empty Shellane and Gasul LPG cylinders werebrought by the NBI agent specifically for refilling. Refilling thesame empty cylinders is by no means an offense in itself – itbeing the legitimate business of Regasco to engage in therefilling and marketing of liquefied petroleum gas. In otherwords, the empty cylinders were merely filled by theemployees of Regasco because they were brought preciselyfor that purpose. They did not pass off the goods as those ofcomplainants’ as no other act was done other than to refillthem in the normal course of its business.

"In some instances, the empty cylinders were merelyswapped by customers for those which are already filled. In

this case, the end-users know fully well that the contents of

7/21/2019 LIP - Cases 8


their cylinders are not those produced by complainants. Andthe reason is quite simple – it is an independent refillingstation.

"At any rate, it is settled doctrine that a corporation has apersonality separate and distinct from its stockholders as inthe case of herein respondents. To sustain the presentallegations, the acts complained of must be shown to havebeen committed by respondents in their individual capacityby clear and convincing evidence. There being none, thecomplaint must necessarily fail. As it were, some of therespondents are even gainfully employed in other businesspursuits. x x x."3

Dispensing with the filing of a motion for reconsideration,respondents sought recourse to the CA through a petition forcertiorari.

In a Decision dated July 2, 2010, the CA grantedrespondents’ certiorari petition. The fallo states:

WHEREFORE, in view of the foregoing premises, thepetition filed in this case is hereby GRANTED. The assailedResolution dated September 18, 2008 of the Department ofJustice in I.S. No. 2005-055 is hereby REVERSED and SET

ASIDE.

SO ORDERED.4

Petitioners then filed a motion for reconsideration. However,the same was denied by the CA in a Resolution datedOctober 11, 2010.

Accordingly, petitioners filed the instant Petition for Reviewon Certiorari raising the following issues for our resolution:

Whether the Petition for Certiorari filed by RESPONDENTS

should have been denied outright.

Whether sufficient evidence was presented to prove that thecrimes of Trademark Infringement and Unfair Competition asdefined and penalized in Section 155 and Section 168 inrelation to Section 170 of Republic Act No. 8293 (TheIntellectual Property Code of the Philippines) had beencommitted.

Whether probable cause exists to hold INDIVIDUALPETITIONERS liable for the offense charged.5

Let us discuss the issues in seriatim.

Anent the first issue, the general rule is that a motion forreconsideration is a condition sine qua non before acertiorari petition may lie, its purpose being to grant anopportunity for the court a quo to correct any error attributedto it by re-examination of the legal and factual circumstancesof the case.6

However, this rule is not absolute as jurisprudence has laiddown several recognized exceptions permitting a resort tothe special civil action for certiorari without first filing amotion for reconsideration, viz.:

(a) Where the order is a patent nullity, as where the court aquo has no jurisdiction;

(b) Where the questions raised in the certiorari proceedingshave been duly raised and passed upon by the lower court,or are the same as those raised and passed upon in thelower court.

(c) Where there is an urgent necessity for the resolution ofthe question and any further delay would prejudice theinterests of the Government or of the petitioner or the subjectmatter of the petition is perishable;

7/21/2019 LIP - Cases 8


(d) Where, under the circumstances, a motion forreconsideration would be useless;

(e) Where petitioner was deprived of due process and thereis extreme urgency for relief;

(f) Where, in a criminal case, relief from an order of arrest isurgent and the granting of such relief by the trial court isimprobable;

(g) Where the proceedings in the lower court are a nullity forlack of due process;

(h) Where the proceeding was ex parte or in which thepetitioner had no opportunity to object; and,

(i) Where the issue raised is one purely of law or publicinterest is involved.7

In the present case, the filing of a motion for reconsiderationmay already be dispensed with considering that thequestions raised in this petition are the same as those thathave already been squarely argued and passed upon by theSecretary of Justice in her assailed resolution.

Apropos the second and third issues, the same may besimplified to one core issue: whether probable cause existsto hold petitioners liable for the crimes of trademarkinfringement and unfair competition as defined and penalizedunder Sections 155 and 168, in relation to Section 170 ofRepublic Act (R.A.) No. 8293.

Section 155 of R.A. No. 8293 identifies the acts constitutingtrademark infringement as follows:

Section 155. Remedies; Infringement. – Any person whoshall, without the consent of the owner of the registered

mark:

155.1 Use in commerce any reproduction, counterfeit, copyor colorable imitation of a registered mark of the samecontainer or a dominant feature thereof in connection withthe sale, offering for sale, distribution, advertising of anygoods or services including other preparatory stepsnecessary to carry out the sale of any goods or services onor in connection with which such use is likely to causeconfusion, or to cause mistake, or to deceive; or

155.2 Reproduce, counterfeit, copy or colorably imitate aregistered mark or a dominant feature thereof and applysuch reproduction, counterfeit, copy or colorable imitation tolabels, signs, prints, packages, wrappers, receptacles oradvertisements intended to be used in commerce upon or inconnection with the sale, offering for sale, distribution, oradvertising of goods or services on or in connection withwhich such use is likely to cause confusion, or to causemistake, or to deceive, shall be liable in a civil action forinfringement by the registrant for the remedies hereinafterset forth: Provided, That the infringement takes place at themoment any of the acts stated in Subsection 155.1 or thissubsection are committed regardless of whether there isactual sale of goods or services using the infringingmaterial.8

From the foregoing provision, the Court in a very similarcase, made it categorically clear that the mere unauthorized

use of a container bearing a registered trademark inconnection with the sale, distribution or advertising of goodsor services which is likely to cause confusion, mistake ordeception among the buyers or consumers can beconsidered as trademark infringement.9

Here, petitioners have actually committed trademarkinfringement when they refilled, without the respondents’consent, the LPG containers bearing the registered marks ofthe respondents. As noted by respondents, petitioners’ acts

will inevitably confuse the consuming public, since they have

7/21/2019 LIP - Cases 8


no way of knowing that the gas contained in the LPG tanksbearing respondents’ marks is in reality not the latter’s LPGproduct after the same had been illegally refilled. The publicwill then be led to believe that petitioners are authorizedrefillers and distributors of respondents’ LPG products,considering that they are accepting empty containers ofrespondents and refilling them for resale.

As to the charge of unfair competition, Section 168.3, inrelation to Section 170, of R.A. No. 8293 describes the actsconstituting unfair competition as follows:

Section 168. Unfair Competition, Rights, Regulations andRemedies. x x x.

168.3 In particular, and without in any way limiting the scopeof protection against unfair competition, the following shall bedeemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them thegeneral appearance of goods of another manufacturer ordealer, either as to the goods themselves or in the wrappingof the packages in which they are contained, or the devicesor words thereon, or in any other feature of their appearance,which would be likely to influence purchasers to believe thatthe 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 shalldeceive the public and defraud another of his legitimatetrade, or any subsequent vendor of such goods or any agentof any vendor engaged in selling such goods with a likepurpose;

Section 170. Penalties. Independent of the civil andadministrative sanctions imposed by law, a criminal penaltyof imprisonment from two (2) years to five (5) years and afine 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 actsmentioned in Section 155, Section 168 and Subsection169.1.

From jurisprudence, unfair competition has been defined asthe passing off (or palming off) or attempting to pass off uponthe public of the goods or business of one person as thegoods or business of another with the end and probableeffect of deceiving the public.10

Passing off (or palming off) takes place where the defendant,by imitative devices on the general appearance of the goods,misleads prospective purchasers into buying hismerchandise under the impression that they are buying thatof his competitors. Thus, the defendant gives his goods thegeneral appearance of the goods of his competitor with theintention of deceiving the public that the goods are those ofhis competitor.11

In the present case, respondents pertinently observed thatby refilling and selling LPG cylinders bearing their registeredmarks, petitioners are selling goods by giving them thegeneral appearance of goods of another manufacturer.

What's more, the CA correctly pointed out that there is ashowing that the consumers may be misled into believingthat the LPGs contained in the cylinders bearing the marks

"GASUL" and "SHELLANE" are those goods or products ofthe petitioners when, in fact, they are not. Obviously, themere use of those LPG cylinders bearing the trademarks"GASUL" and "SHELLANE" will give the LPGs sold byREGASCO the general appearance of the products of thepetitioners.

In sum, this Court finds that there is sufficient evidence towarrant the prosecution of petitioners for trademarkinfringement and unfair competition, considering that

petitioner Republic Gas Corporation, being a corporation,

7/21/2019 LIP - Cases 8


possesses a personality separate and distinct from theperson of its officers, directors andstockholders.12Petitioners, being corporate officers and/ordirectors, through whose act, default or omission thecorporation commits a crime, may themselves be individuallyheld answerable for the crime.13 Veritably, the CAappropriately pointed out that petitioners, being in directcontrol and supervision in the management and conduct ofthe affairs of the corporation, must have known or are awarethat the corporation is engaged in the act of refilling LPGcylinders bearing the marks of the respondents withoutauthority or consent from the latter which, under thecircumstances, could probably constitute the crimes oftrademark infringement and unfair competition. Theexistence of the corporate entity does not shield fromprosecution the corporate agent who knowingly andintentionally caused the corporation to commit a crime. Thus,

petitioners cannot hide behind the cloak of the separatecorporate personality of the corporation to escape criminalliability. A corporate officer cannot protect himself behind acorporation where he is the actual, present and efficientactor.14

WHEREFORE, premises considered, the petition is herebyDENIED and the Decision dated July 2, 2010 and Resolutiondated October 11, 2010 of the Court of Appeals in CA-G.R.SP No. 106385 are AFFIRMED.

SO ORDERED.

7/21/2019 LIP - Cases 8


VICTORIO P. DIAZ, Petitioner,vs.PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS[PHILS.], INC., Respondents.

It is the tendency of the allegedly infringing mark to beconfused with the registered trademark that is the gravamenof the offense of infringement of a registered trademark. Theacquittal of the accused should follow if the allegedlyinfringing mark is not likely to cause confusion. Thereby, theevidence of the State does not satisfy the quantum of proofbeyond reasonable doubt.

Accused Victorio P. Diaz (Diaz) appeals the resolutionspromulgated on July 17, 20071 and November 22,2007,2whereby the Court of Appeals (CA), respectively,dismissed his appeal in C.A.-G.R. CR No. 30133 for thebelated filing of the appellant's brief, and denied his motionfor reconsideration. Thereby, the decision rendered onFebruary 13, 2006 in Criminal Case No. 00-0318 andCriminal Case No. 00-0319 by the Regional Trial Court,Branch 255, in Las Pifias City (RTC) convicting him for twocounts of infringement of trademark were affirmed.3

Antecedents

On February 10, 2000, the Department of Justice filed two

informations in the RTC of Las Piñas City, charging Diaz withviolation of Section 155, in relation to Section 170, ofRepublic Act No. 8293, also known as the IntellectualProperty Code of the Philippines (Intellectual PropertyCode), to wit:

Criminal Case No. 00-0318

That on or about August 28, 1998, and on dates priorthereto, in Las Pinas City, and within the jurisdiction of this

Honorable Court, the abovenamed accused, with criminal

intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafterreferred to as LEVI’S), did then and there, willfully,unlawfully, feloniously, knowingly and intentionally engagedin commerce by reproducing, counterfeiting, copying andcolorably imitating Levi’s registered trademarks or dominantfeatures thereof such as the ARCUATE DESIGN, TWOHORSE BRAND, TWO HORSE PATCH, TWO HORSELABEL WITH PATTERNED ARCUATE DESIGN, TAB ANDCOMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and inconnection thereto, sold, offered for sale, manufactured,distributed counterfeit patches and jeans, including otherpreparatory steps necessary to carry out the sale of saidpatches and jeans, which likely caused confusion, mistake,and /or deceived the general consuming public, without theconsent, permit or authority of the registered owner, LEVI’S,thus depriving and defrauding the latter of its right to theexclusive use of its trademarks and legitimate trade, to the

damage and prejudice of LEVI’S.

CONTRARY TO LAW.4

Criminal Case No. 00-0319

That on or about August 28, 1998, and on dates priorthereto, in Las Pinas City, and within the jurisdiction of thisHonorable Court, the abovenamed accused, with criminalintent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter

referred to as LEVI’S), did then and there, willfully,unlawfully, feloniously, knowingly and intentionally engagedin commerce by reproducing, counterfeiting, copying andcolorably imitating Levi’s registered trademarks or dominantfeatures thereof such as the ARCUATE DESIGN, TWOHORSE BRAND, TWO HORSE PATCH, TWO HORSELABEL WITH PATTERNED ARCUATE DESIGN, TAB ANDCOMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and inconnection thereto, sold, offered for sale, manufactured,distributed counterfeit patches and jeans, including other

preparatory steps necessary to carry out the sale of said

7/21/2019 LIP - Cases 8


patches and jeans, which likely caused confusion, mistake,and /or deceived the general consuming public, without theconsent, permit or authority of the registered owner, LEVI’S,thus depriving and defrauding the latter of its right to theexclusive use of its trademarks and legitimate trade, to thedamage and prejudice of LEVI’S.

CONTRARY TO LAW.5

The cases were consolidated for a joint trial. Diaz entered hispleas of not guilty to each information on June 21, 2000.6

1. Evidence of the Prosecution

Levi Strauss and Company (Levi’s), a foreign corporationbased in the State of Delaware, United States of America,had been engaged in the apparel business. It is the owner oftrademarks and designs of Levi’s jeans like LEVI’S 501, thearcuate design, the two-horse brand, the two-horse patch,the two-horse patch with pattern arcuate, and the compositetab arcuate. LEVI’S 501 has the following registeredtrademarks, to wit: (1) the leather patch showing two horsespulling a pair of pants; (2) the arcuate pattern with theinscription "LEVI STRAUSS & CO;" (3) the arcuate designthat refers to "the two parallel stitching curving downwardthat are being sewn on both back pockets of a Levi’s Jeans;"and (4) the tab or piece of cloth located on the structural

seam of the right back pocket, upper left side. All thesetrademarks were registered in the Philippine Patent Office inthe 1970’s, 1980’s and early part of 1990’s.7

Levi Strauss Philippines, Inc. (Levi’s Philippines) is alicensee of Levi’s. After receiving information that Diaz wasselling counterfeit LEVI’S 501 jeans in his tailoring shops in

Almanza and Talon, Las Piñas City, Levi’s Philippines hireda private investigation group to verify the information.Surveillance and the purchase of jeans from the tailoring

shops of Diaz established that the jeans bought from the

tailoring shops of Diaz were counterfeit or imitations ofLEVI’S 501. Levi’s Philippines then sought the assistance ofthe National Bureau of Investigation (NBI) for purposes ofapplying for a search warrant against Diaz to be served athis tailoring shops. The search warrants were issued in duecourse. Armed with the search warrants, NBI agentssearched the tailoring shops of Diaz and seized several fakeLEVI’S 501 jeans from them. Levi’s Philippines claimed thatit did not authorize the making and selling of the seized

jeans; that each of the jeans were mere imitations of genuineLEVI’S 501 jeans by each of them bearing the registeredtrademarks, like the arcuate design, the tab, and the leatherpatch; and that the seized jeans could be mistaken fororiginal LEVI’S 501 jeans due to the placement of thearcuate, tab, and two-horse leather patch.8

2. Evidence of the Defense

On his part, Diaz admitted being the owner of the shopssearched, but he denied any criminal liability.

Diaz stated that he did not manufacture Levi’s jeans, andthat he used the label "LS Jeans Tailoring" in the jeans thathe made and sold; that the label "LS Jeans Tailoring" wasregistered with the Intellectual Property Office; that his shopsreceived clothes for sewing or repair; that his shops offeredmade-to-order jeans, whose styles or designs were done in

accordance with instructions of the customers; that since thetime his shops began operating in 1992, he had received nonotice or warning regarding his operations; that the jeans heproduced were easily recognizable because the label "LSJeans Tailoring," and the names of the customers wereplaced inside the pockets, and each of the jeans had an"LSJT" red tab; that "LS" stood for "Latest Style;" and thatthe leather patch on his jeans had two buffaloes, not twohorses.9

Ruling of the RTC

7/21/2019 LIP - Cases 8


On February 13, 2006, the RTC rendered its decision findingDiaz guilty as charged, disposing thus:

WHEREFORE, premises considered, the Court findsaccused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyondreasonable doubt of twice violating Sec. 155, in relation toSec. 170, of RA No. 8293, as alleged in the Informations inCriminal Case Nos. 00-0318 & 00-0319, respectively, andhereby sentences him to suffer in each of the cases thepenalty of imprisonment of TWO (2) YEARS of prisioncorrecional , as minimum, up to FIVE (5) YEARS of prisioncorrecional , as maximum, as well as pay a fineof P50,000.00 for each of the herein cases, with subsidiaryimprisonment in case of insolvency, and to suffer theaccessory penalties provided for by law.

Also, accused Diaz is hereby ordered to pay to the private

complainant Levi’s Strauss (Phils.), Inc. the following, thus:

1. P50,000.00 in exemplary damages; and

2. P222,000.00 as and by way of attorney’s fees.

Costs de officio.

SO ORDERED.10

Ruling of the CA

Diaz appealed, but the CA dismissed the appeal on July 17,2007 on the ground that Diaz had not filed his appellant’sbrief on time despite being granted his requested severalextension periods.

Upon denial of his motion for reconsideration, Diaz is nowbefore the Court to plead for his acquittal.

Issue

Diaz submits that:

THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THERULE ON TECHNICALITIES AND OVERRIDESUBSTANTIAL JUSTICE BY DISMISSING THE APPEALOF THE PETITIONER FOR LATE FILING OF

APPELLANT’S BRIEF.11

Ruling

The Court first resolves whether the CA properly dismissedthe appeal of Diaz due to the late filing of his appellant’sbrief.

Under Section 7, Rule 44 of the Rules of Court , the appellantis required to file the appellant’s brief in the CA "within forty-five (45) days from receipt of the notice of the clerk that allthe evidence, oral and documentary, are attached to therecord, seven (7) copies of his legibly typewritten,mimeographed or printed brief, with proof of service of two(2) copies thereof upon the appellee." Section 1(e) of Rule50 of the Rules of Court grants to the CA the discretion todismiss an appeal either motu proprio or on motion of theappellee should the appellant fail to serve and file therequired number of copies of the appellant’s brief within thetime provided by the Rules of Court .12

The usage of the word may in Section 1(e) of Rule 50indicates that the dismissal of the appeal upon failure to filethe appellant’s brief is not mandatory, but discretionary.Verily, the failure to serve and file the required number ofcopies of the appellant’s brief within the time provided bythe Rules of Court does not have the immediate effect ofcausing the outright dismissal of the appeal. This means thatthe discretion to dismiss the appeal on that basis is lodged inthe CA, by virtue of which the CA may still allow the appeal

to proceed despite the late filing of the appellant’s brief,

7/21/2019 LIP - Cases 8


when the circumstances so warrant its liberality. In decidingto dismiss the appeal, then, the CA is bound to exercise itssound discretion upon taking all the pertinent circumstancesinto due consideration.

The records reveal that Diaz’s counsel thrice sought anextension of the period to file the appellant’s brief. The firsttime was on March 12, 2007, the request being for anextension of 30 days to commence on March 11, 2007. TheCA granted his motion under its resolution of March 21,2007. On April 10, 2007, the last day of the 30-dayextension, the counsel filed another motion, seeking anadditional 15 days. The CA allowed the counsel until April25, 2007 to serve and file the appellant’s brief. On April 25,2007, the counsel went a third time to the CA with anotherrequest for 15 days. The CA still granted such third motionfor extension, giving the counsel until May 10, 2007.

Notwithstanding the liberality of the CA, the counsel did notliterally comply, filing the appellant’s brief only on May 28,2007, which was the 18th day beyond the third extensionperiod granted.

Under the circumstances, the failure to file the appellant’sbrief on time rightly deserved the outright rejection of theappeal. The acts of his counsel bound Diaz like any otherclient. It was, of course, only the counsel who was wellaware that the Rules of Court fixed the periods to file

pleadings and equally significant papers like the appellant’sbrief with the lofty objective of avoiding delays in theadministration of justice.

Yet, we have before us an appeal in two criminal cases inwhich the appellant lost his chance to be heard by the CA onappeal because of the failure of his counsel to serve and filethe appellant’s brief on time despite the grant of severalextensions the counsel requested. Diaz was convicted andsentenced to suffer two indeterminate sentences that would

require him to spend time in detention for each conviction

lasting two years, as minimum, to five years, as maximum,and to pay fines totaling P100,000.00 (with subsidiaryimprisonment in case of his insolvency). His personal libertyis now no less at stake. This reality impels us to look beyondthe technicality and delve into the merits of the case to seefor ourselves if the appeal, had it not been dismissed, wouldhave been worth the time of the CA to pass upon. After all,his appellant’s brief had been meanwhile submitted to theCA. While delving into the merits of the case, we haveuncovered a weakness in the evidence of guilt that cannotbe simply ignored and glossed over if we were to be true toour oaths to do justice to everyone.

We feel that despite the CA being probably right indismissing the excuses of oversight and excusablenegligence tendered by Diaz’s counsel to justify the belatedfiling of the appellant’s brief as unworthy of serious

consideration, Diaz should not be made to suffer the direconsequence. Any accused in his shoes, with his personalliberty as well as his personal fortune at stake, expectedlybut innocently put his fullest trust in his counsel’s abilitiesand professionalism in the handling of his appeal. Hethereby delivered his fate to the hands of his counsel.Whether or not those hands were efficient or trained enoughfor the job of handling the appeal was a learning that hewould get only in the end. Likelier than not, he was probablyeven unaware of the three times that his counsel had

requested the CA for extensions. If he were now to be left tohis unwanted fate, he would surely suffer despite hisinnocence. How costly a learning it would be for him! That iswhere the Court comes in. It is most important for us asdispensers of justice not to allow the inadvertence orincompetence of any counsel to result in the outrightdeprivation of an appellant’s right to life, liberty or property.13

We do not mind if this softening of judicial attitudes bemislabeled as excessive leniency. With so much on the line,

the people whose futures hang in a balance should not be

7/21/2019 LIP - Cases 8


left to suffer from the incompetence, mindlessness or lack ofprofessionalism of any member of the Law Profession. Theyreasonably expect a just result in every litigation. The courtsmust give them that just result. That assurance is thepeople’s birthright. Thus, we have to undo Diaz’s dire fate.

Even as we now set aside the CA’s rejection of the appeal ofDiaz, we will not remand the records to the CA for its review.In an appeal of criminal convictions, the records are laidopen for review. To avoid further delays, therefore, we take itupon ourselves to review the records and resolve the issueof guilt, considering that the records are already before us.

Section 155 of R.A. No. 8293 defines the acts that constituteinfringement of trademark, viz :

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 samecontainer or a dominant feature thereof in connection withthe sale, offering for sale, distribution, advertising of anygoods or services including other preparatory stepsnecessary to carry out the sale of any goods or services onor in connection with which such use is likely to causeconfusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate aregistered mark or a dominant feature thereof and applysuch reproduction, counterfeit, copy or colorable imitation tolabels, signs, prints, packages, wrappers, receptacles oradvertisements intended to be used in commerce upon or inconnection with the sale, offering for sale, distribution, oradvertising of goods or services on or in connection withwhich such use is likely to cause confusion, or to causemistake, 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 themoment any of the acts stated in Subsection 155.1 or thissubsection are committed regardless of whether there isactual sale of goods or services using the infringing material.

The elements of the offense of trademark infringement underthe Intellectual Property Code are, therefore, the following:

1. The trademark being infringed is registered in theIntellectual Property Office;

2. The trademark is reproduced, counterfeited,copied, or colorably imitated by the infringer;

3. The infringing mark is used in connection with thesale, offering for sale, or advertising of any goods,business or services; or the infringing mark is applied

to labels, signs, prints, packages, wrappers,receptacles or advertisements intended to be usedupon or in connection with such goods, business orservices;

4. The use or application of the infringing mark islikely to cause confusion or mistake or to deceivepurchasers or others as to the goods or servicesthemselves or as to the source or origin of such goodsor services or the identity of such business; and

5. The use or application of the infringing mark iswithout the consent of the trademark owner or theassignee thereof.14

As can be seen, the likelihood of confusion is the gravamenof the offense of trademark infringement.15 There are twotests to determine likelihood of confusion, namely: thedominancy test, and the holistic test. The contrastingconcept of these tests was explained in Societes Des

Produits Nestle, S.A. v. Dy, Jr., thus:

7/21/2019 LIP - Cases 8


x x x. The dominancy test focuses on the similarity of themain, prevalent or essential features of the competingtrademarks that might cause confusion. Infringement takesplace when the competing trademark contains the essentialfeatures of another. Imitation or an effort to imitate isunnecessary. The question is whether the use of the marksis likely to cause confusion or deceive purchasers.

The holistic test considers the entirety of the marks, includinglabels and packaging, in determining confusing similarity.The focus is not only on the predominant words but also onthe other features appearing on the labels.16

As to what test should be applied in a trademarkinfringement case, we said in McDonald’s Corporation v.Macjoy Fastfood Corporation17 that:

In trademark cases, particularly in ascertaining whether onetrademark is confusingly similar to another, no set rules canbe deduced because each case must be decided on itsmerits. In such cases, even more than in any other litigation,precedent must be studied in the light of the facts of theparticular case. That is the reason why in trademark cases,

jurisprudential precedents should be applied only to a case ifthey are specifically in point.

The case of Emerald Garment Manufacturing Corporation v.

Court of Appeals,18 which involved an alleged trademarkinfringement of jeans products, is worth referring to. There,H.D. Lee Co., Inc. (H.D. Lee), a corporation based in theUnited States of America, claimed that Emerald Garment’strademark of "STYLISTIC MR. LEE" that it used on its jeansproducts was confusingly similar to the "LEE" trademark thatH.D. Lee used on its own jeans products. Applying theholistic test, the Court ruled that there was no infringement.

The holistic test is applicable here considering that the

herein criminal cases also involved trademark infringement

in relation to jeans products. Accordingly, the jeanstrademarks of Levi’s Philippines and Diaz must beconsidered as a whole in determining the likelihood ofconfusion between them. The maong pants or jeans madeand sold by Levi’s Philippines, which included LEVI’S 501,were very popular in the Philippines. The consuming publicknew that the original LEVI’S 501 jeans were under a foreign

brand and quite expensive. Such jeans could be purchasedonly in malls or boutiques as ready-to-wear items, and werenot available in tailoring shops like those of Diaz’s as well asnot acquired on a "made-to-order" basis. Under thecircumstances, the consuming public could easily discern ifthe jeans were original or fake LEVI’S 501, or weremanufactured by other brands of jeans. Confusion anddeception were remote, for, as the Court has observedin Emerald Garments:

First, the products involved in the case at bar are, in themain, various kinds of jeans. These are not your ordinaryhousehold items like catsup, soy sauce or soap which are ofminimal cost. Maong pants or jeans are not inexpensive.

Accordingly, the casual buyer is predisposed to be morecautious and discriminating in and would prefer to mull overhis purchase. Confusion and deception, then, is less likely.In Del Monte Corporation v. Court of Appeals, we noted that:

.... Among these, what essentially determines the attitudes of

the purchaser, specifically his inclination to be cautious, isthe cost of the goods. To be sure, a person who buys a boxof candies will not exercise as much care as one who buysan expensive watch. As a general rule, an ordinary buyerdoes not exercise as much prudence in buying an article forwhich he pays a few centavos as he does in purchasing amore valuable thing. Expensive and valuable items arenormally bought only after deliberate, comparative andanalytical investigation. But mass products, low pricedarticles in wide use, and matters of everyday purchase

7/21/2019 LIP - Cases 8


requiring frequent replacement are bought by the casualconsumer without great care....

Second, like his beer, the average Filipino consumergenerally buys his jeans by brand. He does not ask the salesclerk for generic jeans but for, say, a Levis, Guess, Wrangleror even an Armani. He is, therefore, more or less

knowledgeable and familiar with his preference and will noteasily be distracted.

Finally, in line with the foregoing discussions, more creditshould be given to the "ordinary purchaser." Cast in thisparticular controversy, the ordinary purchaser is not the"completely unwary consumer" but is the "ordinarilyintelligent buyer" considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok is

better suited to the present case. There, the "ordinarypurchaser" was defined as one "accustomed to buy, andtherefore to some extent familiar with, the goods in question.The test of fraudulent simulation is to be found in thelikelihood of the deception of some persons in somemeasure acquainted with an established design anddesirous of purchasing the commodity with which that designhas been associated . The test is not found in the deception,or the possibility of deception, of the person who knowsnothing about the design which has been counterfeited, and

who must be indifferent between that and the other. Thesimulation, in order to be objectionable, must be such asappears likely to mislead the ordinary intelligent buyer whohas a need to supply and is familiar with the article that heseeks to purchase.19

Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. Histrademark was visually and aurally different from thetrademark "LEVI STRAUSS & CO" appearing on the patch of

original jeans under the trademark LEVI’S 501. The word

"LS" could not be confused as a derivative from "LEVISTRAUSS" by virtue of the "LS" being connected to the word"TAILORING", thereby openly suggesting that the jeansbearing the trademark "LS JEANS TAILORING" came orwere bought from the tailoring shops of Diaz, not from themalls or boutiques selling original LEVI’S 501 jeans to theconsuming public.

There were other remarkable differences between the twotrademarks that the consuming public would easily perceive.Diaz aptly noted such differences, as follows:

The prosecution also alleged that the accused copied the"two horse design" of the petitioner-private complainant butthe evidence will show that there was no such design in theseized jeans. Instead, what is shown is "buffalo design."

Again, a horse and a buffalo are two different animals which

an ordinary customer can easily distinguish. x x x.

The prosecution further alleged that the red tab was copiedby the accused. However, evidence will show that the redtab used by the private complainant indicates the word"LEVI’S" while that of the accused indicates the letters"LSJT" which means LS JEANS TAILORING. Again, evenan ordinary customer can distinguish the word LEVI’S fromthe letters LSJT.

x x x x

In terms of classes of customers and channels of trade, the jeans products of the private complainant and the accusedcater to different classes of customers and flow through thedifferent channels of trade. The customers of the privatecomplainant are mall goers belonging to class A and Bmarket group – while that of the accused are those whobelong to class D and E market who can only afford Php 300for a pair of made-toorder pants.20 x x x.

7/21/2019 LIP - Cases 8


Moreover, based on the certificate issued by the IntellectualProperty Office, "LS JEANS TAILORING" was a registeredtrademark of Diaz. He had registered his trademark prior tothe filing of the present cases.21 The Intellectual PropertyOffice would certainly not have allowed the registration hadDiaz’s trademark been confusingly similar with the registeredtrademark for LEVI’S 501 jeans.

Given the foregoing, it should be plain that there was nolikelihood of confusion between the trademarks involved.Thereby, the evidence of guilt did not satisfy the quantum ofproof required for a criminal conviction, which is proofbeyond reasonable doubt. According to Section 2, Rule 133of the Rules of Court , proof beyond a reasonable doubt doesnot mean such a degree of proof as, excluding possibility oferror, produces absolute certainty. Moral certainty only isrequired, or that degree of proof which produces conviction

in an unprejudiced mind. Consequently, Diaz should beacquitted of the charges.

WHEREFORE, the Court ACQUITS petitioner VICTORIO P.DIAZ of the crimes of infringement of trademark charged inCriminal Case No. 00-0318 and Criminal Case No. 00-0319for failure of the State to establish his guilt by proof beyondreasonable doubt.

No pronouncement on costs of suit.

SO ORDERED.

7/21/2019 LIP - Cases 8


CENTURY CHINESE MEDICINE CO., MING SENGCHINESE DRUGSTORE, XIANG JIAN CHINESE DRUGSTORE, TEK SAN CHINESE DRUG STORE, SIM SIMCHINESE DRUG STORE, BAN SHIONG TAY CHINESEDRUG STORE and/or WILCENDO TAN MENDEZ,SHUANG YING CHINESE DRUGSTORE, and BACLARANCHINESE DRUG STORE, Petitioners,

vs.PEOPLE OF THE PHILIPPINES and LING NALAU, Respondents.

Before us is a petition for review on certiorari which seeks toreverse and set aside the Decision1 dated March 31, 2009 ofthe Court of Appeals in CA-G.R. CV No. 88952 and theResolution2 dated July 2, 2009, which deniedreconsideration thereof. The CA reversed the Order 3 datedSeptember 25, 2006 of the Regional Trial Court (RTC),

Branch 143, Makati City, quashing Search Warrants Nos.05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042and 05-043, and the Order 4 dated March 7, 2007 denyingreconsideration thereof.

The antecedent facts are as follows:

Respondent Ling Na Lau, doing business under the nameand style Worldwide Pharmacy,5 is the sole distributor andregistered trademark owner of TOP GEL T.G. & DEVICE OF

A LEAF papaya whitening soap as shown by Certificate ofRegistration 4-2000-009881 issued to her by the IntellectualProperty Office (IPO) for a period of ten years from August24, 2003.6 On November 7, 2005, her representative, PingNa Lau, (Ping) wrote a letter 7addressed to National Bureauof Investigation (NBI) Director Reynaldo Wycoco, through

Atty. Jose Justo Yap and Agent Joseph G. Furing (AgentFuring), requesting assistance for an investigation on severaldrugstores which were selling counterfeit whitening papayasoaps bearing the general appearance of their products.

Agent Furing was assigned to the case and he executed anaffidavit8 stating that: he conducted his own investigation,and on November 9 and 10, 2005, he, together with JunaydEsmael (Esmael), were able to buy whitening soaps bearingthe trademark "TOP-GEL", "T.G." & "DEVICE OF A LEAF"with corresponding receipts from a list of drugstores whichincluded herein petitioners Century Chinese Medicine Co.,

Min Seng Chinese Drugstore, Xiang Jiang Chinese DrugStore, Tek San Chinese Drug Store, Sim Sim Chinese DrugStore, Ban Shiong Tay Drugstore, Shuang Ying ChineseDrugstore, and Baclaran Chinese Drug Store; whileconducting the investigation and test buys, he was able toconfirm Ping's complaint to be true as he personally sawcommercial quantities of whitening soap bearing the saidtrademarks being displayed and offered for sale at the saiddrugstores; he and Esmael took the purchased items to theNBI, and Ping, as the authorized representative and expert

of Worldwide Pharmacy in determining counterfeit andunauthorized reproductions of its products, personallyexamined the purchased samples, and issued aCertification9 dated November 18, 2005 wherein heconfirmed that, indeed, the whitening soaps bearing thetrademarks "TOP-GEL", "T.G." & "DEVICE OF A LEAF" fromthe subject drugstores were counterfeit.

