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Trade Mark Cases List

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1. Mirpuri done
2. Berris Agricultural done
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4. Cofee Partners Done
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Copy Right Cases List

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GSIS FAMILY BANK - THRIFT BANK [Formerly Inc.], Petitioner,


vs.
BPI FAMILY BANK, Respondent.

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari filed by GSIS Family Bank - Thrift Bank1 assailing the Court
of Appeals Decision2 dated March 29, 2006 (Decision) and Resolution3 dated October 23, 2006
which denied petitioner's petition for review of the Securities and Ex.change Commission Decision
dated February 22, 2005 (SEC En Banc Decision). The SEC En Banc Decision4 prohibited petitioner
from using the word "Family" as part of its corporate name and ordered petitioner to delete the word
from its name.5

Facts

Petitioner was originally organized as Royal Savings Bank and started operations in 1971. Beginning
1983 and 1984, petitioner encountered liquidity problems. On July 9, 1984, it was placed under
receivership and later temporarily closed by the Central Bank of the Philippines. Two (2) months
after its closure, petitioner reopened and was renamed Comsavings Bank, Inc. under the
management of the Commercial Bank of Manila.6

In 1987, the Government Service Insurance System (GSIS) acquired petitioner from the Commercial
Bank of Manila. Petitioner's management and control was thus transferred to GSIS.7 To improve its
marketability to the public, especially to the members of the GSIS, petitioner sought Securities and
Exchange Commission (SEC) approval to change its corporate name to "GSIS Family Bank, a Thrift
Bank."8 Petitioner likewise applied with the Department of Trade and Industry (DTI) and Bangko
Sentral ng Pilpinas (BSP) for authority to use "GSIS Family Bank, a Thrift Bank" as its business
name. The DTI and the BSP approved the applications.9 Thus, petitioner operates under the
corporate name "GSIS Family Bank – a Thrift Bank," pursuant to the DTI Certificate of Registration
No. 741375 and the Monetary Board Circular approval.10

Respondent BPI Family Bank was a product of the merger between the Family Bank and Trust
Company (FBTC) and the Bank of the Philippine Islands (BPI).11 On June 27, 1969, the Gotianum
family registered with the SEC the corporate name "Family First Savings Bank," which was amended
to "Family Savings Bank," and then later to "Family Bank and Trust Company."12 Since its
incorporation, the bank has been commonly known as "Family Bank." In 1985, Family Bank merged
with BPI, and the latter acquired all the rights, privileges, properties, and interests of Family Bank,
including the right to use names, such as "Family First Savings Bank,"
"Family Bank," and "Family Bank and Trust Company." BPI Family Savings Bank was registered
with the SEC as a wholly-owned subsidiary of BPI. BPI Family Savings Bank then registered with the
Bureau of Domestic Trade the trade or business name "BPI Family Bank," and acquired a reputation
and goodwill under the name.13

Proceedings before the SEC

Eventually, it reached respondent’s attention that petitioner is using or attempting to use the name
"Family Bank." Thus, on March 8, 2002, respondent petitioned the SEC Company Registration and
Monitoring Department (SEC CRMD) to disallow or prevent the registration of the name "GSIS
Family Bank" or any other corporate name with the words "Family Bank" in it. Respondent claimed
exclusive ownership to the name "Family Bank," having acquired the name since its purchase and
merger with Family Bank and Trust Company way back 1985.14 Respondent also alleged that
through the years, it has been known as "BPI Family Bank" or simply "Family Bank" both locally and
internationally. As such, it has acquired a reputation and goodwill under the name, not only with
clients here and abroad, but also with correspondent and competitor banks, and the public in
general.15

Respondent prayed the SEC CRMD to disallow or prevent the registration of the name "GSIS Family
Bank" or any other corporate name with the words "Family Bank" should the same be presented for
registration.

Respondent likewise prayed the SEC CRMD to issue an order directing petitioner or any other
corporation to change its corporate name if the names have already been registered with the SEC.16

The SEC CRMD was thus confronted with the issue of whether the names BPI Family Bank and
GSIS Family Bank are confusingly similar as to require the amendment of the name of the latter
corporation.

The SEC CRMD declared that upon the merger of FBTC with the BPI in 1985, the latter acquired the
right to the use of the name of the absorbed corporation. Thus, BPI Family Bank has a prior right to
the use of the name

Family Bank in the banking industry, arising from its long and extensive nationwide use, coupled with
its registration with the Intellectual Property Office (IPO) of the name "Family Bank" as its trade
name. Applying the rule of "priority in registration" based on the legal maxim first in time, first in right,
the SEC CRMD concluded that BPI has the preferential right to the use of the name "Family Bank."
More, GSIS and Comsavings Bank were then fully aware of the existence and use of the name
"Family Bank" by FBTC prior to the latter's merger with BPI.17

The SEC CRMD also held that there exists a confusing similarity between the corporate names BPI
Family Bank and GSIS Family Bank. It explained that although not identical, the corporate names
are indisputably similar, as to cause confusion in the public mind, even with the exercise of
reasonable care and observation, especially so since both corporations are engaged in the banking
business.18

In a decision19 dated May 19, 2003, the SEC CRMD said, PREMISES CONSIDERED respondent
GSIS FAMILY BANK is hereby directed to refrain from using the word "Family" as part of its name
and make good its commitment to change its name by deleting or dropping the subject word from its
corporate name within [thirty (30) days] from the date of actual receipt hereof.20
Petitioner appealed21 the decision to the SEC En Banc, which denied the appeal, and upheld the
SEC CRMD in the SEC En Banc Decision.22 Petitioner elevated the SEC En Banc Decision to the
Court of Appeals, raising the following issues:

1. Whether the use by GSIS Family Bank of the words "Family Bank" is deceptively and
confusingly similar to the name BPI Family Bank;

2. Whether the use by Comsavings Bank of "GSIS Family Bank" as its business constitutes
unfair competition;

3. Whether BPI Family Bank is guilty of forum shopping;

4. Whether the approval of the DTI and the BSP of petitioner's application to use the name
GSIS Family Bank constitutes its authority to the lawful and valid use of such trade name or
trade mark;

5. Whether the application of respondent BPI Family Bank for the exclusive use of the name
"Family Bank," a generic name, though not yet approved by IPO of the Bureau of Patents,
has barred the GSIS Family Bank from using such trade mark or name.23

Court of Appeals Ruling

The Court of Appeals ruled that the approvals by the BSP and by the DTI of petitioner’s application
to use the name "GSIS Family Bank" do not constitute authority for its lawful and valid use. It said
that the SEC has absolute jurisdiction, supervision and control over all corporations.24 The Court of
Appeals held that respondent was entitled to the exclusive use of the corporate name because of its
prior adoption of the name "Family Bank" since 1969.25There is confusing similarity in the corporate
names because "[c]onfusion as to the possible association with GSIS might arise if we were to allow
Comsavings Bank to add its parent company’s acronym, ‘GSIS’ to ‘Family Bank.’ This is true
especially considering both companies belong to the banking industry. Proof of actual confusion
need not be shown. It suffices that confusion is probably or likely to occur."26The Court of Appeals
also ruled out forum shopping because not all the requirements of litis pendentia are present.27

The dispositive portion of the decision read,

WHEREFORE, the instant petition for review is hereby DISMISSED for lack of merit.28

After its Motion for Reconsideration was denied,29 petitioner brought the decision to this Court via a
Petition for Review on Certiorari.30

Issues in the Petition

Petitioner raised the following issues in its petition:

I. The Court of Appeals gravely erred in affirming the SEC Resolution finding the word
"Family" not generic despite its unregistered status with the IPO of the Bureau of Patents
and the use by GSIS-Family Bank in its corporate name of the words "[F]amily [B]ank" as
deceptive and [confusingly similar] to the name BPI Family Bank;31
II. The Court of Appeals gravely erred when it ruled that the respondent is not guilty of forum
shopping despite the filing of three (3) similar complaints before the DTI and BSP and with
the SEC without the requisite certification of non-forum shopping attached thereto;32

III. The Court of Appeals gravely erred when it completely disregarded the opinion of the
Banko Sentral ng Pilipinas that the use by the herein petitioner of the trade name GSIS
Family Bank – Thrift Bank is not similar or does not deceive or likely cause any deception to
the public.33

Court's Ruling

We uphold the decision of the Court of Appeals.

Section 18 of the Corporation Code provides,

Section 18. Corporate name. – No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by law or is patently deceptive,
confusing or contrary to existing laws. When a change in the corporate name is approved, the
Commission shall issue an amended certificate of incorporation under the amended name.

In Philips Export B.V. v. Court of Appeals,34 this Court ruled that to fall within the prohibition of the law
on the right to the exclusive use of a corporate name, two requisites must be proven, namely:

(1) that the complainant corporation acquired a prior right over the use of such corporate
name; and

(2) the proposed name is either

(a) identical or

(b) deceptive or confusingly similar to that of any existing corporation or to any other
name already protected by law; or

(c) patently deceptive, confusing or contrary to existing law.35

These two requisites are present in this case. On the first requisite of a prior right, Industrial
Refractories Corporation of the Philippines v. Court of Appeals (IRCP case)36 is instructive. In that
case, Refractories Corporation of the Philippines (RCP) filed before the SEC a petition to compel
Industrial Refractories Corporation of the Philippines (IRCP) to change its corporate name on the
ground that its corporate name is confusingly similar with that of RCP’s such that the public may be
confused into believing that they are one and the same corporation. The SEC and the Court of
Appeals found for petitioner, and ordered IRCP to delete or drop from its corporate name the word
"Refractories." Upon appeal of IRCP, this Court upheld the decision of the CA.

Applying the priority of adoption rule to determine prior right, this Court said that RCP has acquired
the right to use the word "Refractories" as part of its corporate name, being its prior registrant. In
arriving at this conclusion, the Court considered that RCP was incorporated on October 13, 1976
and since then continuously used the corporate name "Refractories Corp. of the Philippines."
Meanwhile, IRCP only started using its corporate name "Industrial Refractories Corp. of the
Philippines" when it amended its Articles of Incorporation on August 23, 1985.37
In this case, respondent was incorporated in 1969 as Family Savings Bank and in 1985 as BPI
Family Bank. Petitioner, on the other hand, was incorporated as GSIS Family – Thrift Bank only in
2002,38 or at least seventeen (17) years after respondent started using its name. Following the
precedent in the IRCP case, we rule that respondent has the prior right over the use of the corporate
name.

The second requisite in the Philips Export case likewise obtains on two points: the proposed name is
(a) identical or (b) deceptive or confusingly similar to that of any existing corporation or to any other
name already protected by law.

On the first point (a), the words "Family Bank" present in both petitioner and respondent's corporate
name satisfy the requirement that there be identical names in the existing corporate name and the
proposed one.

Respondent cannot justify its claim under Section 3 of the Revised Guidelines in the Approval of
Corporate and Partnership Names,39 to wit:

3. The name shall not be identical, misleading or confusingly similar to one already registered by
another corporation or partnership with the Commission or a sole proprietorship registered with the
Department of Trade and Industry.

If the proposed name is similar to the name of a registered firm, the proposed name must contain at
least one distinctive word different from the name of the company already registered.

Section 3 states that if there be identical, misleading or confusingly similar name to one already
registered by another corporation or partnership with the SEC, the proposed name must contain at
least one distinctive word different from the name of the company already registered. To show
contrast with respondent's corporate name, petitioner used the words "GSIS" and "thrift." But these
are not sufficiently distinct words that differentiate petitioner's corporate name from respondent's.
While "GSIS" is merely an acronym of the proper name by which petitioner is identified, the word
"thrift" is simply a classification of the type of bank that petitioner is. Even if the classification of the
bank as "thrift" is appended to petitioner's proposed corporate name, it will not make the said
corporate name distinct from respondent's because the latter is likewise engaged in the banking
business.

This Court used the same analysis in Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K.
sa Bansang Pilipinas, Inc. v. Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan.40 In
that case, Iglesia ng Dios Kay Cristo Jesus filed a case before the SEC to compel Ang mga Kaanib
sa Iglesia ng Dios Kay Kristo Hesus to change its corporate name, and to prevent it from using the
same or similar name on the ground that the same causes confusion among their members as well
as the public. Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus claimed that it complied with
SEC Memorandum Circular No. 14-2000 by adding not only two, but eight words to their registered
name, to wit: "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc.," which effectively distinguished it
from Iglesia ng Dios Kay Cristo Jesus. This Court rejected the argument, thus:

The additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc." in petitioner's name
are, as correctly observed by the SEC, merely descriptive of and also referring to the
members, or kaanib, of respondent who are likewise residing in the Philippines. These words
can hardly serve as an effective differentiating medium necessary to avoid confusion or
difficulty in distinguishing petitioner from respondent. This is especially so, since both
petitioner and respondent corporations are using the same acronym – H.S.K.; not to mention
the fact that both are espousing religious beliefs and operating in the same place. Xxx41
On the second point (b), there is a deceptive and confusing similarity between petitioner's proposed
name and respondent's corporate name, as found by the SEC.42 In determining the existence of
confusing similarity in corporate names, the test is whether the similarity is such as to mislead a
person using ordinary care and discrimination.43 And even without such proof of actual confusion
between the two corporate names, it suffices that confusion is probable or likely to occur.44

Petitioner's corporate name is "GSIS Family Bank—A Thrift Bank" and respondent's corporate name
is "BPI Family Bank." The only words that distinguish the two are "BPI," "GSIS," and "Thrift." The first
two words are merely the acronyms of the proper names by which the two corporations identify
themselves; and the third word simply describes the classification of the bank. The overriding
consideration in determining whether a person, using ordinary care and discrimination, might be
misled is the circumstance that both petitioner and respondent are engaged in the same business of
banking. "The likelihood of confusion is accentuated in cases where the goods or business of one
corporation are the same or substantially the same to that of another corporation."45

Respondent alleged that upon seeing a Comsavings Bank branch with the signage "GSIS Family
Bank" displayed at its premises, some of the respondent’s officers and their clients began asking
questions. These include whether GSIS has acquired Family Bank; whether there is a joint
arrangement between GSIS and Family Bank; whether there is a joint arrangement between BPI
and GSIS regarding Family Bank; whether Comsavings Bank has acquired Family Bank; and
whether there is there an arrangement among Comsavings Bank, GSIS, BPI, and Family Bank
regarding BPI Family Bank and GSIS Family Bank.46 The SEC made a finding that "[i]t is not a
remote possibility that the public may entertain the idea that a relationship or arrangement indeed
exists between BPI and GSIS due to the use of the term ‘Family Bank’ in their corporate names."47

Findings of fact of quasi-judicial agencies, like the SEC, are generally accorded respect and even
finality by this Court, if supported by substantial evidence, in recognition of their expertise on the
specific matters under their consideration, more so if the same has been upheld by the appellate
court, as in this case.48

Petitioner cannot argue that the word "family" is a generic or descriptive name, which cannot be
appropriated exclusively by respondent. "Family," as used in respondent's corporate name, is not
generic. Generic marks are commonly used as the name or description of a kind of goods, such as
"Lite" for beer or "Chocolate Fudge" for chocolate soda drink. Descriptive marks, on the other hand,
convey the characteristics, function, qualities or ingredients of a product to one who has never seen
it or does not know it exists, such as "Arthriticare" for arthritis medication.49

Under the facts of this case, the word "family" cannot be separated from the word "bank."50 In
asserting their claims before the SEC up to the Court of Appeals, both petitioner and respondent
refer to the phrase "Family Bank" in their submissions. This coined phrase, neither being generic nor
descriptive, is merely suggestive and may properly be regarded as arbitrary. Arbitrary marks are
"words or phrases used as a mark that appear to be random in the context of its use. They are
generally considered to be easily remembered because of their arbitrariness. They are original and
unexpected in relation to the products they endorse, thus, becoming themselves
distinctive."51 Suggestive marks, on the other hand, "are marks which merely suggest some quality or
ingredient of goods. xxx The strength of the suggestive marks lies on how the public perceives the
word in relation to the product or service."52

In Ang v. Teodoro,53 this Court ruled that the words "Ang Tibay" is not a descriptive term within the
meaning of the Trademark Law but rather a fanciful or coined phrase.54 In so ruling, this Court
considered the etymology and meaning of the Tagalog words, "Ang Tibay" to determine whether
they relate to the quality or description of the merchandise to which respondent therein applied them
as trademark, thus:

We find it necessary to go into the etymology and meaning of the Tagalog words "Ang Tibay" to
determine whether they are a descriptive term, i.e., whether they relate to the quality or description
of the merchandise to which respondent has applied them as a trade-mark. The word "ang" is a
definite article meaning "the" in English. It is also used as an adverb, a contraction of the word
"anong" (what or how). For instance, instead of saying, "Anong ganda!" ("How beautiful!"), we
ordinarily say, "Ang ganda!" Tibay is a root word from which are derived the verb magpatibay (to
strengthen); the nouns pagkamatibay (strength, durability), katibayan (proof, support, strength),
katibaytibayan (superior strength); and the adjectives matibay (strong, durable, lasting), napakatibay
(very strong), kasintibay or magkasintibay (as strong as, or of equal strength). The phrase "Ang
Tibay" is an exclamation denoting admiration of strength or durability. For instance, one who tries
hard but fails to break an object exclaims, "Ang tibay!" ("How strong!") It may also be used in a
sentence thus, "Ang tibay ng sapatos mo!" ("How durable your shoes are!") The phrase "ang tibay"
is never used adjectively to define or describe an object. One does not say, "ang tibay sapatos" or
"sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos" or "sapatos na matibay."

From all of this we deduce that "Ang Tibay" is not a descriptive term within the meaning of the Trade-
Mark Law but rather a fanciful or coined phrase which may properly and legally be appropriated as a
trade-mark or trade-name. xxx55 (Underscoring supplied).

The word "family" is defined as "a group consisting of parents and children living together in a
household" or "a group of people related to one another by blood or marriage."56 Bank, on the other
hand, is defined as "a financial establishment that invests money deposited by customers, pays it out
when requested, makes loans at interest, and exchanges currency."57 By definition, there can be no
expected relation between the word "family" and the banking business of respondent. Rather, the
words suggest that respondent’s bank is where family savings should be deposited. More, as in the
Ang case, the phrase "family bank" cannot be used to define an object.

Petitioner’s argument that the opinion of the BSP and the certificate of registration granted to it by
the DTI constitute authority for it to use "GSIS Family Bank" as corporate name is also untenable.

The enforcement of the protection accorded by Section 18 of the Corporation Code to corporate
names is lodged exclusively in the SEC. The jurisdiction of the SEC is not merely confined to the
adjudicative functions provided in Section 5 of the SEC Reorganization Act,58 as amended.59 By
express mandate, the SEC has absolute jurisdiction, supervision and control over all
corporations.60 It is the SEC’s duty to prevent confusion in the use of corporate names not only for
the protection of the corporations involved, but more so for the protection of the public. It has
authority to de-register at all times, and under all circumstances corporate names which in its
estimation are likely to generate confusion.61

The SEC62 correctly applied Section 18 of the Corporation Code, and Section 15 of SEC
Memorandum Circular No. 14-2000, pertinent portions of which provide:

In implementing Section 18 of the Corporation Code of the Philippines (BP 69), the following revised
guidelines in the approval of corporate and partnership names are hereby adopted for the
information and guidance of all concerned:

xxx
15. Registrant corporations or partnership shall submit a letter undertaking to change their corporate
or partnership name in case another person or firm has acquired a prior right to the use of the said
firm name or the same is deceptively or confusingly similar to one already registered unless this
undertaking is already included as one of the provisions of the articles of incorporation or partnership
of the registrant.

The SEC, after finding merit in respondent's claims, can compel petitioner to abide by its
commitment "to change its corporate name in the event that another person, firm or entity has
acquired a prior right to use of said name or one similar to it."63

Clearly, the only determination relevant to this case is that one made by the SEC in the exercise of
its express mandate under the law. The BSP opinion invoked by petitioner even acknowledges that
"the issue on whether a proposed name is identical or deceptively similar to that of any of existing
corporation is matter within the official jurisdiction and competence of the SEC."64

Judicial notice65 may also be taken of the action of the IPO in approving respondent’s registration of
the trademark "BPI Family Bank" and its logo on October 17, 2008. The certificate of registration of a
mark shall be prima facie evidence of the validity of the registration, the registrant’s ownership of the
mark, and of the registrant’s exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate.66

Finally, we uphold the Court of Appeals' finding that the issue of forum shopping was belatedly
raised by petitioner and, thus, cannot anymore be considered at the appellate stage of the
proceedings. Petitioner raised the issue of forum shopping for the first time only on
appeal.67 Petitioner argued that the complaints filed by respondent did not contain certifications
against non-forum shopping, in violation of Section 5, Rule 7 of the Rules of Court.68

In S.C. Megaworld Construction and Development Corporation vs. Parada,69 this Court said that
objections relating to non-compliance with the verification and certification of non-forum shopping
should be raised in the proceedings below, and not for the first time on appeal. In that case, S.C.
Megaworld argued that the complaint for collection of sum of money should have been dismissed
outright by the trial court on account of an invalid nonforum shopping certification. It alleged that the
Special Power of Attorney granted to Parada did not specifically include an authority for the latter to
sign the verification and certification of non-forum shopping, thus rendering the complaint defective
for violation of Sections 4 and 5 of Rule 7 of the Rules of Court. On motion for reconsideration of the
decision of the Court of Appeals, petitioner raised for the first time, the issue of forum shopping. The
Court ruled against S.C. Megaworld, thus:

It is well-settled that no question will be entertained on appeal unless it has been raised in the
proceedings below. Points of law, theories, issues and arguments not brought to the attention of the
lower court, administrative agency or quasi-judicial body, need not be considered by a reviewing
court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness
and due process impel this rule. Any issue raised for the first time on appeal is barred by estoppel.70

In this case, the fact that respondent filed a case before the DTI was made known to petitioner71 long
before the SEC rendered its decision. Yet, despite its knowledge, petitioner failed to question the
alleged forum shopping before the SEC. The exceptions to the general rule that forum shopping
should be raised in the earliest opportunity, as explained in the cited case of Young v. Keng
Seng,72 do not obtain in this case.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated March 29, 2006
is hereby AFFIRMED.
SO ORDERED.

SERI SOMBOONSAKDIKUL, Petitioner


vs.
ORLANE S.A., Respondent

G.R. No. 188996

DECISION

JARDELEZA, J.:

Assailed in this petition is the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 105229
dated July 14, 2009 which affirmed the decision of the Director General of the Intellectual Property
Office (IPO) denying the application for the mark "LOLANE."

Facts

On September 23, 2003, petitioner Seri Somboonsakdikul (petitioner) filed an application for
registration2 of the mark LOLANE with the IPO for goods3 classified under Class 3 (personal care
products) of the International Classification of Goods and Services for the Purposes of the
Registration of Marks (International Classification of Goods).4 Orlane S.A. (respondent) filed an
opposition to petitioner's application, on the ground that the mark LOLANE was similar to ORLANE
in presentation, general appearance and pronunciation, and thus would amount to an infringement of
its mark.5 Respondent alleged that: (1) it was the rightful owner of the ORLANE mark which was first
used in 1948; (2) the mark was earlier registered in the Philippines on July 26, 1967 under
Registration No. 129961 for the following goods:6

x x x perfumes, toilet water, face powders, lotions, essential oils, cosmetics, lotions for the hair,
dentrifices, eyebrow pencils, make-up creams, cosmetics & toilet preparations under Registration
No. 12996.7

and (3) on September 5, 2003, it filed another application for use of the trademark on its additional
products:

x x x toilet waters; revitalizing waters, perfumes, deodorants and body deodorants, anti-perspiration
toiletries; men and women perfume products for face care and body care; face, eye, lips, nail, hand
make-up products and make-up removal products, towels impregnated with cosmetic lotions;
tanning and instant tanning sunproducts, sunprotection products, (not for medical use), after-
suncosmetic products; cosmetic products; slimming cosmetic aids; toiletries; lotions, shampoos and
hair care products; shave and after shave products, shaving and hair removing products; essential
oils; toothpastes; toiletry, cosmetic and shaving kits for travel, filled or fitted vanity-cases[.]8
Respondent adds that by promotion, worldwide registration, widespread and high standard use, the
mark had acquired distinction, goodwill, superior quality image and reputation and was now well-
known.9 Imputing bad faith on the petitioner, respondent claimed that LOLANE' s first usage was only
on August 19, 2003.10

In his answer,11 petitioner denied that the LOLANE mark was confusingly similar to the mark
ORLANE. He averred that he was the lawful owner of the mark LOLANE which he has used for
various personal care products sold worldwide. He alleged that the first worldwide use of the mark
was in Vietnam on July 4, 1995. Petitioner also alleged that he had continuously marketed and
advertised Class 3 products bearing LOLANE mark in the Philippines and in different parts of the
world and that as a result, the public had come to associate the mark with him as provider of quality
personal care products.12

Petitioner maintained that the marks were distinct and not confusingly similar either under the
dominancy test or the holistic test. The mark ORLANE was in plain block upper case letters while the
mark LOLANE was printed in stylized word with the second letter L and the letter A co-joined.
Furthermore, the similarity in one syllable would not automatically result in confusion even if used in
the same class of goods since his products always appear with Thai characters while those of
ORLANE always had the name Paris on it. The two marks are also pronounced differently. Also,
even if the two marks contained the word LANE it would not make them confusingly similar since the
IPO had previously allowed the co-existence of trademarks containing the syllable "joy" or "book"
and that he also had existing registrations and pending applications for registration in other
countries.13

The Bureau of Legal Affairs (BLA) rejected petitioner's application in a Decision14 dated February 27,
2007, finding that respondent's application was filed, and its mark registered, much earlier.15 The
BLA ruled that there was likelihood of confusion based on the following observations: (1) ORLANE
and LOLANE both consisted of six letters with the same last four letters - LANE; (2) both were used
as label for similar products; (3) both marks were in two syllables and that there was only a slight
difference in the first syllable; and (4) both marks had the same last syllable so that if these marks
were read aloud, a sound of strong similarity would be produced and such would likely deceive or
cause confusion to the public as to the two trademarks.16

Petitioner filed a motion for reconsideration but this was denied by the Director of the BLA on May 7,
2007.17 The BLA ruled that the law did not require the marks to be so identical as to produce actual
error or mistake as the likelihood of confusion was enough. The BLA also found that the dominant
feature in both marks was the word LANE; and that the marks had a strong visual and aural
resemblance that could cause confusion to the buying public. This resemblance was amplified by the
relatedness of the goods.18

On appeal, the Director General of the IPO affirmed the Decision of the BLA Director. Despite the
difference in the first syllable, there was a strong visual and aural resemblance since the marks had
the same last four letters, i.e., LANE, and such word is pronounced in this jurisdiction as in
"pedestrian lane."19 Also, the mark ORLANE is a fanciful mark invented by the owner for the sole
purpose of functioning as a trademark and is highly distinctive. Thus, the fact that two or more
entities would accidentally adopt an identical or similar fanciful mark was too good to be true
especially when they dealt with the same goods or services.20 The Director General also noted that
foreign judgments invoked by petitioner for the grant of its application are not judicial precedents.21

Thus, petitioner filed a petition for review22 before the CA arguing that there is no confusing similarity
between the two marks. Petitioner maintained that LANE is not the dominant feature of the mark and
that the dominancy test did not apply since the trademarks are only plain word marks and the
dominancy test presupposes that the marks involved are composite marks.23 Petitioner pointed out
that the IPO had previously allowed the mark GIN LANE under Registration No. 4-2004-006914
which also involved products under Class 3.24 While petitioner admitted that foreign judgments are
not judicial precedents, he argued that the IPO failed to recognize relevant foreign
judgments, i.e., the Australian Registrar of Trademarks and the IPO of Singapore which ruled that
there was no confusing similarity between the marks LOLANE and ORLANE.25 Lastly, the Director
General should have deferred to the findings of the Trademark Examiner who made a substantive
examination of the application for trademark registration, and who is an expert in the field and is in
the best position to determine whether there already exists a registered mark or mark for
registration. Since petitioner's application for registration of the mark LOLANE proceeded to
allowance and publication without any adverse citation of a prior confusingly similar mark, this meant
that the Trademark Examiner was of the view that LO LANE was not confusingly similar to
ORLANE.26

The CA Ruling

The CA denied the petition and held that there exists colorable imitation of respondent's mark by
LOLANE.27

The CA accorded due respect to the Decision of the Director General and ruled that there was
substantial evidence to support the IPO's findings of fact. Applying the dominancy test, the CA ruled
that LOLANE' s mark is confusingly or deceptively similar to ORLANE. There are predominantly
striking similarities in the two marks including LANE, with only a slight difference in the first letters,
thus the two marks would likely cause confusion to the eyes of the public. The similarity is
highlighted when the two marks are pronounced considering that both are one word consisting of
two syllables. The CA ruled that when pronounced, the two marks produce similar sounds.28 The CA
did not heed petitioner's contention that since the mark ORLANE is of French origin, the same is
pronounced as "ORLAN." Filipinos would invariably pronounce it as "OR-LEYN."29 The CA also noted
that the trademark ORLANE is a fanciful name and petitioner was not able to explain why he chose
the word LOLANE as trademark for his personal care products. Thus, the only logical conclusion is
that he would want to benefit from the established reputation and goodwill of the ORLANE mark.30

The CA rejected petitioner's assertion that his products' cheaper price and low-income market
eliminates the likelihood of confusion. Low-income groups, and even those who usually purchased
ORLANE products despite the higher cost, may be led to believe that LOLANE products are low-end
personal care products also marketed by respondent.31

The CA upheld the applicability of the dominancy test in this case. According to the CA, the
dominancy test is already recognized and incorporated in Section 155.1 of Republic Act No. 8293
(RA 8293), otherwise known as the Intellectual Property Code of the Philippines.32 Citing McDonald's
Corporation v. MacJoy Fastfood Corporation,33 the CA ruled that the dominancy test is also preferred
over the holistic test. This is because the latter relies only on the visual comparison between two
trademarks, whereas the dominancy test relies not only on the visual, but also on their aural and
connotative comparisons, and their overall impressions created.34 Nonetheless, the CA stated that
there is nothing in this jurisdiction dictating that the dominancy test is applicable for composite
marks.35

The CA was not swayed by the alleged favorable judgment by the IPO in the GIN LANE application,
ruling that in trademark cases, jurisprudential precedents should be applied only to a case if they are
specifically in point.36 It also did not consider the ruling of the IPOs in Australia, South Africa,
Thailand and Singapore which found no confusing similarity between the marks LOLANE and
ORLANE, stating that foreign judgments do not constitute judicial precedent in this jurisdiction.37
Finally, the CA did not give merit to petitioner's contention that the Director General should have
deferred to the findings of the Trademark Examiner. According to the CA, the proceedings before the
Trademark Examiner are ex-parte,38 and his findings are merely prima facie. Whatever his decision
may be is still subject to review and/or appeal.39

The Petition40

Petitioner maintains that the CA erred in its interpretation of the dominancy test, when it ruled that
the dominant feature of the contending marks is the suffix "LANE."41 The CA failed to consider that in
determining the dominant portion of a mark, significant weight must be given to whether the buyer
would be more likely to remember and use one part of a mark as indicating the origin of the
goods.42 Thus, that part which will likely make the most impression on the ordinary viewer will be
treated as the dominant portion of conflicting marks and given greater weight in the comparison.43

Petitioner argues that both LOLANE and ORLANE are plain word marks which are devoid of
features that will likely make the most impression on the ordinary viewer. If at all, the very word
marks themselves, LOLANE and ORLANE are each to be regarded as dominant
features.44 Moreover, the suffix LANE is a weak mark, being "in common use by many other sellers in
the market. "45 Thus, LANE is also used in the marks SHELLANE and GIN LANE, the latter covering
goods under Class 3. Moreover, the two marks are aurally different since respondent's products
originate from France and is read as "OR-LAN" and not "OR-LEYN."46

Petitioner also claims that the CA completely disregarded the holistic test, thus ignoring the
dissimilarity of context between LOLANE and ORLANE. Assuming that the two marks produce
similar sounds when pronounced, the differences in marks in their entirety as they appear in their
respective product labels should still be the controlling factor in determining confusing similarity.47

Besides, there has been no explicit declaration abandoning the holistic test.48 Thus, petitioner urges
us to go beyond the similarities in spelling and instead consider how the marks appear in their
respective labels, the dissimilarities in the size and shape of the containers, their color, words
appearing thereon and the general appearance,49 hence: (1) the commonality of the marks ORLANE
and LOLANE starts from and ends with the four-letter similarity-LANE and nothing else;50 (2)
ORLANE uses "safe" or conventional colors while LOLANE uses loud or psychedelic colors and
designs with Thai characters;51 and (3) ORLANE uses the term "Paris," indicating the source of origin
of its products.52

Petitioner likewise claims that consumers will be more careful in their choice because the goods in
question are directly related to personal hygiene and have direct effects on their well-being, health
and safety.53 Moreover, with the huge price difference between ORLANE and LOLANE products,
relevant purchasers are less likely to be confused.54

Finally, petitioner notes that respondent has neither validly proven nor presented sufficient evidence
that the mark ORLANE is in actual commercial use in the Philippines. Respondent failed to allege in
any of its pleadings submitted to the IPO's BLA and the IPO Director General the names of local
outlets that products bearing the mark ORLANE are being marketed or sold to the general
consuming public.55

Respondent's Comment56

Respondent reiterates the decisions of the CA and the IPO.57 It maintains that ORLANE is entitled to
protection under RA 8293 since it is registered with the IPO with proof of actual use.58 Respondent
posits that it has established in the world59 and in the Philippines an image and reputation for
manufacturing and selling quality beauty products. Its products have been sold in the market for 61
years and have been used in the Philippines since 1972.60 Thus, to allow petitioner's application
would unduly prejudice respondent's right over its registered trademark.61 Lastly, respondent argues
that decisions of administrative agencies such as the IPO shall not be disturbed by the courts,
absent any showing that the former have acted without or in excess of their jurisdiction, or with grave
abuse of discretion.62

Issue

We resolve the issue of whether there is confusing similarity between ORLANE and LOLANE which
would bar the registration of LOLANE before the IPO.

Our Ruling

We find that the CA erred when it affirmed the Decision of the IPO.

While it is an established rule in administrative law that the courts of justice should respect the
findings of fact of administrative agencies, the courts may not be bound by such findings of fact
when there is absolutely no evidence in support thereof or such evidence is clearly, manifestly and
patently insubstantial; and when there is a clear showing that the administrative agency acted
arbitrarily or with grave abuse of discretion or in a capricious and whimsical manner, such that its
action may amount to an excess or lack of jurisdiction.63 Moreover, when there is a showing that the
findings or conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in
disregard of the evidence on record, they may be reviewed by the courts.64 Such is the case here.

There is no colorable imitation between the marks LOLANE and ORLANE which would lead to any
likelihood of confusion to the ordinary purchasers.

A trademark is defined under Section 121.1 of RA 8293 as any visible sign capable of distinguishing
the goods. It is susceptible to registration if it is crafted fancifully or arbitrarily and is capable of
identifying and distinguishing the goods of one manufacturer or seller from those of another.65 Thus,
the mark must be distinctive.66 The registrability of a trademark is governed by Section 123 of RA
8293. Section 123.1 provides:

Section 123. Registrability. -

123 .1. A mark cannot be registered if it:

xxx

d. Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing
or priority date, in respect of:

i. The same goods or services, or

ii. Closely related goods or services, or

iii. If it nearly resembles such a mark as to be likely to deceive or cause confusion;

e. Is identical with, or confusingly similar to, or constitutes a translation of a mark which is


considered by the competent authority of the Philippines to be well-known internationally and in the
Philippines, whether or not it is registered here, as being already the mark of a person other than the
applicant for registration, and used for identical or similar goods or services: Provided, That in
determining whether a mark is well-known, account shall be taken of the knowledge of the relevant
sector of the public, rather than of the public at large, including knowledge in the Philippines which
has been obtained as a result of the promotion of the mark;

xxx

In Mighty Corporation v. E. & J Gallo Winery,67 we laid down the

requirements for a finding of likelihood of confusion, thus:

There are two types of confusion in trademark infringement. The first is "confusion of goods" when
an otherwise prudent purchaser is induced to purchase one product in the belief that he is
purchasing another, in which case defendant's goods are then bought as the plaintiffs and its poor
quality reflects badly on the plaintiffs reputation. The other is "confusion of business" wherein the
goods of the parties are different but the defendant's product can reasonably (though mistakenly) be
assumed to originate from the plaintiff, thus deceiving the public into believing that there is some
connection between the plaintiff and defendant which, in fact, does not exist.

In determining the likelihood of confusion, the Court must consider: [a] the resemblance
between the trademarks; [b] the similarity of the goods to which the trademarks are attached;
[c] the likely effect on the purchaser and [d] the registrant's express or implied consent and
other fair and equitable considerations. (Citations omitted, emphasis supplied.)68

While Mighty Corporation enumerates four requirements, the most essential requirement, to our
mind, for the determination of likelihood of confusion is the existence of resemblance between the
trademarks, i.e., colorable imitation. Absent any finding of its existence, there can be no likelihood of
confusion. Thus we held:

Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable
imitation" which has been defined as "such similarity in form, content, words, sound, meaning,
special arrangement or general appearance of the trademark or trade name in their overall
presentation or in their essential and substantive and distinctive parts as would likely mislead or
confuse persons in the ordinary course of purchasing the genuine article." (Citations omitted.)69

We had the same view in Emerald Garment Manufacturing Corporation v. Court of Appeals,70 where
we stated:

Proceeding to the task at hand, the essential element of infringement is colorable imitation. This
term has been defined as "such a close or ingenious imitation as to be calculated to deceive ordinary
purchasers, or such resemblance of the infringing mark to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives, and to cause him to purchase the one
supposing it to be the other."

