1. Mighty Corporation vs. Gallo Winery, G.R. No. 154342, July 14, 2004.
4. Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive
2. Sasot & Sasot vs. People, G.R. No. 143193, June 29, 2005
3. Elidad Kho vs. CA, G.R. No. 115758, March 19, 2002
4. Pearl & Dean vs. Shoemart, G.R. No. 148222, August 15, 2003
5. La Chemise Lacoste vs. Fernandez, 129 SCRA 373, 393.
1. Mighty Corporation vs. Gallo Winery, G.R. No. 154342, July 14, 2004.
[G.R. No. 154342. July 14, 2004]
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,
INC. petitioners, vs. E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC. respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners Mighty
Corporation and La Campana Fabrica de Tabaco, Inc. (La Campana) seek to annul,
reverse and set aside: (a) the November 15, 2001 decision[1] of the Court of Appeals
(CA) in CA-G.R. CV No. 65175 affirming the November 26, 1998 decision,[2] as
modified by the June 24, 1999 order,[3] of the Regional Trial Court of Makati City,
Branch 57 (Makati RTC) in Civil Case No. 93-850, which held petitioners liable for, and
permanently enjoined them from, committing trademark infringement and unfair
competition, and which ordered them to pay damages to respondents E. & J. Gallo
Winery (Gallo Winery) and The Andresons Group, Inc. (Andresons); (b) the July 11,
2002 CA resolution denying their motion for reconsideration[4] and (c) the aforesaid
Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the
Philippines but organized and existing under the laws of the State of California, United
States of America (U.S.), where all its wineries are located. Gallo Winery produces
different kinds of wines and brandy products and sells them in many countries under
different registered trademarks, including the GALLO and ERNEST & JULIO GALLO
wine trademarks.
wine importer and distributor in the Philippines since 1991, selling these products in its
own name and for its own account.[5]
Gallo Winerys GALLO wine trademark was registered in the principal register of
the Philippine Patent Office (now Intellectual Property Office) on November 16, 1971
under Certificate of Registration No. 17021 which was renewed on November 16, 1991
for another 20 years.[6] Gallo Winery also applied for registration of its ERNEST &
JULIO GALLO wine trademark on October 11, 1990 under Application Serial No.
901011-00073599-PN but the records do not disclose if it was ever approved by the
Director of Patents.[7]
On the other hand, petitioners Mighty Corporation and La Campana and their
sister company, Tobacco Industries of the Philippines (Tobacco Industries), are
engaged in the cultivation, manufacture, distribution and sale of tobacco products for
which they have been using the GALLO cigarette trademark since 1973. [8]
The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of
GALLO 100s cigarette mark on September 14, 1973 and GALLO filter cigarette mark
on March 26, 1976, both for the manufacture and sale of its cigarette products. In 1976,
Tobacco Industries filed its manufacturers sworn statement as basis for BIRs collection
of specific tax on GALLO cigarettes.[9]
On February 5, 1974, Tobacco Industries applied for, but eventually did not
pursue, the registration of the GALLO cigarette trademark in the principal register of
the then Philippine Patent Office.[10]
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La
Campana which, on July 16, 1985, applied for trademark registration in the Philippine
Patent Office.[11] On July 17, 1985, the National Library issued Certificate of Copyright
Registration No. 5834 for La Campanas lifetime copyright claim over GALLO cigarette
labels.[12]
Subsequently, La Campana authorized Mighty Corporation to manufacture and
sell cigarettes bearing the GALLO trademark.[13] BIR approved Mighty Corporations
use of GALLO 100s cigarette brand, under licensing agreement with Tobacco
Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100s cigarette brand
on April 3, 1989.[14]
Petitioners claim that GALLO cigarettes have been sold in the Philippines since
1973, initially by Tobacco Industries, then by La Campana and finally by Mighty
Corporation.[15]
On the other hand, although the GALLO wine trademark was registered in the
Philippines in 1971, respondents claim that they first introduced and sold the GALLO
and ERNEST & JULIO GALLO wines in the Philippines circa 1974 within the then U.S.
military facilities only. By 1979, they had expanded their Philippine market through
authorized distributors and independent outlets.[16]
Respondents claim that they first learned about the existence of GALLO
cigarettes in the latter part of 1992 when an Andresons employee saw such cigarettes
on display with GALLO wines in a Davao supermarket wine cellar section.[17] Forthwith,
respondents sent a demand letter to petitioners asking them to stop using the GALLO
trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark
and tradename infringement and unfair competition, with a prayer for damages and
preliminary injunction.
Respondents charged petitioners with violating Article 6bis of the Paris Convention
for the Protection of Industrial Property (Paris Convention)[18] and RA 166 (Trademark
Law),[19] specifically, Sections 22 and 23 (for trademark infringement),[20] 29 and
30[21] (for unfair competition and false designation of origin) and 37 (for tradename
infringement).[22] They claimed that petitioners adopted the GALLO trademark to ride
on Gallo Winerys GALLO and ERNEST & JULIO GALLO trademarks established
reputation and popularity, thus causing confusion, deception and mistake on the part
of the purchasing public who had always associated GALLO and ERNEST & JULIO
GALLO trademarks with Gallo Winerys wines. Respondents prayed for the issuance of
a writ of preliminary injunction and ex parte restraining order, plus P2 million as actual
and compensatory damages, at least P500,000 as exemplary and moral damages, and
at least P500,000 as attorneys fees and litigation expenses.[23]
In their answer, petitioners alleged, among other affirmative defenses, that:
petitioners GALLO cigarettes and Gallo Winerys wines were totally unrelated products;
Gallo Winerys GALLO trademark registration certificate covered wines only, not
cigarettes; GALLO cigarettes and GALLO wines were sold through different channels
of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO
menthols, were low-cost items compared to Gallo Winerys high-priced luxury wines
which cost between P98 to P242.50; the target market of Gallo Winerys wines was the
middle or high-income bracket with at least P10,000 monthly income while GALLO
cigarette buyers were farmers, fishermen, laborers and other low-income workers; the
dominant feature of the GALLO cigarette mark was the rooster device with the
manufacturers name clearly indicated as MIGHTY CORPORATION while, in the case
of Gallo Winerys wines, it was the full names of the founders-owners ERNEST & JULIO
GALLO or just their surname GALLO; by their inaction and conduct, respondents were
guilty of laches and estoppel; and petitioners acted with honesty, justice and good faith
in the exercise of their right to manufacture and sell GALLO cigarettes.
In an order dated April 21, 1993,[24] the Makati RTC denied, for lack of merit,
respondents prayer for the issuance of a writ of preliminary injunction,[25] holding that
respondents GALLO trademark registration certificate covered wines only, that
respondents wines and petitioners cigarettes were not related goods and respondents
failed to prove material damage or great irreparable injury as required by Section 5,
Rule 58 of the Rules of Court.[26]
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents motion
for reconsideration. The court reiterated that respondents wines and petitioners
cigarettes were not related goods since the likelihood of deception and confusion on
the part of the consuming public was very remote. The trial court emphasized that it
could not rely on foreign rulings cited by respondents because the[se] cases were
decided by foreign courts on the basis of unknown facts peculiar to each case or upon
factual surroundings which may exist only within their jurisdiction. Moreover, there
[was] no showing that [these cases had] been tested or found applicable in our
jurisdiction.[27]
On February 20, 1995, the CA likewise dismissed respondents petition for review
on certiorari, docketed as CA-G.R. No. 32626, thereby affirming the Makati RTCs denial
of the application for issuance of a writ of preliminary injunction against petitioners.[28]
After trial on the merits, however, the Makati RTC, on November 26, 1998, held
petitioners liable for, and permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the GALLO trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the
defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their distributors, trade outlets,
and all persons acting for them or under their instructions, from (i) using E & Js
registered trademark GALLO or any other reproduction, counterfeit, copy or colorable
imitation of said trademark, either singly or in conjunction with other words, designs or
emblems and other acts of similar nature, and (ii) committing other acts of unfair
competition against plaintiffs by manufacturing and selling their cigarettes in the
domestic or export markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs
(i) actual and compensatory damages for the injury and prejudice and impairment of
plaintiffs business and goodwill as a result of the acts and conduct pleaded as basis for
this suit, in an amount equal to 10% of FOURTEEN MILLION TWO HUNDRED THIRTY
FIVE THOUSAND PESOS (PHP14,235,000.00) from the filing of the complaint until
fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorneys fees and expenses of litigation in the amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED.[29]
On June 24, 1999, the Makati RTC granted respondents motion for partial
reconsideration and increased the award of actual and compensatory damages to 10%
of P199,290,000 or P19,929,000.[30]
On appeal, the CA affirmed the Makati RTC decision and subsequently denied
petitioners motion for reconsideration.
III.
