Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
PHILIP MORRIS, INC., BENSON &
HEDGES
(CANADA),
INC.,
and
FABRIQUES DE TABAC REUNIES,
S.A., (now known as PHILIP MORRIS
PRODUCTS S.A.),
Petitioners,
- versus FORTUNE
CORPORATION,

G.R. No. 158589

Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

TOBACCO Promulgated:

Respondent.
June 27, 2006
x------------------------------------------------------------------------------------x

DECISION
GARCIA, J.:
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson &
Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the
reversal and setting aside of the following issuances of the Court of Appeals (CA) inCA-G.R. CV No. 66619, to
wit:
1. Decision dated January 21, 2003[1] affirming an earlier decision of the Regional Trial Court
of Pasig City, Branch 166, in its Civil Case No. 47374, which dismissed the complaint for
trademark infringement and damages thereat commenced by the petitioners against
respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 2003[2] denying petitioners motion for reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of
America, is, per Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine Patents Office
(PPO), the registered owner of the trademark MARK VII for cigarettes. Similarly, petitioner Benson & Hedges
(Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark MARK TEN for
cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as can be seen in Trademark
Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques
de Tabac Reunies, S.A., is the assignee of the trademark LARK, which was originally registered in 1964 by
Ligget and Myers Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company
organized in the Philippines, manufactures and sells cigarettes using the trademark MARK.

The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of
their respective trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of
Trademark and Damages against respondent Fortune Tobacco Corporation,docketed as Civil Case No. 47374 of
the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners]
alleged that they are foreign corporations not doing business in the Philippines and are suing on
an isolated transaction. xxx they averred that the countries in which they are domiciled grant xxx
to corporate or juristic persons of the Philippines the privilege to bring action for infringement,
xxx without need of a license to do business in those countries. [Petitioners] likewise manifested
[being registered owners of the trademark MARK VII and MARK TEN for cigarettes as
evidenced by the corresponding certificates of registration and an applicant for the registration of
the trademark LARK MILDS]. xxx. [Petitioners] claimed that they have registered the
aforementioned trademarks in their respective countries of origin and that, by virtue of the long
and extensive usage of the same, these trademarks have already gained international fame and
acceptance. Imputing bad faith on the part of the [respondent], petitioners claimed that the
[respondent], without any previous consent from any of the [petitioners], manufactured and sold
cigarettes bearing the identical and/or confusingly similar trademark MARK xxx Accordingly,
they argued that [respondents] use of the trademark MARK in its cigarette products have caused
and is likely to cause confusion or mistake, or would deceive purchasers and the public in
general into buying these products under the impression and mistaken belief that they are buying
[petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual
Property (Paris Convention, for brevity), to which the Philippines is a signatory xxx,
[petitioners] pointed out that upon the request of an interested party, a country of the Union may
prohibit the use of a trademark which constitutes a reproduction, imitation, or translation of a
mark already belonging to a person entitled to the benefits of the said Convention. They likewise
argued that, in accordance with Section 21-A in relation to Section 23 of Republic Act 166, as
amended, they are entitled to relief in the form of damages xxx [and] the issuance of a writ of
preliminary injunction which should be made permanent to enjoin perpetually the [respondent]
from violating [petitioners] right to the exclusive use of their aforementioned trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred
[among other things] xxx that MARK is a common word, which cannot particularly identify a
product to be the product of the [petitioners] xxx
xxx xxx xxx.
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the
[petitioners] prayer for the issuance of a writ of preliminary injunction was negatively resolved
by the court in an Order xxx dated March 28, 1973. [The incidental issue of the propriety of an
injunction would eventually be elevated to the CA and would finally be resolved by the Supreme
Court in its Decision dated July 16, 1993 in G.R. No. 91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its Decision xxx
dated November 3, 1999 dismissing the complaint and counterclaim after making a finding that
the [respondent] did not commit trademark infringement against the [petitioners]. Resolving first

the issue of whether or not [petitioners] have capacity to institute the instant action, the trial court
opined that [petitioners] failure to present evidence to support their allegation that their
respective countries indeed grant Philippine corporations reciprocal or similar privileges by law
xxx justifies the dismissal of the complaint xxx. It added that the testimonies of [petitioners]
witnesses xxx essentially declared that [petitioners] are in fact doing business in the Philippines,
but [petitioners] failed to establish that they are doing so in accordance with the legal
requirement of first securing a license. Hence, the court declared that [petitioners] are barred
from maintaining any action in Philippine courts pursuant to Section 133 of the Corporation
Code.
The issue of whether or not there was infringement of the [petitioners] trademarks by the
[respondent] was likewise answered xxx in the negative. It expounded that in order for a name,
symbol or device to constitute a trademark, it must, either by itself or by association, point
distinctly to the origin or ownership of the article to which it is applied and be of such nature as
to permit an exclusive appropriation by one person. Applying such principle to the instant case,
the trial court was of the opinion that the words MARK, TEN, LARK and the Roman Numerals
VII, either alone or in combination of each other do not by themselves or by association point
distinctly to the origin or ownership of the cigarettes to which they refer, such that the buying
public could not be deceived into believing that [respondents] MARK cigarettes originated either
from the USA, Canada, or Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the
trial court stated that the general rule is that an infringement exists if the resemblance is so close
that it deceives or is likely to deceive a customer exercising ordinary caution in his dealings and
induces him to purchase the goods of one manufacturer in the belief that they are those of
another. xxx. The trial court ruled that the [petitioners] failed to pass these tests as it neither
presented witnesses or purchasers attesting that they have bought [respondents] product
believing that they bought [petitioners] MARK VII, MARK TEN or LARK, and have also failed
to introduce in evidence a specific magazine or periodical circulated locally, which promotes and
popularizes their products in the Philippines. It, moreover, elucidated that the words consisting of
the trademarks allegedly infringed by [respondent] failed to show that they have acquired a
secondary meaning as to identify them as [petitioners] products. Hence, the court ruled that the
[petitioners] cannot avail themselves of the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either party stating
that, since the [petitioners] filed the action in the belief that they were aggrieved by what they
perceived to be an infringement of their trademark, no wrongful act or omission can be attributed
to them. xxx.[3] (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has committed trademark
infringement, petitioners went on appeal to the CA whereat their appellate recourse was docketed as CA-G.R.
CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter
of their legal capacity to sue in this country for trademark infringement, nevertheless affirmed the trial courts
decision on the underlying issue of respondents liability for infringement as it found that:
xxx the appellants [petitioners] trademarks, i.e., MARK VII, MARK TEN and LARK, do
not qualify as well-known marks entitled to protection even without the benefit of actual use in
the local market and that the similarities in the trademarks in question are insufficient as to cause
deception or confusion tantamount to infringement. Consequently, as regards the third issue,

there is likewise no basis for the award of damages prayed for by the appellants herein. [4] (Word
in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally
challenged Resolution of May 30, 2003, petitioners are now with this Court via this petition for review
essentially raising the following issues: (1) whether or not petitioners, as Philippine registrants of trademarks,
are entitled to enforce trademark rights in this country; and (2) whether or not respondent has committed
trademark infringement against petitioners by its use of the mark MARK for its cigarettes, hence liable for
damages.
In its Comment,[5] respondent, aside from asserting the correctness of the CAs finding on its liability for
trademark infringement and damages, also puts in issue the propriety of the petition as it allegedly raises
questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises both
questions of fact and law contrary to the prescription against raising factual questions in a petition for review on
certiorari filed before the Court. A question of law exists when the doubt or difference arises as to what the law
is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or
falsity of alleged facts.[6]
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts. [7] Unless
the factual findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with grave
abuse of discretion, or contrary to the findings culled by the court of origin,[8]we will not disturb them.
It is petitioners posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn
therefrom by the CA is correct is one of law.[9]But, even if we consider and accept as pure questions of law the
issues raised in this petition, still, the Court is not inclined to disturb the conclusions reached by the appellate
court, the established rule being that all doubts shall be resolved in favor of the correctness of such conclusions.
[10]

Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in accordance with
law and established jurisprudence in arriving at its assailed decision.
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof
adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from those
manufactured, sold, or dealt in by others.[11] Inarguably, a trademark deserves protection. For, as Mr. Justice
Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:[12]
The protection of trademarks is the laws recognition of the psychological function of
symbols. If it is true that we live by symbols, it is no less true that we purchase goods by them. A
trade-mark is a merchandising short-cut which induces a purchaser to select what he wants, or
what he has been led to believe what he wants. The owner of a mark exploits this human
propensity by making every effort to impregnate the atmosphere of the market with the drawing
power of a congenial symbol. Whatever the means employed, the aim is the same - to convey
through the mark, in the minds of potential customers, the desirability of the commodity upon
which it appears. Once this is attained, the trade-mark owner has something of value. If another
poaches upon the commercial magnetism of the symbol he has created, the owner can obtain
legal redress.

It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce trademark
rights in this country, specifically, the right to sue for trademark infringement in Philippine courts and be
accorded protection against unauthorized use of their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate
nationals of member-countries of the Paris Union, they can sue before Philippine courts for infringement of
trademarks, or for unfair competition, without need of obtaining registration or a license to do business in
the Philippines, and without necessity of actually doing business in the Philippines. To petitioners, these
grievance right and mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No. 166, as
amended, or the Trademark Law, but also by Article 2 of the Paris Convention for the Protection of Industrial
Property, otherwise known as the Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines as
evidenced by the certificates of registration of their trademarks. The marks MARK TEN and LARK were
registered on the basis of actual use in accordance with Sections 2-A [13] and 5(a)[14] of R.A. No. 166, as
amended, providing for a 2-month pre-registration use in local commerce and trade while the registration of
MARK VII was on the basis of registration in the foreign country of origin pursuant to Section 37 of the same
law wherein it is explicitly provided that prior use in commerce need not be alleged.[15]
Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not
mean that cigarettes bearing their trademarks are not available and sold locally. Citing Converse Rubber
Corporation v. Universal Rubber Products, Inc.,[16] petitioners state that such availability and sale may be
effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of
trademarks in the country in view of the Philippines adherence to the Trade Related Aspects of Intellectual
Property Rights or the TRIPS Agreement and the enactment of R.A. No. 8293, or the Intellectual Property Code
(hereinafter the IP Code), both of which provide that the fame of a trademark may be acquired through
promotion or advertising with no explicit requirement of actual use in local trade or commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it must
be emphasized that their standing to sue in Philippine courts had been recognized, and rightly so, by the CA. It
ought to be pointed out, however, that the appellate court qualified its holding with a statement, following G.R.
No. 91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune Tobacco Corporation,
[17]
that such right to sue does not necessarily mean protection of their registered marks in the absence of actual
use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of
registration of their trademarks in thePhilippines.
As we ruled in G.R. No. 91332,[18] supra, so it must be here.
Admittedly,
the registration of a trademark
gives the registrant,
such as petitioners, advantages denied non-registrants or ordinary users, like respondent. But while petitioners
enjoy the statutory presumptions arising from such registration, [19] i.e., as to the validity of the registration,
ownership and the exclusive right to use the registered marks, they may not successfully sue on the basis alone
of their respective certificates of registration of trademarks. For, petitioners are still foreign corporations. As
such, they ought, as a condition to availment of the rights and privilegesvis--vis their trademarks in this
country, to show proof that, on top of Philippine registration, their country grants substantially similar
rights and privileges to Filipino citizens pursuant to Section 21-A[20] of R.A. No. 166.
In Leviton Industries v. Salvador,[21] the Court further held that the aforementioned reciprocity
requirement is a condition sine qua non to filing a suit by a foreign corporation which, unless alleged in the
complaint, would justify dismissal thereof, a mere allegation that the suit is being pursued under Section 21-A
of R.A. No. 166 not being sufficient. In a subsequent case, [22] however, the Court held that where the

complainant is a national of a Paris Convention- adhering country, its allegation that it is suing under said
Section 21-A would suffice, because the reciprocal agreement between the two countries is embodied and
supplied by the Paris Convention which, being considered part of Philippine municipal laws, can be taken
judicial notice of in infringement suits.[23]
As well, the fact that their respective home countries, namely, the United States, Switzerland and
Canada, are, together with the Philippines, members of the Paris Union does not automatically entitle petitioners
to the protection of their trademarks in this country absent actual use of the marks in local commerce and
trade.
True, the Philippines adherence to the Paris Convention[24] effectively obligates the country to honor and enforce
its provisions[25] as regards the protection of industrial property of foreign nationals in this country. However,
any protection accorded has to be made subject to the limitations of Philippine laws. [26] Hence, despite Article 2
of the Paris Convention which substantially provides that (1) nationals of member-countries shall have in this
country rights specially provided by the Convention as are consistent with Philippine laws, and enjoy the
privileges that Philippine laws now grant or may hereafter grant to its nationals, and (2) while no domicile
requirement in the country where protection is claimed shall be required of persons entitled to the benefits of the
Union for the enjoyment of any industrial property rights, [27] foreign nationals must still observe and comply
with the conditions imposed by Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 2 [28] and 2-A[29] thereof, mandates actual
use of the marks and/or emblems in local commerce and trade before they may be registered and ownership
thereof acquired, the petitioners cannot, therefore, dispense with the element of actual use. Their being nationals
of member-countries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,[30] the Court reiterated its rulings in Sterling
Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, [31] Kabushi Kaisha Isetan v.
Intermediate Appellate Court,[32] and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation [33] on
the importance of actual commercial use of a trademark in the Philippines notwithstanding the Paris
Convention:
The provisions of the 1965 Paris Convention relied upon by private respondent and Sec.
21-A of the Trademark Law were sufficiently expounded upon and qualified in the recent case
of Philip Morris, Inc., et. al. vs. Court of Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirements of actual use in the Philippines must subordinate an international
agreement inasmuch as the apparent clash is being decided by a municipal tribunal. Xxx. Withal,
the fact that international law has been made part of the law of the land does not by any means
imply the primacy of international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of International Law are given a
standing equal, not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement but the
question of whether they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the Philippines in line with
Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a
foreign corporation not licensed to do business in the Philippines files a complaint for
infringement, the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit for infringement

but it may not necessarily be entitled to protection due to absence of actual use of the emblem in
the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the
actual use of such trademark in local commerce. As it were, registration does not confer upon the registrant an
absolute right to the registered mark. The certificate of registration merely constitutes prima facie evidence that
the registrant is the owner of the registered mark. Evidence of non-usage of the mark rebuts the presumption of
trademark ownership,[34] as what happened here when petitioners no less admitted not doing business in this
country.[35]
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey
an absolute right or exclusive ownership thereof. To borrow from Shangri-La International Hotel Management,
Ltd. v. Development Group of Companies, Inc.[36] trademark is a creation of use and, therefore, actual use is a
pre-requisite to exclusive ownership; registration is only an administrative confirmation of the existence of the
right of ownership of the mark, but does not perfect such right; actual use thereof is the perfecting ingredient.[37]
Petitioners reliance on Converse Rubber Corporation[38] is quite misplaced, that case being cast in a
different factual milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not licensed to
do, and not so engaged in, business in the Philippines, may actually earn reputation or goodwill for its goods in
the country. But unlike in the instant case, evidence of actual sales of Converse rubber shoes, such as sales
invoices, receipts and the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint
herein having been filed in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code,
however, took effect only on January 1, 1998 without a provision as to its retroactivity.[39] In the same vein, the
TRIPS Agreement was inexistent when the suit for infringement was filed, the Philippines having adhered
thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by
actual use thereof in the country accords the registrant only the standing to sue for infringement in Philippine
courts. Entitlement to protection of such trademark in the country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or
tradename in connection with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of
such business; or reproduce, counterfeit, copy of color ably imitate any such mark or tradename
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in connection
with such goods, business, or services, shall be liable to a civil action by the registrant for any or
all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondents mark MARK for cigarettes is
confusingly or deceptively similar with theirduly registered MARK VII, MARK TEN and LARK marks
likewise for cigarettes. To them, the word MARK would likely cause confusion in the trade, or deceive
purchasers, particularly as to the source or origin of respondents cigarettes.
The likelihood of confusion is the gravamen of trademark infringement. [40] But likelihood of confusion is
a relative concept, the particular, and sometimes peculiar, circumstances of each case being determinative of its
existence. Thus, in trademark infringement cases, more than in other kinds of litigation, precedents must be
evaluated in the light of each particular case.[41]

In
determining
similarity
and
likelihood
of
confusion,
jurisprudence has developed two tests: the dominancy test and the holistic test.[42] The dominancy test[43] sets
sight on the similarity of the prevalent features of the competing trademarks that might cause confusion and
deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of the
marks involved would be likely to cause confusion or mistake in the mind of the public or deceive purchasers.
[44]

In contrast, the holistic test[45] entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the
likelihood of confusion resulting in infringement arising from the respondents use of the trademark MARK for
its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they
appear on the products,[46] the striking dissimilarities are significant enough to warn any purchaser that one is
different from the other. Indeed, although the perceived offending word MARK is itself prominent in petitioners
trademarks MARK VII and MARK TEN, the entire marking system should be considered as a whole and not
dissected, because a discerning eye would focus not only on the predominant word but also on the other features
appearing in the labels. Only then would such discerning observer draw his conclusion whether one mark would
be confusingly similar to the other and whether or not sufficient differences existed between the marks.[47]
This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three cigarette
brands of the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a
trademark serves as a tool to point out distinctly the origin or ownership of the goods to which it is affixed,
[48]
the likelihood of confusion tantamount to infringement appears to be farfetched. The reason for the origin
and/or ownership angle is that unless the words or devices do so point out the origin or ownership, the person
who first adopted them cannot be injured by any appropriation or imitation of them by others, nor can the public
be deceived.[49]
Since the word MARK, be it alone or in combination with the word TEN and the Roman numeral VII,
does not point to the origin or ownership of the cigarettes to which they apply, the local buying public could not
possibly be confused or deceived that respondents MARK is the product of petitioners and/or originated from
the U.S.A., Canada or Switzerland. And lest it be overlooked, no actual commercial use of petitioners marks in
local commerce was proven. There can thus be no occasion for the public in this country, unfamiliar in the first
place with petitioners marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable
circumstances in determining likelihood of confusion. Del Monte Corp. v. CA[50] dealt with another, where we
instructed to give due regard to the ordinary purchaser, thus:
The question is not whether the two articles are distinguishable by their label when set
side by side but whether the general confusion made by the article upon the eye of the casual
purchaser who is unsuspicious and off his guard, is such as to likely result in his confounding it
with the original. As observed in several cases, the general impression of the ordinary purchaser,
buying under the normally prevalent conditions in trade and giving the attention such purchasers
usually give in buying that class of goods is the touchstone.
When we spoke of an ordinary purchaser, the reference was not to the completely unwary customer but
to the ordinarily intelligent buyer considering the type of product involved.[51]

It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by
those who are already predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be all too
familiar with his brand and discriminating as well. We, thus, concur with the CA when it held, citing a definition
found in Dy Buncio v. Tan Tiao Bok,[52] that the ordinary purchaser in this case means one accustomed to buy,
and therefore to some extent familiar with, the goods in question.
Pressing on with their contention respecting the commission of trademark infringement, petitioners finally point
to Section 22 of R.A. No. 166, as amended. As argued, actual use of trademarks in local commerce is, under
said section, not a requisite before an aggrieved trademark owner can restrain the use of his trademark upon
goods manufactured or dealt in by another, it being sufficient that he had registered the trademark or trade-name
with the IP Office. In fine, petitioners submit that respondent is liable for infringement,
having manufactured and sold cigarettes with the trademark MARK which, as it were, are identical and/or
confusingly similar with their duly registered trademarks MARK VII, MARK TEN and LARK.
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,[53] the Court held that the following constitute the
elements of trademark infringement in accordance not only with Section 22 of R.A. No. 166, as amended, but
also Sections 2, 2-A, 9-A[54] and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in the principal
register of the Philippine Patent Office,
(b) is used by another person in connection with the sale, offering for sale, or advertising of any
goods, business or services or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or such trademark is reproduced, counterfeited, copied or
colorably imitated by another person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
As already found herein, while petitioners have registered the trademarks MARK VII, MARK TEN and
LARK for cigarettes in the Philippines, prior actual commercial use thereof had not been proven. In fact,
petitioners judicial admission of not doing business in this country effectively belies any pretension to the
contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks are wellknown and/or have acquired goodwill in the Philippines so as to be entitled to protection even without actual
use in this country in accordance with Article 6bis [55] of the Paris Convention. As correctly found by the CA,
affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants [petitioners]
products are indeed well-known in the Philippines, either through actual sale of the product or
through different forms of advertising. This finding is supported by the fact that appellants admit
in their Complaint that they are not doing business in the Philippines, hence, admitting that their
products are not being sold in the local market. We likewise see no cogent reason to disturb the
trial courts finding that the appellants failed to establish that their products are widely known by
local purchasers as (n)o specific magazine or periodical published in the Philippines, or in other

countries but circulated locally have been presented by the appellants during trial. The appellants
also were not able to show the length of time or the extent of the promotion or advertisement
made to popularize their products in the Philippines.[56]
Last, but not least, we must reiterate that the issue of trademark infringement is factual,
with both the trial and appellate courts having peremptorily found allegations of infringement on the part of
respondent to be without basis. As we said time and time again, factual determinations of the trial court,
concurred in by the CA, are final and binding on this Court.[57]
For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks
prior to respondents use of its mark and for petitioners failure to demonstrate confusing similarity between said
trademarks, the dismissal of their basic complaint for infringement and the concomitant plea for damages must
be affirmed. The law, the surrounding circumstances and the equities of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of
the Court of Appeals are AFFIRMED.
Costs against the petitioners.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 97343 September 13, 1993

PASCUAL GODINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, SPECIAL FOURTH DIVISION and SV-AGRO
ENTERPRISES, INC.,respondents.
Jesus S. Anonat for petitioner.
Arturo M. Alinio for private respondent.
ROMERO, J.:
Through this petition for review in certiorari of a decision of the Court of Appeals affirming the decision of the
trial court, petitioner Pascual Godines seeks to reverse the adverse decision of the Court a quo that he was liable
for infringement of patent and unfair competition. The dispositive portion of the assailed decision is hereby
quoted to wit:
WHEREFORE, with the elimination of the award for attorney's fees, the judgment appealed
from is hereby AFFIRMED, with costs against appellant. 1
The patent involved in this case is Letters Patent No. UM-2236 issued by the Philippine Patent Office to one
Magdalena S. Villaruz on July 15, 1976. It covers a utility model for a hand tractor or power tiller, the main
components of which are the following: "(1) a vacuumatic house float; (2) a harrow with adjustable operating
handle; (3) a pair of paddy wheels; (4) a protective water covering for the engine main drive; (5) a transmission
case; (6) an operating handle; (7) an engine foundation on the top midportion of the vacuumatic housing float to
which the main engine drive is detachedly installed; (8) a frontal frame extension above the quarter
circularly shaped water covering hold (sic) in place the transmission case; (9) a V-belt connection to the engine
main drive with transmission gear through the pulley, and (10) an idler pulley installed on the engine
foundation." 2 The patented hand tractor works in the following manner: "the engine drives the transmission
gear thru the V-belt, a driven pulley and a transmission shaft. The engine drives the transmission gear by
tensioning of the V-belt which is controlled by the idler pulley. The V-belt drives the pulley attached to the
transmission gear which in turn drives the shaft where the paddy wheels are attached. The operator handles the
hand tractor through a handle which is inclined upwardly and supported by a pair of substanding pipes and
reinforced by a U-shaped G.I. pipe at the V-shaped end." 3
The above mentioned patent was acquired by SV-Agro Industries Enterprises, Inc., herein private respondent,
from Magdalena Villaruz, its chairman and president, by virtue of a Deed of Assignment executed by the latter
in its favor. On October 31, 1979, SV-Agro Industries caused the publication of the patent in Bulletin Today, a
newspaper of general circulation.

In accordance with the patent, private respondent manufactured and sold the patented power tillers with the
patent imprinted on them. In 1979, SV-Agro Industries suffered a decline of more than 50% in sales in its
Molave, Zamboanga del Sur branch. Upon investigation, it discovered that power tillers similar to those
patented by private respondent were being manufactured and sold by petitioner herein. Consequently, private
respondent notified Pascual Godines about the existing patent and demanded that the latter stop selling and
manufacturing similar power tillers. Upon petitioner's failure to comply with the demand, SV-Agro Industries
filed before the Regional Trial Court a complaint for infringement of patent and unfair competition.
After trial, the court held Pascual Godines liable for infringement of patent and unfair competition. The
dispositive portion of the decision reads as follows:
WHEREFORE, premises considered, JUDGMENT is hereby rendered in favor of the plaintiff
SV-Agro Industries Enterprises, Inc., and against defendant Pascual Godines:
1. Declaring the writ of preliminary injunction issued by this Court against defendant as
permanent;
2. Ordering defendant Pascual Godines to pay plaintiff the sum of Fifty Thousand Pesos
(P50,000.00) as damages to its business reputation and goodwill, plus the further sum of Eighty
Thousand Pesos (P80,000.00) for unrealized profits during the period defendant was
manufacturing and selling copied or imitation floating power tiller;
3. Ordering the defendant to pay the plaintiff, the further sum of Eight Thousand Pesos
(P8,000.00) as reimbursement of attorney's fees and other expenses of litigation; and to pay the
costs of the suit.
SO ORDERED. 4
The decision was affirmed by the appellate court.
Thereafter, this petition was filed. Petitioner maintains the defenses which he raised before the trial and
appellate courts, to wit: that he was not engaged in the manufacture and sale of the power tillers as he made
them only upon the special order of his customers who gave their own specifications; hence, he could not be
liable for infringement of patent and unfair competition; and that those made by him were different from those
being manufactured and sold by private respondent.
We find no merit in his arguments. The question of whether petitioner was manufacturing and selling power
tillers is a question of fact better addressed to the lower courts. In dismissing the first argument of petitioner
herein, the Court of Appeals quoted the findings of the court, to wit:
It is the contention of defendant that he did not manufacture or make imitations or copies of
plaintiff's turtle power tiller as what he merely did was to fabricate his floating power tiller upon
specifications and designs of those who ordered them. However, this contention appears
untenable in the light of the following circumstances: 1) he admits in his Answer that he has been
manufacturing power tillers or hand tractors, selling and distributing them long before plaintiff
started selling its turtle power tiller in Zamboanga del Sur and Misamis Occidental, meaning that
defendant is principally a manufacturer of power tillers, not upon specification and design of
buyers, but upon his own specification and design; 2) it would be unbelievable that defendant
would fabricate power tillers similar to the turtle power tillers of plaintiff upon specifications of

buyers without requiring a job order where the specification and designs of those ordered are
specified. No document was (sic) ever been presented showing such job orders, and it is rather
unusual for defendant to manufacture something without the specification and designs,
considering that he is an engineer by profession and proprietor of the Ozamis Engineering shop.
On the other hand, it is also highly unusual for buyers to order the fabrication of a power tiller or
hand tractor and allow defendant to manufacture them merely based on their verbal instructions.
This is contrary to the usual business and manufacturing practice. This is not only time
consuming, but costly because it involves a trial and error method, repeat jobs and material
wastage. Defendant judicially admitted two (2) units of the turtle power tiller sold by him to
Policarpio Berondo. 5
Of general acceptance is the rule imbedded in our jurisprudence that ". . . the jurisdiction of the Supreme Court
in cases brought to it from the Court of Appeals in a petition for certiorari under Rule 45 of the Rules of Court
is limited to the review of errors of law, and that said appellate court's findings of fact are conclusive upon this
Court." 6
The fact that petitioner herein manufactured and sold power tillers without patentee's authority has been
established by the courts despite petitioner's claims to the contrary.
The question now arises: Did petitioner's product infringe upon the patent of private respondent?
Tests have been established to determine infringement. These are (a) literal infringement; and (b) the doctrine of
equivalents. 7 In using literal infringement as a test, ". . . resort must be had, in the first instance, to the words of
the claim. If accused matter clearly falls within the claim, infringement is made out and that is the end of
it." 8 To determine whether the particular item falls within the literal meaning of the patent claims, the court
must juxtapose the claims of the patent and the accused product within the overall context of the claims and
specifications, to determine whether there is exact identity of all material elements. 9
The trial court made the following observation:
Samples of the defendant's floating power tiller have been produced and inspected by the court
and compared with that of the turtle power tiller of the plaintiff (see Exhibits H to H-28). In
appearance and form, both the floating power tillers of the defendant and the turtle power tiller
of the plaintiff are virtually the same. Defendant admitted to the Court that two (2) of the power
inspected on March 12, 1984, were manufactured and sold by him (see TSN, March 12, 1984, p.
7). The three power tillers were placed alongside with each other. At the center was the turtle
power tiller of plaintiff, and on both sides thereof were the floating power tillers of defendant
(Exhibits H to H-2). Witness Rodrigo took photographs of the same power tillers (front, side, top
and back views for purposes of comparison (see Exhibits H-4 to H-28). Viewed from any
perspective or angle, the power tiller of the defendant is identical and similar to that of the turtle
power tiller of plaintiff in form, configuration, design and appearance. The parts or components
thereof are virtually the same. Both have the circularly-shaped vacuumatic housing float, a paddy
in front, a protective water covering, a transmission box housing the transmission gears, a handle
which is V-shaped and inclined upwardly, attached to the side of the vacuumatic housing float
and supported by the upstanding G.I. pipes and an engine base at the top midportion of the
vacuumatic housing float to which the engine drive may be attached. In operation, the floating
power tiller of the defendant operates also in similar manner as the turtle power tiller of plaintiff.
This was admitted by the defendant himself in court that they are operating on the same
principles. (TSN, August 19, 1987, p. 13) 10

Moreover, it is also observed that petitioner also called his power tiller as a floating power tiller. The patent
issued by the Patent Office referred to a "farm implement but more particularly to a turtle hand tractor having a
vacuumatic housing float on which the engine drive is held in place, the operating handle, the harrow housing
with its operating handle and the paddy wheel protective covering." 11 It appears from the foregoing observation
of the trial court that these claims of the patent and the features of the patented utility model were copied by
petitioner. We are compelled to arrive at no other conclusion but that there was infringement.
Petitioner's argument that his power tillers were different from private respondent's is that of a drowning man
clutching at straws.
Recognizing that the logical fallback position of one in the place of defendant is to aver that his product is
different from the patented one, courts have adopted the doctrine of equivalents which recognizes that minor
modifications in a patented invention are sufficient to put the item beyond the scope of literal
infringement. 12 Thus, according to this doctrine, "(a)n infringement also occurs when a device appropriates a
prior invention by incorporating its innovative concept and, albeit with some modification and change, performs
substantially the same function in substantially the same way to achieve substantially the same result." 13 The
reason for the doctrine of equivalents is that to permit the imitation of a patented invention which does not copy
any literal detail would be to convert the protection of the patent grant into a hollow and useless thing. Such
imitation would leave room for indeed encourage the unscrupulous copyist to make unimportant and
insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the
copied matter outside the claim, and hence outside the reach of the law. 14
In this case, the trial court observed:
Defendant's witness Eduardo Caete, employed for 11 years as welder of the Ozamis
Engineering, and therefore actually involved in the making of the floating power tillers of
defendant tried to explain the difference between the floating power tillers made by the
defendant. But a careful examination between the two power tillers will show that they will
operate on the same fundamental principles. And, according to establish jurisprudence, in
infringement of patent, similarities or differences are to be determined, not by the names of
things, but in the light of what elements do, and substantial, rather than technical, identity in the
test. More specifically, it is necessary and sufficient to constitute equivalency that the same
function can be performed in substantially the same way or manner, or by the same or
substantially the same, principle or mode of operation; but where these tests are satisfied, mere
differences of form or name are immaterial. . . . 15
It also stated:
To establish an infringement, it is not essential to show that the defendant adopted the device or
process in every particular; Proof of an adoption of the substance of the thing will be sufficient.
"In one sense," said Justice Brown, "it may be said that no device can be adjudged an
infringement that does not substantially correspond with the patent. But another construction,
which would limit these words to exact mechanism described in the patent, would be so
obviously unjust that no court could be expected to adopt it. . . .
The law will protect a patentee against imitation of his patent by other forms and proportions. If
two devices do the same work in substantially the same way, and accomplish substantially the
same result, they are the same, even though they differ in name, form, or shape. 16

We pronounce petitioner liable for infringement in accordance with Section 37 of Republic Act No. 165, as
amended, providing, inter alia:
Sec. 37. Right of Patentees. A patentee shall have the exclusive right to make, use and sell the
patented machine, article or product, and to use the patented process for the purpose of industry
or commerce, throughout the territory of the Philippines for the terms of the patent; and such
making, using, or selling by any person without the authorization of the Patentee constitutes
infringement of the patent. (Emphasis ours)
As far as the issue regarding unfair competition is concerned, suffice it to say that Republic Act No. 166, as
amended, provides, inter alia:
Sec. 29. Unfair competition, rights and remedies. . . .
xxx xxx xxx
In particular, and without in any way limiting the scope of unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of goods of
another manufacturer or dealer, either as to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices or words thereon, or in any other feature of
their appearance, which would be likely to influence purchasers 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. . . .
xxx xxx xxx
Considering the foregoing, we find no reversible error in the decision of the Court of Appeals affirming with
modification the decision of the trial court.
WHEREFORE, premises considered, the decision of the Court of Appeals is hereby AFFIRMED and this
petition DENIED for lack of merit.
Bidin, Melo and Vitug, JJ., concur.
Feliciano, J., is on leave.

SECOND DIVISION

FREDCO MANUFACTURING G.R. No. 185917

CORPORATION,
Petitioner, Present:
CARPIO, J., Chairperson,
NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.
PRESIDENT AND FELLOWS
OF HARVARD COLLEGE Promulgated:
(HARVARD UNIVERSITY),
Respondents. June 1, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 24 October 2008 Decision2 and 8 January 2009
Resolution3 of the Court of Appeals in CA-G.R. SP No. 103394.
The Antecedent Facts
On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a corporation organized and
existing under the laws of the Philippines, filed a Petition for Cancellation of Registration No. 56561 before the
Bureau of Legal Affairs of the Intellectual Property Office (IPO) against respondents President and Fellows of
Harvard College (Harvard University), a corporation organized and existing under the laws of Massachusetts,
United States of America. The case was docketed as Inter Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard University on 25 November 1993 for the
mark Harvard Veritas Shield Symbol for decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying
discs under Classes 16, 18, 21, 25 and 28 of the Nice International Classification of Goods and Services. Fredco

alleged that the mark Harvard for t-shirts, polo shirts, sandos, briefs, jackets and slacks was first used in the
Philippines on 2 January 1982 by New York Garments Manufacturing & Export Co., Inc. (New York
Garments), a domestic corporation and Fredcos predecessor-in-interest. On 24 January 1985, New York
Garments filed for trademark registration of the mark Harvard for goods under Class 25. The application
matured into a registration and a Certificate of Registration was issued on 12 December 1988, with a 20-year
term subject to renewal at the end of the term. The registration was later assigned to Romeo Chuateco, a
member of the family that owned New York Garments.
Fredco alleged that it was formed and registered with the Securities and Exchange Commission on 9 November
1995 and had since then handled the manufacture, promotion and marketing of Harvard clothing articles.
Fredco alleged that at the time of issuance of Registration No. 56561 to Harvard University, New York
Garments had already registered the mark Harvard for goods under Class 25. Fredco alleged that the registration
was cancelled on 30 July 1998 when New York Garments inadvertently failed to file an affidavit of use/non-use
on the fifth anniversary of the registration but the right to the mark Harvard remained with its predecessor New
York Garments and now with Fredco.
Harvard University, on the other hand, alleged that it is the lawful owner of the name and mark Harvard in
numerous countries worldwide, including the Philippines. Among the countries where Harvard University has
registered its name and mark Harvard are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.