Esmael also executed an affidavit10 corroborating AgentFuring's statement. Ping's affidavit11 stated that upon his

personal examination of the whitening soaps purchased frompetitioners bearing the subject trademark, he found that thewhitening soaps were different from the genuine quality oftheir original whitening soaps with the trademarks "TOP-GEL", "T.G." & "DEVICE OF A LEAF" and certified that theywere all counterfeit.

On November 21, 2005, Agent Furing applied for theissuance of search warrants before the Regional Trial Court(RTC), Branch 143, Makati City, against petitioners and

other establishments for violations of Sections 168 and 155,

7/21/2019 LIP - Cases 8


both in relation to Section 170 of Republic Act (RA) No.8293, otherwise known as the Intellectual Property Code ofthe Philippines. Section 168, in relation to Section 170,penalizes unfair competition; while Section 155, in relation toSection 170, punishes trademark infringement.

On November 23, 2005, after conducting searching

questions upon Agent Furing and his witnesses, the RTCgranted the applications and issued Search Warrants Nos.05-030, 05-033, and 05-038 for unfair competition andSearch Warrants Nos. 05-022, 05-023, 05-025, 05-042 and05-043 for trademark infringement against petitioners.

On December 5, 2005, Agent Furing filed his ConsolidatedReturn of Search Warrants.12

On December 8, 2005, petitioners collectively filed their

Motion to Quash13 the Search Warrants contending that theirissuances violated the rule against forum shopping; thatBenjamin Yu (Yu) is the sole owner and distributor of theproduct known as "TOP-GEL"; and there was a prejudicialquestion posed in Civil Case No. 05-54747 entitled ZennaChemical Industry v. Ling Na Lau, et al., pending in Branch93 of the RTC of Quezon City, which is a case filed by Yuagainst respondent for damages due to infringement oftrademark/tradename, unfair competition with prayer for theimmediate issuance of a temporary restraining order and/or

preliminary prohibitory injunction.

On January 9, 2006, respondent filed herComment/Opposition14 thereto arguing the non-existence offorum shopping; that Yu is not a party- respondent in thesecases and the pendency of the civil case filed by him isimmaterial and irrelevant; and that Yu cannot be consideredthe sole owner and distributor of "TOP GEL T.G. & DEVICEOF A LEAF." The motion was then submitted for resolution inan Order dated January 30, 2006. During the pendency of

the case, respondent, on April 20, 2006, filed a

Submission15 in relation to the Motion to Quash attaching anOrder 16 dated March 21, 2006 of the IPO in IPV Case No.10-2005-00001 filed by respondent against Yu, doingbusiness under the name and style of MCA Manufacturingand Heidi S. Cua, proprietor of South Ocean Chinese DrugStores for trademark infringement and/or unfair competitionand damages with prayer for preliminary injunction. The

Order approved therein the parties' Joint Motion To ApproveCompromise Agreement filed on March 8, 2006. We quote inits entirety the Order as follows:

The Compromise Agreement between the hereincomplainant and respondents provides as follows:

1. Respondents acknowledge the exclusive right ofComplainant over the trademark TOP GEL T.G. & DEVICEOF A LEAF for use on papaya whitening soap as registered

under Registration No. 4-2000-009881 issued on August 24,2003.

2. Respondents acknowledge the appointment by ZennaChemical Industry Co., Ltd. of Complainant as the exclusivePhilippine distributor of its products under the tradename andtrademark TOP GEL MCA & MCA DEVICE (A SQUAREDEVICE CONSISTING OF A STYLIZEDREPRESENTATION OF A LETTER "M" ISSUED " OVERTHE LETTER "CA") as registered under Registration No. 4-

1996-109957 issued on November 17, 2000, as well as theassignment by Zenna Chemical Industry Co., Ltd. toComplainant of said mark for use on papaya whitening soap.

3. Respondents admit having used the tradename andtrademark aforesaid but after having realized thatComplainant is the legitimate assignee of TOP GEL MCA &MCA DEVICE and the registered owner of TOP GEL T.G. &DEVICE OF A LEAF, now undertake to voluntarily cease anddesist from using the aforesaid tradename and trademark

and further undertake not to manufacture, sell, distribute,

7/21/2019 LIP - Cases 8


and otherwise compete with Complainant, now and atanytime in the future, any papaya whitening soap using orbearing a mark or name identical or confusingly similar to, orconstituting a colorable imitation of, the tradename andtrademark TOP GEL MCA & MCA DEVICE and/or TOP GELT.G. & DEVICE OF A LEAF as registered and describedabove.

4. Respondents further undertake to withdraw and/or dismisstheir counterclaim and petition to cancel and/or revokeRegistration No. 4-2000-009881 issued to Complainant.Respondents also further undertake to pull out within 45days from approval of the Compromise Agreement all theirproducts bearing a mark or name identical or confusinglysimilar to, or constituting a colorable imitation of, thetradename and trademark TOP GEL MCA & MCA DEVICEand/or TOP GEL T.G. & DEVICE OF A LEAF, from the

market nationwide.

5. Respondents finally agree and undertake to payComplainant liquidated damages in the amount of FIVEHUNDRED THOUSAND (Php500,000.00) PESOS for everybreach or violation of any of the foregoing undertakingswhich complainant may enforce by securing a writ ofexecution from this Office, under this case.

6. Complainant, on the other hand, agrees to waive all her

claim for damages against Respondents as alleged in hercomplaint filed in the Intellectual Property Office only.

7. The Parties hereby agree to submit this Compromise Agreement for Approval of this Office and pray for issuanceof a decision on the basis thereof.

Finding the Compromise Agreement to have been dulyexecuted and signed by the parties and/or theirrepresentatives/counsels and the terms and conditions

thereof to be in conformity with the law, morals, good

customs, public order and public policy, the same is hereby APPROVED. Accordingly, the above-entitled case isDISMISSED as all issues raised concerning herein partieshave been rendered MOOT AND ACADEMIC.

SO ORDERED.17

On September 25, 2006, the RTC issued itsOrder 18 sustaining the Motion to Quash the SearchWarrants, the dispositive portion of which reads as follows:

WHEREFORE, finding that the issuance of the questionedsearch warrants were not supported by probable cause, theMotion to Quash is GRANTED. Search warrants nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-043 are ordered lifted and recalled.

The NBI Officers who effected the search warrants arehereby ordered to return the seized items to hereinrespondents within ten (10) days from receipt of this Order.

So Ordered.19

In quashing the search warrants, the RTC applied the Ruleson Search and Seizure for Civil Action in Infringement ofIntellectual Property Rights.20 It found the existence of aprejudicial question which was pending before Branch 93 of

RTC Quezon City, docketed as Civil Case No. 05-54747, onthe determination as to who between respondent and Yu isthe rightful holder of the intellectual property right over thetrademark TOP GEL T.G. & DEVICE OF A LEAF; and therewas also a case for trademark infringement and/or unfaircompetition filed by respondent against Yu before the IPOwhich was pending at the time of the application for thesearch warrants. It is clear, therefore, that at the time of thefiling of the application for the search warrants, there is yetno determination of the alleged right of respondent over the

subject trademark/tradename. Also, the RTC found that

7/21/2019 LIP - Cases 8


petitioners relied heavily on Yu's representation that he is thesole owner/distributor of the Top Gel whitening soap, as thelatter even presented Registration No. 4-1996-109957 fromthe IPO for a term of 20 years from November 17, 2000covering the same product. There too was the notarizedcertification from Zenna Chemical Industry of Taiwan, ownerof Top Gel MCA, with the caveat that the sale, production or

representation of any imitated products under its trademarkand tradename shall be dealt with appropriate legal action.

The RTC further said that in the determination of probablecause, the court must necessarily resolve whether or not anoffense exists to justify the issuance of a search warrant orthe quashal of the one already issued. In this case,respondent failed to prove the existence of probable cause,which warranted the quashal of the questioned searchwarrants.

On November 13, 2006, respondent filed an Urgent Motionto Hold in Abeyance the Release of Seized Evidence.21

Respondent filed a motion for reconsideration, which theRTC denied in its Order 22 dated March 7, 2007.

Respondent then filed her appeal with the CA. Afterrespondent filed her appellant's brief and petitioners theirappellee's brief, the case was submitted for decision.

On March 31, 2009, the CA rendered its assailed Decision,the dispositive portion of which reads:

WHEREFORE, in view of the foregoing premises, judgmentis hereby rendered by us GRANTING the appeal filed in thiscase and SETTING ASIDE the Order dated March 7, 2007issued by Branch 143 of the Regional Trial Court of theNational Capital Judicial Region stationed in Makati City inthe case involving Search Warrants Nos. 05-030, 05-033,

05-038, 05-022, 05-023, 05-025, 05-042, 05-043.23

In reversing the RTC's quashal of the search warrants, theCA found that the search warrants were applied for andissued for violations of Sections 155 and 168, in relation toSection 170, of the Intellectual Property Code and that theapplications for the search warrants were in anticipation ofcriminal actions which are to be instituted against petitioners;thus, Rule 126 of the Rules of Criminal Procedure was

applicable. It also ruled that the basis for the applications forissuance of the search warrants on grounds of trademarksinfringement and unfair competition was the trademark TOPGEL T.G. & DEVICE OF A LEAF; that respondent was theregistered owner of the said trademark, which gave her theright to enforce and protect her intellectual property rightsover it by seeking assistance from the NBI.

The CA did not agree with the RTC that there existed aprejudicial question, since Civil Case No. 05-54747 was

already dismissed on June 10, 2005, i.e., long before thesearch warrants subject of this appeal were applied for; andthat Yu's motion for reconsideration was denied onSeptember 15, 2005 with no appeal having been filedthereon as evidenced by the Certificate of Finality issued bythe said court.

Petitioners' motion for reconsideration was denied by the CAin a Resolution dated July 2, 2009. Hence, this petition filedby petitioners raising the issue that:

(A) THE COURT OF APPEALS ERRED ANDGRAVELY ABUSED ITS DISCRETION INREVERSING THE FINDINGS OF THE REGIONALTRIAL COURT AND HELD THAT THE LATTER

APPLIED THE RULES ON SEARCH AND SEIZUREIN CIVIL ACTIONS FOR INFRINGEMENT OFINTELLECTUAL PROPERTY RIGHTS.24

(B) THE COURT OF APPEALS ERRED AND

GRAVELY ABUSED ITS DISCRETION WHEN IT

7/21/2019 LIP - Cases 8


BASED ITS RULING ON THE ARGUMENT WHICHWAS BROUGHT UP FOR THE FIRST TIME INRESPONDENT LING NA LAU'S APPELLANT'SBRIEF.25

Petitioners contend that the products seized from theirrespective stores cannot be the subject of the search

warrants and seizure as those Top Gel products are notfruits of any crime, infringed product nor intended to be usedin any crime; that they are legitimate distributors who areauthorized to sell the same, since those genuine top gelproducts bore the original trademark/tradename of TOP GELMCA, owned and distributed by Yu. Petitioners also claimthat despite the RTC's order to release the seized TOP GELproducts, not one had been returned; that one or twosamples from each petitioner’s' drugstore would havesufficed in case there is a need to present them in a criminal

prosecution, and that confiscation of thousands of theseproducts was an overkill.

Petitioners also argue that the issue that the RTC erred inapplying the rules on search and seizure in anticipation of acivil action was never raised in the RTC.

The issue for resolution is whether or not the CA erred inreversing the RTC's quashal of the assailed search warrants.

We find no merit in the petition.

The applications for the issuance of the assailed searchwarrants were for violations of Sections 155 and 168, both inrelation to Section 170 of Republic Act (RA) No. 8293,otherwise known as the Intellectual Property Code of thePhilippines. Section 155, in relation to Section 170, punishestrademark infringement; while Section 168, in relation toSection 170, penalizes unfair competition, to wit:

Sec 155. Remedies; Infringement. – Any person who shall,without the consent of the owner of the registered mark:

155.1 Use in commerce any reproduction, counterfeit, copyor colorable imitation of a registered mark or the samecontainer or a dominant feature thereof in connection withthe sale, offering for sale, distribution, advertising of any

goods or services including other preparatory stepsnecessary to carry out the sale of any goods or services onor in connection with which such use is likely to causeconfusion, or to cause mistake, or to deceive; or

While

Sec. 168. Unfair Competition, Rights, Regulation andRemedies. –

168.3. In particular, and without in any way limiting the scopeof protection against unfair competition, the following shall bedeemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them thegeneral appearance of goods of another manufacturer ordealer, either as to the goods themselves or in the wrappingof the packages in which they are contained, or the devicesor 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 whootherwise clothes the goods with such appearance as shalldeceive the public and defraud another of his legitimatetrade, or any subsequent vendor of such goods or any agentof any vendor engaged in selling such goods with a likepurpose;

SEC. 170. Penalties. - Independent of the civil andadministrative sanctions imposed by law, a criminal penalty

of imprisonment from two (2) years to five (5) years and a

7/21/2019 LIP - Cases 8


fine ranging from Fifty thousand pesos (P50,000.00) to Twohundred thousand pesos (P200,000.00) shall be imposed onany person who is found guilty of committing any of the actsmentioned in Section 155 [Infringement], Section 168 [UnfairCompetition] and Subsection 169.1 [False Designation ofOrigin and False Description or Representation].

Thus, we agree with the CA that A.M. No. 02-1-06-SC, whichprovides for the Rules on the Issuance of the Search andSeizure in Civil Actions for Infringement of IntellectualProperty Rights, is not applicable in this case as the searchwarrants were not applied based thereon, but in anticipationof criminal actions for violation of intellectual property rightsunder RA 8293. It was established that respondent hadasked the NBI for assistance to conduct investigation andsearch warrant implementation for possible apprehension ofseveral drugstore owners selling imitation or counterfeit TOP

GEL T.G. & DEVICE OF A LEAF papaya whitening soap. Also, in his affidavit to support his application for theissuance of the search warrants, NBI Agent Furing statedthat "the items to be seized will be used as relevant evidencein the criminal actions that are likely to be instituted." Hence,Rule 126 of the Rules of Criminal Procedure applies.

Rule 126 of the Revised Rules of Court, which governs theissuance of the assailed Search Warrants, provides, to wit:

SEC. 3. Personal property to be seized. - A search warrantmay be issued for the search and seizure of personalproperty:

(a) Subject of the offense;

(b) Stolen or embezzled and other proceeds or fruitsof the offense; or

(c) Used or intended to be used as the means of

committing an offense.

SEC. 4. Requisites for issuing search warrant. - A searchwarrant shall not issue except upon probable cause inconnection with one specific offense to be determinedpersonally by the judge after examination under oath oraffirmation of the complainant and the witnesses he mayproduce, and particularly describing the place to be searchedand the things to be seized which may be anywhere in the

Philippines.

SEC. 5. Examination of complainant; record. - The judgemust, before issuing the warrant, personally examine in theform of searching questions and answers, in writing andunder oath, the complainant and the witnesses he mayproduce on facts personally known to them and attach to therecord their sworn statements together with the affidavitssubmitted.

A core requisite before a warrant shall validly issue is theexistence of a probable cause, meaning "the existence ofsuch facts and circumstances which would lead a reasonablydiscreet and prudent man to believe that an offense hasbeen committed and that the objects sought in connectionwith the offense are in the place to be searched."26 And whenthe law speaks of facts, the reference is to facts, data orinformation personally known to the applicant and thewitnesses he may present. Absent the element of personalknowledge by the applicant or his witnesses of the facts

upon which the issuance of a search warrant may be justified, the warrant is deemed not based on probable causeand is a nullity, its issuance being, in legal contemplation,arbitrary.27 The determination of probable cause does notcall for the application of rules and standards of proof that a

judgment of conviction requires after trial on the merits.28 Asimplied by the words themselves, "probable cause" isconcerned with probability, not absolute or even moralcertainty. The prosecution need not present at this stageproof beyond reasonable doubt. The standards of judgment

7/21/2019 LIP - Cases 8


are those of a reasonably prudent man,29 not the exactingcalibrations of a judge after a full-blown trial.30

The RTC quashed the search warrants, saying that (1) thereexists a prejudicial question pending before Branch 93 of theRTC of Quezon City, docketed as Civil Case No. 05-54747,i.e., the determination as to who between respondent and Yu

is the rightful holder of the intellectual property right over thetrademark TOP GEL T.G. & DEVICE OF A LEAF; and therewas also a case for trademark infringement and/or unfaircompetition filed by respondent against Yu pending beforethe IPO, docketed as IPV Case No. 10-2005-00001; and (2)Yu's representation that he is the sole distributor of the TopGel whitening soap, as the latter even presentedRegistration No. 4-1996-109957 issued by the IPO to ZennaChemical Industry as the registered owner of the trademarkTOP GEL MCA & DEVICE MCA for a term of 20 years from

November 17, 2000 covering the same product.

We do not agree. We affirm the CA's reversal of the RTCOrder quashing the search warrants.

The affidavits of NBI Agent Furing and his witnesses,Esmael and Ling, clearly showed that they are seekingprotection for the trademark "TOP GEL T.G. and DEVICEOF A LEAF" registered to respondent under Certificate ofRegistration 4-2000-009881 issued by the IPO on August 24,

2003, and no other. While petitioners claim that the productthey are distributing was owned by Yu with the trademarkTOP GEL MCA and MCA DEVISE under Certificate ofRegistration 4-1996-109957, it was different from thetrademark TOP GEL T.G. and DEVICE OF A LEAF subjectof the application. We agree with the CA's finding in thiswise:

x x x It bears stressing that the basis for the applications forissuances of the search warrants on grounds of trademark

infringement and unfair competition is the trademark TOP

GEL T.G. & DEVICE OF A LEAF. Private complainant-appellant was issued a Certificate of Registration No. 4-2000-009881 of said trademark on August 24, 2003 by theIntellectual Property Office, and is thus considered the lawfulholder of the said trademark. Being the registrant and theholder of the same, private complainant-appellant had theauthority to enforce and protect her intellectual property

rights over it. This prompted her to request for assistancefrom the agents of the NBI, who thereafter conducted aseries of investigation, test buys and inspection regardingthe alleged trademark infringement by herein respondents-appellees. Subsequently, Ping Na Lau, private complainant-appellant’s representative, issued a certification with thefinding that the examined goods were counterfeit. Thisprompted the NBI agents to apply for the issuances ofsearch warrants against the respondents-appellees. Saidapplications for the search warrants were granted after by

Judge Laguilles after examining under oath the applicant Agent Furing of the NBI and his witnesses Ping Na Lau andJunayd R. Ismael.

Based on the foregoing, it is clear that the requisites for theissuance of the search warrants had been complied with andthat there is probable cause to believe that an offense hadbeen committed and that the objects sought in connectionwith the offense were in the places to be searched. Theoffense pertains to the alleged violations committed by

respondents-appellees upon the intellectual property rightsof herein private complainant-appellant, as holder of thetrademark TOP GEL T.G. & DEVICE OF A LEAF underCertificate of Registration No. 4-2000-009881, issued on

August 24, 2003 by the Intellectual Property Office.31

Notably, at the time the applications for the issuance of thesearch warrants were filed on November 21, 2005, as theCA correctly found, Civil Case No. Q-05-54747, which theRTC found to be where a prejudicial question was raised,

was already dismissed on June 10, 2005,32

because of the

7/21/2019 LIP - Cases 8


pendency of a case involving the same issues and partiesbefore the IPO. Yu's motion for reconsideration was deniedin an Order 33 dated September 15, 2005. In fact, a Certificateof Finality34 was issued by the RTC on January 4, 2007.

Moreover, the IPO case for trademark infringement andunfair competition and damages with prayer for preliminary

injunction filed by respondent against Yu and Heidi Cua,docketed as IPV Case No. 10-2005-00001, would not alsobe a basis for quashing the warrants.1avvphi1 In fact, priorto the applications for the issuance of the assailed searchwarrants on November 21, 2005, the IPO had issued anOrder 35 dated October 20, 2005 granting a writ of preliminaryinjunction against Yu and Cua, the dispositive portion ofwhich reads:

WHEREFORE, the WRIT OF PRELIMINARY INJUNCTION

is hereby issued against Respondent, Benjamin Yu, doingbusiness under the name and style of MCA Manufacturingand Heidi S. Cua, Proprietor of South Ocean Chinese DrugStore, and their agents, representatives, dealers anddistributors and all persons acting in their behalf, to ceaseand desist using the trademark "TOP GEL T.G. & DEVICEOF A LEAF" or any colorable imitation thereof on Papayawhitening soaps they manufacture, sell, and/or offer for sale,and otherwise, from packing their Papaya Whitening Soapsin boxes with the same general appearance as those of

complainant's boxes within a period of NINETY (90) DAYS,effective upon the receipt of respondent of the copy of theCOMPLIANCE filed with this Office by the Complainantstating that it has posted a CASH BOND in the amount ofONE HUNDRED THOUSAND PESOS (Php100,000.00)together with the corresponding Official Receipt Number anddate thereof. Consequently, complainant is directed to informthis Office of actual date of receipt by Respondent of theaforementioned COMPLIANCE.36

To inform the public of the issuance of the writ of preliminaryinjunction, respondent's counsel had the dispositive portionof the Order published in The Philippine Star newspaper onOctober 30, 2005.37 Thus, it was clearly stated that Yu, doingbusiness under the name and style of MCA Manufacturing,his agents, representatives, dealers and distributors and allpersons acting in his behalf, were to cease and desist from

using the trademark "TOP GEL & DEVICE OF A LEAF" orany colorable imitation thereof on Papaya Whitening soapsthey manufacture, sell and/or offer for sale. Petitioners, whoadmitted having derived their TOP GEL products from Yu,are, therefore, notified of such injunction and were enjoinedfrom selling the same.

Notwithstanding, at the time of the application of the searchwarrants on November 21, 2005, and while the injunctionwas in effect, petitioners were still selling the alleged

counterfeit products bearing the trademark TOP GEL T.G. &DEVICE OF A LEAF. There exists a probable cause forviolation of respondent's intellectual property rights, whichentitles her as the registered owner of the trademark TOPGEL and DEVICE OF A LEAF to be protected by theissuance of the search warrants.

More importantly, during the pendency of petitioners' motionto quash in the RTC, respondent submitted the Order datedMarch 8, 2006 of the IPO in IPV Case No. 10-2005-00001,

where the writ of preliminary injunction was earlier issued,approving the compromise agreement entered into byrespondent with Yu and Cua where it was stated, amongothers, that:

1. Respondents acknowledge the exclusive right ofComplainant over the trademark TOP GEL T.G. &DEVICE OF A LEAF for use on papaya whiteningsoap as registered under Registration No. 4-2000-009881 issued on August 24, 2003.

7/21/2019 LIP - Cases 8


2. Respondents acknowledge the appointment byZenna Chemical Industry Co., Ltd. of Complainant asthe exclusive Philippine distributor of its productsunder the tradename and trademark TOP GEL MCA& MCA DEVICE (A SQUARE DEVICE CONSISTINGOF A STYLIZED REPRESENTATION OF A LETTER"M" OVER THE LETTER "CA") as registered under

Registration No 4-1996-109957 issued on November17, 2000, as well as the assignment by ZennaChemical Industry Co., Ltd. to Complainant of saidmark for use on papaya whitening soap.

3. Respondents admit having used the tradenameand trademark aforesaid, but after having realized thatComplainant is the legitimate assignee of TOP GELMCA & MCA DEVICE and the registered owner ofTOP GEL T.G. & DEVICE OF A LEAF, now undertake

to voluntarily cease and desist from using theaforesaid tradename and trademark, and furtherundertake not to manufacture, sell and distribute andotherwise compete with complainant, now and atanytime in the future, any papaya whitening soapusing or bearing a mark or name identical orconfusingly similar to, or constituting a colorableimitation of the tradename and trademark TOP GELMCA & MCA DEVICE and/or TOP GEL T.G. &DEVICE OF A LEAF as registered and described

above.38

Hence, it appears that there is no more controversy as towho is the rightful holder of the trademark TOP GEL T.G. &DEVICE OF A LEAF. Therefore, respondent, as owner ofsuch registered trademark has the right to the issuance ofthe search warrants.

Anent petitioners' claim that one or two samples of the TopGel products from each of them, instead of confiscating

thousands of the products, would have sufficed for the

purpose of an anticipated criminal action, citing our ruling inSummerville General Merchandising Co. v. Court of

Appeals,39 is not meritorious.

We do not agree.

The factual milieu of the two cases are different. In

Summerville, the object of the violation of Summerville'sintellectual property rights, as assignee of Royal playingcards and Royal brand playing cards case, was limited to thedesign of Summerville's Royal plastic container case whichencased and wrapped the Crown brand playing cards. In theapplication for the search warrant which the RTCsubsequently issued, one of the items to be seized were theCrown brand playing cards using the copyright plastic andJoker of Royal brand. Thus, numerous boxes containingCrown playing cards were seized and upon the RTC's

instruction were turned over to Summerville, subject to thecondition that the key to the said warehouse be turned overto the court sheriff. Respondents moved for the quashal ofthe search warrant and for the return of the seizedproperties. The RTC partially granted the motion by orderingthe release of the seized Crown brand playing cards and theprinting machines; thus, only the Royal plastic containercases of the playing cards were left in the custody ofSummerville. The CA sustained the RTC order. On petitionwith us, we affirmed the CA. We found therein that the

Crown brand playing cards are not the subject of the offenseas they are genuine and the Crown trademark wasregistered to therein respondents’ names; that it was thedesign of the plastic container/case that is alleged to havebeen utilized by respondents to deceive the public intobelieving that the Crown brand playing cards are the sameas those manufactured by Summerville. We then said thatassuming that the Crown playing cards could be consideredsubject of the offense, a sample or two are more thanenough to retain should there have been a need to examine

them along with the plastic container/case; and that there

7/21/2019 LIP - Cases 8


was no need to hold the hundreds of articles seized. We saidso in the context that since what was in dispute was thedesign of the Royal plastic cases/containers of playing cardsand not the playing card per se, a small number of Crownbrand playing cards would suffice to examine them with theRoyal plastic cases/containers. And the return of the playingcards would better serve the purposes of justice and

expediency. However, in this case, the object of the violationof respondent's intellectual property right is the allegedcounterfeit TOP GEL T.G. & DEVICE OF A LEAF papayawhitening soap being sold by petitioners, so there is a needto confiscate all these articles to protect respondent's rightas the registered owner of such trademark.

Petitioners next contend that the CA's ruling on theapplicability of Rule 126 of the Rules of Court that the searchwarrants were issued in anticipation of a criminal action was

only based on respondent's claim which was only brought forthe first time in her appellant's brief.

We are not persuaded.

We find worth quoting respondent's argument addressingthis issue in its Comment, thus:

In the assailed Decision, the Court of Appeals found that theRule correctly applicable to the subject search warrants was

Rule 126 of the Rules of Court. Petitioners fault the appellatecourt for ruling that the Regional Trial Court incorrectlyapplied the Rules on Search and Seizure in Civil Actions forInfringement of Intellectual Property Rights on the basis ofan argument that private respondent brought up for the firsttime in her Appellant's Brief.

A cursory perusal of the Appellant's Brief shows that thefollowing issues/errors were raised, that: (1) the HonorableTrial Court erred in holding that the "Rules on Search and

Seizure for Infringement of Intellectual Property Rights" applyto the search warrants at bar; (2) x x x.

It must be remembered that there was no trial on the meritsto speak of in the trial court, and the matter of the applicationof the wrong set of Rules only arose in the Order dated 25thSeptember 2006 which sustained the Motion to Quash. A

thorough examination of the Appellee's Brief filed bypetitioners (respondents-appellees in the Court of Appeals)reveals, however, that petitioners NEVER assailed the firstissue/error on the ground that the same was raised for thefirst time on appeal. It is only now, after the appellate courtrendered a Decision and Resolution unfavorable to them,that petitioners questioned the alleged procedural error.Petitioners should now be considered in estoppel to questionthe same.40

Indeed, perusing the appellee's (herein petitioners) brief filedwith the CA, the matter of the non-applicability of the rules onsearch and seizure in civil action for infringement ofintellectual property rights was never objected as beingraised for the first time. On the contrary, petitioners hadsquarely faced respondent's argument in this wise:

Appellant (herein respondent) contends that the rule (SC Adm. Memo 1-06, No. 02-1-06, Rule on Search and Seizurein Civil Actions for Infringement of Intellectual Property

Rights) does [not] apply to the search warrants in the [case]at bar, for the reason that the search warrants themselvesreveal that the same were applied for and issued forviolations of "Section 155 in relation to Section 170 of RA8293" and violations of "Section 168 in relation to Section170 of RA 8293," and that a perusal of the records wouldshow that there is no mention of a civil action or anticipationthereof, upon which the search warrants are applied for.

Appellees (herein petitioners) cannot agree with the

contention of the appellant.1âwphi1 Complainant NBI Agent

7/21/2019 LIP - Cases 8


Joseph G. Furing, who applied for the search warrants,violated the very rule on search and seizure for infringementof Intellectual Property Rights. The search warrants appliedfor by the complainants cannot be considered a criminalaction. There was no criminal case yet to speak of whencomplainants applied for issuance of the search warrants.There is distinction here because the search applied for is

civil in nature and no criminal case had been filed. Thecomplaint is an afterthought after the respondents-appelleesfiled their Motion to Quash Search Warrant before theRegional Trial Court of Manila, Branch 24. The groundsenumerated in the rule must be complied with in order toprotect the constitutional mandate that "no person shall bedeprived of life liberty or property without due process of lawnor shall any person be denied the equal protection of thelaw." Clearly, the application of the search warrants forviolation of unfair competition and infringement is in the

nature of a civil action.41

WHEREFORE, the petition for review is DENIED. TheDecision dated March 31, 2009 and the Resolution datedJuly 2, 2009 of the Court of Appeals, in CA-G.R. CV No.88952, are hereby AFFIRMED.

SO ORDERED.

7/21/2019 LIP - Cases 8


BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG(formerly BIRKENSTOCK ORTHOPAEDIEGMBH),Petitioner,vs.PHILIPPINE SHOE EXPO MARKETINGCORPORATION, Respondent.

Assailed in this Petition for Review on Certiorari1 are theCourt of Appeals (CA) Decision2 dated June 25, 2010 andResolution3 dated October 27, 2010 in CA-G.R. SP No.112278 which reversed and set aside the IntellectualProperty Office (IPO) Director General’s Decision4 datedDecember 22, 2009 that allowed the registration of varioustrademarks in favor of petitioner Birkenstock OrthopaedieGmbH & Co. KG.

The Facts

Petitioner, a corporation duly organized and existing underthe laws of Germany, applied for various trademarkregistrations before the IPO, namely: (a) "BIRKENSTOCK"under Trademark Application Serial No. (TASN) 4-1994-091508 for goods falling under Class 25 of the InternationalClassification of Goods and Services (Nice Classification)with filing date of March 11, 1994; (b) "BIRKENSTOCK BADHONNEF -RHEIN & DEVICE COMPRISING OF ROUNDCOMPANY SEAL AND REPRESENTATION OF A FOOT,

CROSS AND SUNBEA M" under TASN 4-1994-091509 forgoods falling under Class 25 of the Nice Classification withfiling date of March 11, 1994; and (c) "BIRKENSTOCK BADHONNEF-RHEIN & DEVICE COMPRISING OF ROUNDCOMPANY SEAL AND REPRESENTATION OF A FOOT,CROSS AND SUNBEAM" under TASN 4-1994-095043 forgoods falling under Class 10 of the Nice Classification withfiling date of September 5, 1994 (subject applications).5

However, registration proceedings of the subject applications

were suspended in view of an existing registration of the

mark "BIRKENSTOCK AND DEVICE" under RegistrationNo. 56334 dated October 21, 1993 (Registration No. 56334)in the name of Shoe Town International and IndustrialCorporation, the predecessor-in-interest of respondentPhilippine Shoe Expo Marketing Corporation.6 In this regard,on May 27, 1997 petitioner filed a petition for cancellation ofRegistration No. 56334 on the ground that it is the lawful and

rightful owner of the Birkenstock marks (CancellationCase).7 During its pendency, however, respondent and/or itspredecessor-in-interest failed to file the required 10th YearDeclaration of Actual Use (10th Year DAU) for RegistrationNo. 56334 on or before October 21, 2004,8 thereby resultingin the cancellation of such mark.9 Accordingly, thecancellation case was dismissed for being moot andacademic.10

The aforesaid cancellation of Registration No. 56334 paved

the way for the publication of the subject applications in theIPO e-Gazette on February 2, 2007.11 In response,respondent filed three (3) separate verified notices ofoppositions to the subject applications docketed as InterPartes Case Nos. 14-2007-00108, 14-2007-00115, and 14-2007-00116,12 claiming, inter alia, that: (a) it, together with itspredecessor-in-interest, has been using Birkenstock marksin the Philippines for more than 16 years through the mark"BIRKENSTOCK AND DEVICE"; (b) the marks covered bythe subject applications are identical to the one covered by

Registration No. 56334 and thus, petitioner has no right tothe registration of such marks; (c) on November 15, 1991,respondent’s predecessor-in-interest likewise obtained aCertificate of Copyright Registration No. 0-11193 for theword "BIRKENSTOCK" ; (d) while respondent and itspredecessor-in-interest failed to file the 10th Yea r DAU, itcontinued the use of "BIRKENSTOCK AND DEVICE" inlawful commerce; and (e) to record its continued ownershipand exclusive right to use the "BIRKENSTOCK" marks, ithas filed TASN 4-2006-010273 as a " re-application " of its

old registration, Registration No. 56334.13

On November 13,

7/21/2019 LIP - Cases 8


2007, the Bureau of Legal Affairs (BLA) of the IPO issuedOrder No. 2007-2051 consolidating the aforesaid inter partescases (Consolidated Opposition Cases).14

The Ruling of the BLA

In its Decision15 dated May 28, 2008, the BLA of the IPO

sustained respondent’s opposition, thus, ordering therejection of the subject applications. It ruled that thecompeting marks of the parties are confusingly similar sincethey contained the word "BIRKENSTOCK" and are used onthe same and related goods. It found respondent and itspredecessor-in-interest as the prior user and adopter of"BIRKENSTOCK" in the Philippines, while on the other hand,petitioner failed to present evidence of actual use in the tradeand business in this country. It opined that while RegistrationNo. 56334 was cancelled, it does not follow that prior right

over the mark was lost, as proof of continuous anduninterrupted use in trade and business in the Philippineswas presented. The BLA likewise opined that petitioner’smarks are not well -known in the Philippines andinternationally and that the various certificates of registrationsubmitted by petitioners were all photocopies and, therefore,not admissible as evidence.16

Aggrieved, petitioner appealed to the IPO Director General.