Colorable imitation does not mean such similitude as amounts to identity. Nor does it require that all
the details be literally copied. x x x (Citation omitted, emphasis supplied.)71

In determining colorable imitation, we have used either the dominancy test or the holistic or totality
test. The dominancy test considers the similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the
purchasing public. More consideration is given on the aural and visual impressions created by the
marks on the buyers of goods, giving little weight to factors like process, quality, sales outlets, and
market segments.72 On the other hand, the holistic test considers the entirety of the marks as applied
to the products, including the labels and packaging, in determining confusing similarity. The focus is
not only on the predominant words but also on the other features appearing on the labels.73

The CA's use of the dominancy test is in accord with our more recent ruling in UFC Philippines, Inc.
(now merged with Nutria-Asia, Inc. as the surviving entity) v. Barrio Fiesta Manufacturing
Corporation.74 In UFC Philippines, Inc., we relied on our declarations in McDonald's Corporation v.
L.C. Big Mak Burger, Inc.,75 Co Tiong Sa v. Director of Patents,76 and Societe Des Produits Nestle,
S.A. v. Court of Appeals77 that the dominancy test is more in line with the basic rule in trademarks
that confusing similarity is determined by the aural, visual and connotative and overall impressions
created by the marks. Thus, based on the dominancy test, we ruled that there is no confusing
similarity between "PAPA BOY & DEVICE" mark, and "PAPA KETSARAP" and "PAPA BANANA
CATSUP."

While there are no set rules as what constitutes a dominant feature with respect to trademarks
applied for registration, usually, what are taken into account are signs, color, design, peculiar shape
or name, or some special, easily remembered earmarks of the brand that readily attracts and
catches the attention of the ordinary consumer.78In UFC Philippines, Inc., what we considered as the
dominant feature of the mark is the first word/figure that catches the eyes or that part which appears
prominently to the eyes and ears.79

However, while we agree with the CA's use of the dominancy test, we arrive at a different
conclusion. Based on the distinct visual and aural differences between LOLANE and ORLANE, we
find that there is no confusing similarity between the two marks.

The suffix LANE is not the dominant feature of petitioner's mark. Neither can it be considered as the
dominant feature of ORLANE which would make the two marks confusingly similar.

First, an examination of the appearance of the marks would show that there are noticeable
differences in the way they are written or printed as shown below:80

As correctly argued by petitioner in his answer before the BLA, there are visual differences between
LOLANE and ORLANE since the mark ORLANE is in plain block upper case letters while the mark
LOLANE was rendered in stylized word with the second letter L and the letter A co-joined.81

Second, as to the aural aspect of the marks, LOLANE and ORLANE do not sound alike. Etepha v.
Director of Patents, et al.82 finds application in this case. In Etepha, we ruled that there is no
confusing similarity between PERTUSSIN and ATUSSIN. The Court considered among other factors
the aural differences between the two marks as follows:

5. As we take up Pertussin and Atussin once again, we cannot escape notice of the fact that the two
words do not sound alike-when pronounced. There is not much phonetic similarity between the two.
The Solicitor General well-observed that in Pertussin the pronunciation of tbe prefix "Per", whether
correct or incorrect, includes a combination of three letters

P, e and r; whereas, in Atussin the whole starts with the single letter A added to suffix
"tussin". Appeals to the ear are dissimilar. And this, because in a word combination, the part that
1âwphi1

comes first is the most pronounced. An expositor of the applicable rule here is the decision in the
Syrocol-Cheracol controversy. There, the ruling is that trademark Syrocol (a cough medicine
preparation) is not confusedly similar to trademark Cheracol (also a cough medicine preparation).
Reason: the two words "do not look or sound enough alike to justify a holding of trademark
infringement", and the "only similarity is in the last syllable, and that is not uncommon in names
given drug compounds". (Citation omitted, emphasis supplied.)83

Similar to Etepha, appeals to the ear in pronouncing ORLANE and LOLANE are dissimilar. The first
syllables of each mark, i.e., OR and LO do not sound alike, while the proper pronunciation of the last
syllable LANE-"LEYN" for LOLANE and "LAN" for ORLANE, being of French origin, also differ. We
take exception to the generalizing statement of the Director General, which was affirmed by the CA,
that Filipinos would invariably pronounce ORLANE as "ORLEYN." This is another finding of fact
which has no basis, and thus, justifies our reversal of the decisions of the IPO Director General and
the CA. While there is possible aural similarity when certain sectors of the market would pronounce
ORLANE as "ORLEYN," it is not also impossible that some would also be aware of the proper
pronunciation--especially since, as respondent claims, its trademark ORLANE has been sold in the
market for more than 60 years and in the Philippines, for more than 40 years.84

Respondent failed to show proof that the suffix LANE has registered in the mind of consumers that
such suffix is exclusively or even predominantly associated with ORLANE products. Notably and as
correctly argued by petitioner, the IPO previously allowed the registration of the mark GIN LANE for
goods also falling under Class 3, i.e., perfume, cologne, skin care preparations, hair care
preparations and toiletries.85

We are mindful that in the earlier cases of Mighty Corporation and Emerald, despite a finding that
there is no colorable imitation, we still discussed the nature of the goods using the trademark and
whether the goods are identical, similar, competing or related. We need not belabor a similar
discussion here considering that the essential element in determining likelihood of
confusion, i.e., colorable imitation by LO LANE of the mark ORLANE, is absent in this case.
Resemblance between the marks is a separate requirement from, and must not be confused with,
the requirement of a similarity of the goods to which the trademarks are attached. In Great White
Shark Enterprises, Inc v. Caralde, Jr.,86 after we ruled that there was no confusing similarity between
Great White Shark's "GREG NORMAN LOGO" and Caralde's "SHARK & LOGO" mark due to the
visual and aural dissimilarities between the two marks, we deemed it unnecessary to resolve
whether Great White Shark's mark has gained recognition as a well-known mark.

Finding that LOLANE is not a colorable imitation of ORLANE due to distinct visual and aural
differences using the dominancy test, we no longer find it necessary to discuss the contentions of
the petitioner as to the appearance of the marks together with the packaging, nature of the goods
represented by the marks and the price difference, as well as the applicability of foreign judgments.
We rule that the mark LOLANE is entitled to registration.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated July 14, 2009
is REVERSED and SET ASIDE. Petitioner's application of the mark LOLANE for goods classified
under Class 3 of the International Classification of Goods is GRANTED.

SO ORDERED.
LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS, LYCEUM OF APARRI,
LYCEUM OF CABAGAN, LYCEUM OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM
OF TUAO, INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM OF SOUTHERN
PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC. and WESTERN PANGASINAN LYCEUM,
INC., respondents.

G.R. No. 101897. March 5, 1993.

Quisumbing, Torres & Evangelista Law Offices and Ambrosio Padilla for petitioner.

Antonio M. Nuyles and Purungan, Chato, Chato, Tarriela & Tan Law Offices for respondents.

Froilan Siobal for Western Pangasinan Lyceum.

SYLLABUS

1. CORPORATION LAW; CORPORATE NAMES; REGISTRATION OF PROPOSED NAME WHICH


IS IDENTICAL OR CONFUSINGLY SIMILAR TO THAT OF ANY EXISTING CORPORATION,
PROHIBITED; CONFUSION AND DECEPTION EFFECTIVELY PRECLUDED BY THE
APPENDING OF GEOGRAPHIC NAMES TO THE WORD "LYCEUM". — The Articles of
Incorporation of a corporation must, among other things, set out the name of the corporation.
Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are
concerned: "Section 18. Corporate name. — No corporate name may be allowed by the Securities
an Exchange Commission if the proposed name is identical or deceptively or confusingly similar to
that of any existing corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved,
the Commission shall issue an amended certificate of incorporation under the amended name." The
policy underlying the prohibition in Section 18 against the registration of a corporate name which is
"identical or deceptively or confusingly similar" to that of any existing corporation or which is
"patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud
upon the public which would have occasion to deal with the entity concerned, the evasion of legal
obligations and duties, and the reduction of difficulties of administration and supervision over
corporations. We do not consider that the corporate names of private respondent institutions are
"identical with, or deceptively or confusingly similar" to that of the petitioner institution. True enough,
the corporate names of private respondent entities all carry the word "Lyceum" but confusion and
deception are effectively precluded by the appending of geographic names to the word "Lyceum."
Thus, we do not believe that the "Lyceum of Aparri" can be mistaken by the general public for the
Lyceum of the Philippines, or that the "Lyceum of Camalaniugan" would be confused with the
Lyceum of the Philippines.

2. ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD "LYCEUM," NOT ATTENDED
WITH EXCLUSIVITY. — It is claimed, however, by petitioner that the word "Lyceum" has acquired a
secondary meaning in relation to petitioner with the result that word, although originally a generic,
has become appropriable by petitioner to the exclusion of other institutions like private respondents
herein. The doctrine of secondary meaning originated in the field of trademark law. Its application
has, however, been extended to corporate names sine the right to use a corporate name to the
exclusion of others is based upon the same principle which underlies the right to use a particular
trademark or tradename. In Philippine Nut Industry, Inc. v. Standard Brands, Inc., the doctrine of
secondary meaning was elaborated in the following terms: " . . . a word or phrase originally
incapable of exclusive appropriation with reference to an article on the market, because
geographically or otherwise descriptive, might nevertheless have been used so long and so
exclusively by one producer with reference to his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his product." The
question which arises, therefore, is whether or not the use by petitioner of "Lyceum" in its corporate
name has been for such length of time and with such exclusivity as to have become associated or
identified with the petitioner institution in the mind of the general public (or at least that portion of the
general public which has to do with schools). The Court of Appeals recognized this issue and
answered it in the negative: "Under the doctrine of secondary meaning, a word or phrase originally
incapable of exclusive appropriation with reference to an article in the market, because geographical
or otherwise descriptive might nevertheless have been used so long and so exclusively by one
producer with reference to this article that, in that trade and to that group of the purchasing public,
the word or phrase has come to mean that the article was his produce (Ana Ang vs. Toribio Teodoro,
74 Phil. 56). This circumstance has been referred to as the distinctiveness into which the name or
phrase has evolved through the substantial and exclusive use of the same for a considerable period
of time. . . . No evidence was ever presented in the hearing before the Commission which sufficiently
proved that the word 'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If
there was any of this kind, the same tend to prove only that the appellant had been using the
disputed word for a long period of time. . . . In other words, while the appellant may have proved that
it had been using the word 'Lyceum' for a long period of time, this fact alone did not amount to mean
that the said word had acquired secondary meaning in its favor because the appellant failed to prove
that it had been using the same word all by itself to the exclusion of others. More so, there was no
evidence presented to prove that confusion will surely arise if the same word were to be used by
other educational institutions. Consequently, the allegations of the appellant in its first two assigned
errors must necessarily fail." We agree with the Court of Appeals. The number alone of the private
respondents in the case at bar suggests strongly that petitioner's use of the word "Lyceum" has not
been attended with the exclusivity essential for applicability of the doctrine of secondary meaning.
Petitioner's use of the word "Lyceum" was not exclusive but was in truth shared with the Western
Pangasinan Lyceum and a little later with other private respondent institutions which registered with
the SEC using "Lyceum" as part of their corporation names. There may well be other schools using
Lyceum or Liceo in their names, but not registered with the SEC because they have not adopted the
corporate form of organization.

3. ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO DETERMINE WHETHER THEY ARE
CONFUSINGLY OR DECEPTIVELY SIMILAR TO ANOTHER CORPORATE ENTITY'S NAME. —
petitioner institution is not entitled to a legally enforceable exclusive right to use the word "Lyceum"
in its corporate name and that other institutions may use "Lyceum" as part of their corporate names.
To determine whether a given corporate name is "identical" or "confusingly or deceptively similar"
with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or
"Liceo" in both names. One must evaluate corporate names in their entirety and when the name of
petitioner is juxtaposed with the names of private respondents, they are not reasonably regarded as
"identical" or "confusingly or deceptively similar" with each other.

DECISION

FELICIANO, J p:

Petitioner is an educational institution duly registered with the Securities and Exchange Commission
("SEC"). When it first registered with the SEC on 21 September 1950, it used the corporate name
Lyceum of the Philippines, Inc. and has used that name ever since.

On 24 February 1984, petitioner instituted proceedings before the SEC to compel the private
respondents, which are also educational institutions, to delete the word "Lyceum" from their
corporate names and permanently to enjoin them from using "Lyceum" as part of their respective
names.

Some of the private respondents actively participated in the proceedings before the SEC. These are
the following, the dates of their original SEC registration being set out below opposite their
respective names:

Western Pangasinan Lyceum — 27 October 1950

Lyceum of Cabagan — 31 October 1962

Lyceum of Lallo, Inc. — 26 March 1972

Lyceum of Aparri — 28 March 1972

Lyceum of Tuao, Inc. — 28 March 1972

Lyceum of Camalaniugan — 28 March 1972

The following private respondents were declared in default for failure to file an answer despite
service of summons:

Buhi Lyceum;

Central Lyceum of Catanduanes;

Lyceum of Eastern Mindanao, Inc.; and

Lyceum of Southern Philippines

Petitioner's original complaint before the SEC had included three (3) other entities:

1. The Lyceum of Malacanay;

2. The Lyceum of Marbel; and

3. The Lyceum of Araullo

The complaint was later withdrawn insofar as concerned the Lyceum of Malacanay and the Lyceum
of Marbel, for failure to serve summons upon these two (2) entities. The case against the Liceum of
Araullo was dismissed when that school motu proprio change its corporate name to "Pamantasan ng
Araullo."

The background of the case at bar needs some recounting. Petitioner had sometime before
commenced in the SEC a proceeding (SEC-Case No. 1241) against the Lyceum of Baguio, Inc. to
require it to change its corporate name and to adopt another name not "similar [to] or identical" with
that of petitioner. In an Order dated 20 April 1977, Associate Commissioner Julio Sulit held that the
corporate name of petitioner and that of the Lyceum of Baguio, Inc. were substantially identical
because of the presence of a "dominant" word, i.e., "Lyceum," the name of the geographical location
of the campus being the only word which distinguished one from the other corporate name. The SEC
also noted that petitioner had registered as a corporation ahead of the Lyceum of Baguio, Inc. in
point of time, 1 and ordered the latter to change its name to another name "not similar or identical
[with]" the names of previously registered entities.

The Lyceum of Baguio, Inc. assailed the Order of the SEC before the Supreme Court in a case
docketed as G.R. No. L-46595. In a Minute Resolution dated 14 September 1977, the Court denied
the Petition for Review for lack of merit. Entry of judgment in that case was made on 21 October
1977. 2

Armed with the Resolution of this Court in G.R. No. L-46595, petitioner then wrote all the educational
institutions it could find using the word "Lyceum" as part of their corporate name, and advised them
to discontinue such use of "Lyceum." When, with the passage of time, it became clear that this
recourse had failed, petitioner instituted before the SEC SEC-Case No. 2579 to enforce what
petitioner claims as its proprietary right to the word "Lyceum." The SEC hearing officer rendered a
decision sustaining petitioner's claim to an exclusive right to use the word "Lyceum." The hearing
officer relied upon the SEC ruling in the Lyceum of Baguio, Inc. case (SEC-Case No. 1241) and held
that the word "Lyceum" was capable of appropriation and that petitioner had acquired an
enforceable exclusive right to the use of that word.

On appeal, however, by private respondents to the SEC En Banc, the decision of the hearing officer
was reversed and set aside. The SEC En Banc did not consider the word "Lyceum" to have become
so identified with petitioner as to render use thereof by other institutions as productive of confusion
about the identity of the schools concerned in the mind of the general public. Unlike its hearing
officer, the SEC En Banc held that the attaching of geographical names to the word "Lyceum" served
sufficiently to distinguish the schools from one another, especially in view of the fact that the
campuses of petitioner and those of the private respondents were physically quite remote from each
other. 3

Petitioner then went on appeal to the Court of Appeals. In its Decision dated 28 June 1991, however,
the Court of Appeals affirmed the questioned Orders of the SEC En Banc. 4 Petitioner filed a motion
for reconsideration, without success.

Before this Court, petitioner asserts that the Court of Appeals committed the following errors:

1. The Court of Appeals erred in holding that the Resolution of the Supreme Court in G.R. No. L-
46595 did not constitute stare decisis as to apply to this case and in not holding that said Resolution
bound subsequent determinations on the right to exclusive use of the word Lyceum.

2. The Court of Appeals erred in holding that respondent Western Pangasinan Lyceum, Inc. was
incorporated earlier than petitioner.

3. The Court of Appeals erred in holding that the word Lyceum has not acquired a secondary
meaning in favor of petitioner.

4. The Court of Appeals erred in holding that Lyceum as a generic word cannot be appropriated by
the petitioner to the exclusion of others. 5

We will consider all the foregoing ascribed errors, though not necessarily seriatim. We begin by
noting that the Resolution of the Court in G.R. No. L-46595 does not, of course, constitute res
adjudicata in respect of the case at bar, since there is no identity of parties. Neither is stare decisis
pertinent, if only because the SEC En Banc itself has re-examined Associate Commissioner Sulit's
ruling in the Lyceum of Baguio case. The Minute Resolution of the Court in G.R. No. L-46595 was
not a reasoned adoption of the Sulit ruling.

The Articles of Incorporation of a corporation must, among other things, set out the name of the
corporation. 6 Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate
names are concerned:

"SECTION 18. Corporate name. — No corporate name may be allowed by the Securities an
Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that
of any existing corporation or to any other name already protected by law or is patently deceptive,
confusing or contrary to existing laws. When a change in the corporate name is approved, the
Commission shall issue an amended certificate of incorporation under the amended name."
(Emphasis supplied)

The policy underlying the prohibition in Section 18 against the registration of a corporate name which
is "identical or deceptively or confusingly similar" to that of any existing corporation or which is
"patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud
upon the public which would have occasion to deal with the entity concerned, the evasion of legal
obligations and duties, and the reduction of difficulties of administration and supervision over
corporations. 7

We do not consider that the corporate names of private respondent institutions are "identical with, or
deceptively or confusingly similar" to that of the petitioner institution. True enough, the corporate
names of private respondent entities all carry the word "Lyceum" but confusion and deception are
effectively precluded by the appending of geographic names to the word "Lyceum." Thus, we do not
believe that the "Lyceum of Aparri" can be mistaken by the general public for the Lyceum of the
Philippines, or that the "Lyceum of Camalaniugan" would be confused with the Lyceum of the
Philippines.

Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion which in turn referred to a
locality on the river Ilissius in ancient Athens "comprising an enclosure dedicated to Apollo and
adorned with fountains and buildings erected by Pisistratus, Pericles and Lycurgus frequented by the
youth for exercise and by the philosopher Aristotle and his followers for teaching." 8 In time, the word
"Lyceum" became associated with schools and other institutions providing public lectures and
concerts and public discussions. Thus today, the word "Lyceum" generally refers to a school or an
institution of learning. While the Latin word "lyceum" has been incorporated into the English
language, the word is also found in Spanish (liceo) and in French (lycee). As the Court of Appeals
noted in its Decision, Roman Catholic schools frequently use the term; e.g., "Liceo de Manila,"
"Liceo de Baleno" (in Baleno, Masbate), "Liceo de Masbate," "Liceo de Albay." 9 "Lyceum" is in fact
as generic in character as the word "university." In the name of the petitioner, "Lyceum" appears to
be a substitute for "university;" in other places, however, "Lyceum," or "Liceo" or "Lycee" frequently
denotes a secondary school or a college. It may be (though this is a question of fact which we need
not resolve) that the use of the word "Lyceum" may not yet be as widespread as the use of
"university," but it is clear that a not inconsiderable number of educational institutions have adopted
"Lyceum" or "Liceo" as part of their corporate names. Since "Lyceum" or "Liceo" denotes a school or
institution of learning, it is not unnatural to use this word to designate an entity which is organized
and operating as an educational institution.

It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary meaning in
relation to petitioner with the result that that word, although originally a generic, has become
appropriable by petitioner to the exclusion of other institutions like private respondents herein.
The doctrine of secondary meaning originated in the field of trademark law. Its application has,
however, been extended to corporate names sine the right to use a corporate name to the exclusion
of others is based upon the same principle which underlies the right to use a particular trademark or
tradename. 10 In Philippine Nut Industry, Inc. v. Standard Brands, Inc., 11 the doctrine of secondary
meaning was elaborated in the following terms:

" . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on
the market, because geographically or otherwise descriptive, might nevertheless have been used so
long and so exclusively by one producer with reference to his article that, in that trade and to that
branch of the purchasing public, the word or phrase has come to mean that the article was his
product." 12

The question which arises, therefore, is whether or not the use by petitioner of "Lyceum" in its
corporate name has been for such length of time and with such exclusivity as to have become
associated or identified with the petitioner institution in the mind of the general public (or at least that
portion of the general public which has to do with schools). The Court of Appeals recognized this
issue and answered it in the negative:

"Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive
appropriation with reference to an article in the market, because geographical or otherwise
descriptive might nevertheless have been used so long and so exclusively by one producer with
reference to this article that, in that trade and to that group of the purchasing public, the word or
phrase has come to mean that the article was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil.
56). This circumstance has been referred to as the distinctiveness into which the name or phrase
has evolved through the substantial and exclusive use of the same for a considerable period of time.
Consequently, the same doctrine or principle cannot be made to apply where the evidence did not
prove that the business (of the plaintiff) has continued for so long a time that it has become of
consequence and acquired a good will of considerable value such that its articles and produce have
acquired a well-known reputation, and confusion will result by the use of the disputed name (by the
defendant) (Ang Si Heng vs. Wellington Department Store, Inc., 92 Phil. 448).

With the foregoing as a yardstick, [we] believe the appellant failed to satisfy the aforementioned
requisites. No evidence was ever presented in the hearing before the Commission which sufficiently
proved that the word 'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If
there was any of this kind, the same tend to prove only that the appellant had been using the
disputed word for a long period of time. Nevertheless, its (appellant) exclusive use of the word
(Lyceum) was never established or proven as in fact the evidence tend to convey that the cross-
claimant was already using the word 'Lyceum' seventeen (17) years prior to the date the appellant
started using the same word in its corporate name. Furthermore, educational institutions of the
Roman Catholic Church had been using the same or similar word like 'Liceo de Manila,' 'Liceo de
Baleno' (in Baleno, Masbate), 'Liceo de Masbate,' 'Liceo de Albay' long before appellant started
using the word 'Lyceum'. The appellant also failed to prove that the word 'Lyceum' has become so
identified with its educational institution that confusion will surely arise in the minds of the public if
the same word were to be used by other educational institutions.

In other words, while the appellant may have proved that it had been using the word 'Lyceum' for a
long period of time, this fact alone did not amount to mean that the said word had acquired
secondary meaning in its favor because the appellant failed to prove that it had been using the same
word all by itself to the exclusion of others. More so, there was no evidence presented to prove that
confusion will surely arise if the same word were to be used by other educational institutions.
Consequently, the allegations of the appellant in its first two assigned errors must necessarily fail."
13 (Underscoring partly in the original and partly supplied)
We agree with the Court of Appeals. The number alone of the private respondents in the case at bar
suggests strongly that petitioner's use of the word "Lyceum" has not been attended with the
exclusivity essential for applicability of the doctrine of secondary meaning. It may be noted also that
at least one of the private respondents, i.e., the Western Pangasinan Lyceum, Inc., used the term
"Lyceum" seventeen (17) years before the petitioner registered its own corporate name with the SEC
and began using the word "Lyceum." It follows that if any institution had acquired an exclusive right
to the word "Lyceum," that institution would have been the Western Pangasinan Lyceum, Inc. rather
than the petitioner institution.

In this connection, petitioner argues that because the Western Pangasinan Lyceum, Inc. failed to
reconstruct its records before the SEC in accordance with the provisions of R.A. No. 62, which
records had been destroyed during World War II, Western Pangasinan Lyceum should be deemed
to have lost all rights it may have acquired by virtue of its past registration. It might be noted that the
Western Pangasinan Lyceum, Inc. registered with the SEC soon after petitioner had filed its own
registration on 21 September 1950. Whether or not Western Pangasinan Lyceum, Inc. must be
deemed to have lost its rights under its original 1933 registration, appears to us to be quite
secondary in importance; we refer to this earlier registration simply to underscore the fact that
petitioner's use of the word "Lyceum" was neither the first use of that term in the Philippines nor an
exclusive use thereof. Petitioner's use of the word "Lyceum" was not exclusive but was in truth
shared with the Western Pangasinan Lyceum and a little later with other private respondent
institutions which registered with the SEC using "Lyceum" as part of their corporation names. There
may well be other schools using Lyceum or Liceo in their names, but not registered with the SEC
because they have not adopted the corporate form of organization.

We conclude and so hold that petitioner institution is not entitled to a legally enforceable exclusive
right to use the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as
part of their corporate names. To determine whether a given corporate name is "identical" or
"confusingly or deceptively similar" with another entity's corporate name, it is not enough to ascertain
the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their
entirety and when the name of petitioner is juxtaposed with the names of private respondents, they
are not reasonably regarded as "identical" or "confusingly or deceptively similar" with each other.

WHEREFORE, the petitioner having failed to show any reversible error on the part of the public
respondent Court of Appeals, the Petition for Review is DENIED for lack of merit, and the Decision
of the Court of Appeals dated 28 June 1991 is hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.
UFC PHILIPPINES, INC. (now merged with NUTRI-ASIA, INC., with NUTRI-ASIA, INC. as the
surviving entity), Petitioner,
vs.
BARRIO FIESTA MANUFACTURING CORPORATION, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

For our disposition is a petition for review on certiorari under Rule 45 seeking to annul and set aside
the June 23, 2011 Decision1 and the October 4, 2011 Resolution2 of the Court of Appeals in CA-
G.R. SP No. 107570, which reversed and set aside the March 26, 2008 Decision3 of the Bureau of
Legal Affairs of the Intellectual Property Office (IPO-BLA) and the January 29, 2009 Decision4 of the
Director General of the IPO.

Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly organized and existing under Philippine
laws.5 It is the emergent entity in a merger with UFC Philippines, Inc. that was completed on
February 11, 2009.6 Respondent Barrio Fiesta Manufacturing Corporation (respondent) is likewise a
corporation organized and existing under Philippine laws.

On April 4, 2002, respondent filed Application No. 4-2002-002757 for the mark "PAPA BOY &
DEVICE" for goods under Class 30, specifically for "lechon sauce."7 The Intellectual Property Office
(IPO) published said application for opposition in the IP Phil. e-Gazette released on September 8,
2006. The mark appears as follows:

On December 11, 2006, petitioner filed with the IPO-BLA a Verified Notice of Opposition to the
above-mentioned application and alleged that:

1. The mark "PAPA" for use on banana catsup and other similar goods was first used [in] 1954 by
Neri Papa, and thus, was taken from his surname;

2. After using the mark "PAP A" for about twenty-seven (27) years, Neri Papa subsequently
assigned the mark "PAPA" to Heman D. Reyes who, on September 17, 1981, filed an application to
register said mark "PAP A" for use on banana catsup, chili sauce, achara, banana chips, and instant
ube powder;

3. On August 14, 1983, Heman D. Reyes was issued Certificate of Registration No. 32416;
4. [Certificate of] Registration No. 32416 was subsequently assigned to the following in successive
fashion: Acres & Acres Food, Inc., Southeast Asia Food, Inc., Heinz-UFC Philippines, Inc., and
Opposer UFC Philippines, Inc.;

5. Last October 28, 2005, Heinz-UFC Philippines, Inc. filed Application Serial No. 4-2005-010788
which, in effect, is a re-registration of Registration No. 32416 which expired on August 11, 2003;

6. Heman D. Reyes also filed on March 04, 1982 an application to register in the Supplemental
Register the "PAPA BANANA CATSUP Label";

7. On August 11, 1983, Heman D. Reyes was issued Certificate of Registration No. SR-6282 which
was subsequently assigned to Acres & Acres Food, Inc., Southeast Asia Food, Inc., Heinz-UFC
Philippines, Inc.;

8. After its expiration, Opposer filed on November 15, 2006 Trademark Application Serial No. 4-
2006-012346 for the re-registration of the "PAP A Label Design";

9. The mark "PAP A KETSARAP" for use on banana sauce falling under Class 30 was also
registered in favor of Acres & Acres Food, Inc. under Registration No. 34681 issued on August 23,
1985 and renewed last August 23, 2005 by Heinz-UFC Philippines, Inc. for ten (10) years;

10. On November 07, 2006, Registration No. 34681 was assigned to Opposer;

11. Opposer has not abandoned the use of the mark "PAP A" and the variations thereof as Opposer
has continued their use up to the present;

12. The mark "PAPA BOY & DEVICE" is identical to the mark "PAPA" owned by Opposer and duly
registered in its favor, particularly the dominant feature thereof;

13. [With the] dominant feature of respondent-applicant's mark "PAPA BOY & DEVICE", which is
Opposer's "PAPA" and the variations thereof, confusion and deception is likely to result: The
consuming public, particularly the unwary customers, will be deceived, confused, and mistaken into
believing that respondent-applicant's goods come from Opposer or are authorized by Opposer to
Opposer's prejudice, which is particularly true considering that Opposer's sister company, Southeast
Asia Food, Inc., and its predecessors-in-interest have been major manufacturers and distributors of
lechon sauce and other table sauces since 1965 under its registered mark "Mang Tomas";

14. Respondent-applicant's mark "PAPA BOY & DEVICE" which nearly resembles Opposer's mark
"PAPA" and the variations thereof will impress upon the gullible or unsuspecting public that it is the
same or related to Opposer as to source because its dominant part is the same as Opposer's mark
and, thus, will likely be mistaken to be the mark, or related to, or a derivative or variation of,
Opposer's mark;

15. The goods covered by respondent-applicant's application fall under Class 30, the same Class
under which Opposer's goods enumerated in its earlier issued registrations;

16. The test of dominancy is now explicitly incorporated into law in Section 155 .1 of the IP Code
which defines infringement as the colorable imitation of a registered mark or a dominant feature
thereof, and is provided for by jurisprudence;
17. As a corporation also engaged in the food business, Respondent-applicant knew and/or ought to
know that Opposer and its predecessors-in-interest have been using the mark "PAPA" and the
variations thereof for the last fifty-two (52) years while its sister company is engaged in the business
of manufacturing and distributing "lechon sauce" and other table sauces for the last forty-one (41)
years;

18. The approval of the subject application will violate Opposer's right to the exclusive use of its
registered mark "PAPA" and the variations thereof per Section 138 of the IP Code;

19. The approval of the subject application has caused and will continue to cause great and
irreparable damage and injury to Opposer;

20. Respondent-applicant filed the subject application fraudulently and in bad faith; and

21. Respondent-applicant is not entitled to register the subject mark in its favor.8

In its verified opposition before the IPO, petitioner contended that "PAPA BOY & DEVICE" is
confusingly similar with its "PAPA" marks inasmuch as the former incorporates the term "PAP A,"
which is the dominant feature of petitioner's "PAPA" marks. Petitioner averred that respondent's use
of "PAPA BOY & DEVICE" mark for its lechon sauce product, if allowed, would likely lead the
consuming public to believe that said lechon sauce product originates from or is authorized by
petitioner, and that the "PAPA BOY & DEVICE" mark is a variation or derivative of petitioner's
"PAPA" marks. Petitioner argued that this was especially true considering that petitioner's ketchup
product and respondent's lechon sauce product are related articles that fall under the same Class
30.9

Petitioner alleged that the registration of respondent's challenged mark was also likely to damage
the petitioner, considering that its former sister company, Southeast Asia Food, Inc., and the latter's
predecessors-in-interest, had been major manufacturers and distributors of lechon and other table
sauces since 1965, such as products employing the registered "Mang Tomas" mark.

In its Verified Answer, respondent argued that there is no likelihood of confusion between petitioner's
family of "PAPA" trademarks and respondent's "PAPA BOY & DEVICE" trademark. Respondent
raised affirmative defenses and we quote the relevant ones below:

3. Opposer cites several of its following marks in support of its opposition to the application but an
examination of said marks [reveals] that these have already expired and/or that no confusing
similarity exists x xx;

4. Assuming that the mark "PAPA KETSARAP" had been timely renewed on August 23, 2005 for
"banana sauce" under Class 30, the same is not a hindrance to the successful registration of the
mark "PAPA BOY & DEVICE": Jurisprudence provides that a certificate of registration confers upon
the trademark owner the exclusive right to use its own symbol only to those goods specified in the
certificate subject to the conditions and limitations stated therein;

5. As a result, Opposer's right to use the mark "PAPAKETSARAP" is limited to the products covered
by its certificate of registration which is Class 30 for banana sauce;

6. Contrary to Opposer's belief, the dominant features of Respondent-applicant's mark "PAPA BOY
& DEVICE" are the words "PAPA BOY" and the representation of a smiling hog-like character
gesturing the thumbs-up sign and wearing a traditional Filipino hat and scarf while the dominant
feature of Opposer's mark "PAPA KETSARAP" are the words "Papa" and "Ketsarap", not the word
"Papa"; and the word "Ketsarap " is more prominently printed and displayed in the foreground than
the word "Papa" for which reasons opposer's reference to the Dominancy Test fails;

7. Opposer's allegation that the registration of Respondent-applicant's mark "PAPA BOY & DEVICE"
will damage and prejudice the mark "MANG TOMAS" is irrelevant considering that Opposer's basis
for filing this opposition is the alleged confusing similarity between Respondent-applicant's mark and
Opposer's mark "PAPA KETSARAP", not the mark "MANG TOMAS";

8. Respondent-applicant's mark "PAPA BOY & DEVICE" is neither identical nor confusingly similar
to Opposer's mark "PAPA KETSARAP": Respondent-applicant's mark "PAPABOY & DEVICE" is an
arbitrary mark which differs in overall sound, spelling, meaning, style, configuration, presentation,
and appearance from Opposer's mark "PAPA KETSARAP";

9. The dissimilarities between the marks are so distinct, thus, confusion is very unlikely: While
Opposer's mark is a plain word mark, Respondent-applicant's mark "PAPA BOY & DEVICE" is much
more intricate and distinctive such as Opposer's mark not having the words "Lechon Sauce" printed
inside a blue ribbon-like device which is illustrated below the words "PAPA BOY", Opposer's mark
not having a prominent smiling hog-like character gesturing a thumbs-up sign and wearing a Filipino
hat and scarf stands beside the words "PAPA BOY", and Opposer's mark not having the words
"Barrio Fiesta" albeit conspicuously displayed above the mark, all which leave no doubt in the
consumer's mind on the product that he is purchasing;

10. Aside from the fact that Respondent-applicant's mark "PAPA BOY & DEVICE" is distinct and
different in appearance, spelling, sound, meaning, and style from Opposer's mark "PAPA
KETSARAP", the difference in the goods covered by both marks is obvious: Since the goods
covered by Respondent-applicant's mark is unrelated and non-competing to those covered by
Opposer's mark, the doctrine allowing the registrations of marks covering unrelated and non-
competing goods as enunciated by the Supreme Court is therefore applicable in this case;

11. Respondent-applicant's mark cannot be confusingly similar to Opposer's mark considering that
the products covered by these marks are different: While Respondent-applicant's mark "PAPA BOY
& DEVICE" covers lechon sauce under Class 30, Opposer's mark "PAPA KETSARAP" covers
banana sauce;

12. If a consumer is in the market for banana sauce, he will not buy lechon sauce and vice-versa
and as a result, the margin of error in the acquisition of one from the other is simply remote;

13. Respondent-applicant is the exclusive owner of the mark "PAPA BOY & DEVICE" for lechon
sauce under Class 30: The words "PAPA BOY" is a combination of the nickname of Bonifacio
Ongpauco who is one of Respondent-applicant's incorporators and founders" BOY"- and the word
"PAPA" as Bonifacio Ongpauco's mother, Sixta P. Evangelista, had been fondly known as "Mama
Chit", making Respondent-applicant the prior adopter, user, and applicant of the mark "PAPA BOY &
DEVICE" in the Philippines;

14. To protect its ownership over the mark "PAPA BOY & DEVICE" considering that it is the first to
adopt and use said mark, Respondent-applicant applied for its registration under Application Serial
No. 4-2002-002757 for Class 30, and said application was found registrable by the Examiner as. a
consequence of which the same was recommended for allowance after undergoing a thorough
process of examination, which recommendation was then approved by the Director of the Bureau of
Trademarks (BOT);
15. Respondent-applicant's mark "PAPA BOY & DEVICE" has been commercially used in the
Philippines;

16. Respondent-applicant's mark "PAPA BOY & DEVICE" has been promoted and advertised for a
considerable duration of time and over wide geographical areas: Respondent-applicant has invested
tremendous amount of resources in the promotion of its mark "PAPA BOY & DEVICE" through
various media including print publications and promotional materials;

17. The widespread local commercial use of the subject mark by Respondent-applicant to
distinguish and identify its various high-quality consumer products has earned Respondent-applicant
a well-deserved business reputation and goodwill;

18. Respondent-applicant's mark is distinctive and capable of identifying its goods and distinguishing
them from those offered for sale by others in the market including Opposer's goods for which reason
no confusion will result because Respondent-applicant's mark is for lechon sauce while Opposer's
mark is for banana sauce; and

19. The presence of a common prefix "PAPA" in the marks of both parties does not render said
marks identical or confusingly similar: Opposer cannot exclusively appropriate said prefix
considering that other marks such as "Papa Heinz Pizza", "Papa Heinz Sausage", "Papa Beaver",
"Papa Pop", "Pizza Papa John's & Design", "Papadoods", and "Papa in Wine and Device" are valid
and active.10

Petitioner's mark and its variations appear as follows:

1. "PAPA" under Registration No. 32416 for Class 29 goods;11

2. The mark "PAPA" as it appeared upon re-registration of Certificate No. 32416, under Application
No. 4-2005-010788 for Classes 29 and 30 goods;12
3. "PAPA LABEL DESIGN" under Registration No. 4-2006-012364·13 and

4. "PAPA KETSARAP" under Certificate of Registration No. 34681, for banana sauce (Class 30).14
PROCEEDINGS BEFORE THE INTELLECTUAL PROPERTY OFFICE

The case was referred to mediation but the parties failed to arrive at an amicable settlement. The
case was thus set for preliminary conference. Subsequently, the IPO-BLA directed the parties to file
their respective position papers and draft decisions.