Argentina 26. South Korea

Benelux4 27. Malaysia
Brazil 28. Mexico
Canada 29. New Zealand
Chile 30. Norway
China P.R. 31. Peru
Colombia 32. Philippines
Costa Rica 33. Poland
Cyprus 34. Portugal
Czech Republic 35. Russia
Denmark 36. South Africa
Ecuador 37. Switzerland
Egypt 38. Singapore
Finland 39. Slovak Republic
France 40. Spain
Great Britain 41. Sweden
Germany 42. Taiwan
Greece 43. Thailand
Hong Kong 44. Turkey
India 45. United Arab Emirates
Indonesia 46. Uruguay
Ireland 47. United States of America
Israel 48. Venezuela
Italy 49. Zimbabwe
Japan 50. European Community5

The name and mark Harvard was adopted in 1639 as the name of Harvard College6 of Cambridge,
Massachusetts, U.S.A. The name and mark Harvard was allegedly used in commerce as early as 1872. Harvard
University is over 350 years old and is a highly regarded institution of higher learning in the United States and
throughout the world. Harvard University promotes, uses, and advertises its name Harvard through various
publications, services, and products in foreign countries, including the Philippines. Harvard University further

alleged that the name and the mark have been rated as one of the most famous brands in the world, valued
between US $750,000,000 and US $1,000,000,000.
Harvard University alleged that in March 2002, it discovered, through its international trademark watch
program, Fredcos website www.harvard-usa.com. The website advertises and promotes the brand name Harvard
Jeans USA without Harvard Universitys consent. The websites main page shows an oblong logo bearing the
mark Harvard Jeans USA, Established 1936, and Cambridge, Massachusetts. On 20 April 2004, Harvard
University filed an administrative complaint against Fredco before the IPO for trademark infringement and/or
unfair competition with damages.
Harvard University alleged that its valid and existing certificates of trademark registration in the Philippines
are:
1.
Trademark Registration No. 56561 issued on 25 November 1993 for Harvard Veritas Shield Design for
goods and services in Classes 16, 18, 21, 25 and 28 (decals, tote bags, serving trays, sweatshirts, t-shirts, hats
and flying discs) of the Nice International Classification of Goods and Services;
2.
Trademark Registration No. 57526 issued on 24 March 1994 for Harvard Veritas Shield Symbol for
services in Class 41; Trademark Registration No. 56539 issued on 25 November 1998 for Harvard for services
in Class 41; and
3.
Trademark Registration No. 66677 issued on 8 December 1998 for Harvard Graphics for goods in Class 9.
Harvard University further alleged that it filed the requisite affidavits of use for the mark Harvard Veritas Shield
Symbol with the IPO.
Further, on 7 May 2003 Harvard University filed Trademark Application No. 4-2003-04090 for Harvard
Medical International & Shield Design for services in Classes 41 and 44. In 1989, Harvard University
established the Harvard Trademark Licensing Program, operated by the Office for Technology and Trademark
Licensing, to oversee and manage the worldwide licensing of the Harvard name and trademarks for various
goods and services. Harvard University stated that it never authorized or licensed any person to use its name
and mark Harvard in connection with any goods or services in the Philippines.
In a Decision7 dated 22 December 2006, Director Estrellita Beltran-Abelardo of the Bureau of Legal Affairs,
IPO cancelled Harvard Universitys registration of the mark Harvard under Class 25, as follows:
WHEREFORE, premises considered, the Petition for Cancellation is hereby GRANTED. Consequently,
Trademark Registration Number 56561 for the trademark HARVARD VE RI TAS SHIELD SYMBOL issued on
November 25, 1993 to PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD
UNIVERSITY) should be CANCELLED only with respect to goods falling under Class 25. On the other hand,
considering that the goods of Respondent-Registrant falling under Classes 16, 18, 21 and 28 are not confusingly
similar with the Petitioners goods, the Respondent-Registrant has acquired vested right over the same and
therefore, should not be cancelled.
Let the filewrapper of the Trademark Registration No. 56561 issued on November 25, 1993 for the trademark
HARVARD VE RI TAS SHIELD SYMBOL, subject matter of this case together with a copy of this Decision be
forwarded to the Bureau of Trademarks (BOT) for appropriate action.
SO ORDERED.8
Harvard University filed an appeal before the Office of the Director General of the IPO. In a Decision9 dated 21
April 2008, the Office of the Director General, IPO reversed the decision of the Bureau of Legal Affairs, IPO.
The Director General ruled that more than the use of the trademark in the Philippines, the applicant must be the
owner of the mark sought to be registered. The Director General ruled that the right to register a trademark is

based on ownership and when the applicant is not the owner, he has no right to register the mark. The Director
General noted that the mark covered by Harvard Universitys Registration No. 56561 is not only the word
Harvard but also the logo, emblem or symbol of Harvard University. The Director General ruled that Fredco
failed to explain how its predecessor New York Garments came up with the mark Harvard. In addition, there
was no evidence that Fredco or New York Garments was licensed or authorized by Harvard University to use its
name in commerce or for any other use.
The dispositive portion of the decision of the Office of the Director General, IPO reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The appealed decision is hereby
REVERSED and SET ASIDE. 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 and the Administrative, Financial 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.10
Fredco filed a petition for review before the Court of Appeals assailing the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the decision of the Office of the Director General of the
IPO.
The Court of Appeals adopted the findings of the Office of the Director General and ruled that the latter
correctly set aside the cancellation by the Director of the Bureau of Legal Affairs of Harvard Universitys
trademark registration under Class 25. The Court of Appeals ruled that Harvard University was able to
substantiate that it appropriated and used the marks Harvard and Harvard Veritas Shield Symbol in Class 25
way ahead of Fredco and its predecessor New York Garments. The Court of Appeals also ruled that the records
failed to disclose any explanation for Fredcos use of the name and mark Harvard and the words USA,
Established 1936, and Cambridge, Massachusetts within an oblong device, US Legend and Europes No. 1
Brand. Citing Shangri-La International Hotel Management, Ltd. v. Developers Group of Companies, Inc.,11 the
Court of Appeals ruled:
One who has imitated the trademark of another cannot bring an action for infringement, particularly against the
true owner of the mark, because he would be coming to court with unclean hands. Priority is of no avail to the
bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take advantage of
the goodwill established by the true owner.12
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, premises considered, the petition for review is DENIED. The Decision dated April 21, 2008 of
the Director General of the IPO in Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby
AFFIRMED.
SO ORDERED.13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of Appeals denied the motion for lack of merit.
Hence, this petition before the Court.

The Issue
The issue in this case is whether the Court of Appeals committed a reversible error in affirming the decision of
the Office of the Director General of the IPO.
The Ruling of this Court
The petition has no merit.
There is no dispute that the mark Harvard used by Fredco is the same as the mark Harvard in the Harvard
Veritas Shield Symbol of Harvard University. It is also not disputed that Harvard University was named
Harvard College in 1639 and that then, as now, Harvard University is located in Cambridge, Massachusetts,
U.S.A. It is also unrefuted that Harvard University has been using the mark Harvard in commerce since 1872. It
is also established that Harvard University has been using the marks Harvard and Harvard Veritas Shield
Symbol for Class 25 goods in the United States since 1953. Further, there is no dispute that Harvard University
has registered the name and mark Harvard in at least 50 countries.
On the other hand, Fredcos predecessor-in-interest, New York Garments, started using the mark Harvard in the
Philippines only in 1982. New York Garments filed an application with the Philippine Patent Office in 1985 to
register the mark Harvard, which application was approved in 1988. Fredco insists that the date of actual use in
the Philippines should prevail on the issue of who has the better right to register the marks.
Under Section 2 of Republic Act No. 166,14 as amended (R.A. No. 166), before a trademark can be registered, it
must have been actually used in commerce for not less than two months in the Philippines prior to the filing of
an application for its registration. While Harvard University had actual prior use of its marks abroad for a long
time, it did not have actual prior use in the Philippines of the mark Harvard Veritas Shield Symbol before its
application for registration of the mark Harvard with the then Philippine Patents Office. However, Harvard
Universitys registration of the name Harvard is based on home registration which is allowed under Section 37
of R.A. No. 166.15 As pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the registration of trademark that the applicant
thereof must prove that the same has been actually in use in commerce or services for not less than two (2)
months in the Philippines before the application for registration is filed, where the trademark sought to be
registered has already been registered in a foreign country that is a member of the Paris Convention, the
requirement of proof of use in the commerce in the Philippines for the said period is not necessary. An applicant
for registration based on home certificate of registration need not even have used the mark or trade name in this
country.16
Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco alleged that Harvard Universitys
registration is based on home registration for the mark Harvard Veritas Shield for Class 25.17
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293),18 [m]arks registered under
Republic Act No. 166 shall remain in force but shall be deemed to have been granted under this Act x x x,
which does not require actual prior use of the mark in the Philippines. Since the mark Harvard Veritas Shield
Symbol is now deemed granted under R.A. No. 8293, any alleged defect arising from the absence of actual prior
use in the Philippines has been cured by Section 239.2.19 In addition, Fredcos registration was already cancelled
on 30 July 1998 when it failed to file the required affidavit of use/non-use for the fifth anniversary of the marks
registration. Hence, at the time of Fredcos filing of the Petition for Cancellation before the Bureau of Legal
Affairs of the IPO, Fredco was no longer the registrant or presumptive owner of the mark Harvard.

There are two compelling reasons why Fredcos petition must fail.
First, Fredcos registration of the mark Harvard and its identification of origin as Cambridge, Massachusetts
falsely suggest that Fredco or its goods are connected with Harvard University, which uses the same mark
Harvard and is also located in Cambridge, Massachusetts. This can easily be gleaned from the following oblong
logo of Fredco that it attaches to its clothing line:
Fredcos registration of the mark Harvard should not have been allowed because Section 4(a) of R.A. No. 166
prohibits the registration of a mark which may disparage orfalsely suggest a connection with persons, living or
dead, institutions, beliefs x x x. Section 4(a) of R.A. No. 166 provides:
Section 4. Registration of trade-marks, trade-names and service- marks on the principal register. There is
hereby established a register of trade-mark, trade-names and service-marks which shall be known as the
principal register. The owner of a trade-mark, a trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the right to register the same on
the principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous manner, or matter which may disparage
or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring
them into contempt or disrepute;
(b) x x x (emphasis supplied)
Fredcos use of the mark Harvard, coupled with its claimed origin in Cambridge, Massachusetts, obviously
suggests a false connection with Harvard University. On this ground alone, Fredcos registration of the mark
Harvard should have been disallowed.
Indisputably, Fredco does not have any affiliation or connection with Harvard University, or even with
Cambridge, Massachusetts. Fredco or its predecessor New York Garments was not established in 1936, or in the
U.S.A. as indicated by Fredco in its oblong logo. Fredco offered no explanation to the Court of Appeals or to
the IPO why it used the mark Harvard on its oblong logo with the words Cambridge, Massachusetts,
Established in 1936, and USA. Fredco now claims before this Court that it used these words to evoke a lifestyle
or suggest a desirable aura of petitioners clothing lines. Fredcos belated justification merely confirms that it
sought to connect or associate its products with Harvard University, riding on the prestige and popularity of
Harvard University, and thus appropriating part of Harvard Universitys goodwill without the latters consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham Act,20 the trademark law of the United
States. These provisions are intended to protect the right of publicity of famous individuals and institutions from
commercial exploitation of their goodwill by others.21 What Fredco has done in using the mark Harvard and the
words Cambridge, Massachusetts, USA to evoke a desirable aura to its products is precisely to exploit
commercially the goodwill of Harvard University without the latters consent. This is a clear violation of Section
4(a) of R.A. No. 166. Under Section 17(c)22 of R.A. No. 166, such violation is a ground for cancellation of
Fredcos registration of the mark Harvard because the registration was obtained in violation of Section 4 of R.A.
No. 166.
Second, the Philippines and the United States of America are both signatories to the Paris Convention for the
Protection of Industrial Property (Paris Convention). The Philippines became a signatory to the Paris
Convention on 27 September 1965. Articles 6bis and 8 of the Paris Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake either administratively 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, imitation or translation, liable to create confusion or a mark considered by the
competent authority of the country as being already the mark of a person entitled to the benefits of the
present Convention and used for identical or similar goods. These provisions shall also apply when the

essential part of the mark 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 supplied)
Thus, this Court has ruled that the Philippines is obligated to assure nationals of countries of the Paris
Convention 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.23
Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No. 166, as follows:
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.24
x x x x (Emphasis supplied)
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.
Harvard is the trade name of the world famous Harvard University, and it is also a trademark of Harvard
University. Under Article 8 of the Paris Convention, as well as Section 37 of R.A. No. 166, Harvard University
is entitled to protection in the Philippines of its trade name Harvard even without registration of such trade
name in the Philippines. This means that no educational entity in the Philippines can use the trade name Harvard
without the consent of Harvard University. Likewise, no entity in the Philippines can claim, expressly or
impliedly through the use of the name and mark Harvard, that its products or services are authorized, approved,
or licensed by, or sourced from, Harvard University without the latters consent.
Article 6bis of the Paris Convention has been administratively implemented in the Philippines through two
directives of the then Ministry (now Department) of Trade, which directives were upheld by this Court in
several cases.25 On 20 November 1980, then Minister of Trade Secretary Luis Villafuerte issued a Memorandum
directing the Director of Patents to reject, pursuant to the Paris Convention, all pending applications for
Philippine registration of signature and other world-famous trademarks by applicants other than their original
owners.26 The Memorandum states:
Pursuant to the Paris Convention for the Protection of Industrial Property to which the Philippines is a signatory,
you are hereby directed to reject all pending applications for Philippine registration of signature and other
world-famous trademarks by applicants other than its original owners or users.

The conflicting claims over internationally known trademarks involve such name brands as Lacoste, Jordache,
Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph
Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be asked to
surrender their certificates of registration, if any, to avoid suits for damages and other legal action by the
trademarks foreign or local owners or original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance.27
In a Memorandum dated 25 October 1983, then Minister of Trade and Industry Roberto Ongpin affirmed the
earlier Memorandum of Minister Villafuerte. Minister Ongpin directed the Director of Patents to implement
measures necessary to comply with the Philippines obligations under the Paris Convention, thus:
1.
Whether the trademark under consideration is well-known in the Philippines or is a mark already
belonging to a person entitled to the benefits of the CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes and ex parte cases, according to any of the following
criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark being considered is already wellknown in the Philippines such that permission for its use by other than its original owner will constitute a
reproduction, imitation, translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by proof that goods bearing the trademark
are sold on an international scale, advertisements, the establishment of factories, sales offices, distributorships,
and the like, in different countries, including volume or other measure of international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s) of another country or
countries, taking into consideration the dates of such registration;
(d) that the trademark has been long established and obtained goodwill and general international consumer
recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership and has the right to registration under the
provisions of the aforestated PARIS CONVENTION.
2.
The word trademark, as used in this MEMORANDUM, shall include tradenames, service marks,
logos, signs, emblems, insignia or other similar devices used for identification and recognition by
consumers.
3.
The Philippine Patent Office shall refuse all applications for, or cancel the registration of, trademarks
which constitute a reproduction, translation or imitation of a trademark owned by a person, natural or corporate,
who is a citizen of a country signatory to the PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY.
x x x x28 (Emphasis supplied)
In Mirpuri, the Court ruled that the essential requirement under Article 6bis of the Paris Convention is that the
trademark to be protected must be well-known in the country where protection is sought.29 The Court declared
that the power to determine whether a trademark is well-known lies in the competent authority of the country of

registration or use.30 The Court then stated that the competent authority would either be the registering authority
if it has the power to decide this, or the courts of the country in question if the issue comes before the courts.31
To be protected under the two directives of the Ministry of Trade, an internationally well-known mark need not
be registered or used in the Philippines.32 All that is required is that the mark is well-known internationally and
in the Philippines for identical or similar goods, whether or not the mark is registered or used in the Philippines.
The Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.:33
The fact that respondents marks are neither registered nor used in the Philippines is of no moment. The
scope of protection initially afforded by Article 6bis of the Paris Convention has been expanded in the
1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, wherein the World
Intellectual Property Organization (WIPO) General Assembly and the Paris Union agreed to a nonbinding
recommendation that a well-known mark should be protected in a country even if the mark is neither
registered nor used in that country. Part I, Article 2(3) thereof provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State shall not require, as a condition for determining
whether a mark is a well-known mark:
(i) that the mark has been used in, or that the mark has been registered or that an application for registration of
the mark has been filed in or in respect of, the Member State:
(ii) that the mark is well known in, or that the mark has been registered or that an application for registration of
the mark has been filed in or in respect of, any jurisdiction other than the Member State; or
(iii) that the mark is well known by the public at large in the Member State.34 (Italics in the original decision;
boldface supplied)
Indeed, Section 123.1(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. Section 123.1(e) does not require
that the well-known mark be used in commerce in the Philippines but only that it be well-known in the
Philippines. Moreover, Rule 102 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and
Marked or Stamped Containers, which implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a mark is well-known. In determining whether a mark is wellknown, the following criteria or any combination thereof may be taken into account:
(a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and
geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs
or exhibitions, of the goods and/or services to which the mark applies;
(b) the market share, in the Philippines and in other countries, of the goods and/or services to which the mark
applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of registration attained by the mark in the world;
(g) the extent to which the mark has been used in the world;

(h) the exclusivity of use attained by the mark in the world;

(i) the commercial value attributed to the mark in the world;
(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and
(l) the presence or absence of identical or similar marks validly registered for or used on identical or similar
goods or services and owned by persons other than the person claiming that his mark is a well-known
mark. (Emphasis supplied)

Since any combination of the foregoing criteria is sufficient to determine that a mark is well-known, it is
clearly not necessary that the mark be used in commerce in the Philippines. Thus, while under the territoriality
principle a mark must be used in commerce in the Philippines to be entitled to protection, internationally wellknown marks are the exceptions to this rule.
In the assailed Decision of the Office of the Director General dated 21 April 2008, the Director General found
that:
Traced to its roots or origin, HARVARD is not an ordinary word. It refers to no other than Harvard University, a
recognized and respected institution of higher learning located in Cambridge, Massachusetts, U.S.A. Initially
referred to simply as the new college, the institution was named Harvard College on 13 March 1639, after its
first principal donor, a young clergyman named John Harvard. A graduate of Emmanuel College, Cambridge in
England, John Harvard bequeathed about four hundred books in his will to form the basis of the college library
collection, along with half his personal wealth worth several hundred pounds. The earliest known official
reference to Harvard as a university rather than college occurred in the new Massachusetts Constitution of 1780.
Records also show that the first use of the name HARVARD was in 1638 for educational services, policy
courses of instructions and training at the university level. It has a Charter. Its first commercial use of the name
or mark HARVARD for Class 25 was on 31 December 1953 covered by UPTON Reg. No. 2,119,339 and
2,101,295. Assuming in arguendo, that the Appellate may have used the mark HARVARD in the Philippines
ahead of the Appellant, it still cannot be denied that the Appellants use thereof was decades, even centuries,
ahead of the Appellees. More importantly, the name HARVARD was the name of a person whose deeds were
considered to be a cornerstone of the university. The Appellants logos, emblems or symbols are owned by
Harvard University. The name HARVARD and the logos, emblems or symbols are endemic and cannot be
separated from the institution.35
Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is the oldest and one of the foremost educational institutions in the
United States, it being established in 1636. It is located primarily in Cambridge, Massachusetts and was named
after John Harvard, a puritan minister who left to the college his books and half of his estate.
The mark Harvard College was first used in commerce in the United States in 1638 for educational services,
specifically, providing courses of instruction and training at the university level (Class 41). Its application for
registration with the United States Patent and Trademark Office was filed on September 20, 2000 and it was

registered on October 16, 2001. The marks Harvard and Harvard Ve ri tas Shield Symbol were first used in
commerce in the the United States on December 31, 1953 for athletic uniforms, boxer shorts, briefs, caps, coats,
leather coats, sports coats, gym shorts, infant jackets, leather jackets, night shirts, shirts, socks, sweat pants,
sweatshirts, sweaters and underwear (Class 25). The applications for registration with the USPTO were filed on
September 9, 1996, the mark Harvard was registered on December 9, 1997 and the mark Harvard Ve ri tas
Shield Symbol was registered on September 30, 1997.36
We also note that in a Decision37 dated 18 December 2008 involving a separate case between Harvard
University and Streetward International, Inc.,38 the Bureau of Legal Affairs of the IPO ruled that the mark
Harvard is a well-known mark. This Decision, which cites among others the numerous trademark registrations
of Harvard University in various countries, has become final and executory.
There is no question then, and this Court so declares, that Harvard is a well-known name and mark not only in
the United States but also internationally, including the Philippines. The mark Harvard is rated as one of the
most famous marks in the world. It has been registered in at least 50 countries. It has been used and promoted
extensively in numerous publications worldwide. It has established a considerable goodwill worldwide since the
founding of Harvard University more than 350 years ago. It is easily recognizable as the trade name and mark
of Harvard University of Cambridge, Massachusetts, U.S.A., internationally known as one of the leading
educational institutions in the world. As such, even before Harvard University applied for registration of the
mark Harvard in the Philippines, the mark was already protected under Article 6bis and Article 8 of the Paris
Convention. Again, even without applying the Paris Convention, Harvard University can invoke Section 4(a) of
R.A. No. 166 which prohibits the registration of a mark which may disparage or falsely suggest a connection
with persons, living or dead, institutions, beliefs x x x.
WHEREFORE, we DENY the petition. We AFFIRM the 24 October 2008 Decision and 8 January 2009
Resolution of the Court of Appeals in CA-G.R. SP No. 103394.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 185830
June 5, 2013
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
Generals 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 Cointreaus 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 Ecoles 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 marks 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 Ecoles directress, Ms. Lourdes L. Dayrit. Thus, Cointreau concluded that Ecoles 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 Ecoles opposition
to the subject mark, necessarily resulting in the rejection of Cointreaus 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 establishCointreaus
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 BLAs decision, thus,
granting Cointreaus 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
Cointreaus undisputed use of such mark since 1895 for its culinary school in Paris, France (in which
petitioners 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 Generals reversal of the BLAs Decision unacceptable, Ecole filed a Petition for
Review16 dated June 7, 2008 with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO Director Generals 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 Cointreaus right to register the subject mark cannot be barred by Ecoles 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 Courts resolution is whether the CA was correct in upholding the IPO Director
Generals 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 Cointreaus application for registration of the
subject mark.
The Courts 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.
Petitioners 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 owners 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, Cointreaus country
of origin, are both signatories to the Paris Convention for the Protection of Industrial Property (Paris
Convention).23Articles 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.1wphi1 These
provisions shall also apply when the essential part of the mark constitutes a reproduction of any such wellknown 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
Ecoles averred first use of the same in the Philippines in 1948, of which the latter was fully aware thereof. In
fact, Ecoles present directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco Dayrit), had trained
in Cointreaus 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 Ecoles directress was fully aware, being an alumna of the latters 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.

Republic of the Philippines

SUPREME COURT
Manila
First Division
EN BANC
G.R. No. 175769-70

January 19, 2009

ABS-CBN BROADCASTING CORPORATION, Petitioners,

vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO),
MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari1 assails the July 12, 2006 Decision2 of the Court of Appeals in CA-G.R. SP
Nos. 88092 and 90762, which affirmed the December 20, 2004 Decision of the Director-General of the
Intellectual Property Office (IPO) in Appeal No. 10-2004-0002. Also assailed is the December 11, 2006
Resolution3 denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the Republic of the
Philippines to engage in television and radio broadcasting.4 It broadcasts television programs by wireless means
to Metro Manila and nearby provinces, and by satellite to provincial stations through Channel 2 on Very High
Frequency (VHF) and Channel 23 on Ultra High Frequency (UHF). The programs aired over Channels 2 and 23
are either produced by ABS-CBN or purchased from or licensed by other producers.
ABS-CBN also owns regional television stations which pattern their programming in accordance with perceived
demands of the region. Thus, television programs shown in Metro Manila and nearby provinces are not
necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting System. It
delivers digital direct-to-home (DTH) television via satellite to its subscribers all over the Philippines. Herein
individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada, Raul B. De Mesa, and Aloysius M.
Colayco, are members of PMSIs Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 86305 on May 7, 1998 and was given a
Provisional Authority by the National Telecommunications Commission (NTC) on February 1, 2000 to install,
operate and maintain a nationwide DTH satellite service. When it commenced operations, it offered as part of

its program line-up ABS-CBN Channels 2 and 23, NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN
Channel 9, and IBC Channel 13, together with other paid premium program channels.
However, on April 25, 2001,6 ABS-CBN demanded for PMSI to cease and desist from rebroadcasting Channels
2 and 23. On April 27, 2001,7 PMSI replied that the rebroadcasting was in accordance with the authority granted
it by NTC and its obligation under NTC Memorandum Circular No. 4-08-88,8 Section 6.2 of which requires all
cable television system operators operating in a community within Grade A or B contours to carry the
television signals of the authorized television broadcast stations.9
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the negotiations
were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSIs inability to ensure the prevention of
illegal retransmission and further rebroadcast of its signals, as well as the adverse effect of the rebroadcasts on
the business operations of its regional television stations.10
On May 13, 2002, ABS-CBN filed with the IPO a complaint for Violation of Laws Involving Property Rights,
with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, which
was docketed as IPV No. 10-2002-0004. It alleged that PMSIs unauthorized rebroadcasting of Channels 2 and
23 infringed on its broadcasting rights and copyright.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBNs application for a temporary
restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2 and 23 and likewise filed
a petition for certiorari with the Court of Appeals, which was docketed as CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the must-carry rule under
Memorandum Circular No. 04-08-88. It also submitted a letter dated December 20, 2002 of then NTC
Commissioner Armi Jane R. Borje to PMSI stating as follows:
This refers to your letter dated December 16, 2002 requesting for regulatory guidance from this Commission in
connection with the application and coverage of NTC Memorandum Circular No. 4-08-88, particularly Section
6 thereof, on mandatory carriage of television broadcast signals, to the direct-to-home (DTH) pay television
services of Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television services are broadcast services, the only difference
being the medium of delivering such services (i.e. the former by satellite and the latter by cable). Both can carry
broadcast signals to the remote areas, thus enriching the lives of the residents thereof through the dissemination
of social, economic, educational information and cultural programs.
The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite services.
Concededly, PMSIs DTH pay television services covers very much wider areas in terms of carriage of
broadcast signals, including areas not reachable by cable television services thereby providing a better medium
of dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88,
particularly section 6 thereof, on mandatory carriage of television broadcast signals, DTH pay television
services should be deemed covered by such NTC Memorandum Circular.
For your guidance. (Emphasis added)11

On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated July 24, 2003
from the NTC enjoining strict and immediate compliance with the must-carry rule under Memorandum Circular
No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter dated July 17, 2003
from President/COO Rene Q. Bello of the International Broadcasting Corporation (IBC-Channel 13)
complaining that your company, Dream Broadcasting System, Inc., has cut-off, without any notice or
explanation whatsoever, to air the programs of IBC-13, a free-to-air television, to the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator, operating a direct-to-home (DTH)
broadcasting system, with a provisional authority (PA) from the NTC, your company, along with cable
television operators, are mandated to strictly comply with the existing policy of NTC on mandatory
carriage of television broadcast signals as provided under Memorandum Circular No. 04-08-88, also
known as the Revised Rules and Regulations Governing Cable Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum Circular, requires all cable
television system operators, operating in a community within the Grade A or B contours to mustcarry the television signals of the authorized television broadcast stations, one of which is IBC-13. Said
directive equally applies to your company as the circular was issued to give consumers and the public a
wider access to more sources of news, information, entertainment and other programs/contents.
This Commission, as the governing agency vested by laws with the jurisdiction, supervision and control over all
public services, which includes direct broadcast satellite operators, and taking into consideration the paramount
interest of the public in general, hereby directs you to immediately restore the signal of IBC-13 in your network
programs, pursuant to existing circulars and regulations of the Commission.
For strict compliance. (Emphasis added)12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled
Implementing Rules and Regulations Governing Community Antenna/Cable Television (CATV) and Direct
Broadcast Satellite (DBS) Services to Promote Competition in the Sector. Article 6, Section 8 thereof states:
As a general rule, the reception, distribution and/or transmission by any CATV/DBS operator of any television
signals without any agreement with or authorization from program/content providers are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88, the NTC
explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003 would have the effect of amending
the provisions of MC 4-08-88 on mandatory carriage of television signals, the answer is in the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.

Please be advised, therefore, that as duly licensed direct-to-home satellite television service provider
authorized by this Commission, your company continues to be bound by the guidelines provided for
under MC 04-08-88, specifically your obligation under its mandatory carriage provisions, in addition to
your obligations under MC 10-10-2003. (Emphasis added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a decision14 finding that PMSI infringed the broadcasting rights and
copyright of ABS-CBN and ordering it to permanently cease and desist from rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO which was
docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with the Court of Appeals a
Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for Certiorari in CA-G.R. SP No.
71597, which was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision15 in favor of PMSI, the dispositive
portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly, Decision No. 200301 dated 22 December 2003 of the Director of Bureau of Legal Affairs is hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for appropriate action, and
the records be returned to her for proper disposition. The Documentation, Information and Technology Transfer
Bureau is also given a copy for library and reference purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining order and writ of
preliminary injunction with the Court of Appeals, which was docketed as CA-G.R. SP No. 88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter, ABS-CBN filed a
petition for contempt against PMSI for continuing to rebroadcast Channels 2 and 23 despite the restraining
order. The case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos. 88092 and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the Director-General
of the IPO and dismissed both petitions filed by ABS-CBN.17
ABS-CBNs motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSIs unauthorized rebroadcasting of Channels 2 and 23 is an infringement of its
broadcasting rights and copyright under the Intellectual Property Code (IP Code);18that Memorandum Circular
No. 04-08-88 excludes DTH satellite television operators; that the Court of Appeals interpretation of the mustcarry rule violates Section 9 of Article III19 of the Constitution because it allows the taking of property for
public use without payment of just compensation; that the Court of Appeals erred in dismissing the petition for
contempt docketed as CA-G.R. SP No. 90762 without requiring respondents to file comment.

Respondents, on the other hand, argue that PMSIs rebroadcasting of Channels 2 and 23 is sanctioned by
Memorandum Circular No. 04-08-88; that the must-carry rule under the Memorandum Circular is a valid
exercise of police power; and that the Court of Appeals correctly dismissed CA-G.R. SP No. 90762 since it
found no need to exercise its power of contempt.
After a careful review of the facts and records of this case, we affirm the findings of the Director-General of the
IPO and the Court of Appeals.
There is no merit in ABS-CBNs contention that PMSI violated its broadcasters rights under Section 211 of the
IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations shall enjoy the
exclusive right to carry out, authorize or prevent any of the following acts:
211.1. The rebroadcasting of their broadcasts;
xxxx
Neither is PMSI guilty of infringement of ABS-CBNs copyright under Section 177 of the IP Code which states
that copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the public
performance of the work (Section 177.6), and other communication to the public of the work (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as the transmission by wireless means for the public
reception of sounds or of images or of representations thereof; such transmission by satellite is also
broadcasting where the means for decrypting are provided to the public by the broadcasting organization or
with its consent.
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the Protection
of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise known as the 1961 Rome
Convention, of which the Republic of the Philippines is a signatory, 21 is the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization.
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and thus cannot be
considered to have infringed ABS-CBNs broadcasting rights and copyright, thus:
That the Appellants [herein respondent PMSI] subscribers are able to view Appellees [herein petitioner ABSCBN] programs (Channels 2 and 23) at the same time that the latter is broadcasting the same is undisputed. The
question however is, would the Appellant in doing so be considered engaged in broadcasting. Section 202.7 of
the IP Code states that broadcasting means
the transmission by wireless means for the public reception of sounds or of images or of representations
thereof; such transmission by satellite is also broadcasting where the means for decrypting are provided to the
public by the broadcasting organization or with its consent.
Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting, to wit:

1. The transmission by wireless means for the public reception of sounds or of images or of
representations thereof; and
2. The transmission by satellite for the public reception of sounds or of images or of representations
thereof where the means for decrypting are provided to the public by the broadcasting organization or
with its consent.
It is under the second category that Appellants DTH satellite television service must be examined since it is
satellite-based. The elements of such category are as follows:
1. There is transmission of sounds or images or of representations thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
4. The means for decrypting are provided to the public by the broadcasting organization or with its
consent.
It is only the presence of all the above elements can a determination that the DTH is broadcasting and
consequently, rebroadcasting Appellees signals in violation of Sections 211 and 177 of the IP Code, may be
arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section 202.7 of the IP Code
presupposes that the origin of the signals is the broadcaster. Hence, a program that is broadcasted is attributed to
the broadcaster. In the same manner, the rebroadcasted program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the programs broadcasted by
the Appellee. Appellant did not make and transmit on its own but merely carried the existing signals of the
Appellee. When Appellants subscribers view Appellees programs in Channels 2 and 23, they know that the
origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits, the signals are
scattered or dispersed in the air. Anybody may pick-up these signals. There is no restriction as to its number,
type or class of recipients. To receive the signals, one is not required to subscribe or to pay any fee. One only
has to have a receiver, and in case of television signals, a television set, and to tune-in to the right
channel/frequency. The definition of broadcasting, wherein it is required that the transmission is wireless, all the
more supports this discussion. Apparently, the undiscriminating dispersal of signals in the air is possible only
through wireless means. The use of wire in transmitting signals, such as cable television, limits the recipients to
those who are connected. Unlike wireless transmissions, in wire-based transmissions, it is not enough that one
wants to be connected and possesses the equipment. The service provider, such as cable television companies
may choose its subscribers.
The only limitation to such dispersal of signals in the air is the technical capacity of the transmitters and other
equipment employed by the broadcaster. While the broadcaster may use a less powerful transmitter to limit its
coverage, this is merely a business strategy or decision and not an inherent limitation when transmission is
through cable.

Accordingly, the nature of broadcasting is to scatter the signals in its widest area of coverage as possible. On
this score, it may be said that making public means that accessibility is undiscriminating as long as it [is] within
the range of the transmitter and equipment of the broadcaster. That the medium through which the Appellant
carries the Appellees signal, that is via satellite, does not diminish the fact that it operates and functions as a
cable television. It remains that the Appellants transmission of signals via its DTH satellite television service
cannot be considered within the purview of broadcasting. x x x
xxxx
This Office also finds no evidence on record showing that the Appellant has provided decrypting means to the
public indiscriminately. Considering the nature of this case, which is punitive in fact, the burden of proving the
existence of the elements constituting the acts punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of the Appellees
programs on Channels 2 and 23, as defined under the Rome Convention.22
Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization. The Working Paper23 prepared by the
Secretariat of the Standing Committee on Copyright and Related Rights defines broadcasting organizations as
entities that take the financial and editorial responsibility for the selection and arrangement of, and investment
in, the transmitted content.24 Evidently, PMSI would not qualify as a broadcasting organization because it does
not have the aforementioned responsibilities imposed upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers receive in
its unaltered form. PMSI does not produce, select, or determine the programs to be shown in Channels 2 and 23.
Likewise, it does not pass itself off as the origin or author of such programs. Insofar as Channels 2 and 23 are
concerned, PMSI merely retransmits the same in accordance with Memorandum Circular 04-08-88. With regard
to its premium channels, it buys the channels from content providers and transmits on an as-is basis to its
viewers. Clearly, PMSI does not perform the functions of a broadcasting organization; thus, it cannot be said
that it is engaged in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSIs services are similar
to a cable television system because the services it renders fall under cable retransmission, as described in the
Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be retransmitted to new audiences by means of
cable or wire. In the early days of cable television, it was mainly used to improve signal reception, particularly
in so-called shadow zones, or to distribute the signals in large buildings or building complexes. With
improvements in technology, cable operators now often receive signals from satellites before retransmitting
them in an unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-the-air or delayed
(deferred transmission) on the basis of a fixation or a reproduction of a fixation. Furthermore, they might be
unaltered or altered, for example through replacement of commercials, etc. In general, however, the term
retransmission seems to be reserved for such transmissions which are both simultaneous and
unaltered.