The Ruling of the IPO Director General

In his Decision17 dated December 22, 2009, the IPO DirectorGeneral reversed and set aside the ruling of the BLA, thusallowing the registration of the subject applications. He heldthat with the cancellation of Registration No. 56334 forrespondent’s failure to file the 10th Year DAU, there is nomore reason to reject the subject applications on the groundof prior registration by another proprietor.18 More importantly,he found that the evidence presented proved that petitioner

is the true and lawful owner and prior user of

"BIRKENSTOCK" marks and thus, entitled to the registrationof the marks covered by the subject applications.19 The IPODirector General further held that respondent’s copyright forthe word "BIRKENSTOCK" is of no moment since copyrightand trademark are different forms of intellectual property thatcannot be interchanged.20

Finding the IPO Director General’s reversal of the BLAunacceptable, respondent filed a petition for review with theCA.

Ruling of the CA

In its Decision21 dated June 25, 2010, the CA reversed andset aside the ruling of the IPO Director General andreinstated that of the BLA. It disallowed the registration of thesubject applications on the ground that the marks covered by

such applications "are confusingly similar, if not outrightidentical" with respondent’s mark.22 It equally held thatrespondent’s failure to file the 10th Year DAU forRegistration No. 56334 "did not deprive petitioner of itsownership of the ‘BIRKENSTOCK’ mark since it hassubmitted substantial evidence showing its continued use,promotion and advertisement thereof up to the present."23 Itopined that when respondent’s predecessor-in-interestadopted and started its actual use of "BIRKENSTOCK,"there is neither an existing registration nor a pending

application for the same and thus, it cannot be said that itacted in bad faith in adopting and starting the use of suchmark.24 Finally, the CA agreed with respondent thatpetitioner’s documentary evidence, being mere photocopies,were submitted in violation of Section 8.1 of Office Order No.79, Series of 2005 (Rules on Inter Partes Proceedings).

Dissatisfied, petitioner filed a Motion forReconsideration25 dated July 20, 2010, which was, however,denied in a Resolution26 dated October 27, 2010. Hence, this

petition.27

7/21/2019 LIP - Cases 8


Issues Before the Court

The primordial issue raised for the Court’s resolution iswhether or not the subject marks should be allowedregistration in the name of petitioner.

The Court’s Ruling

The petition is meritorious.

A. Admissibility of Petitioner’s Documentary Evidence.

In its Comment28 dated April 29, 2011, respondent assertsthat the documentary evidence submitted by petitioner in theConsolidated Opposition Cases, which are merephotocopies, are violative of Section 8.1 of the Rules on InterPartes Proceedings, which requires certified true copies of

documents and evidence presented by parties in lieu oforiginals.29 As such, they should be deemed inadmissible.

The Court is not convinced.

It is well-settled that "the rules of procedure are mere toolsaimed at facilitating the attainment of justice, rather than itsfrustration. A strict and rigid application of the rules mustalways be eschewed when it would subvert the primaryobjective of the rules, that is, to enhance fair trials and

expedite justice. Technicalities should never be used todefeat the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for theproper and just determination of his cause, free from theconstraints of technicalities."30 "Indeed, the primordial policyis a faithful observance of [procedural rules], and theirrelaxation or suspension should only be for persuasivereasons and only in meritorious cases, to relieve a litigant ofan injustice not commensurate with the degree of histhoughtlessness in not complying with the procedure

prescribed."31

This is especially true with quasi-judicial and

administrative bodies, such as the IPO, which are not boundby technical rules of procedure.32 On this score, Section 5 ofthe Rules on Inter Partes Proceedings provides:

Sec. 5. Rules of Procedure to be followed in the conduct ofhearing of Inter Partes cases. – The rules of procedureherein contained primarily apply in the conduct of hearing of

Inter Partes cases. The Rules of Court may be appliedsuppletorily. The Bureau shall not be bound by stricttechnical rules of procedure and evidence but may adopt, inthe absence of any applicable rule herein, such mode ofproceedings which is consistent with the requirements of fairplay and conducive to the just, speedy and inexpensivedisposition of cases, and which will give the Bureau thegreatest possibility to focus on the contentious issues beforeit. (Emphasis and underscoring supplied)

In the case at bar, while petitioner submitted merephotocopies as documentary evidence in the ConsolidatedOpposition Cases, it should be noted that the IPO hadalready obtained the originals of such documentary evidencein the related Cancellation Case earlier filed before it. Underthis circumstance and the merits of the instant case as willbe subsequently discussed, the Court holds that the IPODirector General’s relaxation of procedure was a validexercise of his discretion in the interest of substantial

justice.33

Having settled the foregoing procedural matter, the Courtnow proceeds to resolve the substantive issues.

B. Registration and ownership of "BIRKENSTOCK."

Republic Act No. (RA) 166,34 the governing law forRegistration No. 56334, requires the filing of a DAU onspecified periods,35 to wit:

7/21/2019 LIP - Cases 8


Section 12. Duration. – Each certificate of registration shallremain in force for twenty years: Provided, That registrationsunder the provisions of this Act shall be cancelled by theDirector, unless within one year following the fifth, tenth andfifteenth anniversaries of the date of issue of the certificate ofregistration, the registrant shall file in the Patent Office anaffidavit showing that the mark or trade-name is still in use or

showing that its non-use is due to special circumstancewhich excuse such non-use and is not due to any intention toabandon the same, and pay the required fee.

The Director shall notify the registrant who files the above-prescribed affidavits of his acceptance or refusal thereof and,if a refusal, the reasons therefor. (Emphasis andunderscoring supplied)

The aforementioned provision clearly reveals that failure to

file the DAU within the requisite period results in theautomatic cancellation of registration of a trademark. In turn,such failure is tantamount to the abandonment or withdrawalof any right or interest the registrant has over histrademark.36

In this case, respondent admitted that it failed to file the 10thYear DAU for Registration No. 56334 within the requisiteperiod, or on or before October 21, 2004. As a consequence,it was deemed to have abandoned or withdrawn any right or

interest over the mark "BIRKENSTOCK." Neither can itinvoke Section 23637 of the IP Code which pertains tointellectual property rights obtained under previousintellectual property laws, e.g., RA 166, precisely because italready lost any right or interest over the said mark.

Besides, petitioner has duly established its true and lawfulownership of the mark "BIRKENSTOCK."

Under Section 238 of RA 166, which is also the law governing

the subject applications, in order to register a trademark, one

must be the owner thereof and must have actually used themark in commerce in the Philippines for two (2) months priorto the application for registration. Section 2-A39 of the samelaw sets out to define how one goes about acquiringownership thereof. Under the same section, it is clear thatactual use in commerce is also the test of ownership but theprovision went further by saying that the mark must not have

been so appropriated by another. Significantly, to be anowner, Section 2-A does not require that the actual use of atrademark must be within the Philippines. Thus, under RA166, one may be an owner of a mark due to its actual usebut may not yet have the right to register such ownershiphere due to the owner’s failure to use the same in thePhilippines for two (2) months prior to registration.40

It must be emphasized that registration of a trademark, byitself, is not a mode of acquiring ownership.1âwphi1 If the

applicant is not the owner of the trademark, he has no rightto apply for its registration. Registration merely creates aprima facie presumption of the validity of the registration, ofthe registrant’s ownership of the trademark, and of theexclusive right to the use thereof. Such presumption, just likethe presumptive regularity in the performance of officialfunctions, is rebuttable and must give way to evidence to thecontrary.41

Clearly, it is not the application or registration of a trademark

that vests ownership thereof, but it is the ownership of atrademark that confers the right to register the same. Atrademark is an industrial property over which its owner isentitled to property rights which cannot be appropriated byunscrupulous entities that, in one way or another, happen toregister such trademark ahead of its true and lawful owner.The presumption of ownership accorded to a registrant mustthen necessarily yield to superior evidence of actual and realownership of a trademark.

7/21/2019 LIP - Cases 8


The Court’s pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 is instructive on this point:

The ownership of a trademark is acquired by its registrationand its actual use by the manufacturer or distributor of thegoods made available to the purchasing public. x x x Acertificate of registration of a mark, once issued, constitutes

prima facie evidence of the validity of the registration, of theregistrant’s ownership of the mark, and of the registrant’sexclusive right to use the same in connection with the goodsor services and those that are related thereto specified in thecertificate. x x x In other words, the prima facie presumptionbrought about by the registration of a mark may bechallenged and overcome in an appropriate action, x x x byevidence of prior use by another person, i.e. , it willcontrovert a claim of legal appropriation or of ownershipbased on registration by a subsequent user. This is because

a trademark is a creation of use and belongs to one who firstused it in trade or commerce.43(Emphasis and underscoringsupplied)

In the instant case, petitioner was able to establish that it isthe owner of the mark "BIRKENSTOCK." It submittedevidence relating to the origin and history of"BIRKENSTOCK" and its use in commerce long beforerespondent was able to register the same here in thePhilippines. It has sufficiently proven that "BIRKENSTOCK"

was first adopted in Europe in 1774 by its inventor, JohannBirkenstock, a shoemaker, on his line of quality footwear andthereafter, numerous generations of his kin continuouslyengaged in the manufacture and sale of shoes and sandalsbearing the mark "BIRKENSTOCK" until it became the entitynow known as the petitioner. Petitioner also submittedvarious certificates of registration of the mark"BIRKENSTOCK" in various countries and that it has usedsuch mark in different countries worldwide, including thePhilippines.44

On the other hand, aside from Registration No. 56334 whichhad been cancelled, respondent only presented copies ofsales invoices and advertisements, which are not conclusiveevidence of its claim of ownership of the mark"BIRKENSTOCK" as these merely show the transactionsmade by respondent involving the same.45

In view of the foregoing circumstances, the Court finds thepetitioner to be the true and lawful owner of the mark"BIRKENSTOCK" and entitled to its registration, and thatrespondent was in bad faith in having it registered in itsname. In this regard, the Court quotes with approval thewords of the IPO Director General, viz.:

The facts and evidence fail to show that [respondent] was ingood faith in using and in registering the markBIRKENSTOCK. BIRKENSTOCK, obviously of German

origin, is a highly distinct and arbitrary mark. It is very remotethat two persons did coin the same or identical marks. Tocome up with a highly distinct and uncommon markpreviously appropriated by another, for use in the same lineof business, and without any plausible explanation, isincredible. The field from which a person may select atrademark is practically unlimited. As in all other cases ofcolorable imitations, the unanswered riddle is why, of themillions of terms and combinations of letters and designsavailable, [respondent] had to come up with a mark identical

or so closely similar to the [petitioner’s] if there was no intentto take advantage of the goodwill generated by the[petitioner’s] mark. Being on the same line of business, it ishighly probable that the [respondent] knew of the existenceof BIRKENSTOCK and its use by the [petitioner], before[respondent] appropriated the same mark and had itregistered in its name.46

WHEREFORE, the petition is GRANTED. The Decisiondated June 25, 2010 and Resolution dated October 27, 2010

of the Court of Appeals in CA-G.R. SP No. 112278 are

7/21/2019 LIP - Cases 8


REVERSED and SET ASIDE. Accordingly, the Decisiondated December 22, 2009 of the IPO Director General ishereby REINSTATED.

SO ORDERED.

7/21/2019 LIP - Cases 8


CHESTER UYCO, WINSTON UYCHIYONG, and CHERRYC. UYCO-ONG, Petitioners,vs.VICENTE LO, Respondent.

We resolve the motion for reconsideration1 dated October22, 2012 filed by petitioners Chester Uyco, Winston

Uychiyong and Cherry C. Uyco-Ong to set aside theResolution2 dated September 12, 2012 of this Court, whichaffirmed the decision3 dated March 9, 2012 and theresolution4 dated June 21, 2012 of the Court of Appeals (CA)in CA-G.R. SP No. 111964. The CA affirmed theresolution5 dated September 1, 2008 of the Department ofJustice (DOJ). Both the CA and the DOJ found probablecause to charge the petitioners with false designation oforigin, in violation of Section 169.1, in relation with Section170, of Republic Act No. (RA) 8293, otherwise known as the

"Intellectual Property Code of the Philippines."6

The disputed marks in this case are the "HIPOLITO & SEAHORSE & TRIANGULAR DEVICE," "FAMA," and otherrelated marks, service marks and trade names of CasaHipolito S.A. Portugal appearing in kerosene burners.Respondent Vicente Lo and Philippine BurnersManufacturing Corporation (PBMC) filed a complaint againstthe officers of Wintrade Industrial SalesCorporation(Wintrade), including petitioners Chester Uyco, Winston

Uychiyong and Cherry Uyco-Ong, and of National Hardware,including Mario Sy Chua, for violation of Section 169.1, inrelation to Section 170, of RA 8293.

Lo claimed in his complaint that Gasirel-Industria deComercio e Componentes para Gass, Lda. (Gasirel), theowner of the disputed marks, executed a deed of assignmenttransferring these marks in his favor, to be used in allcountries except for those in Europe and America.7 In a testbuy, Lo purchased from National Hardware kerosene

burners with the subject marks and the designations "Made

in Portugal" and "Original Portugal" in the wrappers. Theseproducts were manufactured by Wintrade. Lo claimed that asthe assignee for the trademarks, he had not authorizedWintrade to use these marks, nor had Casa Hipolito S.A.Portugal. While a prior authority was given to Wintrade’spredecessor-in-interest, Wonder Project & DevelopmentCorporation (Wonder), Casa Hipolito S.A. Portugal had

already revoked this authority through a letter of cancellationdated May 31, 1993.8 The kerosene burners manufacturedby Wintrade have caused confusion, mistake and deceptionon the part of the buying public. Lo stated that the real andgenuine burners are those manufactured by its agent,PBMC.

In their Answer, the petitioners stated that they are theofficers of Wintrade which owns the subject trademarks andtheir variants. To prove this assertion, they submitted as

evidence the certificates of registration with the IntellectualProperty Office. They alleged that Gasirel, not Lo, was thereal party-in-interest. They allegedly derived their authority touse the marks from Casa Hipolito S.A. Portugal throughWonder, their predecessor-in-interest. Moreover, PBMC hadalready ceased to be a corporation and, thus, the licensingagreement between PBMC and Lo could not be given effect,particularly because the agreement was not notarized anddid not contain the provisions required by Section 87 of RA8293. The petitioners pointed out that Lo failed to sufficiently

prove that the burners bought from National Hardware werethose that they manufactured. But at the same time, theyalso argued that the marks "Made in Portugal" and "OriginalPortugal" are merely descriptive and refer to the source ofthe design and the history of manufacture.

In a separate Answer, Chua admitted that he had dealt withWintrade for several years and had sold its products. He hadnot been aware that Wintrade had lost the authority tomanufacture, distribute, and deal with products containing

the subject marks, and he was never informed of Wintrade’s

7/21/2019 LIP - Cases 8


loss of authority. Thus, he could have not been part of anyconspiracy.

After the preliminary investigation, the Chief StateProsecutor found probable cause to indict the petitioners forviolation of Section 169.1, in relation with Section 170, of RA8293. This law punishes any person who uses in commerce

any false designation of origin which is likely to causeconfusion or mistake as to the origin of the product. The lawseeks to protect the public; thus, even if Lo does not havethe legal capacity to sue, the State can still prosecute thepetitioners to prevent damage and prejudice to the public.

On appeal, the DOJ issued a resolution affirming the findingof probable case. It gave credence to Lo’s assertion that heis the proper assignee of the subject marks. Moreimportantly, it took note of the petitioners’ admission that

they used the words "Made in Portugal" when in fact, theseproducts were made in the Philippines. Had they intended torefer to the source of the design or the history of themanufacture, they should have explicitly said so in theirpackaging. It then concluded that the petitioners’ defenseswould be better ventilated during the trial and that theadmissions of the petitioners make up a sufficient basis forprobable cause.

The CA found no grave abuse of discretion on the part of the

DOJ and affirmed the DOJ’s ruling.

When the petitioners filed their petition before us, we deniedthe petition for failure to sufficiently show any reversible errorin the assailed judgment to warrant the exercise of theCourt’s discretionary power.

We find no reversible error on the part of the CA and theDOJ to merit reconsideration. The petitioners reiterate theirargument that the products bought during the test buy

bearing the trademarks in question were not manufactured

by, or in any way connected with, the petitioners and/orWintrade. They also allege that the words "Made in Portugal"and "Original Portugal" refer to the origin of the design andnot to the origin of the goods.

The petitioners again try to convince the Court that they havenot manufactured the products bearing the marks "Made in

Portugal" and "Original Portugal" that were bought during thetest buy. However, their own admission and the statementgiven by Chua bear considerable weight.

The admission in the petitioners’ Joint Affidavit is not in anyway hypothetical, as they would have us believe. Theynarrate incidents that have happened. They refer toWintrade’s former association with Casa Hipolito S.A.Portugal; to their decision to produce the burners in thePhilippines; to their use of the disputed marks; and to their

justification for their use. It reads as follows:

24. As earlier mentioned, the predecessor-in-interest ofWintrade was the former exclusive licensee of Casa HipolitoSA of Portugal since the 1970’s, and that Wintradepurchased all the rights on the said trademarks prior to theclosure of said company. Indeed, the burners sold byWintrade used to be imported from Portugal, but Wintradelater on discovered the possibility of obtaining these burnersfrom other sources or of manufacturing the same in the

Philippines.

Wintrade’s decision to procure these burners from sourcesother than Portugal is certainly its management prerogative.The presence of the words "made in Portugal" and "originalPortugal" on the wrappings of the burners and on theburners themselves which are manufactured by Wintrade isan allusion to the fact that the origin of the design of saidburners can be traced back to Casa Hipolito SA of Portugal,and that the history of the manufacture of said burners are

rooted in Portugal. These words were not intended to

7/21/2019 LIP - Cases 8


deceive or cause mistake and confusion in the minds of thebuying public.9

Chua, the owner of National Hardware — the place wherethe test buy was conducted — admits that Wintrade hasbeen furnishing it with kerosene burners with the markings"Made in Portugal" for the past 20 years, to wit:

5. I hereby manifests (sic) that I had been dealing withWintrade Industrial Sales Corporation (WINTRADE forbrevity) for around 20 years now by buying products from it. Iam not however aware that WINTRADE was no longerauthorized to deal, distribute or sell kerosene burner bearingthe mark HIPOLITO and SEA HORSE Device, with markings"Made in Portugal" on the wrapper as I was never informedof such by WINTRADE nor was ever made aware of anynotices posted in the newspapers informing me of such fact.

Had I been informed, I would have surely stopped dealingwith WINTRADE.101âwphi1

Thus, the evidence shows that petitioners, who are officersof Wintrade, placed the words "Made in Portugal" and"Original Portugal" with the disputed marks knowing fully well— because of their previous dealings with the Portuguesecompany — that these were the marks used in the productsof Casa Hipolito S.A. Portugal. More importantly, theproducts that Wintrade sold were admittedly produced in the

Philippines, with no authority from Casa Hipolito S.A.Portugal. The law on trademarks and trade names preciselyprecludes a person from profiting from the businessreputation built by another and from deceiving the public asto the origins of products. These facts support the consistentfindings of the State Prosecutor, the DOJ and the CA thatprobable cause exists to charge the petitioners with falsedesignation of origin. The fact that the evidence did not comefrom Lo, but had been given by the petitioners, is of nosignificance.

The argument that the words "Made in Portugal" and"Original Portugal" refer to the origin of the design and not tothe origin of the goods does not negate the finding ofprobable cause; at the same time, it is an argument that thepetitioners are not barred by this Resolution from raising as adefense during the hearing of the case.

WHEREFORE, premises considered, we hereby DENY themotion for reconsideration for lack of merit.

SO ORDERED.

7/21/2019 LIP - Cases 8


SONIC STEEL INDUSTRIES, INC., COMPLAINANT,vs.ATTY. NONNATUS P. CHUA, RESPONDENT.

Before us is a complaint for disbarment filed by complainantSonic Steel Industries, Inc. against respondent, Atty.Nonnatus P. Chua.

The facts follow.

Complainant is a corporation doing business as amanufacturer and distributor of zinc and aluminum-zinccoated metal sheets known in the market as Superzinc andSuperlume. On the other hand, respondent is the Vice-President, Corporate Legal Counsel and Assistant CorporateSecretary of Steel Corporation (STEELCORP).

The controversy arose when, on September 5, 2005,STEELCORP, with the assistance of the National Bureau ofInvestigation, applied for and was granted by the RegionalTrial Court (RTC) of Cavite City, Branch 17, a SearchWarrant directed against complainant.

On the strength of the search warrant, complainant’s factorywas searched and, consequently, properties were seized. Aweek after, STEELCORP filed before the Department ofJustice a complaint for violation of Section 168, in relation to

Section 170, of Republic Act No. 82931

against complainantand the latter’s officers.

Based on three documents, to wit: (1) the Affidavit of Mr. Antonio Lorenzana (Executive Vice-President ofSTEELCORP), in support of the application for the SearchWarrant; (2) the exchange between Mr. Lorenzana andJudge Melchor Sadang of Branch 17, RTC of Cavite, duringthe searching inquiry conducted by the latter for theapplication for warrant, as evidenced by the Transcript of

Stenographic Notes (TSN) dated September 5, 2005 in

People v. John Doe a.k.a. Anthony Ong, et al.; and (3) theComplaint-Affidavit executed by respondent and filed beforethe Department of Justice, complainant asserts thatrespondent performed the ensuing acts:

(a)

In stating that STEELCORP is the exclusive licensee ofPhilippine Patent No. 16269, respondent deliberately misledthe court as well as the Department of Justice, becauseLetters Patent No. 16269 have already lapsed, making it partof the public domain.

(b)

In refusing to provide the RTC of Cavite City, Branch 17 acopy of the patent, respondent intentionally deceived said

court because even the first page of the patent will clearlyshow that said patent already lapsed. It appears that LettersPatent No. 16269 was issued on August 25, 1983 andtherefore had already lapsed rendering it part of the publicdomain as early as 2000. Had respondent shown a copy ofthe patent to the judge, said judge would not have beenmisled into issuing the search warrant because any personwould know that a patent has a lifetime of 17 years under theold law and 20 years under R.A. 8293. Either way, it isapparent from the face of the patent that it is already a

lapsed patent and therefore cannot be made basis for asupposed case of infringement more so as basis for theapplication for the issuance of a search warrant.

In the affidavit submitted by Mr. Antonio Lorenzana,complainant asserts that the same includes statementsexpressing that STEELCORP is the licensee of PhilippinePatent No. 16269, to wit:

2. STEELCORP is the exclusive licensee of and

manufacturer in the Philippines of "GALVALUME" metal

7/21/2019 LIP - Cases 8


sheet products, which are coated with aluminum-zinc alloy,produced by using the technical information and the patenton Hot Dip Coating of Ferrous Strands with PatentRegistration No. 16269 issued by the Philippine IntellectualProperty Office ("IPO"), a process licensed by BIECInternational, Inc. to STEELCORP for the amount of overTwo Million Five Hundred Thousand U.S. Dollars

($2,500,000.00).

7. Specifically, the acts committed by RESPONDENTS ofstoring, selling, retailing, distributing, importing, dealing withor otherwise disposing of "SUPERLUME" metal sheetproducts which are similarly coated with aluminum-zinc alloyand cannot be produced without utilizing the same basictechnical information and the registered patent used bySTEELCORP to manufacture "GALVALUME" metal sheetproducts, the entire process of which has been lawfully and

exclusively licensed to STEELCORP by BIEC International,Inc., constitute unfair competition in that –

b. While SUPERLUME metal sheets have the same generalappearance as those of GALVALUME metal sheets whichare similarly coated with aluminum-zinc alloy, produced byusing the same technical information and theaforementioned registered patent exclusively licensed to andmanufactured in the Philippines since 1999 by STEELCORP,the machinery and process for the production of

SUPERLUME metal sheet products were not installed andformulated with the technical expertise of BIEC International,Inc. to enable the SONIC to achieve the optimum results inthe production of aluminum-zinc alloy-coated metal sheets;

8. On the [bases] of the foregoing analyses of the featuresand characteristics of RESPONDENTS’ SUPERLUME metalsheet products, the process by which they are manufacturedand produced certainly involves an assembly line thatsubstantially conforms with the technical information and

registered patent licensed to STEELCORP, which should

include, but are not limited to, the following majorcomponents and specifications, viz.:

9. It is plain from the physical appearance and features ofthe metal sheets which are coated with aluminum-zinc alloyand produced by using the technical information and theregistered patent exclusively licensed to STEELCORP by

BIEC International, Inc.; the mark ending with the identicalsyllable "LUME" to emphasize its major component (i.e.,aluminum) which is used in Respondents’ "SUPERLUME"metal sheets while having the same general appearance ofSTEELCORP’s genuine "GALVALUME" metal sheets, thatthe intention of RESPONDENTS is to cash in on the goodwillof STEELCORP by passing off its "SUPERLUME" metalsheet products as those of STEELCORP’s "GALVALUME"metal sheet products, which increases the inducement of theordinary customer to buy the deceptively manufactured and

unauthorized production of "SUPERLUME" metal sheetproducts.

11. STEELCORP has lost and will continue to losesubstantial revenues and will sustain damages as a result ofthe wrongful conduct of RESPONDENTS and their deceptiveuse of the technical information and registered patent,exclusively licensed to STEELCORP, as well as the otherfeatures of their SUPERLUME metal sheets, that have thesame general appearance as the genuine GALVALUME

metal sheets of STEELCORP. The conduct ofRESPONDENTS has also deprived and will continue todeprive STEELCORP of opportunities to expand itsgoodwill.2

Also, in the searching questions of Judge Melchor Sadang ofthe RTC of Cavite City, Branch 17, complainant asserts thatrespondent deliberately misled and intentionally deceived thecourt in refusing to provide a copy of Philippine Patent No.16269 during the hearing for the application for a search

warrant, to wit:

7/21/2019 LIP - Cases 8


[COURT to Mr. Lorenzana]

Q: You stated here in your affidavit that you are theExecutive Vice-President of Steel Corporation of thePhilippines. Is that correct?

A: Yes sir.

Q: You also state that Steel Corporation owns a patentexclusively licensed to Steel Corporation by BIECInternational, Inc. Do you have document to show that?

ATTY. CHUA: We reserve the presentation of the trademarklicense, your Honor.

Q: Why are you applying a search warrant against therespondent Sonic Steel Industries?

A: We will know that Sonic is not licensed to produce thatproduct coming from the technology which is exclusivelylicensed to our Company, your Honor. We know that fromour own knowledge. Also, the investigation of the NBIconfirms further that the product has already been in themarket for quite some time. As a product, it has the samefeature and characteristic as that of GALVALUME, yourHonor.

Q: In other words, you are not saying that Sonic is using thetrademark GALVALUME but only using the technology of theprocess which is only licensed to Steel Corporation. Is thatcorrect?

A: Yes, your Honor.

Court to Lorenzana:

Q: The patent on the Hot Dip Coating of Ferrous Strands, do

you have a document regarding that?

A: Yes, your Honor. It is in the office.

ATTY. CHUA: We reserve the right to present it, your Honor.

Court:

Q: You stated a while ago that it is the Steel Corporation that

has been licensed by the BIEC International to manufacturesheet products which are coated with aluminum-zinc alloy. Isthat correct?

A: Yes, your Honor.3

Subsequently, respondent initiated a complaint for violationof Section 168 of Republic Act No. 8293 againstcomplainant, as well as its officers, before the Department ofJustice. In his complaint-affidavit, respondent stated that

STEELCORP is the exclusive licensee of Philippine PatentNo. 16269 on Hot Dip Coating of Ferrous Strands which wasallegedly violated by complainant. Thus:

2. STEELCORP is the exclusive licensee and manufacturerin the Philippines of "GALVALUME" metal sheet products,which are coated with aluminum-zinc alloy, produced byusing the technical information and the patent on Hot DipCoating of Ferrous Strands with Patent Registration No.16269, issued by the Philippine Intellectual Property Office

("IPO"), a process licensed by BIEC International, Inc. toSTEELCORP for the amount of over Two Million FiveHundred Thousand U.S. Dollars ($2,500,000.00).

13. x x x x

b. While SUPERLUME metal sheets have the same generalappearance as those of GALVALUME metal sheets whichare similarly coated with aluminum-zinc alloy, produced byusing the same technical information and the

aforementioned registered patent exclusively licensed to and

7/21/2019 LIP - Cases 8


manufactured in the Philippines since 1999 by STEELCORP,the machinery and process for the production ofSUPERLUME metal sheet products were not installed andformulated with the technical expertise of BIEC International,Inc. to enable SONIC to achieve the optimum results in theproduction of aluminum-zinc alloy-coated metal sheets;

15. The natural, probable and foreseeable result ofRESPONDENTS’ conduct is to continue to depriveSTEELCORP of the exclusive benefits of using the technicalinformation and patent for the manufacture and distributionof aluminum-zinc alloy-coated metal sheet products, depriveSTEELCORP of sales and goodwill, and continue to injureSTEELCORP’s relations with present and prospectivecustomers.

16. STEELCORP has lost and will continue to lose

substantial revenues and will sustain damages as a result ofthe wrongful conduct by RESPONDENTS and theirdeceptive use the technical information and patent,exclusively licensed by BIEC International, Inc. toSTEELCORP, used and/or intended to be used byRESPONDENTS for the manufacture, retail, dealings with orotherwise disposals of unauthorized SUPERLUMEaluminum-zinc alloy-coated metal sheet products, as well asthe other features of its product, having the same generalappearance and characteristics as those of the genuine

GALVALUME aluminum-zinc alloy-coated metal sheetproducts. RESPONDENTS’ conduct has also deprivedSTEELCORP and will continue to deprive STEELCORP ofopportunities to expand its goodwill.4

For his part, respondent counters that he never made anallegation or reservation that STEELCORP owned PhilippinePatent No. 16269. He asserts that he merely reserved theright to present the trademark license exclusively licensed toSTEELCORP by BIEC International, Inc. which is composed

of the technical information and the patent used to produce

GALVALUME metal sheet products, the same technologybeing utilized by complainant without authority fromSTEELCORP.

Respondent further avers that the Complaint-Affidavit filedbefore the Department of Justice did not categorically claimthat STEELCORP is the owner of the patent, but simply that

STEELCORP is the exclusive licensee of the process bywhich GALVALUME is produced.

The complaint was then referred to the Integrated Bar of thePhilippines (IBP) for investigation, report andrecommendation.

In its Report and Recommendation dated July 10, 2007, theIBP’s Commission on Bar Discipline resolved to suspendrespondent from the practice of law for three (3) months with

admonition that a repetition of the same or similar act in thefuture will be dealt with more severely.

On August 17, 2007, the IBP Board of Governors passedResolution No. XVIII-2007-76 wherein it resolved to adoptand approve the Report and Recommendation of theInvestigating Officer of the Commission on Bar Discipline,with the modification that respondent is suspended from thepractice of law for six (6) months.

Unfazed, respondent filed a Motion for Reconsiderationagainst said Resolution, but the same was denied onJanuary 14, 2012.

Accordingly, the Resolution, together with the records of thecase, was transmitted to this Court for final action.

We affirm in toto the findings and recommendations of theIBP.

7/21/2019 LIP - Cases 8


Pertinent provisions in the Code of ProfessionalResponsibility state:

Canon 1 – A lawyer shall uphold the Constitution, obey thelaws of the land and promote respect for the law and legalprocess.

Rule 1.01 – A lawyer shall not engage in unlawful, dishonestand immoral or deceitful conduct.

Canon 10 – A lawyer owes candor, fairness and good faith tothe court.

Rule 10.01 – A lawyer shall do no falsehood, nor consent tothe doing of any in Court, nor shall he mislead or allow theCourt to be misled by an artifice.

Lawyers are officers of the court, called upon to assist in theadministration of justice. They act as vanguards of our legalsystem, protecting and upholding truth and the rule of law.They are expected to act with honesty in all their dealings,especially with the court. Verily, the Code of ProfessionalResponsibility enjoins lawyers from committing or consentingto any falsehood in court or from allowing the courts to bemisled by any artifice. Moreover, they are obliged to observethe rules of procedure and not to misuse them to defeat theends of justice.5

In the present case, it appears that respondent claimed ormade to appear that STEELCORP was the licensee of thetechnical information and the patent on Hot Dip Coating ofFerrous Strands or Philippine Patent No. 16269. However,an extensive investigation made by the IBP’s Commission onBar Discipline showed that STEELCORP only has rights as alicensee of the technical information and not the rights as alicensee of the patent, viz.:

x x x In respondent’s words and crafted explanation, heclaimed that STEELCORP had rights as a licensee of theprocess, consisting of a combination of the TechnicalInformation and the Patent. Considering, however, thatSTEELCORP’s rights as a licensee of the process isseverable into (a) rights as licensee of the technicalinformation and (b) rights as a licensee of Patent No. 16269,

respondent was less than candid in asserting thatSTEELCORP had rights to the entire process during therelevant periods, as will be explained below.