The IPO-BLA rendered a Decision on March 26, 2008 sustaining petitioner's Opposition and
rejecting respondent's application for "PAPA BOY & DEVICE." The fallo of said decision reads as
follows:

WHEREFORE, the VERIFIED NOTICE OF OPPOSITION filed by UFC Philippines, Inc. is, as it is
hereby, SUSTAINED. Consequently, Application Serial No. 4-2002-002757 for the mark "PAPA BOY
& DEVICE" for lechon sauce under Class 30 filed on April 04, 2002 by Barrio Fiesta Manufacturing
Corporation, is, as it is hereby, REJECTED.

Let the file wrapper of PAPA BOY & Device subject matter of this case be forwarded to the Bureau
of Trademarks (BOT) for appropriate action in accordance with this Decision.15

Respondent filed an appeal before the IPO Director General, who found it unmeritorious, and
disposed of the case in the following manner:

WHEREFORE, the instant appeal is hereby DISMISSED. Let a copy of this Decision as well as the
trademark application and records be furnished and returned to the Director of the Bureau of Legal
Affairs for appropriate action. Further, let also the Director of the Bureau of Trademarks and the
library of the Documentation, Information and Technology Transfer Bureau be furnished a copy of
this Decision for information, guidance, and records purposes."16

DECISION OF THE COURT OF APPEALS

Respondent then filed a petition with the Court of Appeals, questioning the above decision of the
IPO Director General that affirmed the decision of the IPO Bureau of Legal Affairs Director, which
disallowed respondent's application for trademark registration. Respondent's arguments before the
Court of Appeals are quoted below:
A.

REGISTRATION NOS. 32416 AND 42005010788 ISSUED FOR THE "PAPA" MARK AND
REGISTRATION NOS. SR-6282 AND 42006012364 ISSUED FOR THE TRADEMARK "PAPA
BANANA CATSUP LABEL/PAPA LABEL DESIGN" SHOULD NOT BE USED AS BASIS IN
DETERMINING THE EXISTENCE OF CONFUSING SIMILARITY.

B.

THERE IS NO CONFUSING SIMILARITY BETWEEN PETITIONER-APPLICANT'S "PAPA BOY &


DEVICE" AND RESPONDENT'S "PAPA KETSARAP" MARK.

C.

PETITIONER-APPLICANT IS ENTITLED TO THE REGISTRATION OF THE MARK "PAPA BOY &


DEVICE."

D.

THE OPPOSITION STATES NO CAUSE OF ACTION, AND HENCE, SHOULD BE DENIED


OUTRIGHT.17

As regards the first ground, the Court of Appeals held:

Records show that respondent UFC has Certificates of Registration for the trademarks PAPA, PAPA
BANANA CATSUP label and PAPA KETSARAP. A closer look at the respective Certificate[ s] of
Registration of the aforementioned marks, however, reveals that at the time the trademark
application of petitioner was published in the IPO e-Gazette on September 8, 2006, the duration of
the trademark registration of respondent over the marks PAPA and PAPA BANANA CATSUP have
already expired. On the other hand, the mark PAPA KETSARAP was timely renewed by
respondent as shown by the Certificate of Renewal of Registration issued on September 1,
2006 by the Director of the Bureau of Trademarks.

Under R.A. No. 8293, as amended by R.A. No. 9150, the duration of a trademark registration is 10
years, renewable for periods of 10 years each renewal. The request for renewal must be made
within 6 months before or after the expiration of the registration. Respondent's PAPA mark was not
renewed within the period provided for under RA No. 8293. Its registered term ended on August 11,
2003 but was reapplied for registration only on April 4, 2005. Meanwhile, the mark PAPA BANANA
CATSUP was registered by respondent only in the Supplemental Register, hence, was not provided
any protection. x x x. It is noted that the PAPA BANANA CATSUP label was applied for registration
on November 15, 2006, over three years after the expiration of its registration in the Supplemental
Register of the Philippine Patent Office on August 11, 2003. Thus, while petitioner has a point
that the marks PAPA and PAPA BANANA CATSUP have already expired and the latter having
been afforded no protection at all and should not be juxtaposed with petitioner's trademark,
respondent can still use the marks PAPA KETSARAP and PAPA BANANA CATSUP, it
appearing that the Intellectual Property Office issued a Certificate of Registration No. 4-2006-
012364 for the latter on April 30, 2007, to bar the registration of petitioner's "PAPA BOY &
DEVICE" mark.18 (Emphases supplied, citations omitted.)

Anent the second ground, the Court of Appeals ruled in the following manner:
After taking into account the aforementioned doctrines and the factual circumstances of the
case at bar, this Court, after considering the trademarks involved as a whole, is of the view
that petitioner's trademark "PAP A BOY & DEVICE" is not confusingly similar to respondent's
"PAPA KETSARAP" and "PAPA BANANA CATSUP" trademark. Petitioner's trademark is "PAPA
BOY" as a whole as opposed to respondent's "PAPA". Although on its label the word "PAPA" is
prominent, the trademark should be taken as a whole and not piecemeal. The difference between
the two marks are conspicuous and noticeable. While respondent's products are both labeled as
banana sauces, that of petitioner Barrio Fiesta is labeled as lechon sauce.

Moreover, it appears on the label of petitioner's product that the said lechon sauce is manufactured
by Barrio Fiesta thus, clearly informing the public [of] the identity of _the manufacturer of the lechon
sauce. As claimed by respondent, its products have been in commercial use for decades. It is safe
to assume then that the consumers are already aware that "PAPA KETSARAP" and "PAPA
BANANA CATSUP" are products of UFC and not of petitioner or the other way around. In addition,
as correctly pointed out by petitioner, if a consumer is in the market for banana sauce, he will not
buy lechon sauce and vice-versa because aside from the fact that the labels of both parties' products
contain the kind of sauce they are marketing, the color of the products is visibly different. An ordinary
consumer is familiar with the fact that the color of a banana sauce is red while a lechon sauce is
dark brown. There can be no deception as both products are marketed in bottles making the
distinction visible to the eye of the consumer and the likelihood of acquiring a wrong sauce, remote.
Even if the products are placed side by side, the dissimilarities between the two marks are
conspicuous, noticeable and substantial enough to matter especially in the light of the following
variables that must be factored in.

Lastly, respondent avers that the word "PAPA" was coined after the surname of the person who first
created and made use of the mark. Admittedly, while "PAPA" is a surname, it is more widely known
as a term of endearment for one's father. Respondent cannot, therefore, claim exclusive ownership
over and singular use of [the] term. Petitioner was able to explain that it adopted the word "PAPA" in
parallel to the nickname of the founder of Barrio fiesta which is "MAMA CHIT". "PAPA BOY" was
derived from the nickname of one of the incorporators of herein petitioner, a certain Bonifacio
Ongpauco, son of Mama Chit.19 (Emphasis ours, citation omitted.)

THEORY OF PETITIONER

Thus, petitioner came to this Court, seeking the reversal of the questioned decision and resolution of
the Court of Appeals, and the reinstatement of the decision of the IPO Director General affirming the
decision of the IPO-BLA. Petitioner raises the following grounds:

I.

The court a quo erred in applying the "holistic test" to determine whether there is confusing similarity
between the contending marks, and in reversing the IPO-BLA and the Director General's application
of the "dominancy test."

II.

The court a quo erred in holding that there is no likelihood of confusion between the contending
marks given that the "PAPA BOY & DEVICE" mark is used on lechon sauce, as opposed to ketchup
products.

III.
The court a quo erred in holding that Petitioner cannot claim exclusive ownership and use of the
"PAP A" mark for its sauce products because "PAPA" is supposedly a common term of endearment
for one's father.20

Under the first ground, petitioner submitted the following arguments:

1. The findings of administrative agencies, if supported by substantial evidence, are binding upon the
courts.21

Petitioner alleges that the Court of Appeals should have respected the ruling of the IPO Director
General, which was consistent with the ruling of the IPO-BLA and supported by substantial
evidence, instead of substituting its findings of fact for those of the Director General and the IPO-
BLA.

2. The dominancy test should have been applied to determine if there is confusing similarity between
the competing marks.22

Petitioner points out that the Director General and the IPO-BLA found that the dominant feature of
the competing marks is the word "PAP A" and the minor additions to respondent's "PAPA BOY &
DEVICE" mark do not negate likelihood of confusion caused by the latter's use of the dominant word
"PAPA." Petitioner claims that even compared solely to petitioner's "PAPA KETSARAP" mark
(Registration No. 34681), which is conceded to have been timely renewed and to have never
expired, respondent's "PAPA BOY & DEVICE" would still create the likelihood of confusion.23

According to petitioner, the Court of Appeals based its decision on Mead Johnson & Co. v. N.V.J.
Van Dorp, Ltd.,24 a case decided almost five decades ago, long before Republic Act No. 8293 or the
1998 Intellectual Property Code was enforced. Thus, the Court of Appeals erroneously applied the
holistic test since given the nature of the products bearing the competing marks, the dominancy test
should have been applied.

Petitioner claims that "[k]etchup and lechon sauce are common and inexpensive household products
that are sold in groceries and regularly encountered by the ordinary or common purchaser who is not
expected to examine, scrutinize, and compare the details of the competing marks."25

Petitioner distinguishes this case from Mead Johnson and claims that the ordinary purchaser of
ketchup or lechon sauce is not likely to closely scrutinize each mark as a whole, for the latter is
"undiscemingly rash" and usually in a hurry, and cannot be expected to take note of the smiling hog-
like character or the blue ribbon-like device with the words "Lechon Sauce." Petitioner argues that
under the Intellectual Property Code, it is not necessary for one to colorably imitate the competing
trademark as a whole. It is sufficient that one imitates a "dominant feature" of the mark to constitute
trademark infringement.

Petitioner asserts that as the IPO-BLA and the Director General observed that the ordinary
purchaser is most likely to notice the words "PAPA BOY," which, in turn, may lead him to believe that
there is a connection between respondent's lechon sauce and petitioner's ketchup products.

Under the second ground, petitioner argues that the Court of Appeals seemed to be unmindful that
two kinds of confusion may arise from the use of similar or colorable imitation marks, i.e., confusion
of goods (product confusion) and confusion of business (source or origin confusion). Petitioner
claims that it is reasonable to assume that it may expand its business to producing lechon sauce,
inasmuch as it already produces food sauce products and its Articles of Incorporation authorizes it to
do so.
Petitioner alleges that the IPO-BLA recognized that confusion of business may arise from
respondent's use of its "PAPA BOY & DEVICE" mark for lechon sauce products, and that the
Director-General agreed with the IPO-BLA's findings on this issue.

Petitioner asserts that ketchup and lechon sauce are undeniably related goods; that they belong to
the same class, i.e., Class 30 of the Nice Classifications; that they serve practically the same
purpose, i.e., to spice up dishes; and that they are sold in similar bottles in the same shelves in
grocery stores. Petitioner argues that the Court of Appeals had absolutely no basis for stating that a
person who is out to buy ketchup is not likely to buy lechon sauce by mistake, as this analysis
allegedly only applies to "product confusion" and does not consider confusion of business. Petitioner
alleges that "[t]here equally is actionable confusion when a buyer purchases Respondent's 'PAPA
BOY' lechon sauce believing that the said product is related to or associated with the famous 'PAPA
KETSUP' makers." Petitioner further alleges that "it is reasonable and likely for a consumer to
believe that Respondent's 'PAPA BOY' lechon sauce originated from or is otherwise connected with
Petitioner's line of sauces" and that this is "the precise evil that recognition of confusion of business
seeks to prevent."26

Petitioner avers that "PAPA" is a well-known mark and that it has been in commercial use as early
as 1954 on banana ketchup and similar goods. The "PAPA" mark is also registered as a trademark
and in commercial use in other parts of the world such as the United States of America and the
Middle East. Petitioner claims that "[b ]eing a trademark that is registered and well-known both
locally and internationally, Petitioner's 'PAPA' marks cannot be appropriated by another person or
entity not only with respect to goods similar to those with respect to which it is registered, but also
with respect to goods which are not similar to those for which the 'PAPA' marks are registered."27

Under the third ground, petitioner claims that the fact that the word "PAPA" is a known term of
endearment for fathers does not preclude it from being used as a mark to identify goods. Petitioner
claims that their mark falls under a type of mark known as "arbitrary or fanciful marks," which are
"marks that bear no logical relation to the actual characteristics of the products they represent," are
"highly distinctive and valid," and "are entitled to the greatest protection."28

Petitioner claims that the mark "PAPA" falls under this class of arbitrary marks, even if "PAPA" is
also a common term of endearment for one's father. Petitioner states that there is no logical
connection between one's father and food sauces, such as ketchup; thus, with respect to ketchup,
food sauces, and their related products, and for the purpose of identifying its products, petitioner
claims exclusive ownership of the term "PAPA" as an arbitrary mark.

Petitioner alleges that if respondent "has a good faith and proud desire to unmistakably and distinctly
identify its lechon sauce product out in the market, it should have coined a mark that departs from
and is distinguished from those of its competitors." Petitioner claims that respondent, with full
knowledge of the fame and the decades-long commercial use of petitioner's "PAPA" marks, opted
for "PAPA BOY & DEVICE," which obviously is just a "colorable imitation."29

THEORY OF RESPONDENT

In its Comment,30 respondent claims that petitioner's marks have either expired and/or "that no
confusing similarity exists between them and respondent's "PAPA BOY & DEVICE' mark."
Respondent alleges that under Section 15 of Republic Act No. 166, a renewal application should be
filed within six months before the expiration of the period or within three months after such
expiration. Respondent avers that the expiration of the 20-year term for the "PAPA" mark under
Registration No. 32416 issued on August 11, 1983 was August 11, 2003. The sixth month before
August 11, 2003 was February 11, 2003 and the third month after August 11, 2003 was November
11, 2003. Respondent claims that the application that petitioner filed on October 28, 2005 was
almost two years late. Thus, it was not a renewal application, but could only be considered a new
application under the new Trademark Law, with the filing date reckoned on October 28, 2005. The
registrability of the mark under the new application was examined again, and any certificate issued
for the registration of "PAPA" could not have been a renewal certificate.

As for petitioner's other mark "PAPA BANANA CATSUP LABEL," respondent claims that its 20-year
term also expired on August 11, 2003 and that petitioner only filed its application for the new "PAPA
LABEL DESIGN" on November 15, 2006. Having been filed three years beyond the renewal
application deadline, petitioner was not able to renew its application on time, and cannot claim a
"continuous existence of its rights over the 'PAPA BANANA CATSUP LABEL."' Respondent claims
that the two marks are different from each other and that the registration of one is independent of the
other. Respondent concludes that the certificate of registration issued for "PAPA LABEL DESIGN" is
"not and will never be a renewal certificate."31

Respondent also avers as follows:

1.3. With regard to the two new registrations of petitioner namely: "PAPA" (Reg. No. 4-2005-010788)
and "PAPA LABEL DESIGN" (Reg. No. 4-2006-012364), these were filed on October 28, 2005 and
November 15, 2006, respectively, under the Intellectual Property Code (RA 8293), which follows the
"first to file" rule, and were obviously filed later than respondent's "PAPA BOY & DEVICE" mark filed
on April 4, 2002. These new marks filed much later than the opposed "PAPA BOY & DEVICE" mark
cannot, therefore, be used as basis for the opposition and should in fact, be denied outrightly.

xxxx

A search of the Online Trademark Database of Intellectual Property Office (IPO) will show that only
Registration No. 34681 issued for "PAPA KETSARAP" was properly renewed on August 23, 2005.
xx x Clearly, the registrations of "PAPA" and "PAPA BANANA CATSUP LABEL" marks under
registration nos. 32416 and SR-6282 respectively, have already expired when Petitioner filed its
opposition proceeding against Respondent's trademark on December 11, 2006. Having expired, and
therefore, no longer legally existing, the "PAPA" and "PAPA BANANA CATSUP LABEL" marks
CANNOT BAR the registration of respondent's mark. To allow petitioner's expired marks to prevent
respondent's distinct "PAPA BOY & DEVICE" mark from being registered would be the ultimate
absurdity.32

Respondent posits that the Court of Appeals did not err in reversing the decisions of the
administrative agencies, alleging that "[while] it is true that the general rule is that the factual findings
of administrative bodies deserve utmost respect when supported by evidence, the same is subject to
exceptions,"33 and that the Court of Appeals had justifiable reasons to disregard the factual finding of
the IPO. Here, the Court of Appeals wisely identified certain material facts that were overlooked by
the IPO-BLA and the IPO Director General which it opined, when correctly appreciated, would alter
the result of the case.

Respondent alleges that the IPO-BLA erroneously considered petitioner's marks "PAPA" and "PAPA
BANANA CATSUP LABEL" when it applied the dominancy test in determining whether petitioner's
marks are confusingly similar to those of respondent's mark "PAPA BOY & DEVICE."

Respondent avers that the IPO-BLA absurdly took emphasis on the mark "PAPA" to arrive at its
decision and did not take into consideration that petitioner's mark was already expired when
respondent applied for the registration of its "PAPA BOY & DEVICE" mark. Respondent compares
its "PAPA BOY & DEVICE" with the only mark that respondent allegedly has, "PAPA KETSARAP,"
and found no confusing similarity between the two.

We quote below respondent's discussion of its application of the dominancy test to the marks in
question:

Applying the Dominancy test, as correctly emphasized by the Court of Appeals, the dominant feature
in respondent's mark is "PAPA BOY" and not "PAPA". It can be gleaned from respondent's mark that
the word "PAPA" was written in the same font, style and color as the word "BOY". There is also the
presence of a "smiling hog-like character" which is positioned very prominently, both in size and
location in said mark, at glance (sic) even more dominant than the word "PAPA BOY".

xxxx

On the other hand, the dominant feature in petitioner's mark is "KETSARAP", not "PAPA". Even an
ordinary examiner could observe that the word "KETSARAP" in petitioner's mark is more prominently
printed than the word "PAPA".

xxxx

In a dominancy test, the prominent feature of the competing trademarks must be similar to cause
confusion or deception. x x x.34

Verily, respondent's dominant feature "PAPA BOY" and the smiling hog-like character and
petitioner's dominant feature "KETSARAP", being the word written in a larger font, are neither
confusing nor deceiving to the public. In fact, the differences between their dominant marks are very
noticeable and conspicuous to every purchaser.

Furthermore, the Supreme Court in Societe des Produits Nestle, SA. v. Dy [ 641 Phil. 345], applied
the dominancy test by taking into account the aural effects of the words and letters contained in the
marks in determining the issue of confusing similarity. Obviously, petitioners' "PAPA KETSARAP"
mark does not in any way sounds (sic) like respondent's "PAPA BOY" mark. The common prefix
"PAPA" does not render the marks aurally the same. As discussed above, the dominant feature in
petitioner's mark is "KETSARAP" and the dominant feature in respondent's mark is "PAPA BOY".
Thus, the words "KETSARAP" and "PAP A BOY" in petitioner's and respondent's respective marks
are obviously different in sound, making "PAPA BOY & DEVICE" even more distinct from petitioner's
"PAPA KETSARAP" mark.35

Using the holistic test, respondent further discusses the differences in the marks in this wise:

Even the use of the holistic test x x x takes into consideration the entirety of the marks in question
[to] be considered in resolving confusing similarity. The differences are again very obvious.
Respondent's mark has (1) the word "lechon sauce" printed inside a blue ribbon-like device which is
illustrated below the word "PAPA BOY"; (2) a prominent smiling hog-like character gesturing a
thumbs-up sign and wearing a Filipino hat and scarf stands beside the word "PAPA BOY"; and the
word "BARRIO FIESTA" conspicuously displayed above the said trademark which leaves no doubt
in the consumer's mind on the product that he or she is purchasing. On the other hand, petitioner's
mark is the word "PAPA" enclosed by a cloud on top of the word "KETSARAP' enclosed by a
geometrical figure.

xxxx
In the instant case, the respective marks are obviously different in color scheme, logo, spelling,
sound, meaning and connotation. Thus, yet again, under the holistic test there can be no confusion
or deception between these marks.

It also bears stressing that petitioner's "PAPA KETSARAP" mark covers "banana catsup" while
respondent's "PAPA BOY & DEVICE" covers "lechon sauce'', thereby obliterating any confusion of
products of both marks as they travel different channels of trade. If a consumer is in the market for
banana catsup, he or she will not buy lechon sauce and vice-versa. As a result, the margin of error
in the acquisition of one for the other is simply remote. Lechon sauce which is liver sauce is distinct
from catsup extracted/ made from banana fruit. The flavor and taste of a lechon sauce are far from
those of a banana catsup. Lechon sauce is sauce for "lechon" while banana catsup is apparently
catsup made from banana.36

Respondent also contends that "PAPA BOY & DEVICE" mark is not confusingly similar to
petitioner's trademark "PAPA KETSARAP" in terms of appearance, sound, spelling and meaning.
The difference in nature, usage, taste and appearance of products decreases the possibility of
deception among buyers.37

Respondent alleges that since petitioner merely included banana catsup as its product in its
certificate, it cannot claim any further right to the mark "PAPA KETSARAP" on products other than
banana catsup. Respondent also alleges that petitioner cannot raise "international notoriety of the
mark" for the first time on appeal and that there is no proof that petitioner's mark is internationally
well-known.38

Furthermore, respondent argues that petitioner cannot claim exclusive ownership over the use of the
word "PAPA," a term of endearment for one's father. Respondent points out that there are several
other valid and active marks owned by third parties which use the word "PAPA," even in classes of
goods similar to those of petitioner's. Respondent avers that petitioner's claim that its "PAPA" mark
is an arbitrary mark is belatedly raised in the instant petition, and cannot be allowed because the
"PAPA KETSARAP" mark would immediately bring the consuming public to thinking that the product
involved is catsup and the description of said catsup is "masarap" (delicious) and due to the logical
relation of the petitioner's mark to the actual product, it being descriptive or generic, it is far from
being arbitrary or fanciful.39

Lastly, respondent claims that the Court of Appeals correctly ruled that respondent's product cannot
be confused as originating from the petitioner. Since it clearly appears in the product label of the
respondent that it is manufactured by Barrio Fiesta, the public is dutifully informed of the identity of
the lechon sauce manufacturer. The Court of Appeals further took into account the fact that
petitioner's products have been in commercial use for decades.40

Petitioner, in its Reply41 to respondent's Comment, contends that respondent cannot invoke a prior
filing date for the "PAPA BOY" mark as against Petitioner's "PAPA" and "PAPA BANANA CATSUP
LABEL" marks, because the latter marks were still registered when respondent applied for
registration of its "PAPA BOY" mark. Thus, the IPO-BLA and Director General correctly considered
them in deciding whether the "PAPA BOY" mark should be registered, using the "first to file" rule
under Section 123.l(d) of Republic Act No. 8293, or the Intellectual Property Code (IP Code).

Petitioner reiterates its argument that the Court of Appeals erred in applying the holistic test and that
the proper test under the circumstances is the dominancy test, which was correctly applied by the
IPO-BLA and the Director General.42

THIS COURT'S RULING


The petition has merit.

We find that the Court of Appeals erred in applying the holistic test and in reversing and setting aside
the decision of the IPO-BLA and that of the IPO Director General, both of which rejected
respondent's application for the mark "PAPA BOY & DEVICE."

In Dermaline, Inc. v. Myra Pharmaceuticals, Inc.,43 we defined a trademark as "any distinctive word,
name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured,
sold, or dealt by others." We held that a trademark is "an intellectual property deserving protection by
law."

The rights of the trademark owner are found in the Intellectual Property Code, which provides:

Section 147. Rights Conferred. - 147.1. The owner of a registered mark shall have the exclusive
right to prevent all third parties not having the owner's consent from using in the course of trade
identical or similar signs or containers for goods or services which are identical or similar to those in
respect of which the trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or services, a likelihood of
confusion shall be presumed.

Section 168. Unfair Competition, Rights, Regulation and Remedies. - 168.1. A person who has
identified in the mind of the public the goods he manufactures or deals in, his business or services
from those of others, whether or not a registered mark is employed, has a property right in the
goodwill of the said goods, business or services so identified, which will be protected in the same
manner as other property rights.

The guideline for courts in determining likelihood of confusion is found in A.M. No. 10-3-10-SC, or
the Rules of Procedure for Intellectual Property Rights Cases, Rule 18, which provides:

RULE 18
Evidence in Trademark Infringement and Unfair Competition Cases

SECTION 1. Certificate of Registration. - A certificate of registration of a mark shall be prima


facie evidence of:

a) the validity of the registration;

b) the registrant's ownership of the mark; and

c) the registrant's exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate.

xxxx

SECTION 3. Presumption of Likelihood of Confusion. - Likelihood of confusion shall be presumed in


case an identical sign or mark is used for identical goods or services.

SECTION 4. Likelihood of Confusion in Other Cases. - In determining whether one trademark is


confusingly similar to or is a colorable imitation of another, the court must consider the general
impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and
giving the attention such purchasers usually give in buying that class of goods. Visual, aural,
connotative comparisons and overall impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace must be taken into account. Where there are both
similarities and differences in the marks, these must be weighed against one another to see which
predominates.

In determining likelihood of confusion between marks used on non-identical goods or services,


several factors may be taken into account, such as, but not limited to:

a) the strength of plaintiffs mark;

b) the degree of similarity between the plaintiffs and the defendant's marks;

c) the proximity of the products or services;

d) the likelihood that the plaintiff will bridge the gap;

e) evidence of actual confusion;

f) the defendant's good faith in adopting the mark;

g) the quality of defendant's product or service; and/or

h) the sophistication of the buyers.

"Colorable imitation" denotes such a close or ingenious imitation as to be calculated to deceive


ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser giving
such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be
the other.

SECTION 5. Determination of Similar and Dissimilar Goods or Services. - Goods or services may
not be considered as being similar or dissimilar to each other on the ground that, in any registration
or publication by the Office, they appear in different classes of the Nice Classification.

In this case, the findings of fact of the highly technical agency, the Intellectual Property Office, which
has the expertise in this field, should have been given great weight by the Court of Appeals. As we
held in Berris Agricultural Co., Inc. v. Abyadang44:

R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods (trademark)
or services (service mark) of an enterprise and shall include a stamped or marked container of
goods. It also defines a "collective mark" as any visible sign designated as such in the application for
registration and capable of distinguishing the origin or any other common characteristic, including
the quality of goods or services of different enterprises which use the sign under the control of the
registered owner of the collective mark.

On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by
another. A trademark, being a special property, is afforded protection by law. But for one to enjoy
this legal protection, legal protection ownership of the trademark should rightly be established.
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer.
or distributor of the goods made available to the purchasing public. Section 122 of R.A.. No. 8293
provides that the rights in a mark shall be acquired by means of its valid registration with the IPO. A
certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity of
the registration, of the registrant's ownership of the mark, and of the registrant's exclusive right to
use the same in connection with the goods or services and those that are related thereto specified in
the certificate. R.A. No. 8293, however, requires the applicant for registration or the registrant to file
a declaration of actual use (DAU) of the mark, with evidence to that effect, within three (3) years
from the filing of the application for registration; otherwise, the application shall be refused or the
mark shall be removed from the register. In other words, the prima facie presumption brought about
by the registration of a mark may be challenged and overcome, in an appropriate action, by proof of
the nullity of the registration or of non-use of the mark, except when excused. Moreover, the
presumption may likewise be defeated by evidence of prior use by another person, i.e., it will
controvert a claim of legal appropriation or of ownership based on registration by a subsequent user.
This is because a trademark is a creation of use and belongs to one who first used it in trade or
commerce.

The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does
not suffice. One may make advertisements, issue circulars, distribute price lists on certain goods, but
these alone will not inure to the claim of ownership of the mark until the goods bearing the mark are
sold to the public in the market. Accordingly, receipts, sales invoices, and testimonies of witnesses
as customers, or orders of buyers, best prove the actual use of a mark in trade and commerce
during a certain period of time.

xxxx

Verily, the protection of trademarks as intellectual property is intended not only to preserve the
goodwill and reputation of the business established on the goods bearing the mark through actual
use over a period of time, but also to safeguard the public as consumers against confusion on these
goods. On this matter of particular concern, administrative agencies, such as the IPO, by
reason of their special knowledge and expertise over matters falling under their jurisdiction,
are in a better position to pass judgment thereon. Thus, their findings of fact in that regard
are generally accorded great respect, if not finality by the courts, as long as they are
supported by substantial evidence, even if such evidence might not be overwhelming or even
preponderant. It is not the task of the appellate court to weigh once more the evidence
submitted before the administrative body and to substitute its own judgment for that of the
administrative agency in respect to sufficiency of evidence. (Emphasis added, citations
omitted.)

In trademark controversies, each case must be scrutinized according to its peculiar circumstances,
such that jurisprudential precedents should only be made to apply if they are specifically in
point.45 The cases discussed below are mentioned only for purposes of lifting the applicable
doctrines, laws, and concepts, but not for their factual circumstances, because of the uniqueness of
each case in controversies such as this one.

There are two tests used in jurisprudence to determine likelihood of confusion, namely the
dominancy test used by the IPO, and the holistic test adopted by the Court of Appeals. In Skechers,
U.S.A., Inc. v. Inter Pacific Industrial Trading Corp.,46 we held:

The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to
cause confusion. In determining similarity and likelihood of confusion, jurisprudence has developed
tests - the Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public. Duplication or imitation is not
necessary; neither is it required that the mark sought to be registered suggests an effort to imitate.
Given more consideration are the aural and visual impressions created by the marks on the buyers
of goods, giving little weight to factors like prices, quality, sales outlets, and market segments.

xxxx

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2)
types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the other;
and (2) confusion of business (source or origin confusion), where, although the goods of" the parties
are different, the product, the mark of which registration is applied for by one party, is such as might
reasonably be assumed to originate with the registrant of an earlier product, and the public would
then be deceived either into that belief or into the belief that there is some connection between the
two parties, though inexistent.

Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by
respondent in its Strong rubber shoes infringes on the mark already registered by petitioner with the
IPO. While it is undisputed that petitioner's stylized "S" is within an oval design, to this Court's mind,
the dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S" which
catches the eye of the purchaser. Thus, even if respondent did not use an oval design, the mere fact
that it used the same stylized "S", the same being the dominant feature of petitioner's trademark,
already constitutes infringement under the Dominancy Test.

This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be
considered as highly identifiable to the products of petitioner alone. The CA even supported its
conclusion by stating that the letter "S" has been used in so many existing trademarks, the most
popular of which is the trademark "S" enclosed by an inverted triangle, which the CA says is
identifiable to Superman. Such reasoning, however, misses the entire point, which is that respondent
had used a stylized "S," which is the same stylized "S" which petitioner has a registered trademark
for. The letter "S" used in the Superman logo, on the other hand, has a block-like tip on the upper
portion and a round elongated tip on the lower portion. Accordingly, the comparison made by the CA
of the letter "S" used in the Superman trademark with petitioner's stylized "S" is not appropriate to
the case at bar.

Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on
the font and the size of the lettering, the stylized "S" utilized by respondent is the very same stylized
"S" used by petitioner; a stylized "S" which is unique and distinguishes petitioner's trademark.
Indubitably, the likelihood of confusion is present as purchasers will associate the respondent's use
of the stylized "S" as having been authorized by petitioner or that respondent's product is connected
with petitioner's business.

xxxx

While there may be dissimilarities between the appearances of the shoes, to this Court's mind such
dissimilarities do not outweigh the stark and blatant similarities in their general features.xx x.

Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic
test, ruled that there was no colorable imitation, when it cannot be any more clear and apparent to
this Court that there is colorable imitation. The dissimilarities between the shoes are too trifling and
frivolous that it is indubitable that respondent's products will cause confusion and mistake in the eyes
of the public. Respondent's shoes may not be an exact replica of petitioner's shoes, but the features
and overall design are so similar and alike that confusion is highly likely.

xxxx

Neither can the difference in price be a complete defense in trademark infringement. In McDonald's
Corporation v. L.C Big Mak Burger, Inc., this Court held:

Modem law recognizes that the protection to which the owner of a trademark is entitled is not limited
to guarding his goods or business from actual market competition with identical or similar products of
the parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or
trade-name is likely to lead to a confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his business into the field (see 148 ALR
56 et seq; 53 Am. Jur. 576) or is in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577).
xx x.

Indeed, the registered trademark owner may use its mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The purchasing public might be mistaken in thinking
that petitioner had ventured into a lower market segment such that it is not inconceivable for the
public to think that Strong or Strong Sport Trail might be associated or connected with petitioner's
brand, which scenario is plausible especially since both petitioner and respondent manufacture
rubber shoes.

Withal, the protection of trademarks as intellectual property is intended not only to preserve the
goodwill and reputation of the business established on the goods bearing the mark through actual
use over a period of time, but also to safeguard the public as consumers against confusion on these
goods. While respondent's shoes contain some dissimilarities with petitioner's shoes, this Court
cannot close its eye to the fact that for all intents and purpose, respondent had deliberately
attempted to copy petitioner's mark and overall design and features of the shoes. Let it be
remembered, that defendants in cases of infringement do not normally copy but only make colorable
changes. The most successful form of copying is to employ enough points of similarity to confuse
the public, with enough points of difference to confuse the courts. (Citations omitted.)

The Court discussed the concept of confusion of business in the case of Societe Des Produits
Nestle, S.A. v. Dy, Jr.,47 as quoted below:

Among the elements, the element of likelihood of confusion is the gravamen of trademark
infringement. There are two types of confusion in trademark infringement: confusion of goods and
confusion of business. In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, the Court distinguished the two types of confusion:

Callman notes two types of confusion. The first is the confusion of goods "in which event the
ordinarily prudent purchaser would be induced to purchase one product in the belief that he was
purchasing the other." In which case, "defendant's goods are then bought as the plaintiff's, and the
poorer quality of the former reflects adversely on the plaintiff's reputation." The other is the confusion
of business: "Here though the goods of the parties are different, the defendant's product is such as
might reasonably be assumed to originate with the plaintiff, and the public would then be deceived
either into that belief or into the belief that there is some connection between the plaintiff and
defendant which, in fact, does not exist."
There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The
dominancy test focuses on the similarity of the main, prevalent or essential features of the competing
trademarks that might cause confusion. Infringement takes place when the competing trademark
contains the essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive purchasers.

xxxx

In cases involving trademark infringement, no set of rules can be deduced. Each case must be
decided on its own merits. Jurisprudential precedents must be studied in the light of the facts of each
particular case. In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court held:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to


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

In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In
recent cases with similar factual milieus, the Court has consistently applied the dominancy test. x x
x.

xxxx

In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy test in
holding that "MACJOY" is confusingly similar to "MCDONALD'S." The Court held:

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

xxxx

Applying the dominancy test to the instant case, the Court finds that herein petitioner's
"MCDONALD'S" and respondent's "MACJOY" marks are confusingly similar with each other that an
ordinary purchaser can conclude an association or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as
dominant features. x x x.

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

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

In McDonald's Corporation v. L. C. Big Mak Burger, Inc., the Court applied the dominancy test in
holding that "BIG MAK" is confusingly similar to "BIG MAC." The Court held:

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

Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:

x x x It has been consistently held that the question of infringement of a trademark is to be


determined by the test of dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White
Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes
in the mind of the public or deceive purchasers. (Auburn Rubber Corporation vs. Hanover Rubber
Co., 107 F. 2d 588; xx x)

xxxx

The test of dominancy is now explicitly incorporated into law in Section 155.l of the Intellectual
Property Code which defines infringement as the "colorable imitation of a registered mark x x x or
a dominant feature thereof."

Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in
likelihood of confusion. First, "Big Mak" sounds exactly the same as "Big Mac." Second, the first
word in "Big Mak" is exactly the same as the first word in "Big Mac." Third, the first two letters in
"Mak" are the same as the first two letters in "Mac." Fourth, the last letter "Mak" while a "k" sounds
the same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in
spelling, thus "Caloocan" is spelled "Kalookan."