49. The Rome Convention does not grant rights against unauthorized cable retransmission. Without such a right,
cable operators can retransmit both domestic and foreign over the air broadcasts simultaneously to their
subscribers without permission from the broadcasting organizations or other rightholders and without obligation
to pay remuneration.25 (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission. The
retransmission of ABS-CBNs signals by PMSI which functions essentially as a cable television does not
therefore constitute rebroadcasting in violation of the formers intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of
copyright:
xxxx
(h) The use made of a work by or under the direction or control of the Government, by the National Library or
by educational, scientific or professional institutions where such use is in the public interest and is compatible
with fair use;
The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is
under the direction and control of the government though the NTC which is vested with exclusive jurisdiction to
supervise, regulate and control telecommunications and broadcast services/facilities in the Philippines.26 The
imposition of the must-carry rule is within the NTCs power to promulgate rules and regulations, as public
safety and interest may require, to encourage a larger and more effective use of communications, radio and
television broadcasting facilities, and to maintain effective competition among private entities in these activities
whenever the Commission finds it reasonably feasible.27 As correctly observed by the Director-General of the
IPO:
Accordingly, the Must-Carry Rule under NTC Circular No. 4-08-88 falls under the foregoing category of
limitations on copyright. This Office agrees with the Appellant [herein respondent PMSI] that the Must-Carry
Rule is in consonance with the principles and objectives underlying Executive Order No. 436,28 to wit:
The Filipino people must be given wider access to more sources of news, information, education, sports event
and entertainment programs other than those provided for by mass media and afforded television programs to
attain a well informed, well-versed and culturally refined citizenry and enhance their socio-economic growth:
WHEREAS, cable television (CATV) systems could support or supplement the services provided by television
broadcast facilities, local and overseas, as the national information highway to the countryside.29
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a situation whereby station owners and a few
networks would have unfettered power to make time available only to the highest bidders, to communicate only
their own views on public issues, people, and to permit on the air only those with whom they agreed contrary
to the state policy that the (franchise) grantee like the petitioner, private respondent and other TV station

owners, shall provide at all times sound and balanced programming and assist in the functions of public
information and education.
This is for the first time that we have a structure that works to accomplish explicit state policy goals.30
Indeed, intellectual property protection is merely a means towards the end of making society benefit from the
creation of its men and women of talent and genius. This is the essence of intellectual property laws, and it
explains why certain products of ingenuity that are concealed from the public are outside the pale of protection
afforded by the law. It also explains why the author or the creator enjoys no more rights than are consistent with
public welfare.31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative franchises
granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in the Constitution,
specifically Sections 9,32 17,33 and 2434 of Article II on the Declaration of Principles and State Policies.35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which authorizes it
to construct, operate and maintain, for commercial purposes and in the public interest, television and radio
broadcasting in and throughout the Philippines x x x. Section 4 thereof mandates that it shall provide adequate
public service time to enable the government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public participation
such as in community programming; assist in the functions of public information and education x x x.
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which similarly
states that it shall provide adequate public service time to enable the government, through the said
broadcasting stations, to reach the population on important public issues; provide at all times sound and
balanced programming; promote public participation such as in community programming; assist in the
functions of public information and education x x x. Section 5, paragraph 2 of the same law provides that the
radio spectrum is a finite resource that is a part of the national patrimony and the use thereof is a privilege
conferred upon the grantee by the State and may be withdrawn anytime, after due process.
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,36 the Court held that a franchise is a mere
privilege which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave frequencies
have to be allocated as there are more individuals who want to broadcast than there are frequencies to assign. A
franchise is thus a privilege subject, among other things, to amendment by Congress in accordance with the
constitutional provision that any such franchise or right granted . . . shall be subject to amendment, alteration
or repeal by the Congress when the common good so requires.
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and
television broadcast stations and, until the present case was brought, such provisions had not been thought of as
taking property without just compensation. Art. XII, 11 of the Constitution authorizes the amendment of
franchises for the common good. What better measure can be conceived for the common good than one for
free air time for the benefit not only of candidates but even more of the public, particularly the voters, so that
they will be fully informed of the issues in an election? [I]t is the right of the viewers and listeners, not the
right of the broadcasters, which is paramount.

Nor indeed can there be any constitutional objection to the requirement that broadcast stations give free air time.
Even in the United States, there are responsible scholars who believe that government controls on broadcast
media can constitutionally be instituted to ensure diversity of views and attention to public affairs to further the
system of free expression. For this purpose, broadcast stations may be required to give free air time to
candidates in an election. Thus, Professor Cass R. Sunstein of the University of Chicago Law School, in urging
reforms in regulations affecting the broadcast industry, writes:
xxxx
In truth, radio and television broadcasting companies, which are given franchises, do not own the airwaves and
frequencies through which they transmit broadcast signals and images. They are merely given the temporary
privilege of using them. Since a franchise is a mere privilege, the exercise of the privilege may reasonably be
burdened with the performance by the grantee of some form of public service. x x x37
There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its signals is for a commercial purpose;
that its being the countrys top broadcasting company, the availability of its signals allegedly enhances PMSIs
attractiveness to potential customers;38 or that the unauthorized carriage of its signals by PMSI has created
competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that such
carriage adversely affected the business operations of its regional stations. Except for the testimonies of its
witnesses,[39] no studies, statistical data or information have been submitted in evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has the burden of
proving by substantial evidence the allegations in the complaint.40 Mere allegation is not evidence, and is not
equivalent to proof.41
Anyone in the country who owns a television set and antenna can receive ABS-CBNs signals for free. Other
broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be
accessed for free. No payment is required to view the said channels42 because these broadcasting networks do
not generate revenue from subscription from their viewers but from airtime revenue from contracts with
commercial advertisers and producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of PMSI, it offers its
customers premium paid channels from content providers like Star Movies, Star World, Jack TV, and AXN,
among others, thus allowing its customers to go beyond the limits of Free TV and Cable TV.43 It does not
advertise itself as a local channel carrier because these local channels can be viewed with or without DTH
television.
Relevantly, PMSIs carriage of Channels 2 and 23 is material in arriving at the ratings and audience share of
ABS-CBN and its programs. These ratings help commercial advertisers and producers decide whether to buy
airtime from the network. Thus, the must-carry rule is actually advantageous to the broadcasting networks
because it provides them with increased viewership which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television providers
such as PMSI. PMSI uses none of ABS-CBNs resources or equipment and carries the signals and shoulders the
costs without any recourse of charging.44 Moreover, such carriage of signals takes up channel space which can
otherwise be utilized for other premium paid channels.

There is no merit to ABS-CBNs argument that PMSIs carriage of Channels 2 and 23 resulted in competition
between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern its regional programming
in accordance with perceived demands of the region; however, it cannot impose this kind of programming on
the regional viewers who are also entitled to the free-to-air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBNs responsibilities is to scatter its signals to the widest area of
coverage as possible. That it should limit its signal reach for the sole purpose of gaining profit for its regional
stations undermines public interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the pursuit of
profit. The right of the viewers and listeners to the most diverse choice of programs available is
paramount.45 The Director-General correctly observed, thus:
The Must-Carry Rule favors both broadcasting organizations and the public. It prevents cable television
companies from excluding broadcasting organization especially in those places not reached by signal. Also, the
rule prevents cable television companies from depriving viewers in far-flung areas the enjoyment of programs
available to city viewers. In fact, this Office finds the rule more burdensome on the part of the cable television
companies. The latter carries the television signals and shoulders the costs without any recourse of charging. On
the other hand, the signals that are carried by cable television companies are dispersed and scattered by the
television stations and anybody with a television set is free to pick them up.
With its enormous resources and vaunted technological capabilities, Appellees [herein petitioner ABS-CBN]
broadcast signals can reach almost every corner of the archipelago. That in spite of such capacity, it chooses to
maintain regional stations, is a business decision. That the Must-Carry Rule adversely affects the profitability
of maintaining such regional stations since there will be competition between them and its Metro Manila station
is speculative and an attempt to extrapolate the effects of the rule. As discussed above, Appellants DTH satellite
television services is of limited subscription. There was not even a showing on part of the Appellee the number
of Appellants subscribers in one region as compared to non-subscribing television owners. In any event, if this
Office is to engage in conjecture, such competition between the regional stations and the Metro Manila station
will benefit the public as such competition will most likely result in the production of better television
programs.46
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General that PMSI
did not infringe on ABS-CBNs intellectual property rights under the IP Code. The findings of facts of
administrative bodies charged with their specific field of expertise, are afforded great weight by the courts, and
in the absence of substantial showing that such findings are made from an erroneous estimation of the evidence
presented, they are conclusive, and in the interest of stability of the governmental structure, should not be
disturbed.47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not reviewable by
the Supreme Court. They carry even more weight when the Court of Appeals affirms the factual findings of a
lower fact-finding body,48 as in the instant case.
There is likewise no merit to ABS-CBNs contention that the Memorandum Circular excludes from its coverage
DTH television services such as those provided by PMSI. Section 6.2 of the Memorandum Circular requires all
cable television system operators operating in a community within Grade A or B contours to carry the
television signals of the authorized television broadcast stations.49 The rationale behind its issuance can be
found in the whereas clauses which state:

Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown their ability to offer
additional programming and to carry much improved broadcast signals in the remote areas, thereby enriching
the lives of the rest of the population through the dissemination of social, economic, educational information
and cultural programs;
Whereas, the national government supports the promotes the orderly growth of the Cable Television industry
within the framework of a regulated fee enterprise, which is a hallmark of a democratic society;
Whereas, public interest so requires that monopolies in commercial mass media shall be regulated or prohibited,
hence, to achieve the same, the cable TV industry is made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National Telecommunications
Commission the authority to set down rules and regulations in order to protect the public and promote the
general welfare, the National Telecommunications Commission hereby promulgates the following rules and
regulations on Cable Television Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of the general
public and to promote dissemination of information. In line with this policy, it is clear that DTH television
should be deemed covered by the Memorandum Circular. Notwithstanding the different technologies employed,
both DTH and cable television have the ability to carry improved signals and promote dissemination of
information because they operate and function in the same way.
In its December 20, 2002 letter,50 the NTC explained that both DTH and cable television services are of a
similar nature, the only difference being the medium of delivering such services. They can carry broadcast
signals to the remote areas and possess the capability to enrich the lives of the residents thereof through the
dissemination of social, economic, educational information and cultural programs. Consequently, while the
Memorandum Circular refers to cable television, it should be understood as to include DTH television which
provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication Corporation,51 we held:
The NTC, being the government agency entrusted with the regulation of activities coming under its special and
technical forte, and possessing the necessary rule-making power to implement its objectives, is in the best
position to interpret its own rules, regulations and guidelines. The Court has consistently yielded and accorded
great respect to the interpretation by administrative agencies of their own rules unless there is an error of law,
abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of
the law.52
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its resolution is not
necessary in the disposition of the instant case. One of the essential requisites for a successful judicial inquiry
into constitutional questions is that the resolution of the constitutional question must be necessary in deciding
the case.53 In Spouses Mirasol v. Court of Appeals,54 we held:
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other
grounds. The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of
the political departments are valid, absent a clear and unmistakable showing to the contrary. To doubt is to
sustain. This presumption is based on the doctrine of separation of powers. This means that the measure had
first been carefully studied by the legislative and executive departments and found to be in accord with the
Constitution before it was finally enacted and approved.55

The instant case was instituted for violation of the IP Code and infringement of ABS-CBNs broadcasting rights
and copyright, which can be resolved without going into the constitutionality of Memorandum Circular No. 0408-88. As held by the Court of Appeals, the only relevance of the circular in this case is whether or not
compliance therewith should be considered manifestation of lack of intent to commit infringement, and if it is,
whether such lack of intent is a valid defense against the complaint of petitioner.56
The records show that petitioner assailed the constitutionality of Memorandum Circular No. 04-08-88 by way of
a collateral attack before the Court of Appeals. In Philippine National Bank v. Palma,57 we ruled that for reasons
of public policy, the constitutionality of a law cannot be collaterally attacked. A law is deemed valid unless
declared null and void by a competent court; more so when the issue has not been duly pleaded in the trial
court.58
As a general rule, the question of constitutionality must be raised at the earliest opportunity so that if not raised
in the pleadings, ordinarily it may not be raised in the trial, and if not raised in the trial court, it will not be
considered on appeal.59 In Philippine Veterans Bank v. Court of Appeals,60 we held:
We decline to rule on the issue of constitutionality as all the requisites for the exercise of judicial review are not
present herein. Specifically, the question of constitutionality will not be passed upon by the Court unless,
at the first opportunity, it is properly raised and presented in an appropriate case, adequately argued,
and is necessary to a determination of the case, particularly where the issue of constitutionality is the very
lis mota presented.x x x61
Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any other formal
charge requiring the respondent to show cause why he should not be punished for contempt or (2) by the filing
of a verified petition, complying with the requirements for filing initiatory pleadings.62
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP No. 90762, for
PMSIs alleged disobedience to the Resolution and Temporary Restraining Order, both dated July 18, 2005,
issued in CA-G.R. SP No. 88092. However, after the cases were consolidated, the Court of Appeals did not
require PMSI to comment on the petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092 and
ordered the dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without having
ordered respondents to comment on the same. Consequently, it would have us reinstate CA-G.R. No. 90762 and
order respondents to show cause why they should not be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature. The modes of
procedure and rules of evidence adopted in contempt proceedings are similar in nature to those used in criminal
prosecutions. 63 While it may be argued that the Court of Appeals should have ordered respondents to comment,
the issue has been rendered moot in light of our ruling on the merits. To order respondents to comment and have
the Court of Appeals conduct a hearing on the contempt charge when the main case has already been disposed
of in favor of PMSI would be circuitous. Where the issues have become moot, there is no justiciable
controversy, thereby rendering the resolution of the same of no practical use or value.64
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-G.R. SP
Nos. 88092 and 90762, sustaining the findings of the Director-General of the Intellectual Property Office and

dismissing the petitions filed by ABS-CBN Broadcasting Corporation, and the December 11, 2006 Resolution
denying the motion for reconsideration, are AFFIRMED.
SO ORDERED.

Republic of the Philippines

Supreme Court
Manila

FIRST DIVISION

GEMMA ONG a.k.a. MARIA TERESA

GEMMA CATACUTAN,

G.R. No. 169440

Petitioner,
Present:

CORONA, C.J.,
Chairperson,

- versus -

CARPIO,*
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PERLAS-BERNABE,** JJ.
PEOPLE OF THE PHILIPPINES,
Respondent.

Promulgated:

November 23, 2011

x----------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of Court, to set aside
and reverse the June 16, 2005 Decision[1] of the Court of Appeals in CA-G.R. CR No. 28308, which affirmed
the September 23, 2003 Decision[2] of the Regional Trial Court (RTC) of Manila, Branch 24 in Criminal Case
No. 00-184454.

On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma) was charged
before the RTC for Infringement under Section 155 in relation to Section 170 of Republic Act No. 8293 or the
Intellectual Property Code. The accusatory portion of the Information reads:

That sometime in September 25, 1998 and prior thereto at Sta. Cruz, Manila and within
the jurisdiction of this Honorable Court, the above-named accused did then and there, knowingly,
maliciously, unlawfully and feloniously engage in the distribution, sale, [and] offering for sale of
counterfeit Marlboro cigarettes which had caused confusion, deceiving the public that such
cigarettes [were] Marlboro cigarettes and those of the Telengtan Brothers and Sons, Inc., doing
business under the style of La Suerte Cigar and Cigarettes Factory, the exclusive manufacturer of
Marlboro Cigarette in the Philippines and that of Philip Morris Products, Inc. (PMP7) the
registered owner and proprietor of the MARLBORO trademark together with the devices,
including the famous-Root Device, to their damage and prejudice, without the accused seeking
their permit or authority to manufacture and distribute the same.[3]

On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a warrant of arrest
against Gemma, but lifted[4] and set aside[5] the same after Gemma voluntarily surrendered on August 4, 2000,
and filed a cash bond for 12,000.00.

Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000. [6] After the pre-trial
conference on February 13, 2001,[7] trial on the merits ensued.

The prosecution called to the witness stand the following: Roger Sherman Slagle, the Director of
Operations of Philip Morris Malaysia, and Philip Morris Philippines, Inc.s (PMPI) product/brand security
expert, to testify that according to his examination, the products they seized at the subject premises were
counterfeit cigarettes;[8] as well as Jesse Lara, who, as then Senior Investigator III at the Intellectual Property
Rights (IPR) Unit of the Economic Intelligence and Investigation Bureau (EIIB), Department of Finance, led
the investigating team, to testify on the events that led to the arrest of Gemma.[9] The prosecution also presented
the billing accountant of Quasha Ancheta Pea & Nolasco Law Office (Quasha Law Office), Juliet Flores, to
show that PMPI, being one of Quasha Law Offices clients, paid the amount of $4,069.12 for legal services
rendered.[10] The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a senior law partner at Quasha
Law Office, who testified that as the duly appointed Attorney-in-Fact of PMPI, he was in charge of the EIIB
search operation in the subject premises. Atty. Ancheta said that while he was not personally present during the
implementation of the search warrant, he sent Atty. Leonardo Salvador, who constantly reported the
developments to him.[11]

The facts, as succinctly summarized by the Court of Appeals, are as follows:

On September 10, 1998, Jesse S. Lara, then Senior Investigator III at the Intellectual
Property Rights (IPR) Unit of the Economic Intelligence and Investigation Bureau (EIIB),
Department of Finance, received reliable information that counterfeit Marlboro cigarettes were
being distributed and sold by two (2) Chinese nationals, Johnny Sia and Jessie Concepcion, in
the areas of Tondo, Binondo, Sta. Cruz and Quiapo, Manila. A mission team formed by EIIB,
including Lara, conducted surveillance operation to verify the report. EIIB agents Leonardo
Villanueva and Jigo Madrigal did a test-buy on the different sari-sari stores of Manila located in
Quiapo, Tondo, Sta. Cruz and Blumentritt areas and took samples of Marlboro cigarettes sold
therein. During the surveillance, the container van delivering the Marlboro packed in black
plastic bags was seen parked at 1677 Bulacan corner Hizon Streets, Sta. Cruz, Manila [(the
subject premises)]. Upon inquiry from the Barangay Chairman, they also learned that the place is
owned by a certain Mr. Jackson Ong.

The EIIB team coordinated with officers of Philip Morris, Inc., owner of the trademark Marlboro
Label in the Philippines duly registered with the Philippine Patents Office and subsequently with
the Intellectual Property Office (IPO) since 1956. Initial examination made by Philip Morris, Inc.
on those random sample purchases revealed that the cigarettes were indeed fake products
unauthorized by the company. With official indorsement by the EIIB, Senior Investigator Lara
filed an application for search warrant before the Regional Trial Court of Dasmarias, Cavite,
Branch 90.

On September 24, 1998, Executive Judge Dolores L. Espaol issued a search warrant after
finding probable cause to believe that Mr. Jackson Ong has in his possession/control in the
premises located at 1675-1677 Bulacan St. cor. M. Hizon St., Sta. Cruz, Manila, the following
properties:

Substantial number of fake locally made and imported fake cigarettes bearing the
Marlboro brand, together with the corresponding labels, cartons, boxes and other
packaging as well as receipts, invoices and other documents relative to the
purchase, sale, and distribution of the aforesaid fake Marlboro cigarettes.

On September 25, 1998, the EIIB team led by Senior Investigator Lara implemented the search
warrant, together with SPO2 Rommel P. Sese of the Western Police District (WPD) as
representative of the Philippine National Police (PNP), Barangay Chairman Ernesto Traje, Sr.,
Barangay Kagawad Vivian V. Rallonza and Atty. Leonardo P. Salvador who was sent by [Quasha
Pea & Nolasco Law Office,] the law firm engaged by Philip Morris, Inc. They proceeded to the
subject premises but Jackson Ong, the alleged owner, was not there. It was accused, who is
supposedly either the spouse or common-law wife of Jackson Ong, who entertained them. At
first, accused refused to allow them entry into the premises but eventually the team was able to
search the premises and found Marlboro cigarettes stocked in several boxes containing fifty (50)
reams inside each box which were packed in black plastic sacks like in balikbayan boxes. The

Inventory and Certification In the Conduct of Search were duly accomplished and signed by the
members of the EIIB and the other representatives present during the actual search (SPO2 Sese,
Jess Lara, Traje, Sr., Henry Mariano, Isidro Burgos and Atty. Salvador). Accused signed her
name in the said documents as Gemma Ong, as the Owner/Representative, while a certain
employee, Girlie Cantillo, also signed as witness.

On September 28, 1998, a Return of Search Warrant was submitted by the EIIB to the issuing
court stating that the articles seized pursuant to the warrant were stored in the premises of the
EIIB and requesting that EIIB be granted temporary custody of the goods. Acting on the Urgent
Motion To Transfer Custody of Confiscated Articles filed by Philip Morris Products, Inc. (PMPI)
of Virginia, U.S.A., Executive Judge Dolores L. Espaol ordered the custody of the seized goods
transferred from EIIB to PMPI c/o Quasha Ancheta Pea and Nolasco Law Office, the Attorneyin-Fact of PMPI. Judge Espaol subsequently also issued an order dated October 15, 1998
authorizing PMPI to secure and take out samples of the unauthorized products from the
confiscated cartons/boxes of Marlboro cigarettes which are stored at Four Winds Phils. Inc.
warehouse located at No. 2241 Pasong Tamo Extension, Makati City under the direct and
personal control and supervision of Sheriff IV Tomas C. Azurin. PMPI had earlier sought such
order from the court for the purpose of laboratory analysis and scientific testing of the samples
from the confiscated cigarettes.

On the basis of the results of the examination conducted by PMPI on the samples obtained from
the confiscated boxes of cigarettes bearing the Marlboro brand, which confirmed the same to be
unauthorized products and not genuine Marlboro cigarettes, the EIIB filed a case for Violation of
Sections 155 and 168 in relation to Section 170 of Republic Act No. 8293 against Jackson Ong
who is not an authorized distributor of Marlboro products in the Philippines.[12]

After the prosecution rested its case, the defense filed a Demurrer to Evidence, [13] which the RTC denied
on March 26, 2003.[14] The defense moved for a reconsideration of this order but the same was denied on April
22, 2003.[15]

Gemma, as the lone witness for the defense, then took the witness stand. She said that she is married to
Co Yok Piao, a Chinese national, but she still uses her maiden name Catacutan. [16] She denied that she is the
Gemma Ong accused in this case. She testified that she was arrested on August 4, 2000, without the arresting
officers asking for her name. She said that when she pleaded to be released, she was instructed to post a cash
bond, which she did in the amount of 12,000.00.Gemma averred that when she posted her bond and signed her
certificate of arraignment, she did so under her real name Maria Teresa Gemma Catacutan, as opposed to the
signatures in the Inventory and Certification in the Conduct of Search (search documents), which she denied
signing. She claimed that she was not able to bring up her defense of mistaken identity early on as she did not
know when the proper time to raise it was. She avowed that she was not interrogated by the police prior to her

arrest, despite the two-year gap between it and the search of the subject premises. She alleged that she did not
know Jackson Ong and that the prosecution witnesses, whom she first saw during her trial, couldnt even point to
her as the person present during the raid when they testified in court. Gemma further asseverated that while she
could not remember where she was on September 25, 1998, she was sure that she was not at the subject
premises on that date. Gemma presented her Identification Card issued by the Professional Regulation
Commission (PRC) to show that she is a dentist by profession, although she claimed that she is a
businessperson in practice. She said that she used to buy and sell gear fabrics, t-shirts, truck materials, and real
estate[17] under the business name Fascinate Trading based in Bulacan Street, Sta. Cruz, Manila, but that it had
ceased operations in February 1998.[18] Gemma denied ever having engaged in the manufacture and sale of any
kind of cigarettes and claimed that she could not even distinguish between a fake and a genuine Marlboro
cigarette.[19]

On September 30, 2003, the RTC convicted Gemma of the crime as charged. The dispositive portion of
its Decision reads:

Accordingly, this Court finds accused Gemma Catacutan guilty beyond reasonable doubt of
violation of Section 155 in relation to Section 170 of Republic Act No. 8293 and hereby
sentences her to suffer the penalty of imprisonment of two (2) years and to pay a fine of Fifty
Thousand (50,000.00) Pesos.

Accused is further directed to indemnify private complainant the sum of US$4,069.12 or its peso
equivalent, as actual damages.

The records of the case as against Jackson Ong is hereby ordered archived pending his arrest.

With costs against accused Gemma Catacutan.[20]

In resolving the case, the RTC narrowed down the issue to whether Gemma Catacutan was the same
accused identified as Gemma Ong. The RTC answered this in the affirmative as it found Gemmas defense of
mistaken identity as untenable, especially since she claimed to be a professional. The RTC explained:

Ranged against the positive and forthright declaration of the prosecution witnesses, the
mere uncorroborated and self-serving denials of the accused cannot stand. (People vs. Hortaleza,
258 SCRA 201)

We note in disbelief that it was only in the hearing of November 26, 2001, that accused[s] former
lawyer manifested that accused is known as Gemma Catacutan never as Gemma Ong (tsn,
November 26, 2001, p. 3) and as admitted by her, she never revealed her true identity when
arrested, when she posted her bail bond and even during her arraignment.

She could have protested at the time of her arrest that they were arresting the wrong person but
this she did not do. She proceeded to post a bond for her provisional liberty, hired a lawyer to
defend her but failed to divulge the very information that could have led to an early dismissal of
the case, if true.

Her pretensions of ignorance as to the proper stage of when to explain (tsn, May 26, 2003), p. 13
can hardly be given credit. A dentist by profession, it is utterly incredible that she remained meek
all through-out her arrest and the posting of her bail bond.[21]

The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale and manufacture
of Marlboro cigarettes, the address of her business Fascinate Trading is registered as 1677 Bulacan Street, Sta.
Cruz, Manila, the same property raided by the EIIB that contained the counterfeit cigarettes.[22]

Aggrieved, Gemma appealed the RTCs decision to the Court of Appeals based on the following grounds:

THE LOWER COURT GRIEVOUSLY ERRED IN CONVICTING DR. MARIA

TERESA GEMMA CATACUTAN GUILTY OF THE CRIME OF VIOLATION OF THE
INTELLECTUAL PROPERTY RIGHTS LAW DESPITE UTTER LACK OF EVIDENCE.

II

THE LOWER COURT IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN ON

THE BASIS OF SURMISE (sic), CONJECTURES AND GUESSWORK COMMITTED
GRAVE VIOLENCE AGAINST THE CONSTITUTIONAL PRESUMPTION OF
INNOCENCE.
III

THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN

CONVICTING THE ACCUSED-APPELLANT WHO HAD NOT BEEN POSITIVELY
IDENTIFIED AND PINPOINTED AS MANUFACTURER NOR (sic) DISTRIBUTOR OF
FAKE MARLBORO PRODUCT.

IV

THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN NOT

GIVING THE SLIGHTEST CREDENCE TO THE UNCONTRADICTED, UNREFUTED AND
CANDID TESTIMONY OF THE ACCUSED-APPELLANT, BUT INSTEAD, CONVICTED
HER ON [T]HE BASIS OF EXTRAPOLATED EVIDENCE NOT BORNE BY THE
RECORDS.

THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN

CONVICTING ACCUSED-APPELLANT DESPITE THE UTTER AND PATHETIC LACK OF
EVIDENCE TO SUSTAIN THE PROSECUTIONS LAME, SHALLOW AND
UNCONFOUNDED THEORY OF GUILT.[23]

The Court of Appeals found Gemmas appeal to be unmeritorious. It said that Gemma was positively
identified by the prosecution witnesses as the woman who entertained them during the search of the subject
premises on September 25, 1998, and the woman who signed the Certification in the Conduct of Search and
Inventory. The Court of Appeals agreed with the RTCs rejection of Gemmas defense of mistaken identity, as she
should have raised it at the earliest opportunity, which was at the time of her arrest, the posting of her bail bond,
or during her arraignment. The Court of Appeals held that the amendment of the prosecution witnesses
affidavits was explained during the hearing, and although the original affidavits were the ones marked during
the pre-trial, the amended ones provided the basis for the filing of the Information against Gemma and her coaccused Jackson Ong. The Court of Appeals also noted that the March 20, 2000 Resolution of the State
Prosecutor specifically mentioned that the search warrant was served on Gemma Ong. The Court of Appeals
then proclaimed that in the hierarchy of evidence, the testimony of the witness in court commands greater
weight than his written affidavit.[24]

The Court of Appeals affirmed the conviction of Gemma for trademark infringement under Section 155
of Republic Act No. 8293, as the counterfeit goods seized by the EIIB were not only found in her possession
and control, but also in the building registered under her business, Fascinate Trading. The Court of Appeals said
that the prosecution had satisfactorily proven Gemmas commission of the offense since the unauthorized use of

the trademark Marlboro, owned by PMPI, was clearly intended to deceive the public as to the origin of the
cigarettes being distributed and sold, or intended to be distributed and sold. The Court of Appeals further
sustained the penalty and damages imposed by the RTC for being in accord with the law and facts.[25]

Gemma is now before this Court with the following assignment of errors:

A.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF
PROSECUTION WITNESSES IDENTIFYING PETITIONER AS PRESENT AT THE TIME
AND PLACE WHEN THE SEARCH AND SEIZURE TOOK PLACE.

B.

THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF

PROSECUTION WITNESSES THAT THEY SAW PETITIONER SIGN HER NAME AS
GEMMA ONG AS OWNER/CLAIMANT/REPRESENTATIVE (OF THE ARTICLES SEIZED)
ON THE SEARCH WARRANT (EXH. A), CERTIFICATION IN THE CONDUCT OF
SEARCH (EXH. B) AND INVENTORY OF THE S[E]IZED ARTICLES AT THE TIME OF
THE SEARCH (EXH. D).

C.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONERS SIGNATURE

IN EXHIBITS A, B AND C ARE NOT HERS BUT WERE FORGED, BEING COMPLETELY
AND PATENTLY DISSIMILAR TO HER TRUE AND REAL SIGNATURE AS SHOWN IN
HER OFFICIAL I.D AS PROFESSIONAL DENTIST.

D.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF THE

PROSECUTION WITNESSES WHICH DID NOT MENTION PETITIONERS PRESENCE AT
THE TIME AND PLACE OF THE SEARCH CANNOT TAKE PRECEDENCE OVER THEIR
CONTRARY TESTIMONIES IN COURT THAT SHE WAS PRESENT AND IN FACT THE
OCCUPANT AND OWNER OF THE PREMISES FROM WHICH SHE INITIALLY
BLOCKED THEIR ENTRY INTO.

E.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS THE

VERY SAME PERSON WHO WAS CAUGHT IN POSSESSION AND CONTROL OF THE
PREMISES WHERE THE COUNTERFEIT ARTICLES WERE SEIZED BECAUSE SHE
ALLEGEDLY NEVER PROTESTED BEING WRONGFULLY ACCUSED AT THE TIME OF
HER ARREST ON 4 AUGUST 2000, WHEN SHE POSTED HER CASH BOND AND WHEN
SHE EVEN SIGNED HER NAME AS MA. TERESA GEMMA CATACUTAN IN THE
WAIVER, UNDERTAKING AND CERTIFICATE OR ARRAIGNMENT, ALL IN THE NAME
OF THE ACCUSED AS GEMMA ONG, a.k.a. MA. THERESA CATACUTAN.

F.

THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR FAILURE

OF THE PROSECUTION TO PROVE THE GUILT OF THE ACCUSED-APPELLANT
BEYOND REASONABLE DOUBT.[26]

Gemma argues that if it were true that she was in the subject premises when it was raided on September
25, 1998, then her name and presence would have been mentioned in the respective affidavits of Slagle and
Atty. Ancheta; and the EIIB agents who conducted the search would have confronted, investigated, or arrested
her.Gemma insists that the fact that her name was only mentioned for the first time in the amended affidavits
yields to the conclusion that she was not in the subject premises when it was searched and that the testimonies
of the prosecution witnesses were perjured.[27]

Gemma further claims that the courts below were wrong in finding that she never protested that she was
mistakenly identified. She claims that she was arrested without the benefit of a preliminary investigation and all
she wanted to do at that point was to get out [of] the clutches of overzealous and eager beaver policemen who
were exuberant in arresting an innocent party like[28] her. Gemma also explains that her non-protest during her
arraignment was upon the advice of her former lawyer, who said that he would correct it in the proper time
during the trial.

Respondent People of the Philippines, in its comment,[29] avers that there are only two issues to be
resolved in this case, to wit:

1.

THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES QUESTIONS

OF FACT WHICH ARE NOT PROPER FOR REVIEW UNDER RULE 45 OF THE
REVISED RULES OF COURT.

2.

THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONERS

CONVICTION FOR VIOLATION OF SECTION 155 IN RELATION TO SECTION
170 OF R.A. 8293 (INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES).[30]

Respondent claims that a perusal of the issues in Gemmas petition readily discloses that only questions
of fact have been raised, which are not reviewable in an appeal by certiorari.[31] Respondent asseverates that
Gemmas conviction was warranted as the prosecution had sufficiently established her presence during the
search of the subject premises where she signed the search documents as Gemma Ong. Moreover, the
respondent avers, Gemma failed to timely protest her arrest and raise her claim that she is not Gemma Ong.[32]

Issues

A study of the pleadings filed before this Court shows that the only issues to be resolved are the
following:

1.

Whether or not accused-appellants petition for review on certiorari under Rule 45 of the Rules of
Court is fatally defective as it raises questions of fact; and

2.

Whether or not Gemmas guilt was proven beyond reasonable doubt in light of her alleged mistaken
identity.

This Courts Ruling

Procedural Issue

As this case reached this Court via Rule 45 of the Rules of Court, the basic rule is that factual questions are
beyond the province of this Court, because only questions of law may be raised in a petition for review.

[33]

However, in exceptional cases, this Court has taken cognizance of questions of fact in order to resolve legal
issues, such as when there was palpable error or a grave misapprehension of facts by the lower court.
[34]
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals,[35] we said that
although submission of issues of fact in an appeal by certiorari taken to this Court is ordinarily proscribed, this
Court nonetheless retains the option in the exercise of its sound discretion, taking into account the attendant
circumstances, either to decide the case or refer it to the proper court for determination. [36] Since the
determination of the identity of Gemma is the very issue affecting her guilt or innocence, this Court chooses to
take cognizance of this case in the interest of proper administration of justice.

Gemma is guilty of violating

Section 155 in relation to Section 170 of
Republic Act No. 8293

Gemma was charged and convicted of violating Section 155 in relation to Section 170 of Republic Act
No. 8293, or the Intellectual Property Code of the Philippines.