The Issues
 Petitioners now seek relief from this Court contending that the CA did not follow
prevailing laws and jurisprudence when it held that: [a] RA 8293 (Intellectual Property
Code of the Philippines [IP Code]) was applicable in this case; [b] GALLO cigarettes
and GALLO wines were identical, similar or related goods for the reason alone that they
were purportedly forms of vice; [c] both goods passed through the same channels of
trade and [d] petitioners were liable for trademark infringement, unfair competition and
damages.[31]
Respondents, on the other hand, assert that this petition which invokes Rule 45
does not involve pure questions of law, and hence, must be dismissed outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only
questions of law[32] (that is, the doubt pertains to the application and interpretation of
law to a certain set of facts) and not questions of fact (where the doubt concerns the
truth or falsehood of alleged facts),[33] otherwise, the petition will be denied. We are not
a trier of facts and the Court of Appeals factual findings are generally conclusive upon
us.[34]
This case involves questions of fact which are directly related and intertwined with
questions of law. The resolution of the factual issues concerning the goods similarity,
identity, relation, channels of trade, and acts of trademark infringement and unfair
competition is greatly dependent on the interpretation of applicable laws. The
controversy here is not simply the identity or similarity of both parties trademarks but
whether or not infringement or unfair competition was committed, a conclusion based
on statutory interpretation. Furthermore, one or more of the following exceptional
circumstances oblige us to review the evidence on record:[35]
(1) the conclusion is grounded entirely on speculation, surmises, and
conjectures;
(2) the inference of the Court of Appeals from its findings of fact is manifestly
mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the
case, and the same are contrary to the admissions of both the appellant
and the appellee;
(6) the findings are without citation of specific evidence on which they are
based;
(7) the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence
of evidence and are contradicted [by the evidence] on record.[36]
In this light, after thoroughly examining the evidence on record, weighing,
analyzing and balancing all factors to determine whether trademark infringement and/or
unfair competition has been committed, we conclude that both the Court of Appeals
and the trial court veered away from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark
infringement and unfair competition committed during the effectivity of the Paris
Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held
liable not only under the aforesaid governing laws but also under the IP Code which
took effect only on January 1, 1998,[37] or about five years after the filing of the
complaint:
Defendants unauthorized use of the GALLO trademark constitutes trademark
infringement pursuant to Section 22 of Republic Act No. 166, Section 155 of the IP
Code, Article 6bis of the Paris Convention, and Article 16 (1) of the TRIPS Agreement
as it causes confusion, deception and mistake on the part of the purchasing
public.[38] (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati RTC decision:
In the light of its finding that appellants use of the GALLO trademark on its cigarettes is
likely to create confusion with the GALLO trademark on wines previously registered
and used in the Philippines by appellee E & J Gallo Winery, the trial court thus did
not err in holding that appellants acts not only violated the provisions of the our
trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293) but also Article 6bis of the
Paris Convention.[39] (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP Code
in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed
from the fact that it has first been promulgated. A law that is not yet effective cannot be
considered as conclusively known by the populace. To make a law binding even before
it takes effect may lead to the arbitrary exercise of the legislative power.[40]Nova
constitutio futuris formam imponere debet non praeteritis. A new state of the law ought
to affect the future, not the past. Any doubt must generally be resolved against the
retroactive operation of laws, whether these are original enactments, amendments or
repeals.[41] There are only a few instances when laws may be given retroactive
effect,[42] none of which is present in this case.
The IP Code, repealing the Trademark Law,[43] was approved on June 6,
1997. Section 241 thereof expressly decreed that it was to take effect only on January
1, 1998, without any provision for retroactive application. Thus, the Makati RTC and the
CA should have limited the consideration of the present case within the parameters of
the Trademark Law and the Paris Convention, the laws in force at the time of the filing
of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a
common conception at their root, that is, a person shall not be permitted to misrepresent
his goods or his business as the goods or business of another, the law on unfair
competition is broader and more inclusive than the law on trademark infringement. The
latter is more limited but it recognizes a more exclusive right derived from the trademark
adoption and registration by the person whose goods or business is first associated
with it. The law on trademarks is thus a specialized subject distinct from the law on
unfair competition, although the two subjects are entwined with each other and are
dealt with together in the Trademark Law (now, both are covered by the IP
Code). Hence, even if one fails to establish his exclusive property right to a trademark,
he may still obtain relief on the ground of his competitors unfairness or fraud. Conduct
constitutes unfair competition if the effect is to pass off on the public the goods of one
man as the goods of another. It is not necessary that any particular means should be
used to this end.[44]
In Del Monte Corporation vs. Court of Appeals,[45] we distinguished trademark
infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark,
whereas unfair competition is the passing off of one's goods as
those of another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas
in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition
registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,[46] an international agreement binding on the
Philippines and the United States (Gallo Winerys country of domicile and origin)
prohibits the [registration] or use of a trademark which constitutes a reproduction,
imitation or translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-known in that country
as being already the mark of a person entitled to the benefits of the [Paris] Convention
and used for identical or similar goods. [This rule also applies] when the essential part
of the mark constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith. There is no time limit for seeking the
prohibition of the use of marks used in bad faith.[47]
Thus, under Article 6bis of the Paris Convention, the following are the elements of
trademark infringement:
(a) registration or use by another person of a trademark which is a reproduction,
imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration
or use[48] to be well-known in that country and is already the mark of a
person entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for
infringement when, among others, he uses without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any registered mark or
tradename in connection with the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as to the source or origin of such goods
or services, or identity of such business; or reproduce, counterfeit, copy or colorably
imitate any such mark or tradename and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business
or services.[49] Trademark registration and actual use are material to the complaining
partys cause of action.
Corollary to this, Section 20 of the Trademark Law[50] considers the trademark
registration certificate as prima facie evidence of the validity of the registration, the
registrants ownership and exclusive right to use the trademark in connection with the
goods, business or services as classified by the Director of Patents[51] and as specified
in the certificate, subject to the conditions and limitations stated therein. Sections 2 and
2-A[52] of the Trademark Law emphasize the importance of the trademarks actual use
in commerce in the Philippines prior to its registration. In the adjudication of trademark
rights between contending parties, equitable principles of laches, estoppel, and
acquiescence may be considered and applied.[53]
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the
following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in the
principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of such
business; or such trademark is reproduced, counterfeited, copied or colorably
imitated by another person and such reproduction, counterfeit, copy or
colorable imitation is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with
such goods, business or services as to likely cause confusion or mistake or
to deceive purchasers,
 (c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be
determined by domestic authorities), while the Trademark Law protects all trademarks,
whether well-known or not, provided that they have been registered and are in actual
commercial use in the Philippines. Following universal acquiescence and comity, in
case of domestic legal disputes on any conflicting provisions between the Paris
Convention (which is an international agreement) and the Trademark law (which is a
municipal law) the latter will prevail.[54]
Under both the Paris Convention and the Trademark Law, the protection of a
registered trademark is limited only to goods identical or similar to those in respect of
which such trademark is registered and only when there is likelihood of confusion.
Under both laws, the time element in commencing infringement cases is material in
ascertaining the registrants express or implied consent to anothers use of its trademark
or a colorable imitation thereof. This is why acquiescence, estoppel or laches may
defeat the registrants otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition
precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents own judicial admission, the GALLO wine trademark was
registered in the Philippines in November 1971 but the wine itself was first marketed
and sold in the country only in 1974 and only within the former U.S. military facilities,
and outside thereof, only in 1979. To prove commercial use of the GALLO wine
trademark in the Philippines, respondents presented sales invoice no. 29991 dated July
9, 1981 addressed to Conrad Company Inc., Makati, Philippines and sales invoice no.
85926 dated March 22, 1996 addressed to Andresons Global, Inc., Quezon City,
Philippines. Both invoices were for the sale and shipment of GALLO wines to the
Philippines during that period.[55] Nothing at all, however, was presented to evidence
the alleged sales of GALLO wines in the Philippines in 1974 or, for that matter, prior to
July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization
letters, forms and manufacturers sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have indeed been using and selling
GALLO cigarettes in the Philippines since 1973 or before July 9, 1981.[56]
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,[57] we
reiterated our rulings in Pagasa Industrial Corporation vs. Court of
Appeals,[58]Converse Rubber Corporation vs. Universal Rubber Products,
Inc.,[59] Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,[60] Kabushi Kaisha Isetan vs. Intermediate Appellate
Court,[61] and Philip Morris vs. Court of Appeals,[62] giving utmost importance to
the actual commercial use of a trademark in the Philippines prior to its registration,
notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's contention
that private respondent failed to prove prior actual commercial use of its LEE
trademark in the Philippines before filing its application for registration with the
BPTTT and hence, has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial Property
relied upon by private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166)
were sufficiently expounded upon and qualified in the recent case of Philip Morris,
Inc. v. Court of Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in
the municipal sphere. Under the doctrine of incorporation as applied in most countries,
rules of international law are given a standing equal, not superior, to national legislative
enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines on
account of Section 21-A of the Trademark Law but the question of whether they
have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the Philippines
in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners
to claim that when a foreign corporation not licensed to do business in the Philippines
files a complaint for infringement, the entity need not be actually using the trademark
in commerce in the Philippines. Such a foreign corporation may have the personality to
file a suit for infringement but it may not necessarily be entitled to protection due to
absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several
registration certificates for its various trademarks LEE, LEE RIDERS, and LEESURES
in both the supplemental and principal registers, as early as 1969 to 1973. However,
registration alone will not suffice. In Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214 [1969]; Reiterated
in Kabushi Isetan vs. Intermediate Appellate Court (203 SCRA 583 [1991]) we
declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down through the
years is that actual use in commerce or business is a prerequisite in the
acquisition of the right of ownership over a trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or its weight as
evidence of validity, ownership and exclusive use, is qualified. A registration
certificate serves merely as prima facie evidence. It is not conclusive but can and
may be rebutted by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of Patents and
the Court of Appeals. After a meticulous study of the records, we observe that the
Director of Patents and the Court of Appeals relied mainly on the registration
certificates as proof of use by private respondent of the trademark LEE which,
as we have previously discussed are not sufficient. We cannot give credence to
private respondent's claim that its LEE mark first reached the Philippines in the
1960's through local sales by the Post Exchanges of the U.S. Military Bases in
the Philippines (Rollo, p. 177) based as it was solely on the self-serving
statements of Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a wholly
owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private respondent.