In Societe Des Produits Nestle, SA. v. Court of Appeals, the Court applied the dominancy test in
holding that "FLAVOR MASTER" is confusingly similar to "MASTER ROAST" and "MASTER
BLEND." The Court held:

While this Court agrees with the Court of Appeals' detailed enumeration of differences between the
respective trademarks of the two coffee products, this Court cannot agree that totality test is the one
applicable in this case. Rather, this Court believes that the dominancy test is more suitable to this
case in light of its peculiar factual milieu.

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

For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held
that:

xxxx

The scope of protection afforded to registered trademark owners is not limited to protection
from. infringers with identical goods. The scope of protection extends to protection from
1âwp hi1

infringers with related goods, and to market areas that are the normal expansion of business
of the registered trademark owners. Section 138 of R.A. No. 8293 states:

Certificates of Registration. - A certificate of registration of a mark shall be prima facie evidence of


validity of the registration, the registrant's ownership of the mark, and of the registrant's exclusive
right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. x x x.

In Mighty Corporation v. E. & J Gallo Winery, the Court held that, "Non-competing goods may be
those which, though they are not in actual competition, are so related to each other that it can
reasonably be assumed that they originate from one manufacturer, in which case, confusion of
business can arise out of the use of similar marks." In that case, the Court enumerated factors in
determining whether goods are related: (1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential characteristics of the goods, with reference to
their form, composition, texture or quality; and (4) style of distribution and marketing of the goods,
including how the goods are displayed and sold.

xxxx

x x x. However, as the registered owner of the "NAN" mark, Nestle should be free to use its
mark on similar products, in different segments of the market, and at different price levels.
In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court held that the scope of protection
afforded to registered trademark owners extends to market areas that are the normal expansion of
business:

xxxx

Even respondent's use of the "Big Mak" mark on non-hamburger food products cannot excuse their
infringement of petitioners' registered mark, otherwise registered marks will lose their protection
under the law.

The registered trademark owner may use his mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The Court has recognized that the registered
trademark owner enjoys protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited
to guarding his goods or business from actual market competition with identical or similar products of
the parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or
trade-name is likely to lead to a confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his business into the field (see 148 ALR
56 et sq; 53 Am. Jur. 576) or is in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Arn. Jur. 576, 577).
(Emphases supplied, citations omitted.)

Again, this Court discussed the dominancy test and confusion of business in Dermaline, Inc. v. Myra
Pharmaceuticals, Inc.,48 and we quote:

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks
that might cause confusion or deception. It is applied when the trademark sought to be registered
contains the main, essential and dominant features of the earlier registered trademark, and
confusion or deception is likely to result. Duplication or imitation is not even required; neither is it
necessary that the label of the applied mark for registration should suggest an effort to imitate. The
important issue is whether the use of the marks involved would likely cause confusion or mistake in
the mind of or deceive the ordinary purchaser, or one who is accustomed to buy, and therefore to
some extent familiar with, the goods in question. Given greater consideration are the aural and
visual impressions created by the marks in the public mind, giving little weight to factors like prices,
quality, sales outlets, and market segments. The test of dominancy is now explicitly incorporated into
law in Section 155.l of R.A. No. 8293 which provides-

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a


registered mark or the same container or a dominant feature thereof in connection with the
sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to
deceive xx x.

xxxx

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2)
types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the other;
and (2) confusion of business (source or origin confusion), where, although the goods of the parties
are different, the product, the mark of which registration is applied for by one party, is such as might
reasonably be assumed to originate with the registrant of an earlier product, and the public would
then be deceived either into that belief or into the belief that there is some connection between the
two parties, though inexistent.

xxxx

We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are
no set rules that can be deduced as what constitutes a dominant feature with respect to trademarks
applied for registration; usually, what are taken into account are signs, color, design, peculiar shape
or name, or some special, easily remembered earmarks of the brand that readily attracts and
catches the attention of the ordinary consumer.

xxxx

Further, Dermaline's stance that its product belongs to a separate and different classification from
Myra's products with the registered trademark does not eradicate the possibility of mistake on the
part of the purchasing public to associate the former with the latter, especially considering that both
classifications pertain to treatments for the skin.

Indeed, the registered trademark owner may use its mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The Court is cognizant that the registered trademark
owner enjoys protection in product and market areas that are the normal potential expansion of his
business. Thus, we have held-

Modern law recognizes that the protection to which the owner of a trademark is entitled is not
limited to guarding his goods or business from actual market competition with identical or
similar products of the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as
where prospective purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576)
or is in any way connected with the activities of the infringer; or when it forestalls the
normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577).

Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such
that, considering the current proliferation of health and beauty products in the market, the
purchasers would likely be misled that Myra has already expanded its business through Dermaline
from merely carrying pharmaceutical topical applications for the skin to health and beauty services.

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

Section 123.l(d) of the IP Code provides:

A mark cannot be registered if it:

xxxx

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date, in respect of:

i. The same goods or services, or

ii. Closely related goods or services, or

iii. If it nearly resembles such a mark as to be likely to deceive or cause confusion[.]

A scrutiny of petitioner's and respondent's respective marks would show that the IPO-BLA and the
IPO Director General correctly found the word "PAPA" as the dominant feature of petitioner's mark
"PAPA KETSARAP." Contrary to respondent's contention, "KETSARAP" cannot be the dominant
feature of the mark as it is merely descriptive of the product. Furthermore, it is the "PAPA" mark that
has been in commercial use for decades and has established awareness and goodwill among
consumers.
We likewise agree with the IPO-BLA that the word "PAPA" is also the dominant feature of
respondent's "PAPA BOY & DEVICE" mark subject of the application, such that "the word 'PAPA' is
written on top of and before the other words such that it is the first word/figure that catches the
eyes."49 Furthermore, as the IPO Director General put it, the part of respondent's mark which
appears prominently to the eyes and ears is the phrase "PAPA BOY" and that is what a purchaser of
respondent's product would immediately recall, not the smiling hog.

We quote the relevant portion of the IPO-BLA decision on this point below:

A careful examination of Opposer's and Respondent-applicant's respective marks shows that the
word "PAPA" is the dominant feature: In Opposer's marks, the word "PAPA" is either the mark by
itself or the predominant word considering its stylized font and the conspicuous placement of the
word "PAPA" before the other words. In Respondent-applicant's mark, the word "PAPA" is written on
top of and before the other words such that it is the first word figure that catches the eyes. The visual
and aural impressions created by such dominant word "PAPA" at the least is that the respective
goods of the parties originated from the other, or that one party has permitted or has been given
license to the other to use the word "PAPA" for the other party's product, or that there is a
relation/connection between the two parties when, in fact, there is none. This is especially true
considering that the products of both parties belong to the same class and are closely related:
Catsup and lechon sauce or liver sauce are both gravy-like condiments used to spice up dishes.
Thus, confusion of goods and of business may likely result.

Under the Dominancy Test, the dominant features of the competing marks are considered in
determining whether these competing marks are confusingly similar. Greater weight is given to the
similarity of the appearance of the products arising from the adoption of the dominant features of the
registered mark, disregarding minor differences. The visual, aural, connotative, and overall
comparisons and impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace are the main considerations (McDonald's Corporation, et al., v. L. C.
Big Mak Burger, Inc., et al., G. R. No.143993, August 18, 2004; Societe Des Produits Nestle, S. A."
et al. v. Court of Appeals, et al., G. R. No. 112012, April 4, 2001). If the competing trademark
contains the main or essential or dominant features of another, and confusion and deception is likely
to result, infringement takes place. (Lim Hoa v. Director of Patents, 100 Phil. 214 [1956]); Co Tiong
Sa v. Director of Patents, et al., G. R. No. L-5378, May 24, 1954). Duplication or imitation is not
necessary; nor is it necessary that the infringing label should suggest an effort to imitate (Lim Hoa v.
Director of Patents, supra, and Co Liang Sa v. Director of Patents, supra). Actual confusion is not
required: Only likelihood of confusion on the part of the buying public is necessary so as to render
two marks confusingly similar so as to deny the registration of the junior mark (Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 137 Phil. 838 [1969]).

As to the first issue of whether PAPA BOY is confusingly similar to Opposer's PAPA mark, this
Bureau rules in the affirmative.

The records bear the following:

1. Registration No. 32416 issued for the mark "PAPA" under Class 29 goods was deemed
expired as of February 11, 2004 (Exhibit "A" attached to the VERIFIED NOTICE OF
OPPOSITION). Application Serial No. 4-2005-010788 was filed on October 28, 2005 for the
same mark "PAPA" for Class 30 goods and Registration No. 42005010788 was issued on
March 19, 2007;

2. Opposer was issued for the mark "PAPA BANANA CATSUP LABEL" on August 11, 1983
Registration No. SR-6282 for Class 30 goods in the Supplemental Register, which
registration expired in 2003. Application Serial No. 4-2006-012364 was filed for the mark
"PAPA LABEL DESIGN" for Class 30 goods on November 15, 2006, and Registration No.
42006012364 was issued on April 30, 2007; and

3. Lastly, Registration No. 34681 for the mark "PAPA KETSARAP" for Class 30 goods was
issued on August 23, 1985 and was renewed on August 23, 2005.

Though Respondent-applicant was first to file the subject application on April 04, 2002 vis-a-vis the
mark "PAP A" the filing date of which is reckoned on October 28, 2005, and the mark "PAPA LABEL
DESIGN" the filing date of which is reckoned on November 15, 2006, Opposer was able to secure a
registration for the mark "PAPA KETSARAP" on August 23, 1985 considering that Opposer was the
prior registrant and that its renewal application timely filed on August 23, 2005.

xxxx

Pursuant to [Section 123 .1 (d) of the IP Code], the application for registration of the subject mark
cannot be allowed considering that Opposer was earlier registrant of the marks PAPA and PAPA
KETSARAP which registrations were timely renewed upon its expiration. Respondent-applicant's
mark "PAPA BOY & DEVICE" is confusingly similar to Opposer's mark "PAPA KETSARAP" and is
applied to goods that are related to Opposer's goods, but Opposer's mark "PAPA KETSARAP" was
registered on August 23, 1985 per Certificate of Registration No. 34681, which registration was
renewed for a period of 10 years counted from August 23, 2005 per Certificate of Renewal of
Registration No. 34681 issued on August 23, 2005. To repeat, Opposer has already registered a
mark which Respondent-applicant's mark nearly resembles as to likely deceive or cause confusion
as to origin and which is applied to goods to which respondent-applicant's goods under Class 30 are
closely related.
1âw phi 1

Section 138 of the IP Code provides that a certificate of registration of a mark is prima
facie evidence of the validity of the registration, the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with the goods and those that are related
thereto specified in the certificate.50

We agree that respondent's mark cannot be registered. Respondent's mark is related to a product,
lechon sauce, an everyday all-purpose condiment and sauce, that is not subjected to great scrutiny
and care by the casual purchaser, who knows from regular visits to the grocery store under what
aisle to find it, in which bottle it is contained, and approximately how much it costs. Since petitioner's
product, catsup, is also a household product found on the same grocery aisle, in similar packaging,
the public could think that petitioner had expanded its product mix to include lechon sauce, and that
the "PAPA BOY" lechon sauce is now part of the "PAPA" family of sauces, which is not unlikely
considering the nature of business that petitioner is in. Thus, if allowed. registration, confusion of
business may set in, and petitioner's hard-earned goodwill may be associated to the newer product
introduced by respondent, all because of the use of the dominant feature of petitioner's mark on
respondent's mark, which is the word "PAPA." The words "Barrio Fiesta" are not included in the
mark, and although printed on the label of respondent's lechon sauce packaging, still do not remove
the impression that "PAPA BOY" is a product owned by the manufacturer of "PAPA" catsup, by
virtue of the use of the dominant feature. It is possible that petitioner could expand its business to
include lechon sauce, and that would be well within petitioner's rights, but the existence of a "PAPA
BOY" lechon sauce would already eliminate this possibility and deprive petitioner of its rights as an
owner of a valid mark included in the Intellectual Property Code.

The Court of Appeals likewise erred in finding that "PAPA," being a common term of endearment for
one's father, is a word over which petitioner could not claim exclusive use and ownership. The
Merriam-Webster dictionary defines "Papa" simply as "a person's father." True, a person's father has
no logical connection with catsup products, and that precisely makes "PAPA" as an arbitrary mark
capable of being registered, as it is distinctive, coming from a family name that started the brand
several decades ago. What was registered was not the word "Papa" as defined in the dictionary, but
the word "Papa" as the last name of the original owner of the brand. In fact, being part of several of
petitioner's marks, there is no question that the IPO has found "PAPA" to be a registrable mark.

Respondent had an infinite field of words and combinations of words to choose from to coin a mark
for its lechon sauce. While its claim as to the origin of the term "PAPA BOY" is plausible, it is not a
strong enough claim to overrule the rights of the owner of an existing and valid mark. Furthermore,
this Court cannot equitably allow respondent to profit by the name and reputation carefully built by
petitioner without running afoul of the basic demands of fair play.51

WHEREFORE, we hereby GRANT the petition. We SET ASIDE the June 23, 2011 Decision and
the October 4, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 107570,
and REINSTATE the March 26, 2008 Decision of the Bureau of Legal Affairs of the Intellectual
Property Office (IPO-BLA) and the January 29, 2009 Decision of the Director General of the IPO.
ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE PHILIPPINES), INC., Petitioner,
vs.
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L., B.V., Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the December 23, 2008 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 104672 which affirmed in toto the Intellectual 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 to register the same under its name.

The Facts

On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the
(now defunct) Bureau of Patents, Trademarks, and Technology Transfer (BPTTT) of the Department
of Trade and Industry a trademark application for the mark "LE CORDON BLEU & DEVICE" for
goods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International Classification of
Goods and Services for the Purposes of Registrations of Marks ("Nice Classification") (subject
mark). The application was filed pursuant 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. Bearing Serial No. 72264, such application was published for opposition in the March-April
1993 issue of the BPTTT Gazette 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, averring that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE
MANILLE," which it has been using since 1948 in cooking and other culinary activities, including in
its restaurant business; and (b) it has earned immense and invaluable goodwill such that Cointreau’s
use of the subject mark will actually create confusion, mistake, and deception to the buying public as
to the origin and sponsorship of the goods, and cause great and irreparable injury and damage to
Ecole’s business reputation and goodwill as a senior user of the same.5

On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the
subject mark. It averred that: (a) it has filed applications for the subject mark’s registration in various
jurisdictions, including the Philippines; (b) Le Cordon Bleu is a culinary school of worldwide acclaim
which was established in Paris, France in 1895; (c) Le Cordon Bleu was the first cooking school to
have set the standard for the teaching 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 being the exclusive owner of the subject
mark is a fraudulent misrepresentation.6

During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos.
60631 and 54352 for the marks "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895
& DEVICE" for goods and services under classes 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 the subject mark, necessarily resulting in the rejection of Cointreau’s application.9 While
noting the certificates of registration obtained from other countries and other pertinent materials
showing the use of the subject mark outside the Philippines, the BLA did not find such evidence
sufficient to establishCointreau’s claim of prior use of the same in the Philippines. It emphasized that
the adoption and use of trademark must be in commerce in the Philippines and not abroad. It then
concluded that Cointreau has not established any proprietary right entitled to protection in the
Philippine jurisdiction because the law on trademarks rests upon the doctrine 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 BLEU MANILLE" has been known and used in the Philippines since 1948 and registered
under the name "ECOLE DE CUISINE MANILLE (THE CORDON BLEU OF THE PHILIPPINES),
INC." on May 9, 1980.11

Aggrieved, Cointreau filed an appeal with the IPO Director General.

The Ruling of the IPO Director General

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

In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he
considered Cointreau’s undisputed use of such mark since 1895 for its culinary school in Paris,
France (in which petitioner’s own directress, Ms. Lourdes L. Dayrit, had trained in 1977). Contrarily,
he found that while Ecole may have prior use of the subject mark in the Philippines since 1948, it
failed to explain how it came up with such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject mark, rendering it beyond the mantle of
protection of Section 4(d)14 of R.A. No. 166.15

Finding the IPO Director General’s reversal of the BLA’s Decision unacceptable, Ecole filed a
Petition for Review16dated June 7, 2008 with the CA.

Ruling of the CA

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

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

Hence, this petition.


Issues Before the Court

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

At this point, it should be noted that the instant case shall be resolved under the provisions of the old
Trademark Law, R.A. No. 166, which was the law in force at the time of Cointreau’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 the subject mark, considering that it was
the first entity that used the same in the Philippines. Hence, it is the one entitled to its registration
and not Cointreau.

Petitioner’s argument is untenable.

Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the owner thereof
and must have actually used the mark in commerce in the Philippines for two (2) months prior to the
application for registration. Section 2-A21 of the same law sets out to define how one goes about
acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the
test of ownership but the provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that Section 2-A does not require that
the actual use of a trademark must be within the Philippines. Thus, as correctly mentioned by the
CA, under R.A. No. 166, one may be an owner of a mark due to its actual use but may not yet have
the right to register such ownership here due to the owner’s failure to use the same in the Philippines
for two (2) months prior to registration.22

Nevertheless, foreign marks which are not registered are still accorded protection against
infringement and/or unfair competition. At this point, it is worthy to emphasize that the Philippines
and France, Cointreau’s country of origin, are both signatories to the Paris Convention for the
Protection of Industrial Property (Paris Convention).23 Articles 6bis and 8 of the Paris Convention
state:

ARTICLE 6bis

(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of
an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark
which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to be well known in that
country as being already the mark of a person entitled to the benefits of this Convention and used for
identical or similar goods. These provisions shall also apply when the essential part of the mark
1âwphi1

constitutes a reproduction 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 the Union without the obligation of filing or
registration, whether or not it forms part of a trademark. (Emphasis and underscoring 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 are nationals of, domiciled in, or have a
bona fide or effective business or commercial establishment in any foreign country, which is a party
to any international convention or treaty relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be entitled to the benefits and subject to
the provisions of this Act to the extent and under the conditions essential to give effect to any such
convention and treaties so long as the Philippines shall continue to be a party thereto, except as
provided in the following paragraphs of this section.

xxxx

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

xxxx

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

In the instant case, it is undisputed that Cointreau has been using the subject mark in France since
1895, prior to Ecole’s averred first use of the same in the Philippines in 1948, of which the latter was
fully aware thereof. In fact, Ecole’s present directress, Ms. Lourdes L. Dayrit (and even its foundress,
Pat Limjuco Dayrit), had trained in Cointreau’s Le Cordon Bleu culinary school in Paris, France.
Cointreau was likewise the first registrant of the said mark under various classes, both abroad and in
the Philippines, having secured Home Registration No. 1,390,912 dated November 25, 1986 from its
country of origin, as well as several trademark registrations in the Philippines.26

On the other hand, Ecole has no certificate of registration over the subject mark but only a pending
application covering 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 after Cointreau filed its
trademark application for goods and services falling under different classes in 1990. Under the
foregoing circumstances, even if Ecole was the first to use the mark in the Philippines, it cannot be
said to have validly appropriated the same.

It is thus clear that at the time Ecole started using the subject mark, the same was already being
used by Cointreau, albeit abroad, of which Ecole’s directress was fully aware, being an alumna of
the latter’s culinary school in Paris, France. Hence, Ecole cannot claim any tinge of ownership
whatsoever over the subject mark as Cointreau is the true and lawful owner thereof. As such, the
IPO Director General and the CA were correct in declaring Cointreau as the true and lawful owner of
the subject mark and as such, is entitled to have the same registered under its name.

In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines, as amended, has already dispensed with the
requirement of prior actual use at the time of registration.27 Thus, there is more reason to allow the
registration of the subject mark under the name of Cointreau as its true and lawful owner.

As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the
goods (or services) to which it is affixed; to secure to him, who has been instrumental in bringing into
the market a superior article of merchandise, the fruit of his industry and skill; to assure the public
that they are procuring the genuine article; to prevent fraud and imposition; and to protect the
manufacturer against substitution and sale of an inferior and different article as his product."28 As
such, courts will protect trade names or marks, although not registered or properly selected as
trademarks, on the broad ground of enforcing justice and protecting one in the fruits of his toil.29

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

SO ORDERED.
WILTON DY and/or PHILITES ELECTRONIC & LIGHTING PRODUCTS, Petitioner
vs
KONINKLIJKE PHILIPS ELECTRONICS, N.V., Respondent

DECISION

SERENO, CJ.:

This Petition for Review on Certiorari1 filed by petitioner Wilton Dy and/or Philites Electronic &
Lighting Products ("PHILITES") assails the Decision2 and Resolution3 of the Court of Appeals (CA) in
CA-G.R. SP No. 103350. The appellate court reversed and set aside the Decision4 of the IPP Office
of the Director General (IPP-DG), which affirmed the Decision5 of the Intellectual Property Philippines
Bureau of Legal Affairs (IPP-BLA) upholding petitioner's trademark application.

THE ANTECEDENT FACTS

On 12 April 2000, petitioner PHILITES filed a trademark application (Application Serial Number 4-
2000-002937) covering its fluorescent bulb, incandescent light, starter and ballast. After publication,
respondent Koninklijke Philips Electronics, N .V. ("PHILIPS") filed a Verified Notice of Opposition on
17 March 2006, alleging the following:

(a) The approval of Application Serial No. 4-2000-002937 is contrary to the following provisions of
Republic Act No. [RAJ 8293 or the Intellectual Property Code of the Philippines (IP Code): Sections
123.l(d), (i) and (iii), 123.l(e), 147, and 168.

(b) The approval of Application Serial No. 4-2000-002937 will cause grave and irreparable damage
and injury to oppose.

(c) The use and registration of the applied for mark by [petitioner] will mislead the public as to the
origin, nature, quality, and characteristic of the goods on which it is affixed;

(d) [Petitioner's] application for registration is tantamount to fraud as it seeks to register and obtain
legal protection for an identical or confusingly similar mark that clearly infringes upon the established
rights of the [respondent] over its registered and internationally well-known mark.

(e) The registration of the trademark PHILITES & LETTER P DEVICE in the name of the [petitioner]
will violate the proprietary rights and interests, business reputation and goodwill of the [respondent]
over its trademark, considering that the distinctiveness of the trademark PHILIPS will be diluted.

(t) The registration of the applied for mark will not only prejudice the Opposer, but will also cause
[petitioner] to unfairly profit commercially from the goodwill, fame and notoriety of Opposer's
trademark and reputation.

(g) [Petitioner's] registration and use of the applied for mark in connection with goods under Class 11
will weaken the unique and distinctive significance of mark PHILIPS and will tarnish, degrade or
dilute the distinctive quality of Opposer's trademark and will result in the gradual attenuation or
whittling away of the value of Opposer's trademark, in violation of Opposer's proprietary rights.6
On 8 August 2006, petitioner filed a Verified Answer, stating that its PHILITES & LETTER P DEVICE
trademark and respondent's PHILIPS have vast dissimilarities in terms of spelling, sound and
meaning.7

At the conclusion of the hearing, on 9 November 2006, IPP-BLA Director Estrellita Beltran-Abelardo
rendered a Decision8 denying the Opposition filed by respondent PHILIPS. The dispositive portion of
the Decision reads:

WHEREFORE, premises considered the OPPOSITION filed by Koninklijke Philips Electronics, N.V.
is hereby DENIED. Accordingly, Application Serial no. 4-2000-002937 filed by Respondent-
Applicant, Wilton Dy and/or Philites Electronic & Lighting Products on 12 April 2000 for the mark
"PHILITES & LETTER P DEVICE" used on fluorescent bulb, incandescent light starter, ballast under
class 11, is as it is, hereby GRANTED.

Let the filewrapper of "PHILITES & LETTER P DEVICE," subject matter of this case together with
this Decision be forwarded to the Bureau of Trademarks (BOT) for appropriate action.

SO ORDERED.

In upholding petitioner's trademark application, the IPP-BLA stated that assuming respondent's mark
was well-known in the Philippines, there should have been prior determination of whether or not the
mark under application for registration was "identical with, or confusingly similar to, or constitutes a
translation of such well-known mark in order that the owner of the well-known mark can prevent its
registration."9 From the evidence presented, the IPP-BLA concluded that the PHILIPS and PHILITES
marks were so unlike, both visually and aurally. It held that no confusion was likely to occur, despite
their contemporaneous use, based on the following observations:

The Philips shield mark has four stars in different sizes located at the north east and south west
portions inside a circle within the shield. There are three wavy lines dissecting the middle of the
circle. None of these appear in the respondent's mark.

[Respondent] declares that the word Philips is the surname of the brothers who founded the Philips
company engaged in manufacturing and selling lighting products. [Petitioner] on the other hand has
testified that the word Philites is coined from the word 'Philippines' and 'lights,' hence 'Philites.' This
Bureau finds that there is no dictionary meaning to the [petitioner's] mark. It is a coined and arbitrary
word capable of appropriation as a trademark. x x x

Moreover, by mere pronouncing the two marks, the phonetic sounds produced when each mark is
uttered are not the same. The last syllable of respondent's mark is uttered in a long vowel sound,
while the last vowel of the opposer's mark is not.
x x x. This Bureau believes that opposer has no monopoly over the color or diameter or shape of a
light bulb or packaging shape unless registrations were secured to protect the same. The images of
the packages are reproduced below for reference.

x x x. For one, respondent adopts a yellow to light yellow dominant color while the oppose uses an
orange yellow hue. The mark "Philites" is printed in yellow with light blue background as compared to
the "Philips" mark typed in white against a black background.

It is fundamental in trademark jurisprudence that color alone, unless displayed in an arbitrary design
docs not function as a trademark.

Secondly, there appears to be other advertising slogans that appear in respondent's package such
as the words, "new", "prolong lite life", "E-coat finished" and "with additional 35% more than
ordinary". These phrases are absent in opposer's package. These phrases can be considered in the
nature of descriptive terms that can be appropriated by anyone.10

Upon appeal, the IPP-DG rendered a Decision11 on 16 April 2008, affirming the ruling of the IPP-BLA
as follows:

WHEREFORE, premises considered, that instant appeal is hereby DISMISSED for lack of merit.
Accordingly, Decision No. 2006-125 of the Director of the Bureau of Legal Affairs dated 09
November 2006, is hereby AFFIRMED.

Let a copy of this Decision as well as the trademark application and records be furnished and
returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the
Directors of the Bureau of Trademarks, the Administrative, Pinancial and Human Resources
Development Services Bureau, and the library of the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information, guidance and records
purposes.

SO ORDERED.
In so ruling, the IPP-DG noted that "[t]he dominant feature of the [respondent's] trademark is
'PHILIPS' while that of the [petitioner's] trademark is 'PHILITES.' While the first syllables of the marks
are identical - 'PHI' - the second syllables are not. The differences in the last syllable accounted for
the variance of the trademarks visually and aurally."12 Moreover, there were "glaring differences and
dissimilarities in the design and general appearance of the Philips shield emblem mark and the letter
'P' of Philites mark."13 Thus, "even if the [petitioner's] products bearing the trademark PHILIPS are
placed side by side with other brands, the purchaser would not be confused to pick up the
[petitioner's] product if this is his choice or preference, unless the resemblance in the appearance of
the trademarks is so glaring which [it] is not in this case."14

As regards the issue of petitioner submitting a trademark drawing different from that used in the
packaging, the IPP-DG noted that this case involved an opposition to the registration of a mark,
while labels and packaging were technically not a part thereof.15 At best, respondent supposedly had
the remedy of filing a case for trademark infringement and/or unfair competition.16

Upon intermediate appellate review, the CA rendered a Decision 17 on 7 October 2008. The
dispositive portion herein reads:

WHEREFORE, premises considered, the Petition for Review is GRANTED. The Decision dated 16
April 2008 of the Director General of the Intellectual Property Office in Appeal No. 14-06-28; IPC No.
14-2006- 00034 is REVERSED and SET ASIDE. The application for trademark registration
(Application Serial Number 4-2000-002937) of respondent Wilton Dy and/or Philites Electronic &
Lighting Products is DISMISSED. Costs against respondent.

SO ORDERED.

In so ruling, the CA reasoned that the "drawing of the trademark submitted by [petitioner] has a
different appearance from that of [petitioner's] actual wrapper or packaging that contain the light
bulbs, which We find confusingly similar with that of [respondent's] registered trademark and
packaging."18 Moreover, it found to be "self-serving [petitioner's] asseveration that the mark
'PHILITES' is a coined or arbitrary mark from the words 'Philippines' and 'lights.' Of all the marks that
[petitioner] could possibly think of for his light bulbs, it is odd that [petitioner] chose a mark with the
letters 'PHILI,' which are the same prevalent or dominant five letters found in [respondent's]
trademark 'PHILIPS' for the same products, light bulbs."19 Hence, the appellate court concluded that
petitioner had intended to ride on the long-established reputation and goodwill of respondent's
trademark.20

On 25 October 2008, petitioner filed a Motion for Reconsideration, which was denied in a
Resolution21 issued by the CA on 18 December 2008.

Hence, this petition.

Respondent filed its Comment22 on 23 June 2009, and petitioner filed its Reply23 on 10 November
2009.

THE ISSUES

From the foregoing, we reduce the issues to the following:

1. Whether or not respondent's mark is a registered and well-known mark in the Philippines; and
2. Whether or not the mark applied for by petitioner is identical or confusingly similar with that of
respondent.

OUR RULING

The Petition is bereft of merit.

A trademark is "any distinctive word, name, symbol, emblem, sign, or device, or any combination
thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by othcrs."24 It is "intellectual property deserving
protection by law,"25 and "susceptible to registration if it is crafted fancifully or arbitrarily and is
capable of identifying and distinguishing the goods of one manufacturer or seller from those of
another."26

Section 122 of the Intellectual Property Code of the Philippines (IPC) provides that rights to a mark
shall be acquired through registration validly done in accordance with the provisions of this
law.27 Corollary to that rule, Section 123 provides which marks cannot be registered.

Respondent opposes petitioner's application on the ground that PHILITES' registration will mislead
the public over an identical or confusingly similar mark of PHILIPS, which is registered and
internationally well-known mark. Specifically, respondent invokes the following provisions of Section
123:

Section 123. Registrability. - 123 .1. A mark cannot be registered if it:

xxx

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date, in respect of:

(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion;

(e) Is identical with, or confusingly similar to, or constitutes a translation of a mark whid1 is
considered by the competent authority of the Philippines to be well-known internationally and in the
Philippines, whether or not it is registered here, as being already the mark of a person other than the
applicant for registration, and used for identical or similar goods or services: Provided, That in
determining whether a mark is well-known, account shall be taken of the knowledge of the relevant
sector of the public, rather than of the public at large, including knowledge in the Philipines which
has been obtained as a result of the promotion of the mark.28

Respondent's mark is a registered and well-known mark in the


Philippines

There is no question that respondent's mark PHILIPS is already a registered and well-known mark in
the Philippines.
As we have said in Fredco Manufacturing Corporation v. Harvard University,29 "[i]ndeed, Section
123.l(e) of R.A. No. 8293 now categorically states that 'a mark which is considered by the competent
authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is
registered here,' cannot be registered by another in the Philippines. "30

Rule l00(a) of the Rules and Regulations on Trademarks, Service Marks, Tradenames and Marked
or Stamped Containers defines "competent authority" in the following manner:

(c) "Competent authority" for purposes of determining whether a mark is well-known, means the
Court, the Director General, the Director of the Bureau of Legal Affairs, or any administrative agency
or office vested with quasi-judicial or judicial jurisdiction to hear and adjudicate any action to enforce
the rights to a mark.

We thus affirm the following findings of the CA, inasmuch as the trademark of PHILIPS is a
registered and well-known mark, as held in the Supreme Court Decision in Philips Export B. V, v.
CA:31

Petitioner (PHILIPS) is the registered owner in the Philippines of the "PHILIPS" and "PHILIPS
SHIELD EMBLEM" trademarks, as shown by Certificates of Registration Nos. 42271 and 42270. The
Philippine trademark registrations of petitioner's "PHILIPS" and "PHILIPS SHIELD EMBLEM" are
also evidenced by Certificates of Registration Nos. R- 1651, R-29134, R-1674, and R-28981. The
said registered trademarks "PHILIPS" and "PHILIPS SHIELD EMBLEM" cover classes 7, 8, 9, 10,
11, 14, and 16. The assailed Decision itself states that "(T)he Appellant's trademark is already
registered and in use in the Philippines". It also appears that worldwide, petitioner has thousands of
trademark registrations x x x in various countries. As found by the High Court in Philips Export B.V.
vs Court of Appeals, PHILIPS is a trademark or trade name which was registered as far back as
1922, and has acquired the status of a well-known mark in the Philippines and internationally as
well.32

Petitioner seeks to register a mark


nearly resembling that of respondent,
which may likely to deceive or cause
confusion among consumers.

Despite respondent's diversification to numerous and varied industries,33 the records show that both
parties are engaged in the same line of business: selling identical or similar goods such as
fluorescent bulbs, incandescent lights, starters and ballasts.

In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the
dominancy test, and the holistic or totality test.34

On one hand, the dominancy test focuses on "the similarity of the prevalent or dominant features of
the competing trademarks that might cause confusion, mistake, and deception in the mind of the
purchasing public. Duplication or imitation is not necessary; neither is it required that the mark
sought to be registered suggests an effort to imitate. Given more consideration are the aural and
visual impressions created by the marks on the buyers of goods, giving little weight to factors like
prices, quality, sales outlets, and market segments. "35

On the other hand, the holistic or totality test necessitates a "consideration of the entirety of the
marks as applied to the products, including the labels and packaging, in determining confusing
similarity. The discerning eye of the observer must focus not only on the predominant words, but
also on the other features appearing on both labels so that the observer may draw conclusion on
whether one is confusingly similar to the other."36
1âwphi1

Applying the dominancy test to this case requires us to look only at the mark submitted by petitioner
in its application, while we give importance to the aural and visual impressions the mark is likely to
create in the minds of the buyers. We agree with the findings of the CA that the mark "PHILITES"
bears an uncanny resemblance or confusing similarity with respondent's mark "PHILIPS," to wit:

Applying the dominancy test in the instant case, it shows the uncanny resemblance or confusing
similarity between the trademark applied for by respondent with that of petitioner's registered
trademark. An examination of the trademarks shows that their dominant or prevalent feature is the
five-letter "PHILI", "PHILIPS" for petitioner, and "PHILITES" for respondent. The marks are
confusingly similar with each other such that an ordinary purchaser can conclude an association or
relation between the marks. The consuming public does not have the luxury of time to ruminate the
phonetic sounds of the trademarks, to find out which one has a short or long vowel sound. At
bottom, the letters "PHILI'' visually catch the attention of the consuming public and the use of
respondent's trademark will likely deceive or cause confusion. Most importantly, both trademarks are
used in the sale of the same goods, which are light bulbs.37

The confusing similarity becomes even more prominent when we examine the entirety of the marks
used by petitioner and respondent, including the way the products are packaged. In using the holistic
test, we find that there is a confusing similarity between the registered marks PHILIPS and
PHILITES, and note that the mark petitioner seeks to register is vastly different from that which it
actually uses in the packaging of its products. We quote with approval the findings of the CA as
follows:

Applying the holistic test, entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. A comparison
between petitioner's registered trademark "PHILIPS'' as used in the wrapper or packaging of its light
bulbs and that of respondent's applied for trademark "PHILITES" as depicted in the container or
actual wrapper/packaging of the latter's light bulbs will readily show that there is a strong similitude
and likeness between the two trademarks that will likely cause deception or confusion to the
purchasing public. The fact that the parties' wrapper or packaging reflects negligible differences
considering the use of a slightly different font and hue of the yellow is of no moment because taken
in their entirety, respondent's trademark "PHILITES" will likely cause confusion or deception to the
ordinary purchaser with a modicum of intelligence.38
W LAND HOLDINGS, INC., Petitioner, v. STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 22, 2015 and the
Resolution3dated January 7, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 133825 affirming the
Decision4 dated January 10, 2014 of the Intellectual Property Office (IPO) - Director General (IPO DG),
which, in turn, reversed the Decision5 dated May 11, 2012 of the IPO Bureau of Legal Affairs (BLA) in Inter
Partes Case No. 14-2009-00143, and accordingly, dismissed petitioner W Land Holdings, Inc.'s (W Land)
petition for cancellation of the trademark "W" registered in the name of respondent Starwood Hotels and
Resorts, Worldwide, Inc. (Starwood).

The Facts

On December 2, 2005, Starwood filed before the IPO an application for registration of the trademark "W" for
Classes 436 and 447 of the International Classification of Goods and Services for the Purposes of the
Registration of Marks8 (Nice Classification).9 On February 26, 2007, Starwood's application was granted and
thus, the "W" mark was registered in its name.10 However, on April 20, 2006, W Land applied11 for the
registration of its own "W" mark for Class 36,12 which thereby prompted Starwood to oppose the same.13 In
a Decision14 dated April 23, 2008, the BLA found merit in Starwood's opposition, and ruled that W Land's
"W" mark is confusingly similar with Starwood's mark,15 which had an earlier filing date. W Land filed a
motion for reconsideration16 on June 11, 2008, which was denied by the BLA in a Resolution17 dated July 23,
2010.