Section 155. Remedies; Infringement. - Any person who shall, without the consent of the
owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or services including other preparatory
steps necessary to carry out the sale of any goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant
feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of
goods or services on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the infringement takes place at the moment
any of the acts stated in Subsection 155.1 or this subsection are committed regardless of
whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A.
No 166a)
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. (Arts. 188 and 189, Revised Penal Code.)
(Emphases supplied.)

A mark is 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.[37]

In McDonalds Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., [38] this
Court held:

To establish trademark infringement, the following elements must be shown: (1) the
validity of plaintiffs mark; (2) the plaintiffs ownership of the mark; and (3) the use of the mark or
its colorable imitation by the alleged infringer results in likelihood of confusion. Of these, it is
the element of likelihood of confusion that is the gravamen of trademark infringement.

A mark is valid if it is distinctive and not barred from registration. Once registered, not only the marks
validity, but also the registrants ownership of the mark isprima facie presumed.[39]

The prosecution was able to establish that the trademark Marlboro was not only valid for being neither
generic nor descriptive, it was also exclusively owned by PMPI, as evidenced by the certificates of registration
issued by the Intellectual Property Office of the Department of Trade and Industry.[40]

Anent the element of confusion, both the RTC and the Court of Appeals have correctly held that the
counterfeit cigarettes seized from Gemmas possession were intended to confuse and deceive the public as to the
origin of the cigarettes intended to be sold, as they not only bore PMPIs mark, but they were also packaged
almost exactly as PMPIs products.[41]

Regarding the Claim of Mistaken Identity

Despite all these findings, Gemma has posited only a single defense, from the RTC all the way up to this
Court: that she is not the Gemma Ong named and accused in this case. She bases this claim on the alleged
discrepancies in the prosecution witnesses original affidavits vis--vis the amended ones, which discrepancies,
according to her, strongly suggest her innocence.

This Court has time and again held that between an affidavit executed outside the court, and a testimony
given in open court, the latter almost always prevails.

Discrepancies between a sworn statement and testimony in court do not outrightly justify
the acquittal of an accused. Such discrepancies do not necessarily discredit the witness since ex
parte affidavits are often incomplete. They do not purport to contain a complete compendium of
the details of the event narrated by the affiant. Thus, our rulings generally consider sworn
statements taken out of court to be inferior to in court testimony. x x x.[42]

A reading of the original affidavits[43] executed by Slagle and Atty. Ancheta, readily reveals that they
concentrated on the facts and events leading up to the search and seizure of the contraband materials from the
subject premises. They not only failed to mention Gemma Ongs presence there, but they also failed to mention
the other witnesses names and presence there as well. Although this might appear to be a mistake on the part of
a known and established law firm like the Quasha Law Office, the firm immediately sought to rectify this by
having the affidavits of Slagle, Atty. Ancheta, and Lara amended.

If it were true that Gemma was not at the subject premises at all on September 25, 1998, then she should
have grabbed every chance to correct this notion and expose this mistake before she was arrested. She could
have brought up her defense of mistaken identity or absence at the raid in the preliminary investigation
conducted prior to the issuance of her warrant of arrest; but instead, she chose to ignore her subpoena and
disregard the preliminary investigation. Even then, Gemmahad the opportunity to raise the fact that she was not
Gemma Ong; not only during her arrest, but also during the posting of the cash bond for her bail, and more
importantly, during her arraignment, when she was asked if she understood the charges against her. Gemma
also knew that the Information was filed against her on the basis of the amended affidavits, thus, she could have
filed a motion to quash the information before she entered her plea, or asked that a reinvestigation be
conducted. However, all these Gemma failed to do. We agree with the RTC that it is highly unlikely that a
person of her stature and educational attainment would be so meek and timid that she failed to protest against
her being wrongly identified, accused, arrested, and potentially imprisoned. If what she says were true, she
would not have agreed to post bail or to be arraigned without at the very least, bringing up the fact that she was
not the Gemma Ong the police officers were looking for. In addition, her own lawyer, Atty. Maglinao, brought
up the fact that she was not Gemma Ong, only for the purpose of correcting the Information, and not to contest
it, to wit:

WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR CONTINUATION
OF DIRECT EXAMINATION BY:
ATTY. ERESE:

With the kind permission of the hon. court.

COURT: Proceed.

ATTY. MAGLINAO:
I would just want to be on record that my client, Gemma Catacutan has never been known as
Gemma Ong because her real name is Gemma Catacutan.

COURT: Do you have any objection to the amendment of the information?

ATTY. MAGLINAO:
No, your Honor. May we request to correct the information from Gemma Ong to Gemma
Catacutan.[44]

Gemma further accuses the prosecution witnesses of falsely testifying and of perjuring themselves just
so they can satisfy a big client like PMPI by showing that somebody had been arrested for counterfeiting its
cigarettes. The crimes Gemma is imputing on these witnesses are serious crimes, and in the absence of concrete
and convincing evidence, this Court could not believe her mere allegations that imply that these people would
destroy someones life just so they can please a client, more so over mere cigarettes. In Principio v. Hon.
Barrientos,[45] we said:

Bad faith is never presumed while good faith is always presumed and the chapter on Human
Relations of the Civil Code directs every person, inter alia, to observe good faith, which springs
from the fountain of good conscience. Therefore, he who claims bad faith must prove it. For one
to be in bad faith, the same must be evident. x x x.[46]

The prosecution witnesses, contrary to Gemmas claim, had positively identified her as the person who
initially refused the search team entrance, then later acquiesced to the search operations. Slagle explained that
even though he mentioned Gemma only in his amended affidavit, he was sure that she was at the subject
premises on the day that they searched it:

Testimony of Roger Sherman Slagle

ATTY. MAGLINAO:

Q In this amended affidavit you mentioned the name, Gemma Catacutan as one of the accused?

A Yes sir.

Q Can you tell the court how you were able to include the name of Gemma Catacutan in
your amended affidavit, when in fact it did not appear in the first
affidavit?

A When we arrived she was there and she was very nervous and upset.

xxxx

A It is very clear to me when I arrived there that she was somehow involved.[47] (Emphases ours.)

Lara on the other hand, even pointed to her and thus positively identified her to be the one who had
signed the search documents,[48] as the owner of the subject premises, to wit:

Testimony of Jesse Lara

ATTY. FREZ
Q : Mr. Witness, do you know this person who wrote the name Gemma Ong?

A : Yes, sir, Gemma Ong is the owner of the premises when we served the search
warrant and also, she was the one who refused us to gain entry during the
service of the search warrant.

Q : Were you able to gain entry at the premises?

A : Yes, sir.

Q : So, as regard to the person whom you identify as the one who refused you to gain
entry, would you be able to identify this person?

A : Yes, sir, that lady in pink is Mrs. Gemma Ong.

(As witness is pointing to the accused Gemma Ong).

Q : Mr. Witness, why do you say that the person whom you pointed to us is the one
who wrote the name Mrs. Gemma Ong?

WITNESS
Because when we served the search warrant she signed it in our
presence and that is her own signature.

xxxx

ATTY. FREZ
Q : So, Mr. Witness, in this Inventory, we made some markings during the pre-trial
conference and I see here above the signature (Owner/Representative),
there exist a handwritten name which reads GEMMA ONG and above it,
there exist a signature, are you familiar with this person which appears to
be Gemma Ong?

A : Yes, sir, Gemma Ong signed that in my presence.

Q : Your Honor, during the pre-trial conference, it was previously marked as Exhibit D1. Mr. Witness, I also see here a Verification but there also exist an entry
below the name and I quote Owner/Claimant/Representative, there
appears a handwritten name Gemma Ong and a signature above it, are you
familiar with this person which appears to be Gemma Ong?

A : Yes, sir, Gemma Ong signed that in my presence.

xxxx

Q : Mr. Witness, in this document which is the certification in the Conduct of Search and
I have here above the entry (Owner/Representative), a handwritten name
which reads Gemma Ong and there exist a signature above the
handwritten name, can you identify the signature?

A : Yes, sir, this was signed by Gemma Ong in my presence.[49] (Emphases ours.)

Lara further attested to the fact that the search warrant was served on Gemma, who later on entertained
the search team:

ATTY. FREZ
Mr. Witness, the person to whom you served the search warrant is identified as Mrs. Gemma
Ong, do you know her relationship with the accused Jackson Ong?

ATTY. FERNANDEZ
Objection, your honor, the witness would be incompetent . . .

COURT
May answer.
(The stenographer read back the question).

WITNESS
I am not familiar with the relationship of Mrs. Gemma Ong with Jackson Ong because during the
service of the search warrant, Mrs. Gemma Ong was there together with
two employees and when I asked where was Jackson Ong, she was the one
who entertained us.

ATTY. FREZ
So, the search warrant was served against Gemma Ong?

WITNESS

Yes, Sir.[50]

Positive identification of a culprit is of great weight in determining whether an accused is guilty or not.
[51]
Gemma, in claiming the defense of mistaken identity, is in reality denying her involvement in the crime. This
Court has held that the defense of denial is insipid and weak as it is easy to fabricate and difficult to prove; thus,
it cannot take precedence over the positive testimony of the offended party.[52] The defense of denial is
unavailing when placed astride the undisputed fact that there was positive identification of the accused.[53]

While Gemma claims she does not know Jackson Ong, the subject premises where the counterfeit
cigarettes were seized was registered under her admitted business Fascinate Trading. [54] Aside from the bare
allegation that she had stopped operations in the subject premises as early as February 1998, she has neither
proven nor shown any evidence that she had relinquished control of the building after that date. Gemmas
allegation that she did not sign the search documents, and that the signatures therein did not match the signature
on her PRC identification card, must also be struck down as she has not shown proof that her PRC signature is
the only way she has ever signed her name. She could have, at the very least, gotten a handwriting expert to
testify on her behalf that there is no way that the signatures in the search documents and the signature on her
PRC identification card could have been written by one and the same person; instead, she relied on the flimsy
contention that the two signatures were, on their face, different.

Gemmas defense consists of her claim of mistaken identity, her denial of her involvement in the crime,
and her accusation against the prosecution witnesses of allegedly giving false testimonies and committing
perjury. These are all weak, unproven, and unfounded claims, and will not stand against the strong evidence
against her.

WHEREFORE, this Court DENIES the Petition. The June 16, 2005 Decision of the Court of Appeals
in CA-G.R. CR No. 28308 is AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION
G.R. No. 194062

June 17, 2013

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, REGASCOs 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 REGASCOs
regular customer. Inside REGASCOs refilling plant, they witnessed that REGASCOs 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&Ss 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. Respondents 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 REGASCOs 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 petitioners 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 prosecutors 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 latters 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 (P50,000) to
Two hundred thousand pesos (P200,000), shall be imposed on any person who is found guilty of committing
any of the acts mentioned in Section 155, Section 168 and Subsection 169.1.
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.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 188526

November 11, 2013

CENTURY CHINESE MEDICINE CO., MING SENG CHINESE DRUGSTORE, XIANG JIAN
CHINESE DRUG STORE, TEK SAN CHINESE DRUG STORE, SIM SIM CHINESE DRUG STORE,
BAN SHIONG TAY CHINESE DRUG STORE and/or WILCENDO TAN MENDEZ, SHUANG YING
CHINESE DRUGSTORE, and BACLARAN CHINESE DRUG STORE, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES and LING NA LAU, Respondents.
DECISION
PERALTA, J.:
Before us is a petition for review on certiorari which seeks to reverse and set aside the Decision1 dated March
31, 2009 of the Court of Appeals in CA-G.R. CV No. 88952 and the Resolution2 dated July 2, 2009, which
denied reconsideration thereof. The CA reversed the Order3 dated September 25, 2006 of the Regional Trial
Court (RTC), Branch 143, Makati City, quashing Search Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05023, 05-025, 05-042 and 05-043, and the Order4 dated March 7, 2007 denying reconsideration thereof.
The antecedent facts are as follows:
Respondent Ling Na Lau, doing business under the name and style Worldwide Pharmacy,5 is the sole distributor
and registered trademark owner of TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap as shown by
Certificate of Registration 4-2000-009881 issued to her by the Intellectual Property Office (IPO) for a period of
ten years from August 24, 2003.6 On November 7, 2005, her representative, Ping Na Lau, (Ping) wrote a
letter7addressed to National Bureau of Investigation (NBI) Director Reynaldo Wycoco, through Atty. Jose Justo

Yap and Agent Joseph G. Furing (Agent Furing), requesting assistance for an investigation on several drugstores
which were selling counterfeit whitening papaya soaps bearing the general appearance of their products.
Agent Furing was assigned to the case and he executed an affidavit8 stating that: he conducted his own
investigation, and on November 9 and 10, 2005, he, together with Junayd Esmael (Esmael), were able to buy
whitening soaps bearing the trademark "TOP-GEL", "T.G." & "DEVICE OF A LEAF" with corresponding
receipts from a list of drugstores which included herein petitioners Century Chinese Medicine Co., Min Seng
Chinese Drugstore, Xiang Jiang Chinese Drug Store, Tek San Chinese Drug Store, Sim Sim Chinese Drug
Store, Ban Shiong Tay Drugstore, Shuang Ying Chinese Drugstore, and Baclaran Chinese Drug Store; while
conducting the investigation and test buys, he was able to confirm Ping's complaint to be true as he personally
saw commercial quantities of whitening soap bearing the said trademarks being displayed and offered for sale at
the said drugstores; he and Esmael took the purchased items to the NBI, and Ping, as the authorized
representative and expert of Worldwide Pharmacy in determining counterfeit and unauthorized reproductions of
its products, personally examined the purchased samples, and issued a Certification9 dated November 18, 2005
wherein he confirmed that, indeed, the whitening soaps bearing the trademarks "TOP-GEL", "T.G." &
"DEVICE OF A LEAF" from the subject drugstores were counterfeit.
Esmael also executed an affidavit10 corroborating Agent Furing's statement. Ping's affidavit11 stated that upon his
personal examination of the whitening soaps purchased from petitioners bearing the subject trademark, he found
that the whitening soaps were different from the genuine quality of their original whitening soaps with the
trademarks "TOP-GEL", "T.G." & "DEVICE OF A LEAF" and certified that they were all counterfeit.
On November 21, 2005, Agent Furing applied for the issuance of search warrants before the Regional Trial
Court (RTC), Branch 143, Makati City, against petitioners and other establishments for violations of Sections
168 and 155, both in relation to Section 170 of Republic Act (RA) No. 8293, otherwise known as the
Intellectual Property Code of the Philippines. Section 168, in relation to Section 170, penalizes unfair
competition; while Section 155, in relation to Section 170, punishes trademark infringement.
On November 23, 2005, after conducting searching questions upon Agent Furing and his witnesses, the RTC
granted the applications and issued Search Warrants Nos. 05-030, 05-033, and 05-038 for unfair competition
and Search Warrants Nos. 05-022, 05-023, 05-025, 05-042 and 05-043 for trademark infringement against
petitioners.
On December 5, 2005, Agent Furing filed his Consolidated Return of Search Warrants.12
On December 8, 2005, petitioners collectively filed their Motion to Quash13 the Search Warrants contending that
their issuances violated the rule against forum shopping; that Benjamin Yu (Yu) is the sole owner and distributor
of the product known as "TOP-GEL"; and there was a prejudicial question posed in Civil Case No. 05-54747
entitled Zenna Chemical Industry v. Ling Na Lau, et al., pending in Branch 93 of the RTC of Quezon City,
which is a case filed by Yu against respondent for damages due to infringement of trademark/tradename, unfair
competition with prayer for the immediate issuance of a temporary restraining order and/or preliminary
prohibitory injunction.
On January 9, 2006, respondent filed her Comment/Opposition14 thereto arguing the non-existence of forum
shopping; that Yu is not a party- respondent in these cases and the pendency of the civil case filed by him is
immaterial and irrelevant; and that Yu cannot be considered the sole owner and distributor of "TOP GEL T.G. &
DEVICE OF A LEAF." The motion was then submitted for resolution in an Order dated January 30, 2006.
During the pendency of the case, respondent, on April 20, 2006, filed a Submission15 in relation to the Motion to
Quash attaching an Order16 dated March 21, 2006 of the IPO in IPV Case No. 10-2005-00001 filed by

respondent against Yu, doing business under the name and style of MCA Manufacturing and Heidi S. Cua,
proprietor of South Ocean Chinese Drug Stores for trademark infringement and/or unfair competition and
damages with prayer for preliminary injunction. The Order approved therein the parties' Joint Motion To
Approve Compromise Agreement filed on March 8, 2006. We quote in its entirety the Order as follows:
The Compromise Agreement between the herein complainant and respondents provides as follows:
1. Respondents acknowledge the exclusive right of Complainant over the trademark TOP GEL T.G. &
DEVICE OF A LEAF for use on papaya whitening soap as registered under Registration No. 4-2000009881 issued on August 24, 2003.
2. Respondents acknowledge the appointment by Zenna Chemical Industry Co., Ltd. of Complainant as
the exclusive Philippine distributor of its products under the tradename and trademark TOP GEL MCA
& MCA DEVICE (A SQUARE DEVICE CONSISTING OF A STYLIZED REPRESENTATION OF A
LETTER "M" ISSUED " OVER THE LETTER "CA") as registered under Registration No. 4-1996109957 issued on November 17, 2000, as well as the assignment by Zenna Chemical Industry Co., Ltd.
to Complainant of said mark for use on papaya whitening soap.
3. Respondents admit having used the tradename and trademark aforesaid but after having realized that
Complainant is the legitimate assignee of TOP GEL MCA & MCA DEVICE and the registered owner of
TOP GEL T.G. & DEVICE OF A LEAF, now undertake to voluntarily cease and desist from using the
aforesaid tradename and trademark and further undertake not to manufacture, sell, distribute, and
otherwise compete with Complainant, now and at anytime in the future, any papaya whitening soap
using or bearing a mark or name identical or confusingly similar to, or constituting a colorable imitation
of, the tradename and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE
OF A LEAF as registered and described above.
4. Respondents further undertake to withdraw and/or dismiss their counterclaim and petition to cancel
and/or revoke Registration No. 4-2000-009881 issued to Complainant. Respondents also further
undertake to pull out within 45 days from approval of the Compromise Agreement all their products
bearing a mark or name identical or confusingly similar to, or constituting a colorable imitation of, the
tradename and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A
LEAF, from the market nationwide.
5. Respondents finally agree and undertake to pay Complainant liquidated damages in the amount of
FIVE HUNDRED THOUSAND (Php500,000.00) PESOS for every breach or violation of any of the
foregoing undertakings which complainant may enforce by securing a writ of execution from this Office,
under this case.
6. Complainant, on the other hand, agrees to waive all her claim for damages against Respondents as
alleged in her complaint filed in the Intellectual Property Office only.
7. The Parties hereby agree to submit this Compromise Agreement for Approval of this Office and pray
for issuance of a decision on the basis thereof.
Finding the Compromise Agreement to have been duly executed and signed by the parties and/or their
representatives/counsels and the terms and conditions thereof to be in conformity with the law, morals, good
customs, public order and public policy, the same is hereby APPROVED. Accordingly, the above-entitled case
is DISMISSED as all issues raised concerning herein parties have been rendered MOOT AND ACADEMIC.

SO ORDERED.17
On September 25, 2006, the RTC issued its Order18 sustaining the Motion to Quash the Search Warrants, the
dispositive portion of which reads as follows:
WHEREFORE, finding that the issuance of the questioned search warrants were not supported by probable
cause, the Motion to Quash is GRANTED. Search warrants nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05025, 05-042, 05-043 are ordered lifted and recalled.
The NBI Officers who effected the search warrants are hereby ordered to return the seized items to herein
respondents within ten (10) days from receipt of this Order.
So Ordered.19
In quashing the search warrants, the RTC applied the Rules on Search and Seizure for Civil Action in
Infringement of Intellectual Property Rights.20 It found the existence of a prejudicial question which was
pending before Branch 93 of RTC Quezon City, docketed as Civil Case No. 05-54747, on the determination as
to who between respondent and Yu is the rightful holder of the intellectual property right over the trademark
TOP GEL T.G. & DEVICE OF A LEAF; and there was also a case for trademark infringement and/or unfair
competition filed by respondent against Yu before the IPO which was pending at the time of the application for
the search warrants. It is clear, therefore, that at the time of the filing of the application for the search warrants,
there is yet no determination of the alleged right of respondent over the subject trademark/tradename. Also, the
RTC found that petitioners relied heavily on Yu's representation that he is the sole owner/distributor of the Top
Gel whitening soap, as the latter even presented Registration No. 4-1996-109957 from the IPO for a term of 20
years from November 17, 2000 covering the same product. There too was the notarized certification from Zenna
Chemical Industry of Taiwan, owner of Top Gel MCA, with the caveat that the sale, production or
representation of any imitated products under its trademark and tradename shall be dealt with appropriate legal
action.
The RTC further said that in the determination of probable cause, the court must necessarily resolve whether or
not an offense exists to justify the issuance of a search warrant or the quashal of the one already issued. In this
case, respondent failed to prove the existence of probable cause, which warranted the quashal of the questioned
search warrants.
On November 13, 2006, respondent filed an Urgent Motion to Hold in Abeyance the Release of Seized
Evidence.21
Respondent filed a motion for reconsideration, which the RTC denied in its Order22 dated March 7, 2007.
Respondent then filed her appeal with the CA. After respondent filed her appellant's brief and petitioners their
appellee's brief, the case was submitted for decision.
On March 31, 2009, the CA rendered its assailed Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the appeal
filed in this case and SETTING ASIDE the Order dated March 7, 2007 issued by Branch 143 of the Regional
Trial Court of the National Capital Judicial Region stationed in Makati City in the case involving Search
Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-043.23

In reversing the RTC's quashal of the search warrants, the CA found that the search warrants were applied for
and issued for violations of Sections 155 and 168, in relation to Section 170, of the Intellectual Property Code
and that the applications for the search warrants were in anticipation of criminal actions which are to be
instituted against petitioners; thus, Rule 126 of the Rules of Criminal Procedure was applicable. It also ruled
that the basis for the applications for issuance of the search warrants on grounds of trademarks infringement and
unfair competition was the trademark TOP GEL T.G. & DEVICE OF A LEAF; that respondent was the
registered owner of the said trademark, which gave her the right to enforce and protect her intellectual property
rights over it by seeking assistance from the NBI.
The CA did not agree with the RTC that there existed a prejudicial question, since Civil Case No. 05-54747 was
already dismissed on June 10, 2005, i.e., long before the search warrants subject of this appeal were applied for;
and that Yu's motion for reconsideration was denied on September 15, 2005 with no appeal having been filed
thereon as evidenced by the Certificate of Finality issued by the said court.
Petitioners' motion for reconsideration was denied by the CA in a Resolution dated July 2, 2009. Hence, this
petition filed by petitioners raising the issue that:
(A) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN
REVERSING THE FINDINGS OF THE REGIONAL TRIAL COURT AND HELD THAT THE
LATTER APPLIED THE RULES ON SEARCH AND SEIZURE IN CIVIL ACTIONS FOR
INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.24
(B) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT
BASED ITS RULING ON THE ARGUMENT WHICH WAS BROUGHT UP FOR THE FIRST TIME
IN RESPONDENT LING NA LAU'S APPELLANT'S BRIEF.25
Petitioners contend that the products seized from their respective stores cannot be the subject of the search
warrants and seizure as those Top Gel products are not fruits of any crime, infringed product nor intended to be
used in any crime; that they are legitimate distributors who are authorized to sell the same, since those genuine
top gel products bore the original trademark/tradename of TOP GEL MCA, owned and distributed by Yu.
Petitioners also claim that despite the RTC's order to release the seized TOP GEL products, not one had been
returned; that one or two samples from each petitioners' drugstore would have sufficed in case there is a need to
present them in a criminal prosecution, and that confiscation of thousands of these products was an overkill.
Petitioners also argue that the issue that the RTC erred in applying the rules on search and seizure in anticipation
of a civil action was never raised in the RTC.
The issue for resolution is whether or not the CA erred in reversing the RTC's quashal of the assailed search
warrants.
We find no merit in the petition.
The applications for the issuance of the assailed search warrants were for violations of Sections 155 and 168,
both in relation to Section 170 of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property
Code of the Philippines. Section 155, in relation to Section 170, punishes trademark infringement; while Section
168, in relation to Section 170, penalizes unfair competition, to wit:
Sec 155. Remedies; Infringement. Any person who shall, without the consent of the owner of the registered
mark:

155.1 Use in commerce any reproduction, counterfeit, 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
While
Sec. 168. Unfair Competition, Rights, Regulation and Remedies.
xxxx
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;
And
SEC. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty
of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00)
to Two hundred thousand pesos (P200,000.00) shall be imposed on any person who is found guilty of
committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and
Subsection 169.1 [False Designation of Origin and False Description or Representation].
Thus, we agree with the CA that A.M. No. 02-1-06-SC, which provides for the Rules on the Issuance of the
Search and Seizure in Civil Actions for Infringement of Intellectual Property Rights, is not applicable in this
case as the search warrants were not applied based thereon, but in anticipation of criminal actions for violation
of intellectual property rights under RA 8293. It was established that respondent had asked the NBI for
assistance to conduct investigation and search warrant implementation for possible apprehension of several
drugstore owners selling imitation or counterfeit TOP GEL T.G. & DEVICE OF A LEAF papaya whitening
soap. Also, in his affidavit to support his application for the issuance of the search warrants, NBI Agent Furing
stated that "the items to be seized will be used as relevant evidence in the criminal actions that are likely to be
instituted." Hence, Rule 126 of the Rules of Criminal Procedure applies.
Rule 126 of the Revised Rules of Court, which governs the issuance of the assailed Search Warrants, provides,
to wit:
SEC. 3. Personal property to be seized. - A search warrant may be issued for the search and seizure of personal
property:
(a) Subject of the offense;

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

(c) Used or intended to be used as the means of committing an offense.
SEC. 4. Requisites for issuing search warrant. - A 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.
SEC. 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.
A core requisite before a warrant shall validly issue is the existence of a probable cause, meaning "the existence
of such facts and circumstances which would lead a reasonably 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 to be
searched."26 And when the law speaks of facts, the reference is to facts, data or information personally known to
the applicant and the witnesses he may present. Absent the element of personal knowledge by the applicant or
his witnesses of the facts upon which the issuance of a search warrant may be justified, the warrant is deemed
not based on probable cause and is a nullity, its issuance being, in legal contemplation, arbitrary.27 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.28 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
proof beyond reasonable doubt. The standards of judgment are those of a reasonably prudent man,29 not the
exacting calibrations of a judge after a full-blown trial.30
The RTC quashed the search warrants, saying that (1) there exists a prejudicial question pending before Branch
93 of the RTC of Quezon City, docketed as Civil Case No. 05-54747, i.e., the determination as to who between
respondent and Yu is the rightful holder of the intellectual property right over the trademark TOP GEL T.G. &
DEVICE OF A LEAF; and there was also a case for trademark infringement and/or unfair competition filed by
respondent against Yu pending before the IPO, docketed as IPV Case No. 10-2005-00001; and (2) Yu's
representation that he is the sole distributor of the Top Gel whitening soap, as the latter even presented
Registration No. 4-1996-109957 issued by the IPO to Zenna Chemical Industry as the registered owner of the
trademark TOP GEL MCA & DEVICE MCA for a term of 20 years from November 17, 2000 covering the same
product.
We do not agree. We affirm the CA's reversal of the RTC Order quashing the search warrants.
The affidavits of NBI Agent Furing and his witnesses, Esmael and Ling, clearly showed that they are seeking
protection for the trademark "TOP GEL T.G. and DEVICE OF A LEAF" registered to respondent under
Certificate of Registration 4-2000-009881 issued by the IPO on August 24, 2003, and no other. While
petitioners claim that the product they are distributing was owned by Yu with the trademark TOP GEL MCA
and MCA DEVISE under Certificate of Registration 4-1996-109957, it was different from the trademark TOP
GEL T.G. and DEVICE OF A LEAF subject of the application. We agree with the CA's finding in this wise:
x x x It bears stressing that the basis for the applications for issuances of the search warrants on grounds of
trademark infringement and unfair competition is the trademark TOP GEL T.G. & DEVICE OF A LEAF.
Private complainant-appellant was issued a Certificate of Registration No. 4-2000-009881 of said trademark on

August 24, 2003 by the Intellectual Property Office, and is thus considered the lawful holder of the said
trademark. Being the registrant and the holder of the same, private complainant-appellant had the authority to
enforce and protect her intellectual property rights over it. This prompted her to request for assistance from the
agents of the NBI, who thereafter conducted a series of investigation, test buys and inspection regarding the
alleged trademark infringement by herein respondents-appellees. Subsequently, Ping Na Lau, private
complainant-appellants representative, issued a certification with the finding that the examined goods were
counterfeit. This prompted the NBI agents to apply for the issuances of search warrants against the respondentsappellees. Said applications for the search warrants were granted after by Judge Laguilles after examining under
oath the applicant Agent Furing of the NBI and his witnesses Ping Na Lau and Junayd R. Ismael.
Based on the foregoing, it is clear that the requisites for the issuance of the search warrants had been complied
with and that there is probable cause to believe that an offense had been committed and that the objects sought
in connection with the offense were in the places to be searched. The offense pertains to the alleged violations
committed by respondents-appellees upon the intellectual property rights of herein private complainantappellant, as holder of the trademark TOP GEL T.G. & DEVICE OF A LEAF under Certificate of Registration
No. 4-2000-009881, issued on August 24, 2003 by the Intellectual Property Office.31
Notably, at the time the applications for the issuance of the search warrants were filed on November 21, 2005,
as the CA correctly found, Civil Case No. Q-05-54747, which the RTC found to be where a prejudicial question
was raised, was already dismissed on June 10, 2005,32 because of the pendency of a case involving the same
issues and parties before the IPO. Yu's motion for reconsideration was denied in an Order33 dated September 15,
2005. In fact, a Certificate of Finality34 was issued by the RTC on January 4, 2007.
Moreover, the IPO case for trademark infringement and unfair competition and damages with prayer for
preliminary injunction filed by respondent against Yu and Heidi Cua, docketed as IPV Case No. 10-2005-00001,
would not also be a basis for quashing the warrants.1avvphi1 In fact, prior to the applications for the issuance of
the assailed search warrants on November 21, 2005, the IPO had issued an Order35 dated October 20, 2005
granting a writ of preliminary injunction against Yu and Cua, the dispositive portion of which reads:
WHEREFORE, the WRIT OF PRELIMINARY INJUNCTION is hereby issued against Respondent, Benjamin
Yu, doing business under the name and style of MCA Manufacturing and Heidi S. Cua, Proprietor of South
Ocean Chinese Drug Store, and their agents, representatives, dealers and distributors and all persons acting in
their behalf, to cease and desist using the trademark "TOP GEL T.G. & DEVICE OF A LEAF" or any colorable
imitation thereof on Papaya whitening soaps they manufacture, sell, and/or offer for sale, and otherwise, from
packing their Papaya Whitening Soaps in boxes with the same general appearance as those of complainant's
boxes within a period of NINETY (90) DAYS, effective upon the receipt of respondent of the copy of the
COMPLIANCE filed with this Office by the Complainant stating that it has posted a CASH BOND in the
amount of ONE HUNDRED THOUSAND PESOS (Php100,000.00) together with the corresponding Official
Receipt Number and date thereof. Consequently, complainant is directed to inform this Office of actual date of
receipt by Respondent of the aforementioned COMPLIANCE.36
To inform the public of the issuance of the writ of preliminary injunction, respondent's counsel had the
dispositive portion of the Order published in The Philippine Star newspaper on October 30, 2005.37 Thus, it was
clearly stated that Yu, doing business under the name and style of MCA Manufacturing, his agents,
representatives, dealers and distributors and all persons acting in his behalf, were to cease and desist from using
the trademark "TOP GEL & DEVICE OF A LEAF" or any colorable imitation thereof on Papaya Whitening
soaps they manufacture, sell and/or offer for sale. Petitioners, who admitted having derived their TOP GEL
products from Yu, are, therefore, notified of such injunction and were enjoined from selling the same.