Under the TECHNICAL INFORMATION AND PATENTLICENSE AGREEMENT between STEELCORP and BIECInternational, Inc., the terms "technical information" and"patent" are separate and distinct. Thus, technicalinformation is defined under such contract as "Licensor’sexisting proprietary data, know-how and technical

information which relates to the subject of Sheet and/or Stripcoated with an aluminum-zinc alloy xxx and to facilities andequipment for the manufacture and use thereof and to data,know-how and technical information applicable thereto as ofthe Effective Date xxxx." On the other hand, Licensed Patentis defined therein as "Patent No. 16269" entitled "Hot dipcoating of ferrous strands." The combination of suchproprietary data, know-how and the patent on Hot DipCoating of Ferrous Strands is the process over whichSTEELCORP claims it had proprietary license, and

represents the same process used by STEELCORP inproducing GALVALUME products. This is supposedly thebasis upon which STEELCORP (through Mr. Lorenzana inhis Affidavit in support of the application for a searchwarrant, presumably under the direction of respondent) andrespondent (in his Complaint-Affidavit before the Departmentof Justice) asserted then that it was the exclusive licensee ofthe technical information and registered Patent No. 16269.

However, from the time that STEELCORP applied for a

search warrant over SONIC STEEL’s premises (through the

7/21/2019 LIP - Cases 8


affidavit of Mr. Lorenzana and presumably with respondent’sstrategy as counsel), Patent No. 16269 had long expired.This fact is crucial in that the license STEELCORP had, asclaimed by respondent, was over the entire process and not

just the technical information as a component thereof. Accordingly, when the application for search was filed andwhen respondent subscribed to his Complaint-Affidavit

before the Department of Justice, STEELCORP had no moreexclusive license to Patent No. 16269. Said patent hadalready become free for anyone’s use, including SONICSTEEL. All that STEELCORP possessed during those timeswas the residual right to use (even if exclusively) just thetechnical information defined in its agreement with BIECInternational, Inc. STEELCORP had only an incompletelicense over the process. The expiration of the patenteffectively negated and rendered irrelevant respondent’sdefense of subsistence of the contract between

STEELCORP and BIEC International, Inc. during the filing ofthe application for search warrant and filing of respondent’saffidavit before the Department of justice. There is basis,therefore, to the claim that respondent has not been "candidenough" in his actuations.

It would also appear that respondent was wanting in candoras regards his dealings with the lower court.1âwphi1 Theinterjection made by respondent during Judge Sadang’s(Branch 17, Regional Trial Court of Cavite) searching

examination of Mr. Lorenzana illustrates this, viz.:

Q: You also state here that Steel Corporation owns a patentexclusively licensed to Steel Corporation by BIECInternational, Inc. Do you have a document to show that?

ATTY. CHUA: We reserve the presentation of the trademarklicense, your Honor.

Q: The patent on the Hot Dip Coating of Ferrous Strands, do

you have a document regarding that?

A: Yes, your Honor. It is in the office.

ATTY. CHUA: We reserve the right to present it, your Honor.

It is worth underscoring that although Judge Sadangaddressed his questions solely to Mr. Lorenzana, respondentwas conveniently quick to interrupt and manifest his client’s

reservation to present the trademark license. Respondentwas equally swift to end Judge Sadang’s inquiry over thepatent by reserving the right to present the same at anothertime. While it is not the Commission’s province to dwell withsuppositions and hypotheses, it is well within its powers tomake reasonable inferences from established facts. Giventhat Patent No. 16269 had been in expiry for more than five(5) years when Judge Sadang propounded his questions, itlogically appears that respondent, in making suchreservations in open court, was trying to conceal from the

former the fact of the patent’s expiration so as to facilitate thegrant of the search warrant in favor of STEELCORP. This iscontrary to the exacting standards of conduct required from amember of the Bar.

Indeed, the practice of law is not a right but merely aprivilege bestowed upon by the State upon those who showthat they possess, and continue to possess, thequalifications required by law for the conferment of suchprivilege. One of those requirements is the observance of

honesty and candor. Candor in all their dealings is the veryessence of a practitioner’s honorable membership in thelegal profession. Lawyers are required to act with the higheststandard of truthfulness, fair play and nobility in the conductof litigation and in their relations with their clients, theopposing parties, the other counsels and the courts. Theyare bound by their oath to speak the truth and to conductthemselves according to the best of their knowledge anddiscretion, and with fidelity to the courts and their clients.6

7/21/2019 LIP - Cases 8


From the foregoing, it is clear that respondent violated hisduties as a lawyer to avoid dishonest and deceitful conduct,(Rule 1.01, Canon 1) and to act with candor, fairness andgood faith (Rule 10.01, Canon 10). Also, respondentdesecrated the solemn oath he took before this Court whenhe sought admission to the bar, i.e., not to do any falsehoodnor consent to the doing of any in Court. Thus, even at the

risk of jeopardizing the probability of prevailing onSTEELCORP’s application for a search warrant, respondentshould have informed the court of the patent’s expiration soas to allow the latter to make an informed decision given allavailable and pertinent facts.

WHEREFORE, premises considered, respondent Atty.Nonnatus P. Chua is hereby SUSPENDED from the practiceof law for six (6) months with ADMONITION that a repetitionof the same or similar act in the future will be dealt with more

severely.

SO ORDERED.

7/21/2019 LIP - Cases 8


LA CHEMISE LACOSTE, S. A., petitioner,vs.HON. OSCAR C. FERNANDEZ, Presiding Judge ofBranch XLIX, Regional Trial Court, National CapitalJudicial Region, Manila and GOBINDRAMHEMANDAS, respondents.

It is among this Court's concerns that the Philippines shouldnot acquire an unbecoming reputation among themanufacturing and trading centers of the world as a havenfor intellectual pirates imitating and illegally profiting fromtrademarks and tradenames which have establishedthemselves in international or foreign trade.

Before this Court is a petition for certiorari with preliminaryinjunction filed by La Chemise Lacoste, S.A., a well knownEuropean manufacturer of clothings and sporting apparels

sold in the international market and bearing the trademarks"LACOSTE" "CHEMISE LACOSTE", "CROCODILEDEVICE" and a composite mark consisting of the word"LACOSTE" and a representation of a crocodile/alligator.The petitioner asks us to set aside as null and void, the orderof judge Oscar C. Fernandez, of Branch XLIX, Regional TrialCourt, National Capital Judicial Region, granting the motionto quash the search warrants previously issued by him andordering the return of the seized items.

The facts are not seriously disputed. The petitioner is aforeign corporation, organized and existing under the laws ofFrance and not doing business in the Philippines, It isundeniable from the records that it is the actual owner of theabovementioned trademarks used on clothings and othergoods specifically sporting apparels sold in many parts of theworld and which have been marketed in the Philippines since1964, The main basis of the private respondent's case is itsclaim of alleged prior registration.

In 1975, Hemandas & Co., a duly licensed domestic firmapplied for and was issued Reg. No. SR-2225 (SR stands forSupplemental Register) for the trademark "CHEMISELACOSTE & CROCODILE DEVICE" by the Philippine PatentOffice for use on T-shirts, sportswear and other garmentproducts of the company. Two years later, it applied for theregistration of the same trademark under the Principal

Register. The Patent Office eventually issued an order datedMarch 3, 1977 which states that:

... Considering that the mark was already registered in theSupplemental Register in favor of herein applicant, the Officehas no other recourse but to allow the application, however,Reg. No. SR-2225 is now being contested in a Petition forCancellation docketed as IPC No. 1046, still registrant ispresumed to be the owner of the mark until after theregistration is declared cancelled.

Thereafter, Hemandas & Co. assigned to respondentGobindram Hemandas all rights, title, and interest in thetrademark "CHEMISE LACOSTE & DEVICE".

On November 21, 1980, the petitioner filed its application forregistration of the trademark "Crocodile Device" (ApplicationSerial No. 43242) and "Lacoste" (Application Serial No.43241).The former was approved for publication while thelatter was opposed by Games and Garments in Inter Partes

Case No. 1658. In 1982, the petitioner filed a Petition for theCancellation of Reg. No. SR-2225 docketed as Inter PartesCase No. 1689. Both cases have now been considered bythis Court in Hemandas v. Hon. Roberto Ongpin (G.R. No.65659).

On March 21, 1983, the petitioner filed with the NationalBureau of Investigation (NBI) a letter-complaint allegingtherein the acts of unfair competition being committed byHemandas and requesting their assistance in his

apprehension and prosecution. The NBI conducted an

7/21/2019 LIP - Cases 8


investigation and subsequently filed with the respondentcourt two applications for the issuance of search warrantswhich would authorize the search of the premises used andoccupied by the Lacoste Sports Center and Games andGarments both owned and operated by Hemandas.

The respondent court issued Search Warrant Nos. 83-128

and 83-129 for violation of Article 189 of the Revised PenalCode, "it appearing to the satisfaction of the judge afterexamining under oath applicant and his witnesses that thereare good and sufficient reasons to believe that GobindramHemandas ... has in his control and possession in hispremises the ... properties subject of the offense," (Rollo, pp.67 and 69) The NBI agents executed the two searchwarrants and as a result of the search found and seizedvarious goods and articles described in the warrants.

Hemandas filed a motion to quash the search warrantsalleging that the trademark used by him was different frompetitioner's trademark and that pending the resolution of IPCNo. 1658 before the Patent Office, any criminal or civil actionon the same subject matter and between the same partieswould be premature.

The petitioner filed its opposition to the motion arguing thatthe motion to quash was fatally defective as it cited no validground for the quashal of the search warrants and that the

grounds alleged in the motion were absolutely without merit.The State Prosecutor likewise filed his opposition on thegrounds that the goods seized were instrument of a crimeand necessary for the resolution of the case on preliminaryinvestigation and that the release of the said goods would befatal to the case of the People should prosecution follow incourt.

The respondent court was, however, convinced that therewas no probable cause to justify the issuance of the search

warrants. Thus, in its order dated March 22, 1983, the

search warrants were recalled and set aside and the NBIagents or officers in custody of the seized items wereordered to return the same to Hemandas. (Rollo, p. 25)

The petitioner anchors the present petition on the followingissues:

Did respondent judge act with grave abuse of discretionamounting to lack of jurisdiction,

(i) in reversing the finding of probable cause which hehimself had made in issuing the search warrants, uponallegations which are matters of defense and as such can beraised and resolved only upon trial on the merits; and

(ii) in finding that the issuance of the search warrants ispremature in the face of the fact that (a) Lacoste's

registration of the subject trademarks is still pending with thePatent Office with opposition from Hemandas; and (b) thesubject trademarks had been earlier registered byHemandas in his name in the Supplemental Register of thePhilippine Patent Office?

Respondent, on the other hand, centers his arguments onthe following issues:

I THE PETITIONER HAS NO CAPACITY TO SUE BEFORE

PHILIPPINE COURTS.

II THE RESPONDENT JUDGE DID NOT COMMIT AGRAVE ABUSE OF DISCRETION TANTAMOUNT TOLACK OF JURISDICTION IN ISSUING THE ORDERDATED APRIL 22, 1983.

Hemandas argues in his comment on the petitionfor certiorari that the petitioner being a foreign corporationfailed to allege essential facts bearing upon its capacity to

sue before Philippine courts. He states that not only is the

7/21/2019 LIP - Cases 8


petitioner not doing business in the Philippines but it also isnot licensed to do business in the Philippines. He also citesthe case of Leviton Industries v. Salvador (114 SCRA 420) tosupport his contention The Leviton case, however, involveda complaint for unfair competition under Section 21-A ofRepublic Act No. 166 which provides:

Sec. 21 — A. Any foreign corporation or juristic person towhich a mark or tradename has been registered or assignedunder this Act may bring an action hereunder forinfringement, for unfair competition, or false designation oforigin and false description, whether or not it has beenlicensed to do business in the Philippines under Actnumbered Fourteen Hundred and Fifty-Nine, as amended,otherwise known as the Corporation Law, at the time itbrings the complaint; Provided , That the country of which thesaid foreign corporation or juristic person is a citizen, or in

which it is domiciled, by treaty, convention or law, grants asimilar privilege to corporate or juristic persons of thePhilippines.

We held that it was not enough for Leviton, a foreigncorporation organized and existing under the laws of theState of New York, United States of America, to merelyallege that it is a foreign corporation. It averred in Paragraph2 of its complaint that its action was being filed under theprovisions of Section 21-A of Republic Act No. 166, as

amended. Compliance with the requirements imposed by theabovecited provision was necessary because Section 21-Aof Republic Act No. 166 having explicitly laid down certainconditions in a specific proviso, the same must be expresslyaverred before a successful prosecution may ensue. It istherefore, necessary for the foreign corporation to complywith these requirements or aver why it should be exemptedfrom them, if such was the case. The foreign corporationmay have the right to sue before Philippine courts, but ourrules on pleadings require that the qualifying circumstances

necessary for the assertion of such right should first beaffirmatively pleaded.

In contradistinction, the present case involves a complaint forviolation of Article 189 of the Revised Penal Code.The Leviton case is not applicable.

Asserting a distinctly different position from the Levitonargument, Hemandas argued in his brief that the petitionerwas doing business in the Philippines but was not licensed todo so. To support this argument, he states that theapplicable ruling is the case of Mentholatum Co., Inc. v.Mangaliman: (72 Phil. 524) where Mentholatum Co. Inc., aforeign corporation and Philippine-American Drug Co., theformer's exclusive distributing agent in the Philippines filed acomplaint for infringement of trademark and unfaircompetition against the Mangalimans.

The argument has no merit. The Mentholatum case isdistinct from and inapplicable to the case at bar. Philippine

American Drug Co., Inc., was admittedly selling products ofits principal Mentholatum Co., Inc., in the latter's name or forthe latter's account. Thus, this Court held that "whatevertransactions the Philippine-American Drug Co., Inc. hadexecuted in view of the law, the Mentholatum Co., Inc., did ititself. And, the Mentholatum Co., Inc., being a foreign doingbusiness in the Philippines without the license required by

Section 68 of the Corporation Law, it may not prosecute thisaction for violation of trademark and unfair competition."

In the present case, however, the petitioner is a foreigncorporation not doing business in the Philippines. Themarketing of its products in the Philippines is done throughan exclusive distributor, Rustan Commercial Corporation Thelatter is an independent entity which buys and then marketsnot only products of the petitioner but also many otherproducts bearing equally well-known and established

7/21/2019 LIP - Cases 8


trademarks and tradenames. in other words, Rustan is not amere agent or conduit of the petitioner.

The rules and regulations promulgated by the Board ofInvestments pursuant to its rule-making power underPresidential Decree No. 1789, otherwise known as theOmnibus Investment Code, support a finding that the

petitioner is not doing business in the Philippines. Rule I,Sec. 1 (g) of said rules and regulations defines "doingbusiness" as one" which includes, inter alia:

(1) ... A foreign firm which does business through middlemenacting on their own names, such as indentors, commercialbrokers or commission merchants, shall not be deemeddoing business in the Philippines. But such indentors,commercial brokers or commission merchants shall be theones deemed to be doing business in the Philippines.

(2) Appointing a representative or distributor who isdomiciled in the Philippines, unless said representative ordistributor has an independent status, i.e., it transactsbusiness in its name and for its account, and not in the nameor for the account of a principal Thus, where a foreign firm isrepresented by a person or local company which does notact in its name but in the name of the foreign firm the latter isdoing business in the Philippines.

Applying the above provisions to the facts of this case, wefind and conclude that the petitioner is not doing business inthe Philippines. Rustan is actually a middleman acting andtransacting business in its own name and or its own accountand not in the name or for the account of the petitioner.

But even assuming the truth of the private respondent'sallegation that the petitioner failed to allege material facts inits petition relative to capacity to sue, the petitioner may stillmaintain the present suit against respondent Hemandas. As

early as 1927, this Court was, and it still is, of the view that a

foreign corporation not doing business in the Philippinesneeds no license to sue before Philippine courts forinfringement of trademark and unfair competition. Thus,in Western Equipment and Supply Co. v. Reyes (51 Phil.115), this Court held that a foreign corporation which hasnever done any business in the Philippines and which isunlicensed and unregistered to do business here, but is

widely and favorably known in the Philippines through theuse therein of its products bearing its corporate andtradename, has a legal right to maintain an action in thePhilippines to restrain the residents and inhabitants thereoffrom organizing a corporation therein bearing the samename as the foreign corporation, when it appears that theyhave personal knowledge of the existence of such a foreigncorporation, and it is apparent that the purpose of theproposed domestic corporation is to deal and trade in thesame goods as those of the foreign corporation.

We further held:

... That company is not here seeking to enforce any legal orcontrol rights arising from, or growing out of, any businesswhich it has transacted in the Philippine Islands. The solepurpose of the action:

Is to protect its reputation, its corporate name, its goodwill,whenever that reputation, corporate name or goodwill have,

through the natural development of its trade, establishedthemselves.' And it contends that its rights to the use of itscorporate and trade name:

Is a property right, a right in rem, which it may assert andprotect against all the world, in any of the courts of the world-even in jurisdictions where it does not transact business-justthe same as it may protect its tangible property, real orpersonal, against trespass, or conversion. Citing sec. 10,Nims on Unfair Competition and TradeMarks and cases

cited; secs. 21-22, Hopkins on TradeMarks, Trade Names

7/21/2019 LIP - Cases 8


and Unfair Competition and cases cited.' That point issustained by the authorities, and is well stated in HanoverStar Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). inwhich the syllabus says:

Since it is the trade and not the mark that is to be protected,a trade-mark acknowledges no territorial boundaries of

municipalities or states or nations, but extends to everymarket where the trader's goods have become known andIdentified by the use of the mark.

Our recognizing the capacity of the petitioner to sue is not byany means novel or precedent setting. Our jurisprudence isreplete with cases illustrating instances when foreigncorporations not doing business in the Philippines maynonetheless sue in our courts. In East Board Navigation Ltd,v. Ysmael and Co., Inc. (102 Phil. 1), we recognized a right

of foreign corporation to sue on isolated transactions.In General Garments Corp. v. Director of Patents (41 SCRA50), we sustained the right of Puritan Sportswear Corp., aforeign corporation not licensed to do and not doing businessin the Philippines, to file a petition for cancellation of atrademark before the Patent Office.

More important is the nature of the case which led to thispetition. What preceded this petition for certiorari was a lettercomplaint filed before the NBI charging Hemandas with a

criminal offense, i.e., violation of Article 189 of the RevisedPenal Code. If prosecution follows after the completion of thepreliminary investigation being conducted by the SpecialProsecutor the information shall be in the name of thePeople of the Philippines and no longer the petitioner whichis only an aggrieved party since a criminal offense isessentially an act against the State. It is the latter which isprincipally the injured party although there is a private rightviolated. Petitioner's capacity to sue would become,therefore, of not much significance in the main case. We

cannot snow a possible violator of our criminal statutes to

escape prosecution upon a far-fetched contention that theaggrieved party or victim of a crime has no standing to sue.

In upholding the right of the petitioner to maintain the presentsuit before our courts for unfair competition or infringementof trademarks of a foreign corporation, we are moreoverrecognizing our duties and the rights of foreign states under

the Paris Convention for the Protection of Industrial Propertyto which the Philippines and France are parties. We aresimply interpreting and enforcing a solemn internationalcommitment of the Philippines embodied in a multilateraltreaty to which we are a party and which we entered intobecause it is in our national interest to do so.

The Paris Convention provides in part that:

ARTICLE 1

(1) The countries to which the present Convention appliesconstitute themselves into a Union for the protection ofindustrial property.

(2) The protection of industrial property is concerned withpatents, utility models, industrial designs, trademarks servicemarks, trade names, and indications of source orappellations of origin, and the repression of unfaircompetition.

ARTICLE 2

(2) Nationals of each of the countries of the Union shall asregards the protection of industrial property, enjoy in all theother countries of the Union the advantages that theirrespective laws now grant, or may hereafter grant, tonationals, without prejudice to the rights specially providedby the present Convention. Consequently, they shall havethe same protection as the latter, and the same legal remedy

against any infringement of their rights, provided they

7/21/2019 LIP - Cases 8


observe the conditions and formalities imposed uponnationals.

ARTICLE 6

(1) The countries of the Union undertake, eitheradministratively if their legislation so permits, or at the

request of an interested party, to refuse or to cancel theregistration and to prohibit the use of a trademark whichconstitutes a reproduction, imitation or translation, liable tocreate confusion, of a mark considered by the competentauthority of the country of registration or use to be well-known in that country as being already the mark of a personentitled to the benefits of the present Convention and usedfor Identical or similar goods. These provisions shall alsoapply when the essential part of the mark constitutes areproduction of any such well-known mark or an imitation

liable to create confusion therewith.

ARTICLE 8

A trade name shall be protected in all the countries of theUnion without the obligation of filing or registration, whetheror not it forms part of a trademark.

ARTICLE 10bis

(1) The countries of the Union are bound to assure topersons entitled to the benefits of the Union effectiveprotection against unfair competition.

ARTICLE 10ter

(1) The countries of the Union undertake to assure tonationals of the other countries of the Union appropriatelegal remedies to repress effectively all the acts referred to in

Articles 9, 10 and l0bis.

(2) They undertake, further, to provide measures to permitsyndicates and associations which represent theindustrialists, producers or traders concerned and theexistence of which is not contrary to the laws of theircountries, to take action in the Courts or before theadministrative authorities, with a view to the repression of theacts referred to in Articles 9, 10 and 10bis, in so far as the

law of the country in which protection is claimed allows suchaction by the syndicates and associations of that country.

ARTICLE 17

Every country party to this Convention undertakes to adopt,in accordance with its constitution, the measures necessaryto ensure the application of this Convention.

It is understood that at the time an instrument of ratification

or accession is deposited on behalf of a country; suchcountry will be in a position under its domestic law to giveeffect to the provisions of this Convention. (61 O.G. 8010)

In Vanity Fair Mills, Inc. v. T Eaton Co. (234 F. 2d 633) theUnited States Circuit Court of Appeals had occasion tocomment on the extraterritorial application of the ParisConvention It said that:

[11] The International Convention is essentially a compact

between the various member countries to accord in their owncountries to citizens of the other contracting partiestrademark and other rights comparable to those accordedtheir own citizens by their domestic law. The underlyingprinciple is that foreign nationals should be given the sametreatment in each of the member countries as that countrymakes available to its own citizens. In addition, theConvention sought to create uniformity in certain respects byobligating each member nation 'to assure to nationals ofcountries of the Union an effective protection against unfair

competition.'

7/21/2019 LIP - Cases 8


[12] The Convention is not premised upon the Idea that thetrade-mark and related laws of each member nation shall begiven extra-territorial application, but on exactly the converseprinciple that each nation's law shall have only territorialapplication. Thus a foreign national of a member nationusing his trademark in commerce in the United States isaccorded extensive protection here against infringement and

other types of unfair competition by virtue of United Statesmembership in the Convention. But that protection has itssource in, and is subject to the limitations of, American law,not the law of the foreign national's own country. ...

By the same token, the petitioner should be given the sametreatment in the Philippines as we make available to our owncitizens. We are obligated to assure to nationals of "countriesof the Union" an effective protection against unfaircompetition in the same way that they are obligated to

similarly protect Filipino citizens and firms.

Pursuant to this obligation, the Ministry of Trade onNovember 20, 1980 issued a memorandum addressed to theDirector of the Patents Office directing the latter:

... to reject all pending applications for Philippine registrationof signature and other world famous trademarks byapplicants other than its original owners or users.

The conflicting claims over internationally known trademarksinvolve such name brands as Lacoste, Jordache, GloriaVanderbilt, 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 tosurrender their certificates of registration, if any, to avoidsuits for damages and other legal action by the trademarks'

foreign or local owners or original users.

The memorandum is a clear manifestation of our avowedadherence to a policy of cooperation and amity with allnations. It is not, as wrongly alleged by the privaterespondent, a personal policy of Minister Luis Villafuertewhich expires once he leaves the Ministry of Trade. For atreaty or convention is not a mere moral obligation to beenforced or not at the whims of an incumbent head of a

Ministry. It creates a legally binding obligation on the partiesfounded on the generally accepted principle of internationallaw of pacta sunt servanda which has been adopted as partof the law of our land. (Constitution, Art. II, Sec. 3). Thememorandum reminds the Director of Patents of his legalduty to obey both law and treaty. It must also be obeyed.

Hemandas further contends that the respondent court did notcommit grave abuse of discretion in issuing the questionedorder of April 22, 1983.

A review of the grounds invoked by Hemandas in his motionto quash the search warrants reveals the fact that they arenot appropriate for quashing a warrant. They are matters ofdefense which should be ventilated during the trial on themerits of the case. For instance, on the basis of the factsbefore the Judge, we fail to understand how he could treat abare allegation that the respondent's trademark is differentfrom the petitioner's trademark as a sufficient basis to grantthe motion to quash. We will treat the issue of prejudicial

question later. Granting that respondent Hemandas was onlytrying to show the absence of probable cause, we,nonetheless, hold the arguments to be untenable.

As a mandatory requirement for the issuance of a validsearch warrant, the Constitution requires in no uncertainterms the determination of probable cause by the judge afterexamination under oath or affirmation of the complainant andthe witnesses he may produce (Constitution, Art. IV, Sec. 3).Probable cause has traditionally meant such facts and

circumstances antecedent to the issuance of the warrant that

7/21/2019 LIP - Cases 8


are in themselves sufficient to induce a cautious man to relyupon them and act in pursuance thereof (People v. Sy Juco,64 Phil. 667).

This concept of probable cause was amplified and modifiedby our ruling in Stonehill v. Diokno, (20 SCRA 383) thatprobable cause "presupposes the introduction of competent

proof that the party against whom it is sought hasperformed particular acts, or committed specific omissions,violating a given provision of our criminal laws."

The question of whether or not probable cause exists is onewhich must be decided in the light of the conditions obtainingin given situations (Central Bank v. Morfe, 20 SCRA 507).We agree that there is no general formula or fixed rule forthe determination of the existence of probable cause since,as we have recognized in Luna v. Plaza(26 SCRA 310), the

existence depends to a large degree upon the finding oropinion of the judge conducting the examination. However,the findings of the judge should not disregard the factsbefore him nor run counter to the clear dictates of reason.More so it is plain that our country's ability to abide byinternational commitments is at stake.

The records show that the NBI agents at the hearing of theapplication for the warrants before respondent courtpresented three witnesses under oath, sworn statements,

and various exhibits in the form of clothing apparelsmanufactured by Hemandas but carrying the trademarkLacoste. The respondent court personally interrogatedRamon Esguerra, Samuel Fiji, and Mamerto Espatero bymeans of searching questions. After hearing the testimoniesand examining the documentary evidence, the respondentcourt was convinced that there were good and sufficientreasons for the issuance of the warrant. And it then issuedthe warrant.

The respondent court, therefore, complied with theconstitutional and statutory requirements for the issuance ofa valid search warrant. At that point in time, it was fullyconvinced that there existed probable cause. But afterhearing the motion to quash and the oppositions thereto, therespondent court executed a complete turnabout anddeclared that there was no probable cause to justify its

earlier issuance of the warrants.

True, the lower court should be given the opportunity tocorrect its errors, if there be any, but the rectification must,as earlier stated be based on sound and valid grounds. Inthis case, there was no compelling justification for the aboutface. The allegation that vital facts were deliberatelysuppressed or concealed by the petitioner should have beenassessed more carefully because the object of the quashalwas the return of items already seized and easily examined

by the court. The items were alleged to be fake and quiteobviously would be needed as evidence in the criminalprosecution. Moreover, an application for a search warrant isheard ex parte. It is neither a trial nor a part of the trial.

Action on these applications must be expedited for time is ofthe essence. Great reliance has to be accorded by the judgeto the testimonies under oath of the complainant and thewitnesses. The allegation of Hemandas that the applicantwithheld information from the respondent court was clearlyno basis to order the return of the seized items.

Hemandas relied heavily below and before us on theargument that it is the holder of a certificate of registration ofthe trademark "CHEMISE LACOSTE & CROCODILEDEVICE". Significantly, such registration is only in theSupplemental Register.

A certificate of registration in the Supplemental Register isnot prima facie evidence of the validity of registration, of theregistrant's exclusive right to use the same in connection

with the goods, business, or services specified in the

7/21/2019 LIP - Cases 8


certificate. Such a certificate of registration cannot be filed,with effect, with the Bureau of Customs in order to excludefrom the Philippines, foreign goods bearing infringementmarks or trade names (Rule 124, Revised Rules of PracticeBefore the Phil. Pat. Off. in Trademark Cases; Martin,Philippine Commercial Laws, 1981, Vol. 2, pp. 513-515).

Section 19-A of Republic Act 166 as amended not onlyprovides for the keeping of the supplemental register inaddition to the principal register but specifically directs that:

The certificates of registration for marks and trade namesregistered on the supplemental register shall beconspicuously different from certificates issued for marksand trade names on the principal register.

The reason is explained by a leading commentator on

Philippine Commercial Laws:

The registration of a mark upon the supplemental register isnot, as in the case of the principal register, prima facieevidence of (1) the validity of registration; (2) registrant'sownership of the mark; and (3) registrant's exclusive right touse the mark. It is not subject to opposition, although it maybe cancelled after its issuance. Neither may it be the subjectof interference proceedings. Registration on thesupplemental register is not constructive notice of

registrant's claim of ownership. A supplemental register isprovided for the registration of marks which are notregistrable on the principal register because of some defects(conversely, defects which make a mark unregistrable on theprincipal register, yet do not bar them from the supplementalregister.) (Agbayani, II Commercial Laws of the Philippines,1978, p. 514, citing Uy Hong Mo v. Titay & Co., et al., Dec.No. 254 of Director of Patents, Apr. 30, 1963);

Registration in the Supplemental Register, therefore, serves

as notice that the registrant is using or has appropriated the

trademark. By the very fact that the trademark cannot as yetbe entered in the Principal Register, all who deal with itshould be on guard that there are certain defects, someobstacles which the user must Still overcome before he canclaim legal ownership of the mark or ask the courts tovindicate his claims of an exclusive right to the use of thesame. It would be deceptive for a party with nothing more

than a registration in the Supplemental Register to posturebefore courts of justice as if the registration is in the PrincipalRegister.

The reliance of the private respondent on the last sentenceof the Patent office action on application Serial No. 30954that "registrant is presumed to be the owner of the mark untilafter the registration is declared cancelled" is, therefore,misplaced and grounded on shaky foundation, Thesupposed presumption not only runs counter to the precept

embodied in Rule 124 of the Revised Rules of Practicebefore the Philippine Patent Office in Trademark Cases butconsidering all the facts ventilated before us in the fourinterrelated petitions involving the petitioner and therespondent, it is devoid of factual basis. And even in caseswhere presumption and precept may factually be reconciled,we have held that the presumption is rebuttable, notconclusive, (People v. Lim Hoa, G.R. No. L10612, May 30,1958, Unreported). One may be declared an unfaircompetitor even if his competing trademark is registered

(Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil. 928; LaYebana Co. v. Chua Seco & Co., 14 Phil. 534).

By the same token, the argument that the application waspremature in view of the pending case before the PatentOffice is likewise without legal basis.

The proceedings pending before the Patent Office involvingIPC Co. 1658 do not partake of the nature of a prejudicialquestion which must first be definitely resolved.

7/21/2019 LIP - Cases 8


Section 5 of Rule 111 of the Rules of Court provides that:

A petition for the suspension of the criminal action basedupon the pendency of a pre-judicial question in a civil case,may only be presented by any party before or during the trialof the criminal action.

The case which suspends the criminal prosecution must be acivil case which is determinative of the innocence or, subjectto the availability of other defenses, the guilt of the accused.The pending case before the Patent Office is anadministrative proceeding and not a civil case. The decisionof the Patent Office cannot be finally determinative of theprivate respondent's innocence of the charges against him.

In Flordelis v. Castillo (58 SCRA 301), we held that:

As clearly delineated in the aforecited provisions of the newCivil Code and the Rules of Court, and as uniformly appliedin numerous decisions of this Court, (Berbari v. Concepcion,40 Phil. 837 (1920); Aleria v. Mendoza, 83 Phil. 427 (1949);People v. Aragon, 94 Phil. 357 (1954); Brito-Sy v. MalateTaxicab & Garage, Inc., 102 Phil 482 (1957); Mendiola v.Macadael, 1 SCRA 593; Benitez v. Concepcion, 2 SCRA178; Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia,22 SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA271) the doctrine of prejudicial question was held

inapplicable because no criminal case but merely anadministrative case and a civil suit were involved. The Court,however, held that, in view of the peculiar circumstances ofthat case, the respondents' suit for damages in the lowercourt was premature as it was filed during the pendency ofan administrative case against the respondents before thePOLCOM. 'The possibility cannot be overlooked,' said theCourt, 'that the POLCOM may hand down a decisionadverse to the respondents, in which case the damage suitwill become unfounded and baseless for wanting in cause of

action.') the doctrine of pre-judicial question comes into play

generally in a situation where a civil action and a criminalaction both penned and there exists in the former an issuewhich must be preemptively resolved before the criminalaction may proceed, because howsoever the issue raised inthe civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminalcase.

In the present case, no civil action pends nor has any beeninstituted. What was pending was an administrative casebefore the Patent Office.

Even assuming that there could be an administrativeproceeding with exceptional or special circumstances whichrender a criminal prosecution premature pending thepromulgation of the administrative decision, no such peculiarcircumstances are present in this case.

Moreover, we take note of the action taken by the PatentsOffice and the Minister of Trade and affirmed by theIntermediate Appellate Court in the case of La ChemiseLacoste S. A. v . Ram Sadhwani (AC-G.R. No. SP-13356,June 17, 1983).

The same November 20, 1980 memorandum of the Ministerof Trade discussed in this decision was involved in theappellate court's decision. The Minister as the "implementing

authority" under Article 6bis of the Paris Convention for theprotection of Industrial Property instructed the Director ofPatents to reject applications for Philippine registration ofsignature and other world famous trademarks by applicantsother than its original owners or users. The brand "Lacoste"was specifically cited together with Jordache, GloriaVanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,Oscar dela Renta, Calvin Klein, Givenchy, Ralph Laurence,Geoffrey Beene, Lanvin, and Ted Lapidus. The Director ofPatents was likewise ordered to require Philippine registrants

of such trademarks to surrender their certificates of

7/21/2019 LIP - Cases 8


registration. Compliance by the Director of Patents waschallenged.