(Original Records, p. 52) Similarly, we give little weight to the numerous vouchers
representing various advertising expenses in the Philippines for LEE products.
It is well to note that these expenses were incurred only in 1981 and 1982 by LEE
(Phils.), Inc. after it entered into a licensing agreement with private respondent
on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the
business of selling jeans and other garments adopting its STYLISTIC MR. LEE
trademark since 1975as evidenced by appropriate sales invoices to various stores
and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526
[1982]) and Converse Rubber Corp. v. Universal Rubber Products, Inc., (147 SCRA
154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior
to its registration. There is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it used in trade or
business in the Philippines the subject mark; it did not present proof to invest it
with exclusive, continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The invoices submitted
by respondent which were dated way back in 1957 show that the zippers sent to
the Philippines were to be used as samples and of no commercial value. The
evidence for respondent must be clear, definite and free from inconsistencies.Samples
are not for sale and therefore, the fact of exporting them to the Philippines cannot be
considered to be equivalent to the use contemplated by law. Respondent did not expect
income from such samples. There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines prior
to petitioner's use of its own mark and for failure to establish confusing similarity
between said trademarks, private respondent's action for infringement must
necessarily fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents judicial admission that
the actual commercial use of the GALLO wine trademark was subsequent to its
registration in 1971 and to Tobacco Industries commercial use of the GALLO cigarette
trademark in 1973, we rule that, on this account, respondents never enjoyed the
exclusive right to use the GALLO wine trademark to the prejudice of Tobacco Industries
and its successors-in-interest, herein petitioners, either under the Trademark Law or
the Paris Convention.
Respondents GALLO trademark
registration is limited to
wines only
We also note that the GALLO trademark registration certificates in the Philippines
and in other countries expressly state that they cover wines only, without any evidence
or indication that registrant Gallo Winery expanded or intended to expand its business
to cigarettes.[63]
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys
exclusive right to use the GALLO trademark should be limited to wines, the only product
indicated in its registration certificates. This strict statutory limitation on the exclusive
right to use trademarks was amply clarified in our ruling in Faberge, Inc. vs.
Intermediate Appellate Court:[64]
Having thus reviewed the laws applicable to the case before Us, it is not difficult to
discern from the foregoing statutory enactments that private respondent may be
permitted to register the trademark BRUTE for briefs produced by it notwithstanding
petitioner's vehement protestations of unfair dealings in marketing its own set of items
which are limited to: after-shave lotion, shaving cream, deodorant, talcum powder and
toilet soap. Inasmuch as petitioner has not ventured in the production of briefs,
an item which is not listed in its certificate of registration, petitioner cannot and
should not be allowed to feign that private respondent had invaded petitioner's
exclusive domain. To be sure, it is significant that petitioner failed to annex in its Brief
the so-called eloquent proof that petitioner indeed intended to expand its mark BRUT
to other goods (Page 27, Brief for the Petitioner; page 202, Rollo). Even then, a mere
application by petitioner in this aspect does not suffice and may not vest an exclusive
right in its favor that can ordinarily be protected by the Trademark Law. In
short, paraphrasing Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate of registration
issued by the Director of Patents can confer upon petitioner the exclusive right
to use its own symbol only to those goods specified in the certificate, subject to
any conditions and limitations stated therein. This basic point is perhaps the
unwritten rationale of Justice Escolin in Philippine Refining Co., Inc. vs. Ng
Sam (115 SCRA 472 [1982]), when he stressed the principle enunciated by the United
States Supreme Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70 L
ed 317, 46 Sct. 160) that one who has adopted and used a trademark on his goods
does not prevent the adoption and use of the same trademark by others for
products which are of a different description. Verily, this Court had the occasion to
observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944
[1966]) that no serious objection was posed by the petitioner therein since the applicant
utilized the emblem Tango for no other product than hair pomade in which petitioner
does not deal.
This brings Us back to the incidental issue raised by petitioner which private respondent
sought to belie as regards petitioner's alleged expansion of its business. It may be
recalled that petitioner claimed that it has a pending application for registration of the
emblem BRUT 33 for briefs (page 25, Brief for the Petitioner; page 202, Rollo) to
impress upon Us the Solomonic wisdom imparted by Justice JBL Reyes in Sta. Ana
vs. Maliwat (24 SCRA 1018 [1968]), to the effect that dissimilarity of goods will not
preclude relief if the junior user's goods are not remote from any other product
which the first user would be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the Trademark Law now embodied substantially
under Section 4(d) of Republic Act No. 166, as amended, the erudite jurist opined that
the law in point does not require that the articles of manufacture of the previous user
and late user of the mark should possess the same descriptive properties or should fall
into the same categories as to bar the latter from registering his mark in the principal
register. (supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark
Law extends only to the goods used by the first user as specified in the certificate
of registration following the clear message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which was
relied upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It would
seem that Section 4(d) does not require that the goods manufactured by the
second user be related to the goods produced by the senior user while Section
20 limits the exclusive right of the senior user only to those goods specified in
the certificate of registration. But the rule has been laid down that the clause which
comes later shall be given paramount significance over an anterior proviso upon the
presumption that it expresses the latest and dominant purpose. (Graham Paper Co. vs.
National Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's L. Ins.
Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061; cited by Martin,
Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably follows that
Section 20 is controlling and, therefore, private respondent can appropriate its
symbol for the briefs it manufactures because as aptly remarked by Justice
Sanchez in Sterling Products International Inc. vs. Farbenfabriken Bayer (27
SCRA 1214 [1969]):
Really, if the certificate of registration were to be deemed as including goods not
specified therein, then a situation may arise whereby an applicant may be
tempted to register a trademark on any and all goods which his mind may
conceive even if he had never intended to use the trademark for the said
goods. We believe that such omnibus registration is not contemplated by our
Trademark Law. (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion,
mistake or deceit as to the identity, source or origin of the goods or identity of the
business as a consequence of using a certain mark. Likelihood of confusion is
admittedly a relative term, to be determined rigidly according to the particular (and
sometimes peculiar) circumstances of each case. Thus, in trademark cases, more than
in other kinds of litigation, precedents must be studied in the light of each particular
case. [65]
There are two types of confusion in trademark infringement. The first is confusion
of goods when an otherwise prudent purchaser is induced to purchase one product in
the belief that he is purchasing another, in which case defendants goods are then
bought as the plaintiffs and its poor quality reflects badly on the plaintiffs reputation.The
other is confusion of business wherein the goods of the parties are different but the
defendants product can reasonably (though mistakenly) be assumed to originate from
the plaintiff, thus deceiving the public into believing that there is some connection
between the plaintiff and defendant which, in fact, does not exist.[66]
In determining the likelihood of confusion, the Court must consider: [a] the
resemblance between the trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the purchaser and [d] the registrants
express or implied consent and other fair and equitable considerations.