Notwithstanding, at the time of the application of the search warrants on November 21, 2005, and while the
injunction was in effect, petitioners were still selling the alleged counterfeit products bearing the trademark TOP
GEL T.G. & DEVICE OF A LEAF. There exists a probable cause for violation of respondent's intellectual
property rights, which entitles her as the registered owner of the trademark TOP GEL and DEVICE OF A LEAF
to be protected by the issuance of the search warrants.
More importantly, during the pendency of petitioners' motion to quash in the RTC, respondent submitted the
Order dated March 8, 2006 of the IPO in IPV Case No. 10-2005-00001, where the writ of preliminary
injunction was earlier issued, approving the compromise agreement entered into by respondent with Yu and Cua
where it was stated, among others, that:
1. Respondents acknowledge the exclusive right of Complainant over the trademark TOP GEL T.G. &
DEVICE OF A LEAF for use on papaya whitening soap as registered under Registration No. 4-2000009881 issued on August 24, 2003.
2. Respondents acknowledge the appointment by Zenna Chemical Industry Co., Ltd. of Complainant as
the exclusive Philippine distributor of its products under the tradename and trademark TOP GEL MCA
& MCA DEVICE (A SQUARE DEVICE CONSISTING OF A STYLIZED REPRESENTATION OF A
LETTER "M" OVER THE LETTER "CA") as registered under Registration No 4-1996-109957 issued
on November 17, 2000, as well as the assignment by Zenna Chemical Industry Co., Ltd. to Complainant
of said mark for use on papaya whitening soap.
3. Respondents admit having used the tradename and trademark aforesaid, but after having realized that
Complainant is the legitimate assignee of TOP GEL MCA & MCA DEVICE and the registered owner of
TOP GEL T.G. & DEVICE OF A LEAF, now undertake to voluntarily cease and desist from using the
aforesaid tradename and trademark, and further undertake not to manufacture, sell and distribute and
otherwise compete with complainant, now and at anytime in the future, any papaya whitening soap
using or bearing a mark or name identical or confusingly similar to, or constituting a colorable imitation
of the tradename and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE
OF A LEAF as registered and described above.38
Hence, it appears that there is no more controversy as to who is the rightful holder of the trademark TOP GEL
T.G. & DEVICE OF A LEAF. Therefore, respondent, as owner of such registered trademark has the right to the
issuance of the search warrants.
Anent petitioners' claim that one or two samples of the Top Gel products from each of them, instead of
confiscating thousands of the products, would have sufficed for the purpose of an anticipated criminal action,
citing our ruling in Summerville General Merchandising Co. v. Court of Appeals,39 is not meritorious.
We do not agree.
The factual milieu of the two cases are different. In Summerville, the object of the violation of Summerville's
intellectual property rights, as assignee of Royal playing cards and Royal brand playing cards case, was limited
to the design of Summerville's Royal plastic container case which encased and wrapped the Crown brand
playing cards. In the application for the search warrant which the RTC subsequently issued, one of the items to
be seized were the Crown brand playing cards using the copyright plastic and Joker of Royal brand. Thus,
numerous boxes containing Crown playing cards were seized and upon the RTC's instruction were turned over
to Summerville, subject to the condition that the key to the said warehouse be turned over to the court sheriff.
Respondents moved for the quashal of the search warrant and for the return of the seized properties. The RTC

partially granted the motion by ordering the release of the seized Crown brand playing cards and the printing
machines; thus, only the Royal plastic container cases of the playing cards were left in the custody of
Summerville. The CA sustained the RTC order. On petition with us, we affirmed the CA. We found therein that
the Crown brand playing cards are not the subject of the offense as they are genuine and the Crown trademark
was registered to therein respondents names; that it was the design of the plastic container/case that is alleged
to have been utilized by respondents to deceive the public into believing that the Crown brand playing cards are
the same as those manufactured by Summerville. We then said that assuming that the Crown playing cards
could be considered subject of the offense, a sample or two are more than enough to retain should there have
been a need to examine them along with the plastic container/case; and that there was no need to hold the
hundreds of articles seized. We said so in the context that since what was in dispute was the design of the Royal
plastic cases/containers of playing cards and not the playing card per se, a small number of Crown brand
playing cards would suffice to examine them with the Royal plastic cases/containers. And the return of the
playing cards would better serve the purposes of justice and expediency. However, in this case, the object of the
violation of respondent's intellectual property right is the alleged counterfeit TOP GEL T.G. & DEVICE OF A
LEAF papaya whitening soap being sold by petitioners, so there is a need to confiscate all these articles to
protect respondent's right as the registered owner of such trademark.
Petitioners next contend that the CA's ruling on the applicability of Rule 126 of the Rules of Court that the
search warrants were issued in anticipation of a criminal action was only based on respondent's claim which
was only brought for the first time in her appellant's brief.
We are not persuaded.
We find worth quoting respondent's argument addressing this issue in its Comment, thus:
In the assailed Decision, the Court of Appeals found that the Rule correctly applicable to the subject search
warrants was Rule 126 of the Rules of Court. Petitioners fault the appellate court for ruling that the Regional
Trial Court incorrectly applied the Rules on Search and Seizure in Civil Actions for Infringement of Intellectual
Property Rights on the basis of an argument that private respondent brought up for the first time in her
Appellant's Brief.
A cursory perusal of the Appellant's Brief shows that the following issues/errors were raised, that: (1) the
Honorable Trial Court erred in holding that the "Rules on Search and Seizure for Infringement of Intellectual
Property Rights" apply to the search warrants at bar; (2) x x x.
It must be remembered that there was no trial on the merits to speak of in the trial court, and the matter of the
application of the wrong set of Rules only arose in the Order dated 25th September 2006 which sustained the
Motion to Quash. A thorough examination of the Appellee's Brief filed by petitioners (respondents-appellees in
the Court of Appeals) reveals, however, that petitioners NEVER assailed the first issue/error on the ground that
the same was raised for the first time on appeal. It is only now, after the appellate court rendered a Decision and
Resolution unfavorable to them, that petitioners questioned the alleged procedural error. Petitioners should now
be considered in estoppel to question the same.40
Indeed, perusing the appellee's (herein petitioners) brief filed with the CA, the matter of the non-applicability of
the rules on search and seizure in civil action for infringement of intellectual property rights was never objected
as being raised for the first time. On the contrary, petitioners had squarely faced respondent's argument in this
wise:

Appellant (herein respondent) contends that the rule (SC Adm. Memo 1-06, No. 02-1-06, Rule on Search and
Seizure in Civil Actions for Infringement of Intellectual Property Rights) does [not] apply to the search warrants
in the [case] at bar, for the reason that the search warrants themselves reveal that the same were applied for and
issued for violations of "Section 155 in relation to Section 170 of RA 8293" and violations of "Section 168 in
relation to Section 170 of RA 8293," and that a perusal of the records would show that there is no mention of a
civil action or anticipation thereof, upon which the search warrants are applied for.
Appellees (herein petitioners) cannot agree with the contention of the appellant.1wphi1 Complainant NBI
Agent Joseph G. Furing, who applied for the search warrants, violated the very rule on search and seizure for
infringement of Intellectual Property Rights. The search warrants applied for by the complainants cannot be
considered a criminal action. There was no criminal case yet to speak of when complainants applied for
issuance of the search warrants. There is distinction here because the search applied for is civil in nature and no
criminal case had been filed. The complaint is an afterthought after the respondents-appellees filed their Motion
to Quash Search Warrant before the Regional Trial Court of Manila, Branch 24. The grounds enumerated in the
rule must be complied with in order to protect the constitutional mandate that "no person shall be deprived of
life liberty or property without due process of law nor shall any person be denied the equal protection of the
law." Clearly, the application of the search warrants for violation of unfair competition and infringement is in
the nature of a civil action.41
WHEREFORE, the petition for review is DENIED. The Decision dated March 31, 2009 and the Resolution
dated July 2, 2009 of the Court of Appeals, in CA-G.R. CV No. 88952, are hereby AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190706

July 21, 2014

SHANG PROPERTIES REALTY CORPORATION (formerly THE SHANG GRAND TOWER

CORPORATION) and SHANG PROPERTIES, INC. (formerly EDSA PROPERTIES HOLDINGS,
INC.), Petitioners,
vs.
ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the Decision2 dated December 18, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with modification the Decision3 dated September 3,
2008 of the Intellectual Property Office (IPO) Director-General. The CA: (a) affirmed the denial of the
application for registration of the mark "ST. FRANCIS TOWERS" filed by petitioners Shang Properties Realty
Corporation and Shang Properties, Inc. (petitioners); ( b) found petitioners to have committed unfair
competition for using the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA
PLACE"; (c) ordered petitioners to cease and desist from using "ST. FRANCIS" singly or as part of a composite
mark; and (d) ordered petitioners to jointly and severally pay respondent St. Francis Square Development
Corporation (respondent) a fine in the amount of P200,000.00.
The Facts
Respondent a domestic corporation engaged in the real estate business and the developer of the St. Francis
Square Commercial Center, built sometime in 1992, located at Ortigas Center, Mandaluyong City, Metro
Manila (Ortigas Center)4 filed separate complaints against petitioners before the IPO - Bureau of Legal Affairs
(BLA), namely: (a) an intellectual property violation case for unfair competition, false or fraudulent declaration,
and damages arising from petitioners use and filing of applications for the registration of the marks "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE," docketed as IPV Case No. 10-200500030 (IPV Case); and (b) an inter partes case opposing the petitioners application for registration of the mark
"THE ST. FRANCIS TOWERS" for use relative to the latters business, particularly the construction of
permanent buildings or structures for residential and office purposes, docketed as Inter PartesCase No. 14-200600098 (St. Francis Towers IP Case); and (c) an inter partes case opposing the petitioners application for
registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE," docketed as IPC No. 14-2007-00218
(St. Francis Shangri-La IP Case).5
In its complaints, respondent alleged that it has used the mark "ST. FRANCIS" to identify its numerous property
development projects located at Ortigas Center, such as the aforementioned St. Francis Square Commercial
Center, a shopping mall called the "St. Francis Square," and a mixed-use realty project plan thatincludes the St.
Francis Towers. Respondent added that as a result of its continuous use of the mark "ST. FRANCIS" in its real
estate business,it has gained substantial goodwill with the public that consumers and traders closely identify the
said mark with its property development projects. Accordingly, respondent claimed that petitioners could not
have the mark "THE ST. FRANCIS TOWERS" registered in their names, and that petitioners use of the marks
"THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate
development projects constitutes unfair competition as well as false or fraudulent declaration.6
Petitioners denied committing unfair competition and false or fraudulent declaration, maintaining that they
could register the mark "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"
under their names. They contended that respondent is barred from claiming ownership and exclusive use ofthe
mark "ST. FRANCIS" because the same is geographically descriptive ofthe goods or services for which it is

intended to be used.7 This is because respondents as well as petitioners real estate development projects are
locatedalong the streets bearing the name "St. Francis," particularly, St. FrancisAvenue and St. Francis Street
(now known as Bank Drive),8 both within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision9 in the IPV Case, and found that petitioners committed
acts of unfair competition against respondent by its use of the mark "THE ST. FRANCIS TOWERS" but not
with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It, however, refused to award damages
in the latters favor, considering that there was no evidence presented to substantiate the amount of damages it
suffered due to the formers acts. The BLA found that "ST. FRANCIS," being a name of a Catholic saint, may
be considered as an arbitrary mark capable of registration when used in real estate development projects as the
name has no direct connection or significance when used in association with real estate. The BLA neither
deemed "ST. FRANCIS" as a geographically descriptive mark, opiningthat there is no specific lifestyle, aura,
quality or characteristic that the real estate projects possess except for the fact that they are located along St.
Francis Avenueand St. Francis Street (now known as Bank Drive), Ortigas Center. In this light, the BLA found
that while respondents use of the mark "ST. FRANCIS" has not attained exclusivity considering that there are
other real estate development projects bearing the name "St. Francis" in other areas,10 it must nevertheless be
pointed out that respondent has been known to be the only real estate firm to transact business using such name
within the Ortigas Center vicinity. Accordingly, the BLA considered respondent to have gained goodwill and
reputation for its mark, which therefore entitles it to protection against the use by other persons, at least, to those
doing business within the Ortigas Center.11
Meanwhile, on March 28, 2007, the BLA rendered a Decision12 in the St. Francis Towers IP Case, denying
petitioners application for registration of the mark "THE ST. FRANCIS TOWERS." Excluding the word
"TOWERS" in view of petitioners disclaimer thereof, the BLA ruled that petitioners cannot register the mark
"THE ST. FRANCIS" since it is confusingly similar to respondents"ST. FRANCIS" marks which are registered
with the Department of Trade and Industry(DTI). It held that respondent had a better right over the use of the
mark "ST. FRANCIS" because of the latters appropriation and continuous usage thereof for a long period of
time.13 A little over a year after, or on March 31, 2008, the BLA then rendered a Decision14 in the St. Francis
Shangri-La IP Case, allowing petitioners application for registration of the mark "THE ST. FRANCIS
SHANGRI-LA PLACE." It found that respondent cannot preclude petitioners from using the mark "ST.
FRANCIS" as the records show that the formers use thereof had not been attended with exclusivity. More
importantly, it found that petitioners had adequately appended the word "Shangri-La" to its composite mark to
distinguish it from that of respondent, in which case, the former had removed any likelihood of confusion that
may arise from the contemporaneous use by both parties of the mark "ST. FRANCIS."
Both parties appealed the decision in the IPV Case, while petitioners appealed the decision in the St. Francis
Towers IP Case. Due to the identity of the parties and issues involved, the IPO Director-General ordered the
consolidation of the separate appeals.15 Records are, however, bereft of any showing that the decision in the St.
Francis Shangri-La IP Casewas appealed by either party and, thus, is deemed to have lapsed into finality.
The IPO Director-General Ruling
In a Decision16 dated September 3, 2008, then IPO Director-General Adrian S. Cristobal, Jr. affirmedthe rulings
of the BLA that: (a) petitioners cannot register the mark "THEST. FRANCIS TOWERS"; and (b) petitioners are
not guilty of unfair competition in its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." However,
the IPO DirectorGeneral reversed the BLAs findingthat petitioners committed unfair competition through their
use of the mark "THE ST. FRANCIS TOWERS," thus dismissing such charge. He foundthat respondent could

not be entitled to the exclusive use of the mark "ST. FRANCIS," even at least to the locality where it conducts
its business, because it is a geographically descriptive mark, considering that it was petitioners as well as
respondents intention to use the mark "ST. FRANCIS"in order to identify, or at least associate, their real estate
development projects/businesses with the place or location where they are situated/conducted, particularly, St.
Francis Avenue and St. Francis Street (now known as Bank Drive), Ortigas Center. He further opined that
respondents registration of the name "ST. FRANCIS" with the DTI is irrelevant since what should be
controlling are the trademark registrations with the IPO itself.17 Also, the IPO Director-General held that since
the parties are both engaged in the real estate business, it would be "hard to imagine that a prospective buyer
will be enticed to buy, rent or purchase [petitioners] goods or servicesbelieving that this is owned by
[respondent] simply because of the name ST. FRANCIS. The prospective buyer would necessarily discuss
things with the representatives of [petitioners] and would readily know that this does not belong to
[respondent]."18
Disagreeing solely with the IPO Director-Generals ruling on the issue of unfair competition (the bone of
contention in the IPV Case), respondent elevated the sameto the CA.
In contrast, records do not show that either party appealed the IPO Director-Generals ruling on the issue ofthe
registrability of the mark "THE ST. FRANCIS TOWERS" (the bone of contention in the St. Francis Towers IP
Case). As such, said pronouncement isalso deemed to have lapsed into finality.
The CA Ruling
In a Decision19 dated December 18, 2009, the CA found petitioners guilty of unfair competition not only
withrespect to their use of the mark "THE ST. FRANCIS TOWERS" but alsoof the mark "THE ST. FRANCIS
SHANGRI-LA PLACE." Accordingly, itordered petitioners to cease and desist from using "ST. FRANCIS"
singly or as part of a composite mark, as well as to jointly and severally pay respondent a fine in the amount
ofP200,000.00.
The CA did not adhere to the IPO Director-Generals finding that the mark "ST. FRANCIS" is geographically
descriptive, and ruled that respondent which has exclusively and continuously used the mark "ST. FRANCIS"
for more than a decade, and,hence, gained substantial goodwill and reputation thereby is very muchentitled to
be protected against the indiscriminate usage by other companies of the trademark/name it has so painstakingly
tried to establish and maintain. Further, the CA stated that even on the assumption that "ST. FRANCIS" was
indeed a geographically descriptive mark, adequateprotection must still begiven to respondent pursuant to the
Doctrine of Secondary Meaning.20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter PartesCases having lapsed into finality, the sole issue thus left for the Courts
resolution is whether or not petitioners are guilty of unfair competition in using the marks "THE ST. FRANCIS
TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE."
The Courts Ruling
The petition is meritorious.

Section 168 of Republic Act No. 8293,21 otherwise known as the "Intellectual Property Code of the Philippines"
(IP Code), provides for the rules and regulations on unfair competition.
To begin, Section 168.1 qualifies who is entitled to protection against unfair competition. It states that
"[a]person who has identified in the mind of the public the goods he manufacturesor 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 inthe same manner as other
property rights."
Section 168.2proceeds to the core of the provision, describing forthwith who may be found guilty of and subject
to an action of unfair competition that is, "[a]ny 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 x x x."
Without limiting its generality, Section 168.3goes on to specify examples of acts which are considered as
constitutive of unfair competition, viz.:
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 ofsuch 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 service 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.
Finally, Section 168.4 dwells on a matter of procedure by stating that the "[t]he remedies provided by Sections
156,22 157,23 and 16124 shall apply mutatis mutandis."
The statutory attribution of the unfair competition concept is wellsupplemented by jurisprudential
pronouncements. In the recent case of Republic Gas Corporation v. Petron Corporation,25 the Court has echoed
the classic definition of the term which is "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. 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. [In other words], the defendant gives his
goods the general appearance of the goods of his competitor with the intention of deceiving the publicthat the
goods are those of his competitor."26 The "true test" of unfair competition has thus been "whether the acts of the
defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases

under the ordinary conditions of theparticular trade to which the controversy relates." Based on the foregoing, it
is therefore essential to prove the existence of fraud, or the intent to deceive, actual or probable,27 determined
through a judicious scrutiny of the factual circumstances attendant to a particular case.28
Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair competition. The
CAscontrary conclusion was faultily premised on its impression that respondenthad the right to the exclusive
use of the mark "ST. FRANCIS," for which the latter had purportedly established considerable goodwill. What
the CA appears to have disregarded or been mistaken in its disquisition, however, is the
geographicallydescriptive nature of the mark "ST. FRANCIS" which thus bars its exclusive appropriability,
unless a secondary meaning is acquired. As deftly explained in the U.S. case of Great Southern Bank v. First
Southern Bank:29 "[d]escriptive geographical terms are inthe public domain in the sense that every seller
should have the right to inform customers of the geographical origin of his goods. A geographically descriptive
term is any noun or adjective that designates geographical location and would tend to be regarded by buyers as
descriptive of the geographic location of origin of the goods or services. A geographically descriptive term can
indicate any geographic location on earth, such as continents, nations, regions, states, cities, streets and
addresses, areas of cities, rivers, and any other location referred to by a recognized name. In order to determine
whether or not the geographic term in question is descriptively used, the following question is relevant: (1) Is
the mark the name of the place or region from which the goods actually come? If the answer is yes, then the
geographic term is probably used in a descriptive sense, and secondary meaning is required for protection."30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc.,31 it was held that secondary meaningis
established when a descriptive mark no longer causes the public to associate the goods with a particular place,
but to associate the goods with a particular source.In other words, it is not enough that a geographicallydescriptive mark partakes of the name of a place known generally to the public to be denied registration as it is
also necessary to show that the public would make a goods/place association that is, to believe that the goods
for which the mark is sought to be registered originatein that place.1wphi1 To hold sucha belief, it is necessary,
of course, that the purchasers perceive the mark as a place name, from which the question of obscurity or
remoteness then comes to the fore.32 The more a geographical area is obscure and remote, it becomes less likely
that the public shall have a goods/place association with such area and thus, the mark may not be deemed as
geographically descriptive. However, where there is no genuine issue that the geographical significance of a
term is its primary significanceand where the geographical place is neither obscure nor remote, a public
association of the goods with the place may ordinarily be presumed from the fact that the applicants own goods
come from the geographical place named in the mark.33
Under Section 123.234 of the IP Code, specific requirements have to be met in order to conclude that a
geographically-descriptive mark has acquired secondary meaning, to wit: (a) the secondary meaning must have
arisen as a result of substantial commercial use of a mark in the Philippines; (b) such use must result in the
distinctiveness of the mark insofar as the goods or theproducts are concerned; and (c) proof of substantially
exclusive and continuous commercial use in the Philippines for five (5) years beforethe date on which the claim
of distinctiveness is made. Unless secondary meaning has been established, a geographically-descriptive mark,
dueto its general public domain classification, is perceptibly disqualified from trademark registration. Section
123.1(j) of the IP Code states this rule as follows:
SEC. 123. Registrability.
123.1 A mark cannot be registered if it:
xxxx

(j) Consists exclusively of signs orof indications that may serve in trade to designate the kind, quality, quantity,
intended purpose, value, geographical origin, time or production of the goods or rendering of the services, or
other characteristics of the goods or services; (Emphasis supplied) x x x x
Cognizant of the foregoing, the Court disagrees with the CA that petitioners committed unfair competition due
to the mistaken notion that petitioner had established goodwill for the mark "ST. FRANCIS" precisely because
said circumstance, by and of itself, does not equateto fraud under the parameters of Section 168 of the IP Code
as above-cited. In fact, the records are bereft of any showing thatpetitioners gave their goods/services the
general appearance that it was respondent which was offering the same to the public. Neither did petitioners
employ any means to induce the public towards a false belief that it was offering respondents goods/services.
Nor did petitioners make any false statement or commit acts tending to discredit the goods/services offered by
respondent. Accordingly, the element of fraud which is the core of unfair competition had not been established.
Besides, respondent was not able toprove its compliance with the requirements stated in Section 123.2 of the IP
Code to be able to conclude that it acquired a secondary meaning and, thereby, an exclusive right to the "ST.
FRANCIS" mark, which is, as the IPO Director-General correctly pointed out, geographically-descriptive of the
location in which its realty developments have been built, i.e., St. Francis Avenue and St. Francis Street (now
known as "Bank Drive"). Verily, records would reveal that while it is true that respondent had been using the
mark "ST. FRANCIS" since 1992, its use thereof has been merely confined to its realty projects within the
Ortigas Center, as specifically mentioned.As its use of the mark is clearly limited to a certain locality, it cannot
be said thatthere was substantial commercial use of the same recognizedall throughout the country. Neither is
there any showing of a mental recognition in buyers and potential buyers minds that products connected with
the mark "ST. FRANCIS" are associated with the same source35 that is, the enterprise of respondent. Thus,
absent any showing that there exists a clear goods/service-association between the realty projects located in the
aforesaid area and herein respondent as the developer thereof, the latter cannot besaid to have acquired a
secondary meaning as to its use of the "ST. FRANCIS" mark.
In fact, even on the assumption that secondary meaning had been acquired, said finding only accords
respondents protectional qualification under Section 168.1 of the IP Code as above quoted. Again, this does not
automatically trigger the concurrence of the fraud element required under Section 168.2 of the IP Code, as
exemplified by the acts mentioned in Section 168.3 of the same. Ultimately, as earlier stated, there can be no
unfair competition without this element. In this respect, considering too the notoriety of the Shangri-La brand in
the real estate industry which dilutes petitioners' propensity to merely ride on respondent's goodwill, the more
reasonable conclusion is that the former's use of the marks "THE ST. FRANCIS TOWERS" and "THE ST.
FRANCIS SHANGRI-LA PLACE" was meant only to identify, or at least associate, their real estate project/s
with its geographical location. As aptly observed by the IPO DirectorGeneral:36
In the case at hand, the parties are business competitors engaged in real estate or property development,
providing goods and services directly connected thereto. The "goods" or "products" or "services" are real estate
and the goods and the services attached to it or directly related to it, like sale or lease of condominium units,
offices, and commercial spaces, such as restaurants, and other businesses. For these kinds of goods or services
there can be no description of its geographical origin as precise and accurate as that of the name of the place
where they are situated. (Emphasis and underscoring supplied)
Hence, for all the reasons above-discussed, the Court hereby grants the instant petition, and, thus, exonerates
petitioners from the charge of unfair competition in the IPV Case. As the decisions in the Inter Partes Cases
were not appealed, the registrability issues resolved therein are hereby deemed to have attained finality and,
therefore, are now executory.

WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2009 of the Court of Appeals in
CA-G.R. SP No. 105425 is hereby REVERSED and SET ASIDE. Accordingly, the Decision dated September 3,
2008 of the Intellectual Property Office-Director General is REINSTATED.
SO ORDERED.

FIRST DIVISION
G.R. No. 212705, September 10, 2014
ROBERTO CO, Petitioner, v. KENG HUAN JERRY YEUNG AND EMMA YEUNG, Respondents.
RE S O LUTI ON
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision2 dated September 16, 2013 and the
Resolution3 dated May 29, 2014 of the Court of Appeals (CA) in CA-G.R. CV No. 93679 which affirmed the
Decision4 dated October 27, 2008 of the Regional Trial Court of Quezon City, Branch 90 (RTC), finding
petitioner Roberto Co (Co), among others, guilty of unfair competition and, thus, liable for damages to
respondents KengHuan Jerry Yeung and Emma Yeung (Sps. Yeung).
The Facts
At the core of the controversy is the product Greenstone Medicated Oil Item No. 16 (Greenstone) which is
manufactured by Greenstone Pharmaceutical, a traditional Chinese medicine manufacturing firm based in Hong
Kong and owned by KengHuan Jerry Yeung (Yeung), and is exclusively imported and distributed in the
Philippines by Taka Trading owned by Yeungs wife, Emma Yeung (Emma).5cralawred
On July 27, 2000, Sps. Yeung filed a civil complaint for trademark infringement and unfair competition before
the RTC against Ling Na Lau, her sister Pinky Lau (the Laus), and Co for allegedly conspiring in the sale of
counterfeit Greenstone products to the public. In the complaint, Sps. Yeung averred that on April 24, 2000,
Emmas brother, Jose Ruivivar III (Ruivivar), bought a bottle of Greenstone from Royal Chinese Drug Store
(Royal) in Binondo, Manila, owned by Ling Na Lau. However, when he used the product, Ruivivar doubted its
authenticity considering that it had a different smell, and the heat it produced was not as strong as the original
Greenstone he frequently used. Having been informed by Ruivivar of the same, Yeung, together with his son,
John Philip, went to Royal on May 4, 2000 to investigate the matter, and, there, found seven (7) bottles of
counterfeit Greenstone on display for sale. He was then told by Pinky Lau (Pinky) the stores proprietor that
the items came from Co of KiaoAn Chinese Drug Store. According to Pinky, Co offered the products on April
28, 2000 as Tienchi Fong Sap Oil Greenstone (Tienchi) which she eventually availed from him. Upon
Yeungs prodding, Pinky wrote a note stating these events.6cralawred
In defense, Co denied having supplied counterfeit items to Royal and maintained that the stocks of Greenstone
came only from Taka Trading. Meanwhile, the Laus denied selling Greenstone and claimed that the seven (7)
items of Tienchi were left by an unidentified male person at the counter of their drug store and that when Yeung

came and threatened to report the matter to the authorities, the items were surrendered to him. As to Pinkys
note, it was claimed that she was merely forced by Yeung to sign the same.7cralawred
The RTC Ruling
In a Decision8 dated October 27, 2008, the RTC ruled in favor of Sps. Yeung, and accordingly ordered Co and
the Laus to pay Sps. Yeung: (a) P300,000.00 as temperate damages; (b) P200,000.00 as moral damages; (c)
P100,000.00 as exemplary damages; (d) P100,000.00 as attorneys fees; and (e) costs of suit.9cralawred
It found that the Sps. Yeung had proven by preponderance of evidence that the Laus and Co committed unfair
competition through their conspiracy to sell counterfeit Greenstone products that resulted in confusion and
deception not only to the ordinary purchaser, like Ruivivar, but also to the public.10 It, however, did not find the
Laus and Co liable for trademark infringement as there was no showing that the trademark Greenstone was
registered at the time the acts complained of occurred,i.e., in May 2000.11 Dissatisfied, the Laus and Co
appealed to the CA.
The CA Ruling
In a Decision12 dated September 16, 2013, the CA affirmed the RTC Decision, pointing out that in the matter of
credibility of witnesses, the findings of the trial court are given great weight and the highest degree of
respect.13Accordingly, it sustained the RTCs finding of unfair competition, considering that Sps. Yeungs
evidence preponderated over that of the Laus and Co which was observed to be shifty and contradictory.
Resultantly, all awards of damages in favor of Sps. Yeung were upheld.14cralawred
The Laus and Co respectively moved for reconsideration but were, however, denied in a Resolution15dated May
29, 2014, hence, Co filed the instant petition. On the other hand, records are bereft of any showing that the Laus
instituted any appeal before this Court.
The Issue Before the Court
The sole issue for the Courts resolution is whether or not the CA correctly upheld Cos liability for unfair
competition.
The Courts Ruling
The petition is without merit.
The Courts review of the present case is via a petition for review under Rule 45 of the Rules of Court, which
generally bars any question pertaining to the factual issues raised. The well-settled rule is that questions of fact
are not reviewable in petitions for review under Rule 45, subject only to certain exceptions, among them, the
lack of sufficient support in evidence of the trial courts judgment or the appellate courts misapprehension of
the adduced facts.16cralawred
Co, who mainly interposes a denial of the acts imputed against him, fails to convince the Court that any of the
exceptions exists so as to warrant a review of the findings of facts in this case. Factual findings of the RTC,
when affirmed by the CA, are entitled to great weight and respect by the Court and are deemed final and
conclusive when supported by the evidence on record.17 The Court finds that both the RTC and the CA fully
considered the evidence presented by the parties, and have adequately explained the legal and evidentiary
reasons in concluding that Co committed acts of unfair competition.
Unfair competition is 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. This takes place where 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.18cralawred
Here, it has been established that Co conspired with the Laus in the sale/distribution of counterfeit Greenstone
products to the public, which were even packaged in bottles identical to that of the original, thereby giving rise
to the presumption of fraudulent intent.19 In light of the foregoing definition, it is thus clear that Co, together
with the Laus, committed unfair competition, and should, consequently, be held liable therefor. To this end, the
Court finds the award of P300,000.00 as temperate damages to be appropriate in recognition of the pecuniary
loss suffered by Sps. Yeung, albeit its actual amount cannot, from the nature of the case, as it involves damage
to goodwill, be proved with certainty.20 The awards of moral and exemplary damages, attorneys fees, and costs
of suit are equally sustained for the reasons already fully-explained by the courts a quo in their decisions.
Although liable for unfair competition, the Court deems it apt to clarify that Co was properly exculpated from
the charge of trademark infringement considering that the registration of the trademark Greenstone essential
as it is in a trademark infringement case was not proven to have existed during the time the acts complained of
were committed, i.e., in May 2000.In this relation, the distinctions between suits for trademark infringement and
unfair competition prove useful: (a) the former is the unauthorized use of a trademark, whereas the latter is the
passing off of ones goods as those of another; (b) fraudulent intent is unnecessary in the former, while it is
essential in the latter; and (c) in the former, prior registration of the trademark is a pre-requisite to the action,
while it is not necessary in the latter.21cralawred
WHEREFORE, the petition is DENIED. The Decision dated September 16, 2013 and the Resolution dated
May 29, 2014 of the Court of Appeals in CA-G.R. CV No. 93679 are hereby AFFIRMED.
SO ORDERED.cralawlaw library

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. 194307

November 20, 2013

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE

GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA) Decision2 dated June 25, 2010
and Resolution3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the
Intellectual Property Office (IPO) Director Generals Decision4 dated December 22, 2009 that allowed the
registration of various trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark
registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN)
4-1994-091508 for goods falling under Class 25 of the International Classification of Goods and Services (Nice
Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE
COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND
SUNBEA M" under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classification with
filing date of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING
OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under
TASN 4-1994-095043 for goods falling under Class 10 of the Nice Classification with filing date of September
5, 1994 (subject applications).5
However, registration proceedings of the subject applications were suspended in view of an existing registration
of the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993
(Registration No. 56334) in the name of Shoe Town International and Industrial Corporation, the predecessorin-interest of respondent Philippine Shoe Expo Marketing Corporation.6 In this regard, on May 27, 1997
petitioner filed a petition for cancellation of Registration No. 56334 on the ground that it is the lawful and
rightful owner of the Birkenstock marks (Cancellation Case).7 During its pendency, however, respondent and/or
its predecessor-in-interest failed to file the required 10th Year Declaration of Actual Use (10th Year DAU) for
Registration No. 56334 on or before October 21, 2004,8 thereby resulting in the cancellation of such
mark.9 Accordingly, the cancellation case was dismissed for being moot and academic.10
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject
applications in the IPO e-Gazette on February 2, 2007.11 In response, respondent filed three (3) separate verified
notices of oppositions to the subject applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-200700115, and 14-2007-00116,12 claiming, inter alia, that: (a) it, together with its predecessor-in-interest, has been
using Birkenstock marks in the Philippines for more than 16 years through the mark "BIRKENSTOCK AND
DEVICE"; (b) the marks covered by the subject applications are identical to the one covered by Registration
No. 56334 and thus, petitioner has no right to the registration of such marks; (c) on November 15, 1991,
respondents predecessor-in-interest likewise obtained a Certificate of Copyright Registration No. 0-11193 for

the word "BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest failed to file the 10th Yea r
DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its
continued ownership and exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 4-2006-010273
as a " re-application " of its old registration, Registration No. 56334.13 On November 13, 2007, the Bureau of
Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the aforesaid inter partes cases
(Consolidated Opposition Cases).14
The Ruling of the BLA
In its Decision15 dated May 28, 2008, the BLA of the IPO sustained respondents opposition, thus, ordering the
rejection of the subject applications. It ruled that the competing marks of the parties are confusingly similar
since they contained the word "BIRKENSTOCK" and are used on the same and related goods. It found
respondent and its predecessor-in-interest as the prior user and adopter of "BIRKENSTOCK" in the Philippines,
while on the other hand, petitioner failed to present evidence of actual use in the trade and business in this
country. It opined that while Registration No. 56334 was cancelled, it does not follow that prior right over the
mark was lost, as proof of continuous and uninterrupted use in trade and business in the Philippines was
presented. The BLA likewise opined that petitioners marks are not well -known in the Philippines and
internationally and that the various certificates of registration submitted by petitioners were all photocopies and,
therefore, not admissible as evidence.16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision17 dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the
BLA, thus allowing the registration of the subject applications. He held that with the cancellation of
Registration No. 56334 for respondents failure to file the 10th Year DAU, there is no more reason to reject the
subject applications on the ground of prior registration by another proprietor.18 More importantly, he found that
the evidence presented proved that petitioner is the true and lawful owner and prior user of "BIRKENSTOCK"
marks and thus, entitled to the registration of the marks covered by the subject applications.19 The IPO Director
General further held that respondents copyright for the word "BIRKENSTOCK" is of no moment since
copyright and trademark are different forms of intellectual property that cannot be interchanged.20
Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a petition for review
with the CA.
Ruling of the CA
In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General and
reinstated that of the BLA. It disallowed the registration of the subject applications on the ground that the marks
covered by such applications "are confusingly similar, if not outright identical" with respondents mark.22 It
equally held that respondents failure to file the 10th Year DAU for Registration No. 56334 "did not deprive
petitioner of its ownership of the BIRKENSTOCK mark since it has submitted substantial evidence showing
its continued use, promotion and advertisement thereof up to the present."23 It opined that when respondents
predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK," there is neither an existing
registration nor a pending application for the same and thus, it cannot be said that it acted in bad faith in
adopting and starting the use of such mark.24 Finally, the CA agreed with respondent that petitioners
documentary evidence, being mere photocopies, were submitted in violation of Section 8.1 of Office Order No.
79, Series of 2005 (Rules on Inter Partes Proceedings).

Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July 20, 2010, which was, however, denied in
a Resolution26 dated October 27, 2010. Hence, this petition.27
Issues Before the Court
The primordial issue raised for the Courts resolution is whether or not the subject marks should be allowed
registration in the name of petitioner.
The Courts Ruling
The petition is meritorious.
A. Admissibility of Petitioners Documentary Evidence.
In its Comment28 dated April 29, 2011, respondent asserts that the documentary evidence submitted by
petitioner in the Consolidated Opposition Cases, which are mere photocopies, are violative of Section 8.1 of the
Rules on Inter Partes Proceedings, which requires certified true copies of documents and evidence presented by
parties in lieu of originals.29 As such, they should be deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather
than its frustration. A strict and rigid application of the rules must always be eschewed when it would subvert
the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never
be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities."30"Indeed, the primordial policy is a faithful observance of [procedural rules], and their relaxation
or suspension should only be for persuasive reasons and only in meritorious cases, to relieve a litigant of an
injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure
prescribed."31 This is especially true with quasi-judicial and administrative bodies, such as the IPO, which are
not bound by technical rules of procedure.32 On this score, Section 5 of the Rules on Inter Partes Proceedings
provides:
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. The rules of
procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court
may be applied suppletorily. The Bureau shall not be bound by strict technical rules of procedure and evidence
but may adopt, in the absence of any applicable rule herein, such mode of proceedings which is consistent with
the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases, and which
will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis and
underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated
Opposition Cases, it should be noted that the IPO had already obtained the originals of such documentary
evidence in the related Cancellation Case earlier filed before it. Under this circumstance and the merits of the
instant case as will be subsequently discussed, the Court holds that the IPO Director Generals relaxation of
procedure was a valid exercise of his discretion in the interest of substantial justice.33
Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.