The Intermediate Appellate Court, in the LaChemise Lacoste S.A. v. Sadhwani decision which we citewith approval sustained the power of the Minister of Trade toissue the implementing memorandum and, after going over

the evidence in the records, affirmed the decision of theDirector of Patents declaring La Chemise Lacoste &A. theowner of the disputed trademark and crocodile or alligatordevice. The Intermediate Appellate Court speaking throughMr. Justice Vicente V. Mendoza stated:

In the case at bar, the Minister of Trade, as 'the competentauthority of the country of registration,' has found that amongother well-known trademarks 'Lacoste' is the subject ofconflicting claims. For this reason, applications for its

registration must be rejected or refused, pursuant to thetreaty obligation of the Philippines.

Apart from this finding, the annexes to the opposition, whichLa Chemise Lacoste S.A. filed in the Patent Office, show thatit is the owner of the trademark 'Lacoste' and the deviceconsisting of a representation of a crocodile or alligator bythe prior adoption and use of such mark and device onclothing, sports apparel and the like. La Chemise LacosteS.A, obtained registration of these mark and device and was

in fact issued renewal certificates by the French NationalIndustry Property Office.

Indeed, due process is a rule of reason. In the case at barthe order of the Patent Office is based not only on theundisputed fact of ownership of the trademark by theappellee but on a prior determination by the Minister ofTrade, as the competent authority under the ParisConvention, that the trademark and device sought to beregistered by the appellant are well-known marks which the

Philippines, as party to the Convention, is bound to protect in

favor of its owners. it would be to exalt form over substanceto say that under the circumstances, due process requiresthat a hearing should be held before the application is actedupon.

The appellant cites section 9 of Republic Act No. 166, whichrequires notice and hearing whenever an opposition to the

registration of a trademark is made. This provision does notapply, however, to situations covered by the ParisConvention, where the appropriate authorities havedetermined that a well-known trademark is already that ofanother person. In such cases, the countries signatories tothe Convention are obliged to refuse or to cancel theregistration of the mark by any other person or authority. Inthis case, it is not disputed that the trademark Lacoste issuch a well-known mark that a hearing, such as thatprovided in Republic Act No. 166, would be superfluous.

The issue of due process was raised and fully discussed inthe appellate court's decision. The court ruled that dueprocess was not violated.

In the light of the foregoing it is quite plain that the prejudicialquestion argument is without merit.

We have carefully gone over the records of all the cases filedin this Court and find more than enough evidence to sustain

a finding that the petitioner is the owner of the trademarks"LACOSTE", "CHEMISE LACOSTE", the crocodile oralligator device, and the composite mark of LACOSTE andthe representation of the crocodile or alligator. Anypretensions of the private respondent that he is the ownerare absolutely without basis. Any further ventilation of theissue of ownership before the Patent Office will be asuperfluity and a dilatory tactic.

The issue of whether or not the trademark used by the

private respondent is different from the petitioner's trade

7/21/2019 LIP - Cases 8


mark is a matter of defense and will be better resolved in thecriminal proceedings before a court of justice instead ofraising it as a preliminary matter in an administrativeproceeding.

The purpose of the law protecting a trademark cannot beoveremphasized. They are to point out distinctly the origin or

ownership of the article to which it is affixed, to secure tohim, who has been instrumental in bringing into market asuperior article of merchandise, the fruit of his industry andskill, and to prevent fraud and imposition (Etepha v. Directorof Patents, 16 SCRA 495).

The legislature has enacted laws to regulate the use oftrademarks and provide for the protection thereof. Moderntrade and commerce demands that depredations onlegitimate trade marks of non-nationals including those who

have not shown prior registration thereof should not becountenanced. The law against such depredations is notonly for the protection of the owner of the trademark but also,and more importantly, for the protection of purchasers fromconfusion, mistake, or deception as to the goods they arebuying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; GeneralGarments Corporation v. Director of Patents, 41 SCRA 50).

The law on trademarks and tradenames is based on theprinciple of business integrity and common justice' This law,

both in letter and spirit, is laid upon the premise that, while itencourages fair trade in every way and aims to foster, andnot to hamper, competition, no one, especially a trader, is

justified in damaging or jeopardizing another's business byfraud, deceipt, trickery or unfair methods of any sort. Thisnecessarily precludes the trading by one dealer upon thegood name and reputation built up by another (Baltimore v.Moses, 182 Md 229, 34 A (2d) 338).

The records show that the goodwill and reputation of the

petitioner's products bearing the trademark LACOSTE date

back even before 1964 when LACOSTE clothing apparelswere first marketed in the Philippines. To allow Hemandas tocontinue using the trademark Lacoste for the simple reasonthat he was the first registrant in the Supplemental Registerof a trademark used in international commerce and notbelonging to him is to render nugatory the very essence ofthe law on trademarks and tradenames.

We now proceed to the consideration of the petitionin Gobindram Hemandas Suianani u. Hon. Roberto VOngpin,et al. (G.R. No. 65659).

Actually, three other petitions involving the same trademarkand device have been filed with this Court.

In Hemandas & Co. v. Intermediate Appellate Court, et al .(G.R. No. 63504) the petitioner asked for the following relief:

IN VIEW OF ALL THE FOREGOING, it is respectfully prayed(a) that the Resolutions of the respondent Court of January3, 1983 and February 24, 1983 be nullified; and that theDecision of the same respondent Court of June 30, 1983 bedeclared to be the law on the matter; (b) that the Director ofPatents be directed to issue the corresponding registrationcertificate in the Principal Register; and (c) granting upon thepetitioner such other legal and equitable remedies as are

justified by the premises.

On December 5, 1983, we issued the following resolution:

Considering the allegations contained, issues raised and thearguments adduced in the petition for review, therespondent's comment thereon, and petitioner's reply to saidcomment, the Court Resolved to DENY the petition for lackof merit.

The Court further Resolved to CALL the attention of the

Philippine Patent Office to the pendency in this Court of G.R.

7/21/2019 LIP - Cases 8


No. 563796-97 entitled 'La Chemise Lacoste, S.A. v. Hon.Oscar C. Fernandez and Gobindram Hemandas' which wasgiven due course on June 14, 1983 and to the fact that G.R.No. 63928-29 entitled 'Gobindram Hemandas v. La ChemiseLacoste, S.A., et al.' filed on May 9, 1983 was dismissed forlack of merit on September 12, 1983. Both petitions involvethe same dispute over the use of the trademark 'Chemise

Lacoste'.

The second case of Gobindram Hemandas vs. La ChemiseLacoste, S.A., et al. (G.R. No. 63928-29) prayed for thefollowing:

I. On the petition for issuance of writ of preliminary injunction,an order be issued after due hearing:

l. Enjoining and restraining respondents Company,

attorneys-in-fact, and Estanislao Granados from furtherproceedings in the unfair competition charges pending withthe Ministry of Justice filed against petitioner;

2. Enjoining and restraining respondents Company and itsattorneys-in-fact from causing undue publication innewspapers of general circulation on their unwarranted claimthat petitioner's products are FAKE pending proceedingshereof; and

3. Enjoining and restraining respondents Company and itsattorneys-in-fact from sending further threatening letters topetitioner's customers unjustly stating that petitioner'sproducts they are dealing in are FAKE and threatening themwith confiscation and seizure thereof.

II. On the main petition, judgment be rendered:

l. Awarding and granting the issuance of the Writ ofProhibition, prohibiting, stopping, and restraining

respondents from further committing the acts complained of;

2. Awarding and granting the issuance of the Writ ofMandamus, ordering and compelling respondents NationalBureau of Investigation, its aforenamed agents, and StateProsecutor Estanislao Granados to immediately comply withthe Order of the Regional Trial Court, National CapitalJudicial Region, Branch XLIX, Manila, dated April 22, 1983,which directs the immediate return of the seized items under

Search Warrants Nos. 83-128 and 83-129;

3. Making permanent any writ of injunction that may havebeen previously issued by this Honorable Court in thepetition at bar: and

4. Awarding such other and further relief as may be just andequitable in the premises.

As earlier stated, this petition was dismissed for lack of merit

on September 12, 1983. Acting on a motion forreconsideration, the Court on November 23, 1983 resolvedto deny the motion for lack of merit and declared the denialto be final.

Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is thethird petition.

In this last petition, the petitioner prays for the setting asideas null and void and for the prohibiting of the enforcement of

the following memorandum of respondent Minister RobertoOngpin:

FOR: THE DIRECTOR OF PATENTS

Pursuant to Executive Order No. 913 dated 7 October 1983which strengthens the rule-making and adjudicatory powersof the Minister of Trade and Industry and provides inter alia,that 'such rule-making and adjudicatory powers should berevitalized in order that the Minister of Trade and Industry

can ...apply more swift and effective solutions and remedies

ld d bl h h i f i f (d) h h d k h b l bli h d d

7/21/2019 LIP - Cases 8


to old and new problems ... such as the infringement ofinternationally-known tradenames and trademarks ...'and inview of the decision of the Intermediate Appellate Court inthe case of LA CHEMISE LACOSTE, S.A., versus RAMSADWHANI [AC-G.R. Sp. No. 13359 (17) June 1983] whichaffirms the validity of the MEMORANDUM of then MinisterLuis R. Villafuerte dated 20 November 1980 confirming our

obligations under the PARIS CONVENTION FOR THEPROTECTION OF INDUSTRIAL PROPERTY to which theRepublic of the Philippines is a signatory, you are herebydirected to implement measures necessary to effectcompliance with our obligations under said convention ingeneral, and, more specifically, to honor our commitmentunder Section 6 bisthereof, as follows:

1. Whether the trademark under consideration is well-knownin the Philippines or is a mark already belonging to a person

entitled to the benefits of the CONVENTION, this should beestablished, pursuant to Philippine Patent Office proceduresin inter partes and ex parte cases, according to any of thefollowing criteria or any combination thereof:

(a) a declaration by the Minister of Trade and Industry that'the trademark being considered is already well-known in thePhilippines such that permission for its use by other than itsoriginal owner will constitute a reproduction, imitation,translation or other infringement;

(b) that the trademark is used in commerce internationally,supported by proof that goods bearing the trademark aresold on an international scale, advertisements, theestablishment of factories, sales offices, distributorships, andthe like, in different countries, including volume or othermeasure of international trade and commerce;

(c) that the trademark is duly registered in the industrialproperty office(s) of another country or countries, taking into

consideration the dates of such registration;

(d) that the trademark has been long established andobtained goodwill and general international consumerrecognition as belonging to one owner or source;

(e) that the trademark actually belongs to a party claimingownership and has the right to registration under theprovisions of the aforestated PARIS CONVENTION.

2. The word trademark, as used in this MEMORANDUM,shall include tradenames, service marks, logos, signs,emblems, insignia or other similar devices used forIdentification and recognition by consumers.

3. The Philippine Patent Office shall refuse all applicationsfor, or cancel the registration of, trademarks which constitutea reproduction, translation or imitation of a trademark ownedby a person, natural or corporate, who is a citizen of a

country signatory to the PARIS CONVENTION FOR THEPROTECTION OF INDUSTRIAL PROPERTY.

4. The Philippine Patent Office shall give due course to theOpposition in cases already or hereafter filed against theregistration of trademarks entitled to protection of Section 6bis of said PARIS CONVENTION as outlined above, byremanding applications filed by one not entitled to suchprotection for final disallowance by the Examination Division.

5. All pending applications for Philippine registration ofsignature and other world famous trademarks filed byapplicants other than their original owners or users shall berejected forthwith. Where such applicants have alreadyobtained registration contrary to the abovementioned PARISCONVENTION and/or Philippine Law, they shall be directedto surrender their Certificates of Registration to the PhilippinePatent Office for immediate cancellation proceedings.

6 C i t t ith th f i h b di t d t i it t d h d d h d th i f i t f

7/21/2019 LIP - Cases 8


6. Consistent with the foregoing, you are hereby directed toexpedite the hearing and to decide without delay thefollowing cases pending before your Office:

1. INTER PARTES CASE NO. 1689-Petition filed by LaChemise Lacoste, S.A. for the cancellation of Certificate ofRegistration No. SR-2225 issued to Gobindram Hemandas,

assignee of Hemandas and Company;

2. INTER PARTES CASE NO. 1658-Opposition filed byGames and Garments Co. against the registration of thetrademark Lacoste sought by La Chemise Lacoste, S.A.;

3. INTER PARTES CASE NO. 1786-Opposition filed by LaChemise Lacoste, S.A. against the registration of trademarkCrocodile Device and Skiva sought by one Wilson Chua.

Considering our discussions in G.R. Nos. 63796-97, we findthe petition in G.R. No. 65659 to be patently without meritand accordingly deny it due course.

In complying with the order to decide without delay the casesspecified in the memorandum, the Director of Patents shalllimit himself to the ascertainment of facts in issues notresolved by this decision and apply the law as expounded bythis Court to those facts.

One final point. It is essential that we stress our concern atthe seeming inability of law enforcement officials to stem thetide of fake and counterfeit consumer items flooding thePhilippine market or exported abroad from our country. Thegreater victim is not so much the manufacturer whoseproduct is being faked but the Filipino consuming public andin the case of exportations, our image abroad. No less thanthe President, in issuing Executive Order No. 913 datedOctober 7, 1983 to strengthen the powers of the Minister ofTrade and Industry for the protection of consumers, stated

that, among other acts, the dumping of substandard,

imitated, hazardous, and cheap goods, the infringement ofinternationally known tradenames and trademarks, and theunfair trade practices of business firms has reached suchproportions as to constitute economic sabotage. We buy akitchen appliance, a household tool, perfume, face powder,other toilet articles, watches, brandy or whisky, and items ofclothing like jeans, T-shirts, neck, ties, etc. — the list is quite

length — and pay good money relying on the brand name asguarantee of its quality and genuine nature only to explode inbitter frustration and genuine nature on helpless angerbecause the purchased item turns out to be a shoddyimitation, albeit a clever looking counterfeit, of the qualityproduct. Judges all over the country are well advised toremember that court processes should not be used asinstruments to, unwittingly or otherwise, aid counterfeitersand intellectual pirates, tie the hands of the law as it seeks toprotect the Filipino consuming public and frustrate executive

and administrative implementation of solemn commitmentspursuant to international conventions and treaties.

WHEREFORE, the petition in G.R. NOS. 63797-97 is herebyGRANTED. The order dated April 22, 1983 of therespondent regional trial court is REVERSED and SET

ASIDE. Our Temporary Restraining Order dated April 29,1983 is ma(i.e. PERMANENT. The petition in G.R. NO.65659 is DENIED due course for lack of merit. OurTemporary Restraining Order dated December 5, 1983 is

LIFTED and SET ASIDE, effective immediately.

SO ORDERED.

DEL MONTE CORPORATION and PHILIPPINE PACKINGCORPORATION, petitioners,vs.COURT OF APPEALS and SUNSHINE SAUCE

MANUFACTURING INDUSTRIES, respondents.

Th titi ti i th d i i f th th i t d t b ht f th j k h f

7/21/2019 LIP - Cases 8


The petitioners are questioning the decision of therespondent court upholding the dismissal by the trial court oftheir complaint against the private respondent forinfringement of trademark and unfair competition.

Petitioner Del Monte Corporation is a foreign companyorganized under the laws of the United States and not

engaged in business in the Philippines. Both the Philippinesand the United States are signatories to the Convention ofParis of September 27, 1965, which grants to the nationalsof the parties rights and advantages which their ownnationals enjoy for the repression of acts of infringement andunfair competition.

Petitioner Philippine Packing Corporation (Philpack) is adomestic corporation duly organized under the laws of thePhilippines. On April 11, 1969, Del Monte granted Philpack

the right to manufacture, distribute and sell in the Philippinesvarious agricultural products, including catsup, under the DelMonte trademark and logo.

On October 27,1965, Del Monte authorized Philpack toregister with the Philippine Patent Office the Del Montecatsup bottle configuration, for which it was grantedCertificate of Trademark Registration No. SR-913 by thePhilippine Patent Office under the SupplementalRegister. 1 On November 20, 1972, Del Monte also obtained

two registration certificates for its trademark "DEL MONTE"and its logo. 2

Respondent Sunshine Sauce Manufacturing Industries wasissued a Certificate of Registration by the Bureau ofDomestic Trade on April 17,1980, to engage in themanufacture, packing, distribution and sale of various kindsof sauce, identified by the logo Sunshine Fruit Catsup. 3 Thislogo was registered in the Supplemental Register onSeptember 20, 1983. 4 The product itself was contained in

various kinds of bottles, including the Del Monte bottle, which

the private respondent bought from the junk shops forrecycling.

Having received reports that the private respondent wasusing its exclusively designed bottles and a logo confusinglysimilar to Del Monte's, Philpack warned it to desist fromdoing so on pain of legal action. Thereafter, claiming that the

demand had been ignored, Philpack and Del Monte filed acomplaint against the private respondent for infringement oftrademark and unfair competition, with a prayer for damagesand the issuance of a writ of preliminary injunction. 5

In its answer, Sunshine alleged that it had long ceased touse the Del Monte bottle and that its logo was substantiallydifferent from the Del Monte logo and would not confuse thebuying public to the detriment of the petitioners. 6

After trial, the Regional Trial Court of Makati dismissed thecomplaint. It held that there were substantial differencesbetween the logos or trademarks of the parties; that thedefendant had ceased using the petitioners' bottles; and thatin any case the defendant became the owner of the saidbottles upon its purchase thereof from the junk yards.Furthermore, the complainants had failed to establish thedefendant's malice or bad faith, which was an essentialelement of infringement of trademark or unfair competition. 7

This decision was affirmed in toto by the respondent court,which is now faulted in this petition for certiorari under Rule45 of the Rules of Court.

Section 22 of R.A. No. 166, otherwise known as theTrademark Law, provides in part as follows:

Sec. 22. Infringement, what constitutes. — Any person whoshall use, without the consent of the registrant, anyreproduction, 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 (a) Any person who in selling his goods shall give them the

7/21/2019 LIP - Cases 8


offering for sale, or advertising of any goods, business orservices on or in connection with which such use is likely tocause confusion or mistake or to deceive purchasers orothers as to the source or origin of such goods or services oridentity of such business; or reproduce, counterfeit copy orcolorably imitate any such mark or trade name and applysuch reproduction, counterfeit copy or colorable imitation to

labels, signs, prints, packages, wrappers, receptacles oradvertisements intended to be used upon or in connectionwith such goods, business or services, shall be liable to acivil action by the registrant for any or all of the remediesherein provided.

Sec. 29 of the same law states as follows:

Sec. 29. Unfair competition, rights and remedies. — Aperson who has identified in the mind of the public the goods

he manufactures or deals in, his business or services fromthose of others, whether or not a mark or tradename isemployed, has a property right in the goodwill of the saidgoods, business or services so identified, which will beprotected in the same manner as other property rights. Sucha person shall have the remedies provided in section twenty-three, Chapter V hereof.

Any person who shall employ deception or any other meanscontrary to good faith by which he shall pass off the goods

manufactured by him or in which he deals, or his business,or services for those of the one having established suchgoodwill, or who shall commit any acts calculated to producesaid result, shall be guilty of unfair competition, and shall besubject to an action therefor.

In particular, and without in any way limiting the scope ofunfair competition, the following shall be deemed guilty ofunfair competition:

(a) Any person, who in selling his goods shall give them thegeneral appearance of goods of another manufacturer ordealer, either as to the goods themselves or in the wrappingof the packages in which they are contained, or the devicesor words thereon, or in any other feature of their appearance,which would likely influence purchasers to believe that thegoods offered are those of a manufacturer or dealer other

than the actual manufacturer or dealer, or who otherwiseclothes the goods with such appearance as shall deceive thepublic and defraud another of his legitimate trade, or anysubsequent vendor of such goods or any agent of anyvendor engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or whoemploys ally other means calculated to induce the falsebelief that such person is offering the services of anotherwho has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in thecourse of trade or who shall commit any other act contrary togood faith of a nature calculated to discredit the goods,business or services of another.

To arrive at a proper resolution of this case, it is important tobear in mind the following distinctions between infringementof trademark and unfair competition.

(1) Infringement of trademark is the unauthorized use of atrademark, whereas unfair competition is the passing off ofone's goods as those of another.

(2) In infringement of trademark fraudulent intent isunnecessary whereas in unfair competition fraudulent intentis essential.

(3) In infringement of trademark the prior registration of thetrademark is a prerequisite to the action, whereas in unfair

competition registration is not necessary.

8

In the challenged decision the respondent court cited the Sunshine: Sunshine fruit catsup is clearly indicated "made in

7/21/2019 LIP - Cases 8


In the challenged decision, the respondent court cited thefollowing test laid down by this Court in a number of cases:

In determining whether two trademarks are confusinglysimilar, the two marks in their entirety as they appear in therespective labels must be considered in relation to the goodsto which they are attached; the discerning eye of the

observer must focus not only on the predorninant words butalso on the other features appearing on both labels. 9

and applying the same, held that there was no colorableimitation of the petitioners' trademark and logo by the privaterespondent. The respondent court agreed with the findings ofthe trial court that:

In order to resolve the said issue, the Court now attempts tomake a comparison of the two products, to wit:

1. As to the shape of label or make:

Del Monte: Semi-rectangular with a crown or tomato shapedesign on top of the rectangle.

Sunshine: Regular rectangle.

2. As to brand printed on label:

Del Monte: Tomato catsup mark.

Sunshine: Fruit catsup.

3. As to the words or lettering on label or mark:

Del Monte: Clearly indicated words packed by SysuInternational, Inc., Q.C., Philippines.

Sunshine: Sunshine fruit catsup is clearly indicated made inthe Philippines by Sunshine Sauce Manufacturing Industries"No. 1 Del Monte Avenue, Malabon, Metro Manila.

4. As to color of logo:

Del Monte: Combination of yellow and dark red, with words

"Del Monte Quality" in white.

Sunshine: White, light green and light red, with words"Sunshine Brand" in yellow.

5. As to shape of logo:

Del Monte: In the shape of a tomato.

Sunshine: Entirely different in shape.

6. As to label below the cap:

Del Monte: Seal covering the cap down to the neck of thebottle, with picture of tomatoes with words "made from realtomatoes."

Sunshine: There is a label below the cap which says"Sunshine Brand."

7. As to the color of the products:

Del Monte: Darker red.

Sunshine: Lighter than Del Monte.

While the Court does recognize these distinctions, it doesnot agree with the conclusion that there was no infringementor unfair competition. It seems to us that the lower courts

have been so pre occupied with the details that they have A number of courts have held that to determine whether a

7/21/2019 LIP - Cases 8


have been so pre-occupied with the details that they havenot seen the total picture.

It has been correctly held that side-by-side comparison is notthe final test of similarity. 10 Such comparison requires acareful scrutiny to determine in what points the labels of theproducts differ, as was done by the trial judge. The ordinary

buyer does not usually make such scrutiny nor does heusually have the time to do so. The average shopper isusually in a hurry and does not inspect every product on theshelf as if he were browsing in a library. Where thehousewife has to return home as soon as possible to herbaby or the working woman has to make quick purchasesduring her off hours, she is apt to be confused by similarlabels even if they do have minute differences. The maleshopper is worse as he usually does not bother about suchdistinctions.

The question is not whether the two articles aredistinguishable by their label when set side by side butwhether the general confusion made by the article upon theeye of the casual purchaser who is unsuspicious and off hisguard, is such as to likely result in his confounding it with theoriginal. 11 As observed in several cases, the generalimpression of the ordinary purchaser, buying under thenormally prevalent conditions in trade and giving theattention such purchasers usually give in buying that class of

goods is the touchstone.

12

It has been held that in making purchases, the consumermust depend upon his recollection of the appearance of theproduct which he intends to purchase. 13 The buyer having inmind the mark/label of the respondent must rely upon hismemory of the petitioner's mark. 14 Unlike the judge who hasample time to minutely examine the labels in question in thecomfort of his sala, the ordinary shopper does not enjoy thesame opportunity.

A number of courts have held that to determine whether atrademark has been infringed, we must consider the mark asa whole and not as dissected. If the buyer is deceived, it isattributable to the marks as a totality, not usually to any partof it. 15 The court therefore should be guided by its firstimpression, 16 for a buyer acts quickly and is governed by acasual glance, the value of which may be dissipated as soon

as the court assumes to analyze carefully the respectivefeatures of the mark. 17

It has also been held that it is not the function of the court incases of infringement and unfair competition to educatepurchasers but rather to take their carelessness for granted,and to be ever conscious of the fact that marks need not beidentical. A confusing similarity will justify the intervention ofequity. 18 The judge must also be aware of the fact thatusually a defendant in cases of infringement does not

normally copy but makes only colorable changes.

19

Well hasit been said that the most successful form of copying is toemploy enough points of similarity to confuse the public withenough points of difference to confuse the courts. 20

We also note that the respondent court failed to take intoconsideration several factors which should have affected itsconclusion, to wit: age, training and education of the usualpurchaser, the nature and cost of the article, whether thearticle is bought for immediate consumption and also the

conditions under which it is usually purchased .

21

Amongthese, what essentially determines the attitude of thepurchaser, specifically his inclination to be cautious, is thecost of the goods. To be sure, a person who buys a box ofcandies will not exercise as much care as one who buys anexpensive watch. As a general rule, an ordinary buyer doesnot exercise as much prudence in buying an article for whichhe pays a few centavos as he does in purchasing a morevaluable thing. 22 Expensive and valuable items are normallybought only after deliberate, comparative and analyticalinvestigation. But mass products, low priced articles in wide

use and matters of everyday purchase requiring frequent Del Monte bottle The reason is that the configuration of the

7/21/2019 LIP - Cases 8


use, and matters of everyday purchase requiring frequentreplacement are bought by the casual consumer withoutgreat care. 23 In this latter category is catsup.

At that, even if the labels were analyzed together it is notdifficult to see that the Sunshine label is a colorable imitationof the Del Monte trademark. The predominant colors used in

the Del Monte label are green and red-orange, the same withSunshine. The word "catsup" in both bottles is printed inwhite and the style of the print/letter is the same. Althoughthe logo of Sunshine is not a tomato, the figure neverthelessapproximates that of a tomato.

As previously stated, the person who infringes a trade markdoes not normally copy out but only makes colorablechanges, employing enough points of similarity to confusethe public with enough points of differences to confuse the

courts. What is undeniable is the fact that when amanufacturer prepares to package his product, he hasbefore him a boundless choice of words, phrases, colors andsymbols sufficient to distinguish his product from the others.When as in this case, Sunshine chose, without a reasonableexplanation, to use the same colors and letters as thoseused by Del Monte though the field of its selection was sobroad, the inevitable conclusion is that it was donedeliberately to deceive . 24

It has been aptly observed that the ultimate ratio in cases ofgrave doubt is the rule that as between a newcomer who bythe confusion has nothing to lose and everything to gain andone who by honest dealing has already achieved favor withthe public, any doubt should be resolved against thenewcomer inasmuch as the field from which he can select adesirable trademark to indicate the origin of his product isobviously a large one. 25

Coming now to the second issue, we find that the privaterespondent is not guilty of infringement for having used the

Del Monte bottle. The reason is that the configuration of thesaid bottle was merely registered in the SupplementalRegister. In the case of Lorenzana v. Macagba, 26 wedeclared that:

(1) Registration in the Principal Register gives rise to apresumption of the validity of the registration, the registrant's

ownership of the mark and his right to the exclusive usethereof. There is no such presumption in the registration inthe Supplemental Register.

(2) Registration in the Principal Register is limited to theactual owner of the trademark and proceedings therein onthe issue of ownership which may be contested throughopposition or interference proceedings or, after registration,in a petition for cancellation.

Registration in the Principal Register is constructive notice ofthe registrant's claim of ownership, while registration in theSupplemental Register is merely proof of actual use of thetrademark and notice that the registrant has used orappropriated it. It is not subject to opposition although it maybe cancelled after the issuance. Corollarily, registration in thePrincipal Register is a basis for an action for infringementwhile registration in the Supplemental Register is not.

(3) In applications for registration in the Principal Register,

publication of the application is necessary. This is not so inapplications for registrations in the Supplemental Register.

It can be inferred from the foregoing that although Del Montehas actual use of the bottle's configuration, the petitionerscannot claim exclusive use thereof because it has not beenregistered in the Principal Register. However, we find thatSunshine, despite the many choices available to it andnotwithstanding that the caution "Del Monte Corporation, Notto be Refilled" was embossed on the bottle, still opted to usethe petitioners' bottle to market a product which Philpack

also produces This clearly shows the private respondent's different companies stenciled on the containers thereof

7/21/2019 LIP - Cases 8


also produces. This clearly shows the private respondent sbad faith and its intention to capitalize on the latter'sreputation and goodwill and pass off its own product as thatof Del Monte.

The Court observes that the reasons given by therespondent court in resolving the case in favor of Sunshine

are untenable. First, it declared that the registration of theSunshine label belied the company's malicious intent toimitate petitioner's product. Second, it held that the Sunshinelabel was not improper because the Bureau of Patentpresumably considered other trademarks before approving it.Third, it cited the case of Shell Co. v. InsularPetroleum, 27 where this Court declared that selling oil incontainers of another with markings erased, without intent todeceive, was not unfair competition.

Regarding the fact of registration, it is to be noted that theSunshine label was registered not in the Principal Registerbut only in the Supplemental Register where thepresumption of the validity of the trademark, the registrant'sownership of the mark and his right to its exclusive use areall absent.

Anent the assumption that the Bureau of Patent hadconsidered other existing patents, it is reiterated that sinceregistration was only in the Supplemental Register, this did

not vest the registrant with the exclusive right to use the labelnor did it give rise to the presumption of the validity of theregistration.

On the argument that no unfair competition was committed,the Shell Case is not on all fours with the case at barbecause:

(1) In Shell, the absence of intent to deceive was supportedby the fact that the respondent therein, before marketing itsproduct, totally obliterated and erased the brands/mark of the

different companies stenciled on the containers thereof,except for a single isolated transaction. The respondent inthe present case made no similar effort.

(2) In Shell, what was involved was a single isolatedtransaction. Of the many drums used, there was only onecontainer where the Shell label was not erased, while in the

case at hand, the respondent admitted that it made use ofseveral Del Monte bottles and without obliterating theembossed warning.

(3) In Shell, the product of respondent was sold to dealers,not to ultimate consumers. As a general rule, dealers arewell acquainted with the manufacturer from whom they maketheir purchases and since they are more experienced, theycannot be so easily deceived like the inexperienced public.There may well be similarities and imitations which deceive

all, but generally the interests of the dealers are not regardedwith the same solicitude as are the interests of the ordinaryconsumer. For it is the form in which the wares come to thefinal buyer that is of significance. 28

As Sunshine's label is an infringement of the Del Monte'strademark, law and equity call for the cancellation of theprivate respondent's registration and withdrawal of all itsproducts bearing the questioned label from the market. Withregard to the use of Del Monte's bottle, the same constitutes

unfair competition; hence, the respondent should bepermanently enjoined from the use of such bottles.

The court must rule, however, that the damage prayed forcannot be granted because the petitioner has not presentedevidence to prove the amount thereof. Section 23 of R.A. No.166 provides:

Sec. 23. Actions and damages and injunction forinfringement . — Any person entitled to the exclusive use of aregistered mark or trade name may recover damages in a

civil action from any person who infringes his rights and the respondent from using a label similar to that of the

7/21/2019 LIP - Cases 8


civil action from any person who infringes his rights, and themeasure of the damages suffered shall be either thereasonable profit which the complaining party would havemade, had the defendant not infringed his said rights or theprofit which the defendant actually made out of theinfringement, or in the event such measure of damagescannot be readily ascertained with reasonable certainty the

court may award as damages reasonable percentage basedupon the amount of gross sales of the defendant or the valueof the services in connection with which the mark or tradename was used in the infringement of the rights of thecomplaining party. In cases where actual intent to misleadthe public or to defraud the complaining party shall beshown, in the discretion of the court, the damages may bedoubled.

The complaining party, upon proper showing

may also be granted injunction.

Fortunately for the petitioners, they may still find some smallcomfort in Art. 2222 of the Civil Code, which provides:

Art. 2222. The court may award nominal damages in everyobligation arising from any source enumerated in Art. 1157,or in every case where any property right has been invaded.

Accordingly, the Court can only award to the petitioners, as it

hereby does award, nominal damages in the amount ofPl,000.00.

WHEREFORE, the petition is GRANTED. The decision ofthe Court of Appeals dated December 24, 1986 and theResolution dated April 27,1987, are REVERSED and SET

ASIDE and a new judgment is hereby rendered:

(1) Canceling the private respondent's Certificate of RegisterNo. SR-6310 and permanently enjoining the private

respondent from using a label similar to that of thepetitioners.

(2) Prohibiting the private respondent from using the emptybottles of the petitioners as containers for its own products.

(3) Ordering the private respondent to pay the petitioners

nominal damages in the amount of Pl,000.00, and the costsof the suit.

SO ORDERED.

ASIA BREWERY, INC., petitioner advertising offering or announcing for sale or supplying

7/21/2019 LIP - Cases 8


ASIA BREWERY, INC., petitioner,vs.THE HON. COURT OF APPEALS and SAN MIGUELCORPORATION, respondents.

On September 15, 1988, San Miguel Corporation (SMC) fileda complaint against Asia Brewery Inc. (ABI) for infringement

of trademark and unfair competition on account of the latter'sBEER PALE PILSEN or BEER NA BEER product which hasbeen competing with SMC's SAN MIGUEL PALE PILSEN fora share of the local beer market. (San Miguel Corporation vs.

Asia Brewery Inc., Civ. Case. No. 56390, RTC Branch 166,Pasig, Metro Manila.).

On August 27, 1990, a decision was rendered by the trialCourt, presided over by Judge Jesus O. Bersamira,dismissing SMC's complaint because ABI "has not

committed trademark infringement or unfair competitionagainst" SMC (p. 189, Rollo).