Petitioners and respondents both use GALLO in the labels of their respective
cigarette and wine products. But, as held in the following cases, the use of an identical
mark does not, by itself, lead to a legal conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent,[67] we ordered the approval of
Acoje 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,[68] 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;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun
Liong,[69] we 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;
(d) in Shell Company of the Philippines vs. Court of Appeals,[70] in a minute
resolution, we dismissed the petition for review for lack of merit and
affirmed the Patent Offices registration of the trademark SHELL used in
the cigarettes manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Companys opposition as the prior
registrant of the same trademark for its gasoline and other petroleum
products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,[71] we dismissed ESSOs
complaint for trademark infringement against United Cigarette
Corporation and allowed the latter to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO for its petroleum products,
and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,[72] we affirmed the rulings of the Patent Office and the CA
that NSR Rubber Corporation could use the trademark CANON for its
sandals (Class 25) despite Canon Kabushiki Kaishas prior registration
and use of the same trademark for its paints, chemical products, toner
and dyestuff (Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges
on colorable imitation[73] which has been defined as such similarity in form, content,
words, sound, meaning, special arrangement or general appearance of the trademark
or tradename in their overall presentation or in their essential and substantive and
distinctive parts as would likely mislead or confuse persons in the ordinary course of
purchasing the genuine article.[74]
Jurisprudence has developed two tests in determining similarity and likelihood of
confusion in trademark resemblance:[75]
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals[76] and
other cases,[77] and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals[78] and its preceding cases.[79]
The Dominancy Test focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception, and thus
infringement. If the competing trademark contains the main, essential or dominant
features of another, and confusion or deception is likely to result, infringement takes
place. Duplication or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. The question is whether the use of the marks
involved is likely to cause confusion or mistake in the mind of the public or deceive
purchasers.[80]
On the other hand, the Holistic Test requires that the entirety of the marks in
question be considered in resolving confusing similarity. Comparison of words is not
the only determining factor. The trademarks in their entirety as they appear in their
respective labels or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels in order that
he may draw his conclusion whether one is confusingly similar to the other.[81]
In comparing the resemblance or colorable imitation of marks, various factors
have been considered, such as the dominant color, style, size, form, meaning of letters,
words, designs and emblems used, the likelihood of deception of the mark or name's
tendency to confuse[82] and the commercial impression likely to be conveyed by the
trademarks if used in conjunction with the respective goods of the parties.[83]
Applying the Dominancy and Holistic Tests, we find that the dominant feature of
the GALLO cigarette trademark is the device of a large rooster facing left, outlined in
black against a gold background. The roosters color is either green or red green for
GALLO menthols and red for GALLO filters. Directly below the large rooster device is
the word GALLO. The rooster device is given prominence in the GALLO cigarette packs
in terms of size and location on the labels.[84]
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as
it has no relation at all to the product but was chosen merely as a trademark due to the
fondness for fighting cocks of the son of petitioners president. Furthermore, petitioners
adopted GALLO, the Spanish word for rooster, as a cigarette trademark to appeal to
one of their target markets, the sabungeros (cockfight aficionados).[85]
Also, as admitted by respondents themselves,[86] on the side of the GALLO
cigarette packs are the words MADE BY MIGHTY CORPORATION, thus clearly
informing the public as to the identity of the manufacturer of the cigarettes.
On the other hand, GALLO Winerys wine and brandy labels are diverse. In many
of them, the labels are embellished with sketches of buildings and trees, vineyards or
a bunch of grapes while in a few, one or two small roosters facing right or facing each
other (atop the EJG crest, surrounded by leaves or ribbons), with additional designs in
green, red and yellow colors, appear as minor features thereof.[87] Directly below or
above these sketches is the entire printed name of the founder-owners, ERNEST &
JULIO GALLO or just their surname GALLO,[88] which appears in different fonts, sizes,
styles and labels, unlike petitioners uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winerys wines are printed the words VINTED
AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA.[89]
The many different features like color schemes, art works and other markings of
both products drown out the similarity between them the use of the word GALLO ― a
family surname for the Gallo Winerys wines and a Spanish word for rooster for
petitioners cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition; but
confusion of business may arise between non-competing interests as well.[90]
Thus, apart from the strict application of Section 20 of the Trademark Law and
Article 6bis of the Paris Convention which proscribe trademark infringement not only of
goods specified in the certificate of registration but also of identical or similar goods, we
have also uniformly recognized and applied the modern concept of related
goods.[91] Simply stated, when goods are so related that the public may be, or is
actually, deceived and misled that they come from the same maker or manufacturer,
trademark infringement occurs.[92]
Non-competing goods may be those which, though they are not in actual
competition, are so related to each other that it can reasonably be assumed that they
originate from one manufacturer, in which case, confusion of business can arise out of
the use of similar marks.[93] They may also be those which, being entirely unrelated,
cannot be assumed to have a common source; hence, there is no confusion of
business, even though similar marks are used.[94] Thus, there is no trademark
infringement if the public does not expect the plaintiff to make or sell the same class of
goods as those made or sold by the defendant.[95]
In resolving whether goods are related,[96] several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package,
wrapper or container [97]
(d) the nature and cost of the articles [98]
(e) the descriptive properties, physical attributes or essential characteristics with
reference to their form, composition, texture or quality
(f) the purpose of the goods[99]
(g) whether the article is bought for immediate consumption,[100] that is, day-to-
day household items[101]
(h) the fields of manufacture[102]
(i) the conditions under which the article is usually purchased[103] and
(j) the channels of trade through which the goods flow,[104] how they are
distributed, marketed, displayed and sold.[105]
The wisdom of this approach is its recognition that each trademark infringement
case presents its own unique set of facts. No single factor is preeminent, nor can the
presence or absence of one determine, without analysis of the others, the outcome of
an infringement suit. Rather, the court is required to sift the evidence relevant to each
of the criteria. This requires that the entire panoply of elements constituting the relevant
factual landscape be comprehensively examined.[106] It is a weighing and balancing
process. With reference to this ultimate question, and from a balancing of the
determinations reached on all of the factors, a conclusion is reached whether the
parties have a right to the relief sought.[107]
A very important circumstance though is whether there exists a likelihood that an
appreciable number of ordinarily prudent purchasers will be misled, or simply confused,
as to the source of the goods in question.[108] The purchaser is not the completely
unwary consumer but is the ordinarily intelligent buyer considering the type of product
involved.[109] He is accustomed to buy, and therefore to some extent familiar with, the
goods in question. The test of fraudulent simulation is to be found in the likelihood of
the deception of some persons in some measure acquainted with an established design
and desirous of purchasing the commodity with which that design has been
associated. The test is not found in the deception, or the possibility of deception, of the
person who knows nothing about the design which has been counterfeited, and who
must be indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary intelligent buyer
who has a need to supply and is familiar with the article that he seeks to purchase.[110]
Hence, in the adjudication of trademark infringement, we give due regard to the
goods usual purchasers character, attitude, habits, age, training and education. [111]
Applying these legal precepts to the present case, petitioners use of the GALLO
cigarette trademark is not likely to cause confusion or mistake, or to deceive the
ordinarily intelligent buyer of either wines or cigarettes or both as to the identity of the
goods, their source and origin, or identity of the business of petitioners and
respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither
do they belong to the same class of goods. Respondents GALLO wines belong to Class
33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in Trademark Cases
while petitioners GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the decisive
factor in the resolution of whether or not wines and cigarettes are related
goods.Emphasis should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties or characteristics. But
the mere fact that one person has adopted and used a particular trademark for his
goods does not prevent the adoption and use of the same trademark by others on
articles of a different description. [112]
Both the Makati RTC and the CA held that wines and cigarettes are related
products because: (1) they are related forms of vice, harmful when taken in excess,
and used for pleasure and relaxation and (2) they are grouped or classified in the same
section of supermarkets and groceries.
 We find these premises patently insufficient and too arbitrary to support the legal
conclusion that wines and cigarettes are related products within the contemplation of
the Trademark Law and the Paris Convention.
First, anything - not only wines and cigarettes ― can be used for pleasure and
relaxation and can be harmful when taken in excess. Indeed, it would be a grave abuse
of discretion to treat wines and cigarettes as similar or related products likely to cause
confusion just because they are pleasure-giving, relaxing or potentially harmful. Such
reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety of
wholly unrelated products and the goods here involved, wines and cigarettes, have
nothing whatsoever in common with respect to their essential characteristics, quality,
quantity, size, including the nature of their packages, wrappers or containers.[113]
Accordingly, the U.S. patent office and courts have consistently held that the mere
fact that goods are sold in one store under the same roof does not automatically mean
that buyers are likely to be confused as to the goods respective sources, connections
or sponsorships. The fact that different products are available in the same store is an
insufficient standard, in and of itself, to warrant a finding of likelihood of confusion.[114]
In this regard, we adopted the Director of Patents finding in Philippine Refining
Co., Inc. vs. Ng Sam and the Director of Patents:[115]
In his decision, the Director of Patents enumerated the factors that set respondents
products apart from the goods of petitioner. He opined and we quote:
I have taken into account such factors as probable purchaser attitude and habits,
marketing activities, retail outlets, and commercial impression likely to be conveyed by
the trademarks if used in conjunction with the respective goods of the parties, I believe
that ham on one hand, and lard, butter, oil, and soap on the other are products
that would not move in the same manner through the same channels of trade.