B. Registration and ownership of "BIRKENSTOCK."

Republic Act No. (RA) 166,34 the governing law for Registration No. 56334, requires the filing of a DAU on
specified periods,35 to wit:
Section 12. Duration. Each certificate of registration shall remain in force for twenty years: Provided, That
registrations under the provisions of this Act shall be cancelled by the Director, unless within one year
following the fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of registration, the
registrant shall file in the Patent Office an affidavit showing that the mark or trade-name is still in use or
showing that its non-use is due to special circumstance which excuse such non-use and is not due to any
intention to abandon the same, and pay the required fee.
The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or refusal
thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)
The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in
the automatic cancellation of registration of a trademark. In turn, such failure is tantamount to the abandonment
or withdrawal of any right or interest the registrant has over his trademark.36
In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the
requisite period, or on or before October 21, 2004. As a consequence, it was deemed to have abandoned or
withdrawn any right or interest over the mark "BIRKENSTOCK." Neither can it invoke Section 23637 of the IP
Code which pertains to intellectual property rights obtained under previous intellectual property laws, e.g., RA
166, precisely because it already lost any right or interest over the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."
Under Section 238 of RA 166, which is also the law governing the subject applications, in order to register a
trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines
for two (2) months prior to the application for registration. Section 2-A39 of the same law sets out to define how
one goes about acquiring ownership thereof. Under the same section, 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. Significantly, to be an owner, Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Thus, under RA 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 owners failure to use the same in
the Philippines for two (2) months prior to registration.40
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring
ownership.1wphi1 If the applicant is not the owner of the trademark, he has no right to apply for its
registration. Registration merely creates a prima facie presumption of the validity of the registration, of the
registrants ownership of the trademark, and of the exclusive right to the use thereof. Such presumption, just like
the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence
to the contrary.41
Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the
ownership of a trademark that confers the right to register the same. A trademark is an industrial property over
which its owner is entitled to property rights which cannot be appropriated by unscrupulous entities that, in one
way or another, happen to register such trademark ahead of its true and lawful owner. The presumption of

ownership accorded to a registrant must then necessarily yield to superior evidence of actual and real ownership
of a trademark.
The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 is instructive on this point:
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. x x x A certificate of registration of a mark, once issued,
constitutes prima facie evidence of the validity of the registration, of the registrants ownership of the mark, and
of the registrants exclusive right to use the same in connection with the goods or services and those that are
related thereto specified in the certificate. x x x In other words, the prima facie presumption brought about by
the registration of a mark may be challenged and overcome in an appropriate action, x x x 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.43 (Emphasis and underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It
submitted evidence relating to the origin and history of "BIRKENSTOCK" and its use in commerce long before
respondent was able to register the same here in the Philippines. It has sufficiently proven that
"BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann Birkenstock, a shoemaker, on
his line of quality footwear and thereafter, numerous generations of his kin continuously engaged in the
manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it became the entity now
known as the petitioner. Petitioner also submitted various certificates of registration of the mark
"BIRKENSTOCK" in various countries and that it has used such mark in different countries worldwide,
including the Philippines.44
On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented
copies of sales invoices and advertisements, which are not conclusive evidence of its claim of ownership of the
mark "BIRKENSTOCK" as these merely show the transactions made by respondent involving the same.45
In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the
mark "BIRKENSTOCK" and entitled to its registration, and that respondent was in bad faith in having it
registered in its name. In this regard, the Court quotes with approval the words of the IPO Director General,
viz.:
The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark
BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is
very remote that two persons did coin the same or identical marks. To come up with a highly distinct and
uncommon mark previously appropriated by another, for use in the same line of business, and without any
plausible explanation, is incredible. The field from which a person may select a trademark is practically
unlimited. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms
and combinations of letters and designs available, [respondent] had to come up with a mark identical or so
closely similar to the [petitioners] if there was no intent to take advantage of the goodwill generated by the
[petitioners] mark. Being on the same line of business, it is highly probable that the [respondent] knew of the
existence of BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark
and had it registered in its name.46
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27,
2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the
Decision dated December 22, 2009 of the IPO Director General is hereby REINSTATED.

SO ORDERED.

THIRD DIVISION
G.R. No. 209843, March 25, 2015
TAIWAN KOLIN CORPORATION, LTD., Petitioner, v. KOLIN ELECTRONICS CO., INC., Respondent.
DECISION
VELASCO JR., J.:
Nature of the Case
Before the Court is a petition for review under Rule 45 of the Rules of Court interposed by petitioner Taiwan
Kolin Corporation, Ltd. (Taiwan Kolin), assailing the April 30, 2013 Decision1 of the Court of Appeals (CA) in
CA-G.R. SP No. 122565 and its subsequent November 6, 2013 Resolution.2 The assailed issuances effectively
denied petitioners trademark application for the use of KOLIN on its television and DVD
players.chanroblesvirtuallawlibrary
The Facts
On February 29, 1996, Taiwan Kolin filed with the Intellectual Property Office (IPO), then Bureau of Patents,

Trademarks, and Technology Transfer, a trademark application, docketed as Application No. 4-1996-106310,
for the use of KOLIN on a combination of goods, including colored televisions, refrigerators, window-type
and split-type air conditioners, electric fans and water dispensers. Said goods allegedly fall under Classes 9, 11,
and 21 of the Nice Classification (NCL).
Application No. 4-1996-106310 would eventually be considered abandoned for Taiwan Kolins failure to
respond to IPOs Paper No. 5 requiring it to elect one class of good for its coverage. However, the same
application was subsequently revived through Application Serial No. 4-2002-011002,3 with petitioner electing
Class 9 as the subject of its application, particularly: television sets, cassette recorder, VCD Amplifiers,
camcorders and other audio/video electronic equipment, flat iron, vacuum cleaners, cordless handsets,
videophones, facsimile machines, teleprinters, cellular phones and automatic goods vending machine. The
application would in time be duly published.4cralawred
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin Electronics) opposed petitioners revived
application, docketed as Inter Partes Case No. 14-2006-00096. As argued, the mark Taiwan Kolin seeks to
register is identical, if not confusingly similar, with its KOLIN mark registered on November 23, 2003,
covering the following products under Class 9 of the NCL: automatic voltage regulator, converter, recharger,
stereo booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC.5cralawred
To digress a bit, Kolin Electronics KOLIN registration was, as it turns out, the subject of a prior legal dispute
between the parties in Inter Partes Case No. 14-1998-00050 before the IPO. In the said case, Kolin Electronics
own application was opposed by Taiwan Kolin, being, as Taiwan Kolin claimed, the prior registrant and user of
the KOLIN trademark, having registered the same in Taipei, Taiwan on December 1, 1988. The Bureau of
Legal Affairs of the IPO (BLA-IPO), however, did not accord priority right to Taiwan Kolins Taipei registration
absent evidence to prove that it has already used the said mark in the Philippines as early as 1988. On appeal,
the IPO Director General affirmed the BLA-IPOs Decision. Taiwan Kolin elevated the case to the CA, but
without injunctive relief, Kolin Electronics was able to register the KOLIN trademark on November 23, 2003
for its products.6Subsequently, the CA, on July 31, 2006, affirmed7 the Decision of the Director General.
In answer to respondents opposition in Inter Partes Case No. 14-2006-00096, petitioner argued that it should be
accorded the benefits of a foreign-registered mark under Secs. 3 and 131.1 of Republic Act No. 8293, otherwise
known as the Intellectual Property Code of the Philippines (IP Code);8 that it has already registered the
KOLIN mark in the Peoples Republic of China, Malaysia and Vietnam, all of which are parties to the Paris
Convention for the Protection of Industrial Property (Paris Convention) and the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS);and that benefits accorded to a well-known mark should be
accorded to petitioner.9cralawred
Ruling of the BLA-IPO
By Decision10 dated August 16, 2007, the BLA-IPO denied petitioners application disposing as
follows:chanRoblesvirtualLawlibrary
In view of all the foregoing, the instant Opposition is as, it is hereby SUSTAINED. Accordingly, application
bearing Serial No. 4-1996-106310 for the mark KOLIN filed in the name of TAIWAN KOLIN., LTD. on
February 29, 1996 for goods falling under Class 09 of the International Classification of Goods such as cassette
recorder, VCD, woofer, amplifiers, camcorders and other audio/video electronic equipment, flat iron, vacuum
cleaners, cordless handsets, videophones, facsimile machines, teleprinters, cellular phones, automatic goods
vending machines and other electronic equipment is hereby REJECTED.
Let the file wrapper of KOLIN, subject of this case be forwarded to the Bureau of Trademarks (BOT) for
appropriate action in accordance with this Decision.

SO ORDERED.cralawlawlibrary
Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark cannot be registered if it is identical with a
registered mark belonging to a different proprietor in respect of the same or closely-related goods. Accordingly,
respondent, as the registered owner of the mark KOLIN for goods falling under Class 9 of the NCL, should
then be protected against anyone who impinges on its right, including petitioner who seeks to register an
identical mark to be used on goods also belonging to Class 9 of the NCL.12 The BLA-IPO also noted that there
was proof of actual confusion in the form of consumers writing numerous e-mails to respondent asking for
information, service, and complaints about petitioners products.13cralawred
Petitioner moved for reconsideration but the same was denied on January 26, 2009 for lack of merit.14 Thus,
petitioner appealed the above Decision to the Office of the Director General of the
IPO.chanroblesvirtuallawlibrary
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a Decision15 reversing that of the BLA-IPO in the
following wise:chanRoblesvirtualLawlibrary
Wherefore, premises considered, the appeal is hereby GRANTED. The Appellants Trademark Application No.
4-1996-106310 is hereby GIVEN DUE COURSE subject to the use limitation or restriction for the goods
television and DVD player. 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 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.
SO ORDERED.cralawlawlibrary
In so ruling, the IPO Director General ratiocinated that product classification alone cannot serve as the decisive
factor in the resolution of whether or not the goods are related and that emphasis should be on the similarity of
the products involved and not on the arbitrary classification or general description of their properties or
characteristics. As held, the mere fact that one person has adopted and used a particular trademark for his goods
does not prevent the adoption and use of the same trademark by others on articles of a different
description.16cralawred
Aggrieved, respondent elevated the case to the CA.chanroblesvirtuallawlibrary
Ruling of the Court of Appeals
In its assailed Decision, the CA found for Kolin Electronics, on the strength of the following premises: (a) the
mark sought to be registered by Taiwan Kolin is confusingly similar to the one already registered in favor of
Kolin Electronics; (b) there are no other designs, special shape or easily identifiable earmarks that would
differentiate the products of both competing companies;17 and (c) the intertwined use of television sets with
amplifier, booster and voltage regulator bolstered the fact that televisions can be considered as within the
normal expansion of Kolin Electronics,18 and is thereby deemed covered by its trademark as explicitly protected
under Sec. 13819 of the IP Code.20Resultantly, the CA granted respondents appeal
thusly:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is GRANTED. The November 23, 2011 Decision of the Director General of the
Intellectual Property Office in Inter Partes Case No. 14-2006-0096 is REVERSED and SET ASIDE. The
September 17, 2007 Decision of the Bureau of Legal Affairs of the same office is REINSTATED.

SO ORDERED.cralawlawlibrary
Petitioner moved for reconsideration only to be denied by the CA through its equally assailed November 6,
2013 Resolution. Hence, the instant recourse.chanroblesvirtuallawlibrary
The Issue
The primordial issue to be resolved boils down to whether or not petitioner is entitled to its trademark
registration of KOLIN over its specific goods of television sets and DVD players. Petitioner postulates, in the
main, that its goods are not closely related to those of Kolin Electronics. On the other hand, respondent hinges
its case on the CAs findings that its and petitioners products are closely-related. Thus, granting petitioners
application for trademark registration, according to respondent, would cause confusion as to the public.
The Courts Ruling
The petition is impressed with merit.
Identical marks may be registered for
products from the same classification
To bolster its opposition against petitioners application to register trademark KOLIN, respondent maintains
that the element of mark identity argues against approval of such application,quoting the BLA IPOs ruling in
this regard:21cralawred
Indubitably, Respondent-Applicants [herein petitioner] mark is identical to the registered mark of herein
Opposer [herein respondent] and the identical mark is used on goods belonging to Class 9 to which Opposers
goods are also classified. On this point alone, Respondent-Applicants application should already be
denied.cralawlawlibrary
The argument is specious.
The parties admit that their respective sets of goods belong to Class 9 of the NCL, which includes the
following:22cralawred
Class 9
Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling,
checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for
conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for
recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; compact
discs, DVDs and other digital recording media; mechanisms for coin-operated apparatus; cash registers,
calculating machines, data processing equipment, computers; computer software; fire-extinguishing
apparatus.cralawlawlibrary
But mere uniformity in categorization, by itself, does not automatically preclude the registration of what
appears to be an identical mark, if that be the case. In fact, this Court, in a long line of cases,has held that such
circumstance does not necessarily result in any trademark infringement. The survey of jurisprudence cited
in Mighty Corporation v. E. & J Gallo Winery23 is enlightening on this point:chanRoblesvirtualLawlibrary
(a)

in Acoje Mining Co., Inc. vs. Director of Patents,24 we ordered the approval of Acoje Minings application
for registration of the trademark LOTUS for its soy sauce even though Philippine Refining Company had

prior registration and use of such identical mark for its edible oil which, like soy sauce, also belonged to
Class 47;
(b)
in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,25 we upheld the Patent Directors
registration of the same trademark CAMIA for Ng Sams ham under Class 47, despite Philippine Refining
Companys prior trademark registration and actual use of such mark on its lard, butter, cooking oil (all of
which belonged to Class 47), abrasive detergents, polishing materials and soaps;
in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun Liong,26we dismissed
Hickoks petition to cancel private respondents HICKOK trademark registration for its Marikina shoes as
against petitioners earlier registration of the same trademark for handkerchiefs, briefs, belts and wallets.
cralawlawlibrary
(c)

Verily, whether or not the products covered by the trademark sought to be registered by Taiwan Kolin, on the
one hand, and those covered by the prior issued certificate of registration in favor of Kolin Electronics, on the
other, fall under the same categories in the NCL is not the sole and decisive factor in determining a possible
violation of Kolin Electronics intellectual property right should petitioners application be granted. It is
hornbook doctrine, as held in the above-cited cases, that emphasis should be on the similarity of the products
involved and not on the arbitrary classification or general description of their properties or characteristics. The
mere fact that one person has adopted and used a trademark on his goods would not, without more, prevent the
adoption and use of the same trademark by others on unrelated articles of a different kind.27cralawred
The CA erred in denying petitioners
registration application
Respondent next parlays the idea of relation between products as a factor militating against petitioners
application. Citing Esso Standard Eastern, Inc. v. Court of Appeals,28 respondent argues that the goods covered
by petitioners application and those covered by its registration are actually related belonging as they do to the
same class or have the same physical characteristics with reference to their form, composition, texture, or
quality, or if they serve the same purpose. Respondent likewise draws parallelisms between the present
controversy and the following cases:29cralawred
(a)

In Arce & Sons, Inc. vs. Selecta Biscuit Company,30 biscuits were held related to milk because they were
both food products;

(b)
In Chua Che vs. Phil. Patents Office,31 soap and perfume, lipstick and nail polish are held to be similarly
related because they are common household items;
In Ang vs. Teodoro,32 the trademark Ang Tibay for shoes and slippers was disallowed to be used for
shirts and pants because they belong to the same general class of goods; and
(d) In Khe vs. Lever Bros. Co.,33 soap and pomade, although non-competitive, were held to be similar or
belong to the same class, since both are toilet articles.
cralawlawlibrary
(c)

Respondent avers that Kolin Electronics and Taiwan Kolins products are closely-related not only because both
fall under Class 9 of the NCL, but mainly because they both relate to electronic products, instruments,
apparatus, or appliances.34 Pushing the point, respondent would argue that Taiwan Kolin and Kolin Electronics
goods are inherently similar in that they are all plugged into electric sockets and perform a useful
function.35 Furthermore, respondent echoes the appellate courts ratiocination in denying petitioners
application, viz:36cralawred

Significantly, Kolin Electronics goods (automatic voltage regulator; converter; recharger; stereo booster; ACDC regulated power supply; step-down transformer; and PA amplified AC-DC) and Taiwan Kolins television
sets and DVD players are both classified under class 9 of the NICE agreement. At first glance, it is also evident
that all these goods are generally described as electrical devices.x x x [T]he goods of both Kolin Electronics and
Taiwan Kolin will inevitably be introduced to the public as KOLIN products and will be offered for sale in
the same channels of trade. Contrary to Taiwan Kolins claim, power supply as well as audio and stereo
equipment like booster and amplifier are not only sold in hardware and electrical shops. These products are
commonly found in appliance stores alongside television sets and DVD players. With the present trend in
todays entertainment of having a home theater system, it is not unlikely to see a stereo booster, amplifier and
automatic voltage regulator displayed together with the television sets and DVD players. With the intertwined
use of these products bearing the identical KOLIN mark, the ordinary intelligent consumer would likely
assume that they are produced by the same manufacturer.
In sum, the intertwined use, the same classification of the products as class 9 under the NICE Agreement,
and the fact that they generally flow through the same channel of trade clearly establish that Taiwan
Kolins television sets and DVD players are closely related to Kolin Electronics goods. As correctly pointed
out by the BLA-IPO, allowing Taiwan Kolins registration would only confuse consumers as to the origin of
the products they intend to purchase. Accordingly, protection should be afforded to Kolin Electronics, as the
registered owner of the KOLIN trademark.37 (emphasis added)cralawlawlibrary
The CAs approach and reasoning to arrive at the assailed holding that the approval of petitioners application is
likely to cause confusion or deceive fail to persuade.
The products covered by petitioners
application and respondents
registration are unrelated
A certificate of trademark registration confers upon the trademark owner the exclusive right to sue those who
have adopted a similar mark not only in connection with the goods or services specified in the certificate, but
also with those that are related thereto.38cralawred
In resolving one of the pivotal issues in this casewhether or not the products of the parties involved are
relatedthe doctrine in Mighty Corporation is authoritative. There, the Court held that the goods should be
tested against several factors before arriving at a sound conclusion on the question of relatedness. Among these
are:chanRoblesvirtualLawlibrary
(a) the business (and its location) to which the goods belong;
(b) the class of product to which the goods belong;
(c) the products quality, quantity, or size, including the nature of the package, wrapper or container;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or essential characteristics with reference to their form,
composition, texture or quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate consumption, that is, day-to-day household items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually purchased; and
(j) the channels of trade through which the goods flow, how they are distributed, marketed, displayed and
sold.39cralawlawlibrary
As mentioned, the classification of the products under the NCL is merely part and parcel of the factors to be
considered in ascertaining whether the goods are related. It is not sufficient to state that the goods involved
herein are electronic products under Class 9 in order to establish relatedness between the goods, for this only

accounts for one of many considerations enumerated in Mighty Corporation.In this case, credence is accorded
to petitioners assertions that:40cralawred
a. Taiwan Kolins goods are classified as home appliances as opposed to Kolin Electronics goods which
are power supply and audio equipment accessories;ChanRoblesVirtualawlibrary
b. Taiwan Kolins television sets and DVD players perform distinct function and purpose from Kolin
Electronics power supply and audio equipment; and
c. Taiwan Kolin sells and distributes its various home appliance products on wholesale and to accredited
dealers, whereas Kolin Electronics goods are sold and flow through electrical and hardware stores.
Clearly then, it was erroneous for respondent to assume over the CA to conclude that all electronic products are
related and that the coverage of one electronic product necessarily precludes the registration of a similar mark
over another. In this digital age wherein electronic products have not only diversified by leaps and bounds, and
are geared towards interoperability, it is difficult to assert readily, as respondent simplistically did, that all
devices that require plugging into sockets are necessarily related goods.
It bears to stress at this point that the list of products included in Class 941 can be sub-categorized into five (5)
classifications, namely: (1) apparatus and instruments for scientific or research purposes, (2) information
technology and audiovisual equipment, (3) apparatus and devices for controlling the distribution and use of
electricity, (4) optical apparatus and instruments, and (5) safety equipment.42 From this sub-classification, it
becomes apparent that petitioners products, i.e., televisions and DVD players, belong to audiovisiual
equipment, while that of respondent, consisting of automatic voltage regulator, converter, recharger, stereo
booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC, generally fall under
devices for controlling the distribution and use of electricity.
The ordinarily intelligent buyer
is not likely to be confused
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no rigid
set rules can plausible be formulated. Each case must be decided on its merits, with due regard to the goods or
services involved, the usual purchasers character and attitude, among others. In such cases, even more than in
any other litigation, precedent must be studied in the light of the facts of a particular case. That is the reason
why in trademark cases, jurisprudential precedents should be applied only to a case if they are specifically in
point.43cralawred
For a clearer perspective and as matter of record, the following image on the left44 is the trademark applied for
by petitioner, while the image juxtaposed to its right45 is the trademark registered by respondent:
(please see image in G.R. No. 209843 page 10)
While both competing marks refer to the word KOLIN written in upper case letters and in bold font, the Court
at once notes the distinct visual and aural differences between them: Kolin Electronics mark is italicized and
colored black while that of Taiwan Kolin is white in pantone red color background. The differing features
between the two, though they may appear minimal, are sufficient to distinguish one brand from the other.
It cannot be stressed enough that the products involved in the case at bar are, generally speaking, various kinds
of electronic products. These are not ordinary consumable household items, like catsup, soy sauce or soap
which are of minimal cost.46 The products of the contending parties are relatively luxury items not easily
considered affordable. Accordingly, the casual buyer is predisposed to be more cautious and discriminating in

and would prefer to mull over his purchase. Confusion and deception, then, is less likely.47 As further elucidated
in Del Monte Corporation v. Court of Appeals:48cralawred
x x x Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be
cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care
as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence
in buying an article for which he pays a few centavos as he does in purchasing a more valuable
thing. Expensive and valuable items are normally bought only after deliberate, comparative and
analytical investigation. But mass products, low priced articles in wide use, and matters of everyday
purchase requiring frequent replacement are bought by the casual consumer without great care x x x.
(emphasis added)cralawlawlibrary
Respondent has made much reliance on Arce & Sons, Chua Che, Ang, and Khe, oblivious that they involved
common household itemsi.e., biscuits and milk, cosmetics, clothes, and toilet articles, respectivelywhereas
the extant case involves luxury items not regularly and inexpensively purchased by the consuming public. In
accord with common empirical experience, the useful lives of televisions and DVD players last for about five
(5) years, minimum, making replacement purchases very infrequent. The same goes true with converters and
regulators that are seldom replaced despite the acquisition of new equipment to be plugged onto it. In addition,
the amount the buyer would be parting with cannot be deemed minimal considering that the price of televisions
or DVD players can exceed todays monthly minimum wage.In light of these circumstances, it is then expected
that the ordinary intelligent buyer would be more discerning when it comes to deciding which electronic
product they are going to purchase, and it is this standard which this Court applies here in in determining the
likelihood of confusion should petitioners application be granted.
To be sure, the extant case is reminiscent of Emerald Garment Manufacturing Corporation v. Court of
Appeals,49 wherein the opposing trademarks are that of Emerald Garment Manufacturing Corporations
Stylistic Mr. Lee and H.D. Lees LEE. In the said case, the appellate court affirmed the decision of the
Director of Patents denying Emerald Garments application for registration due to confusing similarity with
H.D. Lees trademark. This Court, however, was of a different beat and ruled that there is no confusing
similarity between the marks, given that the products covered by the trademark, i.e., jeans, were,at that time,
considered pricey, typically purchased by intelligent buyers familiar with the products and are more
circumspect, and, therefore, would not easily be deceived. As held:chanRoblesvirtualLawlibrary
Finally, in line with the foregoing discussions, more credit should be given to the ordinary purchaser. Cast in
this particular controversy, the ordinary purchaser is not the completely unwary consumer but is the
ordinarily intelligent buyer considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok50is better suited to the present case. There, the ordinary
purchaser was defined as one accustomed to buy, and therefore to some extent familiar with, the goods in
question. The test of fraudulent simulation is to be found in the likelihood of the deception of some persons in
some measure acquainted with an established design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or the possibility of deception, of the person
who knows nothing about the design which has been counterfeited, and who must be indifferent between that
and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the
ordinary intelligent buyer who has a need to supply and is familiar with the article that he seeks to
purchase.51 (emphasis added)cralawlawlibrary
Consistent with the above ruling, this Court finds that the differences between the two marks, subtle as they
may be, are sufficient to prevent any confusion that may ensue should petitioners trademark application be
granted.As held in Esso Standard Eastern, Inc.:52cralawred

Respondent court correctly ruled that considering the general appearances of each mark as a whole, the
possibility of any confusion is unlikely. A comparison of the labels of the samples of the goods submitted by the
parties shows a great many differences on the trademarks used. As pointed out by respondent court in its
appealed decision, (A) witness for the plaintiff, Mr. Buhay, admitted that the color of the ESSO used by the
plaintiff for the oval design where the blue word ESSO is contained is the distinct and unique kind of blue. In
his answer to the trial courts question, Mr. Buhay informed the court that the plaintiff never used its trademark
on any product where the combination of colors is similar to the label of the Esso cigarettes, and Another
witness for the plaintiff, Mr. Tengco, testified that generally, the plaintiffs trademark comes all in either red,
white, blue or any combination of the three colors. It is to be pointed out that not even a shade of these colors
appears on the trademark of the appellants cigarette. The only color that the appellant uses in its trademark is
green.
Even the lower court, which ruled initially for petitioner, found that a noticeable difference between the brand
ESSO being used by the defendants and the trademark ESSO of the plaintiff is that the former has a rectangular
background, while in that of the plaintiff the word ESSO is enclosed in an oval background.cralawlawlibrary
All told, We are convinced that petitioners trademark registration not only covers unrelated good, but is also
incapable of deceiving the ordinary intelligent buyer. The ordinary purchaser must be thought of as having, and
credited with, at least a modicum of intelligence to be able to see the differences between the two trademarks in
question.53cralawred
Questions of fact may still be entertained
On a final note, the policy according factual findings of courts a quo great respect, if not finality, is not binding
where they have overlooked, misapprehended, or misapplied any fact or circumstance of weight and
substance.54 So it must be here; the nature of the products involved materially affects the outcome of the instant
case. A reversal of the appellate courts Decision is then in order.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The Decision and the Resolution
of the Court of Appeals in CA-G.R. SP No. 122565, dated April 30, 2013 and November 6, 2013, respectively,
are hereby REVERSED and SET ASIDE. Accordingly, the Decision of the Intellectual Property Office
Director General in Inter Partes Case No. 14-2006-00096, dated November 23, 2011, is hereby REINSTATED.
SO ORDERED.cralawlawlibrary
SECOND DIVISION
LEVI STRAUSS & CO., G.R. No. 138900
& LEVI STRAUSS (PHILS.),
INC., Present:
Petitioners,
PUNO,
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
TINGA, and
CLINTON APPARELLE, INC., NAZARIO, JJ.
Respondent.
Promulgated:
September 20, 2005
x----------------------------------------------------------------------x

DECISION
TINGA, J.:
Before us is a petition for review on certiorari [1] under Rule 45 of the 1997 Rules of Civil Procedure filed by
Levi Strauss & Co. (LS & Co.) and Levi Strauss (Philippines), Inc. (LSPI) assailing the Court of
Appeals Decision[2] and Resolution[3] respectively dated 21 December 1998 and 10 May 1999. The
questioned Decision granted respondents prayer for a writ of preliminary injunction in itsPetition[4] and set aside
the trial courts orders dated 15 May 1998[5] and 4 June 1998[6] which respectively granted petitioners prayer for
the issuance of a temporary restraining order (TRO) and application for the issuance of a writ of preliminary
injunction.
This case stemmed from the Complaint[7] for Trademark Infringement, Injunction and Damages filed by
petitioners LS & Co. and LSPI against respondent Clinton Apparelle, Inc. * (Clinton Aparelle) together with an
alternative defendant, Olympian Garments, Inc. (Olympian Garments), before the Regional Trial Court of
Quezon City, Branch 90.[8] The Complaint was docketed as Civil Case No. Q-98-34252, entitled Levi Strauss &
Co. and Levi Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or Olympian Garments, Inc.
The Complaint alleged that LS & Co., a foreign corporation duly organized and existing under the laws of the
State of Delaware, U.S.A., and engaged in the apparel business, is the owner by prior adoption and use since
1986 of the internationally famous Dockers and Design trademark. This ownership is evidenced by its valid and
existing registrations in various member countries of the Paris Convention. In the Philippines, it has a
Certificate of Registration No. 46619 in the Principal Register for use of said trademark on pants, shirts,
blouses, skirts, shorts, sweatshirts and jackets under Class 25.[9]
The Dockers and Design trademark was first used in the Philippines in or about May 1988, by LSPI, a domestic
corporation engaged in the manufacture, sale and distribution of various products bearing trademarks owned by
LS & Co. To date, LSPI continues to manufacture and sell Dockers Pants with the Dockers and Design
trademark.[10]
LS & Co. and LSPI further alleged that they discovered the presence in the local market of jeans under the
brand name Paddocks using a device which is substantially, if not exactly, similar to the Dockers and Design
trademark owned by and registered in the name of LS & Co., without its consent. Based on their information
and belief, they added, Clinton Apparelle manufactured and continues to manufacture such Paddocks jeans and
other apparel.

However, since LS & Co. and LSPI are unsure if both, or just one of impleaded defendants are behind
the manufacture and sale of the Paddocks jeans complained of, they brought this suit under Section 13, Rule
3[11] of the 1997 Rules of Civil Procedure.[12]
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary restraining order be immediately issued
restraining defendants, their officers, employees, agents, representatives, dealers, retailers or
assigns from committing the acts herein complained of, and, specifically, for the defendants,
their officers, employees, agents, representatives, dealers and retailers or assigns, to cease and
desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using
denims, jeans or pants with the design herein complained of as substantially, if not exactly
similar, to plaintiffs Dockers and Design trademark.
2. That after notice and hearing, and pending trial on the merits, a writ of preliminary injunction
be issued enjoining defendants, their officers, employees, agents, dealers, retailers, or assigns
from manufacturing, distributing, selling, offering for sale, advertising, jeans the design herein
complained of as substantially, if not exactly similar, to plaintiffs Dockers and Design trademark.
3. That after trial on the merits, judgment be rendered as follows:
a. Affirming and making permanent the writ of preliminary injunction;
b. Ordering that all infringing jeans in the possession of either or both defendants as the evidence
may warrant, their officers, employees, agents, retailers, dealers or assigns, be delivered to the
Honorable Court of plaintiffs, and be accordingly destroyed;[13]

Acting on the prayer for the issuance of a TRO, the trial court issued an Order[14] setting it for hearing on 5 May
1998. On said date, as respondent failed to appear despite notice and the other defendant, Olympian Garments,
had yet to be notified, the hearing was re-scheduled on 14 May 1998.[15]
On 14 May 1998, neither Clinton Apparelle nor Olympian Garments appeared. Clinton Apparelle claimed that it
was not notified of such hearing. Only Olympian Garments allegedly had been issued with summons. Despite
the absence of the defendants, the hearing on the application for the issuance of a TRO continued.[16]
The following day, the trial court issued an Order[17] granting the TRO applied for, the pertinent portions of
which state:
Considering the absence of counsel/s for the defendant/s during the summary hearing scheduled
on May 5, 1998 and also during the re-scheduled summary hearing held on May 14, 1998 set for
the purpose of determining whether or not a Temporary Restraining Order shall be issued, this
Court allowed the counsel for the plaintiffs to present on May 14, 1998 their

arguments/evidences in support of their application. After hearing the arguments presented by the
counsel for the plaintiffs during the summary hearing, this Court is of the considered and humble
view that grave injustice and irreparable injury to the plaintiffs would arise before the matter of
whether or not the application for the issuance of a Writ of Preliminary Injunction can be heard,
and that, in the interest of justice, and in the meantime, a Temporary Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be issued restraining the defendants, their
officers, employees, agents, representatives, dealers, retailers or assigns from committing the acts
complained of in the verified Complaint, and specifically, for the defendants, their officers,
employees, agents, representatives, dealers and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising or otherwise using denims,
jeans or pants with the design complained of in the verified Complaint as substantially, if not
exactly similar, to plaintiffs Dockers and Design trademark; until after the application/prayer for
the issuance of a Writ of Preliminary Injunction is heard/resolved, or until further orders from
this Court.
The hearing on the application for the issuance of a Writ of Preliminary Injunction as embodied
in the verified Complaint is set on May 26, 1998 (Tuesday) at 2:00 P.M. which setting is
intransferable in character considering that the lifetime of this Temporary Restraining Order is
twenty (20) days from date hereof.[18]
On 4 June 1998, the trial court issued another Order[19] granting the writ of preliminary injunction, to
wit:
ORDER
This resolves the plaintiffs application or prayer for the issuance of a writ of preliminary
injunction as embodied in the verified complaint in this case. Parenthetically, this Court earlier
issued a temporary restraining order. (see Order dated May 15, 1998; see also Order dated May
26, 1998)
After a careful perusal of the contents of the pleadings and documents on record insofar as they
are pertinent to the issue under consideration, this Court finds that at this point in time, the
plaintiffs appear to be entitled to the relief prayed for and this Court is of the considered belief
and humble view that, without necessarily delving on the merits, the paramount interest of justice
will be better served if the status quo shall be maintained and that an injunction bond
of P2,500,000.00 appears to be in order. (see Sections 3 and 4, Rule 58, 1997 Rules of Civil
Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs prayer for the issuance of a writ of preliminary
injunction is GRANTED. Accordingly, upon the plaintiffs filing, within ten (10) days from their
receipt hereof, an injunction bond of P2,500,000.00 executed to the defendants to the effect that
the plaintiffs will pay all damages the defendants may sustain by reason of this injunction in case
the Court should finally decide that the plaintiffs are not entitled thereto, let a writ of preliminary
injunction issue enjoining or restraining the commission of the acts complained of in the verified
Complaint in this case, and specifically, for the defendants, their officers, employees, agents,
representatives, dealers and retailers or assigns or persons acting in their behalf to cease and
desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise using,
denims, jeans or pants with the design complained of in the verified Complaint in this case,
which is substantially, if not exactly, similar to plaintiffs DOCKERS and DESIGN trademark or
logo as covered by the Bureau of Patents, Trademarks and Technology Transfer Certificate of

Registration No. 46619, until after this case shall have been decided on the merits and/or until
further orders from this Court.[20]
The evidence considered by the trial court in granting injunctive relief were as follows: (1) a certified
true copy of the certificate of trademark registration for Dockers and Design; (2) a pair of DOCKERS pants
bearing the Dockers and Design trademark; (3) a pair of Paddocks pants bearing respondents assailed logo; (4)
the Trends MBL Survey Report purportedly proving that there was confusing similarity between two marks; (5)
the affidavit of one Bernabe Alajar which recounted petitioners prior adoption, use and registration of the
Dockers and Design trademark; and (6) the affidavit of one Mercedes Abad of Trends MBL, Inc. which detailed
the methodology and procedure used in their survey and the results thereof.[21]

Clinton Apparelle thereafter filed a Motion to Dismiss[22] and a Motion for Reconsideration[23] of
the Order granting the writ of preliminary injunction. Meantime, the trial court issued an Order[24] approving the
bond filed by petitioners.
On 22 June 1998, the trial court required [25] the parties to file their respective citation of authorities/
jurisprudence/Supreme Court decisions on whether or not the trial court may issue the writ of preliminary
injunction pending the resolution of the Motion for Reconsideration and the Motion to Dismiss filed by
respondent.
On 2 October 1998, the trial court denied Clinton Apparelles Motion to Dismiss and Motion for
Reconsideration in an Omnibus Order,[26]the pertinent portions of which provide:
After carefully going over the contents of the pleadings in relation to pertinent portions of the
records, this Court is of the considered and humble view that:

On the first motion, the arguments raised in the plaintiffs aforecited Consolidated Opposition
appears to be meritorious. Be that as it may, this Court would like to emphasize, among other
things, that the complaint states a cause of action as provided under paragraphs 1 to 18 thereof.
On the second motion, the arguments raised in the plaintiffs aforecited Consolidated Opposition
likewise appear to be impressed with merit. Besides, there appears to be no strong and cogent
reason to reconsider and set aside this Courts Order dated June 4, 1998 as it has been shownso
far that the trademark or logo of defendants is substantially, if not exactly, similar to plaintiffs
DOCKERS and DESIGN trademark or logo as covered by BPTTT Certificate of Registration
No. 46619 even as the BPTTT Certificate of Registration No. 49579 of Clinton Apparelle, Inc. is

only for the mark or word PADDOCKS (see Records, p. 377) In any event, this Court had issued
an Order dated June 18, 1998 for the issuance of the writ of preliminary injunction after the
plaintiffs filed the required bond of P2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss and Motion For
Reconsideration are both DENIED for lack of merit, and accordingly, this Courts Order dated
June 18, 1998 for the issuance of the writ of preliminary injunction is REITERATED so the writ
of preliminary injunction could be implemented unless the implementation thereof is restrained
by the Honorable Court of Appeals or Supreme Court.
The writ of preliminary injunction was thereafter issued on 8 October 1998.[27]

Thus, Clinton Apparelle filed with the Court of Appeals a Petition[28] for certiorari, prohibition and mandamus
with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, assailing the
orders of the trial court dated 15 May 1998, 4 June 1998 and 2 October 1998.
On 20 October 1998, the Court of Appeals issued a Resolution[29] requiring herein petitioners to file their
comment on the Petition and at the same time issued the prayed-for temporary restraining order.
The appellate court rendered on 21 December 1998 its now assailed Decision granting Clinton Apparelles
petition. The Court of Appeals held that the trial court did not follow the procedure required by law for the
issuance of a temporary restraining order as Clinton Apparelle was not duly notified of the date of the summary
hearing for its issuance. Thus, the Court of Appeals ruled that the TRO had been improperly issued.[30]

The Court of Appeals also held that the issuance of the writ of preliminary injunction is questionable. In its
opinion, herein petitioners failed to sufficiently establish its material and substantial right to have the writ
issued. Secondly, the Court of Appeals observed that the survey presented by petitioners to support their
contentions was commissioned by petitioners. The Court of Appeals remarked that affidavits taken ex-parte are
generally considered to be inferior to testimony given in open court. The appellate court also considered that the
injury petitioners have suffered or are currently suffering may be compensated in terms of monetary
consideration, if after trial, a final judgment shall be rendered in their favor.[31]
In addition, the Court of Appeals strongly believed that the implementation of the questioned writ would
effectively shut down respondents business, which in its opinion should not be sanctioned. The Court of
Appeals thus set aside the orders of the trial court dated 15 May 1998 and 4 June 1998, respectively issuing a
temporary restraining order and granting the issuance of a writ of preliminary injunction.