SMC appealed to the Court of Appeals (C.A.-G.R. CV No.28104). On September 30, 1991, the Court of Appeals (SixthDivision composed of Justice Jose C. Campos, Jr., chairmanand ponente, and Justices Venancio D. Aldecoa Jr. andFilemon H. Mendoza, as members) reversed the trial court.The dispositive part of the decision reads as follows:

In the light of the foregoing analysis and under the plainlanguage of the applicable rule and principle on the matter,We find the defendant Asia Brewery Incorporated GUILTY ofinfringement of trademark and unfair competition. Thedecision of the trial court is hereby REVERSED, and a new

judgment entered in favor of the plaintiff and against thedefendant as follows:

(1) The defendant Asia Brewery Inc. its officers, agents,servants and employees are hereby permanently enjoinedand restrained from manufacturing, putting up, selling,

advertising, offering or announcing for sale, or supplyingBeer Pale Pilsen, or any similar preparation, manufacture orbeer in bottles and under labels substantially identical with orlike the said bottles and labels of plaintiff San MiguelCorporation employed for that purpose, or substantiallyidentical with or like the bottles and labels now employed bythe defendant for that purpose, or in bottles or under labels

which are calculated to deceive purchasers and consumersinto the belief that the beer is the product of the plaintiff orwhich will enable others to substitute, sell or palm off thesaid beer of the defendant as and for the beer of the plaintiff-complainant.

(2) The defendant Asia Brewery Inc. is hereby ordered torender an accounting and pay the San Miguel Corporationdouble any and all the payments derived by defendant fromoperations of its business and the sale of goods bearing the

mark "Beer Pale Pilsen" estimated at approximately FiveMillion Pesos (P5,000,000.00); to recall all its productsbearing the mark "Beer Pale Pilsen" from its retailers anddeliver these as well as all labels, signs, prints, packages,wrappers, receptacles and advertisements bearing theinfringing mark and all plates, molds, materials and othermeans of making the same to the Court authorized toexecute this judgment for destruction.

(3) The defendant is hereby ordered to pay plaintiff the sumof Two Million Pesos (P2,000,000.00) as moral damagesand Half a Million Pesos (P5,000,000.00) by way ofexemplary damages.

(4) The defendant is further ordered to pay the plaintiffattorney's fees in the amount of P250,000.00 plus costs tothis suit. (p. 90, Rollo.)

Upon a motion for reconsideration filed by ABI, the abovedispositive part of the decision, was modified by the separate

opinions of the Special Sixth Division 1 so that it should read and Half a Million Pesos (P500,000.00) by way of exemplary

7/21/2019 LIP - Cases 8


opinions of the Special Sixth Division so that it should readthus:

In the light of the foregoing analysis and under the plainlanguage of the applicable rule and principle on the matter,We find the defendant Asia Brewery Incorporated GUILTY ofinfringement of trademark and unfair competition. The

decision of the trial court is hereby REVERSED, and a new judgment entered in favor of the plaintiff and against thedefendant as follows:

(1) The defendant Asia Brewery Inc., its officers, agents,servants and employees are hereby permanently enjoinedand restrained from manufacturing, putting up, selling,advertising, offering or announcing for sale, or supplyingBeer Pale Pilsen, or any similar preparation, manufacture orbeer in bottles and under labels substantially identical with or

like the said bottles and labels of plaintiff San MiguelCorporation employed for that purpose, or substantiallyidentical with or like the bottles and labels now employed bythe defendant for that purpose, or in bottles or under labelswhich are calculated to deceive purchasers and consumersinto the belief that the beer if the product of the plaintiff orwhich will enable others to substitute, sell or palm off thesaid beer of the defendant as and for the beer of the plaintiff-complainant.

(2) The defendant Asia Brewery Inc. is hereby ordered 2 torecall all its products bearing the mark Beer Pale Pilsen fromits retailers and deliver these as well as all labels, signs,prints, packages, wrappers, receptacles and advertisementsbearing the infringing mark and all plates, molds, materialsand other means of making the same to the Court authorizedto execute this judgment for destruction.

(3) The defendant is hereby ordered to pay plaintiff the sumof Two Million Pesos (P2,000,000.00) as moral damages

and Half a Million Pesos (P500,000.00) by way of exemplarydamages.

(4) The defendant is further ordered to pay the plaintiffattorney's fees in the amount of P250,000.00 plus costs ofthis suit.

In due time, ABI appealed to this Court by a petitionfor certiorari under Rule 45 of the Rules of Court. The loneissue in this appeal is whether ABI infringes SMC'strademark: San Miguel Pale Pilsen with Rectangular Hopsand Malt Design, and thereby commits unfair competitionagainst the latter. It is a factual issue (Phil. Nut Industry Inc.v. Standard Brands Inc., 65 SCRA 575) and as a generalrule, the findings of the Court of Appeals upon factualquestions are conclusive and ought not to be disturbed byus. However, there are exceptions to this general rule, and

they are:

(1) When the conclusion is grounded entirely on speculation,surmises and conjectures;

(2) When the inference of the Court of Appeals from itsfindings of fact is manifestly mistaken, absurd andimpossible;

(3) Where there is grave abuse of discretion;

(4) When the judgment is based on a misapprehension offacts;

(5) When the appellate court, in making its findings, wentbeyond the issues of the case, and the same are contrary tothe admissions of both the appellant and the appellee;

(6) When the findings of said court are contrary to those ofthe trial court;

(7) When the findings are without citation of specific Republic Act No. 166, otherwise known as the Trademark

7/21/2019 LIP - Cases 8


( ) e t e d gs a e t out c tat o o spec cevidence on which they are based;

(8) When the facts set forth in the petition as well as in thepetitioner's main and reply briefs are not disputed by therespondents; and

(9) When the findings of facts of the Court of Appeals arepremised on the absence of evidence and are contradictedon record. (Reynolds Philippine Corporation vs. Court of

Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals,147 SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593,609; Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of

Appeals, 198 SCRA 333, 336; also Apex Investment andFinancing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs.De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs. CMS

Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102SCRA 817; and Moran, Jr. vs. CA, 133 SCRA 88].)

Under any of these exceptions, the Court has to review theevidence in order to arrive at the correct findings based onthe record (Roman Catholic Bishop of Malolos, Inc. vs. IAC,191 SCRA 411, 420.) Where findings of the Court of Appealsand trial court are contrary to each other, the Supreme Courtmay scrutinize the evidence on record. (Cruz vs. CA, 129SCRA 222, 227.)

The present case is one of the exceptions because there isno concurrence between the trial court and the Court of

Appeals on the lone factual issue of whether ABI, bymanufacturing and selling its BEER PALE PILSEN in ambercolored steinie bottles of 320 ml. capacity with a whitepainted rectangular label has committed trademarkinfringement and unfair competition against SMC.

Infringement of trademark is a form of unfair competition(Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of

epub c ct o 66, ot e se o as t e ade aLaw, defines what constitutes infringement:

Sec. 22. Infringement, what constitutes. — Any person whoshall use, without the consent of the registrant, anyreproduction, counterfeit, copy or colorable imitation ofany registered mark or trade-name in connection with the

sale, offering for sale, or advertising of any goods, businessor services on or in connection with which such use is likelyto cause confusion or mistake or to deceive purchasers orothers as to the source or origin of such goods or services,or identity of such business; or reproduce, counterfeit, copyor colorably imitate any such mark or trade-name and applysuch reproduction, counterfeit, copy, or colorable imitation tolabels, signs, prints, packages, wrappers, receptacles oradvertisements intended to be used upon or in connectionwith such goods, business or services, shall be liable to a

civil action by the registrant for any or all of the remediesherein provided. (Emphasis supplied.)

This definition implies that only registered trade marks, tradenames and service marks are protected against infringementor unauthorized use by another or others. The use ofsomeone else's registered trademark, trade name or servicemark is unauthorized, hence, actionable, if it is done "withoutthe consent of the registrant." (Ibid .)

The registered trademark of SMC for its pale pilsen beer is:

San Miguel Pale Pilsen With Rectangular Hops and MaltDesign. (Philippine Bureau of Patents, Trademarks andTechnology Transfer Trademark Certificate of RegistrationNo. 36103, dated 23 Oct. 1986,(p. 174, Rollo.)

As described by the trial court in its decision (Page177, Rollo):

. . . . a rectangular design [is] bordered by what appears to trademark and of another. The rule was formulated in Co

7/21/2019 LIP - Cases 8


g g [ ] y ppbe minute grains arranged in rows of three in which thereappear in each corner hop designs. At the top is a phrasewritten in small print "Reg. Phil. Pat. Off." and at the bottom"Net Contents: 320 Ml." The dominant feature is the phrase"San Miguel " written horizontally at the upper portion. Beloware the words "Pale Pilsen" written diagonally across the

middle of the rectangular design. In between is a coat ofarms and the phrase "Expertly Brewed." The "S" in "San"and the "M" of "Miguel," "P" of "Pale" and "Pilsen" are writtenin Gothic letters with fine strokes of serifs, the kind that firstappeared in the 1780s in England and used for printingGerman as distinguished from Roman and Italic. Below "PalePilsen" is the statement "And Bottled by" (first line, "SanMiguel Brewery" (second line), and "Philippines" (third line).(p. 177, Rollo; Emphasis supplied.)

On the other hand, ABI's trademark, as described by the trialcourt, consists of:

. . . a rectangular design bordered by what appear tobe buds of flowers with leaves. The dominant feature is"Beer " written across the upper portion of the rectangulardesign. The phrase "Pale Pilsen" appears immediately belowin smaller block letters. To the left is a hop design and to theright, written in small prints, is the phrase "Net Contents 320ml." Immediately below "Pale Pilsen" is the statement writtenin three lines "Especially brewed and bottled by" (first line),"Asia Brewery Incorporated" (second line), and "Philippines"(third line), (p. 177, Rollo; Emphasis supplied.)

Does ABI's BEER PALE PILSEN label or "design" infringeupon SMC's SAN MIGUEL PALE PILSEN WITHRECTANGULAR MALT AND HOPS DESIGN? The answeris "No."

Infringement is determined by the "test of dominancy" ratherthan by differences or variations in the details of one

Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954);reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214,216-217 (1956), thus:

It has been consistently held that the question ofinfringement of a trademark is to be determined by thetest of

dominancy . Similarity in size, form and color, while relevant,is not conclusive. If the competing trademark contains themain or essential or dominant features of another, andconfusion and deception is likely to result, infringement takesplace. Duplication or imitation is not necessary; nor it isnecessary that the infringing label should suggest an effort toimitate. [C. Neilman Brewing Co. vs. Independent BrewingCo., 191 F., 489, 495, citing Eagle White Lead Co., vs.Pflugh (CC) 180 Fed. 579]. The question at issue in cases ofinfringement of trademarks is whether the use of the marks

involved would be likely to cause confusion or mistakes inthe mind of the public or deceive purchasers. (AuburnRubber Corporation vs. Honover Rubber Co., 107 F. 2d 588;. . . .) (Emphasis supplied.)

In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272,275, the test was similarity or "resemblance between the two(trademarks) such as would be likely to cause the one markto be mistaken for the other. . . . [But] this is not suchsimilitude as amounts to identity."

In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA575, the court was more specific: the test is "similarity in thedominant features of the trademarks."

What are the dominant features of the competing trademarksbefore us?

There is hardly any dispute that the dominant feature ofSMC's trademark is the name of the product: SAN MIGUELPALE PILSEN, written in white Gothic letters with elaborate

serifs at the beginning and end of the letters "S" and "M" on (3) The names of the manufacturers are prominently printed

7/21/2019 LIP - Cases 8


g gan amber background across the upper portion of therectangular design.

On the other hand, the dominant feature of ABI's trademarkis the name: BEER PALE PILSEN, with the word "Beer"written in large amber letters, larger than any of the letters

found in the SMC label.

The trial court perceptively observed that the word "BEER"does not appear in SMC's trademark, just as the words "SANMIGUEL" do not appear in ABI's trademark. Hence, there isabsolutely no similarity in the dominant features of bothtrademarks.

Neither in sound, spelling or appearance can BEER PALEPILSEN be said to be confusingly similar to SAN MIGUEL

PALE PILSEN. No one who purchases BEER PALE PILSENcan possibly be deceived that it is SAN MIGUEL PALEPILSEN. No evidence whatsoever was presented by SMCproving otherwise.

Besides the dissimilarity in their names, the following otherdissimilarities in the trade dress or appearance of thecompeting products abound:

(1) The SAN MIGUEL PALE PILSEN bottle has a slendertapered neck.

The BEER PALE PILSEN bottle has a fat, bulging neck.

(2) The words "pale pilsen" on SMC's label are printed inbold and laced letters along a diagonal band, whereas thewords "pale pilsen" on ABI's bottle are half the size andprinted in slender block letters on a straight horizontal band.(See Exhibit "8-a".).

( ) p y pon their respective bottles.

SAN MIGUEL PALE PILSEN is "Bottled by the San MiguelBrewery, Philippines," whereas BEER PALE PILSEN is"Especially brewed and bottled by Asia BreweryIncorporated, Philippines."

(4) On the back of ABI's bottle is printed in big, bold letters,under a row of flower buds and leaves, its copyrightedslogan:

"BEER NA BEER!"

Whereas SMC's bottle carries no slogan.

(5) The back of the SAN MIGUEL PALE PILSEN bottle

carries the SMC logo, whereas the BEER PALE PILSENbottle has no logo.

(6) The SAN MIGUEL PALE PILSEN bottle cap is stampedwith a coat of arms and the words "San Miguel BreweryPhilippines" encircling the same.

The BEER PALE PILSEN bottle cap is stamped with thename "BEER" in the center, surrounded by the words "AsiaBrewery Incorporated Philippines."

(7) Finally, there is a substantial price difference betweenBEER PALE PILSEN (currently at P4.25 per bottle) and SANMIGUEL PALE PILSEN (currently at P7.00 per bottle). Onewho pays only P4.25 for a bottle of beer cannot expect toreceive San Miguel Pale Pilsen from the storekeeper orbartender.

The fact that the words pale pilsen are part of ABI'strademark does not constitute an infringement of SMC'strademark: SAN MIGUEL PALE PILSEN, for "pale pilsen"

are generic words descriptive of the color ("pale"), of a type (1953), it was held that a dealer in shoes cannot register

7/21/2019 LIP - Cases 8


g ( ) yof beer ("pilsen"), which is a light bohemian beer with astrong hops flavor that originated in the City of Pilsen inCzechoslovakia and became famous in the Middle Ages.(Webster's Third New International Dictionary of the EnglishLanguage, Unabridged. Edited by Philip Babcock Gove.Springfield, Mass.: G & C Merriam Co., [c] 1976, page 1716.)

"Pilsen" is a "primarily geographically descriptive word,"(Sec. 4, subpar. [e] Republic Act No. 166, as inserted bySec. 2 of R.A. No. 638) hence, non-registerable and notappropriable by any beer manufacturer. The Trademark Lawprovides:

Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark used to distinguish his goods, business or servicesfrom the goods, business or services of others shall have theright to register the same [on the principal register], unless it:

xxx xxx xxx

(e) Consists of a mark or trade-name which, when applied toor used in connection with the goods, business or services ofthe applicant is merely descriptive or deceptivelymisdescriptive of them, or when applied to or used inconnection with the goods, business or services of theapplicant is primarily geographically descriptive ordeceptively misdescriptive of them, or is primarily merely asurname." (Emphasis supplied.)

The words "pale pilsen" may not be appropriated by SMC forits exclusive use even if they are part of its registeredtrademark: SAN MIGUEL PALE PILSEN, any more thansuch descriptive words as "evaporated milk," "tomatoketchup," "cheddar cheese," "corn flakes" and "cooking oil"may be appropriated by any single manufacturer of thesefood products, for no other reason than that he was the firstto use them in his registered trademark. In MassoHermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139

( ) g"Leather Shoes" as his trademark because that would bemerely descriptive and it would be unjust to deprive otherdealers in leather shoes of the right to use the same wordswith reference to their merchandise. No one may appropriategeneric or descriptive words. They belong to the publicdomain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676

[1955]):

A word or a combination of words which is merely descriptiveof an article of trade, or of its composition, characteristics, orqualities, cannot be appropriated and protected as atrademark to the exclusion of its use by others. . . . inasmuchas all persons have an equal right to produce and vendsimilar articles, they also have the right to describe themproperly and to use any appropriate language or words forthat purpose, and no person can appropriate to himself

exclusively any word or expression, properly descriptive ofthe article, its qualities, ingredients or characteristics, andthus limit other persons in the use of language appropriate tothe description of their manufactures, the right to the use ofsuch language being common to all . This rule excludingdescriptive terms has also been held to apply to trade-names. As to whether words employed fall within thisprohibition, it is said that the true test is not whether they areexhaustively descriptive of the article designated, butwhether in themselves, and as they are commonly used bythose who understand their meaning, they are reasonablyindicative and descriptive of the thing intended. If they arethus descriptive, and not arbitrary, they cannot beappropriated from general use and become the exclusiveproperty of anyone. (52 Am. Jur. 542-543.)

. . . . Others may use the same or similar descriptive word inconnection with their own wares, provided they take propersteps to prevent the public being deceived. (RichmondRemedies Co. vs. Dr. Miles Medical Co., 16 E. [2d] 598.)

. . . . A descriptive word may be admittedly distinctive, In particular, and without in any way limiting the scope of

7/21/2019 LIP - Cases 8


especially if the user is the first creator of the article. It will,however, be denied protection, not because it lacksdistinctiveness, but rather because others are equallyentitled to its use. (2 Callman. Unfair Competition andTrademarks, pp. 869-870.)" (Emphasis supplied.)

The circumstance that the manufacturer of BEER PALEPILSEN, Asia Brewery Incorporated, has printed its name allover the bottle of its beer product: on the label, on the backof the bottle, as well as on the bottle cap, disproves SMC'scharge that ABI dishonestly and fraudulently intends to palmoff its BEER PALE PILSEN as SMC's product. In view of thevisible differences between the two products, the Courtbelieves it is quite unlikely that a customer of averageintelligence would mistake a bottle of BEER PALE PILSENfor SAN MIGUEL PALE PILSEN.

The fact that BEER PALE PILSEN like SAN MIGUEL PALEPILSEN is bottled in amber-colored steinie bottles of 320 ml.capacity and is also advertised in print, broadcast, andtelevision media, does not necessarily constitute unfaircompetition.

Unfair competition is the employment of deception or anyother means contrary to good faith by which a person shallpass off the goods manufactured by him or in which hedeals, or his business, or services, for those of another whohas already established goodwill for his similar goods,business or services, or any acts calculated to produce thesame result. (Sec. 29, Republic Act No. 166, as amended.)The law further enumerates the more common ways ofcommitting unfair competition, thus:

Sec. 29. . . .

unfair competition, the following shall be deemed guilty ofunfair competition:

(a) Any person, who in selling his goods shall give them thegeneral appearance of goods of another manufacturer ordealer, either as to the goods themselves or in the wrapping

of the packages in which they are contained, or the devicesor words thereon, or in any other feature of their appearance,which would be likely to influence purchasers to believe thatthe goods offered are those of a manufacturer or dealerother than the actual manufacturer or dealer, or whootherwise clothes the goods with such appearance as shalldeceive the public and defraud another of his legitimatetrade, or any subsequent vendor of such goods or any agentof any vendor engaged in selling such goods with a likepurpose.

(b) Any person who by any artifice, or device, or whoemploys any other means calculated to induce the falsebelief that such person is offering the services of anotherwho has identified such services in the mind of the public; or


In this case, the question to be determined is whether ABI isusing a name or mark for its beer that has previously cometo designate SMC's beer, or whether ABI is passing off itsBEER PALE PILSEN as SMC's SAN MIGUEL PALEPILSEN.

. . ..The universal test question is whether the public is likelyto be deceived. Nothing less than conduct tending to pass offone man's goods or business as that of another willconstitute unfair competition. Actual or probable deception

and confusion on the part of the customers by reason of supplying simple human needs in containers or wrappers of

7/21/2019 LIP - Cases 8


defendant's practices must always appear. (Shell Co., of thePhilippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. etal., 120 Phil. 434, 439.)

The use of ABI of the steinie bottle, similar but not identicalto the SAN MIGUEL PALE PILSEN bottle, is not unlawful. As

pointed out by ABI's counsel, SMC did not invent but merelyborrowed the steinie bottle from abroad and it claims neitherpatent nor trademark protection for that bottle shape anddesign. (See rollo, page 55.) The Cerveza Especial and theEfes Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D,57-E.) The trial court found no infringement of SMC's bottle—

The court agrees with defendant that there is no infringementof plaintiff's bottle, firstly, because according to plaintiff'switness Deogracias Villadolid, it is a standard type of bottlecalled steinie, and to witness Jose Antonio Garcia, it is not aSan Miguel Corporation design but a design originallydeveloped in the United States by the Glass ContainerManufacturer's Institute and therefore lacks exclusivity.Secondly, the shape was never registered as a trademark.Exhibit "C" is not a registration of a beer bottle designrequired under Rep. Act 165 but the registration of the nameand other marks of ownership stamped on containers asrequired by Rep. Act 623. Thirdly, the neck of defendant'sbottle is much larger and has a distinct bulge in itsuppermost part. (p. 186, Rollo.)

The petitioner's contention that bottle size, shape and colormay not be the exclusive property of any one beermanufacturer is well taken. SMC's being the first to use thesteinie bottle does not give SMC a vested right to use it tothe exclusion of everyone else. Being of functional orcommon use, and not the exclusive invention of any one, it isavailable to all who might need to use it within the industry.Nobody can acquire any exclusive right to market articles

the general form, size and character commonly andimmediately used in marketing such articles (Dy Buncio vs.Tan Tiao Bok, 42 Phil. 190, 194-195.)

. . . protection against imitation should be properly confinedto nonfunctional features. Even if purely functional elements

are slavishly copied, the resemblance will not support anaction for unfair competition, and the first user cannot claimsecondary meaning protection. Nor can the first userpredicate his claim to protection on the argument that hisbusiness was established in reliance on any suchunpatented nonfunctional feature, even "at large expenditureof money." (Callman Unfair Competition, Trademarks andMonopolies, Sec. 19.33 [4th Ed.].) (Petition for Review, p.28.)

ABI does not use SMC's steinie bottle. Neither did ABI copyit. ABI makes its own steinie bottle which has a fat bulgingneck to differentiate it from SMC's bottle. The amber color isa functional feature of the beer bottle. As pointed out by ABI,all bottled beer produced in the Philippines is contained andsold in amber-colored bottles because amber is the mosteffective color in preventing transmission of light andprovides the maximum protection to beer. As was ruledin California Crushed Fruit Corporation vs. Taylor B. andCandy Co., 38 F2d 885, a merchant cannot be enjoined fromusing a type or color of bottle where the same has the usefulpurpose of protecting the contents from the deleteriouseffects of light rays. Moreover, no one may have a monopolyof any color. Not only beer, but most medicines, whether inliquid or tablet form, are sold in amber-colored bottles.

That the ABI bottle has a 320 ml. capacity is not due to adesire to imitate SMC's bottle because that bottle capacity isthe standard prescribed under Metrication Circular No. 778,dated 4 December 1979, of the Department of Trade, MetricSystem Board.

With regard to the white label of both beer bottles, ABI has a need to supply and is familiar with the article that he

7/21/2019 LIP - Cases 8


explained that it used the color white for its label becausewhite presents the strongest contrast to the amber color of

ABI's bottle; it is also the most economical to use on labels,and the easiest to "bake" in the furnace (p. 16, TSN ofSeptember 20, 1988). No one can have a monopoly of thecolor amber for bottles, nor of white for labels, nor of the

rectangular shape which is the usual configuration of labels.Needless to say, the shape of the bottle and of the label isunimportant. What is all important is the name of the productwritten on the label of the bottle for that is how one beer maybe distinguished form the others.

In Dy Buncio v. Tan Tiao Bok , 42 Phil. 190, 196-197, wheretwo competing tea products were both labelled as Formosantea, both sold in 5-ounce packages made of ordinarywrapping paper of conventional color, both with labelscontaining designs drawn in green ink and Chinesecharacters written in red ink, one label showing a double-decked jar in the center, the other, a flower pot, this courtfound that the resemblances between the designs were notsufficient to mislead the ordinary intelligent buyer, hence,there was no unfair competition. The Court held:

. . . . In order that there may be deception of the buyingpublic in the sense necessary to constitute unfaircompetition, it is necessary to suppose a public accustomedto buy, and therefore to some extent familiar with, the goodsin question. The test of fraudulent simulation is to be found inthe likelihood of the deception of persons in some measureacquainted with an established design and desirous ofpurchasing the commodity with which that design has beenassociated. The test is not found in the deception, orpossibility of the deception, of the person who knows nothingabout the design which has been counterfeited, and whomust be indifferent as between that and the other. Thesimulation, in order to be objectionable, must be such asappears likely to mislead the ordinarily intelligent buyer who

seeks to purchase.

The main thrust of SMC's complaint if not infringement of itstrademark, but unfair competition arising form the allegedly"confusing similarity" in the general appearance or tradedress of ABI's BEER PALE PILSEN beside SMC's SAN

MIGUEL PALE PILSEN (p. 209, Rollo)

SMC claims that the "trade dress" of BEER PALE PILSEN is"confusingly similar" to its SAN MIGUEL PALE PILSENbecause both are bottled in 320 ml. steinie type, amber-colored bottles with white rectangular labels.

However, when as in this case, the names of the competingproducts are clearly different and their respective sourcesare prominently printed on the label and on other parts of thebottle, mere similarity in the shape and size of the containerand label, does not constitute unfair competition. The steiniebottle is a standard bottle for beer and is universally used.SMC did not invent it nor patent it. The fact that SMC's bottleis registered under R.A. No. 623 (as amended by RA 5700,

An Act to Regulate the Use of Duly Stamped or MarkedBottles, Boxes, Casks, Kegs, Barrels and Other SimilarContainers) simply prohibits manufacturers of otherfoodstuffs from the unauthorized use of SMC's bottles byrefilling these with their products. It was not uncommon thenfor products such as patis (fish sauce) and toyo (soy sauce)to be sold in recycled SAN MIGUEL PALE PILSEN bottles.Registration of SMC's beer bottles did not give SMC a patenton the steinie or on bottles of similar size, shape or color.

Most containers are standardized because they are usuallymade by the same manufacturer. Milk, whether in powderedor liquid form, is sold in uniform tin cans. The same can besaid of the standard ketchup or vinegar bottle with its familiarelongated neck. Many other grocery items such as coffee,mayonnaise, pickles and peanut butter are sold in standard

glass jars. The manufacturers of these foodstuffs have equali ht t th t d d ti b ttl d j f th i

. . . to determine whether a trademark hasb i f i d t id th k

7/21/2019 LIP - Cases 8


right to use these standards tins, bottles and jars for theirproducts. Only their respective labels distinguish them fromeach other. Just as no milk producer may sue the others forunfair competition because they sell their milk in the samesize and shape of milk can which he uses, neither may SMCclaim unfair competition arising from the fact that ABI's

BEER PALE PILSEN is sold, like SMC's SAN MIGUEL PALEPILSEN in amber steinie bottles.

The record does not bear out SMC's apprehension thatBEER PALE PILSEN is being passed off as SAN MIGUELPALE PILSEN. This is unlikely to happen for consumers orbuyers of beer generally order their beer by brand. Aspointed out by ABI's counsel, in supermarkets and tiendas,beer is ordered by brand, and the customer surrenders hisempty replacement bottles or pays a deposit to guaranteethe return of the empties. If his empties are SAN MIGUELPALE PILSEN, he will get SAN MIGUEL PALE PILSEN asreplacement. In sari-sari stores, beer is also ordered fromthe tindera by brand. The same is true in restaurants, pubsand beer gardens — beer is ordered from the waiters bybrand. (Op. cit . page 50.)

Considering further that SAN MIGUEL PALE PILSEN hasvirtually monopolized the domestic beer market for the pasthundred years, those who have been drinking no other beerbut SAN MIGUEL PALE PILSEN these many years certainlyknow their beer too well to be deceived by a newcomer inthe market. If they gravitate to ABI's cheaper beer, it will notbe because they are confused or deceived, but because theyfind the competing product to their taste.

Our decision in this case will not diminish our ruling in "DelMonte Corporation vs. Court of Appeals and SunshineSauce Manufacturing Industries," 181 SCRA 410, 419, 3 that:

been infringed, we must consider the mark as awhole and not as dissected. If the buyer isdeceived, it is attributable to the marks as atotality, not usually to any part of it.

That ruling may not apply to all kinds of products. The Court

itself cautioned that in resolving cases of infringement andunfair competition, the courts should "take into considerationseveral factors which would affect its conclusion, to wit: theage, training and education of the usual purchaser, thenature and cost of the article, whether the article is boughtfor immediate consumption and also the conditions underwhich it is usually purchased" (181 SCRA 410, 418-419).

The Del Monte case involved catsup, a common householditem which is bought off the store shelves by housewivesand house help who, if they are illiterate and cannot identifythe product by name or brand, would very likely identify it bymere recollection of its appearance. Since the competitor,Sunshine Sauce Mfg. Industries, not only used recycled DelMonte bottles for its catsup (despite the warning embossedon the bottles: "Del Monte Corporation. Not to be refilled.")but also used labels which were "a colorable imitation" of DelMonte's label, we held that there was infringement of DelMonte's trademark and unfair competition by Sunshine.

Our ruling in Del Monte would not apply to beer which is notusually picked from a store shelf but ordered by brand by thebeer drinker himself from the storekeeper or waiter in a pubor restaurant.

Moreover, SMC's brand or trademark: "SAN MIGUEL PALEPILSEN" is not infringed by ABI's mark: "BEER NA BEER" or"BEER PALE PILSEN." ABI makes its own bottle with abulging neck to differentiate it from SMC's bottle, and prints

ABI's name in three (3) places on said bottle (front, back and

bottle cap) to prove that it has no intention to pass of its"BEER" "SAN MIGUEL "

It has been correctly held that side-by-side comparison is notth fi l t t f i il it S h i i f l

7/21/2019 LIP - Cases 8


"BEER" as "SAN MIGUEL."

There is no confusing similarity between the competingbeers for the name of one is "SAN MIGUEL" while thecompetitor is plain "BEER" and the points of dissimilaritybetween the two outnumber their points of similarity.

Petitioner ABI has neither infringed SMC's trademark norcommitted unfair competition with the latter's SAN MIGUELPALE PILSEN product. While its BEER PALE PILSENadmittedly competes with the latter in the open market, thatcompetition is neither unfair nor fraudulent. Hence, we mustdeny SMC's prayer to suppress it.

WHEREFORE, finding the petition for review meritorious, thesame is hereby granted. The decision and resolution of theCourt of Appeals in CA-G.R. CV No. 28104 are hereby setaside and that of the trial court is REINSTATED and

AFFIRMED. Costs against the private respondent.

SO ORDERED.

CRUZ, J., dissenting:

The present ponencia stresses the specific similarities anddifferences of the two products to support the conclusion thatthere is no infringement of trade marks or unfair competition.That test was rejected in my own ponencia in Del MonteCorporation vs. Court of Appeals, 181 SCRA 410, concurredin by Justices Narvasa, Gancayco, Griño-Aquino andMedialdea, where we declared:

While the Court does recognize these distinctions, it doesnot agree with the conclusion that there was no infringementor unfair competition. It seems to us that the lower courtshave been so preoccupied with the details that they have notseen the total picture.

the final test of similarity. Such comparison requires a carefulscrutiny to determine in what points the labels of theproducts differ, as was done by the trial judge. The ordinarybuyer does not usually make such scrutiny nor does heusually have the time to do so. The average shopper isusually in a hurry and does not inspect every product on theshelf as if he were browsing in a library. Where thehousewife has to return home as soon as possible to herbaby or the working woman has to make quick purchasesduring her off hours, she is apt to be confused by similarlabels even if they do have minute differences. The maleshopper is worse as he usually does not bother about suchdistinctions.

The question is not whether the two articles aredistinguishable by their labels when set aside by side butwhether the general confusion made by the article upon theeye of the casual purchaser who is unsuspicious and off hisguard, is such as to likely result in his confounding it with theoriginal. As observed in several cases, the generalimpression of the ordinary purchaser, buying under thenormally prevalent conditions in trade and giving theattention such purchasers usually give in buying that class ofgoods, is the touchstone.

It has been held that in making purchases, the consumermust depend upon his recollection of the appearance of theproduct which he intends to purchase. The buyer having inmind the mark/label of the respondent must rely upon hismemory of the petitioner's mark. Unlike the judge who hasample time to minutely examine the labels in question in thecomfort of his sala, the ordinary shopper does not enjoy thesame opportunity.

A number of courts have held that to determine whether atrademark has been infringed, we must consider the mark asa whole and not as dissected. If the buyer is deceived, it is

attributable to the marks as a totality, not usually to any partf it Th t th f h ld b id d b it fi t

7/21/2019 LIP - Cases 8


of it. The court therefore should be guided by its firstimpression, for a buyer acts quickly and is governed by acasual glance, the value of which may be dissipated as soonas the court assumes to analyze carefully the respectivefeatures of the mark.

It has also been held that it is not the function of the court incases of infringement and unfair competition to educatepurchasers but rather to take their carelessness for granted,and to be ever conscious of the fact that marks need not beidentical. A confusing similarity will justify the intervention ofequity. The judge must also be aware of the fact that usuallya defendant in cases of infringement does not normally copybut makes only colorable changes. Well has it been said thatthe most successful form of copying is to employ enoughpoints of similarity to confuse the public with enough pointsof difference to confuse the courts.

For the above reasons, and the other arguments stated inDel Monte, I dissent.

MCDONALD'S CORPORATION and MCGEORGE FOODINDUSTRIES INC petitioners

in thePrincipal Register based on its Home Registration inthe United States

7/21/2019 LIP - Cases 8


INDUSTRIES, INC., petitioners,vs.L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A.DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO,ARACELI AYCARDO, and GRACE HUERTO, respondents.

The Case

This is a petition for review1 of the Decision dated 26November 1999 of the Court of Appeals2 finding respondentL.C. Big Mak Burger, Inc. not liable for trademarkinfringement and unfair competition and ordering petitionersto pay respondents P1,900,000 in damages, and of itsResolution dated 11 July 2000 denying reconsideration. TheCourt of Appeals' Decision reversed the 5 September 1994Decision3 of the Regional Trial Court of Makati, Branch 137,finding respondent L.C. Big Mak Burger, Inc. liable fortrademark infringement and unfair competition.