On May 29, 2009, W Land filed a Petition for Cancellation18 of Starwood's mark for non-use under Section
151.119 of Republic Act No. 8293 or the "Intellectual Property Code of the Philippines" (IP Code),20 claiming
that Starwood has failed to use its mark in the Philippines because it has no hotel or establishment in the
Philippines rendering the services covered by its registration; and that Starwood's "W" mark application and
registration barred its own "'W" mark application and registration for use on real estate.21

In its defense,22 Starwood denied having abandoned the subject mark on the ground of non-use, asserting
that it filed with the Director of Trademarks a notarized Declaration of Actual Use23 (DAU)24 with evidence of
use on December 2, 2008,25 which was not rejected. In this relation, Starwood argued that it conducts hotel
and leisure business both directly and indirectly through subsidiaries and franchisees, and operates
interactive websites for its W Hotels in order to accommodate its potential clients worldwide.26 According to
Starwood, apart from viewing agents, discounts, promotions, and other marketing fields being offered by it,
these interactive websites allow Philippine residents to make reservations and bookings, which presuppose
clear and convincing use of the "W'' mark in the Philippines.27

The BLA Ruling

In a Decision28 dated May 11, 2012, the BLA ruled in W Land's favor, and accordingly ordered the
cancellation of Starwood's registration for the "W" mark. The BLA found that the DAU and the attachments
thereto submitted by Starwood did not prove actual use of the "W" mark in the Philippines, considering that
the "evidences of use" attached to the DAU refer to hotel or establishments that are located abroad.29 In this
regard, the BLA opined that "the use of a trademark as a business tool and as contemplated under [Section
151.1 (c) of RA 8293] refers to the actual attachment thereof to goods and services that are sold or availed
of and located in the Philippines."30

Dissatisfied, Starwood appealed31 to the IPO DG.

The IPO DG Ruling


In a Decision32 dated January 10, 2014, the IPO DG granted Starwood's appeal,33 thereby dismissing W
Land's Petition for Cancellation. Contrary to the BLA's findings, the IPO DG found that Starwood's
submission of its DAU and attachments, coupled by the acceptance thereof by the IPO Bureau of
Trademarks, shows that the "W" mark still bears a "registered" status. Therefore, there is a presumption
that Starwood sufficiently complied with the registration requirements for its mark.34 The IPO DG likewise
held that the absence of any hotel or establishment owned by Starwood in the Philippines bearing the "W"
mark should not be equated to the absence of its use in the country, opining that Starwood's pieces of
evidence, particularly its interactive website, indicate actual use in the Philippines,35 citing Rule 20536 of the
Trademark Regulations, as amended by IPO Office Order No. 056-13.37 Finally, the IPO DG stressed that
since Starwood is the undisputed owner of the "W" mark for use in hotel and hotel-related services, any
perceived damage on the part of W Land in this case should be subordinated to the essence of protecting
Starwood's intellectual property rights. To rule otherwise is to undermine the intellectual property system.38

Aggrieved, W Land filed a petition for review39 under Rule 43 of the Rules of Court before the CA.

The CA Ruling

In a Decision40 dated June 22, 2015, the CA affirmed the IPO DG ruling. At the onset, the CA observed that
the hotel business is peculiar in nature in that the offer, as well as the acceptance of room reservations or
bookings wherever in the world is an indispensable element. As such, the actual existence or presence of a
hotel in one place is not necessary before it can be considered as doing business therein.41 In this regard,
the CA recognized that the internet has become a powerful tool in allowing businesses to reach out to
consumers in a given market without being physically present thereat; thus, the IPO DG correctly held that
Starwood's interactive websites already indicate its actual use in the Philippines of the "W" mark.42 Finally,
the CA echoed the IPO DG's finding that since Starwood is the true owner of the "W" mark - as shown by
the fact that Starwood had already applied for the registration of this mark even before W Land was
incorporated - its registration over the same should remain valid, absent any showing that it has abandoned
the use thereof.43

Unperturbed, W Land moved for reconsideration,44 but was denied in a Resolution45 dated January 7, 2016;
hence, this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly affirmed the IPO DG's
dismissal of W Land's Petition for Cancellation of Starwood's "W'' mark.

The Court's Ruling

The petition is without merit.

The IP Code defines a "mark" as "any visible sign capable of distinguishing the goods (trademark) or
services (service mark) of an enterprise."46 Case law explains that "[t]rademarks deal with the psychological
function of symbols and the effect of these symbols on the public at large."47 It is a merchandising short-cut,
and, "[w]hatever the means employed, the aim is the same to convey through the mark, in the minds of
potential customers, the desirability of the commodity upon which it appears."48 Thus, the protection of
trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the
business established on the goods or services bearing the mark through actual use over a period of time,
but also to safeguard the public as consumers against confusion on these goods or services.49 As viewed by
modern authorities on trademark law, trademarks perform three (3) distinct functions: (1) they indicate
origin or ownership of the articles to which they are attached; (2) they guarantee that those articles come
up to a certain standard of quality; and (3) they advertise the articles they symbolize.50

In Berris Agricultural Co., Inc. v. Abyadang,51 this Court explained that "[t]he ownership of a trademark is
acquired by its registration and its actual use by the manufacturer or distributor of the goods made available
to the purchasing public. x x x. A certificate of registration of a mark, once issued, constitutes prima
facieevidence of the validity of the registration, of the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with the goods or services and those that are
related thereto specified in the certificate."52 However, "the prima facie presumption brought about by the
registration of a mark may be challenged and overcome, in an appropriate action, by proof of[, among
others,] non-use of the mark, except when excused."53

The actual use of the mark representing the goods or services introduced and transacted in commerce over
a period of time creates that goodwill which the law seeks to protect. For this reason, the IP Code, under
Section 124.2,54 requires the registrant or owner of a registered mark to declare "actual use of the mark"
(DAU) and present evidence of such use within the prescribed period. Failing in which, the IPO DG may
cause the motu propio removal from the register of the mark's registration.55 Also, any person, believing
that "he or she will be damaged by the registration of a mark," which has not been used within the
Philippines, may file a petition for cancellation.56 Following the basic rule that he who alleges must prove his
case,57 the burden lies on the petitioner to show damage and non-use.

The IP Code and the Trademark Regulations have not specifically defined "use." However, it is understood
that the "use" which the law requires to maintain the registration of a mark must be genuine, and
not merely token. Based on foreign authorities,58 genuine use may be characterized as a bona fide use
which results or tends to result, in one way or another, into a commercial interaction or
transaction "in the ordinary course of trade."59

What specific act or acts would constitute use of the mark sufficient to keep its registration in force may be
gleaned from the Trademark Regulations, Rule 205 of which reads:

RULE 205. Contents of the Declaration and Evidence of Actual Use. — The declaration shall be under
oath, must refer to only one application or registration, must contain the name and address of the applicant
or registrant declaring that the mark is in actual use in the Philippines, list of goods where the mark is
attached; list the name or names and the exact location or locations of the outlet or outlets where
the products are being sold or where the services are being rendered, recite sufficient facts to show
that the mark described in the application or registration is being actually used in the Philippines
and, specifying the nature of such use. The declarant shall attach five labels as actually used on the
goods or the picture of the stamped or marked container visibly and legibly showing the mark as well as
proof of payment of the prescribed fee. [As amended by Office Order No. 08 (2000)] (Emphases supplied)

The Trademark Regulations was amended by Office Order No. 056-13. Particularly, Rule 205 now mentions
certain items which "shall be accepted as proof of actual use of the mark:"

RULE 205. Contents of the Declaration and Evidence of Actual Use.—

(a) The declaration shall be under oath and filed by the applicant or registrant (or the authorized officer in
case of a juridical entity) or the attorney or authorized representative of the applicant or registrant. The
declaration must refer to only one application or registration, shall contain the name and address of the
applicant or registrant declaring that the mark is in actual use in the Philippines, the list of goods or services
where the mark is used, the name/s of the establishment and address where the products are being sold or
where the services are being rendered. If the goods or services are available only by online purchase, the
website must be indicated on the form in lieu of name or address of the establishment or outlet. The
applicant or registrant may include other facts to show that the mark described in the application or
registration is actually being used in the Philippines. The date of first use shall not be required.

(b) Actual use for some of the goods and services in the same class shall constitute use for the entire class
of goods and services. Actual use for one class shall be considered use for related classes. In the event that
some classes are not covered in the declaration, a subsequent declaration of actual use may be filed for the
other classes of goods or services not included in the first declaration, provided that the subsequent
declaration is filed within the three year period or the extension period, in case an extension of time to file
the declaration was timely made. In the event that no subsequent declaration of actual use for the other
classes of goods and services is filed within the prescribed period, the classes shall be automatically dropped
from the application or registration without need of notice to the applicant or registrant.

(c) The following shall be accepted as proof of actual use of the mark: (1) labels of the mark as
these are used; (2) downloaded pages from the website of the applicant or registrant clearly
showing that the goods are being sold or the services are being rendered in the Philippines; (3)
photographs (including digital photographs printed on ordinary paper) of goods bearing the marks as these
are actually used or of the stamped or marked container of goods and of the establishment/s where the
services are being rendered; (4) brochures or advertising materials showing the actual use of the mark on
the goods being sold or services being rendered in the Philippines; (5) for online sale, receipts of sale of
the goods or services rendered or other similar evidence of use, showing that the goods are
placed on the market or the services are available in the Philippines or that the transaction took
place in the Philippines; (6) copies of contracts for services showing the use of the mark. Computer
printouts of the drawing or reproduction of marks will not be accepted as evidence of use.

(d) The Director may, from time to time, issue a list of acceptable evidence of use and those that
will not be accepted by the Office. (Emphases and underscoring supplied)

Office Order No. 056-13 was issued by the IPO DG on April 5, 2013, pursuant to his delegated rule-making
authority under Section 7 of the IP Code.60 The rationale for this issuance, per its whereas clauses, is to
further "the policy of the [IPO] to streamline administrative procedures in registering trademarks" and in so
doing, address the need "to clarify what will be accepted as proof of use." In this regard, the parameters
and list of evidence introduced under the amended Trademark Regulations are thus mere administrative
guidelines which are only meant to flesh out the types of acceptable evidence necessary to prove what the
law already provides, i.e., the requirement of actual use. As such, contrary to W Land's postulation,61 the
same does not diminish or modify any substantive right and hence, may be properly applied to "all pending
and registered marks,"62 as in Starwood's "W" mark for hotel / hotel reservation services being rendered or,
at the very least, made available in the Philippines.

Based on the amended Trademark Regulations, it is apparent that the IPO has now given due regard to the
advent of commerce on the internet. Specifically, it now recognizes, among others, "downloaded pages from
the website of the applicant or registrant clearly showing that the goods are being sold or the services are
being rendered in the Philippines," as well as "for online sale, receipts of sale of the goods or services
rendered or other similar evidence of use, showing that the goods are placed on the market or the services
are available in the Philippines or that the transaction took place in the Philippines,"63 as acceptable proof of
actual use. Truly, the Court discerns that these amendments are but an inevitable reflection of the realities
of the times. In Mirpuri v. CA,64 this Court noted that "[a]dvertising on the Net and cybershopping are
turning the Internet into a commercial marketplace:"65

The Internet is a decentralized computer network linked together through routers and communications
protocols that enable anyone connected to it to communicate with others likewise connected, regardless of
physical location. Users of the Internet have a wide variety of communication methods available to them and
a tremendous wealth of information that they may access. The growing popularity of the Net has been
driven in large part by the World Wide Web, i.e., a system that facilitates use of the Net by sorting through
the great mass of information available on it. Advertising on the Net and cybershopping are turning
the Internet into a commercial marketplace.66 (Emphasis and underscoring supplied)

Thus, as modes of advertising and acquisition have now permeated into virtual zones over cyberspace, the
concept of commercial goodwill has indeed evolved:

In the last half century, the unparalleled growth of industry and the rapid development of communications
technology have enabled trademarks, tradenames and other distinctive signs of a product to penetrate
regions where the owner does not actually manufacture or sell the product itself. Goodwill is no longer
confined to the territory of actual market penetration; it extends to zones where the marked
article has been fixed in the public mind through advertising. Whether in the print, broadcast or
electronic communications medium, particularly on the Internet, advertising has paved the way
for growth and expansion of the product by creating and earning a reputation that crosses over
borders, virtually turning the whole world into one vast marketplace.67 (Emphasis and underscoring
supplied)

Cognizant of this current state of affairs, the Court therefore agrees with the IPO DG, as affirmed by the CA,
that the use of a registered mark representing the owner's goods or services by means of an interactive
website may constitute proof of actual use that is sufficient to maintain the registration of the same. Since
the internet has turned the world into one vast marketplace, the owner of a registered mark is clearly
entitled to generate and further strengthen his commercial goodwill by actively marketing and commercially
transacting his wares or services throughout multiple platforms on the internet. The facilities and avenues
present in the internet are, in fact, more prominent nowadays as they conveniently cater to the modern-day
consumer who desires to procure goods or services at any place and at any time, through the simple click of
a mouse, or the tap of a screen. Multitudinous commercial transactions are accessed, brokered, and
consummated everyday over websites. These websites carry the mark which represents the goods or
services sought to be transacted. For the owner, he intentionally exhibits his mark to attract the customers'
interest in his goods or services. The mark displayed over the website no less serves its functions of
indicating the goods or services' origin and symbolizing the owner's goodwill than a mark displayed in the
physical market. Therefore, there is no less premium to recognize actual use of marks through websites
than their actual use through traditional means. Indeed, as our world evolves, so too should our
appreciation of the law. Legal interpretation - as it largely affects the lives of people in the here and now -
never happens in a vacuum. As such, it should not be stagnant but dynamic; it should not be ensnared in
the obsolete but rather, sensitive to surrounding social realities.

It must be emphasized, however, that the mere exhibition of goods or services over the internet, without
more, is not enough to constitute actual use. To reiterate, the "use" contemplated by law is genuine use -
that is, a bona fide kind of use tending towards a commercial transaction in the ordinary course of trade.
Since the internet creates a borderless marketplace, it must be shown that the owner has actually
transacted, or at the very least, intentionally targeted customers of a particular jurisdiction in
order to be considered as having used the trade mark in the ordinary course of his trade in that
country. A showing of an actual commercial link to the country is therefore imperative. Otherwise,
an unscrupulous registrant would be able to maintain his mark by the mere expedient of setting up a
website, or by posting his goods or services on another's site, although no commercial activity is intended to
be pursued in the Philippines. This type of token use renders inutile the commercial purpose of the mark,
and hence, negates the reason to keep its registration active. As the IP Code expressly requires, the
use of the mark must be "within the Philippines." This is embedded in Section 151 of the IP Code on
cancellation, which reads:

SECTION 151. Cancellation. — 151.1. A petition to cancel a registration of a mark under this Act may be
filed with the Bureau of Legal Affairs by any person who believes that he is or will be damaged by the
registration of a mark under this Act as follows:

(a) Within five (5) years from the date of the registration of the mark
under this Act.

(b) At any time, if the registered mark becomes the generic name for
the goods or services, or a portion thereof, for which it is registered,
or has been abandoned, or its registration was obtained fraudulently
or contrary to the provisions of this Act, or if the registered mark is
being used by, or with the permission of, the registrant so as to
misrepresent the source of the goods or services on or in connection
with which the mark is used. If the registered mark becomes the
generic name for less than all of the goods or services for which it is
registered, a petition to cancel the registration for only those goods
or services may be filed. A registered mark shall not be deemed to
be the generic name of goods or services solely because such mark
is also used as a name of or to identify a unique product or service.
The primary significance of the registered mark to the relevant public
rather than purchaser motivation shall be the test for determining
whether the registered mark has become the generic name of goods
or services on or in connection with which it has been used.
(c) At any time, if the registered owner of the mark without
legitimate reason fails to use the mark within the Philippines,
or to cause it to be used in the Philippines by virtue of a
license during an uninterrupted period of three (3) years or longer.
(Emphasis and underscoring supplied)

The hotel industry is no stranger to the developments and advances in technology. Like most businesses
nowadays, hotels are utilizing the internet to drive almost every aspect of their operations, most especially
the offering and accepting of room reservations or bookings, regardless of the client or customer base. The
CA explained this booking process in that the "business transactions commence with the placing of room
reservations, usually by or through a travel agent who acts for or in behalf of his principal, the hotel
establishment. [The] reservation is first communicated to the reservations and booking assistant tasked to
handle the transaction. After the reservation is made, the specific room reserved for the guest will be
blocked and will not be offered to another guest. As such, on the specified date of arrival, the room reserved
will be available to the guest."68

In this accord, a hotel's website has now become an integral element of a hotel business. Especially with the
uptrend of international travel and tourism, the hotel's website is now recognized as an efficient and
necessary tool in advertising and promoting its brand in almost every part of the world. More so, interactive
websites that allow customers or clients to instantaneously book and pay for, in advance, accommodations
and other services of a hotel anywhere in the world, regardless of the hotel's actual location, dispense with
the need for travel agents or hotel employees to transact the reservations for them. In effect, the hotel's
website acts as a bridge or portal through which the hotel reaches out and provides its services to the
client/customer anywhere in the world, with the booking transaction completed at the client/customer's own
convenience. It is in this sense that the CA noted that the "actual existence or presence of a hotel in one
place is not necessary before it can be considered as doing business therein."69

As earlier intimated, mere use of a mark on a website which can be accessed anywhere in the world will not
automatically mean that the mark has been used in the ordinary course of trade of a particular country.
Thus, the use of mark on the internet must be shown to result into a within-State sale, or at the very least,
discernibly intended to target customers that reside in that country. This being so, the use of the mark on
an interactive website, for instance, may be said to target local customers when they contain
specific details regarding or pertaining to the target State, sufficiently showing an intent towards
realizing a within-State commercial activity or interaction. These details may constitute a local
contact phone number, specific reference being available to local customers, a specific local webpage,
whether domestic language and currency is used on the website, and/or whether domestic payment
methods are accepted.70 Notably, this paradigm of ascertaining local details to evince within-state
commercial intent is subscribed to by a number of jurisdictions, namely, the European Union, Hong Kong,
Singapore, Malaysia, Japan, Australia, Germany, France, Russia, and the United Kingdom.71 As for the U.S. -
where most of our intellectual property laws have been patterned72 - there have been no decisions to date
coming from its Trademark Trial and Appeal Board involving cases challenging the validity of mark
registrations through a cancellation action based on the mark's internet use. However, in International
Bancorp LLC v. Societe des Bains de Mer et du Cercle des Etrangers a Monaco,73 it was ruled that mere
advertising in the U.S. combined with rendering of services to American customers in a foreign country
constituted "use" for the purpose of establishing trademark rights in the U.S.

In this case, Starwood has proven that it owns Philippine registered domain
names,74 i.e., www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph, for its
website that showcase its mark. The website is readily accessible to Philippine citizens and residents, where
they can avail and book amenities and other services in any of Starwood's W Hotels worldwide. Its website
also readily provides a phone number75 for Philippine consumers to call for information or other concerns.
The website further uses the English language76 - considered as an official language in this country77 - which
the relevant market in the Philippines understands and often uses in the daily conduct of affairs. In addition,
the prices for its hotel accommodations and/or services can be converted into the local currency or the
Philippine Peso.78 Amidst all of these features, Starwood's "W" mark is prominently displayed in the website
through which consumers in the Philippines can instantaneously book and pay for their accommodations,
with immediate confirmation, in any of its W Hotels. Furthermore, it has presented data showing a
considerably growing number of internet users in the Philippines visiting its website since 2003, which is
enough to conclude that Starwood has established commercially-motivated relationships with Philippine
consumers.79

Taken together, these facts and circumstances show that Starwood's use of its "W" mark through its
interactive website is intended to produce a discernable commercial effect or activity within the Philippines,
or at the very least, seeks to establish commercial interaction with local consumers. Accordingly, Starwood's
use of the "W" mark in its reservation services through its website constitutes use of the mark sufficient to
keep its registration in force.

To be sure, Starwood's "W" mark is registered for Classes 43, i.e., for hotel, motel, resort and motor inn
services, hotel reservation services, restaurant, bar and catering services, food and beverage preparation
services, cafe and cafeteria services, provision of conference, meeting and social function facilities, under
the Nice Classification.80 Under Section 152.3 of the IP Code, "[t]he use of a mark in connection with one or
more of the goods or services belonging to the class in respect of which the mark is registered shall prevent
its cancellation or removal in respect of all other goods or services of the same class." Thus, Starwood's use
of the "W" mark for reservation services through its website constitutes use of the mark which is already
sufficient to protect its registration under the entire subject classification from non-use cancellation. This,
notwithstanding the absence of a Starwood hotel or establishment in the Philippines.

Finally, it deserves pointing out that Starwood submitted in 2008 its DAU with evidence of use which the
IPO, through its Director of Trademarks and later by the IPO DG in the January 10, 2014 Decision, had
accepted and recognized as valid. The Court finds no reason to disturb this recognition. According to
jurisprudence, administrative agencies, such as the IPO, by means of their special knowledge and expertise
over matters falling within their jurisdiction are in a better position to pass judgment on this issue.81 Thus,
their findings are generally accorded respect and finality, as long as they are supported by substantial
evidence. In this case, there is no compelling basis to reverse the IPO DG's findings - to keep Starwood's
registration for the "W" mark in force - as they are well supported by the facts and the law and thus,
deserve respect from this Court.

WHEREFORE, the petition is DENIED. The Decision dated June 22, 2015 and the Resolution dated January
7, 2016 of the Court of Appeals in CA-G.R. SP No. 133825 are hereby AFFIRMED.

SO ORDERED.
HON NE CHAN, YUNJI ZENG, AND JOHN DOE versus HONDA MOTOR CO., LTD.,
AND HONDA PHIL., INC.,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

CHICO-NAZARIO, J.:

Before the Court is a Petition for Review on Certiorari of the Decision[1] of the
Court of Appeals in CA-G.R. SP No. 85353, granting respondents Petition
for Certiorari and setting aside the Orders dated 20 February 2004 and 18 May
2004, of the Regional Trial Court (RTC) of Manila, Branch 46.

On 14 November 2003, the National Bureau of Investigation (NBI), through


Special Investigator (SI) Glenn Lacaran, applied for search warrants with the RTC
against petitioners for alleged violation of Section 168[2] in relation to Section
170[3] of Republic Act No. 8293 or the Intellectual Property Code of
the Philippines.[4]

On the same date, RTC Judge Artemio S. Tipon issued two search
warrants. The first warrant, Search Warrant No. 03-4438,[5] was directed against
petitioner Hon Ne Chan and John Does, operating under the name and style Dragon
Spirit Motorcycle Center, located at No. 192 M.H. del Pilar Street corner
10th Avenue, Grace Park, Caloocan City, Metro Manila.

On the other hand, the second search warrant, or Search Warrant No. 03-
[6]
4439 was issued against petitioner Yunji Zeng and John Does, operating under the
name and style Dragon Spirit Motorcycle Center, located at No. 192 E. Delos Santos
Avenue, Caloocan City, Metro Manila.

Except for the names of respondents and addresses to be searched, both


search warrants stated the following:
SEARCH WARRANT[7]

TO ANY PEACE OFFICER:

G R E E T I N G S:

It appearing to the satisfaction of the undersigned, after examining under oath


the applicant Special Investigator Glenn M. Lacaran of the National Bureau of
Investigation, and his witnesses Atty. Elmer NA. Cadano and Mr. Rene C. Baltazar, that
there are good and sufficient reasons to believe that a violation of Sec. 168 in relation to
Sec. 170 of the R.A. No. 8293 has been committed and that there are good and sufficient
reasons to believe that the following :

a) Motorcycles bearing the model names and/or markings DS-110,


DSM-110, SUPER WAVE, DS-125, DSM-125, WAVE R, and WAVE and
the engines, moldings, spare parts, tires and accessories for the
manufacture and assembly of such motorcycles;

b) Papers, documents, brochures, documents, receipts, invoices,


ledgers, books of accounts, labels, materials, paraphernalia, effects,
computer software, computer systems, central processing units, hard
disks, floppy disks, diskettes, date storage and retrieval devices,
monitors, and vehicles used or intended to be used in importing,
producing, manufacturing, assembling, selling, marketing,
distributing, dealing with and/or otherwise disposing of motorcycles
bearing the model names and/or markings DS-110, DSM-110, SUPER
WAVE, DS-125, DSM-125, WAVE R, and WAVE,

are in the possession and control of Respondents HON NE CHAN[8] and JOHN DOES,
operating under the name and style DRAGON SPIRIT MOTORCYCLE CENTER, located at
No. 192 M. H. Del Pilar Street corner 10th Avenue, Grace Park, Caloocan City, Metro
Manila, and are being kept and concealed at the said address.[9]

You are hereby commanded to make an immediate search at any time of the day of the
premises above-described and to search for, and seize, the above-described personal
properties which are the subject of the aforesaid offense and bring to this Court said
properties to be dealt with as the law directs.

GIVEN UNDER MY HAND AND SEAL this 14th day of November, 2003 at the City of Manila,
Philippines.

ARTEMIO S. TIPON

Judge

On the strength of these search warrants, NBI agents conducted a search of


petitioners premises and seized the following items:

1. from petitioner Hon Ne Chans premises:


a) seven (7) motorcycles bearing the model name DSM WAVE R;

b) three (3) motorcycles bearing the model name DSM SUPER WAVE, and

c) one (1) motorcycle bearing the model name WAVE CX.

2. from petitioner Yunji Zengs premises:


a) twenty-one (21) motorcycles bearing the model name WAVE CX 110;

b) eight (8) motorcycles bearing the model name WAVE 110;

c) thirty-five (35) motorcycles bearing the model name WAVE 125;

d) one (1) motorcycle bearing the model name WAVE R;

e) eight (8) motorcycles bearing the model name SUPER WAVE 110; and

f) two (2) plastic bags containing various documents.[10]

On 1 December 2003, petitioners filed with the RTC a Joint Motion to Quash
Search Warrants and to Return Illegally Seized Items,[11] averring therein that the
search warrants were issued despite the absence of probable cause and that they
were in the nature of general search warrants. Respondents filed their Opposition
thereto on 7 January 2004[12] but despite this, the trial court still issued an Order
dated 20 February 2004 which quashed both Search Warrants No. 03-4438 and 03-
4439 and ordered the NBI to return to petitioners the articles seized. In quashing
the search warrants, the trial court held that the return of the twenty-two WAVE
CX 110 motorcycle units was proper for they were never specifically mentioned
therein. As regards the rest of the items seized by the NBI agents, the trial court
decreed that their return to petitioners was justified due to lack of probable cause
in the issuance of the search warrants.

Respondents Motion for Reconsideration dated 12 March 2004[13] was denied by


the court a quo through its Order of 18 May 2004.[14] This prompted respondents
to seek recourse before the Court of Appeals via a Petition for Certiorari.[15]

On 31 January 2006, the Court of Appeals rendered the now assailed Decision
granting respondents petition and setting aside the RTCs Orders dated 20 February
2004 and 18 May 2004.[16] The appellate court likewise denied petitioners Motion
for Reconsideration due to lack of merit.

Hence, the present petition imputing error to the Court of Appeals because of the
following:

i.

THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN
RULING THAT THE WARRANTS COMPLIED WITH THE CONSTITUTIONAL AND STATUTORY
REQUIREMENTS FOR THE ISSUANCE OF VALID SEARCH WARRANTS NOTWITHSTANDING
THE LACK OF PROBABLE CAUSE IN CONNECTION WITH ONE SPECIFIC OFFENSE TO SEARCH
AND SEIZE THE MOTORCYCLE UNITS OF THE PETITIONERS AND THE LACK OF
PARTICULARITY IN THE DESCRIPTION OF THE THINGS TO BE SEARCHED.

ii.
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE ERROR IN
RULING THAT RESPONDENT HAD ESTABLISHED GOODWILL IN HONDA WAVE
MOTORCYCLE DESPITE OF THE FACT THAT THERE IS NO EVIDENCE ON RECORD
SUPPORTING THE CLAIM.

iii.

THE COURT OF APPEALS COMMITTED A MISAPPREHENSION OF FACTS IN RULING THAT


THE PETITIONERS PASSED OFF THEIR GOODS AS THAT OF THE RESPONDENTS BY USING
THE MODEL NAME WAVE AND EMBODYING THE PROMINENT FEATURES OF THE DESIGNS,
WHICH IS THE VERY ESSENCE OF UNFAIR COMPETITION.[17]

We are primarily tasked to resolve the questions of: 1) whether probable cause
existed in the issuance of the subject search warrants; 2) whether said search
warrants were in the nature of general search warrants and therefore null and void;
and 3) whether there existed an offense to which the issuance of the search
warrants was connected.

We affirm the Decision of the Court of Appeals.

The pertinent provision of the Rules of Court on the issuance of a search warrant
provides:

Rule 126

Search and Seizure

xxxx

SEC. 4. Requisites for issuing search warrant. A search warrant shall not issue but upon
probable cause in connection with one specific offense to be determined personally by
the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the
things to be seized which may be anywhere in the Philippines.

Thus, the validity of the issuance of a search warrant rests upon the following
factors: (1) it must be issued upon probable cause; (2) the probable cause must be
determined by the judge himself and not by the applicant or any other person; (3)
in the determination of probable cause, the judge must examine, under oath or
affirmation, the complainant and such witnesses as the latter may produce; and (4)
the warrant issued must particularly describe the place to be searched and persons
or things to be seized.[18]

In this case, petitioners argue that the requirements enumerated in Rule 126 of the
Rules of Court pertaining to the issuance of a search warrant were not fulfilled
when Search Warrants No. 03-4438 and 03-4439 were issued by the trial
court. First, they contend that no probable cause existed meriting the issuance of
the search warrants in that it was stated in the Application for Search Warrant of
National Bureau of Investigation Special Investigator (NBI SI) Lacaran that (h)e has
information and verily believes that (petitioners) are in possession or has in their
control properties which are being sold, retailed, distributed, imported, dealt with
or otherwise disposed of, or intended to be used as a means of committing a
violation of Section 168 in relation to Section 170 of Republic Act No. 8293
otherwise known as the Intellectual Property Code of the Philippines[19]Said
statement, petitioners insist, failed to meet the condition that probable cause must
be shown to be within the personal knowledge of the complainant or the witnesses
he may produce and not based on mere hearsay.[20]

It is settled that in determining probable cause, a judge is duty-bound to


personally examine under oath the complainant and the witnesses he may
present. Emphasis must be laid on the fact that the oath required must refer to the
truth of the facts within the personal knowledge of the petitioner or his witnesses,
because the purpose thereof is to convince the committing magistrate, not the
individual making the affidavit and seeking the issuance of the warrant, of the
existence of probable cause.[21] Search warrants are not issued on loose, vague or
doubtful basis of fact, or on mere suspicion or belief.[22]

In the case at bar, petitioners capitalize on the first paragraph of the


Application for Search Warrant executed by NBI SI Lacaran to support their
argument that he lacked the personal knowledge required by both the Rules of
Court and by jurisprudence. However, the very next paragraph of the application
reveals the tremulous nature of their argument for it is clearly stated therein that
far from merely relying on mere information and belief, NBI SI Lacaran personally
verified the report and found [it] to be a fact.[23]This, to our mind, removed the
basis of his application from mere hearsay and supported the earlier finding of
probable cause on the part of the examining judge. We cannot, thus, agree in his
Order of 20 February 2004 quashing the search warrants he earlier issued on 14
November 2003.

It is likewise well to reiterate here that probable cause, as far as the issuance
of a search warrant is concerned, has been uniformly defined as such facts and
circumstances which would lead a reasonable, discreet and prudent man to believe
that an offense has been committed, and that the objects sought in connection
with the offense are in the place sought to be searched.[24] Equally important is our
declaration in Microsoft Corporation and Lotus Development Corporation v.
Maxicorp, Inc.[25] that

The determination of probable cause does not call for the application of rules and
standards of proof that a judgment of conviction requires after trial on the merits. As
implied by the words themselves, probable cause is concerned with probability, not
absolute or even moral certainty. The prosecution need not present at this stage
reasonable doubt. The standards of judgment are those of a reasonably prudent man, not
the exacting calibrations of a judge after a full-blown trial.[26]

Applying these standards, we hold that the trial court overstepped its
boundaries as far as determination of probable cause is concerned when it
ratiocinated in its Order dated 20 February 2004 that
With respect to the other units seized by the NBI, their immediate release is
likewise proper since there is no showing of probable cause that justified the issuance of
the search warrant. The (herein respondents) claims (sic) that the (herein petitioners) are
guilty of Unfair Competition because of the alleged similarities between its motorcycle
units and those of the (petitioners).There maybe similarities as claimed by the
(respondents) but the differences far outweigh the similarities that any confusion to the
consumer is remote and speculative. These differences are quite evident from the very
comparative pictures attached by the (petitioners) in its (sic) application for Search
Warrant as well as in the Opposition filed relative to the pending Joint Motion to Quash
Search Warrants and to Return Illegally Seized Items.

Aside from the differences in features, the motorcycle units sold by the
(petitioners) prominently bear the distinct trade name DRAGON SPIRIT. This is not the
same trade name of the (respondents), which is Honda. The fact alone would practically
eliminate any possible confusion on the part of the public that the motorcycle units they
would be buying from the (petitioners) are those manufactured and/or sold by
(respondents).[27]

Such pronouncement by the RTC is utterly premature for, at that point, all that was
presented before it by respondents was evidence, which to their minds, was
sufficient to support a finding of probable cause. The trial courts above-cited
declaration unmistakably conveys the message that no unfair competition exists in
this case a conclusion that is not within its competence to make, for its task is merely
confined to the preliminary matter of determination of probable cause and nothing
more. The evidence it requires to dispense this function is, as stated before, far less
stringent than that required in the trial on the merits of the charge involving unfair
competition.

Petitioners also argue that the search warrants in question partook the nature of
general search warrants in that they included motorcycles bearing the model name
WAVE. They insist that word WAVE is generic and that it fails to pass the
requirement of particularity of the items to be seized. They also maintain that had
the word WAVE been enough, there would have been no need for petitioners to
state in their application for search warrants the specific motorcycle models, i.e.,
DSM WAVE, DSM SUPERWAVE 110, and WAVE R 125.[28]
It is elemental that in order to be valid, a search warrant must particularly describe
the place to be searched and the things to be seized. The constitutional requirement
of reasonable particularity of description of the things to be seized is primarily
meant to enable the law enforcers serving the warrant to: (1) readily identify the
properties to be seized and thus prevent them from seizing the wrong items; and
(2) leave said peace officers with no discretion regarding the articles to be seized
and thus prevent unreasonable searches and seizures.[29] It is not, however,
required that the things to be seized must be described in precise and minute detail
as to leave no room for doubt on the part of the searching authorities.[30]

In Bache and Co. (Phil.), Inc. v. Judge Ruiz,[31] it was pointed out that one of
the tests to determine the particularity in the description of objects to be seized
under a search warrant is when the things described are limited to those which
bear direct relation to the offense for which the warrant is being issued. A reading
of the search warrants issued by the trial court in this case reveals that the items
to be seized, including motorcycles, are those which are connected with the alleged
violation of Section 168 in relation to Section 170 of Republic Act No. 8293,
notwithstanding the use of the generic word WAVE. We, therefore, adopt the
following finding of the appellate court:

We may say this of the Wave motorcycles. It is evident that Wave is the model name of
the motorcycles produced by the (herein respondents) Honda and, therefore, any
imitation unit that is in the possession of the (herein petitioners) and carries the name
Wave is the fit object of the warrants whether some other name or figure is affixed to it
or not. The name Wave CX 110 is but a [species] of units under the generic name
Wave. The warrant that directs the seizure of Wave logically includes Wave CX 110 and is
by no means converted into a roving commission when it allows the officer to seize it.[32]

Anent petitioners contention that the search warrants were issued in relation to no
particular offense, they rely on the holding of this Court in Savage v. Judge
Taypin,[33] where it was held that
There is evidently no mention of any crime of unfair competition involving design patents
in the controlling provisions on Unfair Competition. It is therefore unclear whether the
crime exists at all, for the enactment of RA 8293 did not result in the reenactment of Art.
189 of the Revised Penal Code. In the face of this ambiguity, we must strictly construe the
statute against the State and liberally in favor of the accused, for penal statutes cannot be
enlarged or extended by intendment, implication or any equitable consideration.[34]

A reading of said case readily exposes its stark inapplicability to the instant Petition.

To be sure, the search warrant in Savage was issued in the face of possible violation
of Republic Act No. 8293. The acts complained of in said case were the alleged
manufacture and fabrication of wrought iron furniture similar to that patented by
private respondent therein sans any license or patent for the same, for the purpose
of deceiving or defrauding private respondent and the buying public.

In making the above-quoted declaration in said case, this Court recognized that
paragraph 3 of Article 189 of the Revised Penal Code stating that

3. Any person who, by means of false or fraudulent representations or declarations, orally


or in writing, or by other fraudulent means shall procure from the patent office or from
any other officewhich may hereafter be established by law for the purposes,
the registration of a tradename, trademark, or service mark, or of himself as the owner of
such tradename, trademark, or service mark or an entry respecting a tradename,
trademark, or servicemark.

was not included in the enactment of Section 168 of Republic Act No. 8293.