With the denial of their Motion for Reconsideration,[32] petitioners are now before this Court seeking a review of
the appellate courtsDecision and Resolution. LS & Co. and LSPI claim that the Court of Appeals committed
serious error in: (1) disregarding the well-defined limits of the writ of certiorari that questions on the sufficiency
of evidence are not to be resolved in such a petition; (2) in holding that there was no confusion between the two

marks; (3) in ruling that the erosion of petitioners trademark is not protectable by injunction; (4) in ignoring the
procedure previously agreed on by the parties and which was adopted by the trial court; and (5) in declaring that
the preliminary injunction issued by the trial court will lead to the closure of respondents business.
In its Comment,[33] Clinton Apparelle maintains that only questions of law may be raised in an appeal by
certiorari under Rule 45 of the Rules of Court. It asserts that the question of whether the Court of Appeals erred
in: (1) disregarding the survey evidence; (2) ruling that there was no confusion between the two marks; and (c)
finding that the erosion of petitioners trademark may not be protected by injunction, are issues not within the
ambit of a petition for review on certiorari under Rule 45. Clinton Apparelle also contends that the Court of
Appeals acted correctly when it overturned the writ of preliminary injunction issued by the trial court. It
believes that the issued writ in effect disturbed the status quo and disposed of the main case without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary injunction by the trial court was proper and whether
the Court of Appeals erred in setting aside the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of an
action prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a
particular act or acts. Injunction is accepted as the strong arm of equity or a transcendent remedy to be used
cautiously as it affects the respective rights of the parties, and only upon full conviction on the part of the court
of its extreme necessity. An extraordinary remedy, injunction is designed to preserve or maintain the status
quo of things and is generally availed of to prevent actual or threatened acts until the merits of the case can be
heard.[34] It may be resorted to only by a litigant for the preservation or protection of his rights or interests and
for no other purpose during the pendency of the principal action.[35] It is resorted to only when there is a pressing
necessity to avoid injurious consequences, which cannot be remedied under any standard compensation. The
resolution of an application for a writ of preliminary injunction rests upon the existence of an emergency or of a
special recourse before the main case can be heard in due course of proceedings.[36]
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted
when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.
Under the cited provision, a clear and positive right especially calling for judicial protection must be shown.
Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a
right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action.
There must exist an actual right.[37] There must be a patent showing by the complaint that there exists a right to
be protected and that the acts against which the writ is to be directed are violative of said right.[38]
There are generally two kinds of preliminary injunction: (1) a prohibitory injunction which commands a party to
refrain from doing a particular act; and (2) a mandatory injunction which commands the performance of some
positive act to correct a wrong in the past.[39]
The Court of Appeals did not err in reviewing proof adduced by petitioners to support its application for the
issuance of the writ. While the matter of the issuance of a writ of preliminary injunction is addressed to the
sound discretion of the trial court, this discretion must be exercised based upon the grounds and in the manner
provided by law. The exercise of discretion by the trial court in injunctive matters is generally not interfered
with save in cases of manifest abuse.[40] And to determine whether there was abuse of discretion, a scrutiny must
be made of the bases, if any, considered by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with great caution and deliberation, and only in
cases of great injury where there is no commensurate remedy in damages.[41]
In the present case, we find that there was scant justification for the issuance of the writ of preliminary
injunction.

Petitioners anchor their legal right to Dockers and Design trademark on the Certificate of Registration issued in
their favor by the Bureau of Patents, Trademarks and Technology Transfer.* According to Section 138 of
Republic Act No. 8293,[42] this Certificate of Registration is prima facie evidence of the validity of the
registration, the registrants ownership of the mark and of the exclusive right to use the same in connection with
the goods or services and those that are related thereto specified in the certificate. Section 147.1 of said law
likewise grants the owner of the registered mark the exclusive right to prevent all third parties not having the
owners consent from using in the course of trade identical or similar signs for goods or services which are
identical or similar to those in respect of which the trademark is registered if such use results in a likelihood of
confusion.
However, attention should be given to the fact that petitioners registered trademark consists of two elements: (1)
the word mark Dockers and (2) the wing-shaped design or logo. Notably, there is only one registration for both
features of the trademark giving the impression that the two should be considered as a single unit. Clinton
Apparelles trademark, on the other hand, uses the Paddocks word mark on top of a logo which according to
petitioners is a slavish imitation of the Dockers design. The two trademarks apparently differ in their word
marks (Dockers and Paddocks), but again according to petitioners, they employ similar or identical logos. It
could thus be said that respondent only appropriates petitioners logo and not the word mark Dockers; it uses
only a portion of the registered trademark and not the whole.
Given the single registration of the trademark Dockers and Design and considering that respondent only uses
the assailed device but a different word mark, the right to prevent the latter from using the challenged Paddocks
device is far from clear. Stated otherwise, it is not evident whether the single registration of the trademark
Dockers and Design confers on the owner the right to prevent the use of a fraction thereof in the course of trade.
It is also unclear whether the use without the owners consent of a portion of a trademark registered in its
entirety constitutes material or substantial invasion of the owners right.
It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central
feature of petitioners trademarkthe feature that prevails or is retained in the minds of the publican imitation of
which creates the likelihood of deceiving the public and constitutes trademark infringement. [43] In sum, there are
vital matters which have yet and may only be established through a full-blown trial.
From the above discussion, we find that petitioners right to injunctive relief has not been clearly and
unmistakably demonstrated. The right has yet to be determined. Petitioners also failed to show proof that there

is material and substantial invasion of their right to warrant the issuance of an injunctive writ. Neither were
petitioners able to show any urgent and permanent necessity for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity for injunctive relief, urging that the erosion or
dilution of their trademark is protectable. They assert that a trademark owner does not have to wait until the
mark loses its distinctiveness to obtain injunctive relief, and that the mere use by an infringer of a registered
mark is already actionable even if he has not yet profited thereby or has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or
services, regardless of the presence or absence of: (1) competition between the owner of the famous mark and
other parties; or (2) likelihood of confusion, mistake or deception. Subject to the principles of equity, the owner
of a famous mark is entitled to an injunction against another persons commercial use in commerce of a mark or
trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality
of the mark. This is intended to protect famous marks from subsequent uses that blur distinctiveness of the mark
or tarnish or disparage it.[44]
Based on the foregoing, to be eligible for protection from dilution, there has to be a finding that: (1) the
trademark sought to be protected is famous and distinctive; (2) the use by respondent of Paddocks and Design
began after the petitioners mark became famous; and (3) such subsequent use defames petitioners mark. In the
case at bar, petitioners have yet to establish whether Dockers and Design has acquired a strong degree of
distinctiveness and whether the other two elements are present for their cause to fall within the ambit of the
invoked protection. The Trends MBL Survey Report which petitioners presented in a bid to establish that there
was confusing similarity between two marks is not sufficient proof of any dilution that the trial court must
enjoin.

The Court also finds that the trial courts order granting the writ did not adequately detail the reasons for the
grant, contrary to our ruling in University of the Philippines v. Hon. Catungal Jr., [45] wherein we held that:
The trial court must state its own findings of fact and cite particular law to justify grant of
preliminary injunction. Utmost care in this regard is demanded.[46]

The trial court in granting the injunctive relief tersely ratiocinated that the plaintiffs appear to be entitled
to the relief prayed for and this Court is of the considered belief and humble view that, without necessarily
delving on the merits, the paramount interest of justice will be better served if the status quo shall be
maintained. Clearly, this statement falls short of the requirement laid down by the above-quoted case. Similarly,
in Developers Group of Companies, Inc. v. Court of Appeals,[47] we held that it was not enough for the trial
court, in its order granting the writ, to simply say that it appeared after hearing that plaintiff is entitled to the
relief prayed for.

In addition, we agree with the Court of Appeals in its holding that the damages the petitioners had suffered or
continue to suffer may be compensated in terms of monetary consideration. As held in Government Service
Insurance System v. Florendo:[48]
a writ of injunction should never have been issued when an action for damages would adequately
compensate the injuries caused. The very foundation of the jurisdiction to issue the writ of
injunction rests in the probability of irreparable injury, inadequacy of pecuniary estimation and
the prevention of the multiplicity of suits, and where facts are not shown to bring the case within
these conditions, the relief of injunction should be refused.[49]
We also believe that the issued injunctive writ, if allowed, would dispose of the case on the merits as it would
effectively enjoin the use of the Paddocks device without proof that there is basis for such action. The prevailing
rule is that courts should avoid issuing a writ of preliminary injunction that would in effect dispose of the main
case without trial.[50] There would be a prejudgment of the main case and a reversal of the rule on the burden of
proof since it would assume the proposition which petitioners are inceptively bound to prove.[51]
Parenthetically, we find no flaw in the Court of Appeals disquisition on the consequences of the issued
injunction. An exercise of caution, we believe that such reflection is necessary to weigh the alleged entitlement
to the writ vis--vis its possible effects. The injunction issued in the instant case is of a serious nature as it tends
to do more than to maintain the status quo. In fact, the assailed injunction if sustained would bring about the
result desired by petitioners without a trial on the merits.
Then again, we believe the Court of Appeals overstepped its authority when it declared that the alleged
similarity as to the two logos is hardly confusing to the public. The only issue brought before the Court of
Appeals through respondents Petition under Rule 65 of the Rules of Court involved the grave abuse of

discretion allegedly committed by the trial court in granting the TRO and the writ of preliminary injunction. The
appellate court in making such a statement went beyond that issue and touched on the merits of the infringement
case, which remains to be decided by the trial court. In our view, it was premature for the Court of Appeals to
declare that there is no confusion between the two devices or logos. That matter remains to be decided on by the
trial court.
Finally, we have no contention against the procedure adopted by the trial court in resolving the application for
an injunctive writ and we believe that respondent was accorded due process. Due process, in essence, is simply
an opportunity to be heard. And in applications for preliminary injunction, the requirement of hearing and prior
notice before injunction may issue has been relaxed to the point that not all petitions for preliminary injunction
must undergo a trial-type hearing, it being a hornbook doctrine that a formal or trial-type hearing is not at all
times and in all instances essential to due process. Due process simply means giving every contending party the
opportunity to be heard and the court to consider every piece of evidence presented in their favor. Accordingly,
this Court has in the case of Co v. Calimag, Jr.,[52] rejected a claim of denial of due process where such claimant
was given the opportunity to be heard, having submitted his counter-affidavit and memorandum in support of
his position.[53]

After a careful consideration of the facts and arguments of the parties, the Court finds that petitioners did not
adequately prove their entitlement to the injunctive writ. In the absence of proof of a legal right and the injury
sustained by the applicant, an order of the trial court granting the issuance of an injunctive writ will be set aside
for having been issued with grave abuse of discretion. [54]Conformably, the Court of Appeals was correct in
setting aside the assailed orders of the trial court.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals dated 21 December 1998
and its Resolution dated 10 May 1999 are AFFIRMED. Costs against petitioners.
SO ORDERED.

FIRST DIVISION

TANDUAY DISTILLERS, INC.,

G.R. NO. 164324

Petitioner,
PRESENT:

- versus -

PUNO, C.J., CHAIRPERSON,

CARPIO,
CORONA,
LEONARDO-DE CASTRO, AND

GINEBRA SAN MIGUEL, INC.,

BERSAMIN, JJ.

RESPONDENT.

PROMULGATED:
AUGUST 14, 2009
X--------------------------------------------------X

DECISION

CARPIO, J.:

The Case
TANDUAY DISTILLERS, INC. (TANDUAY) FILED THIS PETITION FOR REVIEW ON
CERTIORARI[1] ASSAILING THE COURT OF APPEALS DECISION DATED 9 JANUARY 2004[2] AS
WELL AS THE RESOLUTION DATED 2 JULY 2004[3] IN CA-G.R. SP NO. 79655 DENYING THE
MOTION FOR RECONSIDERATION. IN THE ASSAILED DECISION, THE COURT OF APPEALS (CA)
AFFIRMED THE REGIONAL TRIAL COURTS ORDERS[4]DATED 23 SEPTEMBER 2003 AND 17
OCTOBER 2003 WHICH RESPECTIVELY GRANTED GINEBRA SAN MIGUEL, INC.S (SAN MIGUEL)
PRAYER FOR THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER (TRO) AND WRIT OF
PRELIMINARY INJUNCTION. THE REGIONAL TRIAL COURT OF MANDALUYONG CITY, BRANCH

214 (TRIAL COURT), ENJOINED TANDUAY FROM COMMITTING THE ACTS COMPLAINED OF,
AND, SPECIFICALLY, TO CEASE AND DESIST FROM MANUFACTURING, DISTRIBUTING,
SELLING, OFFERING FOR SALE, ADVERTISING, OR OTHERWISE USING IN COMMERCE THE
MARK GINEBRA, AND MANUFACTURING, PRODUCING, DISTRIBUTING, OR OTHERWISE
DEALING IN GIN PRODUCTS WHICH HAVE THE GENERAL APPEARANCE OF, AND WHICH ARE
CONFUSINGLY SIMILAR WITH, SAN MIGUELS MARKS, BOTTLE DESIGN, AND LABEL FOR ITS
GIN PRODUCTS.[5]

THE FACTS

Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor business
since 1854. In 2002, Tanduay developed a new gin product distinguished by its sweet smell, smooth taste, and
affordable price. Tanduay claims that it engaged the services of an advertising firm to develop a brand name and
a label for its new gin product. The brand name eventually chosen was Ginebra Kapitan with the representation
of a revolutionary Kapitan on horseback as the dominant feature of its label. Tanduay points out that the label
design of Ginebra Kapitan in terms of color scheme, size and arrangement of text, and other label features were
precisely selected to distinguish it from the leading gin brand in the Philippine market, Ginebra San Miguel.
Tanduay also states that the Ginebra Kapitan bottle uses a resealable twist cap to distinguish it from Ginebra
San Miguel and other local gin products with bottles which use the crown cap or tansan.[6]

AFTER FILING THE TRADEMARK APPLICATION FOR GINEBRA KAPITAN WITH THE
INTELLECTUAL PROPERTY OFFICE (IPO) AND AFTER SECURING THE APPROVAL OF THE PERMIT
TO MANUFACTURE AND SELL GINEBRA KAPITAN FROM THE BUREAU OF INTERNAL REVENUE,
TANDUAY BEGAN SELLING GINEBRA KAPITAN IN NORTHERN AND SOUTHERN LUZON AREAS
IN MAY 2003. IN JUNE 2003, GINEBRA KAPITAN WAS ALSO LAUNCHED IN METRO MANILA.[7]

ON 13 AUGUST 2003, TANDUAY RECEIVED A LETTER FROM SAN MIGUELS COUNSEL. THE
LETTER INFORMED TANDUAY TO IMMEDIATELY CEASE AND DESIST FROM USING THE MARK
GINEBRA AND FROM COMMITTING ACTS THAT VIOLATE SAN MIGUELS INTELLECTUAL
PROPERTY RIGHTS.[8]
ON 15 AUGUST 2003, SAN MIGUEL FILED A COMPLAINT FOR TRADEMARK INFRINGEMENT,
UNFAIR COMPETITION AND DAMAGES, WITH APPLICATIONS FOR ISSUANCE OF TRO AND WRIT
OF PRELIMINARY INJUNCTION AGAINST TANDUAY BEFORE THE REGIONAL TRIAL COURT OF
MANDALUYONG. THE CASE WAS RAFFLED TO BRANCH 214 AND DOCKETED AS IP CASE NO.
MC-03-01 AND CIVIL CASE NO. MC-03-073.[9]

ON 25 AND 29 AUGUST AND 4 SEPTEMBER 2003, THE TRIAL COURT CONDUCTED HEARINGS ON
THE TRO. SAN MIGUEL SUBMITTED FIVE AFFIDAVITS, BUT ONLY ONE AFFIANT, MERCEDES

ABAD, WAS PRESENTED FOR CROSS-EXAMINATION BECAUSE THE TRIAL COURT RULED THAT
SUCH EXAMINATION WOULD BE INCONSISTENT WITH THE SUMMARY NATURE OF A TRO
HEARING.[10] SAN MIGUEL SUBMITTED THE FOLLOWING PIECES OF EVIDENCE:[11]

1. Affidavit of Mercedes Abad, President and Managing Director of the research firm NFO
Trends, Inc. (NFO Trends), to present, among others, market survey results which prove that gin
drinkers associate the term Ginebra with San Miguel, and that the consuming public is being
misled that Ginebra Kapitan is a product of San Miguel;
2. MARKET SURVEY RESULTS CONDUCTED BY NFO TRENDS TO DETERMINE THE BRAND
ASSOCIATIONS OF THE MARK GINEBRA AND TO PROVE THAT THE CONSUMING PUBLIC IS
CONFUSED AS TO THE MANUFACTURER OF GINEBRA KAPITAN;
3. AFFIDAVIT OF RAMON CRUZ, SAN MIGUELS GROUP PRODUCT MANAGER, TO PROVE,
AMONG OTHERS, THE PRIOR RIGHT OF SAN MIGUEL TO THE MARK GINEBRA AS SHOWN IN
VARIOUS APPLICATIONS FOR, AND REGISTRATIONS OF, TRADEMARKS THAT CONTAIN THE
MARK GINEBRA. HIS AFFIDAVIT INCLUDED DOCUMENTS SHOWING THAT THE MARK GINEBRA
HAS BEEN USED ON SAN MIGUELS GIN PRODUCTS SINCE 1834;
4. AFFIDAVITS OF LEOPOLDO GUANZON, JR., SAN MIGUELS TRADE AND PROMO
MERCHANDISING HEAD FOR NORTH LUZON AREA, AND JUDERICK CRESCINI, SAN MIGUELS
DISTRICT SALES SUPERVISOR FOR SOUTH LUZON-EAST AREA, TO PROVE, AMONG OTHERS,
THAT TANDUAYS SALESMEN OR DISTRIBUTORS MISREPRESENT GINEBRA KAPITAN AS SAN
MIGUELS PRODUCT AND THAT NUMEROUS RETAILERS OF SAN MIGUELS GIN PRODUCTS ARE
CONFUSED AS TO THE MANUFACTURER OF GINEBRA KAPITAN; AND
5. AFFIDAVIT OF JOSE REGINALD PASCUAL, SAN MIGUELS DISTRICT SALES SUPERVISOR FOR
THE NORTH-GREATER MANILA AREA, TO PROVE, AMONG OTHERS, THAT GIN DRINKERS
CONFUSE SAN MIGUEL TO BE THE MANUFACTURER OF GINEBRA KAPITAN DUE TO THE USE
OF THE DOMINANT FEATURE GINEBRA.

Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which motion was denied by the trial
court. Tanduay presented witnesses who affirmed their affidavits in open court, as follows:[12]
1. RAMONCITO BUGIA, GENERAL SERVICES MANAGER OF TANDUAY. ATTACHED
TO HIS AFFIDAVIT WERE VARIOUS CERTIFICATES OF REGISTRATION OF
TRADEMARKS CONTAINING THE WORD GINEBRA OBTAINED BY TANDUAY AND
OTHER LIQUOR COMPANIES, TO PROVE THAT THE WORD GINEBRA IS REQUIRED
TO BE DISCLAIMED BY THE IPO. THE AFFIDAVIT ALSO ATTESTED THAT THERE
ARE OTHER LIQUOR COMPANIES USING THE WORD GINEBRA AS PART OF THEIR
TRADEMARKS FOR GIN PRODUCTS ASIDE FROM SAN MIGUEL AND TANDUAY.
2. HERBERT ROSALES, VICE PRESIDENT OF J. SALCEDO AND ASSOCIATES, INC., THE
ADVERTISING AND PROMOTIONS COMPANY HIRED BY TANDUAY TO DESIGN THE LABEL OF
GINEBRA KAPITAN. HIS AFFIDAVIT ATTESTED THAT THE LABEL WAS DESIGNED TO MAKE IT
LOOK ABSOLUTELY DIFFERENT FROM THE GINEBRA SAN MIGUEL LABEL.

ON 23 SEPTEMBER 2003, THE TRIAL COURT ISSUED A TRO PROHIBITING TANDUAY FROM
MANUFACTURING, SELLING AND ADVERTISING GINEBRA KAPITAN. [13] THE DISPOSITIVE
PORTION READS IN PART:

WHEREFORE, the application for temporary restraining order is hereby GRANTED and made
effective immediately. Plaintiff is directed to post a bond of ONE MILLION PESOS (Php
1,000,000.00) within five (5) days from issuance hereof, otherwise, this restraining order shall
lose its efficacy. Accordingly, defendant Tanduay Distillers, Inc., and all persons and agents
acting for and in behalf are enjoined to cease and desist from manufacturing, distributing, selling,
offering for sale and/or advertising or otherwise using in commerce the mark GINEBRA
KAPITAN which employs, thereon, or in the wrappings, sundry items, cartons and packages
thereof, the mark GINEBRA as well as from using the bottle design and labels for its gin
products during the effectivity of this temporary restraining order unless a contrary order is
issued by this Court.[14]

On 3 October 2003, Tanduay filed a petition for certiorari with the CA. [15] Despite Tanduays Urgent Motion to
Defer Injunction Hearing, the trial court continued to conduct hearings on 8, 9, 13 and 14 October 2003 for
Tanduay to show cause why no writ of preliminary injunction should be issued. [16] On 17 October 2003, the trial
court granted San Miguels application for the issuance of a writ of preliminary injunction. [17] The dispositive
portion of the Order reads:

WHEREFORE, the plaintiffs application for a writ of preliminary injunction is GRANTED.

Upon plaintiffs filing of an injunctive bond executed to the defendant in the amount
of P20,000,000.00 (TWENTY MILLION) PESOS, let a Writ of Preliminary Injunction issue
enjoining the defendant, its employees, agents, representatives, dealers, retailers or assigns, and
any all persons acting on its behalf, from committing the acts complained of, and, specifically, to
cease and desist from manufacturing, distributing, selling, offering for sale, advertising, or
otherwise using in commerce the mark GINEBRA, and manufacturing, producing, distributing or
otherwise dealing in gin products which have the general appearance of, and which are
confusingly similar with, plaintiffs marks, bottle design and label for its gin products.

SO ORDERED.[18]

On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the injunction order. On 10
November 2003, the CA issued a TRO enjoining the trial court from implementing its injunction order and from
further proceeding with the case.[19] On 23 December 2003, the CA issued a resolution directing the parties to

appear for a hearing on 6 January 2004 to determine the need for the issuance of a writ of preliminary
injunction.[20]

ON 9 JANUARY 2004, THE CA RENDERED A DECISION DISMISSING TANDUAYS PETITION AND

SUPPLEMENTAL PETITION. ON 28 JANUARY 2004, TANDUAY MOVED FOR RECONSIDERATION
WHICH WAS DENIED IN A RESOLUTION DATED 2 JULY 2004.[21]

AGGRIEVED BY THE DECISION DISMISSING THE PETITION AND SUPPLEMENTAL PETITION AND
BY THE RESOLUTION DENYING THE MOTION FOR RECONSIDERATION, TANDUAY ELEVATED
THE CASE BEFORE THIS COURT.

THE TRIAL COURTS ORDERS

In the Order dated 23 September 2003, the trial court stated that during the hearings conducted on 25 and 29
August and on 4 and 11 September 2003, the following facts have been established:

1.

San Miguel has registered the trademark Ginebra San Miguel;

2. THERE IS A CLOSE RESEMBLANCE BETWEEN GINEBRA SAN MIGUEL AND

GINEBRA KAPITAN;
3. THE CLOSE SIMILARITY BETWEEN GINEBRA SAN MIGUEL AND GINEBRA
KAPITAN MAY GIVE RISE TO CONFUSION OF GOODS SINCE SAN MIGUEL AND
TANDUAY ARE COMPETITORS IN THE BUSINESS OF MANUFACTURING AND
SELLING LIQUORS; AND
GINEBRA, WHICH IS A WELL-KNOWN TRADEMARK, WAS ADOPTED BY TANDUAY TO BENEFIT
FROM THE REPUTATION AND ADVERTISEMENT OF THE ORIGINATOR OF THE MARK GINEBRA
SAN MIGUEL, AND TO CONVEY TO THE PUBLIC THE IMPRESSION OF SOME SUPPOSED
CONNECTION BETWEEN THE MANUFACTURER OF THE GIN PRODUCT SOLD UNDER THE NAME
GINEBRA SAN MIGUEL AND THE NEW GIN PRODUCT GINEBRA KAPITAN.[22]

Based on these facts, the trial court concluded that San Miguel had demonstrated a clear, positive, and existing
right to be protected by a TRO. Otherwise, San Miguel would suffer irreparable injury if infringement would

not be enjoined. Hence, the trial court granted the application for a TRO and set the hearing for preliminary
injunction.[23]

IN THE ORDER DATED 17 OCTOBER 2003, THE TRIAL COURT GRANTED THE APPLICATION FOR A
WRIT OF PRELIMINARY INJUNCTION. THE TRIAL COURT RULED THAT WHILE A CORPORATION
ACQUIRES A TRADE NAME FOR ITS PRODUCT BY CHOICE, IT SHOULD NOT SELECT A NAME
THAT IS CONFUSINGLY SIMILAR TO ANY OTHER NAME ALREADY PROTECTED BY LAW OR IS
PATENTLY DECEPTIVE, CONFUSING, OR CONTRARY TO EXISTING LAW.[24]
THE TRIAL COURT POINTED OUT THAT SAN MIGUEL AND ITS PREDECESSORS HAVE
CONTINUOUSLY USED GINEBRA AS THE DOMINANT FEATURE OF ITS GIN PRODUCTS SINCE
1834. ON THE OTHER HAND, TANDUAY FILED ITS TRADEMARK APPLICATION FOR GINEBRA
KAPITAN ONLY ON 7 JANUARY 2003. THE TRIAL COURT DECLARED THAT SAN MIGUEL IS THE
PRIOR USER AND REGISTRANT OF GINEBRA WHICH HAS BECOME CLOSELY ASSOCIATED TO
ALL OF SAN MIGUELS GIN PRODUCTS, THEREBY GAINING POPULARITY AND GOODWILL FROM
SUCH NAME.[25]

THE TRIAL COURT NOTED THAT WHILE THE SUBJECT TRADEMARKS ARE NOT IDENTICAL, IT IS
OBVIOUSLY CLEAR THAT THE WORD GINEBRA IS THE DOMINANT FEATURE IN THE
TRADEMARKS. THE TRIAL COURT STATED THAT THERE IS A STRONG INDICATION THAT
CONFUSION IS LIKELY TO OCCUR SINCE ONE WOULD INEVITABLY BE LED TO CONCLUDE
THAT BOTH PRODUCTS ARE AFFILIATED WITH SAN MIGUEL DUE TO THE DISTINCTIVE MARK
GINEBRA WHICH IS READILY IDENTIFIED WITH SAN MIGUEL. THE TRIAL COURT CONCLUDED
THAT ORDINARY PURCHASERS WOULD NOT EXAMINE THE LETTERINGS OR FEATURES
PRINTED ON THE LABEL BUT WOULD SIMPLY BE GUIDED BY THE PRESENCE OF THE
DOMINANT MARK GINEBRA. ANY DIFFERENCE WOULD PALE IN SIGNIFICANCE IN THE FACE
OF EVIDENT SIMILARITIES IN THE DOMINANT FEATURES AND OVERALL APPEARANCE OF THE
PRODUCTS. THE TRIAL COURT EMPHASIZED THAT THE DETERMINATIVE FACTOR WAS
WHETHER THE USE OF SUCH MARK WOULD LIKELY CAUSE CONFUSION ON THE PART OF THE
BUYING PUBLIC, AND NOT WHETHER IT WOULD ACTUALLY CAUSE CONFUSION ON THE PART
OF THE PURCHASERS. THUS, TANDUAYS CHOICE OF GINEBRA AS PART OF THE TRADEMARK
OF GINEBRA KAPITAN TENDED TO SHOW TANDUAYS INTENTION TO RIDE ON THE
POPULARITY AND ESTABLISHED GOODWILL OF GINEBRA SAN MIGUEL. [26]

THE TRIAL COURT HELD THAT TO CONSTITUTE TRADEMARK INFRINGEMENT, IT WAS NOT
NECESSARY THAT EVERY WORD SHOULD BE APPROPRIATED; IT WAS SUFFICIENT THAT
ENOUGH BE TAKEN TO DECEIVE THE PUBLIC IN THE PURCHASE OF A PROTECTED ARTICLE. [27]

THE TRIAL COURT CONCEDED TO TANDUAYS ASSERTION THAT THE TERM GINEBRA IS A
GENERIC WORD; HENCE, IT IS NON-REGISTRABLE BECAUSE GENERIC WORDS ARE BY LAW
FREE FOR ALL TO USE. HOWEVER, THE TRIAL COURT RELIED ON THE PRINCIPLE THAT EVEN IF
A WORD IS INCAPABLE OF APPROPRIATION AS A TRADEMARK, THE WORD MAY STILL
ACQUIRE A PROPRIETARY CONNOTATION THROUGH LONG AND EXCLUSIVE USE BY A
BUSINESS ENTITY WITH REFERENCE TO ITS PRODUCTS. THE PURCHASING PUBLIC WOULD

ASSOCIATE THE WORD TO THE PRODUCTS OF A BUSINESS ENTITY. THE WORD THUS
ASSOCIATED WOULD BE ENTITLED TO PROTECTION AGAINST INFRINGEMENT AND UNFAIR
COMPETITION. THE TRIAL COURT HELD THAT THIS PRINCIPLE COULD BE MADE TO APPLY TO
THIS CASE BECAUSE SAN MIGUEL HAS SHOWN THAT IT HAS ESTABLISHED GOODWILL OF
CONSIDERABLE VALUE, SUCH THAT ITS GIN PRODUCTS HAVE ACQUIRED A WELL-KNOWN
REPUTATION AS JUST GINEBRA. IN ESSENCE, THE WORD GINEBRA HAS BECOME A POPULAR
BY-WORD AMONG THE CONSUMERS AND THEY HAD CLOSELY ASSOCIATED IT WITH SAN
MIGUEL.[28]
ON THE OTHER HAND, THE TRIAL COURT HELD THAT TANDUAY FAILED TO SUBSTANTIATE ITS
CLAIM AGAINST THE ISSUANCE OF THE INJUNCTIVE RELIEF.[29]
THE RULING OF THE COURT OF APPEALS

In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the
determination of whether the TRO and the writ of preliminary injunction were issued by the trial court with
grave abuse of discretion amounting to lack of jurisdiction.[30]

TO WARRANT THE ISSUANCE OF A TRO, THE CA RULED THAT THE AFFIDAVITS OF SAN
MIGUELS WITNESSES AND THE FACT THAT THE REGISTERED TRADEMARK GINEBRA SAN
MIGUEL EXISTS ARE ENOUGH TO MAKE A FINDING THAT SAN MIGUEL HAS A CLEAR AND
UNMISTAKABLE RIGHT TO PREVENT IRREPARABLE INJURY BECAUSE GIN DRINKERS CONFUSE
SAN MIGUEL TO BE THE MANUFACTURER OF GINEBRA KAPITAN.[31]
THE CA ENUMERATED THE REQUISITES FOR AN INJUNCTION: (1) THERE MUST BE A
RIGHT IN ESSE OR THE EXISTENCE OF A RIGHT TO BE PROTECTED AND (2) THE ACT AGAINST
WHICH THE INJUNCTION IS TO BE DIRECTED IS A VIOLATION OF SUCH RIGHT. THE CA STATED
THAT THE TRADEMARKS GINEBRA SAN MIGUEL AND GINEBRA KAPITAN ARE NOT IDENTICAL,
BUT IT IS CLEAR THAT THE WORD GINEBRA IS THE DOMINANT FEATURE IN BOTH
TRADEMARKS. THERE WAS A STRONG INDICATION THAT CONFUSION WAS LIKELY TO OCCUR.
ONE WOULD BE LED TO CONCLUDE THAT BOTH PRODUCTS ARE AFFILIATED WITH SAN
MIGUEL BECAUSE THE DISTINCTIVE MARK GINEBRA IS IDENTIFIED WITH SAN MIGUEL. IT IS
THE MARK WHICH DRAWS THE ATTENTION OF THE BUYER AND LEADS HIM TO CONCLUDE
THAT THE GOODS ORIGINATED FROM THE SAME MANUFACTURER. [32]

THE CA OBSERVED THAT THE GIN PRODUCTS OF GINEBRA SAN MIGUEL AND GINEBRA
KAPITAN POSSESS THE SAME PHYSICAL ATTRIBUTES WITH REFERENCE TO THEIR FORM,
COMPOSITION, TEXTURE, OR QUALITY. THE CA UPHELD THE TRIAL COURTS RULING THAT
SAN MIGUEL HAS SUFFICIENTLY ESTABLISHED ITS RIGHT TO PRIOR USE AND REGISTRATION
OF THE MARK GINEBRA AS A DOMINANT FEATURE OF ITS TRADEMARK. GINEBRA HAS BEEN
IDENTIFIED WITH SAN MIGUELS GOODS, THEREBY, IT ACQUIRED A RIGHT IN SUCH MARK,
AND IF ANOTHER INFRINGED THE TRADEMARK, SAN MIGUEL COULD INVOKE ITS PROPERTY
RIGHT.[33]

The Issue

The central question for resolution is whether San Miguel is entitled to the writ of preliminary injunction
granted by the trial court as affirmed by the CA. For this reason, we shall deal only with the questioned writ and
not with the merits of the case pending before the trial court.