They pertain to unrelated fields of manufacture, might be distributed and
marketed under dissimilar conditions, and are displayed separately even though
they frequently may be sold through the same retail food
establishments. Opposers products are ordinary day-to-day household items whereas
ham is not necessarily so. Thus, the goods of the parties are not of a character which
purchasers would likely attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The particular
goods of the parties are so unrelated that consumers, would not, in any probability
mistake one as the source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing
and are totally unrelated products not likely to cause confusion vis--vis the goods or the
business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in
cartons or packages and smoked. There is a whale of a difference between their
descriptive properties, physical attributes or essential characteristics like form,
composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO
wines are patronized by middle-to-high-income earners while GALLO cigarettes appeal
only to simple folks like farmers, fishermen, laborers and other low-income
workers.[116] Indeed, the big price difference of these two products is an important factor
in proving that they are in fact unrelated and that they travel in different channels of
trade. There is a distinct price segmentation based on vastly different social classes of
purchasers.[117]
GALLO cigarettes and GALLO wines are not sold through the same channels of
trade. GALLO cigarettes are Philippine-made and petitioners neither claim nor pass off
their goods as imported or emanating from Gallo Winery. GALLO cigarettes are
distributed, marketed and sold through ambulant and sidewalk vendors, small
local sari-sari stores and grocery stores in Philippine rural areas, mainly in Misamis
Oriental, Pangasinan, Bohol, and Cebu.[118] On the other hand, GALLO wines are
imported, distributed and sold in the Philippines through Gallo Winerys exclusive
contracts with a domestic entity, which is currently Andresons. By respondents own
testimonial evidence, GALLO wines are sold in hotels, expensive bars and restaurants,
and high-end grocery stores and supermarkets, not through sari-sari stores or
ambulant vendors.[119]
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing
Company vs. Philip Morris, Inc.[120] to support its finding that GALLO wines and GALLO
cigarettes are related goods. The courts a quo should have taken into consideration
the subsequent case of IDV North America, Inc. and R & A Bailey Co. Limited vs. S &
M Brands, Inc.:[121]
IDV correctly acknowledges, however, that there is no per se rule that the use of the
same mark on alcohol and tobacco products always will result in a likelihood of
confusion.Nonetheless, IDV relies heavily on the decision in John Walker & Sons, Ltd.
vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), affd, 222 F. 2d 460
(5th Cir. 1955), wherein the court enjoined the use of the mark JOHNNIE WALKER on
cigars because the fame of the plaintiffs mark for scotch whiskey and because the
plaintiff advertised its scotch whiskey on, or in connection with tobacco products. The
court, in John Walker & Sons, placed great significance on the finding that the
infringers use was a deliberate attempt to capitalize on the senior marks
fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip Morris, Inc., 297
F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the defendants
use of the mark BLACK LABEL for cigarettes because it was likely to cause
confusion with the plaintiffs well-known mark BLACK LABEL for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the principle
that tobacco products and alcohol products should be considered related only
in cases involving special circumstances. Schenley Distillers, Inc. v. General
Cigar Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of special
circumstances has been found to exist where there is a finding of unfair
competition or where a famous or well-known mark is involved and there is a
demonstrated intent to capitalize on that mark. For example, in John Walker &
Sons, the court was persuaded to find a relationship between products, and hence a
likelihood of confusion, because of the plaintiffs long use and extensive advertising of
its mark and placed great emphasis on the fact that the defendant used the trademark
Johnnie Walker with full knowledge of its fame and reputation and with the intention of
taking advantage thereof. John Walker & Sons, 124 F. Supp. At 256; see Mckesson &
Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894, 120 U.S.P.Q. 306, 307 (1959) (holding
that the decision in John Walker & Sons was merely the law on the particular case
based upon its own peculiar facts); see also Alfred Dunhill, 350 F. Supp. At 1363
(defendants adoption of Dunhill mark was not innocent). However, in Schenley, the
court noted that the relation between tobacco and whiskey products is significant where
a widely known arbitrary mark has long been used for diversified products emanating
from a single source and a newcomer seeks to use the same mark on unrelated
goods. Schenley, 427 F.2d. at 785. Significantly, in Schenley, the court looked at the
industry practice and the facts of the case in order to determine the nature and extent
of the relationship between the mark on the tobacco product and the mark on the
alcohol product.
The record here establishes conclusively that IDV has never advertised BAILEYS
liqueurs in conjunction with tobacco or tobacco accessory products and that IDV has
no intent to do so.And, unlike the defendant in Dunhill, S & M Brands does not market
bar accessories, or liqueur related products, with its cigarettes. The advertising and
promotional materials presented a trial in this action demonstrate a complete lack of
affiliation between the tobacco and liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by adopting the
family name Baileys as the mark for its cigarettes, to capitalize upon the fame of the
BAILEYS mark for liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will be
discussed below, and as found in Mckesson & Robbins, the survey evidence
refutes the contention that cigarettes and alcoholic beverages are so intimately
associated in the public mind that they cannot under any circumstances be sold
under the same mark without causing confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the special
circumstances in which courts have found a relationship between tobacco and alcohol
products sufficient to tip the similarity of goods analysis in favor of the protected mark
and against the allegedly infringing mark. It is true that BAILEYS liqueur, the worlds
best selling liqueur and the second best selling in the United States, is a well-
known product. That fact alone, however, is insufficient to invoke the special
circumstances connection here where so much other evidence and so many
other factors disprove a likelihood of confusion. The similarity of products
analysis, therefore, augers against finding that there is a likelihood of
confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in cases
involving special circumstances which exist only if a famous mark is involved and there
is a demonstrated intent to capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in
the late 1980s and the 1990s, that is, after Tobacco Industries use of the GALLO
cigarette trademark in 1973 and petitioners use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor
related goods, a requisite element under both the Trademark Law and the Paris
Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark
in the Philippines. Respondents do not dispute the documentary evidence that aside
from Gallo Winerys GALLO trademark registration, the Bureau of Patents, Trademarks
and Technology Transfer also issued on September 4, 1992 Certificate of Registration
No. 53356 under the Principal Register approving Productos Alimenticios Gallo,
S.As April 19, 1990 application for GALLO trademark registration and use for its
noodles, prepared food or canned noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream, honey,
molasses syrup, yeast, baking powder, salt, mustard, vinegar, species and ice.[122]
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs.
Court of Appeals and NSR Rubber Corporation,[123] GALLO cannot be considered a
well-known mark within the contemplation and protection of the Paris Convention in this
case since wines and cigarettes are not identical or similar goods:
We agree with public respondents that the controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention is that established in Kabushi Kaisha
Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As pointed out by the
BPTTT:
Regarding the applicability of Article 8 of the Paris Convention, this Office
believes that there is no automatic protection afforded an entity whose
tradename is alleged to have been infringed through the use of that name as a
trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No.
75420, 15 November 1991, the Honorable Supreme Court held that:
The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it from using
a tradename which happens to be used in one country. To illustrate if a taxicab
or bus company in a town in the United Kingdom or India happens to use the
tradename Rapid Transportation, it does not necessarily follow that Rapid can
no longer be registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection of
Intellectual Property regarding well-known marks and possible application thereof in
this case. Petitioner, as this office sees it, is trying to seek refuge under its protective
mantle, claiming that the subject mark is well known in this country at the time the then
application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin, issued
a memorandum dated 25 October 1983 to the Director of Patents, a set of guidelines
in the implementation of Article 6bis of the Treaty of Paris. These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the same or similar kinds of
goods; and
d) the person claiming must be the owner of the mark (The
Parties Convention Commentary on the Paris
Convention. Article by Dr. Bogsch, Director General
of the World Intellectual Property Organization,
Geneva, Switzerland, 1985)
From the set of facts found in the records, it is ruled that the Petitioner failed to
comply with the third requirement of the said memorandum that is the mark must
be for use in the same or similar kinds of goods. The Petitioner is using the mark
CANON for products belonging to class 2 (paints, chemical products) while the
Respondent is using the same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time the
Respondent filed its application for the same mark should fail. (Emphasis
supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique problem which must be
answered by weighing the conflicting interests of the litigants.[124]
Respondents claim that GALLO wines and GALLO cigarettes flow through the
same channels of trade, that is, retail trade. If respondents assertion is true, then both
goods co-existed peacefully for a considerable period of time. It took respondents
almost 20 years to know about the existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand, the long period of time that petitioners
were engaged in the manufacture, marketing, distribution and sale of GALLO cigarettes
and, on the other, respondents delay in enforcing their rights (not to mention implied
consent, acquiescence or negligence) we hold that equity, justice and fairness require
us to rule in favor of petitioners. The scales of conscience and reason tip far more
readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith or
fraud, or that they intended to capitalize on respondents goodwill in adopting the
GALLO mark for their cigarettes which are totally unrelated to respondents GALLO
wines. Thus, we rule out trademark infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE
FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or
any other means contrary to good faith by which he passes off the goods manufactured
by him or in which he deals, or his business, or services for those of the one having
established such goodwill, or who commits any acts calculated to produce said result,
is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words thereon,
or in any other feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate trade, or
any subsequent vendor of such goods or any agent of any vendor engaged in selling
such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of another
who has identified such services in the mind of the public;
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods,
business or services of another.
The universal test question is whether the public is likely to be deceived. Nothing
less than conduct tending to pass off one mans goods or business as that of another
constitutes unfair competition. Actual or probable deception and confusion on the part
of customers by reason of defendants practices must always appear.[125]On this score,
we find that petitioners never attempted to pass off their cigarettes as those of
respondents. There is no evidence of bad faith or fraud imputable to petitioners in using
their GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as well as those
recognized by jurisprudence, we conclude that petitioners are not liable for trademark
infringement, unfair competition or damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby
GRANTED. The questioned decision and resolution of the Court of Appeals in CA-G.R.
CV No. 65175 and the November 26, 1998 decision and the June 24, 1999 order of the
Regional Trial Court of Makati, Branch 57 in Civil Case No. 93-850 are hereby
REVERSED and SET ASIDE and the complaint against petitioners DISMISSED.
Costs against respondents.
SO ORDERED.