On the other hand, in the Application for Search Warrant filed by NBI SI Lacaran, it
is clearly stated that what respondents are complaining about was the alleged
violation of the goodwill they have established with respect to their motorcycle
models WAVE 110 S and WAVE 125 S and which goodwill is entitled to protection
in the same manner as other property rights. It is quite obvious then that their
cause of action arose out of the intrusion into their established goodwill involving
the two motorcycle models and not patent infringement, as what existed
in Savage.

WHEREFORE, premises considered the present petition for review is DENIED, and
the 31 January 2006 Decision of the Court of Appeals and its 17 May
2006 Resolution in CA-G.R. SP No. 85353 are AFFIRMED. Costs against petitioners.

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

DECISION

BERSAMIN, J.:

It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is
the gravamen of the offense of infringement of a registered trademark. The acquittal of the accused
should follow if the allegedly infringing mark is not likely to cause confusion. Thereby, the evidence
of the State does not satisfy the quantum of proof beyond reasonable doubt.

Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated 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 the belated filing of the appellant's brief, and denied his motion for
reconsideration. Thereby, the decision rendered on February 13, 2006 in Criminal Case No. 00-0318
and Criminal Case No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City (RTC)
convicting him for two counts 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 with violation of Section 155, in relation to Section 170, of Republic Act No. 8293, also
known as the Intellectual Property Code of the Philippines (Intellectual Property Code), to wit:

Criminal Case No. 00-0318

That on or about August 28, 1998, and on dates prior thereto, 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. (hereinafter referred to as LEVI’S), did then and there, willfully, unlawfully,
feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting,
copying and colorably imitating Levi’s registered trademarks or dominant features thereof such as
the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH
PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH,
and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit patches and
jeans, including other preparatory steps necessary to carry out the sale of said patches and jeans,
which likely caused confusion, mistake, and /or deceived the general consuming public, without the
consent, permit or authority of the registered owner, LEVI’S, thus depriving and defrauding the latter
of its right to the exclusive 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 prior thereto, 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. (hereinafter referred to as LEVI’S), did then and there, willfully, unlawfully,
feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting,
copying and colorably imitating Levi’s registered trademarks or dominant features thereof such as
the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH
PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH,
and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit patches and
jeans, including other preparatory steps necessary to carry out the sale of said patches and jeans,
which likely caused confusion, mistake, and /or deceived the general consuming public, without the
consent, permit or authority of the registered owner, LEVI’S, thus depriving and defrauding the latter
of its right to the exclusive use of its trademarks and legitimate trade, to the damage and prejudice of
LEVI’S.

CONTRARY TO LAW.5

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

1.

Evidence of the Prosecution

Levi Strauss and Company (Levi’s), a foreign corporation based in the State of Delaware, United
States of America, had been engaged in the apparel business. It is the owner of trademarks and
designs of Levi’s jeans like LEVI’S 501, the arcuate design, the two-horse brand, the two-horse
patch, the two-horse patch with pattern arcuate, and the composite tab arcuate. LEVI’S 501 has the
following registered trademarks, to wit: (1) the leather patch showing two horses pulling a pair of
pants; (2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;" (3) the arcuate design that
refers to "the two parallel stitching curving downward that 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 these trademarks were registered in the Philippine Patent Office in the
1970’s, 1980’s and early part of 1990’s.7

Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After receiving information
that Diaz was selling counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza and Talon, Las
Piñas City, Levi’s Philippines hired a 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 of LEVI’S 501. Levi’s
Philippines then sought the assistance of the National Bureau of Investigation (NBI) for purposes of
applying for a search warrant against Diaz to be served at his tailoring shops. The search warrants
were issued in due course. Armed with the search warrants, NBI agents searched the tailoring shops
of Diaz and seized several fake LEVI’S 501 jeans from them. Levi’s Philippines claimed that it did
not authorize the making and selling of the seized jeans; that each of the jeans were mere imitations
of genuine LEVI’S 501 jeans by each of them bearing the registered trademarks, like the arcuate
design, the tab, and the leather patch; and that the seized jeans could be mistaken for original
LEVI’S 501 jeans due to the placement of the arcuate, tab, and two-horse leather patch.8

2.

Evidence of the Defense

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

Diaz stated that he did not manufacture Levi’s jeans, and that he used the label "LS Jeans Tailoring"
in the jeans that he made and sold; that the label "LS Jeans Tailoring" was registered with the
Intellectual Property Office; that his shops received clothes for sewing or repair; that his shops
offered made-to-order jeans, whose styles or designs were done in accordance with instructions of
the customers; that since the time his shops began operating in 1992, he had received no notice or
warning regarding his operations; that the jeans he produced were easily recognizable because the
label "LS Jeans Tailoring," and the names of the customers were placed inside the pockets, and
each of the jeans had an "LSJT" red tab; that "LS" stood for "Latest Style;" and that the leather patch
on his jeans had two buffaloes, not two horses.9

Ruling of the RTC

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

WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz,
GUILTY beyond reasonable doubt of twice violating Sec. 155, in relation to Sec. 170, of RA No.
8293, as alleged in the Informations in Criminal Case Nos. 00-0318 & 00-0319, respectively, and
hereby sentences him to suffer in each of the cases the penalty of imprisonment of TWO (2) YEARS
of prision correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as maximum, as
well as pay a fine of ₱50,000.00 for each of the herein cases, with subsidiary imprisonment in case
of insolvency, and to suffer the accessory 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. ₱50,000.00 in exemplary damages; and

2. ₱222,000.00 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’s brief on time despite being granted his requested several extension periods.

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

Issue

Diaz submits that:

THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT


APPLIED RIGIDLY THE RULE ON TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE
BY DISMISSING THE APPEAL OF THE PETITIONER FOR LATE FILING OF APPELLANT’S
BRIEF.11

Ruling

The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of
his appellant’s brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellant’s brief in
the CA "within forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral
and documentary, are attached to the record, 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 Rule 50 of the Rules of Court grants to the CA the discretion to dismiss an appeal
either motu proprio or on motion of the appellee should the appellant fail to serve and file the
required number of copies of the appellant’s brief within the time provided by the Rules of Court.12

The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon
failure to file the appellant’s brief is not mandatory, but discretionary. Verily, the failure to serve and
file the required number of copies of the appellant’s brief within the time provided by the Rules of
Court does not have the immediate effect of causing the outright dismissal of the appeal. This
means that the discretion to dismiss the appeal on that basis is lodged in the CA, by virtue of which
the CA may still allow the appeal to proceed despite the late filing of the appellant’s brief, when the
circumstances so warrant its liberality. In deciding to dismiss the appeal, then, the CA is bound to
exercise its sound discretion upon taking all the pertinent circumstances into due consideration.

The records reveal that Diaz’s counsel thrice sought an extension of the period to file the appellant’s
brief. The first time was on March 12, 2007, the request being for an extension of 30 days to
commence on March 11, 2007. The CA granted his motion under its resolution of March 21, 2007.
On April 10, 2007, the last day of the 30-day extension, the counsel filed another motion, seeking an
additional 15 days. The CA allowed the counsel until April 25, 2007 to serve and file the appellant’s
brief. On April 25, 2007, the counsel went a third time to the CA with another request for 15 days.
The CA still granted such third motion for extension, giving the counsel until May 10, 2007.
Notwithstanding the liberality of the CA, the counsel did not literally comply, filing the appellant’s brief
only on May 28, 2007, which was the 18th day beyond the third extension period granted.

Under the circumstances, the failure to file the appellant’s brief on time rightly deserved the outright
rejection of the appeal. The acts of his counsel bound Diaz like any other client. It was, of course,
only the counsel who was well aware that the Rules of Court fixed the periods to file pleadings and
equally significant papers like the appellant’s brief with the lofty objective of avoiding delays in the
administration of justice.

Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be
heard by the CA on appeal because of the failure of his counsel to serve and file the appellant’s brief
on time despite the grant of several extensions the counsel requested. Diaz was convicted and
sentenced 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 ₱100,000.00 (with subsidiary imprisonment in case of his insolvency). His personal liberty is
now no less at stake. This reality impels us to look beyond the technicality and delve into the merits
of the case to see for ourselves if the appeal, had it not been dismissed, would have been worth the
time of the CA to pass upon. After all, his appellant’s brief had been meanwhile submitted to the CA.
While delving into the merits of the case, we have uncovered a weakness in the evidence of guilt
that cannot be simply ignored and glossed over if we were to be true to our oaths to do justice to
everyone.

We feel that despite the CA being probably right in dismissing the excuses of oversight and
excusable negligence tendered by Diaz’s counsel to justify the belated filing of the appellant’s brief
as unworthy of serious consideration, Diaz should not be made to suffer the dire consequence. Any
accused in his shoes, with his personal liberty as well as his personal fortune at stake, expectedly
but innocently put his fullest trust in his counsel’s abilities and professionalism in the handling of his
appeal. He thereby delivered his fate to the hands of his counsel. Whether or not those hands were
efficient or trained enough for the job of handling the appeal was a learning that he would get only in
the end. Likelier than not, he was probably even unaware of the three times that his counsel had
requested the CA for extensions. If he were now to be left to his unwanted fate, he would surely
suffer despite his innocence. How costly a learning it would be for him! That is where the Court
comes in. It is most important for us as dispensers of justice not to allow the inadvertence or
incompetence of any counsel to result in the outright deprivation of an appellant’s right to life, liberty
or property.13

We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so
much on the line, the people whose futures hang in a balance should not be left to suffer from the
incompetence, mindlessness or lack of professionalism of any member of the Law Profession. They
reasonably expect a just result in every litigation. The courts must give them that just result. That
assurance is the people’s birthright. Thus, we have to undo Diaz’s dire fate.

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

Section 155 of R.A. No. 8293 defines the acts that constitute infringement 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 same container or a dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other preparatory steps necessary to
carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

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

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

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

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

3. The infringing mark is used in connection with the sale, 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 used upon or in
connection with such goods, business or services;
4. The use or application of the infringing mark is likely to cause confusion or mistake or to
deceive purchasers or others as to the goods or services themselves or as to the source or
origin of such goods or services or the identity of such business; and

5. The use or application of the infringing mark is without the consent of the trademark owner
or the assignee thereof.14

As can be seen, the likelihood of confusion is the gravamen of the offense of trademark
infringement.15 There are two tests to determine likelihood of confusion, namely: the dominancy test,
and the holistic test. The contrasting concept of these tests was explained in Societes Des Produits
Nestle, S.A. v. Dy, Jr., thus:

x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement takes place when the competing
trademark contains the essential features of another. Imitation or an effort to imitate is unnecessary.
The question is whether the use of the marks is likely to cause confusion or deceive purchasers.

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

As to what test should be applied in a trademark infringement case, we said in McDonald’s


Corporation v. Macjoy Fastfood Corporation17 that:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to


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

The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an
alleged trademark infringement of jeans products, is worth referring to. There, H.D. Lee Co., Inc.
(H.D. Lee), a corporation based in the United States of America, claimed that Emerald Garment’s
trademark of "STYLISTIC MR. LEE" that it used on its jeans products was confusingly similar to the
"LEE" trademark that H.D. Lee used on its own jeans products. Applying the holistic 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 jeans trademarks of Levi’s Philippines
and Diaz must be considered as a whole in determining the likelihood of confusion between them.
The maong pants or jeans made and sold by Levi’s Philippines, which included LEVI’S 501, were
very popular in the Philippines. The consuming public knew that the original LEVI’S 501 jeans were
under a foreign brand and quite expensive. Such jeans could be purchased only in malls or
boutiques as ready-to-wear items, and were not available in tailoring shops like those of Diaz’s as
well as not acquired on a "made-to-order" basis. Under the circumstances, the consuming public
could easily discern if the jeans were original or fake LEVI’S 501, or were manufactured by other
brands of jeans. Confusion and deception were remote, for, as the Court has observed in Emerald
Garments:

First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not
your ordinary household items like catsup, soy sauce or soap which are of minimal cost. Maong
pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be more
cautious and discriminating in and would prefer to mull over his purchase. Confusion and deception,
then, is less likely. In Del Monte Corporation v. Court of Appeals, we noted that:

.... Among these, what essentially determines the attitudes of the purchaser, specifically his
inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box of candies
will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary
buyer does not exercise as much prudence in buying an article for which he pays a few centavos as
he does in purchasing a more valuable thing. Expensive and valuable items are normally bought
only after deliberate, comparative and analytical investigation. But mass products, low priced articles
in wide use, and matters of everyday purchase requiring frequent replacement are bought by the
casual consumer without great care....

Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not
ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is,
therefore, more or less knowledgeable and familiar with his preference and will not easily be
distracted.

Finally, in line with the foregoing discussions, more credit should be given to the "ordinary
purchaser." Cast in this particular controversy, the ordinary purchaser is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the
"ordinary purchaser" was defined as one "accustomed to buy, and therefore to some extent familiar
with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of the
deception of some persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who knows nothing about the design which
has been counterfeited, and who must be indifferent between that and the other. The simulation, in
order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer
who has a need to supply and is familiar with the article that he seeks to purchase.19

Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring
shops. His trademark was visually and aurally different from the trademark "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 "LEVI STRAUSS" by virtue of the "LS" being connected to the word
"TAILORING", thereby openly suggesting that the jeans bearing the trademark "LS JEANS
TAILORING" came or were bought from the tailoring shops of Diaz, not from the malls or boutiques
selling original LEVI’S 501 jeans to the consuming public.

There were other remarkable differences between the two trademarks 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 but the evidence will show that there was no such design in the seized 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 copied by the accused. However, evidence will
show that the red tab 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, even an ordinary
customer can distinguish the word LEVI’S from the letters LSJT.
xxxx

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

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

Given the foregoing, it should be plain that there was no likelihood of confusion between the
trademarks involved. Thereby, the evidence of guilt did not satisfy the quantum of proof required for
a criminal conviction, which is proof beyond reasonable doubt. According to Section 2, Rule 133 of
the Rules of Court, proof beyond a reasonable doubt does not mean such a degree of proof as,
excluding possibility of error, produces absolute certainty. Moral certainty only is required, or that
degree of proof which produces conviction in an unprejudiced mind. Consequently, Diaz should be
acquitted of the charges.

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

No pronouncement on costs of suit.

SO ORDERED.
LEVI STRAUSS v. ATTY. RICARDO R. BLANCAFLOR

BRION, J.:
We resolve the petition for review on certiorari[1] filed by the petitioner
Levi Strauss & Co. (Levi's) assailing the August 13, 2012[2] and April 17,
2013[3] resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 123957.

THE FACTS

Levi's is a corporation registered under the laws of the State of Delaware,


United States of America.[4]

On October 11, 1999, Levi's filed an application[5] before the Intellectual


Property Office (IPO) to register the mark TAB DEVICE covering various
goods.[6]

The TAB DEVICE trademark is described as a small marker or tab of textile


material, appearing on and affixed permanently to the garment's exterior
and is visible while the garment is worn.[7]

On February 17, 2006, the trademark examiner rejected[8] Levi's trademark


application because there is nothing in the subject mark that serves to
distinguish Levi's goods; hence, the tab itself does not function as a
trademark.[9] The trademark examiner also stated that Levi's cannot
exclusively appropriate the tab's use because a tab of textile is customarily
used on the products covered by the trademark application.[10]

On July 5, 2006, Levi's appealed the examiner's rejection of the trademark


application to the IPO Director of Trademarks (Director).[11]The Director
issued a decision[12] that affirmed the trademark examiner's findings. On
August 22, 2007, Levi's filed a motion for reconsideration[13] of the
Director's decision, which the Director denied[14] for "lack of merit."

On March 24, 2011, Levi's filed its Appeal Memorandum[15] with the
respondent IPO Director-General, Atty. Ricardo R. Blancaflor (Director-
General), and provided a list of certificates of registration[16] in other
countries covering "nearly identical TAB DEVICE trademark registrations."
THE IPO DIRECTOR-GENERAL RULING

On March 12, 2012, the Director-General issued a decision[17] rejecting the


TAB DEVICE trademark application and dismissing Levi's appeal.[18]

The Director-General held that the TAB DEVICE mark is not distinctive
because there is nothing in the mark that enables a person to distinguish it
from other similar "tabs of textile."[19] The subject mark consists solely of a
rectangular tab of textile that does not point out the origin or source of the
goods or services to distinguish it from another.[20]

The Director-General adopted the Director's observations that there is the


garment industry practice of sewing small tabs of textile in the seams of
clothing, which Levi's cannot appropriate to its exclusive use by the
registration of the TAB DEVICE mark.[21]

The Director-General did not accord evidentiary weight to the certificates of


registrations of Levi's in other countries and held that the rights to a mark
are not acquired through registration in other countries.[22] The Director-
General explained that under the Intellectual Property Code, the mark's
capability to distinguish one's goods or services from another is the very
essence of a mark registration.[23] The registered marks are different from
the subject TAB DEVICE mark.[24] The certificates of registration also do
not show that they cover similar goods covered by the subject trademark
application.[25]

Levi's only recourse was to file a Petition for Review with the CA within 15
days from receipt of the IPO Director-General ruling, or until March 29,
2012, under Rule 43 of the Rules of Court to assail the IPO Director-
General's ruling.[26]

On March 28, 2012, Levi's filed a Motion for Extension of Time (first
motion for extension) to file a verified petition for review with the CA; it
sought an additional 15 days, or until April 13, 2012, to file the petition for
review.[27] Levi's counsel averred that it needed the extension because of
pressure from other equally important professional work and it needed to
gather further evidence.[28]
On April 13, 2012, Levi's filed a Second Motion for Extension of Time;[29] it
asked this time for an additional 15 days, or until April 28, 2012, to file the
petition for review.

Levi's claimed that while the draft of the petition was almost complete,
there was yet again pressure from other equally urgent professional work;
and the consularized special power of attorney (SPA) needed for the filing
of the petition and its verification were still en route from the United
States.[30] Levi's claimed that the delay in the SPA consularization was due
to the closed Philippine Consulate Office in San Francisco, USA, from April
5, 2012 to April 9, 2012, in observance of the Holy Week and the Araw ng
Kagitingan holiday.[31]

THE CA RULING

On April 27, 2012, Levi's filed its petition for review (CA petition for
review).[32]

On June 1, 2012, the CA granted the first motion for extension.[33]

On August 13, 2012, the CA issued a Resolution[34] dismissing Levi's


petition outright. The CA held that Levi's failed to present a compelling
reason for the CA to grant the second motion for extension.[35] According to
the CA, Levi's should have secured the necessary SPA earlier and
anticipated the closure of the Philippine Consulate Office due to the
Philippine holidays.[36] Further, pressure from other equally urgent
professional work is not a compelling reason for an extension.[37]

On September 6, 2012, Levi's filed a motion for reconsideration of the CA


dismissal of the petition.[38] Levi's counsel explained that Levi's only
decided to proceed with the filing of the CA petition for review on April 3,
2012 and it was only on that date that the SPA was executed and
notarized.[39]

In a CA Resolution dated April 17, 2013,[40] the CA denied Levi's motion for
reconsideration. The CA held that Levi's should have been diligent enough
to decide before the end of the first fifteen days or until March 29, 2012
whether it would proceed with the filing of the petition for review.[41] The
first extension was not granted to give Levi's time to decide on whether to
file its petition, but to give Levi's more time to gather further evidence and
to finalize the petition.[42]

THE PETITION

Levi's filed the present petition for review on certiorari[43] to challenge the
CA resolutions which dismissed Levi's CA petition for review.

Levi's principally argues that there are compelling reasons to grant the
second motion for extension.[44]

Levi's avers that its SPA had already been executed and notarized as early
as April 3, 2012.[45] In order to comply with Section 24,[46]Rule 132 of the
Revised Rules on Evidence, Levi's sought the Philippine consulate's
authentication of the notarized SPA.[47] Levi's, however, did not anticipate
that the Philippine Consulate Office would be closed during the Holy Week
and the Araw ng Kagitinganholiday since these were regular working days
in the United States.[48]

Levi's also avers that there was no point for the CA to deny the second
motion for extension since the CA did not promptly act on Levi's first
motion for extension and no prejudice would accrue to the respondent by
granting the second motion for extension.[49] Levi's pointed out that the
Court belatedly granted the first motion for extension only on June 1, 2012,
or only after three and a half months since Levi's filing of the CA petition
for review on April 27, 2012.[50]

THE ISSUE

The core issue of the petition is whether or not the CA gravely erred in
dismissing Levi's CA petition for review on the ground that Levi's filed the
CA petition beyond the extended reglementary period.

OUR RULING

We deny the petition for lack of merit.


Rule 43 of the Rules of Court governs the appeals from quasi-judicial
agencies, such as the IPO, to the CA. Section 1 of Rule 43 provides:

Section 1. Scope. — This Rule shall apply to appeals from judgments or


final orders of the Court of Tax Appeals and from awards, judgments, final
orders or resolutions of or authorized by any quasi-judicial agency in
the exercise of its quasi-judicial functions. Among these agencies are
the Civil Service Commission, Central Board of Assessment Appeals,
Securities and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer,
National Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform under
Republic Act No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Invention Board, Insurance
Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary
arbitrators authorized by law. (emphases supplied)
Section 4, Rule 43 of the Rules of Court provides for the period to appeal to
the CA from the judgments or orders of quasi-judicial agencies:

Section 4. Period of appeal. — The appeal shall be taken within fifteen


(15) days from notice of the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by law for its
effectivity, or of the denial of petitioner's motion for new trial or
reconsideration duly filed in accordance with the governing law of the court
or agency a quo. Only one (1) motion for reconsideration shall be allowed.
Upon proper motion and the payment of the full amount of the docket fee
before the expiration of the reglementary period, the Court of Appeals
may grant an additional period of fifteen (15) days only within
which to file the petition for review. No further extension shall
be granted except for the most compelling reason and in no case
to exceed fifteen (15) days. (emphasis and underscoring supplied)
The rule is clear that an appeal to the CA must be filed within a period of
fifteen (15) days. While an extension of fifteen (15) days and a further
extension of another fifteen (15) days may be requested, the second
extension may be granted at the CA's discretion and only for the most
compelling reason.
Motions for extensions are not granted as a matter of right but in the sound
discretion of the court, and lawyers should never presume that their
motions for extensions or postponement will be granted or that they will be
granted the length of time they pray for.[51] Further, the general rule is that
a second motion for extension is not granted, except when the CA finds a
compelling reason to grant the extension.[52]

The CA correctly held that Levi's failed to present a compelling reason to


grant the second motion for extension.[53]

Levi's, by its own admission, only decided to proceed with the filing of the
CA petition for review after the lapse of the first fifteen-day period for
filing.[54] Levi's late decision necessarily delayed the execution and
notarization of the SPA and, consequently, the Philippine Consulate Offices'
authentication of the SPA. Levi's cannot excuse its delay by citing its failure
to anticipate the Philippine Consulate Office's closure due to the observance
of the Philippine holidays. Certainly, Levi's own delay is not a compelling
reason for the grant of a second extension to file a CA petition for review.

Levi's cannot also assume that its second motion for extension would be
granted since the CA did not immediately act on the first and second
motions for extension.

In Go v. BPI Finance Corporation,[55] we held that a party cannot use the


CA's delayed action on a motion for extension as an excuse to delay the
filing of the pleading as a party cannot make any assumption on how his
motion would be resolved. "In fact, faced with the failure to act, the
conclusion is that no favorable action had taken place and the motion had
been denied."[56]

While the CA's late action on Levi's motions for extension is a response that
this Court does not approve of, Levi's cannot use the CA's delay as an
excuse to assume that the CA granted its second motion for extension and
delay the filing of the CA petition for review.

To stress, the right to appeal is a statutory right, not a natural nor a


constitutional right.[57] The party who intends to appeal must comply with
the procedures and rules governing appeals; otherwise, the right of appeal
may be lost or squandered.[58] The perfection of an appeal in the manner
and within the period permitted by law is not only mandatory, but
jurisdictional, and the failure to perfect that appeal renders the judgment of
the court final and executory.[59]

It is true that in a number of instances, the Court has relaxed the governing
periods of appeal in order to serve substantial justice.[60] The instant case,
however, does not present itself to be an exceptional case to warrant the
relaxation of the Rules on procedure. The following pronouncement is
applicable to the present case:

While petitioner pleads that a liberal, not literal, interpretation of the rules
should be our policy guidance, nevertheless procedural rules are not to be
disdained as mere technicalities. They may not be ignored to suit the
convenience of a party. Adjective law ensures the effective enforcement of
substantive rights through the orderly and speedy administration of justice.
Rules are not intended to hamper litigants or complicate litigation. But they
help provide for a vital system of justice where suitors may be heard in the
correct form and manner, at the prescribed time in a peaceful though
adversarial confrontation before a judge whose authority litigants
acknowledge. Public order and our system of justice are well served by a
conscientious observance of the rules of procedure x x x.[61]
Levi's request for the Court to review its case on the merits should be
denied as well. The ruling of the IPO became final and executory after the
period to appeal expired without the perfection of Levi's' appeal. The Court,
therefore, may no longer review it.

WHEREFORE, we hereby DENY the petition for review on certiorari.


The resolutions dated August 13, 2012 and April 17, 2013, of the Court of
Appeals in CA-G.R. SP No. 123957 are AFFIRMED. Costs against the
petitioner.

SO ORDERED.
REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI ANTONETTE N. TY,
ORLANDO REYES, FERRER SUAZO and ALVIN U. TV, Petitioners,
vs.
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM CORPORATION, and
SHELL INTERNATIONAL PETROLEUM COMPANY LIMITED, Respondents.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by
petitioners seeking the reversal of the Decision1 dated July 2, 2010, and Resolution2 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, as summarized by the CA, are as follows:

Petitioners Petron Corporation ("Petron" for brevity) and Pilipinas Shell Petroleum Corporation
("Shell" for brevity) are two of the largest bulk suppliers and producers of LPG in the Philippines.
Petron is the registered owner in the Philippines of the trademarks GASUL and GASUL cylinders
used for its LGP products. It is the sole entity in the Philippines authorized to allow refillers and
distributors to refill, use, sell, and distribute GASUL LPG containers, products and its trademarks.

Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the tradename,
trademarks, symbols or designs of its principal, Shell International Petroleum Company Limited,
including the marks SHELLANE and SHELL device in connection with the production, sale and
distribution of SHELLANE LPGs. It is the only corporation in the Philippines authorized to allow
refillers and distributors to refill, use, sell and distribute SHELLANE LGP containers and products.
Private respondents, on the other hand, are the directors and officers of Republic Gas Corporation
("REGASCO" for brevity), an entity duly licensed to engage in, conduct and carry on, the business of
refilling, buying, selling, distributing and marketing at wholesale and retail of Liquefied Petroleum
Gas ("LPG").

LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron Gasul Dealers
Association, Inc. and Totalgaz Dealers Association, received reports that certain entities were
engaged in the unauthorized refilling, sale and distribution of LPG cylinders bearing the registered
tradenames and trademarks of the petitioners. As a consequence, on February 5, 2004, Genesis
Adarlo (hereinafter referred to as Adarlo), on behalf of the aforementioned dealers associations, filed
a letter-complaint in the National Bureau of Investigation ("NBI") regarding the alleged illegal trading
of petroleum products and/or underdelivery or underfilling in the sale of LPG products.

Acting on the said letter-complaint, NBI Senior Agent Marvin E. De Jemil (hereinafter referred to as
"De Jemil") was assigned to verify and confirm the allegations contained in the letter-complaint. An
investigation was thereafter conducted, particularly within the areas of Caloocan, Malabon,
Novaliches and Valenzuela, which showed that several persons and/or establishments, including
REGASCO, were suspected of having violated provisions of Batas Pambansa Blg. 33 (B.P. 33). The
surveillance revealed that REGASCO LPG Refilling Plant in Malabon was engaged in the refilling
and sale of LPG cylinders bearing the registered marks of the petitioners without authority from the
latter. Based on its General Information Sheet filed in the Securities and Exchange Commission,
REGASCO’s members of its Board of Directors are: (1) Arnel U. Ty – President, (2) Marie Antoinette
Ty – Treasurer, (3) Orlando Reyes – Corporate Secretary, (4) Ferrer Suazo and (5) Alvin Ty
(hereinafter referred to collectively as private respondents).
De Jemil, with other NBI operatives, then conducted a test-buy operation on February 19, 2004 with
the former and a confidential asset going undercover. They brought with them four (4) empty LPG
cylinders bearing the trademarks of SHELLANE and GASUL and included the same with the
purchase of J&S, a REGASCO’s regular customer. Inside REGASCO’s refilling plant, they witnessed
that REGASCO’s employees carried the empty LPG cylinders to a refilling station and refilled the
LPG empty cylinders. Money was then given as payment for the refilling of the J&S’s empty
cylinders which included the four LPG cylinders brought in by De Jemil and his companion. Cash
Invoice No. 191391 dated February 19, 2004 was issued as evidence for the consideration paid.

After leaving the premises of REGASCO LPG Refilling Plant in Malabon, De Jemil and the other NBI
operatives proceeded to the NBI headquarters for the proper marking of the LPG cylinders. The LPG
cylinders refilled by REGASCO were likewise found later to be underrefilled.

Thus, on March 5, 2004, De Jemil applied for the issuance of search warrants in the Regional Trial
Court, Branch 24, in the City of Manila against the private respondents and/or occupants of
REGASCO LPG Refilling Plant located at Asucena Street, Longos, Malabon, Metro Manila for
alleged violation of Section 2 (c), in relation to Section 4, of B.P. 33, as amended by PD 1865. In his
sworn affidavit attached to the applications for search warrants, Agent De Jemil alleged as follows:

"x x x.

"4. Respondent’s REGASCO LPG Refilling Plant-Malabon is not one of those entities authorized to
refill LPG cylinders bearing the marks of PSPC, Petron and Total Philippines Corporation. A
Certification dated February 6, 2004 confirming such fact, together with its supporting documents,
are attached as Annex "E" hereof.

6. For several days in the month of February 2004, the other NBI operatives and I conducted
surveillance and investigation on respondents’ REGASCO LPG refilling Plant-Malabon. Our
surveillance and investigation revealed that respondents’ REGASCO LPG Refilling Plant-Malabon is
engaged in the refilling and sale of LPG cylinders bearing the marks of Shell International, PSPC
and Petron.

x x x.

8. The confidential asset and I, together with the other operatives of the NBI, put together a test-buy
operation. On February 19, 2004, I, together with the confidential asset, went undercover and
executed our testbuy operation. Both the confidential assets and I brought with us four (4) empty
LPG cylinders branded as Shellane and Gasul. x x x in order to have a successful test buy, we
decided to "ride-on" our purchases with the purchase of Gasul and Shellane LPG by J & S, one of
REGASCO’s regular customers.

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

10. Since the REGASCO employees were under the impression that we were together with J & S,
they made the necessary refilling of our empty LPG cylinders alongside the LPG cylinders brought
by J & S. When we requested for a receipt, the REGASCO employees naturally counted our LPG
cylinders together with the LPG cylinders brought by J & S for refilling. Hence, the amount stated in
Cash Invoice No. 191391 dated February 19, 2004, equivalent to Sixteen Thousand 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.

11. After we accomplished the purchase of the illegally refilled LPG cylinders from respondents’
REGASCO LPG Refilling Plant-Malabon, we left its premises bringing with us the said LPG
cylinders. Immediately, we proceeded to our headquarters and made the proper markings of the
illegally refilled LPG cylinders purchased from respondents’ REGASCO LPG Refilling Plant-Malabon
by indicating therein where and when they were purchased. Since REGASCO is not an authorized
refiller, the four (4) LPG cylinders illegally refilled by respondents’ REGASCO LPG Refilling Plant-
Malabon, were without any seals, and when weighed, were underrefilled. Photographs of the LPG
cylinders illegally refilled from respondents’ REGASCO LPG Refilling Plant-Malabon are attached as
Annex "G" hereof. x x x."

After conducting a personal examination under oath of Agent De Jemil and his witness, Joel Cruz,
and upon reviewing their 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 and
correspondingly issued Search Warrants Nos. 04-5049 and 04-5050.

Upon the issuance of the said search warrants, Special Investigator Edgardo C. Kawada and other
NBI operatives immediately proceeded to the REGASCO LPG Refilling Station in Malabon and
served the search warrants on the private respondents. After searching the premises of REGASCO,
they were able to seize several empty and filled Shellane and Gasul cylinders as well as other allied
paraphernalia.

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

On January 15, 2006, Assistant City Prosecutor Armando C. Velasco recommended the dismissal of
the complaint. The prosecutor found that there was no proof introduced by the petitioners that would
show that private respondent REGASCO was engaged in selling petitioner’s products or that it
imitated and reproduced the registered trademarks of the petitioners. He further held that he saw no
deception on the part of REGASCO in the conduct of its business of refilling and marketing LPG.
The Resolution issued by Assistant City Prosecutor Velasco reads as follows in its dispositive
portion:

"WHEREFORE, foregoing considered, the undersigned finds the evidence against the respondents
to be insufficient to form a well-founded belief that they have probably committed violations of
Republic Act No. 9293. The DISMISSAL of this case is hereby respectfully recommended for
insufficiency of evidence."

On appeal, the Secretary of the Department of Justice affirmed the prosecutor’s dismissal of the
complaint in a Resolution dated September 18, 2008, reasoning therein that:

"x x x, the empty Shellane and Gasul LPG cylinders were brought by the NBI agent specifically for
refilling. Refilling the same empty cylinders is by no means an offense in itself – it being the
legitimate business of Regasco to engage in the refilling and marketing of liquefied petroleum gas. In
other words, the empty cylinders were merely filled by the employees of Regasco because they
were brought precisely for that purpose. They did not pass off the goods as those of complainants’
as no other act was done other than to refill them in the normal course of its business.
"In some instances, the empty cylinders were merely swapped by customers for those which are
already filled. In this case, the end-users know fully well that the contents of their cylinders are not
those produced by complainants. And the reason is quite simple – it is an independent refilling
station.

"At any rate, it is settled doctrine that a corporation has a personality separate and distinct from its
stockholders as in the case of herein respondents. To sustain the present allegations, the acts
complained of must be shown to have been committed by respondents in their individual capacity by
clear and convincing evidence. There being none, the complaint must necessarily fail. As it were,
some of the respondents are even gainfully employed in other business pursuits. x x x."3

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

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

WHEREFORE, in view of the foregoing premises, the petition filed in this case is hereby GRANTED.
The assailed Resolution dated September 18, 2008 of the Department of Justice 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 dated October 11, 2010.

Accordingly, petitioners filed the instant Petition for Review on 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 the crimes of Trademark Infringement and
Unfair Competition as defined and penalized in Section 155 and Section 168 in relation to Section
170 of Republic Act No. 8293 (The Intellectual Property Code of the Philippines) had been
committed.

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

Let us discuss the issues in seriatim.

Anent the first issue, the general rule is that a motion for reconsideration is a condition sine qua non
before a certiorari petition may lie, its purpose being to grant an opportunity for the court a quo to
correct any error attributed to it by re-examination of the legal and factual circumstances of the
case.6

However, this rule is not absolute as jurisprudence has laid down several recognized exceptions
permitting a resort to the special civil action for certiorari without first filing a motion for
reconsideration, viz.:

(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised and
passed upon by the lower court, or are the same as those raised and passed upon in the
lower court.

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

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

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

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

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

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

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

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

Apropos the second and third issues, the same may be simplified to one core issue: whether
probable cause exists to hold petitioners liable for the crimes of trademark infringement and unfair
competition as defined and penalized under Sections 155 and 168, in relation to Section 170 of
Republic Act (R.A.) No. 8293.

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

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

155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered
mark of the same container or a dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other preparatory steps necessary to
carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2 Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature
thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall
be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection
155.1 or this subsection are committed regardless of whether there is actual sale of goods or
services using the infringing material.8
From the foregoing provision, the Court in a very similar case, made it categorically clear that the
mere unauthorized use of a container bearing a registered trademark in connection with the sale,
distribution or advertising of goods or services which is likely to cause confusion, mistake or
deception among the buyers or consumers can be considered as trademark infringement.9

Here, petitioners have actually committed trademark infringement when they refilled, without the
respondents’ consent, the LPG containers bearing the registered marks of the respondents. As
noted by respondents, petitioners’ acts will inevitably confuse the consuming public, since they have
no way of knowing that the gas contained in the LPG tanks bearing respondents’ marks is in reality
not the latter’s LPG product after the same had been illegally refilled. The public will then be led to
believe that petitioners are authorized refillers and distributors of respondents’ LPG products,
considering that they are accepting empty containers of respondents and refilling them for resale.

As to the charge of unfair competition, Section 168.3, in relation to Section 170, of R.A. No. 8293
describes the acts constituting unfair competition as follows:

Section 168. Unfair Competition, Rights, Regulations and Remedies. x x x.

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

(a) Any person, who is selling his goods and gives them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in
which they are contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in
selling such goods with a like purpose;

xxxx

Section 170. Penalties. Independent of the civil and administrative sanctions imposed by law, a
criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty
thousand pesos (₱50,000) to Two hundred thousand pesos (₱200,000), shall be imposed on any
person who is found guilty of committing any of the acts mentioned in Section 155, Section 168 and
Subsection 169.1.