The Facts

Petitioner McDonald's Corporation ("McDonald's") is acorporation organized under the laws of Delaware, UnitedStates. McDonald's operates, by itself or through itsfranchisees, a global chain of fast-food restaurants.McDonald's4 owns a family of marks5 including the "Big Mac"mark for its "double-decker hamburgersandwich."6McDonald's registered this trademark with theUnited States Trademark Registry on 16 October1979.7 Based on this Home Registration, McDonald's appliedfor the registration of the same mark in the Principal Registerof the then Philippine Bureau of Patents, Trademarks andTechnology ("PBPTT"), now the Intellectual Property Office("IPO"). Pending approval of its application, McDonald'sintroduced its "Big Mac" hamburger sandwiches in thePhilippine market in September 1981. On 18 July1985, the PBPTT allowed registration of the "Big Mac" mark

the United States.

Like its other marks, McDonald's displays the "Big Mac"mark in items8 and paraphernalia9 in its restaurants, and inits outdoor and indoor signages. From 1982 to 1990,McDonald's spent P10.5 million in advertisement for "BigMac" hamburger sandwiches alone.10

Petitioner McGeorge Food Industries ("petitionerMcGeorge"), a domestic corporation, is McDonald'sPhilippine franchisee.11

Respondent L.C. Big Mak Burger, Inc. ("respondentcorporation") is a domestic corporation which operates fast-food outlets and snack vans in Metro Manila and nearbyprovinces.12 Respondent corporation's menu includeshamburger sandwiches and other food items.13 RespondentsFrancis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus

Aycardo, Araceli Aycardo, and Grace Huerto ("privaterespondents") are the incorporators, stockholders anddirectors of respondent corporation.14

On 21 October 1988, respondent corporation applied withthe PBPTT for the registration of the "Big Mak" mark for itshamburger sandwiches. McDonald's opposed respondentcorporation's application on the ground that "Big Mak" was acolorable imitation of its registered "Big Mac" mark for thesame food products. McDonald's also informed respondentFrancis Dy ("respondent Dy"), the chairman of the Board ofDirectors of respondent corporation, of its exclusive right tothe "Big Mac" mark and requested him to desist from usingthe "Big Mac" mark or any similar mark.

Having received no reply from respondent Dy, petitioners on6 June 1990 sued respondents in the Regional Trial Court ofMakati, Branch 137 ("RTC"), for trademark infringement andunfair competition. In its Order of 11 July 1990, the RTC

issued a temporary restraining order ("TRO") againstrespondents enjoining them from using the "Big Mak" mark

On 5 September 1994, the RTC rendered judgment ("RTCDecision") finding respondent corporation liable for

7/21/2019 LIP - Cases 8


respondents enjoining them from using the Big Mak markin the operation of their business in the National CapitalRegion.15 On 16 August 1990, the RTC issued a writ ofpreliminary injunction replacing the TRO.16

In their Answer, respondents admitted that they have beenusing the name "Big Mak Burger" for their fast-foodbusiness. Respondents claimed, however, that McDonald'sdoes not have an exclusive right to the "Big Mac" mark orto any other similar mark. Respondents point out that theIsaiyas Group of Corporations ("Isaiyas Group") registeredthe same mark for hamburger sandwiches with the PBPTTon 31 March 1979. One Rodolfo Topacio ("Topacio")similarly registered the same mark on 24 June 1983, priorto McDonald's registration on 18 July 1985. Alternatively ,respondents claimed that they are not liable for trademarkinfringement or for unfair competition, as the "Big Mak" markthey sought to register does not constitute a colorableimitation of the "Big Mac" mark. Respondents asserted thatthey did not fraudulently pass off their hamburgersandwiches as those of petitioners' Big Machamburgers.17 Respondents sought damages in theircounterclaim.

In their Reply, petitioners denied respondents' claim thatMcDonald's is not the exclusive owner of the "Big Mac"mark. Petitioners asserted that while the Isaiyas Group andTopacio did register the "Big Mac" mark ahead ofMcDonald's, the Isaiyas Group did so only in theSupplemental Register of the PBPTT and such registrationdoes not provide any protection. McDonald's disclosed that ithad acquired Topacio's rights to his registration in a Deed of

Assignment dated 18 May 1981.18

The Trial Court's Ruling

Decision ) finding respondent corporation liable fortrademark infringement and unfair competition. However , theRTC dismissed the complaint against private respondentsand the counterclaim against petitioners for lack of merit andinsufficiency of evidence. The RTC held:

Undeniably, the mark "B[ig] M[ac]" is a registered trademarkfor plaintiff McDonald's, and as such, it is entitled [to]protection against infringement.

xxxx

There exist some distinctions between the names "B[ig]M[ac]" and "B[ig] M[ak]" as appearing in the respectivesignages, wrappers and containers of the food products ofthe parties. But infringement goes beyond the physicalfeatures of the questioned name and the original name.There are still other factors to be considered.

xxxx

Significantly, the contending parties are both in the businessof fast-food chains and restaurants. An average person whois hungry and wants to eat a hamburger sandwich may notbe discriminating enough to look for a McDonald's restaurantand buy a "B[ig] M[ac]" hamburger. Once he sees a stallselling hamburger sandwich, in all likelihood, he will dip intohis pocket and order a "B[ig] M[ak]" hamburger sandwich.Plaintiff McDonald's fast-food chain has attained widepopularity and acceptance by the consuming public so muchso that its air-conditioned food outlets and restaurants willperhaps not be mistaken by many to be the same asdefendant corporation's mobile snack vans located alongbusy streets or highways. But the thing is that what is beingsold by both contending parties is a food item – a hamburgersandwich which is for immediate consumption, so that abuyer may easily be confused or deceived into thinking that

the "B[ig] M[ak]" hamburger sandwich he bought is a food-product of plaintiff McDonald's or a subsidiary or allied

plaintiff McDonald's. For, as stated in Section 29, a person isguilty of unfair competition who in selling his goods shall give

7/21/2019 LIP - Cases 8


product of plaintiff McDonald s, or a subsidiary or alliedoutlet thereof . Surely, defendant corporation has its ownsecret ingredients to make its hamburger sandwiches aspalatable and as tasty as the other brands in the market,considering the keen competition among mushroominghamburger stands and multinational fast-food chains andrestaurants. Hence, the trademark "B[ig] M[ac]" has beeninfringed by defendant corporation when it used the name"B[ig] M[ak]" in its signages, wrappers, and containers inconnection with its food business. xxxx

Did the same acts of defendants in using the name "B[ig]M[ak]" as a trademark or tradename in their signages, or incausing the name "B[ig] M[ak]" to be printed on the wrappersand containers of their food products also constitute an act ofunfair competition under Section 29 of the Trademark Law?

The answer is in the affirmative. xxxx

The xxx provision of the law concerning unfair competition isbroader and more inclusive than the lawconcerning theinfringement of trademark, which is of more limited range,but within its narrower range recognizes a more exclusiveright derived by the adoption and registration of thetrademark by the person whose goods or services are firstassociated therewith. xxx Notwithstanding the distinctionbetween an action for trademark infringement and an actionfor unfair competition, however, the law extends substantiallythe same relief to the injured party for both cases. (SeeSections 23 and 29 of Republic Act No. 166)

Any conduct may be said to constitute unfair competition ifthe effect is to pass off on the public the goods of one manas the goods of another. The choice of "B[ig] M[ak]" astradename by defendant corporation is not merely forsentimental reasons but was clearly made to take advantageof the reputation, popularity and the established goodwill of

guilty of unfair competition who in selling his goods shall givethem the general appearance, of goods of anothermanufacturer or dealer, either as to the goods themselves orin the wrapping of the packages in which they are contained,or the devices or words thereon, or in any other feature oftheir appearance, which would likely influence purchasers tobelieve that the goods offered are those of a manufacturer ordealer other than theactual manufacturer or dealer. Thus,plaintiffs have established their valid cause of action againstthe defendants for trademark infringement and unfaircompetition and for damages.19

The dispositive portion of the RTC Decision provides:

WHEREFORE, judgment is rendered in favor of plaintiffsMcDonald's Corporation and McGeorge Food Industries, Inc.and against defendant L.C. Big Mak Burger, Inc., as follows:

1. The writ of preliminary injunction issued in this case on [16 August 1990] is made permanent;

2. Defendant L.C. Big Mak Burger, Inc. is ordered to payplaintiffs actual damages in the amount of P400,000.00,exemplary damages in the amount of P100,000.00, andattorney's fees and expenses of litigation in the amountof P100,000.00;

3. The complaint against defendants Francis B. Dy, Edna A.Dy, Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli

Aycardo and Grace Huerto, as well as all counter-claims, aredismissed for lack of merit as well as for insufficiency ofevidence.20

Respondents appealed to the Court of Appeals.

The Ruling of the Court of Appeals

On 26 November 1999, the Court of Appeals renderedjudgment ("Court of Appeals' Decision") reversing the RTC

name "L.C. Big Mak Burger, Inc." in their restaurant businesswhich serves diversified food items such as siopao noodles

7/21/2019 LIP - Cases 8


judgment ( Court of Appeals Decision ) reversing the RTCDecision and ordering McDonald's to pay respondentsP1,600,000 as actual and compensatory damages andP300,000 as moral damages. The Court of Appeals held:

Plaintiffs-appellees in the instant case would like to impresson this Court that the use of defendants-appellants of itscorporate name – the whole "L.C. B[ig] M[ak] B[urger], I[nc]."which appears on their food packages, signages andadvertisements is an infringement of their trademark "B[ig]M[ac]" which they use to identify [their] double deckersandwich, sold in a Styrofoam box packaging material withthe McDonald's logo of umbrella "M" stampedthereon, together with the printed mark in red bl[o]ck capitalletters, the words being separated by a single space.Specifically, plaintiffs-appellees argue that defendants-appellants' use of their corporate name is a colorableimitation of their trademark "Big Mac".

To Our mind, however, this Court is fully convinced that nocolorable imitation exists. As the definition dictates, it isnot sufficient that a similarity exists in both names, butthat more importantly , the over-all presentation, or in theiressential, substantive and distinctive parts is such as wouldlikely MISLEAD or CONFUSE persons in the ordinary courseof purchasing the genuine article. A careful comparison ofthe way the trademark "B[ig] M[ac]" is being used byplaintiffs-appellees and corporate name L.C. Big MakBurger, Inc. by defendants-appellants, wouldreadily reveal that no confusion could take place, or that theordinary purchasers would be misled by it. As pointed out bydefendants-appellants, the plaintiffs-appellees' trademark isused to designate only one product, a double deckersandwich sold in a Styrofoam box with the "McDonalds"logo. On the other hand, what the defendants-appellantscorporation is using is not a trademark for its food productbut a business or corporate name. They use the business

which serves diversified food items such as siopao, noodles,pizza, and sandwiches such as hotdog, ham, fish burger andhamburger. Secondly , defendants-appellants' corporate orbusiness name appearing in the food packages andsignages are written in silhouette red-orange letters with the"b" and "m" in upper case letters. Above the words "Big Mak"are the upper case letter "L.C.". Below the words "Big Mak"are the words "Burger, Inc." spelled out in upper caseletters. Furthermore, said corporate or business nameappearing in such food packages and signages is alwaysaccompanied by the company mascot, a young chubby boynamed Maky who wears a red T-shirt with the upper case"m" appearing thereinand a blue lower garment. Finally, thedefendants-appellants' food packages are made of plasticmaterial.

xxx [I]t is readily apparent to the naked eye that thereappears a vast difference in the appearance of the productand the manner that the tradename "Big Mak" is being usedand presented to the public. As earlier noted, there areglaring dissimilarities between plaintiffs-appellees' trademarkand defendants-appellants' corporate name. Plaintiffs-appellees' product carrying the trademark "B[ig] M[ac]" is adouble decker sandwich (depicted in the tray mat containingphotographs of the various food products xxx sold in aStyrofoam box with the "McDonald's" logo and trademark inred, bl[o]ck capital letters printed thereon xxx at a price

which is more expensive than the defendants-appellants'comparable food products. In order to buy a "Big Mac", acustomer needs to visit an air-conditioned "McDonald's"restaurant usually located in a nearby commercial center,advertised and identified by its logo - the umbrella "M", andits mascot – "Ronald McDonald". A typical McDonald'srestaurant boasts of a playground for kids, a second floor toaccommodateadditional customers, a drive-thru to allowcustomers with cars to make orders without alighting fromtheir vehicles, the interiors of the building are well-lighted,

distinctly decorated and painted with pastel colors xxx. Inbuying a "B[ig] M[ac]" it is necessary to specify it by its

damages due to acts of another has the burden of provingthat the latter acted in bad faith or with ill motive 21

7/21/2019 LIP - Cases 8


buying a B[ig] M[ac] , it is necessary to specify it by itstrademark. Thus, a customer needs to look for a"McDonald's" and enter it first before he can find ahamburger sandwich which carry the mark "Big Mac". On theother hand, defendants-appellants sell their goods throughsnack vans xxxx

Anent the allegation that defendants-appellants are guilty ofunfair competition, We likewise find the same untenable.

Unfair competition is defined as "the employment ofdeception or any other means contrary to good faith bywhich a person shall pass off the goods manufactured byhim or in which he deals, or his business, or service, forthose of another who has already established good will forhis similar good, business or services, or any acts calculatedto produce the same result" (Sec. 29, Rep. Act No. 166, asamended).

To constitute unfair competition therefore itmust necessarily follow that there was malice and that theentity concerned was in bad faith.

In the case at bar, We find no sufficient evidence adduced byplaintiffs-appellees that defendants-appellants deliberatelytried to pass off the goods manufactured by them for those ofplaintiffs-appellees. The mere suspected similarity in thesound of the defendants-appellants' corporate name with theplaintiffs-appellees' trademark is not sufficient evidence toconclude unfair competition. Defendants-appellantsexplained that the name "M[ak]" in their corporate name wasderived from both the first names of the mother and father ofdefendant Francis Dy, whose names are Maxima andKimsoy. With this explanation, it is up to the plaintiffs-appellees to prove bad faith on the part of defendants-appellants. It is a settled rule that the law always presumesgood faith such that any person who seeks to be awarded

that the latter acted in bad faith or with ill motive.

Petitioners sought reconsideration of the Court of Appeals'Decision but the appellate court denied their motion in itsResolution of 11 July 2000.

Hence, this petition for review.

Petitioners raise the following grounds for their petition:

I. THE COURT OF APPEALS ERRED IN FINDING THATRESPONDENTS' CORPORATE NAME "L.C. BIG MAKBURGER, INC." IS NOT A COLORABLE IMITATION OFTHE MCDONALD'S TRADEMARK "BIG MAC", SUCHCOLORABLE IMITATION BEING AN ELEMENTOF TRADEMARK INFRINGEMENT.

A. Respondents use the words "Big Mak" astrademark for their products and not merely astheir business or corporate name.

B. As a trademark, respondents' "Big Mak" isundeniably and unquestionably similar topetitioners' "Big Mac" trademark based on thedominancy test and the idem sonans testresulting inexorably in confusion on the part ofthe consuming public.

II. THE COURT OF APPEALS ERRED IN REFUSING TOCONSIDER THE INHERENT SIMILARITY BETWEEN THEMARK "BIG MAK" AND THE WORD MARK "BIG MAC" AS

AN INDICATION OF RESPONDENTS' INTENT TODECEIVE OR DEFRAUD FOR PURPOSES OFESTABLISHING UNFAIR COMPETITION.22

Petitioners pray that we set aside the Court of Appeals'Decision and reinstate the RTC Decision.

In their Comment to the petition, respondents question thepropriety of this petition as it allegedly raises only questions

non-liability for trademark infringement and unfaircompetition Ordinarily the Court can deny due course to

7/21/2019 LIP - Cases 8


propriety of this petition as it allegedly raises only questionsof fact. On the merits, respondents contend that the Court of

Appeals committed no reversible error in finding them notliable for trademark infringement and unfair competition andin ordering petitioners to pay damages.

The Issues

The issues are:

1. Procedurally, whether the questions raised in this petitionare proper for a petition for review under Rule 45.

2. On the merits, (a) whether respondents used the words"Big Mak" not only as part of the corporate name "L.C. BigMak Burger, Inc." but also as a trademark for theirhamburger products, and (b) whether respondentcorporation is liable for trademark infringement and unfaircompetition.23

The Court's Ruling

The petition has merit.

On Whether the Questions Raised in the Petition areProper for a Petition for Review

A party intending to appeal from a judgment of the Court of Appeals may file with this Court a petition for review underSection 1 of Rule 45 ("Section 1")24 raising only questions oflaw. A question of law exists when the doubt or differencearises on what the law is on a certain state of facts. There isa question of fact when the doubt or difference arises on thetruth or falsity of the alleged facts. 25

Here, petitioners raise questions of fact and law in assailingthe Court of Appeals' findings on respondent corporation's

competition. Ordinarily, the Court can deny due course tosuch a petition. In view, however, of the contradictoryfindings of fact of the RTC and Court of Appeals, the Courtopts to accept the petition, this being one of the recognizedexceptions to Section 1.26 We took a similar course of actionin Asia Brewery, Inc. v. Court of Appeals27 which alsoinvolved a suit for trademark infringement and unfaircompetition in which the trial court and the Court of Appealsarrived at conflicting findings.

On the Manner Respondents Used"Big Mak" in their Business

Petitioners contend that the Court of Appeals erred in rulingthat the corporate name "L.C. Big Mak Burger, Inc." appearsin the packaging for respondents' hamburger products andnot the words "Big Mak" only.

The contention has merit.

The evidence presented during the hearings on petitioners'motion for the issuance of a writ of preliminary injunctionshows that the plastic wrappings and plastic bags used byrespondents for their hamburger sandwiches bore the words"Big Mak." The other descriptive words "burger" and "100%pure beef" were set in smaller type, along with the locationsof branches.28 Respondents' cash invoices simply refer totheir hamburger sandwiches as "Big Mak."29 It isrespondents' snack vans that carry the words "L.C. Big MakBurger, Inc."30

It was only during the trial that respondents presented inevidence the plastic wrappers and bags for their hamburgersandwiches relied on by the Court of

Appeals.31 Respondents' plastic wrappers and bags wereidentical with those petitioners presented during the hearingsfor the injunctive writ except that the letters "L.C." and the

words "Burger, Inc." in respondents' evidence were addedabove and below the words "Big Mak " respectively Since

To establish trademark infringement, the following elementsmust be shown: (1) the validity of plaintiff's mark; (2) the

7/21/2019 LIP - Cases 8


above and below the words Big Mak, respectively . Sincepetitioners' complaint was based on facts existing before andduring the hearings on the injunctive writ, the factsestablished during those hearings are the proper factualbases for the disposition of the issues raised in this petition.

On the Issue of Trademark Infringement

Section 22 ("Section 22) of Republic Act No. 166, asamended ("RA 166"), the law applicable to thiscase,32 defines trademark infringement as follows:

Infringement, what constitutes. — Any person who[1] shall use, without the consent of theregistrant, any reproduction, counterfeit, copy or colorableimitation of any registered mark or trade-name in connectionwiththe sale, offering for sale, or advertising of any goods,business or services on or in connection with which such useis likely to cause confusion or mistake or to deceivepurchasers or others as to the source or origin of such goodsor services, or identity of such business; or [2] reproduce,counterfeit, copy, or colorably imitateany such mark or trade-name and apply such reproduction, counterfeit, copy, orcolorable imitation to labels, signs, prints, packages,wrappers, receptacles or advertisements intended to beused upon or in connection with such goods, business orservices, shall be liable to a civil action by the registrant

for any or all of the remedies herein provided.33

Petitioners base their cause of action under the first part ofSection 22, i.e. respondents allegedly used, withoutpetitioners' consent, a colorable imitation of the "Big Mac"mark in advertising and selling respondents' hamburgersandwiches. This likely caused confusion in the mind of thepurchasing public on the source of the hamburgers or theidentity of the business.

must be shown: (1) the validity of plaintiff s mark; (2) theplaintiff's ownership of the mark; and (3) the use of the markor its colorable imitation by the alleged infringer results in"likelihood of confusion."34 Of these, it is the elementof likelihood of confusion that is the gravamen of trademarkinfringement.35

On the Validity of the "Big Mac"Markand McDonald's Ownership of such Mark

A mark is valid if it is "distinctive" and thus not barred fromregistration under Section 436 of RA 166 ("Section4").However , once registered, not only the mark's validity butalso the registrant's ownership of the mark is prima faciepresumed.37

Respondents contend that of the two words in the "Big Mac"mark, it is only the word "Mac" that is valid because the word"Big" is generic and descriptive (proscribed under Section4[e]), and thus "incapable of exclusive appropriation."38

The contention has no merit. The "Big Mac" mark, whichshould be treated in its entirety and not dissected word forword,39 is neither generic nor descriptive. Generic marks arecommonly used as the name or description ofa kind of goods,40 such as "Lite" for beer 41 or "ChocolateFudge" for chocolate soda drink.42 Descriptive marks, on theother hand, convey the characteristics, functions, qualities oringredients of a product to one who has never seen it ordoes not know it exists,43 such as "Arthriticare" for arthritismedication.44 On the contrary, "Big Mac" fallsunder the class of fanciful or arbitrary marks as it bears nological relation to the actual characteristics of the product itrepresents.45 As such, it is highly distinctive and thus valid.Significantly, the trademark "Little Debbie" for snack cakeswas found arbitrary or fanciful.46

The Court also finds that petitioners have duly establishedMcDonald's exclusive ownership of the "Big Mac" mark.

was afforded to the party whose registered mark or itscolorable imitation is used on different although related

7/21/2019 LIP - Cases 8


McDonald s exclusive ownership of the Big Mac mark. Although Topacio and the Isaiyas Group registered the "BigMac" mark ahead of McDonald's, Topacio, as petitionersdisclosed, had already assigned his rights to McDonald's.The Isaiyas Group, on the other hand, registered itstrademark only in the Supplemental Register. A mark whichis not registered in the Principal Register, and thus notdistinctive, has no real protection.47 Indeed, we have heldthat registration in the Supplemental Register is not even aprima facie evidence of the validity of the registrant'sexclusive right to use the mark on the goods specified in thecertificate.48

On Types of Confusion

Section 22 covers two types of confusion arising from theuse of similar or colorable imitation marks, namely , confusionof goods (product confusion) and confusion of business(source or origin confusion). In Sterling ProductsInternational, Incorporated v. Farbenfabriken Bayer

Aktiengesellschaft, et al.,49 the Court distinguished these twotypes of confusion, thus:

[Rudolf] Callman notes two types of confusion. The first isthe confusion of goods "in which event the ordinarily prudentpurchaser would be induced to purchase one product in thebelief that he was purchasing the other." xxx The other is the

confusion of business: "Here though the goods of the partiesare different, the defendant's product is such as mightreasonably be assumed to originate with the plaintiff, and thepublic would then be deceived either into that belief or intothe belief that there is some connection between the plaintiffand defendant which, in fact , does not exist."

Under Act No. 666,50 the first trademark law, infringementwas limited to confusion of goods only, when the infringingmark is used on "goods of a similar kind."51 Thus, no relief

colorable imitation is used on different although relatedgoods. To remedy this situation, Congress enacted RA 166on 20 June 1947. In defining trademark infringement,Section 22 of RA 166 deleted the requirement in questionand expanded its scope to include such use of the mark orits colorable imitation that is likely to result in confusion on"the source or origin of such goods or services, or identity ofsuch business."52 Thus, while there is confusion of goodswhen the products are competing, confusion of businessexists when the products are non-competing but relatedenough to produce confusion of affiliation.53

On Whether Confusion of Goods andConfusion of Business are Applicable

Petitioners claim that respondents' use of the "Big Mak" markon respondents' hamburgers results in confusion of goods,particularly with respect to petitioners' hamburgers labeled"Big Mac." Thus, petitioners alleged in their complaint:

1.15. Defendants have unduly prejudiced and clearlyinfringed upon the property rights of plaintiffs in theMcDonald's Marks, particularly the mark "B[ig]M[ac]". Defendants' unauthorized acts are likely, andcalculated, to confuse, mislead or deceive the public intobelieving that the products and services offered by defendantBig Mak Burger, and the business it is engaged in, are

approved and sponsored by, or affiliated with,plaintiffs.54 (Emphasis supplied)

Since respondents used the "Big Mak" mark on the samegoods, i.e. hamburger sandwiches, that petitioners' "BigMac" mark is used, trademark infringement throughconfusion of goods is a proper issue in this case.

Petitioners also claim that respondents' use of the "Big Mak"mark in the sale of hamburgers, the same business that

petitioners are engaged in, results in confusion ofbusiness. P etitioners alleged in their complaint:

Respondents assert that their "Big Mak" hamburgerscater mainly to the low-income group while petitioners' "Big

7/21/2019 LIP - Cases 8


g p

1.10. For some period of time, and without the consent ofplaintiff McDonald's nor its licensee/franchisee, plaintiffMcGeorge, and in clear violation of plaintiffs' exclusive rightto use and/or appropriate the McDonald's marks, defendantBig Mak Burger acting through individual defendants, hasbeen operating "Big Mak Burger", a fast food restaurantbusiness dealing in the sale of hamburger and cheeseburgersandwiches, french fries and other food products, and hascaused to be printed on the wrapper of defendant's foodproducts and incorporated in its signages the name "Big MakBurger", which is confusingly similar to and/or is a colorableimitation of the plaintiff McDonald's mark "B[ig] M[ac]",xxx. Defendant Big Mak Burger has thus unjustly createdthe impression that its business is approved andsponsored by, or affiliated with, plaintiffs.xxxx

2.2 As a consequence of the acts committed by defendants,which unduly prejudice and infringe upon the property rightsof plaintiffs McDonald's and McGeorge as the real ownerand rightful proprietor, and thelicensee/franchisee, respectively , of the McDonald'smarks, and which are likely to have caused confusion ordeceived the public as to the true source, sponsorshipor affiliation of defendants' food products and restaurantbusiness, plaintiffs have suffered and continue to

suffer actual damages in the form of injury to their businessreputation and goodwill, and of the dilution of the distinctivequality of the McDonald's marks,in particular , the mark "B[ig]M[ac]".55 (Emphasis supplied)

Respondents admit that their business includes sellinghamburger sandwiches, the same food product that petitioners sell using the "Big Mac" mark. Thus, trademarkinfringement through confusion of business is also a properissue in this case.

y g p p gMac" hamburgers cater to the middle and upper incomegroups. Even if this is true, the likelihood of confusion ofbusiness remains, since the low-income group might be ledto believe that the "Big Mak" hamburgers are the low-endhamburgers marketed by petitioners. After all, petitionershave the exclusive right to use the "Big Mac" mark.On theother hand, respondents would benefit by associating theirlow-end hamburgers, through the use of the "Big Mak" mark,with petitioners' high-end "Big Mac" hamburgers, leading tolikelihood of confusion in the identity of business.

Respondents further claim that petitioners use the "Big Mac"mark only on petitioners' double-decker hamburgers, whilerespondents use the "Big Mak" mark on hamburgers andother products like siopao, noodles and pizza. Respondentsalso point out that petitioners sell their Big Mac double-deckers in a styrofoam box with the "McDonald's" logo andtrademark in red, block letters at a price more expensivethan the hamburgers of respondents. In contrast,respondents sell their Big Mak hamburgers in plasticwrappers and plastic bags. Respondents further point outthat petitioners' restaurants are air-conditioned buildings withdrive-thru service, compared to respondents' mobile vans.

These and other factors respondents cite cannot negate theundisputed fact that respondents use their "Big Mak" mark

on hamburgers, the same food product that petitioners' sellwith the use of their registered mark "Big Mac." Whether ahamburger is single, double or triple-decker, and whetherwrapped in plastic or styrofoam, it remains the samehamburger food product. Even respondents' use of the "BigMak" mark on non-hamburger food products cannot excusetheir infringement of petitioners' registered mark, otherwiseregistered marks will lose their protection under the law.

The registered trademark owner may use his mark on thesame or similar products, in different segments of the

the Court of Appeals ruled that "it is not sufficient that asimilarity exists in both name(s), but that more importantly ,

7/21/2019 LIP - Cases 8


p , gmarket, and at different price levels depending on variationsof the products for specific segments of the market. TheCourt has recognized that the registered trademark ownerenjoys protection in product and market areas that arethe normal potential expansion of his business. Thus, theCourt has declared:

Modern law recognizes that the protection to which theowner of a trademark is entitled is not limited to guarding hisgoods or business from actual market competition withidentical or similar products of the parties, but extends to allcases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source,as where prospective purchasers would be misled intothinking that the complaining party has extended hisbusiness into the field (see 148 ALR 56 et seq; 53 Am Jur.576) or is inany way connected with the activities of theinfringer; or when it forestalls the normal potential expansionof his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576,577).56 (Emphasis supplied)

On Whether Respondents' Use of the "Big Mak"Mark Results in Likelihood of Confusion

In determining likelihood of confusion, jurisprudence hasdeveloped two tests, the dominancy test and the holistic

test.57 The dominancy test focuses on the similarity ofthe prevalent features of the competing trademarks thatmight cause confusion. In contrast, the holistictest requires the court to consider the entirety of the marksas applied to the products, including the labels andpackaging, in determining confusing similarity.

The Court of Appeals, in finding that there is no likelihood ofconfusion that could arise in the use of respondents' "BigMak" mark on hamburgers, relied on the holistic test. Thus,

y ( ), p y,the overall presentation, or in their essential, substantive anddistinctive parts is such as would likely MISLEAD orCONFUSE persons in the ordinary course of purchasing thegenuine article." The holistic test considers the two marks intheir entirety, as they appear on the goods with their labelsand packaging. It is not enough to consider their words andcompare the spelling and pronunciation of the words.58

Respondents now vigorously argue that the Court of Appeals' application of the holistic test to this case is correctand in accord with prevailing jurisprudence.

This Court, however, has relied on the dominancy test ratherthan the holistic test. The dominancy test considers thedominant features in the competing marksin determining whether they are confusingly similar. Underthe dominancy test, courts give greater weight to thesimilarity of the appearance of the product arisingfrom the adoption of the dominant features of the registeredmark, disregarding minor differences.59 Courts will considermore the aural and visual impressions created by the marksin the public mind, giving little weight to factors like prices,quality, sales outlets and market segments.

Thus, in the 1954 case of Co Tiong Sa v. Director ofPatents,60 the Court ruled:

xxx It has been consistently held that the question ofinfringement of a trademark is to be determined by the test ofdominancy. Similarity in size, form and color, while relevant,is not conclusive. If the competing trademark contains themain or essential or dominant features of another, andconfusion and deception is likely to result, infringementtakes place. Duplication or imitation is not necessary ; nor isitnecessary that the infringing label should suggest an effortto imitate. (G. Heilman Brewing Co. vs. Independent Brewing

Co., 191 F., 489, 495, citing Eagle White Lead Co. vs. Pflugh(CC) 180 Fed. 579). The question at issue in cases

the letter "k" replaces "c" in spelling, thus "Caloocan" isspelled "Kalookan."

7/21/2019 LIP - Cases 8


( ) ) qof infringement of trademarks is whether the use of themarks involved would be likely to cause confusion ormistakes in the mind of the public or deceive purchasers.(Auburn Rubber Corporation vs. Honover Rubber Co., 107 F.2d 588; xxx) (Emphasis supplied.)

The Court reiterated the dominancy test in Lim Hoa v.Director of Patents,61 Phil. Nut Industry, Inc. v. StandardBrands Inc.,62 Converse Rubber Corporation v. UniversalRubber Products, Inc.,63 and Asia Brewery, Inc. v. Courtof Appeals.64 In the 2001 case of Societe Des ProduitsNestlé, S.A. v. Court of Appeals,65 the Court explicitlyrejected the holistic test in this wise:

[T]he totality or holistic test is contrary to the elementarypostulate of the law on trademarks and unfaircompetition that confusing similarity is to be determined onthe basis of visual, aural, connotative comparisonsand overall impressions engendered by the marks incontroversy as they are encountered in the realities of themarketplace. (Emphasis supplied)

The test of dominancy is now explicitly incorporated into lawin Section 155.1 of the Intellectual Property Code whichdefines infringement as the "colorable imitation of aregistered mark xxx or a dominant feature thereof ."

Applying the dominancy test, the Court finds thatrespondents' use of the "Big Mak" mark results in likelihoodof confusion. First, "Big Mak" sounds exactly the same as"Big Mac." Second, the first word in "Big Mak" is exactly thesame as the first word in "Big Mac." Third, the first two lettersin "Mak" are the same as the first two letters in "Mac."Fourth, the last letter in "Mak" while a "k" sounds the sameas "c" when the word "Mak" is pronounced. Fifth, in Filipino,

p

In short, aurally the two marks are the same, with the firstword of both marks phonetically the same, and the secondword of both marks also phonetically the same. Visually, thetwo marks have both two words and six letters, with the firstword of both marks having the same letters and the secondword having the same first two letters. In spelling,considering the Filipino language, even the last lettersof both marks are the same.

Clearly, respondents have adopted in "Big Mak" not onlythe dominant but also almost all the features of "BigMac." Applied to the same food product of hamburgers, thetwo marks will likely result in confusion in the public mind.

The Court has taken into account the aural effects of thewords and letters contained in the marks in determining theissue of confusing similarity. Thus, in Marvex CommercialCo., Inc. v. Petra Hawpia & Co., et al.,66 the Court held:

The following random list of confusingly similar sounds in thematter of trademarks, culled from Nims, Unfair Competitionand Trade Marks, 1947, Vol. 1, will reinforce our view that"SALONPAS" and "LIONPAS" are confusingly similar insound: "Gold Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and

"Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and"Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje";"Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon Amdur,in his book "Trade-Mark Law and Practice", pp. 419-421,cities, as coming within the purview of the idem sonans rule,"Yusea" and "U-C-A", "Steinway Pianos" and "SteinbergPianos", and "Seven-Up" and "Lemon-Up". In Co Tiong vs.Director of Patents, this Court unequivocally said that"Celdura" and "Cordura" are confusingly similar in sound;this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795

that the name "Lusolin" is an infringement of the trademark"Sapolin", as the sound of the two names is almost the

when taken in conjunction with the word "B[ig]", was theirintent to take advantage of Petitioners' xxx "B[ig] M[ac]"

7/21/2019 LIP - Cases 8


same. (Emphasis supplied)

Certainly , "Big Mac" and "Big Mak" for hamburgers createeven greater confusion, not only aurally but also visually.