 2. Sasot & Sasot vs. People, G.R. No. 143193, June 29, 2005
[G.R. No. 143193. June 29, 2005]
MELBAROSE R. SASOT AND ALLANDALE R. SASOT, petitioners, vs. PEOPLE
OF THE PHILIPPINES, THE HONORABLE COURT OF OF APPEALS,
and REBECCA G. SALVADOR, Presiding Judge, RTC, Branch 1,
Manila, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
The case subject of the present special civil action for certiorari is a criminal
prosecution against petitioners for unfair competition under Article 189 of the Revised
Penal Code, filed before the Regional Trial Court (RTC) of Manila (Branch 1), and
docketed as Criminal Case No. 98-166147.[1]
Some time in May 1997, the National Bureau of Investigation (NBI) conducted an
investigation pursuant to a complaint by the NBA Properties, Inc., against petitioners
for possible violation of Article 189 of the Revised Penal Code on unfair competition. In
its Report dated June 4, 1997, the NBI stated that NBA Properties, Inc., is a foreign
corporation organized under the laws of the United States of America, and is the
registered owner of NBA trademarks and names of NBA basketball teams such as USA
BASKETBALL, CHICAGO BULLS, ORLANDO MAGIC, LOS ANGELES LAKERS,
ROCKETS, PHOENIX SUNS, BULLETS, PACERS, CHARLOTTE HORNETS,
BLAZERS, DENVER NUGGETS, SACRAMENTO KINGS, MIAMI HEAT, UTAH JAZZ,
DETROIT PISTONS, MILWAUKEE BUCKS, SEATTLE SONICS, TORONTO
RAPTORS, ATLANTA HAWKS, CAVS, DALLAS MAVERICKS, MINNESOTA
TIMBERWOLVES, and LOS ANGELES CLIPPERS. These names are used on
hosiery, footwear, t-shirts, sweatshirts, tank tops, pajamas, sport shirts, and other
garment products, which are allegedly registered with the Bureau of Patents,
Trademarks and Technology Transfer. The Report further stated that during the
investigation, it was discovered that petitioners are engaged in the manufacture,
printing, sale, and distribution of counterfeit NBA garment products. Hence, it
recommended petitioners prosecution for unfair competition under Article 189 of the
Revised Penal Code.[2]
In a Special Power of Attorney dated October 7, 1997, Rick Welts, as President
of NBA Properties, Inc., constituted the law firm of Ortega, Del Castillo, Bacorro, Odulio,
Calma & Carbonell, as the companys attorney-in-fact, and to act for and on behalf of
the company, in the filing of criminal, civil and administrative complaints, among
others.[3] The Special Power of Attorney was notarized by Nicole Brown of New York
County and certified by Norman Goodman, County Clerk and Clerk of the Supreme
Court of the State of New York. Consul Cecilia B. Rebong of the Consulate General of
the Philippines, New York, authenticated the certification.[4] Welts also executed a
Complaint-Affidavit on February 12, 1998, before Notary Public Nicole J. Brown of the
State of New York.[5]
Thereafter, in a Resolution dated July 15, 1998, Prosecution Attorney Aileen
Marie S. Gutierrez recommended the filing of an Information against petitioners for
violation of Article 189 of the Revised Penal Code.[6] The accusatory portion of the
Information reads:
That on or about May 9, 1997 and on dates prior thereto, in the City of Manila,
Philippines, and within the jurisdiction of this Honorable Court, above named accused
ALLANDALE SASOT and MELBAROSE SASOT of Allandale Sportslines, Inc., did then
and there willfully, unlawfully and feloniously manufacture and sell various garment
products bearing the appearance of NBA names, symbols and trademarks, inducing
the public to believe that the goods offered by them are those of NBA to the damage
and prejudice of the NBA Properties, Inc., the trademark owner of the NBA.
CONTRARY TO LAW.[7]
Before arraignment, petitioners filed a Motion to Quash the Information on the
following grounds:
I. THAT THE FACTS CHARGED DO NOT CONSTITUTE AN OFFENSE
II. AND THIS HONORABLE COURT HAD NO JURISDICTION OVER THE
OFFENSE CHARGED OR THE PERSON OF THE ACCUSED[8]
In support of the foregoing, petitioners argue that the fiscal should have dismissed
Weltss complaint because under the rules, the complaint must be sworn to before the
prosecutor and the copy on record appears to be only a fax transmittal.[9] They also
contend that complainant is a foreign corporation not doing business in the Philippines,
and cannot be protected by Philippine patent laws since it is not a registered patentee.
Petitioners aver that they have been using the business name ALLANDALE
SPORTSLINE, INC. since 1972, and their designs are original and do not appear to be
similar to complainants, and they do not use complainants logo or design.[10]
The trial prosecutor of the RTC-Manila (Branch 1), Jaime M. Guray, filed his
Comment/Opposition to the motion to quash, stating that he has the original copy of
the complaint, and that complainant has an attorney-in-fact to represent it. Prosecutor
Guray also contended that the State is entitled to prosecute the offense even without
the participation of the private offended party, as the crime charged is a public crime.[11]
The trial court sustained the prosecutions arguments and denied petitioners
motion to quash in its Order dated March 5, 1999.[12]
Petitioners filed a special civil action for certiorari with the Court of Appeals (CA)
docketed as CA-G.R. SP No. 52151 which was dismissed per its Decision dated
January 26, 2000.[13] According to the CA, the petition is not the proper remedy in
assailing a denial of a motion to quash, and that the grounds raised therein should be
raised during the trial of the case on the merits.[14] The dispositive portion of the assailed
Decision reads:
WHEREFORE, premises considered, the petition for certiorari is hereby DISMISSED.
Respondent court is hereby ordered to conduct further proceedings with dispatch in
Criminal Case No. 98-166147.
SO ORDERED.[15]
Petitioners sought reconsideration of the Decision but this was denied by the
CA.[16]
Hence, the present petition for review on certiorari under Rule 45 of the Rules of
Court, with issues raised as follows:
1. WHETHER A FOREIGN CORPORATION NOT ENGAGED AND
LICENSE (sic) TO DO BUSINESS IN THE PHILIPPINES MAY
MAINTAIN A CAUSE OF ACTION FOR UNFAIR COMPETITION.
2. WHETHER AN OFFICER OF A FOREIGN CORPORATION MAY ACT IN
BEHALF OF A CORPORATION WITHOUT AUTHORITY FROM ITS
BOARD OF DIRECTORS.
3. WHETHER A FOREIGN CORPORATION NOT ENGAGED IN
BUSINESS AND WHOSE EMBLEM IT SOUGHT TO PROTECT IS
NOT IN ACTUAL USE IS ENTITLED TO THE PROTECTION OF THE
PHILIPPINE LAW.
4. WHETHER THE RESPONDENT REGIONAL TRIAL COURT
CORRECTLY ASSUMED JURISDICTION OVER THE CASE AND
THE PERSONS OF THE ACCUSED.
5. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
WHEN IT DISMISSED THE PETITION.[17]
Petitioners reiterate the argument that the complaint filed by Rick Welts of the
NBA Properties, Inc., is defective and should have been dismissed by the fiscal
because it should have been personally sworn to by the complainant before the
investigating prosecutor. They also reiterate the claim that Welts failed to show any
board resolution showing his authority to institute any action in behalf of the company,
and that the NBAs trademarks are not being actually used in the Philippines, hence,
they are of public dominion and cannot be protected by Philippine patent laws.
Petitioners further contend that they have not committed acts amounting to unfair
competition.[18]
The Office of the Solicitor General appeared in behalf of the People, and filed its
Amended Comment to the petition, praying for its dismissal, arguing that the CA did not
commit any grave abuse of discretion in dismissing the petition for reasons stated in its
Decision dated January 26, 2000.[19]
The petition must be denied.
The Court has consistently held that a special civil action for certiorari is not the
proper remedy to assail the denial of a motion to quash an information.[20] The proper
procedure in such a case is for the accused to enter a plea, go to trial without prejudice
on his part to present the special defenses he had invoked in his motion to quash and,
if after trial on the merits, an adverse decision is rendered, to appeal therefrom in the
manner authorized by law.[21] Thus, petitioners should not have forthwith filed a special
civil action for certiorari with the CA and instead, they should have gone to trial and
reiterate the special defenses contained in their motion to quash. There are no special
or exceptional circumstances[22] in the present case such that immediate resort to a
filing of a petition for certiorari should be permitted. Clearly, the CA did not commit any
grave abuse of discretion in dismissing the petition.
Moreover, the Court does not find any justification for the quashal of the
Information filed against petitioners.
For one, while petitioners raise in their motion to quash the grounds that the facts
charged do not constitute an offense and that the trial court has no jurisdiction over the
offense charged or the person of the accused,[23] their arguments focused on an alleged
defect in the complaint filed before the fiscal, complainants capacity to sue and
petitioners exculpatory defenses against the crime of unfair competition.
Section 3, Rule 117 of the 1985 Rules of Criminal Procedure, which was then in
force at the time the alleged criminal acts were committed, enumerates the grounds for
quashing an information, to wit:
a) That the facts charged do not constitute an offense;
b) That the court trying the case has no jurisdiction over the offense charged
or the person of the accused;
c) That the officer who filed the information had no authority to do so;
d) That it does not conform substantially to the prescribed form;
e) That more than one offense is charged except in those cases in which
existing laws prescribe a single punishment for various offenses;
f) That the criminal action or liability has been extinguished;
g) That it contains averments which, if true, would constitute a legal excuse
or justification; and
h) That the accused has been previously convicted or in jeopardy of being
convicted, or acquitted of the offense charged.