From jurisprudence, unfair competition has been defined as the passing off (or palming off) or
attempting to pass off upon the public of the goods or business of one person as the goods or
business of another with the end and probable effect of deceiving the public.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 his merchandise under the
impression that they are buying that of his competitors. Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of deceiving the public that the
goods are those of his competitor.11

In the present case, respondents pertinently observed that by refilling and selling LPG cylinders
bearing their registered marks, petitioners are selling goods by giving them the general appearance
of goods of another manufacturer.
What's more, the CA correctly pointed out that there is a showing that the consumers may be misled
into believing that the LPGs contained in the cylinders bearing the marks "GASUL" and
"SHELLANE" are those goods or products of the petitioners when, in fact, they are not. Obviously,
the mere use of those LPG cylinders bearing the trademarks "GASUL" and "SHELLANE" will give
the LPGs sold by REGASCO the general appearance of the products of the petitioners.

In sum, this Court finds that there is sufficient evidence to warrant the prosecution of petitioners for
trademark infringement and unfair competition, considering that petitioner Republic Gas Corporation,
being a corporation, possesses a personality separate and distinct from the person of its officers,
directors and stockholders.12Petitioners, being corporate officers and/or directors, through whose act,
default or omission the corporation commits a crime, may themselves be individually held
answerable for the crime.13 Veritably, the CA appropriately pointed out that petitioners, being in direct
control and supervision in the management and conduct of the affairs of the corporation, must have
known or are aware that the corporation is engaged in the act of refilling LPG cylinders bearing the
marks of the respondents without authority or consent from the latter which, under the
circumstances, could probably constitute the crimes of trademark infringement and unfair
competition. The existence of the corporate entity does not shield from prosecution the corporate
agent who knowingly and intentionally caused the corporation to commit a crime. Thus, petitioners
cannot hide behind the cloak of the separate corporate personality of the corporation to escape
criminal liability. A corporate officer cannot protect himself behind a corporation where he is the
actual, present and efficient actor.14

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

SO ORDERED.
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga Plant, vs QUINTIN
J. GOMEZ, a.k.a. KITGOMEZ and DANILO E. GALICIA, a.k.a.
DANNY GALICIA,

Is the hoarding of a competitors product containers punishable as unfair


competition under the Intellectual Property Code (IP Code, Republic Act No. 8293)
that would entitle the aggrieved party to a search warrant against the hoarder? This
is the issue we grapple with in this petition for review on certiorari involving two
rival multinational softdrink giants; petitioner Coca-Cola Bottlers, Phils., Inc.
(Coca-Cola) accuses Pepsi Cola Products Phils., Inc. (Pepsi), represented by the
respondents, of hoarding empty Coke bottles in bad faith to discredit its business and
to sabotage its operation in Bicolandia.

BACKGROUND

The facts, as culled from the records, are summarized below.

On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi for hoarding
Coke empty bottles in Pepsis yard in Concepcion Grande, Naga City, an act
allegedly penalized 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 the respondents.[1] In support of the application, Coca-Cola
submitted the sworn statements of three witnesses: Naga plant representative Arnel
John Ponce said he was informed that one of their plant security guards had gained
access into the Pepsi compound and had seen empty Coke bottles; acting plant
security officer Ylano A. Regaspi said he investigated reports that Pepsi was
hoarding large quantities of Coke bottles by requesting their security guard to enter
the Pepsi plant and he was informed by the security guard that Pepsi hoarded several
Coke bottles; security guard Edwin Lirio stated that he entered Pepsis yard on July
2, 2001 at 4 p.m. and saw empty Coke bottles inside Pepsi shells or cases.[2]

Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga City, after
taking the joint deposition of the witnesses, issued Search Warrant No. 2001-01[3] to
seize2,500 Litro and 3,000 eight and 12 ounces empty Coke bottles at Pepsis Naga
yard for violation of Section 168.3 (c) of the IP Code.[4] The local police seized and
brought to the MTCs custody 2,464 Litro and 4,036 eight and 12 ounces empty Coke
bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells for smaller (eight and 12
ounces) empty Coke bottles, and later filed with the Office of the City Prosecutor of
Naga a complaint against two Pepsi officers for violation of Section 168.3 (c) in
relation to Section 170 of the IP Code.[5] The named 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 that the bottles came
from various Pepsi retailers and wholesalers who included them in their return to
make up for shortages of empty Pepsi bottles; they had no way of ascertaining
beforehand the return of empty Coke bottles as they simply received what had been
delivered; the presence of the bottles in their yard was not intentional nor deliberate;
Ponce and Regaspis statements are hearsay as they had no personal knowledge of
the alleged crime; there is no mention in 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 in their favor. Pepsi security guards
Eduardo E. Miral and Rene Acebuche executed a joint affidavit stating that per their
logbook, Lirio did not visit or enter the plant premises in the afternoon of July 2,
2001.

The respondents also filed motions for the return of their shells and to quash
the search warrant. They contended that no probable cause existed to justify the
issuance of the search warrant; the facts charged do not constitute an offense; and
their Naga plant was in urgent need of the shells.

Coca-Cola opposed the motions as the shells were part of the evidence of the
crime, arguing that Pepsi used the shells in hoarding the bottles. It insisted that the
issuance of warrant was based on probable cause for unfair competition under the IP
Code, and that the respondents violated R.A. 623, the law regulating the use of
stamped or marked bottles, 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 an exhaustive examination of the applicant and
its witnesses through searching questions and that the Pepsi shells are prima
facie evidence that the bottles were placed there by the respondents.
In their motion for reconsideration, the respondents argued for the quashal of
the warrant as the MTC did not conduct a probing and exhaustive examination; the
applicant and its witnesses 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 warrant was issued based on hearsay evidence; and the seizure
of the shells was illegal because they were not included in the warrant.

On November 14, 2001, the MTC denied the motion for reconsideration in
the second assailed order,[7] explaining that the issue of whether there was unfair
competition can only be resolved during trial.
The respondents responded by filing a petition for certiorari under Rule 65 of
the Revised Rules of Court before the Regional Trial Court (RTC) of Naga City on
the ground that the subject search warrant was issued without probable cause and
that the empty shells were neither mentioned in the warrant nor the objects of the
perceived crime.

THE RTC RULINGS

On May 8, 2002, the RTC voided the warrant for lack of probable cause and
the non-commission of the crime of unfair competition, even as it implied that other
laws may have been violated by the respondents. The RTC, though, found no grave
abuse of discretion on the part of the issuing MTC 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 and November 14, 2001 are also
declared VOID and SET ASIDE. The City Prosecutor of Naga City and
SPO1 Ernesto Paredes are directed to return to the Petitioner the properties
seized by virtue of Search Warrant No. 2001-02. No costs.

SO ORDERED.[9]
In a motion for reconsideration, which the RTC denied on July 12, 2002, the
petitioner stressed that the decision of the RTC was contradictory because it
absolved Judge Ocampo of grave abuse of discretion in issuing the search warrant,
but at the same time nullified the issued warrant. The MTC should have dismissed
the petition when it found out that Judge Ocampo did not commit any grave abuse
of discretion.
Bypassing the Court of Appeals, the petitioner asks us through this petition
for review on certiorari under Rule 45 of the Rules of Court to reverse the decision
of the RTC.Essentially, the petition raises questions against the RTCs nullification
of the warrant when it found no grave abuse of discretion committed by the issuing
judge.

THE PETITION and


THE PARTIES POSITIONS

In its petition, the petitioner insists the RTC should have dismissed the
respondents petition for certiorari because it found no grave abuse of discretion by
the MTC in issuing the search warrant. The petitioner further argues that the IP Code
was enacted into law to remedy various forms of unfair competition accompanying
globalization as well as to replace the inutile provision of unfair competition under
Article 189 of the Revised Penal Code. Section 168.3(c) of the IP Code does not
limit the scope of protection on the particular acts enumerated as it expands the
meaning of unfair competition to include other acts contrary to good faith of a nature
calculated to discredit the goods, business or services of another. The inherent
element of unfair competition is fraud or deceit, and that hoarding of large quantities
of a competitors empty bottles is necessarily characterized by bad faith. It claims
that its Bicol bottling operation was prejudiced by the respondents hoarding and
destruction of its empty bottles.
The petitioner also argues that the quashal of the search warrant was improper
because it complied with all the essential requisites of a valid warrant. The empty
bottles were concealed in Pepsi shells to prevent discovery while they were
systematically being destroyed to hamper the petitioners bottling operation and to
undermine the capability of its bottling operations in Bicol.
The respondents counter-argue that although Judge Ocampo conducted his
own examination, he gravely erred and abused his discretion when he ignored the
rule on the need of sufficient evidence to establish probable cause; satisfactory and
convincing evidence is essential to hold them guilty of unfair competition; the
hoarding of empty Coke bottles did not cause actual or probable deception and
confusion on the part of the general public; the alleged criminal acts do not show
conduct aimed at deceiving the public; there was no attempt to use the empty bottles
or pass them off as the respondents goods.
The respondents also argue that the IP Code does not criminalize bottle
hoarding, as the acts penalized must always involve fraud and deceit. The hoarding
does not make them liable for unfair competition as there was no deception or fraud
on the end-users.

THE ISSUE

Based on the parties positions, the basic issue submitted to us for resolution is
whether the Naga MTC was correct in issuing Search Warrant No. 2001-01 for the
seizure of the empty Coke bottles from Pepsis yard for probable violation of Section
168.3 (c) of the IP Code. This basic issue involves two sub-issues, namely, the
substantive issue of whether the application for search warrant effectively charged
an offense, i.e., a violation of Section 168.3 (c) of the IP Code; and the procedural
issue of whether the MTC observed the procedures required by the Rules of Court
in the issuance of search warrants.

OUR RULING

We resolve to deny the petition for lack of merit.

We clarify at the outset that while we agree with the RTC decision, our
agreement is more in the result than in the reasons that supported it. The decision is
correct in nullifying the search warrant because it was issued on an
invalid substantive basis the acts imputed on the respondents do not violate Section
168.3 (c) of the IP Code. For this reason, we deny the present petition.

The issuance of a search warrant[10] against a personal property[11] is governed


by Rule 126 of the Revised Rules of Court whose relevant sections state:
Section 4. Requisites for issuing search warrant. A search warrant
shall not issue except upon probable cause in connection with one
specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the
Philippines.

Section 5. Examination of complainant; record. The judge must,


before issuing the warrant, personally examine in the form of searching
questions and answers, in writing and under oath, the complainant
and the witnesses he may produce on facts personally known to them and
attach to the record their sworn statements together with the affidavits
submitted.

Section 6. Issuance and form of search warrant. If the judge is satisfied


of the existence of facts upon which the application is based or that there
is probable cause to believe that they exist, he shall issue the warrant,
which must be substantially in the form prescribed by these Rules.
[Emphasis supplied]

To paraphrase this rule, a search warrant may be issued only if there is


probable cause in connection with a specific offense alleged in an application based
on the personal knowledge of the applicant and his or her witnesses. This is the
substantive requirement in the issuance of a search warrant. Procedurally, the
determination of probable cause is a personal task of the judge before whom the
application for search warrant is filed, as he has to examine under oath or affirmation
the applicant and his or her witnesses in the form of searching questions and answers
in writing and under oath. The warrant, if issued, must particularly describe the place
to be searched and the things to be seized.

We paraphrase these requirements to stress that they have substantive and


procedural aspects. Apparently, the RTC recognized this dual nature of the
requirements and, hence, treated them separately; it approved of the way the MTC
handled the procedural aspects of the issuance of the search warrant but found its
action on the substantive aspect wanting. It therefore resolved to nullify the warrant,
without however expressly declaring that the MTC gravely abused its discretion
when it issued the warrant applied for. The RTCs error, however, is in the form
rather than the substance of the decision as the nullification of the issued warrant for
the reason the RTC gave was equivalent to the declaration that grave abuse of
discretion was committed. In fact, we so rule as the discussions below will show.

Jurisprudence teaches us that probable cause, as a condition for the issuance


of a search warrant, is such reasons supported by facts and circumstances as will
warrant a cautious man in the belief that his action and the means taken in
prosecuting it are legally just and proper. Probable cause requires facts and
circumstances that would lead a reasonably prudent man to believe that an offense
has been committed and the objects sought in connection with that offense are in the
place to be searched.[12] Implicit in this statement is the recognition that an
underlying offense must, in the first place, exist. In other words, the acts alleged,
taken together, must constitute an offense and that these acts are imputable to an
offender in relation with whom a search warrant is applied for.

In the context of the present case, the question is whether the act charged
alleged to be hoarding of empty Coke bottles constitutes an offense under Section
168.3 (c) of the IP Code. Section 168 in its entirety states:

SECTION 168. Unfair Competition, Rights, Regulation and


Remedies.

168.1. A person who has identified in the mind of the public the
goods he manufactures or deals in, his business or services from those of
others, whether or not a registered mark is employed, has a property right
in the goodwill of the said goods, business or services so identified, which
will be protected in the same manner as other property rights.

168.2. Any person who shall employ deception or any other means
contrary to good faith by which he shall pass off the goods manufactured
by him or in which he deals, or his business, or services for those of the
one having established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair competition, and
shall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scope of


protection against unfair competition, the following shall be deemed
guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer, other than the
actual manufacturer or dealer, or who otherwise clothes the goods with
such appearance as shall deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the
public; or

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

168.4. The remedies provided by Sections 156, 157 and 161 shall
apply mutatis mutandis. (Sec. 29, R.A. No. 166a)

The petitioner theorizes that the above section does not limit the scope of
protection on the particular acts enumerated as it expands the meaning of unfair
competition to include other acts contrary to good faith of a nature calculated to
discredit the goods, business or services of another. Allegedly, the respondents
hoarding of Coca Cola empty bottles is one such act.

We do not agree with the petitioners expansive interpretation of Section 168.3 (c).
Unfair competition, previously defined in Philippine jurisprudence in relation
with R.A. No. 166 and Articles 188 and 189 of the Revised Penal Code, is now
covered by Section 168 of the IP Code as this Code has expressly repealed R.A. No.
165 and R.A. No. 166, and Articles 188 and 189 of the Revised Penal Code.

Articles 168.1 and 168.2, as quoted above, provide the concept and general
rule on the definition of unfair competition. The law does not thereby cover every
unfair act committed in the course of business; it covers only acts characterized
by deception or any other means contrary to good faith in the passing off of goods
and services as those of another who has established goodwill in relation with these
goods or services, or any other act calculated to produce the same result.

What unfair competition is, is further particularized under Section 168.3 when
it provides specifics of what unfair competition is without in any way limiting the
scope of protection against unfair competition. Part of these particulars is provided
under Section 168.3(c) which provides the general catch-all phrase that the petitioner
cites. Under this phrase, a person shall be guilty of unfair competition who shall
commit any other act contrary to good faith of a nature calculated to discredit the
goods, business or services of another.

From jurisprudence, unfair competition has been defined as the passing off
(or palming off) or attempting to pass off upon the public the goods or business of
one person as the goods or business of another with the end and probable effect of
deceiving the public. It formulated the true test of unfair competition: whether the
acts of defendant are such as are calculated to deceive the ordinary buyer making his
purchases under the ordinary conditions which prevail in the particular trade to
which the controversy relates.[13] One of the essential requisites in an action to
restrain unfair competition is proof of fraud; the intent to deceive must be shown
before the right to recover can exist.[14] The advent of the IP Code has not
significantly changed these rulings as they are fully in accord with what Section 168
of the Code in its entirety provides. Deception, passing off and fraud upon the
public are still the key elements that must be present for unfair competition to exist.

The act alleged to violate the petitioners rights under Section 168.3 (c) is
hoarding which we gather to be the collection of the petitioners empty bottles so that
they can be withdrawn from circulation and thus impede the circulation of the
petitioners bottled products. This, according to the petitioner, is an act contrary to
good faith a conclusion that, if true, is indeed an unfair act on the part of the
respondents. The critical question, however, is not the intrinsic unfairness of the act
of hoarding; what is critical for purposes of Section 168.3 (c) is to determine if the
hoarding, as charged, is of a nature calculated to discredit the goods, business or
services of the petitioner.

We hold that it is not. Hoarding as defined by the petitioner is not even an act
within the contemplation of the IP Code.

The petitioners cited basis is a provision of the IP Code, a set of rules that
refer to a very specific subject intellectual property. Aside from the IP Codes actual
substantive contents (which relate specifically to patents, licensing, trademarks,
trade names, service marks, copyrights, and the protection and infringement of the
intellectual properties that these protective measures embody), the coverage and
intent of the Code is expressly reflected in its Declaration of State Policy which
states:
Section 2. Declaration of State Policy. The State recognizes that an
effective intellectual and industrial property system is vital to the
development of domestic and creative activity, facilitates transfer of
technology, attracts foreign investments, and ensures market access for
our products. It shall protect and secure the exclusive rights of scientists,
inventors, artists and other gifted citizens to their intellectual property and
creations, particularly when beneficial to the people, for such periods as
provided in this Act.

The use of intellectual property bears a social function. To this end,


the State shall promote the diffusion of knowledge and information for the
promotion of national development and progress and the common good.

It is also the policy of the State to streamline administrative


procedures of registering patents, trademarks and copyright, to liberalize
the registration on the transfer of technology, and to enhance the
enforcement of intellectual property rights in the Philippines. (n)

Intellectual property rights have furthermore been defined under Section 4 of the
Code to consist of: a) Copyright and Related Rights; b) Trademarks and Service
Marks; c)Geographic Indications; d) IndustrialDesigns; e) Patents; f) Layout-
Designs (Topographies) of Integrated Circuits; and g)Protection of Undisclosed
Information.

Given the IP Codes specific focus, a first test that should be made when a
question arises on whether a matter is covered by the Code is to ask if it refers to an
intellectual property as defined in the Code. If it does not, then coverage by the Code
may be negated.

A second test, if a disputed matter does not expressly refer to an intellectual


property right as defined above, is whether it falls under the general unfair
competition concept and definition under Sections 168.1 and 168.2 of the Code. The
question then is whether there is deception or any other similar act in passing off of
goods or services to be those of another who enjoys established goodwill.

Separately from these tests is the application of the principles of statutory


construction giving particular attention, not so much to the focus of the IP Code
generally, but to the terms of Section 168 in particular. Under the principle
of noscitur a sociis, when a particular word or phrase is ambiguous in itself or is
equally susceptible of various meanings, its correct construction may be made clear
and specific by considering the company of words in which it is found or with which
it is associated.[15]

As basis for this interpretative analysis, we note that Section 168.1 speaks of
a person who has earned goodwill with respect to his goods and services and who is
entitled to protection under the Code, with or without a registered mark. Section
168.2, as previously discussed, refers to the general definition of unfair
competition. Section 168.3, on the other hand, refers to the specific instances of
unfair competition, with Section 168.1 referring to the sale of goods given the
appearance of the goods of another; Section 168.2, to the inducement of belief that
his or her goods or services are that of another who has earned goodwill; while the
disputed Section 168.3 being a catch all clause whose coverage the parties now
dispute.

Under all the above approaches, we conclude that the hoarding - as defined
and charged by the petitioner does not fall within the coverage of the IP Code and
of Section 168 in particular. It does not relate to any patent, trademark, trade name
or service mark that the respondents have invaded, intruded into or used without
proper authority from the petitioner. Nor are the respondents alleged to be
fraudulently passing off their products or services as those of the petitioner. The
respondents are not also alleged to be undertaking any representation or
misrepresentation that would confuse or tend to confuse the goods of the petitioner
with those of the respondents, or vice versa. What in fact the petitioner alleges is an
act foreign to the Code, to the concepts it embodies and to the acts it regulates; as
alleged, hoarding inflicts unfairness by seeking to limit the oppositions sales by
depriving it of the bottles it can use for these sales.

In this light, hoarding for purposes of destruction is closer to what another law
- R.A. No. 623 covers, to wit:

SECTION 1. Persons engaged or licensed to engage in the


manufacture, bottling or selling of soda water, mineral or aerated waters,
cider, milk, cream, or other lawful beverages in bottles, boxes, casks, kegs,
or barrels, and other similar containers, with their names or the names of
their principals or products, or other marks of ownership stamped or
marked thereon, may register with the Philippine Patent Office a
description of the names or are used by them, under the same conditions,
rules, and regulations, made applicable by law or regulation to the
issuance of trademarks.

SECTION 2. It shall be unlawful for any person, without the


written consent of the manufacturer, bottler or seller who has successfully
registered the marks of ownership in accordance with the provisions of the
next preceding section, to fill such bottles, boxes, kegs, barrels, or other
similar containers so marked or stamped, for the purpose of sale, or to
sell, dispose of, buy, or traffic in, or wantonly destroy the same, whether
filled or not, or to use the same for drinking vessels or glasses or for any
other purpose than that registered by the manufacturer, bottler or seller.
Any violation of this section shall be punished by a fine or not more than
one hundred pesos or imprisonment of not more than thirty days or both.

As its coverage is defined under Section 1, the Act appears to be a measure


that may overlap or be affected by the provisions of Part II of the IP Code on The
Law on Trademarks, Service Marks and Trade Names. What is certain is that the IP
Code has not expressly repealed this Act. The Act appears, too, to have specific
reference to a special type of registrants the manufacturers, bottlers or sellers of soda
water, mineral or aerated waters, cider, milk, cream, or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar containers who are given
special protection with respect to the containers they use. In this sense, it is in fact a
law of specific coverage and application, compared with the general terms and
application of the IP Code. Thus, under its Section 2, it speaks specifically of
unlawful use of containers and even of the unlawfulness of their wanton destruction
a matter that escapes the IP Codes generalities unless linked with the concepts of
deception and passing off as discussed above.

Unfortunately, the Act is not the law in issue in the present case and one that
the parties did not consider at all in the search warrant application. The petitioner in
fact could not have cited it in its search warrant application since the one specific
offense that the law allows and which the petitioner used was Section 168.3 (c). If it
serves any purpose at all in our discussions, it is to show that the underlying factual
situation of the present case is in fact covered by another law, not by the IP Code
that the petitioner cites. Viewed in this light, the lack of probable cause to support
the disputed search warrant at once becomes apparent.
Where, as in this case, the imputed acts do not violate the cited offense, the
ruling of this Court penned by Mr. Justice Bellosillo is particularly instructive:

In the issuance of search warrants, the Rules of Court requires a


finding of probable cause in connection with one specific offense to be
determined personally by the judge after examination of the complainant
and the witnesses he may produce, and particularly describing the place
to be searched and the things to be seized. Hence, since there is no crime
to speak of, the search warrant does not even begin to fulfill these
stringent requirements and is therefore defective on its face. The
nullity of the warrant renders moot and academic the other issues raised
in petitioners Motion to Quash and Motion for Reconsideration. Since the
assailed search warrant is null and void, all property seized by virtue
thereof should be returned to petitioners in accordance with established
jurisprudence.[16]

Based on the foregoing, we conclude that the RTC correctly ruled that the
petitioners search warrant should properly be quashed for the petitioners failure to
show that the acts imputed to the respondents do not violate the cited offense. There
could not have been any probable cause to support the issuance of a search warrant
because no crime in the first place was effectively charged. This conclusion renders
unnecessary any further discussion on whether the search warrant application
properly alleged that the imputed act of holding Coke empties was in fact a hoarding
in bad faith aimed to prejudice the petitioners operations, or whether the MTC duly
complied with the procedural requirements for the issuance of a search warrant under
Rule 126 of the Rules of Court.
WHEREFORE, we hereby DENY the petition for lack of
merit. Accordingly, we confirm that Search Warrant No. 2001-01, issued by the
Municipal Trial Court, Branch 1, Naga City, is NULL and VOID. Costs against the
petitioner.
SO ORDERED.
UNILEVER PHILIPPINES, INC., Petitioner,
vs.
MICHAEL TAN a.k.a. PAUL D. TAN, Respondent.

DECISION

BRION, J.:

Before us is a petition for review on certiorari1 filed by Unilever Philippines, Inc. (petitioner), assailing
the decision2dated June 18, 2007 and the resolution3 dated August 16, 2007 of the Court of Appeals
(CA) in CA G.R. SP No. 87000. These CA rulings dismissed the petitioner's petition for certiorari and
mandamus for lack of merit.

The Factual Antecedents

The records show that on January 17, 2002, agents of the National Bureau of Investigation (NBI)
applied for the issuance of search warrants for the search of a warehouse located on Camia Street,
Marikina City, and of an office located on the 3rd floor of Probest International Trading Building,
Katipunan Street, Concepcion, Marikina City, allegedly owned by Michael Tan a.k.a. Paul D. Tan
(respondent). The application alleged that the respondent had in his possession counterfeit
shampoo products which were being sold, retailed, distributed, dealt with or intended to be disposed
of, in violation of Section 168, in relation with Section 170, of Republic Act (R.A.) No. 8293,
otherwise known as the Intellectual Property Code of the Philippines.

On the same date, Judge Antonio M. Eugenio, Jr. of the Regional Trial Court of Manila, Branch 1,
granted the application and issued Search Warrant Nos. 02-2606 and 02-2607. Armed with the
search warrants, the NBI searched the premises and, in the course of the search, seized the
following items:

(A) From [the respondent’s] office:

(a) 192 sachets of Creamsilk Hair Conditioner (White);

(b) 156 sachets of Creamsilk Hair Conditioner (Blue);

(c) 158 sachets of Creamsilk Hair Conditioner (Green);

(d) 204 sachets of Creamsilk Hair Conditioner (Black);

(e) 192 sachets of Vaseline Amino Collagen Shampoo;

(f) 192 sachets of Sunsilk Nutrient Shampoo (Pink);

(g) 144 sachets of Sunsilk Nutrient Shampoo (Blue);

(h) 136 sachets of Sunsilk Nutrient Shampoo (Orange);

(i) 144 sachets of Sunsilk Nutrient Shampoo (Green); and

(j) 1 box of assorted commercial documents.


(B) From [the respondent’s] warehouse[:]

(a) 372 boxes each containing six (6) cases of Sunsilk Nutrient Shampoo; and

(b) 481 boxes each containing six (6) cases Creamsilk Hair Conditioner.4

The NBI thereafter filed with the Department of Justice (DOJ) a complaint against the respondent for
violation of R.A. No. 8293, specifically Section 168 (unfair competition), in relation with Section 170,
docketed as I.S. No. 2002-667.

In his counter-affidavit, the respondent claimed that he is "Paul D. Tan," and not "Michael Tan" as
alluded in the complaint; he is engaged in the business of selling leather goods and raw materials for
making leather products, and he conducts his business under the name "Probest International
Trading," registered with the Department of Trade and Industry; he is not engaged in the sale of
counterfeit Unilever shampoo products; the sachets of Unilever shampoos seized from his office in
Probest International Trading Building are genuine shampoo products which they use for personal
consumption; he does not own and does not operate the warehouse located on Camia Street,
Marikina City, where a substantial number of alleged counterfeit Unilever shampoo products were
found; and he did not violate R.A. No. 8293 because there is no prima facie evidence that he
committed the offense charged.

Rulings of the DOJ

On December 18, 2002, State Prosecutor Melvin J. Abad issued a Resolution5 dismissing the
criminal complaint on the ground of insufficiency of evidence. To quote:

After a thorough evaluation of the evidence, we find no sufficient evidence so as to warrant a finding
of probable cause to indict respondent Paul D. Tan (not Michael Tan) for violation of Section 168
(unfair competition) in relation to Section 170 of R.A. No. 8293.

xxxx

WHEREFORE, it is respectfully recommended that the instant complaint for Violation of Section 168
(unfair competition) in relation to Section 170 of R.A. No. 8293 be DISMISSED for insufficiency of
evidence.6

The State Prosecutor found that the petitioner failed to show the respondent’s actual and direct
participation in the offense charged. While the Certificate of Registration of Probest International
Trading shows that a certain "Paul D. Tan" is the registered owner and proprietor of the office, there
is no showing that he is also the registered owner of the warehouse where the alleged counterfeit
Unilever shampoo products were found. There is also no evidence to support the claim that the
respondent was engaged in the sale of counterfeit products other than the self-serving claim of the
petitioner’s representatives. Lastly, the State Prosecutor found that the pieces of evidence adduced
against the respondent, e.g. alleged counterfeit Unilever shampoo products, by themselves, are not
sufficient to support a finding of probable cause that he is engaged in unfair competition.

The motion for reconsideration that followed was denied in a resolution7 dated June 5, 2003.

On September 9, 2003, the petitioner filed a petition for review with the DOJ,8 which the Acting
Secretary of Justice, Merceditas N. Gutierrez, dismissed in her March 16, 2004 resolution. In the
resolution, the Acting Secretary of Justice affirmed the State Prosecutor’s finding of lack of probable
cause.

The petitioner thereafter sought, but failed, to secure a reconsideration.

On October 19, 2004, the petitioner filed with the CA a petition for certiorari under Rule 65 of the
Rules of Court, imputing grave abuse of discretion on the Acting Secretary of Justice, et al., in
deciding the case in the respondent’s favor.

The Rulings of the CA

The CA, in a decision dated June 18, 2007, dismissed the petition on the ground that the petitioner
failed to establish facts and circumstances that would constitute acts of unfair competition under
R.A. No. 8293. The CA took into account the insufficiency of evidence that would link the respondent
to the offense charged. It also ruled that the Acting Secretary of Justice did not gravely abuse her
discretion when she affirmed the State Prosecutor’s resolution dismissing the petitioner’s complaint
for insufficiency of evidence to establish probable cause.

The petitioner sought reconsideration of the aforementioned decision rendered by the CA but its
motion was denied in a resolution dated August 16, 2007.

The present Rule 45 petition questions the CA’s June 18, 2007 decision and August 16, 2007
resolution.

The Petition

The petitioner contends that the CA erred in dismissing its petition for certiorari and in affirming the
DOJ’s rulings. It argues that while it may be possible that the respondent is not the owner of the
warehouse, the overwhelming pieces of evidence nonetheless prove that he is the owner of the
counterfeit shampoo products found therein. The petitioner also maintains that the voluminous
counterfeit shampoo products seized from the respondent are more than sufficient evidence to indict
him for unfair competition.

The Issue

The case presents to us the issue of whether the CA committed a reversible error in upholding the
Acting Secretary of Justice’s decision dismissing the information against the respondent. The
resolution of this issue requires a determination of the existence of probable cause in order to indict
the respondent of unfair competition.

The Court’s Ruling

We find merit in the petition.

Determination of Probable Cause


Lies Within the Competence of the
Public Prosecutor

The determination of probable cause for purposes of filing of information in court is essentially an
executive function that is lodged, at the first instance, with the public prosecutor and, ultimately, to
the Secretary of Justice.9 The prosecutor and the Secretary of Justice have wide latitude of
discretion in the conduct of preliminary investigation;10and their findings with respect to the existence
or non-existence of probable cause are generally not subject to review by the Court.

Consistent with this rule, the settled policy of non-interference in the prosecutor’s exercise of
discretion requires the courts to leave to the prosecutor and to the DOJ the determination of what
constitutes sufficient evidence to establish probable cause.11 Courts can neither override their
determination nor substitute their own judgment for that of the latter. They cannot likewise order the
prosecution of the accused when the prosecutor has not found a prima facie case.12

Nevertheless, this policy of non-interference is not without exception. The Constitution itself allows
(and even directs) court action where executive discretion has been gravely abused.13 In other
words, the court may intervene in the executive determination of probable cause, review the findings
and conclusions, and ultimately resolve the existence or non-existence of probable cause by
examining the records of the preliminary investigation when necessary for the orderly administration
of justice.14

Courts Cannot Reverse the Secretary


of Justice’s Findings Except in Clear
Cases of Grave Abuse of Discretion

The term "grave abuse of discretion" means such capricious or whimsical exercise of judgment
which is equivalent to lack of jurisdiction. To justify judicial intervention, the abuse of discretion must
be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform
a duty enjoined by law or to act at all in contemplation of law, as where the power is exercised in an
arbitrary and despotic manner by reason of passion or hostility.15 In Elma v. Jacobi,16 we said that:

This error or abuse alone, however, does not render his act amenable to correction and annulment
by the extraordinary remedy of certiorari. To justify judicial intrusion into what is fundamentally the
domain of the Executive, the petitioner must clearly show that the prosecutor gravely abused his
discretion amounting to lack or excess of jurisdiction in making his determination and in arriving at
the conclusion he reached. This requires the petitioner to establish that the prosecutor exercised his
power in an arbitrary and despotic manner by reason of passion or personal hostility; and it must be
so patent and gross as to amount to an evasion or to a unilateral refusal to perform the duty enjoined
or to act in contemplation of law, before judicial relief from a discretionary prosecutorial action may
be obtained. [emphasis supplied]

An examination of the decisions of the State Prosecutor and of the DOJ shows that the complaint’s
dismissal was anchored on the insufficiency of evidence to establish the respondent’s direct,
personal or actual participation in the offense charged. As the State Prosecutor found (and affirmed
by the DOJ), the petitioner failed to prove the ownership of the warehouse where counterfeit
shampoo products were found. This finding led to the conclusion that there was insufficient basis for
an indictment for unfair competition as the petitioner failed to sufficiently prove that the respondent
was the owner or manufacturer of the counterfeit shampoo products found in the warehouse.

A careful analysis of the lower courts’ rulings and the records, however, reveals that substantial facts
and circumstances that could affect the result of the case have been overlooked. While the
ownership of the warehouse on Camia Street, Marikina City, was not proven, sufficient evidence to
prove the existence of probable cause nevertheless exists. These pieces of evidence consist of: (1)
the result of the NBI agents’ search of the office and of the warehouse; (2) Elmer Cadano’s
complaint-affidavit; (3) Rene Baltazar’s affidavit; (4) Unilever’s representatives’ claim that all the
laborers present at the warehouse confirmed that it was operated by Probest International Trading;
(5) other object evidence found and seized at the respondent’s office and warehouse; (6) the NBI
operatives’ Joint Affidavit; (7) the subsequent seizure of counterfeit Unilever products from the
respondent’s warehouse in Antipolo City; and (8) other photographs and documents relative to the
counterfeit products.

These pieces of evidence, to our mind, are sufficient to form a reasonable ground to believe that the
crime of unfair competition was committed and that the respondent was its author.

First, a total of 1,238 assorted counterfeit Unilever products were found at, and seized from, the
respondent’s office located on the 3rd floor of Probest International Trading Building, Katipunan
Street, Concepcion, Marikina City. The huge volume and the location where these shampoos were
found (inside a box under a pile of other boxes located inside the respondent’s office) belie the
respondent’s claim of personal consumption. Human experience and common sense dictate that
shampoo products (intended for personal consumption) will ordinarily and logically be found inside
the house, specifically, inside the bathroom or in a private room, not in the consumer’s office.

Second, the failure to prove that the respondent is the owner of the warehouse located on Camia
St., Marikina City, does not automatically free him from liability. Proof of the warehouse’s ownership
is not crucial to the finding of probable cause. In fact, ownership of the establishment where the
counterfeit products were found is not even an element of unfair competition. While the respondent
may not be its owner, this does not foreclose the possibility that he was the manufacturer or
distributor of the counterfeit shampoo products. Needless to say, what is material to a finding of
probable cause is the commission of acts constituting unfair competition, the presence of all its
elements and the reasonable belief, based on evidence, that the respondent had committed it.

Third, the result of the NBI’s search conducted on January 17, 2002 (yielding to several boxes of
counterfeit shampoo sachets) and the NBI’s Joint Affidavits in support of the application for search
warrants serve as corroborating evidence. The striking similarities17 between the genuine Unilever
shampoo sachets and the counterfeit sachets seized by the NBI support the belief that the
respondent had been engaged in dealing, manufacturing, selling and distributing counterfeit Unilever
shampoo products.

Fourth, there were also allegations that the respondent’s laborers and warehousemen who were
present during the search had confirmed that the warehouse was being maintained and operated by
Probest International Trading. The NBI investigators who served the search warrant also claimed
that several persons, introducing themselves as the respondent’s relatives and friends, had
requested them to seize only a portion of the counterfeit shampoo products. Whether these claims
are admissible in evidence or whether they should be excluded as hearsay are matters that should
be determined not in a preliminary investigation, but in a full-blown trial.

In Lee v. KBC Bank N.V.,18 citing Andres v. Justice Secretary Cuevas,19 we held that:

[A preliminary investigation] is not the occasion for the full and exhaustive display of [the
prosecution’s] evidence. The presence or absence of the elements of the crime is evidentiary in
1âwphi 1

nature and is a matter of defense that may be passed upon after a full-blown trial on the merits.

We also emphasized in that case that:

In fine, the validity and merits of a party’s defense or accusation, as well as the admissibility of
testimonies and evidence, are better ventilated during trial proper than at the preliminary
investigation level.20
Finally, the subsequent events that occurred – after the filing of the petitioner’s complaint and the
institution of its appeal to the CA – are too significant to be ignored.

In its motion to reconsider the CA’s decision,21 the petitioner pointed to the reports it received
sometime in October 2005 that the respondent had resumed its operations involving counterfeit
Unilever products. Notably, these significant reports, albeit supported by the subsequent seizure of
large quantity of counterfeit Unilever shampoos22in the respondent’s warehouse23 (located at No. 13
First Street Corner Sevilla Avenue, Virginia Summerville Subdivision, Barangay Mambugan, Antipolo
City), were ignored by the CA. We, however, find that this development is significant, although they
were not part of the mass of evidence considered below. Even without them and based solely on the
evidentiary materials available below, we conclude that sufficient grounds exist to indict the
respondent for unfair competition.