Indeed, a person cannot distinguish "Big Mac" from "BigMak" by their sound. When one hears a "Big Mac" or "BigMak" hamburger advertisement over the radio, one wouldnot know whether the "Mac" or "Mak" ends with a "c" or a "k."

Petitioners' aggressive promotion of the "Big Mac" mark, asborne by their advertisement expenses, has built goodwilland reputation for such mark making it one of the easilyrecognizable marks in the market today. Thisincreases thelikelihood that consumers will mistakenly associatepetitioners' hamburgers and business with those of

respondents'.

R espondents' inability to explain sufficiently how and whythey came to choose "Big Mak" for their hamburgersandwiches indicates their intent to imitate petitioners' "BigMac" mark. Contrary to the Court of Appeals' finding,respondents' claim that their "Big Mak" mark was inspired bythe first names of respondent Dy's mother (Maxima) andfather (Kimsoy) is not credible. As petitioners well noted:

[R]espondents, particularly Respondent Mr. Francis Dy,could have arrived at a more creative choice for a corporatename by using the names of his parents, especially since hewas allegedly driven by sentimental reasons. For one, hecould have put his father's name ahead of his mother's, as isusually done in this patriarchal society, and derived lettersfrom said names in that order. Or, he could have taken anequalnumber of letters (i.e., two) from each name, as is themore usual thing done. Surely, the more plausible reasonbehind Respondents' choice of the word "M[ak]", especially

g gtrademark, with their alleged sentiment-focused "explanation"merely thought of as a convenient, albeit unavailing, excuseor defense for such an unfair choice of name.67

Absent proof that respondents' adoption of the "Big Mak"mark was due to honest mistake or was fortuitous,68 theinescapable conclusion is that respondents adopted the "BigMak" mark to "ride on the coattails" of the more established"Big Mac" mark.69 This saves respondents much of theexpense in advertising to create market recognition of theirmark and hamburgers.70

Thus, we hold that confusion is likely to result in the publicmind. We sustain petitioners' claim of trademarkinfringement.

On the Lack of Proof of Actual Confusion

Petitioners' failure to present proof of actual confusion doesnot negate their claim of trademark infringement. As notedin American Wire & Cable Co. v. Director ofPatents,71 Section 22 requires the less stringent standard of"likelihood of confusion" only. While proof of actual confusionis the best evidence of infringement, its absence isinconsequential.72

On the Issue of Unfair Competition

Section 29 ("Section 29")73 of RA 166 defines unfaircompetition, thus:

Any person who will employ deception or any other meanscontrary to good faith by which he shall pass off the goodsmanufactured by him or in which he deals, or his business,or services for those of the one having established such

goodwill, or who shall commit any acts calculated to producesaid result, shall be guilty of unfair competition, and shall be

external factors in the packaging or presentation of thegoods. The intent to deceive and defraud may be inferred

7/21/2019 LIP - Cases 8


subject to an action therefor .

In particular , and without in any way limiting the scope ofunfair competition, the following shall be deemed guilty ofunfair competition:

(a) Any person, who in selling his goods shall give themthe general appearance of goods of anothermanufacturer or dealer, either as to the goodsthemselves or in the wrapping of the packages in whichthey are contained, or the devices or words thereon, orin any feature of their appearance, which would be likely toinfluence purchasers to believe that the goods offered arethose of a manufacturer or dealer, otherthan the actual manufacturer or dealer, or who otherwiseclothes 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 agentof any vendor engaged in selling such goods with a likepurpose;

(b) Any person who by any artifice, or device, orwho employs any other means calculated to induce the falsebelief that such person is offering the services of anotherwho has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in thecourse of trade or who shall commit any other act contrary togood faith of a nature calculated to discredit the goods,business or services of another. (Emphasis supplied)

The essential elements of an action for unfair competitionare (1) confusing similarity in the general appearance of thegoods, and (2) intent to deceive the public and defraud acompetitor.74 The confusing similarity may or may not resultfrom similarity in the marks, but may result from other

from the similarity of the appearance of the goods as offeredfor sale to the public.75 Actual fraudulent intent need not beshown.76

Unfair competition is broader than trademark infringementand includes passing off goods with or without trademarkinfringement. Trademark infringement is a form of unfaircompetition.77 Trademark infringement constitutes unfaircompetition when there is not merely likelihood of confusion,but also actual or probable deception on the public becauseof the general appearance of the goods. There can betrademark infringement without unfair competition as whenthe infringer discloses on the labels containing the mark thathe manufactures the goods, thus preventing the public frombeing deceived that the goods originate from the trademarkowner.78

To support their claim of unfair competition, petitioners allegethat respondents fraudulently passed off their hamburgers as"Big Mac" hamburgers. Petitioners add that respondents'fraudulent intent can be inferred from the similarity of themarks in question.79

Passing off (or palming off) takes place where the defendant,by imitative devices on the general appearance of the goods,misleads prospective purchasers into buying his

merchandise under the impression that they are buying thatof his competitors.80 Thus, the defendant gives his goods thegeneral appearance of the goods of his competitor with theintention of deceiving the public that the goods are those ofhis competitor.

The RTC described the respective marks and the goods ofpetitioners and respondents in this wise:

The mark "B[ig] M[ac]" is used by plaintiff McDonald'sto identify its double decker hamburger sandwich. The

are also the goods of petitioners. If respondents sold eggsandwiches only instead of hamburger sandwiches, their use

7/21/2019 LIP - Cases 8


packaging material is a styrofoam box with theMcDonald's logo and trademark in red with blockcapital letters printed on it. All letters of the "B[ig]M[ac]" mark are also in red and block capitalletters. On the other hand,defendants' "B[ig] M[ak]"script print is in orange with only the letter "B" and "M"being capitalized and the packaging material is plasticwrapper. xxxx Further, plaintiffs' logo and mascot arethe umbrella "M" and "RonaldMcDonald's", respectively , compared to the mascot ofdefendant Corporation which is a chubby boy called"Macky" displayed or printed between the words "Big"and "Mak."81 (Emphasis supplied)

Respondents point to these dissimilarities as proof that theydid not give their hamburgers the general appearance of

petitioners' "Big Mac" hamburgers.

The dissimilarities in the packaging are minor compared tothe stark similarities in the words that give respondents'"Big Mak" hamburgers the general appearance of petitioners'"Big Mac" hamburgers. Section 29(a) expressly provides thatthe similarity in the general appearance of the goods may bein the "devices or words" used on the wrappings.Respondents have applied on their plastic wrappers andbags almost the same words that petitioners use on their

styrofoam box. What attracts the attention of the buyingpublic are the words "Big Mak" which are almost the same,aurally and visually, as the words "Big Mac." Thedissimilarities in the material and other devices areinsignificant compared to the glaring similarity in the wordsused in the wrappings.

Section 29(a) also provides that the defendant gives "hisgoods the general appearance of goods of anothermanufacturer." Respondents' goods are hamburgers which

of the "Big Mak" mark would not give their goods the generalappearance of petitioners' "Big Mac" hamburgers. In suchcase, there is only trademark infringement but no unfaircompetition. However , since respondents chose to apply the"Big Mak" mark on hamburgers, just like petitioner's use ofthe "Big Mac" mark on hamburgers, respondentshave obviously clothed their goods with the generalappearance of petitioners' goods.

Moreover, there is no notice to the public that the "Big Mak"hamburgers are products of "L.C. Big Mak Burger, Inc."Respondents introduced during the trial plastic wrappers andbags with the words "L.C. Big Mak Burger, Inc." to inform thepublic of the name of the seller of the hamburgers. However ,petitioners introduced during the injunctive hearings plasticwrappers and bags with the "Big Mak" mark without the

name "L.C. Big Mak Burger, Inc." Respondents' belatedpresentation of plastic wrappers and bags bearing the nameof "L.C. Big Mak Burger, Inc." as the seller of thehamburgers is an after-thought designed to exculpate themfrom their unfair business conduct. As earlier stated, wecannot consider respondents' evidence since petitioners'complaint was based on facts existing before and during theinjunctive hearings.

Thus, there is actually no notice to the public that the "Big

Mak" hamburgers are products of "L.C. Big Mak Burger, Inc."and not those of petitioners who have the exclusive right tothe "Big Mac" mark. This clearly shows respondents' intent todeceive the public. Had respondents' placed a notice on theirplastic wrappers and bags that the hamburgers are sold by"L.C. Big Mak Burger, Inc.", then they could validly claim thatthey did not intend to deceive the public. In such case, thereis only trademark infringement but no unfaircompetition.82 Respondents, however, did not give such

7/21/2019 LIP - Cases 8


COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), NagaPlant, petitioner,

that Pepsi hoarded several Coke bottles; securityguard Edwin Lirio stated that he entered Pepsi's yard onJ l 2 2001 t 4 d t C k b ttl i id

7/21/2019 LIP - Cases 8


vs.QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E.GALICIA, a.k.a. "DANNY GALICIA",respondents.

Is the hoarding of a competitor's product containerspunishable as unfair competition under the IntellectualProperty Code (IP Code, Republic Act No. 8293) that wouldentitle the aggrieved party to a search warrant against thehoarder? This is the issue we grapple with in this petition forreview oncertiorari involving two rival multinational softdrinkgiants; petitioner Coca-Cola Bottlers, Phils., Inc. (Coca-Cola)accuses Pepsi Cola Products Phils., Inc. (Pepsi ),represented by the respondents, of hoarding empty Cokebottles in bad faith to discredit its business and to sabotageits operation in Bicolandia.

BACKGROUND

The facts, as culled from the records, are summarizedbelow.

On July 2, 2001, Coca-Cola applied for a search warrantagainst Pepsi for hoarding Coke empty bottles in Pepsi'syard in Concepcion Grande, Naga City, an act allegedlypenalized as unfair competition under the IP Code. Coca-Cola claimed that the bottles must be confiscated to preclude

their illegal use, destruction or concealment by therespondents.1 In support of the application, Coca-Colasubmitted the sworn statements of three witnesses: Nagaplant representative Arnel John Ponce said he was informedthat one of their plant security guards had gained access intothe Pepsi compound and had seen empty Coke bottles;acting plant security officer Ylano A. Regaspi said heinvestigated reports that Pepsi was hoarding large quantitiesof Coke bottles by requesting their security guard to enterthe Pepsi plant and he was informed by the security guard

July 2, 2001 at 4 p.m. and saw empty Coke bottles insidePepsi shells or cases.2

Municipal Trial Court (MTC ) Executive Judge Julian C.Ocampo of Naga City, after taking the joint deposition of thewitnesses, issued Search Warrant No. 2001-013 to seize2,500 Litro and 3,000 eight and 12 ounces empty Cokebottles at Pepsi's Naga yard for violation of Section 168.3 (c)of the IP Code.4 The local police seized and brought to theMTC's custody 2,464 Litro and 4,036 eight and 12 ouncesempty Coke bottles, 205 Pepsi shells for Litro, and 168 Pepsishells for smaller (eight and 12 ounces) empty Coke bottles,and later filed with the Office of the City Prosecutor of Nagaa complaint against two Pepsi officers for violation of Section168.3 (c) in relation to Section 170 of the IP Code.5Thenamed respondents, also the respondents in this petition,

were Pepsi regional sales manager Danilo E.Galicia (Galicia) and its Naga general manager Quintin J.Gomez, Jr. (Gomez ).

In their counter-affidavits, Galicia and Gomez claimed thatthe bottles came from various Pepsi retailers andwholesalers who included them in their return to make up forshortages of empty Pepsi bottles; they had no way ofascertaining beforehand the return of empty Coke bottles asthey simply received what had been delivered; the presence

of the bottles in their yard was not intentional nor deliberate;Ponce and Regaspi's statements are hearsay as they had nopersonal knowledge of the alleged crime; there is no mentionin the IP Code of the crime of possession of empty bottles;and that the ambiguity of the law, which has a penal nature,must be construed strictly against the State and liberally intheir favor. Pepsi security guards Eduardo E. Miral and Rene

Acebuche executed a joint affidavit stating that per theirlogbook, Lirio did not visit or enter the plant premises in theafternoon of July 2, 2001.

The respondents also filed motions for the return of theirshells and to quash the search warrant. They contended that

b bl i t d t j tif th i f th

The respondents responded by filing a petition for certiorariunder Rule 65 of the Revised Rules of Court before theR i l T i l C t (RTC) f N Cit th d th t

7/21/2019 LIP - Cases 8


no probable cause existed to justify the issuance of thesearch warrant; the facts charged do not constitute anoffense; and their Naga plant was in urgent need of theshells.

Coca-Cola opposed the motions as the shells were part of

the evidence of the crime, arguing that Pepsi used the shellsin hoarding the bottles. It insisted that the issuance ofwarrant was based on probable cause for unfair competitionunder the IP Code, and that the respondents violated R.A.623, the law regulating the use of stamped or markedbottles, boxes, and other similar containers.

THE MTC RULINGS

On September 19, 2001, the MTC issued the first assailed

order 6 denying the twin motions. It explained there was anexhaustive examination of the applicant and its witnessesthrough searching questions and that the Pepsi shells areprima facie evidence that the bottles were placed there bythe respondents.

In their motion for reconsideration, the respondents arguedfor the quashal of the warrant as the MTC did not conduct aprobing and exhaustive examination; the applicant and itswitnesses had no personal knowledge of facts surrounding

the hoarding; the court failed to order the return of the"borrowed" shells; there was no crime involved; the warrantwas issued based on hearsay evidence; and the seizure ofthe shells was illegal because they were not included in thewarrant.

On November 14, 2001, the MTC denied the motion forreconsideration in the second assailed order,7 explaining thatthe issue of whether there was unfair competition can onlybe resolved during trial.

Regional Trial Court (RTC) of Naga City on the ground thatthe subject search warrant was issued without probablecause and that the empty shells were neither mentioned inthe warrant nor the objects of the perceived crime.

THE RTC RULINGS

On May 8, 2002, the RTC voided the warrant for lack ofprobable cause and the non-commission of the crime ofunfair competition, even as it implied that other laws mayhave been violated by the respondents. The RTC, though,found no grave abuse of discretion on the part of the issuingMTC judge.8 Thus,

Accordingly, as prayed for, Search Warrant No. 2001-02 issued by the Honorable Judge Julian C. Ocampo

III on July 2, 2001 is ANNULLED and SET ASIDE.The Orders issued by the Pairing Judge of Br. 1,MTCC of Naga City dated September 19, 2001 andNovember 14, 2001 are also declared VOID and SET

ASIDE. The City Prosecutor of Naga City and SPO1Ernesto Paredes are directed to return to thePetitioner the properties seized by virtue of SearchWarrant No. 2001-02. No costs.

SO ORDERED.9

In a motion for reconsideration, which the RTC denied onJuly 12, 2002, the petitioner stressed that the decision of theRTC was contradictory because it absolved Judge Ocampoof grave abuse of discretion in issuing the search warrant,but at the same time nullified the issued warrant. The MTCshould have dismissed the petition when it found out thatJudge Ocampo did not commit any grave abuse ofdiscretion.

Bypassing the Court of Appeals, the petitioner asks usthrough this petition for review on certiorari under Rule 45 ofth R l f C t t th d i i f th RTC

The respondents counter-argue that although JudgeOcampo conducted his own examination, he gravely erred

d b d hi di ti h h i d th l th

7/21/2019 LIP - Cases 8


the Rules of Court to reverse the decision of the RTC.Essentially, the petition raises questions against the RTC'snullification of the warrant when it found no grave abuse ofdiscretion committed by the issuing judge.

THE PETITION and THE PARTIES' POSITIONS

In its petition, the petitioner insists the RTC should havedismissed the respondents' petition for certiorari because itfound no grave abuse of discretion by the MTC in issuing thesearch warrant. The petitioner further argues that the IPCode was enacted into law to remedy various forms of unfaircompetition accompanying globalization as well as to replacethe inutile provision of unfair competition under Article 189 ofthe Revised Penal Code. Section 168.3(c) of the IP Code

does not limit the scope of protection on the particular actsenumerated as it expands the meaning of unfair competitionto include "other acts contrary to good faith of a naturecalculated to discredit the goods, business or services ofanother." The inherent element of unfair competition is fraudor deceit, and that hoarding of large quantities of acompetitor's empty bottles is necessarily characterized bybad faith. It claims that its Bicol bottling operation wasprejudiced by the respondents' hoarding and destruction ofits empty bottles.

The petitioner also argues that the quashal of the searchwarrant was improper because it complied with all theessential requisites of a valid warrant. The empty bottleswere concealed in Pepsi shells to prevent discovery whilethey were systematically being destroyed to hamper thepetitioner's bottling operation and to undermine the capabilityof its bottling operations in Bicol.

and abused his discretion when he ignored the rule on theneed of sufficient evidence to establish probable cause;satisfactory and convincing evidence is essential to holdthem guilty of unfair competition; the hoarding of empty Cokebottles did not cause actual or probable deception andconfusion on the part of the general public; the alleged

criminal acts do not show conduct aimed at deceiving thepublic; there was no attempt to use the empty bottles or passthem off as the respondents' goods.

The respondents also argue that the IP Code does notcriminalize bottle hoarding, as the acts penalized mustalways involve fraud and deceit. The hoarding does notmake them liable for unfair competition as there was nodeception or fraud on the end-users.

THE ISSUE

Based on the parties' positions, the basic issue submitted tous for resolution is whether the Naga MTC was correct inissuing Search Warrant No. 2001-01 for the seizure of theempty Coke bottles from Pepsi's yard for probable violationof Section 168.3 (c) of the IP Code. This basic issue involvestwo sub-issues, namely, the substantive issue of whether theapplication for search warrant effectively charged an offense,i.e., a violation of Section 168.3 (c) of the IP Code; and the

procedural issue of whether the MTC observed theprocedures required by the Rules of Court in the issuance ofsearch warrants.

OUR RULING

We resolve to deny the petition for lack of merit.

We clarify at the outset that while we agree with the RTCdecision, our agreement is more in the result than in the

reasons that supported it. The decision is correct in nullifyingthe search warrant because it was issued on an invalidsubstantive basis the acts imputed on the respondents do

witnesses. This is the substantive requirement in theissuance of a search warrant. Procedurally, thedetermination of probable cause is a personal task of the

7/21/2019 LIP - Cases 8


substantive basis - the acts imputed on the respondents donot violate Section 168.3 (c) of the IP Code. For this reason,we deny the present petition.

The issuance of a search warrant10 against a personalproperty11 is governed by Rule 126 of the Revised Rules of

Court whose relevant sections state:

Section 4. Requisites for issuing search warrant . - A searchwarrant shall not issue except uponprobable cause inconnection with one specific offense to be determinedpersonally by the judge after examination under oath oraffirmation of the complainant and the witnesses he mayproduce, and particularly describing the place to be searchedand the things to be seized which may be anywhere in thePhilippines.

Section 5. Examination of complainant; record . - The judgemust, before issuing the warrant,personally examine in theform of searching questions and answers, in writing andunder oath, the complainant and the witnesses he mayproduce on facts personally known to them and attach to therecord their sworn statements together with the affidavitssubmitted.

Section 6. Issuance and form of search warrant . - If the

judge is satisfied of the existence of facts upon which theapplication is based or that there is probable cause tobelieve that they exist, he shall issue the warrant, whichmust be substantially in the form prescribed by these Rules.[Emphasis supplied]

To paraphrase this rule, a search warrant may beissued only if there is probable cause in connection with aspecific offense alleged in an application based on the personal knowledge of the applicant and his or her

determination of probable cause is a personal task of the judge before whom the application for search warrant is filed,as he has to examine under oath or affirmation the applicantand his or her witnesses in the form of "searching questionsand answers" in writing and under oath. The warrant, ifissued, must particularly describe the place to be searched

and the things to be seized.

We paraphrase these requirements to stress that they havesubstantive and procedural aspects. Apparently, the RTCrecognized this dual nature of the requirements and, hence,treated them separately; it approved of the way the MTChandled the procedural aspects of the issuance of the searchwarrant but found its action on the substantive aspectwanting. It therefore resolved to nullify the warrant, withouthowever expressly declaring that the MTC gravely abused its

discretion when it issued the warrant applied for. The RTC'serror, however, is in the form rather than the substance ofthe decision as the nullification of the issued warrant for thereason the RTC gave was equivalent to the declaration thatgrave abuse of discretion was committed. In fact, we so ruleas the discussions below will show.

Jurisprudence teaches us that probable cause, as acondition for the issuance of a search warrant, is suchreasons supported by facts and circumstances as will

warrant a cautious man in the belief that his action and themeans taken in prosecuting it are legally just and proper.Probable cause requires facts and circumstances that wouldlead a reasonably prudent man to believe that an offensehas been committed and the objects sought in connectionwith that offense are in the place to be searched.12 Implicit inthis statement is the recognition that an underlying offensemust, in the first place, exist. In other words, the actsalleged, taken together, must constitute an offense and that

these acts are imputable to an offender in relation with whoma search warrant is applied for.

otherwise clothes the goods with such appearance as shalldeceive the public and defraud another of his legitimatetrade or any subsequent vendor of such goods or any agent

7/21/2019 LIP - Cases 8


In the context of the present case, the question is whetherthe act charged - alleged to be hoarding of empty Cokebottles - constitutes an offense under Section 168.3 (c) of theIP Code. Section 168 in its entirety states:

SECTION 168. Unfair Competition, Rights, Regulationand Remedies. -

168.1. A person who has identified in the mind of the publicthe goods he manufactures or deals in, his business orservices from those of others, whether or not a registeredmark is employed, has a property right in the goodwill of thesaid goods, business or services so identified, which will beprotected in the same manner as other property rights.

168.2. Any person who shall employ deception or any othermeans contrary to good faith by which he shall pass off thegoods manufactured by him or in which he deals, or hisbusiness, or services for those of the one having establishedsuch goodwill, or who shall commit any acts calculated toproduce said result, shall be guilty of unfair competition, andshall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scopeof protection against unfair competition, the following shall be

deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them thegeneral appearance of goods of another manufacturer ordealer, either as to the goods themselves or in the wrappingof the packages in which they are contained, or the devicesor words thereon, or in any other feature of their appearance,which would be likely to influence purchasers to believe thatthe goods offered are those of a manufacturer or dealer,other than the actual manufacturer or dealer, or who

trade, or any subsequent vendor of such goods or any agentof any vendor engaged in selling such goods with a likepurpose;

(b) Any person who by any artifice, or device, or whoemploys any other means calculated to induce the false

belief that such person is offering the services of anotherwho has identified such services in the mind of the public; or


168.4. The remedies provided by Sections 156, 157 and 161shall apply mutatis mutandis. (Sec. 29,R.A. No. 166a)

The petitioner theorizes that the above section does not limitthe scope of protection on the particular acts enumerated asit expands the meaning of unfair competition to include"other acts contrary to good faith of a nature calculated todiscredit the goods, business or services of another."

Allegedly, the respondents' hoarding of Coca Cola emptybottles is one such act.

We do not agree with the petitioner's expansive

interpretation of Section 168.3 (c).

"Unfair competition," previously defined in Philippine jurisprudence in relation with R.A. No. 166 and Articles 188and 189 of the Revised Penal Code, is now covered bySection 168 of the IP Code as this Code has expresslyrepealed R.A. No. 165 and R.A. No. 166, and Articles 188and 189 of the Revised Penal Code.

Articles 168.1 and 168.2, as quoted above, provide theconcept and general rule on the definition of unfaircompetition The law does not thereby cover every unfair act

The act alleged to violate the petitioner's rights underSection 168.3 (c) is hoarding which we gather to be thecollection of the petitioner's empty bottles so that they can be

7/21/2019 LIP - Cases 8


competition. The law does not thereby cover every unfair actcommitted in the course of business; it covers only actscharacterized by "deception or any other means contrary togood faith" in the passing off of goods and services as thoseof another who has established goodwill in relation withthese goods or services, or any other act calculated to

produce the same result.

What unfair competition is, is further particularized underSection 168.3 when it provides specifics of what unfaircompetition is "without in any way limiting the scope ofprotection against unfair competition." Part of theseparticulars is provided under Section 168.3(c) which providesthe general "catch-all" phrase that the petitioner cites. Underthis phrase, a person shall be guilty of unfair competition"who shall commit any other act contrary to good faith of a

nature calculated to discredit the goods, business or servicesof another."

From jurisprudence, unfair competition has been defined asthe passing off (or palming off) or attempting to pass off uponthe public the goods or business of one person as the goodsor business of another with the end and probable effect ofdeceiving the public. It formulated the "true test" of unfaircompetition: whether the acts of defendant are such as arecalculated to deceive the ordinary buyer making his

purchases under the ordinary conditions which prevail in theparticular trade to which the controversy relates.13 One of theessential requisites in an action to restrain unfair competitionis proof of fraud; the intent to deceive must be shown beforethe right to recover can exist.14 The advent of the IP Codehas not significantly changed these rulings as they are fullyin accord with what Section 168 of the Code in its entiretyprovides. Deception, passing off and fraud upon the public are still the key elements that must be present forunfair competition to exist.

collection of the petitioner s empty bottles so that they can bewithdrawn from circulation and thus impede the circulation ofthe petitioner's bottled products. This, according to thepetitioner, is an act contrary to good faith - a conclusion that,if true, is indeed an unfair act on the part of the respondents.The critical question, however, is not the intrinsic

unfairness of the act of hoarding; what is critical for purposesof Section 168.3 (c) is to determine if the hoarding, ascharged, "is of a nature calculated to discredit the goods,business or services" of the petitioner.

We hold that it is not. Hoarding as defined by the petitioner isnot even an act within the contemplation of the IP Code.

The petitioner's cited basis is a provision of the IP Code, aset of rules that refer to a very specific subject - intellectual

property. Aside from the IP Code's actual substantivecontents (which relate specifically to patents, licensing,trademarks, trade names, service marks, copyrights, and theprotection and infringement of the intellectual properties thatthese protective measures embody), the coverage and intentof the Code is expressly reflected in its "Declaration of StatePolicy" which states:

Section 2. Declaration of State Policy. - The Staterecognizes that an effective intellectual and industrial

property system is vital to the development ofdomestic and creative activity, facilitates transfer oftechnology, attracts foreign investments, and ensuresmarket access for our products. It shall protect andsecure the exclusive rights of scientists, inventors,artists and other gifted citizens to their intellectual property and creations, particularly when beneficial tothe people, for such periods as provided in this Act.

The use of intellectual property bears a socialfunction. To this end, the State shall promote thediffusion of knowledge and information for the

"noscitur a sociis," when a particular word or phrase isambiguous in itself or is equally susceptible of variousmeanings its correct construction may be made clear and

7/21/2019 LIP - Cases 8


diffusion of knowledge and information for thepromotion of national development and progress andthe common good.

It is also the policy of the State to streamlineadministrative procedures of registering patents,

trademarks and copyright, to liberalize the registrationon the transfer of technology, and to enhance theenforcement of intellectual property rights in thePhilippines. (n)

"Intellectual property rights" have furthermore been definedunder Section 4 of the Code to consist of: a) Copyright andRelated Rights; b) Trademarks and Service Marks; c)Geographic Indications; d) IndustrialDesigns; e) Patents; f)Layout-Designs (Topographies) of Integrated Circuits; and

g)Protection of Undisclosed Information.

Given the IP Code's specific focus, a first test that should bemade when a question arises on whether a matter is coveredby the Code is to ask if it refers to an intellectual property asdefined in the Code. If it does not, then coverage by theCode may be negated.

A second test, if a disputed matter does not expressly referto an intellectual property right as defined above, is whether

it falls under the general "unfair competition" concept anddefinition under Sections 168.1 and 168.2 of the Code. Thequestion then is whether there is "deception" or any othersimilar act in "passing off" of goods or services to be those ofanother who enjoys established goodwill.

Separately from these tests is the application of theprinciples of statutory construction giving particular attention,not so much to the focus of the IP Code generally, but to theterms of Section 168 in particular. Under the principle of

meanings, its correct construction may be made clear andspecific by considering the company of words in which it isfound or with which it is associated.15

As basis for this interpretative analysis, we note that Section168.1 speaks of a person who has earned goodwill with

respect to his goods and services and who is entitled toprotection under the Code, with or without a registeredmark. Section 168.2, as previously discussed, refers to thegeneral definition of unfair competition. Section 168.3, onthe other hand, refers to the specific instances of unfaircompetition, with Section 168.1 referring to the sale ofgoods given the appearance of the goods ofanother; Section 168.2, to the inducement of belief that hisor her goods or services are that of another who has earnedgoodwill; while the disputed Section 168.3 being a "catch

all" clause whose coverage the parties now dispute.

Under all the above approaches, we conclude that the"hoarding" - as defined and charged by the petitioner - doesnot fall within the coverage of the IP Code and of Section168 in particular. It does not relate to any patent, trademark,trade name or service mark that the respondents haveinvaded, intruded into or used without proper authority fromthe petitioner. Nor are the respondents alleged to befraudulently "passing off" their products or services as those

of the petitioner. The respondents are not also alleged to beundertaking any representation or misrepresentation thatwould confuse or tend to confuse the goods of the petitionerwith those of the respondents, or vice versa. What in fact thepetitioner alleges is an act foreign to the Code, to theconcepts it embodies and to the acts it regulates; as alleged,hoarding inflicts unfairness by seeking to limit theopposition's sales by depriving it of the bottles it can use forthese sales.

In this light, hoarding for purposes of destruction is closer towhat another law - R.A. No. 623 - covers, to wit:

sellers of soda water, mineral or aerated waters, cider, milk,cream, or other lawful beverages in bottles, boxes, casks,kegs or barrels and other similar containers - who are given

7/21/2019 LIP - Cases 8


SECTION 1. Persons engaged or licensed to engagein the manufacture, bottling or selling of soda water,mineral or aerated waters, cider, milk, cream, or otherlawful beverages in bottles, boxes, casks, kegs, orbarrels, and other similar containers, with their names

or the names of their principals or products, or othermarks of ownership stamped or marked thereon, mayregister with the Philippine Patent Office a descriptionof the names or are used by them, under the sameconditions, rules, and regulations, made applicable bylaw or regulation to the issuance of trademarks.

SECTION 2. It shall be unlawful for any person,without the written consent of the manufacturer,bottler or seller who has successfully registered the

marks of ownership in accordance with the provisionsof the next preceding section, to fill such bottles,boxes, kegs, barrels, or other similar containersso marked or stamped, for the purpose of sale, orto sell, dispose of, buy, or traffic in, or wantonlydestroy the same, whether filled or not, or to usethe same for drinking vessels or glasses or forany other purpose than that registered by themanufacturer, bottler or seller . Any violation of thissection shall be punished by a fine or not more than

one hundred pesos or imprisonment of not more thanthirty days or both.

As its coverage is defined under Section 1, the Act appearsto be a measure that may overlap or be affected by theprovisions of Part II of the IP Code on "The Law onTrademarks, Service Marks and Trade Names." What iscertain is that the IP Code has not expressly repealed this

Act. The Act appears, too, to have specific reference to aspecial type of registrants - the manufacturers, bottlers or

kegs, or barrels, and other similar containers - who are givenspecial protection with respect to the containers they use. Inthis sense, it is in fact a law of specific coverage andapplication, compared with the general terms and applicationof the IP Code. Thus, under its Section 2, it speaksspecifically of unlawful use of containers and even of the

unlawfulness of their wanton destruction - a matter thatescapes the IP Code's generalities unless linked with theconcepts of "deception" and "passing off" as discussedabove.

Unfortunately, the Act is not the law in issue in the presentcase and one that the parties did not consider at all in thesearch warrant application. The petitioner in fact could nothave cited it in its search warrant application since the "onespecific offense" that the law allows and which the petitioner

used was Section 168.3 (c). If it serves any purpose at all inour discussions, it is to show that the underlying factualsituation of the present case is in fact covered by anotherlaw, not by the IP Code that the petitioner cites. Viewed inthis light, the lack of probable cause to support the disputedsearch warrant at once becomes apparent.

Where, as in this case, the imputed acts do not violate thecited offense, the ruling of this Court penned by Mr. JusticeBellosillo is particularly instructive:

In the issuance of search warrants, the Rules of Courtrequires a finding of probable cause in connectionwith one specific offense to be determined personallyby the judge after examination of the complainant andthe witnesses he may produce, and particularlydescribing the place to be searched and the things tobe seized. Hence, since there is no crime to speakof, the search warrant does not even begin tofulfill these stringent requirements and is

therefore defective on its face. The nullity of thewarrant renders moot and academic the other issuesraised in petitioners' Motion to Quash and Motion for

7/21/2019 LIP - Cases 8


raised in petitioners Motion to Quash and Motion forReconsideration. Since the assailed search warrant isnull and void, all property seized by virtue thereofshould be returned to petitioners in accordance withestablished jurisprudence.16

Based on the foregoing, we conclude that the RTC correctlyruled that the petitioner's search warrant should properly bequashed for the petitioner's failure to show that the actsimputed to the respondents do not violate the cited offense.There could not have been any probable cause to supportthe issuance of a search warrant because no crime in thefirst place was effectively charged. This conclusion rendersunnecessary any further discussion on whether the searchwarrant application properly alleged that the imputed act ofholding Coke empties was in fact a "hoarding" in bad faith

aimed to prejudice the petitioner's operations, or whether theMTC duly complied with the procedural requirements for theissuance of a search warrant under Rule 126 of the Rules ofCourt.

WHEREFORE, we hereby DENY the petition for lack ofmerit. Accordingly, we confirm that Search Warrant No.2001-01, issued by the Municipal Trial Court, Branch 1,Naga City, is NULL and VOID. Costs against the petitioner.

SO ORDERED.

lip - cases 8

Documents