Nowhere in the foregoing provision is there any mention of the defect in the
complaint filed before the fiscal and the complainants capacity to sue as grounds for a
motion to quash.
 For another, under Section 3, Rule 112 of the 1985 Rules of Criminal Procedure,
a complaint is substantially sufficient if it states the known address of the respondent,
it is accompanied by complainants affidavit and his witnesses and supporting
documents, and the affidavits are sworn to before any fiscal, state prosecutor or
government official authorized to administer oath, or in their absence or unavailability,
a notary public who must certify that he personally examined the affiants and that he is
satisfied that they voluntarily executed and understood their affidavits. All these have
been duly satisfied in the complaint filed before Prosecution Attorney Aileen Marie S.
Gutierrez. It must be noted that even the absence of an oath in the complaint does not
necessarily render it invalid.[24] Want of oath is a mere defect of form, which does not
affect the substantial rights of the defendant on the merits.[25]
In this case, Weltss Complaint-Affidavit contains an acknowledgement by Notary
Public Nicole Brown of the State of New York that the same has been subscribed and
sworn to before her on February 12, 1998,[26] duly authenticated by the Philippine
Consulate. While the copy on record of the complaint-affidavit appears to be merely a
photocopy thereof, Prosecution Attorney Gutierrez stated that complainants
representative will present the authenticated notarized original in court,[27] and
Prosecutor Guray manifested that the original copy is already on hand.[28] It is apt to
state at this point that the prosecutor enjoys the legal presumption of regularity in the
performance of his duties and functions, which in turn gives his report the presumption
of accuracy.[29]
Moreover, records show that there are other supporting documents from which
the prosecutor based his recommendation, to wit:
(1) The NBI Report dated June 4, 1997, containing an account of the
investigation conducted from April 30, 1997 to May 9, 1997, and the
subsequent search and seizure of several items from petitioners
establishment;[30]
(2) The letter dated May 8, 1997 from the law firm of Ortega, Del Castillo,
Bacorro, Odulio, Calma & Carbonell to the NBI, seeking assistance in
stopping the illegal manufacture, distribution and sale of fake products
bearing the NBA trademark, and in prosecuting the proprietors of
aforesaid factory;[31] and
(3) The Joint Affidavit executed by Rechie D. Malicse and Dalisay P. Bal-ot
of the Pinkerton Consulting Services (Phils.) Inc., which was certified
to by Prosecution Attorney Gutierrez, attesting to their findings that
petitioners were found to be manufacturing, printing, selling, and
distributing counterfeit NBA garment products.[32]
Consequently, if the information is valid on its face, and there is no showing of
manifest error, grave abuse of discretion and prejudice on the part of public prosecutor,
as in the present case, the trial court should respect such determination.[33]
More importantly, the crime of Unfair Competition punishable under Article 189 of
the Revised Penal Code[34] is a public crime. It is essentially an act against the State
and it is the latter which principally stands as the injured party. The complainants
capacity to sue in such case becomes immaterial.
In La Chemise Lacoste, S.A. vs. Fernandez,[35] a case akin to the present dispute,
as it involved the crime of Unfair Competition under Article 189 of the Revised Penal
Code, and the quashal of search warrants issued against manufacturers of garments
bearing the same trademark as that of the petitioner, the Court succinctly ruled that:
More important is the nature of the case which led to this petition. What preceded this
petition for certiorari was a letter-complaint filed before the NBI charging Hemandas
with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If
prosecution follows after the completion of the preliminary investigation being
conducted by the Special Prosecutor the information shall be in the name of the
People of the Philippines and no longer the petitioner which is only an aggrieved
party since a criminal offense is essentially an act against the State. It is the latter
which is principally the injured party although there is a private right violated.
Petitioner's capacity to sue would become, therefore, of not much significance
in the main case. We cannot allow a possible violator of our criminal statutes to escape
prosecution upon a far-fetched contention that the aggrieved party or victim of a crime
has no standing to sue.
In upholding the right of the petitioner to maintain the present suit before our courts for
unfair competition or infringement of trademarks of a foreign corporation, we are
moreover recognizing our duties and the rights of foreign states under the Paris
Convention for the Protection of Industrial Property to which the Philippines and France
are parties. We are simply interpreting and enforcing a solemn international
commitment of the Philippines embodied in a multilateral treaty to which we are a party
and which we entered into because it is in our national interest to do so.[36] (Emphasis
supplied)
Lastly, with regard to petitioners arguments that the NBA Properties, Inc., is not
entitled to protection under Philippine patent laws since it is not a registered patentee,
that they have not committed acts amounting to unfair competition for the reason that
their designs are original and do not appear to be similar to complainants, and they do
not use complainants logo or design, the Court finds that these are matters of defense
that are better ventilated and resolved during trial on the merits of the case.
WHERFORE, the petition is DENIED for lack of merit. Let the records of this case
be REMANDED to the Regional Trial Court of Manila (Branch 24) where Criminal Case
No. 98-166147 is presently assigned, for further proceedings with reasonable dispatch.
SO ORDERED.
 3. Elidad Kho vs. CA, G.R. No. 115758, March 19, 2002
[G.R. No. 115758. March 19, 2002]
ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS
LABORATORY, petitioner, vs. HON. COURT OF APPEALS,
SUMMERVILLE GENERAL MERCHANDISING and COMPANY, and ANG
TIAM CHAY, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision[1] dated May 24,
1993 of the Court of Appeals setting aside and declaring as null and void the
Orders[2] dated February 10, 1992 and March 19, 1992 of the Regional Trial Court,
Branch 90, of Quezon City granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction
and damages with a prayer for the issuance of a writ of preliminary injunction, docketed
as Civil Case No. Q-91-10926, against the respondents Summerville General
Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.
The petitioners complaint alleges that petitioner, doing business under the name
and style of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin
Chun Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun
Su & Device and Chin Chun Su for medicated cream after purchasing the same from
Quintin Cheng, the registered owner thereof in the Supplemental Register of the
Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529;
that respondent Summerville advertised and sold petitioners cream products under the
brand name Chin Chun Su, in similar containers that petitioner uses, thereby
misleading the public, and resulting in the decline in the petitioners business sales and
income; and, that the respondents should be enjoined from allegedly infringing on the
copyrights and patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is
the exclusive and authorized importer, re-packer and distributor of Chin Chun
Su products manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese
manufacturing company authorized Summerville to register its trade name Chin Chun
Su Medicated Cream with the Philippine Patent Office and other appropriate
governmental agencies; that KEC Cosmetics Laboratory of the petitioner obtained the
copyrights through misrepresentation and falsification; and, that the authority of Quintin
Cheng, assignee of the patent registration certificate, to distribute and market Chin
Chun Su products in the Philippines had already been terminated by the said
Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court
granted the same in an Order dated February 10, 1992, the dispositive portion of which
reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the
style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby granted.
Consequentially, plaintiff is required to file with the Court a bond executed to defendants
in the amount of five hundred thousand pesos (P500,000.00) to the effect that plaintiff
will pay to defendants all damages which defendants may sustain by reason of the
injunction if the Court should finally decide that plaintiff is not entitled thereto.
SO ORDERED.[3]
The respondents moved for reconsideration but their motion for reconsideration was
denied by the trial court in an Order dated March 19, 1992.[4]
On April 24, 1992, the respondents filed a petition for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 27803, praying for the nullification of the said
writ of preliminary injunction issued by the trial court. After the respondents filed their
reply and almost a month after petitioner submitted her comment, or on August 14
1992, the latter moved to dismiss the petition for violation of Supreme Court Circular
No. 28-91, a circular prohibiting forum shopping. According to the petitioner, the
respondents did not state the docket number of the civil case in the caption of their
petition and, more significantly, they did not include therein a certificate of non-forum
shopping. The respondents opposed the petition and submitted to the appellate court
a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No.
27803 ruling in favor of the respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of respondent
court dated February 10, 1992 and March 19, 1992 granting the writ of preliminary
injunction and denying petitioners motion for reconsideration are hereby set aside and
declared null and void. Respondent court is directed to forthwith proceed with the trial
of Civil Case No. Q-91-10926 and resolve the issue raised by the parties on the merits.
SO ORDERED.[5]
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname Chin Chun Su by KEC with the
supplemental register of the Bureau of Patents, Trademarks and Technology Transfer
cannot be equated with registration in the principal register, which is duly protected by
the Trademark Law.
xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
Registration in the Supplemental Register, therefore, serves as notice that the
registrant is using or has appropriated the trademark. By the very fact that the
trademark cannot as yet be on guard and there are certain defects, some obstacles
which the use must still overcome before he can claim legal ownership of the mark or
ask the courts to vindicate his claims of an exclusive right to the use of the same. It
would be deceptive for a party with nothing more than a registration in the Supplemental
Register to posture before courts of justice as if the registration is in the Principal
Register.