Determination of Probable Cause

Merely Requires Probability of Guilt


or Reasonable Ground for Belief

The determination of probable cause needs only to rest on evidence showing that more likely than
not, a crime has been committed and there is enough reason to believe that it was committed by the
accused.24 It need not be based on clear and convincing evidence of guilt, neither on evidence
establishing absolute certainty of guilt.25 What is merely required is "probability of guilt." Its
determination, too, does not call for the application of rules or standards of proof that a judgment of
conviction requires after trial on the merits.26 Thus, in concluding that there is probable cause, it
suffices that it is believed that the act or omission complained of constitutes the very offense
charged.

It is also important to stress that the determination of probable cause does not depend on the validity
or merits of a party’s accusation or defense or on the admissibility or veracity of testimonies
presented. As previously discussed, these matters are better ventilated during the trial proper of the
case.27 As held in Metropolitan Bank & Trust Company v. Gonzales:28

Probable cause has been defined as the existence of such facts and circumstances as would excite
the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the
person charged was guilty of the crime for which he was prosecuted. xxx The term does not mean
"actual or positive cause" nor does it import absolute certainty. It is merely based on opinion and
reasonable belief. Thus, a finding of probable cause does not require an inquiry into whether there is
sufficient evidence to procure a conviction. It is enough that it is believed that the act or omission
complained of constitutes the offense charged. Precisely, there is a trial for the reception of evidence
of the prosecution in support of the charge.

Guided by this ruling, we find that the CA gravely erred in sustaining the Acting Secretary of
Justice’s finding that there was no probable cause to indict the respondent for unfair competition.
The dismissal of the complaint, despite ample evidence to support a finding of probable cause,
clearly constitutes grave error that warrants judicial intervention and correction.

WHEREFORE, in view of the foregoing, judgment is hereby rendered GRANTING the petition filed
by Unilever Philippines, Inc. The appealed decision dated June 18, 2007 and the resolution dated
August 16, 2007 of the Court of Appeals are ANNULLED AND SET ASIDE.

The State Prosecutor is hereby ORDERED to file the appropriate Information against Michael Tan
a.k.a. Paul D. Tan.
SO ORDERED.
CATERPILLAR, INC., Petitioner,
vs.
MANOLO P. SAMSON, Respondent.

DECISION

BERSAMIN, J.:

The determination of probable cause to charge a person in court for a criminal offense is exclusively
lodged in the Executive Branch of the Government, through the Department of Justice. Initially, the
determination is done by the investigating public prosecutor, and on review by the Secretary of
Justice or his duly authorized subordinate. The courts will respect the determination, unless the
same shall be shown to have been made in grave abuse of discretion amounting to lack or excess of
jurisdiction.

The Cases

Before us are the consolidated cases of G.R. No. 2059721 and G.R. No. 164352.2

G.R. No. 164352 involves the appeal by petition for review on certiorari of Caterpillar, Inc.
(Caterpillar) to reverse the decision promulgated on January 21, 20043 by the Court of Appeals (CA)
in CA-G.R. SP No. 75526, and the resolution promulgated on June 30, 2004 denying the motion for
reconsideration thereof.4

G.R. No. 205972 relates to the appeal brought by Caterpillar to assail the decision and resolution
promulgated in CA-G.R. SP No. 102316 respectively on May 8, 20125 and February 12,
2013,6 whereby the CA affirmed the resolutions of the Department of Justice (DOJ) finding that there
was no probable cause to indict Manolo P. Samson (Samson) for unfair competition.

Antecedents

Caterpillar is a foreign corporation engaged in the manufacture and distribution of footwear, clothing
and related items, among others. Its products are known for six core trademarks, namely,
"CATERPILLAR", "CAT" "CATERPILLAR & DESIGN" "CAT AND DESIGN", "WALKING
MACHINES" and "TRACK-TYPE TRACTOR & DESIGN (Core Marks),7 all of which are alleged as
internationally known. On the other hand, Samson, doing business under the names and styles of Itti
Shoes Corporation, Kolm's Manufacturing Corporation and Caterpillar Boutique and General
Merchandise, is the proprietor of various retail outlets in the Philippines selling footwear, bags,
clothing, and related items under the trademark "CATERPILLAR", registered in 1997 under
Trademark Registration No. 64705 issued by the Intellectual Property Office (IPO).8

G.R. No. 164352

On July 26, 2000, upon application of the National Bureau of Investigation (NBI), the Regional Trial
Court (RTC), Branch 56, in Makati City issued Search Warrants Nos. 00-022 to 00-032, inclusive, all
for unfair competition,9 to search the establishments owned, controlled and operated by Samson.
The implementation of the search warrants on July 27, 2000 led to the seizure of various products
bearing Caterpillar's Core Marks.

Caterpillar filed against Samson several criminal complaints for unfair competition in the Department
of Justice (DOJ), docketed as LS. Nos. 2000-13 54 to 2000-13 64, inclusive.
Additionally, on July 31, 2000, Caterpillar commenced a civil action against Samson and his
business entities, with the IPO as a nominal party10 - for Unfair Competition, Damages and
Cancellation of Trademark with Application for Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction - docketed as Civil Case No. Q-00-41446 of the RTC in Quezon City. In said
civil action, the RTC denied Caterpillar's application for the issuance of the TRO on August 17, 2000.

The DOJ, through Senior State Prosecutor Jude R. Romano, issued a joint resolution dated
November 15, 200111recommending that Samson be criminally charged with unfair competition under
Section 168.3 (a),12 in relation to Section 123.l(e),13 Section 131.114 and Section 170,15 all of Republic
Act No. 8293, or the Intellectual Property Code of the Philippines (IP Code).

However, because Samson and his affiliate companies allegedly continued to sell and distribute
products clothed with the general appearance of its own products, Caterpillar again applied for
another set of search warrants against Samson and his businesses. The RTC, Branch 172, in
Valenzuela City issued Search Warrants Nos. 12-V-00,16 13-V-00,17 20-V-0018 and 29-V-0019 upon
application of the NBI, by virtue of the implementation of which several goods were seized and
confiscated by the NBI agents.

As a consequence, Caterpillar filed 26 criminal complaints for unfair competition on January 31,
2001, docketed as LS. Nos. 2001-42 to 2001-67, against Samson and/or the occupants of his
affiliate entities before the DOJ.20 In due course, the DOJ, through State Prosecutor Zenaida M. Lim,
issued a joint resolution dated September 28, 200121recommending the filing of criminal complaints
for unfair competition under Section 168.3(a), in relation to Section 123 .1, Section 131.1 and
Section 170 of the IP Code. Accordingly, six criminal complaints were filed in the RTC, Branch 256,
in Muntinlupa City, presided by Judge Alberto L. Lerma, docketed as Criminal Cases Nos. 02-238 to
02-243.

On January 17 and 22, 2002, Samson filed a petitions for review with the Office of the Secretary of
Justice to appeal the joint resolutions in LS. Nos. 2000-1354 to 2000-136422 and LS. Nos. 2001-042
to 2001-067.23

On May 30, 2002, Samson filed a Motion to Suspend Arraignment in Criminal Cases Nos. 02-238 to
243,24 citing the following as grounds:25

I.

THERE EXISTS PREJUDICIAL QUESTIONS PENDING LITIGATION BEFORE THE REGIONAL


TRIAL COURT OF QUEZON CITY, BRANCH 90, IN CIVIL CASE NO. Q-00-41446 ENTITLED:
"CATERPILLAR, INC., ET AL. VS. ITTI SHOES CORPORATION, ET AL.," THE FINAL
RESOLUTIONS OF WHICH WILL DETERMINE THE OUTCOME OF THE INSTANT CRIMINAL
CASES.

II.

ACCUSED HAS FILED PETITIONS FOR REVIEW WITH THE DEPARTMENT OF JUSTICE
ASSAILING THE RESOLUTIONS OF THE CHIEF STATE PROSECUTOR WHO CAUSED THE
FILING OF THE INSTANT CASES AND ARE STILL PENDING THEREIN UP TO THE PRESENT.

In the meanwhile, on July 10, 2002, the DOJ, through Secretary Hernando B. Perez, issued a
resolution26 denying Samson's petition for review in I.S. Nos. 2000-1354 to 2000-1364. Samson's
motion for reconsideration was likewise denied on May 26, 2003.
On September 23, 2002, Presiding Judge Lerma of the RTC granted Samson's Motion to Suspend
Arraignment, and suspended the arraignment and all other proceedings in Criminal Cases Nos. 02-
240 to 02-243 until Civil Case No. Q-00-41446 was finally resolved,27 holding:

After a careful scrutiny of the case, this Court finds that private complainant, in Civil Case No. Q-00-
41446, seeks for the cancellation of the trademark "CATERPILLAR" which is registered in the name
of the accused and to prevent the latter from using the said trademark ("CATERPILLAR"), while the
issue in the instant case is the alleged unlawful use by the accused of the trademark
"CATERPILLAR" which is claimed to be owned by the private complainant. From the foregoing, this
Court believes that there exists a prejudicial question since the determination of who is really the
lawful or registered user of the trademark "CATERPILLAR" will ultimately determine whether or not
the instant criminal action shall proceed. Clearly, the issues raised in Civil Case No. Q-00-41446 is
similar or intimately related to the issue in the case at bar for if the civil case will be resolved
sustaining the trademark registration of the accused for the trademark CATERPILLAR, then the
latter would have all the authority to continue the use of the said trademark as a consequence of a
valid registration, and by reason of which there may be no more basis to proceed with the instant
criminal action.28

After the RTC denied its motion for reconsideration29 on December 5, 2002,30 Caterpillar elevated the
matter to the CA by petition for certiorari on February 14, 2003,31 docketed as C.A.-G.R. SP No.
75526 entitled Caterpillar, Inc. v. Hon. Alberto L. Lerma, in his capacity as Presiding Judge of
Branch 256 of the Regional Trial Court, Muntinlupa City, and Manolo P. Samson, alleging grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in suspending
the arraignment and other proceedings in Criminal Cases Nos. 02-238 to 02-243 on the ground of
the existence of an alleged prejudicial question in Civil Case No. Q-00-41446 then pending in the
RTC in Quezon City whose resolution would determine the outcome of the criminal cases.

Meanwhile, on January 13, 2003, Acting Justice Secretary Ma. Merceditas N. Gutierrez reversed
and set aside the resolution issued by State Prosecutor Lim in I.S. No. 2001-042 to 2001-067, and
directed the Chief State Prosecutor to cause the withdrawal of the criminal informations filed against
Samson in court,32 disposing as follows:

ACCORDINGLY, the assailed joint resolution is hereby REVERSED and SET ASIDE. The Chief
State Prosecutor is directed to forthwith cause the withdrawal of the informations filed in court
against respondent Manolo P. Samson and to report action taken hereon within ten (10) days from
receipts hereof.33

Acting Justice Secretary Gutierrez based her resolution on the order dated June 26, 2001, whereby
the RTC of Valenzuela City, Branch 172, had quashed the 26 search warrants upon motion of
Samson.34 Consequently, the goods seized and confiscated by virtue of the quashed search warrants
could no longer be admitted in evidence

Correspondingly, Presiding Judge Lerma of the RTC ordered the withdrawal of Criminal Cases Nos.
02-240 to 02-243 on February 4, 2003.35

Aggrieved, Caterpillar assailed the order of Judge Lerma for the withdrawal of Criminal Cases Nos.
02-240 to 02-2432003 by petition for certiorari in the CA on October 16, 2003, docketed as CA-G.R.
SP No. 79937,36 and the CA ultimately granted the petition for certiorari,37 setting aside the assailed
January 13, 2003 resolution of the Acting Justice Secretary and directing the re-filing of the
withdrawn informations against Samson. The Court ultimately affirmed the CA's dec ision through
the resolution promulgated on October 17, 2005 in G.R. No. 169199, and ruling that probable cause
existed for the re-filing of the criminal charges for unfair competition under the IP Code.38
In the assailed January 21, 2004 decision,39 the CA dismissed Caterpillar's petition for certiorari in
CA-G.R. SP No. 75526, viz.:

Petition has no merit.

The mere fact that public respondent denied petitioner's motion for reconsideration does not justify
this petition on the ground of abuse of discretion. Grave abuse of discretion means such capricious
and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where
the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility
and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law. (Benito vs. Comelec, 349 SCRA
705).

Petitioner in this case failed to overcome the burden of showing how public respondent acted with
grave abuse of discretion in granting private respondent's motion and denying his own motion for
reconsideration. What is clear is that public respondent court acted judiciously. A petition
for certiorariunder Rule 65 of the Rules of Court will prosper only if there is showing of grave abuse
of discretion or an act without or in excess of jurisdiction on the part of respondent tribunal (Garcia
vs. HRET, 312 SCRA 353).

Granting arguendo that public respondent court erred in its ruling, still a petition for certiorari under
Rule 65 cannot be justified. Where the court has jurisdiction over the subject matter, the orders or
decision upon all questions pertaining to the cause are orders or decisions within its jurisdiction and
however erroneous they may be, they cannot be corrected by certiorari (De Baron vs. Court of
Appeals, 368 SCRA 407).

WHEREFORE, foregoing premises considered, the Petition having no merit in fact and in law is
hereby DENIED DUE COURSE and ordered DISMISSED. With costs to Petitioners.

SO ORDERED.40

Caterpillar sought the reconsideration of the dismissal, but the CA denied the motion on June 30,
2004.41

Hence, Caterpillar appealed the CA's decision in C.A.-G.R. SP No. 75526 (G.R. No. 164352).

G .R. No. 205972

In the meanwhile, in August 2002, upon receiving the information that Samson and his affiliate
entities continuously sold and distributed products bearing Caterpillar's Core Marks without
Caterpillar's consent, the latter requested the assistance of the Regional Intelligence and
Investigation Division of the National Region Public Police (RIID-NCRPO) for the conduct of an
investigation. Subsequently, after the investigation, the RIID-NCRPO applied for and was granted 16
search warrants against various outlets owned or operated by Samson in Mandaluyong, Quezon
City, Manila, Caloocan, Makati, Parañaque, Las Piñas, Pampanga and Cavite. The warrants were
served on August 27, 2002,42 and as the result products bearing Caterpillar's Core Marks were
seized and confiscated. Consequently, on the basis of the search warrants issued by the various
courts, Caterpillar again instituted criminal complaints in the DOJ for violation of Section 168.3(a), in
relation to Sections 131.3, 123.l(e) and 170 of the IP Code against Samson, docketed as LS. Nos.
2002-995 to 2002-997; 2002-999 to 2002-1010; and 2002-1036.
After the conduct of the preliminary investigation, the DOJ, through State Prosecutor Melvin J.Abad,
issued a joint resolution dated August 21, 2003 dismissing the complaint upon finding that there was
no probable cause to charge Samson with unfair competition.43

Caterpillar moved for the reconsideration of the dismissal, but State Prosecutor Abad denied the
motion on June 18, 2004.44

The Secretary of Justice affirmed the dismissal of the complaint through the resolution issued on
September 19, 2005,45 and denied Caterpillar's motion for reconsideration on December 20, 2007.

Accordingly, Caterpillar appealed to the CA through a petition for review under Rule 43, Rules of
Court (C.A.-G.R. SP No. 102316).46

On May 8, 2012,47 however, the CA denied due course to Caterpillar's petition for review, viz.:

WHEREFORE, premises considered, the petition is DENIED DUE COURSE, and


accordingly, DISMISSED.

SO ORDERED.48

The CA opined that an appeal under Rule 43 to assail the resolution by the Secretary of Justice
determining the existence or non-existence of probable cause was an improper remedy; and that
while it could treat an appeal as a special civil action for certiorari under Rule 65, it could not do so
therein because the allegations of the petition did not sufficiently show grave abuse of discretion on
the part of the Secretary of Justice in issuing the assailed resolutions.

Caterpillar filed a motion for reconsideration, but the CA denied the motion for its lack of merit on
February 12, 2013.49

Hence, Caterpillar commenced G.R. No. 205972.

Issues

Caterpillar submits that the CA erred as follows:

G.R. No. 164352

A.

THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN DENYING DUE


COURSE TO CATERPILLAR INC.'S PETITION FOR CERTIORARI.

B.

THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN NOT HOLDING


THAT THE ORDER SUSPENDING PROCEEDINGS IN CRIMINAL CASES NOS. 02-238 TO 02-
243, ON THE BASIS OF AN ALLEGED PREJUDICIAL QUESTION, WAS CONTRARY TO LAW
AND ESTABLISHED JURISPRUDENCE.

C.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN NOT
HOLDING THAT A CRIMINAL COMPLAINT FOR UNFAIR COMPETITION CAN PROCEED
INDEPENDENTLY OF, AND SIMULTANEOUS WITH, THE CIVIL CASE FOR THE SAME.50

Caterpillar posits that the suspension of proceedings in Criminal Cases Nos. 02-238 to 02-243 was
contrary to Rule 111 of the Rules of Court, Article 33 of the Civil Code on independent civil actions,
and Section 170 of the IP Code, which specifically provides that the criminal penalties for unfair
competition were independent of the civil and administrative sanctions imposed by law; that the
determination of the lawful owner of the "CATERPILLAR" trademark in Civil Case No. Q-00-41446
would not be decisive of the guilt of Samson for unfair competition in Criminal Cases Nos. 02-238 to
02-243 because registration was not an element of the crime of unfair competition; that the civil case
sought to enforce Samson's civil liability arising from the IP Code while the criminal cases would
enforce Samson's liability arising from the crime of unfair competition; and that the Court already
ruled in Samson v. Daway51 that Civil Case No. Q-00-41446 was an independent civil action under
Article 33 of the Civil Code and, as such, could proceed independently of the criminal actions.

In his comment,52 Samson counters that the issues of the lawful and registered owner of the
trademark, the true owner of the goodwill, and whether "CATERPILLAR" was an internationally well-
known mark are intimately related to the issue of guilt in the criminal actions, the resolution of which
should determine whether or not the criminal actions for unfair competition could proceed.

G.R. No. 205972

In this appeal, the petitioner interposes that:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONER'S PETITION


FOR REVIEW SOLELY ON THE GROUND OF AN ALLEGED WRONG REMEDY, DESPITE
PETITIONERS HAVING CLEARLY ESTABLISHED THAT THE SECRETARY OF JUSTICE ACTED
WITH GRAVE ABUSE OF DISCRETION IN ISSUING THE RESOLUTIONS DATED 19
SEPTEMBER 2005 AND 20 DECEMBER 2007, AFFIRMING THE FINDINGS OF THE
INVESTIGATING PROSECUTOR THAT NO PROBABLE CAUSE EXISTS TO CHARGE THE
RESPONDENT OF THE CRIME OF UNFAIR COMPETITION.53

Caterpillar seeks the liberal interpretation of procedural rules in order to serve the higher interest of
substantial justice following the denial by the CA of its petition for being an incorrect remedy; and
insists that it presented substantial evidence to warrant a finding of probable cause for unfair
competition against Samson.

In sum, the issues to be resolved in these consolidated cases are: firstly, whether or not the CA
committed a reversible error in ruling that the trial court a quo did not commit grave abuse of
discretion in suspending the criminal proceedings on account of a prejudicial question;
and, secondly, whether or not the CA committed reversible error in upholding the decision of the
Secretary of Justice finding that there was no probable cause to charge Samson with unfair
competition.

Rulings of the Court

G.R. No. 164352

The appeal in G.R. No. 164352 is meritorious.


We note, to begin with, that Civil Case No. Q-00-41446, the civil case filed by Caterpillar in the RTC
in Quezon City, was for unfair competition, damages and cancellation of trademark, while Criminal
Cases Nos. Q-02-108043-44 were the criminal prosecution of Samson for unfair competition. A
common element of all such cases for unfair competition - civil and criminal - was fraud. Under
Article 33 of the Civil Code, a civil action entirely separate and distinct from the criminal action may
be brought by the injured party in cases of fraud, and such civil action shall proceed independently of
the criminal prosecution. In view of its being an independent civil action, Civil Case No. Q-00-41446
did not operate as a prejudicial question that justified the suspension of the proceedings in Criminal
Cases Nos. Q-02-108043-44.

In fact, this issue has already been raised in relation to the suspension of the arraignment of
Samson in Criminal Cases Nos. Q-02-108043-44 in Samson v. Daway,54 and the Court resolved it
against Samson and in favor of Caterpillar thusly:

Anent the second issue, petitioner failed to substantiate his claim that there was a prejudicial
question. In his petition, he prayed for the reversal of the March 26, 2003 order which sustained the
denial of his motion to suspend arraignment and other proceedings in Criminal Case Nos. Q-02-
108043-44. For unknown reasons, however, he made no discussion in support of said prayer in his
petition and reply to comment. Neither did he attach a copy of the complaint in Civil Case No. Q-00-
41446 nor quote the pertinent portion thereof to prove the existence of a prejudicial question.

At any rate, there is no prejudicial question if the civil and the criminal action can, according to law,
proceed independently of each other. Under Rule 111, Section 3 of the Revised Rules on Criminal
Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent
civil action may be brought by the offended party. It shall proceed independently of the criminal
action and shall require only a preponderance of evidence.

In the case at bar, the common element in the acts constituting unfair competition under Section 168
of R.A. No. 8293 is fraud. Pursuant to Article 33 of the Civil Code, in cases of defamation, fraud, and
physical injuries, a civil action for damages, entirely separate and distinct from the criminal action,
may be brought by the injured party. Hence, Civil Case No. Q-00-41446, which as admitted by
private respondent also relate to unfair competition, is an independent civil action under
Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will
justify the suspension of the criminal cases at bar.55 (Bold emphasis supplied)

Secondly, a civil action for damages and cancellation of trademark cannot be considered a
prejudicial question by which to suspend the proceedings in the criminal cases for unfair competition.
A prejudicial question is that which arises in a civil case the resolution of which is a logical
antecedent of the issues to be determined in the criminal case. It must appear not only that the civil
case involves facts upon which the criminal action is based, but also that the resolution of the issues
raised in the civil action will necessarily be determinative of the criminal case.56 As stated in Librodo
v. Judge Coscolluela, Jr.:57

A prejudicial question is one based on a fact distinct and separate from the crime but so intimately
connected with it that it determines the guilt or innocence of the accused, and for it to suspend the
criminal action, it must appear not only that said case involves facts intimately related to those upon
which the criminal prosecution would be based but also that in the resolution of the issue or issues
raised in the civil case, the guilt or innocence of the accused would necessarily be determined. It
comes into play generally in a situation where a civil action and a criminal action are both
pending and there exists in the former an issue which must be preemptively resolved before
the criminal action may proceed, because howsoever the issue raised in the civil action is
resolved would be determinative juris et de jure of the guilt or innocence of the accused in
the criminal case.58 (Bold underscoring supplied for emphasis)

The elements of a prejudicial question are provided in Section 7 of Rule 111, Rules of Court, to wit:
(a) a previously instituted civil action involves an issue similar to or intimately related to the issue
raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or
not the criminal action may proceed.59

An examination of the nature of the two kinds of cases involved is necessary to determine whether a
prejudicial question existed.

An action for the cancellation of trademark like Civil Case No. Q-00-41446 is a remedy available to a
person who believes that he is or will be damaged by the registration of a mark.60 On the other hand,
the criminal actions for unfair competition (Criminal Cases Nos. Q-02-108043-44) involved the
determination of whether or not Samson had given his goods the general appearance of the goods
of Caterpillar, with the intent to deceive the public or defraud Caterpillar as his competitor.61 In the
suit for the cancellation of trademark, the issue of lawful registration should necessarily be
determined, but registration was not a consideration necessary in unfair competition.62 Indeed, unfair
competition is committed if the effect of the act is "to pass off to the public the goods of one man as
the goods of another;"63 it is independent of registration. As fittingly put in R.F. & Alexander & Co. v.
Ang,64 "one may be declared unfair competitor even if his competing trade-mark is registered."

Clearly, the determination of the lawful ownership of the trademark in the civil action was not
determinative of whether or not the criminal actions for unfair competition shall proceed against
Samson.

G.R. No. 205972

The petition for review on certiorari in G.R. No. 205972 is denied for being bereft of merit. 1âw phi 1

Firstly, Caterpillar assailed the resolution of the Secretary of Justice by filing a petition for review
under Rule 43 of the Rules of Court. Such resort to the petition for review under Rule 43 was
erroneous,65 and the egregious error warranted the denial of the appeal. The petition for review under
Rule 43 applied to all appeals to the CA from quasi-judicial agencies or bodies, particularly those
listed in Section 1 of Rule 43. However, the Secretary of Justice, in the review of the findings of
probable cause by the investigating public prosecutor, was not exercising a quasi-judicial function,
but performing an executive function.66

Moreover, the courts could intervene in the determination of probable cause only through the special
civil action for certiorari under Rule 65 of the Rules of Court, not by appeal through the petition for
review under Rule 43. Thus, the CA could not reverse or undo the findings and conclusions on
probable cause by the Secretary of Justice except upon clear demonstration of grave abuse of
discretion amounting to lack or excess of jurisdiction committed by the Secretary of
Justice.67 Caterpillar did not so demonstrate.

And, secondly, even discounting the technicalities as to consider Caterpillar's petition for review as
one brought under Rule 65, the recourse must still fail.

Probable cause for the purpose of filing an information in court consists in such facts and
circumstances as would engender a well-founded belief that a crime has been committed and the
accused may probably be guilty thereof.68The determination of probable cause lies solely within the
sound discretion of the investigating public prosecutor after the conduct of a preliminary
investigation. It is a sound judicial policy to refrain from interfering with the determination of what
constitutes sufficient and convincing evidence to establish probable cause for the prosecution of the
accused.69 Thus, it is imperative that by the nature of his office, the public prosecutor cannot be
compelled to file a criminal information in court if he is not convinced of the sufficiency of the
evidence adduced for a finding of probable cause.70 Neither can he be precluded from filing an
information if he is convinced of the merits of the case.

In not finding probable cause to indict Samson for unfair competition, State Prosecutor Abad as the
investigating public prosecutor discharged the discretion given to him by the law. Specifically, he
resolved as follows:

It appears from the records that respondent started marketing his (class 25) products bearing the
trademark Caterpillar as early as 1992. In 1994, respondent caused the registration of the trademark
"Caterpillar With A Triangle Device Beneath The Letter [A]" with the Intellectual Property Office.
Sometime on June 16, 1997, the IPO issued Certificate of Registration No. 64705 which appears to
be valid for twenty (20) years, or up to June 16, 2017. Upon the strength of this registration,
respondent continued with his business of marketing shoes, slippers, sandals, boots and similar
Class 25 items bearing his registered trademark "Caterpillar". Under the law, respondent's operative
act of registering his Caterpillar trademark and the concomitant approval/issuance by the
governmental entity concerned, conferred upon him the exclusive right to use said trademark unless
otherwise declared illegal. There being no evidence to controvert the fact that respondent's
Certificate of Registration No. 64705 covering Caterpillar trademark was fraudulently or illegally
obtained, it necessarily follows that its subsequent use and/or being passed on to the public militates
malice or fraudulent intent on the part of respondent. Otherwise stated and from the facts obtaining,
presumption of regularity lies, both from the standpoint of registration and use/passing on of the
assailed Caterpillar products.

Complainant's argument that respondent may still be held liable for unfair competition by reason of
his having passed on five (5) other Caterpillar products like "Cat", "Caterpillar", "Cat and Design",
"Walking Machines" and "Track-Type Tractor Design" is equally difficult to sustain. As may be
gleaned from the records, respondent has been engaged in the sale and distribution of Caterpillar
products since 1992 leading to the establishment of numerous marketing outlets. As such, it would
be difficult to assail the presumption that respondent has already established goodwill insofar as his
registered Caterpillar products are concerned. On the other hand, complainant's registration of the
other Caterpillar products appears to have been caused only in 1995. In this premise, respondent
may be considered as prior user, while the latter, a subsequent one. Jurisprudence dictates that
prior user of the trademark by one, will controvert the claim by a subsequent one.71

We reiterate that the full discretionary authority to determine the existence of probable cause is
lodged in the Executive Branch of the Government, through the public prosecutor, in the first
instance, and the Secretary of Justice, on review. Such authority is exclusive, and the courts are
prohibited from encroaching on the executive function, unless there is a clear showing of grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the public prosecutor or
the Secretary of Justice. As declared in Callo-Claridad v. Esteban:72

A public prosecutor alone determines the sufficiency of evidence that establishes the probable cause
justifying the filing of a criminal information against the respondent because the determination of
existence of a probable cause is the function of the public prosecutor. Generally, the public
prosecutor is afforded a wide latitude of discretion in the conduct of a preliminary investigation.
Consequently, it is a sound judicial policy to refrain from interfering in the conduct of preliminary
investigations, and to just leave to the Department of Justice the ample latitude of discretion in the
determination of what constitutes sufficient evidence to establish probable cause for the prosecution
of supposed offenders. Consistent with this policy, courts do not reverse the Secretary of Justice's
findings and conclusions on the matter of probable cause except in clear cases of grave abuse of
discretion. By way of exception, however, judicial review is permitted where the respondent in the
preliminary investigation clearly establishes that the public prosecutor committed grave abuse of
discretion, that is, when the public prosecutor has exercised his discretion in an arbitrary, capricious,
whimsical or despotic manner by reason of passion or personal hostility, patent and gross enough as
to amount to an evasion of a positive duty or virtual refusal to perform a duty enjoined by law.
Moreover, the trial court may ultimately resolve the existence or nonexistence of probable cause by
examining the records of the preliminary investigation when necessary for the orderly administration
of justice. Although policy considerations call for the widest latitude of deference to the public
prosecutor's findings, the courts should never shirk from exercising their power, when the
circumstances warrant, to determine whether the public prosecutor's findings are supported by the
facts, and by the law.

Relevantly, grave abuse of discretion means such capricious or whimsical exercise of judgment that
is equivalent to lack of jurisdiction. The abuse of discretion must be grave, as when the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must
be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform
the duty enjoined, or to act at all, in contemplation of law, as to be equivalent to having acted without
jurisdiction.73 Herein, Caterpillar did not show the grave abuse of discretion on the part of the
Secretary of Justice.

WHEREFORE, the Court GRANTS the petition for review in G.R. No. 164352; SETS ASIDE the
decision promulgated on January 21, 2004 in CA-G.R. SP No. 75526; DIRECTS the Regional Trial
Court in Muntinlupa City to reinstate Criminal Cases Nos. Q-02-108043-44 and forthwith try and
decide them without undue delay; DENIES the petition for review on certiorari in G.R. No. 205972;
and ORDERS respondent Manolo P. Samson to pay the costs of suit.

SO ORDERED.
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-ONG, Petitioners,
vs.
VICENTE LO, Respondent.

RESOLUTION

BRION, J.:

We resolve the motion for reconsideration1 dated October 22, 2012 filed by petitioners Chester Uyco,
Winston Uychiyong and Cherry C. Uyco-Ong to set aside the Resolution2 dated September 12, 2012
of this Court, which affirmed the decision3 dated March 9, 2012 and the resolution4 dated June 21,
2012 of the Court of Appeals (CA) in CA-G.R. SP No. 111964. The CA affirmed the resolution5 dated
September 1, 2008 of the Department of Justice (DOJ). Both the CA and the DOJ found probable
cause to charge the petitioners with false designation of origin, in violation of Section 169.1, in
relation with Section 170, 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 & SEA HORSE & TRIANGULAR DEVICE,"
"FAMA," and other related marks, service marks and trade names of Casa Hipolito S.A. Portugal
appearing in kerosene burners. Respondent Vicente Lo and Philippine Burners Manufacturing
Corporation (PBMC) filed a complaint against the 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, in relation to Section
170, of RA 8293.

Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes para Gass, Lda.
(Gasirel), the owner of the disputed marks, executed a deed of assignment transferring these marks
in his favor, to be used in all countries except for those in Europe and America.7 In a test buy, Lo
purchased from National Hardware kerosene burners with the subject marks and the designations
"Made in Portugal" and "Original Portugal" in the wrappers. These products were manufactured by
Wintrade. Lo claimed that as the assignee for the trademarks, he had not authorized Wintrade to use
these marks, nor had Casa Hipolito S.A. Portugal. While a prior authority was given to Wintrade’s
predecessor-in-interest, Wonder Project & Development Corporation (Wonder), Casa Hipolito S.A.
Portugal had already revoked this authority through a letter of cancellation dated May 31, 1993.8 The
kerosene burners manufactured by Wintrade have caused confusion, mistake and deception on the
part of the buying public. Lo stated that the real and genuine burners are those manufactured by its
agent, PBMC.

In their Answer, the petitioners stated that they are the officers of Wintrade which owns the subject
trademarks and their variants. To prove this assertion, they submitted as evidence the certificates of
registration with the Intellectual Property Office. They alleged that Gasirel, not Lo, was the real party-
in-interest. They allegedly derived their authority to use the marks from Casa Hipolito S.A. Portugal
through Wonder, their predecessor-in-interest. Moreover, PBMC had already ceased to be a
corporation and, thus, the licensing agreement between PBMC and Lo could not be given effect,
particularly because the agreement was not notarized and did not contain the provisions required by
Section 87 of RA 8293. The petitioners pointed out that Lo failed to sufficiently prove that the burners
bought from National Hardware were those that they manufactured. But at the same time, they also
argued that the marks "Made in Portugal" and "Original Portugal" are merely descriptive and refer to
the source of the design and the history of manufacture.

In a separate Answer, Chua admitted that he had dealt with Wintrade for several years and had sold
its products. He had not been aware that Wintrade had lost the authority to manufacture, distribute,
and deal with products containing the subject marks, and he was never informed of Wintrade’s loss
of authority. Thus, he could have not been part of any conspiracy.

After the preliminary investigation, the Chief State Prosecutor found probable cause to indict the
petitioners for violation of Section 169.1, in relation with Section 170, of RA 8293. This law punishes
any person who uses in commerce any false designation of origin which is likely to cause confusion
or mistake as to the origin of the product. The law seeks to protect the public; thus, even if Lo does
not have the legal capacity to sue, the State can still prosecute the petitioners to prevent damage
and prejudice to the public.

On appeal, the DOJ issued a resolution affirming the finding of probable case. It gave credence to
Lo’s assertion that he is the proper assignee of the subject marks. More importantly, it took note of
the petitioners’ admission that they used the words "Made in Portugal" when in fact, these products
were made in the Philippines. Had they intended to refer to the source of the design or the history of
the manufacture, they should have explicitly said so in their packaging. It then concluded that the
petitioners’ defenses would be better ventilated during the trial and that the admissions of the
petitioners make up a sufficient basis for probable 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 denied the petition for failure to sufficiently
show any reversible error in the assailed judgment to warrant the exercise of the Court’s
discretionary power.

We find no reversible error on the part of the CA and the DOJ to merit reconsideration. The
petitioners reiterate their argument 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/or Wintrade. They also allege that the words "Made in Portugal" and "Original Portugal" refer to
the origin of the design and not to the origin of the goods.

The petitioners again try to convince the Court that they have not manufactured the products bearing
the marks "Made in Portugal" and "Original Portugal" that were bought during the test buy. However,
their own admission and the statement given by Chua bear considerable weight.

The admission in the petitioners’ Joint Affidavit is not in any way hypothetical, as they would have us
believe. They narrate incidents that have happened. They refer to Wintrade’s former association with
Casa Hipolito S.A. Portugal; to their decision to produce the burners in the Philippines; 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 of Wintrade was the former exclusive licensee
of Casa Hipolito SA of Portugal since the 1970’s, and that Wintrade purchased all the rights on the
said trademarks prior to the closure of said company. Indeed, the burners sold by Wintrade used to
be imported from Portugal, but Wintrade later on discovered the possibility of obtaining these
burners from other sources or of manufacturing the same in the Philippines.

Wintrade’s decision to procure these burners from sources other than Portugal is certainly its
management prerogative. The presence of the words "made in Portugal" and "original Portugal" on
the wrappings of the burners and on the burners themselves which are manufactured by Wintrade is
an allusion to the fact that the origin of the design of said burners 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 deceive or cause mistake and confusion in the minds of
the buying public.9
Chua, the owner of National Hardware — the place where the test buy was conducted — admits that
Wintrade has been 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 with Wintrade Industrial Sales Corporation
(WINTRADE for brevity) for around 20 years now by buying products from it. I am not however
aware that WINTRADE was no longer authorized to deal, distribute or sell kerosene burner bearing
the mark HIPOLITO and SEA HORSE Device, with markings "Made in Portugal" on the wrapper as I
was never informed of such by WINTRADE nor was ever made aware of any notices posted in the
newspapers informing me of such fact. Had I been informed, I would have surely stopped dealing
with WINTRADE.10 1âwphi 1

Thus, the evidence shows that petitioners, who are officers of Wintrade, placed the words "Made in
Portugal" and "Original Portugal" with the disputed marks knowing fully well — because of their
previous dealings with the Portuguese company — that these were the marks used in the products
of Casa Hipolito S.A. Portugal. More importantly, the products 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 precisely precludes a person from profiting from the business
reputation built by another and from deceiving the public as to the origins of products. These facts
support the consistent findings of the State Prosecutor, the DOJ and the CA that probable cause
exists to charge the petitioners with false designation of origin. The fact that the evidence did not
come from Lo, but had been given by the petitioners, is of no significance.

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

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

SO ORDERED.

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