The Ruling of the Court

Clear and Unmistakable Right

SECTION 1, RULE 58 OF THE RULES OF COURT DEFINES A PRELIMINARY INJUNCTION AS AN

ORDER GRANTED AT ANY STAGE OF A PROCEEDING PRIOR TO THE JUDGMENT OR FINAL
ORDER, REQUIRING A PARTY OR A COURT, AGENCY, OR A PERSON TO REFRAIN FROM A
PARTICULAR ACT OR ACTS.
A PRELIMINARY INJUNCTION IS A PROVISIONAL REMEDY FOR THE PROTECTION OF
SUBSTANTIVE RIGHTS AND INTERESTS. IT IS NOT A CAUSE OF ACTION IN ITSELF BUT
MERELY AN ADJUNCT TO THE MAIN CASE. ITS OBJECTIVE IS TO PREVENT A THREATENED OR
CONTINUOUS IRREPARABLE INJURY TO SOME OF THE PARTIES BEFORE THEIR CLAIMS CAN BE
THOROUGHLY INVESTIGATED AND ADVISEDLY ADJUDICATED. IT IS RESORTED TO ONLY WHEN
THERE IS A PRESSING NEED TO AVOID INJURIOUS CONSEQUENCES WHICH CANNOT BE
REMEDIED UNDER ANY STANDARD COMPENSATION.[34]
Section 3, Rule 58 of the Rules of Court provides:

SECTION 3. GROUNDS FOR ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.A

PRELIMINARY INJUNCTION MAY BE GRANTED WHEN IT IS ESTABLISHED:
(a) That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a
limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation
would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject
of the action or proceeding, and tending to render the judgment ineffectual.

Before an injunctive writ is issued, it is essential that the following requisites are present: (1) the existence of a
right to be protected and (2) the acts against which the injunction is directed are violative of the right. The onus
probandi is on the movant to show that the invasion of the right sought to be protected is material and
substantial, that the right of the movant is clear and unmistakable, and that there is an urgent and paramount
necessity for the writ to prevent serious damage.[35]
San Miguel claims that the requisites for the valid issuance of a writ of preliminary injunction were clearly
established. The clear and unmistakable right to the exclusive use of the mark Ginebra was proven through the
continuous use of Ginebra in the manufacture, distribution, marketing and sale of gin products throughout the
Philippines since 1834. To the gin-drinking public, the word Ginebra does not simply indicate a kind of
beverage; it is now synonymous with San Miguels gin products.[36]

San Miguel contends that Ginebra can be appropriated as a trademark, and there was no error in the trial courts
provisional ruling based on the evidence on record. Assuming that Ginebra is a generic word which is
proscribed to be registered as a trademark under Section 123.1(h)[37] of Republic Act No. 8293 or the Intellectual
Property Code (IP Code),[38] it can still be appropriated and registered as a trademark under Section 123.1(j)
[39]
in relation to Section 123.2[40] of the IP Code, considering that Ginebra is also a mark which designates the
kind of goods produced by San Miguel. [41] San Miguel alleges that although Ginebra, the Spanish word for gin,
may be a term originally incapable of exclusive appropriation, jurisprudence dictates that the mark has become
distinctive of San Miguels products due to its substantially exclusive and continuous use as the dominant feature
of San Miguels trademarks since 1834. Hence, San Miguel is entitled to a finding that the mark is deemed to
have acquired a secondary meaning.[42] San Miguel states that Tanduay failed to present any evidence to
disprove its claims; thus, there is no basis to set aside the grant of the TRO and writ of preliminary injunction.[43]

San Miguel states that its disclaimer of the word Ginebra in some of its registered marks is without prejudice to,
and did not affect, its existing or future rights over Ginebra, especially since Ginebra has demonstrably become
distinctive of San Miguels products.[44] San Miguel adds that it did not disclaim Ginebra in all of its trademark
registrations and applications like its registration for Ginebra Cruz de Oro, Ginebra Ka Miguel, Ginebra San
Miguel bottle, Ginebra San Miguel, and Barangay Ginebra.[45]

Tanduay asserts that not one of the requisites for the valid issuance of a preliminary injunction is present in this
case. Tanduay argues that San Miguel cannot claim the exclusive right to use the generic word Ginebra for its
gin products based on its registration of the composite marks Ginebra San Miguel, Ginebra S. Miguel 65, and
La Tondea Cliq! Ginebra Mix, because in all of these registrations, San Miguel disclaimed any exclusive right
to use the non-registrable word Ginebra for gin products.[46] Tanduay explains that the word Ginebra, which is
disclaimed by San Miguel in all of its registered trademarks, is an unregistrable component of the composite
mark Ginebra San Miguel. Tanduay argues that this disclaimer further means that San Miguel does not have an
exclusive right to the generic word Ginebra.[47] Tanduay states that the word Ginebra does not indicate the
source of the product, but it is merely descriptive of the name of the product itself and not the manufacturer
thereof.[48]

Tanduay submits that it has been producing gin products under the brand names Ginebra 65, Ginebra Matador,
and Ginebra Toro without any complaint from San Miguel. Tanduay alleges that San Miguel has not filed any
complaint against other liquor companies which use Ginebra as part of their brand names such as Ginebra
Pinoy, a registered trademark of Webengton Distillery; Ginebra Presidente and Ginebra Luzon as registered
trademarks of Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra Santiago as registered
trademarks of Distileria Limtuaco & Co., Inc.[49] Tanduay claims that the existence of these products, the use
and registration of the word Ginebra by other companies as part of their trademarks belie San Miguels claim
that it has been the exclusive user of the trademark containing the word Ginebra since 1834.

Tanduay argues that before a court can issue a writ of preliminary injunction, it is imperative that San Miguel
must establish a clear and unmistakable right that is entitled to protection. San Miguels alleged exclusive right
to use the generic word Ginebra is far from clear and unmistakable. Tanduay claims that the injunction issued
by the trial court was based on its premature conclusion that Ginebra Kapitan infringes Ginebra San Miguel.[50]

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,[51] we held:

While the matter of the issuance of a writ of preliminary injunction is addressed to the sound
discretion of the trial court, this discretion must be exercised based upon the grounds and in the
manner provided by law. The exercise of discretion by the trial court in injunctive matters is
generally not interfered with save in cases of manifest abuse. And to determine whether there
was grave abuse of discretion, a scrutiny must be made of the bases, if any, considered by the
trial court in granting injunctive relief. Be it stressed that injunction is the strong arm of equity
which must be issued with great caution and deliberation, and only in cases of great injury where
there is no commensurate remedy in damages.[52]

The CA upheld the trial courts ruling that San Miguel has sufficiently established its right to prior use and
registration of the word Ginebra as a dominant feature of its trademark. The CA ruled that based on San
Miguels extensive, continuous, and substantially exclusive use of the word Ginebra, it has become distinctive of
San Miguels gin products; thus, a clear and unmistakable right was shown.
We hold that the CA committed a reversible error. The issue in the main case is San Miguels right to the
exclusive use of the mark Ginebra. The two trademarks Ginebra San Miguel and Ginebra Kapitan apparently
differ when taken as a whole, but according to San Miguel, Tanduay appropriates the word Ginebra which is a
dominant feature of San Miguels mark.

It is not evident whether San Miguel has the right to prevent other business entities from using the word
Ginebra. It is not settled (1) whether Ginebra is indeed the dominant feature of the trademarks, (2) whether it is

a generic word that as a matter of law cannot be appropriated, or (3) whether it is merely a descriptive word that
may be appropriated based on the fact that it has acquired a secondary meaning.

The issue that must be resolved by the trial court is whether a word like Ginebra can acquire a secondary
meaning for gin products so as to prohibit the use of the word Ginebra by other gin manufacturers or sellers.
This boils down to whether the word Ginebra is a generic mark that is incapable of appropriation by gin
manufacturers.

In Asia Brewery, Inc. v. Court of Appeals,[53] the Court ruled that pale pilsen are generic words, pale being the
actual name of the color and pilsen being the type of beer, a light bohemian beer with a strong hops flavor that
originated in Pilsen City in Czechoslovakia and became famous in the Middle Ages, and hence incapable of
appropriation by any beer manufacturer.[54] Moreover, Section 123.1(h) of the IP Code states that a mark cannot
be registered if it consists exclusively of signs that are generic for the goods or services that they seek to
identify.

In this case, a cloud of doubt exists over San Miguels exclusive right relating to the word Ginebra. San Miguels
claim to the exclusive use of the word Ginebra is clearly still in dispute because of Tanduays claim that it has, as
others have, also registered the word Ginebra for its gin products. This issue can be resolved only after a fullblown trial.

In Ong Ching Kian Chuan v. Court of Appeals,[55] we held that in the absence of proof of a legal right and the
injury sustained by the movant, the trial courts order granting the issuance of an injunctive writ will be set
aside, for having been issued with grave abuse of discretion.
We find that San Miguels right to injunctive relief has not been clearly and unmistakably demonstrated. The
right to the exclusive use of the word Ginebra has yet to be determined in the main case. The trial courts grant
of the writ of preliminary injunction in favor of San Miguel, despite the lack of a clear and unmistakable right
on its part, constitutes grave abuse of discretion amounting to lack of jurisdiction.
Prejudging the Merits of the Case

Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary injunction, has prejudged the
merits of the case since nothing is left to be decided by the trial court except the amount of damages to be
awarded to San Miguel.[56]
San Miguel claims that neither the CA nor the trial court prejudged the merits of the case. San Miguel states that
the CA did not rule on the ultimate correctness of the trial courts evaluation and appreciation of the evidence
before it, but merely found that the assailed Orders of the trial court are supported by the evidence on record
and that Tanduay was not denied due process. [57] San Miguel argues that the CA only upheld the trial courts

issuance of the TRO and writ of preliminary injunction upon a finding that there was sufficient evidence on
record, as well as legal authorities, to warrant the trial courts preliminary findings of fact.[58]
The instructive ruling in Manila International Airport Authority v. Court of Appeals[59] states:
Considering the far-reaching effects of a writ of preliminary injunction, the trial court should
have exercised more prudence and judiciousness in its issuance of the injunction order. We
remind trial courts that while generally the grant of a writ of preliminary injunction rests on the
sound discretion of the court taking cognizance of the case, extreme caution must be observed in
the exercise of such discretion. The discretion of the court a quo to grant an injunctive writ must
be exercised based on the grounds and in the manner provided by law. Thus, the Court declared
in Garcia v. Burgos:
It has been consistently held that there is no power the exercise of which is more
delicate, which requires greater caution, deliberation and sound discretion, or
more dangerous in a doubtful case, than the issuance of an injunction. It is the
strong arm of equity that should never be extended unless to cases of great injury,
where courts of law cannot afford an adequate or commensurate remedy in
damages.
Every court should remember that an injunction is a limitation upon the freedom
of action of the defendant and should not be granted lightly or precipitately. It
should be granted only when the court is fully satisfied that the law permits it and
the emergency demands it. (Emphasis in the original)

WE BELIEVE THAT THE ISSUED WRIT OF PRELIMINARY INJUNCTION, IF ALLOWED, DISPOSES

OF THE CASE ON THE MERITS AS IT EFFECTIVELY ENJOINS THE USE OF THE WORD GINEBRA
WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL. IN RIVAS V. SECURITIES AND EXCHANGE
COMMISSION,[60] WE RULED THAT COURTS SHOULD AVOID ISSUING A WRIT OF PRELIMINARY
INJUNCTION WHICH WOULD IN EFFECT DISPOSE OF THE MAIN CASE WITHOUT TRIAL. THE
ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION HAD THE EFFECT OF GRANTING THE
MAIN PRAYER OF THE COMPLAINT SUCH THAT THERE IS PRACTICALLY NOTHING LEFT FOR
THE TRIAL COURT TO TRY EXCEPT THE PLAINTIFFS CLAIM FOR DAMAGES.
Irreparable Injury
TANDUAY POINTS OUT THAT THE SUPPOSED DAMAGES THAT SAN MIGUEL WILL SUFFER AS A
RESULT OF TANDUAYS INFRINGEMENT OR UNFAIR COMPETITION CANNOT BE CONSIDERED
IRREPARABLE BECAUSE THE DAMAGES ARE SUSCEPTIBLE OF MATHEMATICAL
COMPUTATION. TANDUAY INVOKES SECTION 156.1 OF THE IP CODE[61] AS THE BASIS FOR THE
COMPUTATION OF DAMAGES.[62]

SAN MIGUEL AVERS THAT IT STANDS TO SUFFER IRREPARABLE INJURY IF THE MANUFACTURE
AND SALE OF TANDUAYS GINEBRA KAPITAN ARE NOT ENJOINED. SAN MIGUEL CLAIMS THAT
THE ROUGH ESTIMATE OF THE DAMAGES[63] IT WOULD INCUR IS SIMPLY A GUIDE FOR THE
TRIAL COURT IN COMPUTING THE APPROPRIATE DOCKET FEES. SAN MIGUEL ASSERTS THAT
THE FULL EXTENT OF THE DAMAGE IT WOULD SUFFER IS DIFFICULT TO MEASURE WITH ANY
REASONABLE ACCURACY BECAUSE IT HAS INVESTED HUNDREDS OF MILLIONS OVER A
PERIOD OF 170 YEARS TO ESTABLISH GOODWILL AND REPUTATION NOW BEING ENJOYED BY
THE GINEBRA SAN MIGUEL MARK.[64] SAN MIGUEL REFUTES TANDUAYS CLAIM THAT THE
INJURY WHICH SAN MIGUEL STANDS TO SUFFER CAN BE MEASURED WITH REASONABLE
ACCURACY AS THE LEGAL FORMULA TO DETERMINE SUCH INJURY IS PROVIDED IN SECTION
156.1 OF THE IP CODE. SAN MIGUEL REASONS THAT IF TANDUAYS CLAIM IS UPHELD, THEN
THERE WOULD NEVER BE A PROPER OCCASION TO ISSUE A WRIT OF PRELIMINARY
INJUNCTION IN RELATION TO COMPLAINTS FOR INFRINGEMENT AND UNFAIR COMPETITION,
AS THE INJURY WHICH THE OWNER OF THE MARK SUFFERS, OR STANDS TO SUFFER, WILL
ALWAYS BE SUSCEPTIBLE OF MATHEMATICAL COMPUTATION.[65]

IN LEVI STRAUSS & CO. V. CLINTON APPARELLE, INC.,[66] THIS COURT UPHELD THE APPELLATE
COURTS RULING THAT THE DAMAGES LEVI STRAUSS & CO. HAD SUFFERED OR CONTINUES TO
SUFFER MAY BE COMPENSATED IN TERMS OF MONETARY CONSIDERATION. THIS COURT,
QUOTING GOVERNMENT SERVICE INSURANCE SYSTEM V. FLORENDO,[67] HELD:

x x x a writ of injunction should never issue when an action for damages would adequately compensate the
injuries caused. The very foundation of the jurisdiction to issue the writ of injunction rests in the probability of
irreparable injury, inadequacy of pecuniary compensation and the prevention of the multiplicity of suits, and
where facts are not shown to bring the case within these conditions, the relief of injunction should be refused.

Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has
failed to prove the probability of irreparable injury which it will stand to suffer if the sale of Ginebra Kapitan is
not enjoined. San Miguel has not presented proof of damages incapable of pecuniary estimation. At most, San
Miguel only claims that it has invested hundreds of millions over a period of 170 years to establish goodwill
and reputation now being enjoyed by the Ginebra San Miguel mark such that the full extent of the damage
cannot be measured with reasonable accuracy. Without the submission of proof that the damage is irreparable
and incapable of pecuniary estimation, San Miguels claim cannot be the basis for a valid writ of preliminary
injunction.

WHEREFORE, WE GRANT THE PETITION. WE SET ASIDE THE DECISION OF THE COURT OF
APPEALS DATED 9 JANUARY 2004 AND THE RESOLUTION DATED 2 JULY 2004 IN CA-G.R. SP NO.
79655. WE DECLARE VOID THE ORDER DATED 17 OCTOBER 2003 AND THE CORRESPONDING

WRIT OF PRELIMINARY INJUNCTION ISSUED BY BRANCH 214 OF THE REGIONAL TRIAL COURT
OF MANDALUYONG CITY IN IP CASE NO. MC-03-01 AND CIVIL CASE NO. MC-03-073.

THE REGIONAL TRIAL COURT OF MANDALUYONG CITY, BRANCH 214, IS DIRECTED TO

CONTINUE EXPEDITIOUSLY WITH THE TRIAL TO RESOLVE THE MERITS OF THE CASE.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 115115 July 18, 1995

CONRAD AND COMPANY, INC., petitioner,
vs.
HON. COURT OF APPEALS, FITRITE INC., and VICTORIA BISCUITS CO., INC., respondents.

VITUG, J.:
In an Amended Decision, dated 20 April 1994, the Court of Appeals reversed an order of the Regional Trial
Court ("RTC") which dismissed Civil Case No. 91-3119 for "Injunction with Damages with Prayer for
Preliminary Injunction" filed by herein private respondents Fitrite, Inc., and Victoria Biscuits Co., Inc., against
petitioner Conrad and Company, Inc.
The RTC, acting on a motion to dismiss filed by petitioner, ordered the dismissal of the complaint. Accordingly,
for purposes of this review, the facts alleged in the complaint, narrated by the appellate court and hereunder
reproduced, should be deemed hypothetically admitted.
. . . Plaintiffs appellants FITRITE, INC. and VICTORIA BISCUIT CO., INC. [private
respondents here], both domestic corporations, are engaged in the business of manufacturing,
selling and distributing biscuits and cookies bearing the trademark "SUNSHINE" in the
Philippines. Defendant CONRAD AND COMPANY [petitioner here] is also engaged in the
business of importing, selling and distributing biscuits and cookies in the Philippines.
Sometime in April 1982, plaintiff FITRITE filed in the Bureau of Patents, Trademarks and
Technology Transfer (hereto referred as BPTTT) applications for registration of the trademark
"SUNSHINE," both in the Supplemental and Principal Registers, to be used on biscuits and
cookies. Since March 31, 1981 FITRITE had exclusively used this trademark in the concept of
owner on its biscuits and cookies. On May 20, 1983
FITRITE's application for this trademark in the Supplemental Register was approved by the
BPTTT and FITRITE was issued a Certificate of Registration No. SR-6217 for a term of 20
years from the date of approval. On March 22, 1990 FITRITE's application for the same
trademark in the Principal Register was approved by BPTTT and FITRITE was issued a
Certificate of Registration No. 47590 for a term of 20 years from said date of approval. On June
28, 1984 FITRITE authorized its sister company, co-plaintiff VICTORIA BISCUIT CO., to use

this trademark on its biscuits and cookies, as well as to manufacture, promote, sell and distribute
products bearing said trademark.
On September 7, 1990, FITRITE assigned its trademark "SUNSHINE AND DEVICE LABEL,"
together with its interest and business goodwill to said VICTORIA BISCUIT. From the time
FITRITE was issued the Certificate of Registration for this trademark on May 20, 1983 up to the
filing of the complaint a quo FITRITE and VICTORIA BISCUIT have been manufacturing,
selling and distributing on a massive scale biscuits and cookies bearing this trademark; so that
through the years of extensive marketing of plaintiffs' biscuits and cookies with this trademark,
their products have become popularly known and enjoyed wide acceptability in Metro Manila
and in the provinces.
Then sometime in June 1990, through the affidavit executed on May 30, 1990 by defendant
CONRAD's own Import Manager and Executive Assistant by the name of Raul Olaya, plaintiffs
succeeded in tracing and discovered that CONRAD had been importing, selling and distributing
biscuits and cookies, and other food items bearing this trademark in the Philippines. Although
CONRAD had never before been engaged in the importation, sale and distribution of products
similar to those of plaintiffs, on April 18, 1988 CONRAD was suddenly designated exclusive
importer and dealer of the products of "Sunshine Biscuits, Inc." for sale in the Philippine market;
and on April 21, 1988, per the affidavit of said Raul Olaya, CONRAD made its first importation,
which was continuously repeated up to the present (May 30, 1990 [date of the affidavit]),
altogether consisting of 51,575 cartons and amounting to $579,224.35.
Those acts of CONRAD, done without plaintiffs' consent, were deliberately calculated to mislead
and deceive the purchasers by making them believe that its (CONRAD'S) "Sunshine" products
had originated from plaintiffs and thereby inducing them to patronize those products, all to the
damage and prejudice of both the purchasing public and plaintiffs. Through their counsel,
plaintiffs addressed a letter to CONRAD demanding, among other things, that it cease and desist
from continuing with those acts, but the demand was ignored. Being acts of infringement and
unfair competition in violation of plaintiffs' rights, plaintiffs can validly avail themselves of the
remedies against infringement under Sec. 23 of Republic Act No. 166, as amended, as well as of
the remedies against unfair competition under
Sec. 29 of the same statute. 1
In seeking the dismissal of the complaint filed by private respondents with the trial court, petitioner invoked,
among other grounds, litis pendentia, the doctrine of primary jurisdiction and failure to state a cause of action.
The trial court, agreeing with petitioner, granted the motion to dismiss the complaint in an Order, dated 26
February 1992, reading thusly:
The Court agrees with defendant that internationally accepted trademarks enjoy protection under
Philippine laws. Defendant having been granted distributorship by Sunshine Biscuits USA over
Philippine territory it follows that the resolution of the issue with respect to the ownership of
Sunshine Biscuits which is the basis of plaintiffs' claim is lodged under the exclusive jurisdiction
of the BPTTT.The action filed by defendant's principal in whose name the trademark
"SUNSHINE BISCUITS" is
alleged to be registered in the United States should be considered as including defendant Conrad
and Company, Inc., it being the beneficiary/agent/assignee of said Sunshine Biscuits, Inc. Thus,
the Court finds the ground of forum shopping applicable to the case at bar. It cannot also be

denied that there is another action pending between the same parties for the same cause.
Plaintiffs, therefore, should not have filed this case with this court. It must, therefore, be
summarily dismissed. The ground of
litis pendentia is no doubt meritorious. The doctrine of primary jurisdiction should be made to
apply in this case considering that the BPTTT had already acquired jurisdiction over the suit
brought by defendant's principal against the plaintiffs involving the right of plaintiffs to use said
trademark. No doubt the BPTTT is better situated, considering its experience and special
knowledge to determine the matters of fact involved. Indeed, the rulings laid down by the
Supreme Court on the point is along this trend.
WHEREFORE, premises considered, the Motion To Dismiss filed by defendant is hereby
GRANTED. The instant case filed by plaintiffs is hereby ordered DISMISSED. 2 (Emphasis
ours)
Unsuccessful in their attempt to have the order reconsidered, private respondents brought the case to the Court
of Appeals (CA-G.R. CV No. 38822).
In an amended decision, dated 20 April 1994, the appellate court reversed the order of the trial court and
ordered the reinstatement of the case, holding, in part, thusly:
1. It was a motion to dismiss that CONRAD filed instead of an
answer where its "affirmative defense" could have been alleged
and later raised in a motion for preliminary hearing for reception of
evidence and not, as CONRAD did, raise such defense in a mere
motion to dismiss, although such defense involved factual matters
outside of the allegations contained in the complaint;
2. No evidence whatever had been introduced before the outright
dismissal, despite the fact that the factual issues involved in
CONRAD's "affirmative defense" were whether the "SUNSHINE"
trademark has been registered in the United States of America as
claimed by CONRAD; if so registered, whether such registration
antedated the registered trademark of FITRITE in the Philippines;
whether Sunshine Biscuits, Inc., CONRAD's principal, is the
actual registrant thereof; and whether CONRAD is truly an agent
of Sunshine Biscuits, Inc. who is protected by the alleged
American "SUNSHINE" trademark and therefore vested with the
legal capacity to raise such "affirmative defense" in the action a
quo; etc.; and
3. Unless and until FITRITE's certificates both in the Supplemental
and Principal Registers as registrant of said "SUNSHINE"
trademark are cancelled by BPTTT, or so long as said
"SUNSHINE" trademark has not been successfully proved by
CONRAD in the action
a quo as belonging to Sunshine Biscuits, Inc. or so long as said
trademark has not been successfully proved by Sunshine Biscuits,
Inc. in the cancellation proceeding before BPTTT as belonging to
it (Sunshine Biscuits), for all legal intents and purposes the

trademark belongs to FITRITE and all those acts of importing,

selling and distributing by CONRAD constitute infringement as
defined in said Sec. 22 of Republic Act No. 166, as amended.
xxx xxx xxx
In sum, we find the appeal impressed with merit, considering that FITRITE is the registrant of
the "SUNSHINE" trademark in the Philippines; that CONRAD's claim that its principal,
Sunshine Biscuits, Inc., is the registrant of a "SUNSHINE" trademark in the United States of
America is a mere allegation still subject to proof; that there is no identity of causes of action and
because the cause before BPTTT is the cancellability of FITRITE's registration while the cause
in the case a quo is infringement by CONRAD of said "SUNSHINE" trademark of FITRITE;
that there is implied admission that CONRAD has been importing, selling and distributing
biscuits, cookies and other food items bearing said "SUNSHINE" trademark without FITRITE's
consent; that so long as the cancellation proceeding remains pending in BPTTT, said
"SUNSHINE" trademark belongs exclusively to FITRITE in the Philippines, and any person
using it without FITRITE's consent is guilty of infringement.
WHEREFORE, the Court hereby:
(1) SETS ASIDE the appealed order dated February 26, 1992 dismissing the complaint a quo;
(2) REINSTATES the complaint;
(3) ORDERS defendant Conrad and Company, Inc. to file its answer within the reglementary
period from receipt hereof;
(4) ORDERS the lower court to proceed with the action a quo, although for a good cause shown
the lower court, in its sound discretion, may suspend the action pending outcome of the
cancellation proceeding between Sunshine Biscuits, Inc. and Fitrite, Inc. in Inter Partes Case
No. 3397 before BPTTT, subject to the condition provided for in No. (5) below;
(5) ORDERS defendant-appellee Conrad and Company, Inc. to desist and refrain from
importing, manufacturing, selling and distributing in the Philippines any goods bearing the
trademark "SUNSHINE & DEVICE LABEL" registered in FITRITE's name pending final
decision in the action a quo, it being understood that this order, to effect such desistance and
enjoin defendant-appellee from the aforesaid activities, shall be considered as the Writ of
Injunction itself and an integral part of this Amended Decision.
No pronouncement as to costs.
SO ORDERED. 3 (Emphasis ours.)
In the instant petition for review, which has additionally prayed for a writ of preliminary injunction or for a
temporary restraining order, petitioner tells us that the appellate court has erred
1. When it ordered the issuance of a writ of preliminary injunction, upon private respondents,
posting of a bond in the sum of P10,000.00, despite the pendency of the cancellation proceedings

in Inter Partes case Nos. 3397 and 3739, and in subsequently amending its decision by issuing
the writ of preliminary injunction itself.
2. When respondent court failed to apply and totally disregarded the provisions of the Paris
Convention for the protection of industrial property, as well as the memorandum of the Minister
of Trade, dated November 20, 1980.
3. In holding that the doctrine of primary jurisdiction by the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT) is not applicable in this case, and in further holding that the issues
involved in this case is not whether the "SUNSHINE" trademark in question is registerable or
cancellable.
4. Respondent court erred in holding that the ground of litis pendentia under the Rules of Court
does not apply in this case for the reason that the cause of action in the cancellation proceedings
before the BPTTT is not the same as the cause of action in the case a quo.
5. In ordering the lower court to proceed with the action a quo, although for a good cause shown
the lower court, in its sound discretion, may suspend the action pending outcome of the
cancellation proceeding between Sunshine Biscuits, Inc. and Fitrite, Inc. in inter partes Case No.
3397 and 3739 before BPTTT. 4
The petition was given due course; however, neither a writ of preliminary injunction nor a restraining order was
issued by this Court.
Unadorned, the issues would revolve simply around the question of whether or not the Court of Appeals
committed reversible error (1) in allowing the trial court to proceed with the case for "injunction with damages"
filed by private respondents notwithstanding the pendency of an administrative case for the cancellation of the
former's trademark filed by supposedly "petitioner's principal" with the Bureau of Patents, Trademarks and
Technology Transfer ("BPTTT"); and (2) in meanwhile issuing an injunction order against petitioner.
We find for private respondents.
The assailed amended decision of the appellate court reinstated the complaint for "Injunction with Damages
with Prayer for Preliminary Injunction" filed by private respondents with the trial court and ordered petitioner to
file its answer. The appellate court enjoined petitioner in the meantime from importing, manufacturing, selling
and distributing in the Philippines goods bearing the trademark "Sunshine and Device Label" duly registered
with BPTTT in private respondents' name.
Petitioner, invoking the case of Developers Group of Companies vs. Court of Appeals (219 SCRA 715),
contends that the "Petitions for Cancellation" of Fitrite's Certificate of Registration No. SR-6217 and No. 47590
in the Supplemental Register and the Principal Register, respectively, which Sunshine Biscuits, Inc., of the
United States of America filed in 1989 and in 1990 (docketed Inter Partes Case No. 3397 and 3739) with
BPTTT cast a cloud of doubt on private respondents' claim of ownership and exclusive right to the use of the
trademark "Sunshine." Considering that this matter is at issue before the BPTTT, which has primary jurisdiction
over the case, petitioner argues, an injunctive relief from any court would be precipitate and improper.
The appellate court, in disposing of petitioner's argument, points out:

Notwithstanding those provisions, it is CONRAD's contention relying on the ruling

in Industrial Enterprises, Inc. vs. Court of Appeals (G.R. No. 88550, 184 SCRA 426 [1990])
that, because technical matters or intricate issues of fact regarding the ownership of the
trademark in question are involved, its determination requires the expertise, specialized skills and
knowledge of the proper administrative body, which is BPTTT, which has the primary
jurisdiction over the action a quo; and therefore the trial court should, and as it correctly did,
yield its jurisdiction to BPTTT.
The trial court erred in adopting such fallacious argument. The issue involved in the action a
quo is not whether the "SUNSHINE" trademark in question is registerable or cancellable
which is the issue pending in BPTTT that may be technical in nature requiring "expertise,
specialized skills and knowledge" since the trademark has already been registered in both the
Supplemental and Principal Registers of BPTTT in the name of FITRITE; actually, the issue
involved in the action a quois whether CONRAD's acts of importing, selling and distributing
biscuits, cookies and other food items bearing said registered "SUNSHINE" trademark in the
Philippines without the consent of its registrant (FITRITE) constitute infringement thereof in
contemplation of Sec. 22 of Republic Act No. 166, as amended. Under Sec. 22, the elements that
constitute infringement are simply (1) the use by any person, without the consent of the
registrant, (2) of any registered mark or trade-name in connection with the sale, business or
services, among other things, bearing such registered mark or trade-name. This, clearly, is a
factual question that does not require any specialized skill and knowledge for resolution to justify
the exercise of primary jurisdiction by BPTTT.
But, even assuming which is not the case that the issue involved here is technical in nature
requiring specialized skills and knowledge, still Industrialized Enterprises does not authorize the
outright dismissal of a case originally cognizable in the courts; what it says is where primary
jurisdiction comes into play in a case "the judicial process is suspended pending referral of such
issues to the administrative body for its view. 5
We cannot see any error in the above disquisition. It might be mentioned that while an application for the
administrative cancellation of a registered trademark on any of the grounds enumerated in Section 17 6 of
Republic Act No. 166, as amended, otherwise known as the Trade-Mark Law, falls under the exclusive
cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action, however, for infringement or unfair competition,
as well as the remedy of injunction and relief for damages, is explicitly and unquestionably within the
competence and jurisdiction of ordinary courts.
Private respondents are the holder of Certificate of Registration No. 47590 (Principal Register) for the
questioned trademark. In Lorenzana vs. Macagba, 154 SCRA 723, cited with approval in Del Monte
Corporation vs. Court of Appeals, 181 SCRA 410, we have declared that registration in the Principal Register
gives rise to a presumption of validity of the registration and of the registrant's ownership and right to the
exclusive use of the mark. It is precisely such a registration that can serve as the basis for an action for
infringement. 7 An invasion of this right entitles the registrant to court protection and relief. Section 23 and
Section 27, Chapter V, of the Trade-Mark Law provides:
Sec. 23. Actions, and damages and injunction for infringement. Any person entitled to the
exclusive use of a registered mark or trade-name may recover damages in a civil action from any
person who infringes his rights, and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have made, had the defendant not infringe
his said rights, or the profit which the defendant actually made out of the infringement, or in the

event such measure of damages cannot be readily ascertained with reasonable certainty, then the
court may award as damages a reasonable percentage based upon the amount of gross sales of
the defendant or the value of the services in connection with which the mark or trade-name was
used in the infringement of the rights of the complaining party. In cases where actual intent to
mislead the public or to defraud the complaining party shall be shown, in the discretion of the
court, the damages may be doubled.
The complaining party, upon proper showing, may also be granted injunction.
Sec. 27. Jurisdiction of [Regional Trial Court]. All actions under this Chapter and Chapters VI
and VII hereof shall be brought before the proper [Regional Trial Court].
Surely, an application with BPTTT for an administrative cancellation of a registered trade mark cannot per
sehave the effect of restraining or preventing the courts from the exercise of their lawfully conferred
jurisdiction. A contrary rule would unduly expand the doctrine of primary jurisdiction which, simply expressed,
would merely behoove regular courts, in controversies involving specialized disputes, to defer to the findings of
resolutions of administrative tribunals on certain technical matters. This rule, evidently, did not escape the
appellate court for it likewise decreed that for "good cause shown, the lower court, in its sound discretion, may
suspend the action pending outcome of the cancellation proceedings" before BPTTT.
Needless to say, we cannot at this stage delve into the merits of the cancellation case. In this instance,
the sole concern, outside of the jurisdictional aspect of the petition hereinbefore discussed, would be that
which focuses on the propriety of the injunction order of the appellate court. On this score, the appellate
court has said:
Thus, having the exclusive right over said trademark, FITRITE should be protected in the use
thereof (Philips Export B.V. vs. Court of Appeals, G.R. No. 96161, 206 SCRA 457 [1992]); and
considering that it is apparent from the record that the invasion of the right FITRITE sought to
protect is material and substantial; that such right of FITRITE is clear and unmistakable; and that
there is an urgent necessity to prevent serious damage to FITRITE's business interest, goodwill
and profit, thus under the authority of Sec. 23 of said Republic Act No. 166, as amended, a
preliminary injunction may be issued in favor of FITRITE to maintain the status quo pending
trial of the action a quo on the meritswithout prejudice to the suspension of such action if the
aforesaid cancellation proceeding before the BPTTT has not been concluded. 8 (Emphasis
supplied.)
The appellate court's finding that there is an urgent necessity for the issuance of the writ of preliminary
injunction pending resolution by BPTTT of the petition for cancellation filed by Sunshine USA in Inter Partes
Case No. 3397 would indeed appear to have merit. The prematurity of petitioner's motion to dismiss places the
case at bench quite apart from that of Developers Group of Companies, Inc. vs. Court of Appeals, 219 SCRA
715. The allegations of the complaint, perforced hypothetically deemed admitted by petitioner, would here
justify the issuance by appellate court of its injunction order. Petitioner, itself, does not even appear to be a party
in the administrative case (Inter Partes Case No. 3397). The averment that Sunshine USA is petitioner's
principal, and that it has a prior foreign registration that should be respected conformably with the Convention
of the Union of Paris for the Protection of Industrial Property are mere asseverations in the motion to dismiss
which, along with some other factual assertions, are yet to be established.
All given, we find no reversible error on the part of the appellate court in its appealed decision.

In closing, the Court would urge the Bureau of Patents, Trademarks and Technology Transfer to resolve with
dispatch the administrative cases (Inter Partes Case No. 3397 and No. 3739) referred to in this decision.
WHEREFORE, the petition for review is DENIED for lack of merit, and the questioned amended decision of
the Court of Appeals is AFFIRMED. Costs against petitioner.
Romero, Melo and Francisco, JJ., concur.
Feliciano, J., concurs in the result.