The reliance of the private respondent on the last sentence of the Patent office action
on application Serial No. 30954 that registrants is presumed to be the owner of the
mark until after the registration is declared cancelled is, therefore, misplaced and
grounded on shaky foundation. The supposed presumption not only runs counter to the
precept embodied in Rule 124 of the Revised Rules of Practice before the Philippine
Patent Office in Trademark Cases but considering all the facts ventilated before us in
the four interrelated petitions involving the petitioner and the respondent, it is devoid of
factual basis. As even in cases where presumption and precept may factually be
reconciled, we have held that the presumption is rebuttable, not conclusive, (People v.
Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One may be declared an unfair
competitor even if his competing trademark is registered (Parke, Davis & Co. v. Kiu Foo
& Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco & Co., 14 Phil 534).[6]
The petitioner filed a motion for reconsideration. This she followed with several
motions to declare respondents in contempt of court for publishing advertisements
notifying the public of the promulgation of the assailed decision of the appellate court
and stating that genuine Chin Chun Su products could be obtained only from
Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear petitioners complaint for final
injunction and damages. On October 22, 1993, the trial court rendered a
Decision[7] barring the petitioner from using the trademark Chin Chun Su and upholding
the right of the respondents to use the same, but recognizing the copyright of the
petitioner over the oval shaped container of her beauty cream. The trial court did not
award damages and costs to any of the parties but to their respective counsels were
awarded Seventy-Five Thousand Pesos (P75,000.00) each as attorneys fees. The
petitioner duly appealed the said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution[8] denying the
petitioners motions for reconsideration and for contempt of court in CA-G.R. SP No.
27803.
Hence, this petition anchored on the following assignment of errors:
I In the case at bar, the petitioner applied for the issuance of a preliminary injunctive
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO RULE ON PETITIONERS MOTION TO
DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN REFUSING TO PROMPTLY RESOLVE PETITIONERS
MOTION FOR RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONERS MOTION FOR
RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED
PETITIONERS RIGHT TO SEEK TIMELY APPELLATE RELIEF AND
VIOLATED PETITIONERS RIGHT TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS IN
CONTEMPT.[9]
The petitioner faults the appellate court for not dismissing the petition on the
ground of violation of Supreme Court Circular No. 28-91. Also, the petitioner contends
that the appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the
Court of Appeals when it failed to rule on her motion for reconsideration within ninety
(90) days from the time it is submitted for resolution. The appellate court ruled only after
the lapse of three hundred fifty-four (354) days, or on June 3, 1994. In delaying the
resolution thereof, the appellate court denied the petitioners right to seek the timely
appellate relief. Finally, petitioner describes as arbitrary the denial of her motions for
contempt of court against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of
the grounds for the issuance of a writ of preliminary injunction is a proof 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, either for
a limited period or perpetually. Thus, a preliminary injunction order may be granted only
when the application for the issuance of the same shows facts entitling the applicant to
the relief demanded.[10] This is the reason why we have ruled that it must be shown that
the invasion of the right sought to be protected is material and substantial, that the right
of complainant is clear and unmistakable, and, that there is an urgent and paramount
necessity for the writ to prevent serious damage.[11]
order on the ground that she is entitled to the use of the trademark on Chin Chun
Su and its container based on her copyright and patent over the same. We first find it
appropriate to rule on whether the copyright and patent over the name and container
of a beauty cream product would entitle the registrant to the use and ownership over
the same to the exclusion of others.
 Trademark, copyright and patents are different intellectual property rights that
cannot be interchanged with one another. A trademark 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.[12] In relation thereto, a trade
name means the name or designation identifying or distinguishing an
enterprise.[13] Meanwhile, the scope of a copyright is confined to literary and artistic
works which are original intellectual creations in the literary and artistic domain
protected from the moment of their creation.[14] Patentable inventions, on the other
hand, refer to any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.[15]
Petitioner has no right to support her claim for the exclusive use of the subject
trade name and its container. The name and container of a beauty cream product are
proper subjects of a trademark inasmuch as the same falls squarely within its definition.
In order to be entitled to exclusively use the same in the sale of the beauty cream
product, the user must sufficiently prove that she registered or used it before anybody
else did. The petitioners copyright and patent registration of the name and container
would not guarantee her the right to the exclusive use of the same for the reason that
they are not appropriate subjects of the said intellectual rights. Consequently, a
preliminary injunction order cannot be issued for the reason that the petitioner has not
proven that she has a clear right over the said name and container to the exclusion of
others, not having proven that she has registered a trademark thereto or used the same
before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final
injunction and damages. The dispositive portion of said decision held that the petitioner
does not have trademark rights on the name and container of the beauty cream product.
The said decision on the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that the same has
been appealed in the Court of Appeals. This is supported by our ruling in La Vista
Association, Inc. v. Court of Appeals[16], to wit:
Considering that preliminary injunction is a provisional remedy which may be granted
at any time after the commencement of the action and before judgment when it is
established that the plaintiff is entitled to the relief demanded and only when his
complaint shows facts entitling such reliefs xxx and it appearing that the trial court had
already granted the issuance of a final injunction in favor of petitioner in its decision
rendered after trial on the merits xxx the Court resolved to Dismiss the instant petition
having been rendered moot and academic. An injunction issued by the trial court after
it has already made a clear pronouncement as to the plaintiffs right thereto, that is, after
the same issue has been decided on the merits, the trial court having appreciated the
evidence presented, is proper, notwithstanding the fact that the decision rendered is
not yet final xxx. Being an ancillary remedy, the proceedings for preliminary injunction
cannot stand separately or proceed independently of the decision rendered on the merit
of the main case for injunction. The merit of the main case having been already
determined in favor of the applicant, the preliminary determination of its non-existence
ceases to have any force and effect. (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that
the decision granting a final injunction is pending appeal. Conversely, a decision
denying the applicant-plaintiffs right to a final injunction, although appealed, renders
moot and academic any objection to the prior dissolution of a writ of preliminary
injunction.
The petitioner argues that the appellate court erred in not dismissing the petition
for certiorari for non-compliance with the rule on forum shopping. We disagree. First,
the petitioner improperly raised the technical objection of non-compliance with
Supreme Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari
filed in the appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules
of Civil Procedure which provides that (I)n petitions for certiorari before the Supreme
Court and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed.
Before giving due course thereto, the court may require the respondents to file their
comment to, and not a motion to dismiss, the petition xxx (italics supplied). Secondly,
the issue was raised one month after petitioner had filed her answer/comment and after
private respondent had replied thereto. Under Section 1, Rule 16 of the Revised Rules
of Civil Procedure, a motion to dismiss shall be filed within the time for but before filing
the answer to the complaint or pleading asserting a claim. She therefore could no longer
submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity
require this Court not to revive a dissolved writ of injunction in favor of a party without
any legal right thereto merely on a technical infirmity. The granting of an injunctive writ
based on a technical ground rather than compliance with the requisites for the issuance
of the same is contrary to the primary objective of legal procedure which is to serve as
a means to dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the
resolution of her motion for reconsideration. But we find that petitioner contributed to
this delay when she filed successive contentious motions in the same proceeding, the
last of which was on October 27, 1993, necessitating counter-manifestations from
private respondents with the last one being filed on November 9, 1993. Nonetheless, it
is well-settled that non-observance of the period for deciding cases or their incidents
does not render such judgments ineffective or void.[17] With respect to the purported
damages she suffered due to the alleged delay in resolving her motion for
reconsideration, we find that the said issue has likewise been rendered moot and
academic by our ruling that she has no right over the trademark and, consequently, to
the issuance of a writ of preliminary injunction.
Finally, we rule that the Court of Appeals correctly denied the petitioners several
motions for contempt of court. There is nothing contemptuous about the advertisements
complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the promulgation of the assailed
Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the
Revised Rules of Civil Procedure, the said decision nullifying the injunctive writ was
immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court
of Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED.
With costs against the petitioner.
SO ORDERED.
 4. Pearl & Dean vs. Shoemart, G.R. No. 148222, August 15, 2003
[G.R. No. 148222. August 15, 2003]
PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART,
INCORPORATED, and NORTH EDSA
MARKETING,INCORPORATED, respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision[1] of the
Court of Appeals reversing the October 31, 1996 decision[2] of the Regional Trial Court
of Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents
Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of
trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals[3] contained a summary of this
dispute:
Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the
manufacture of advertising display units simply referred to as light boxes. These units
utilize specially printed posters sandwiched between plastic sheets and illuminated with
back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration
dated January 20, 1981 over these illuminated display units. The advertising light boxes
were marketed under the trademark Poster Ads. The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer
on June 20, 1983, but was approved only on September 12, 1988, per Registration No.
41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc.
(SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM
City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl
and Deans General Manager, Rodolfo Vergara, submitted for signature the contracts
covering SM Cubao and SM Makati to SMIs Advertising Promotions and Publicity
Division Manager, Ramonlito Abano.Only the contract for SM Makati, however, was
returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
contract and reminding him that their agreement for installation of light boxes was not
only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and
Dean that it was rescinding the contract for SM Makati due to non-performance of the
terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral
action of SMI, saying it was without basis. In the same letter, he pushed for the signing
of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl
and Dean to fabricate its display units, offered to construct light boxes for Shoemarts
chain of stores.SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was
terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to
make the light boxes. Some 300 units were fabricated in 1991. These were delivered
on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes
were installed at SM City and in the fastfood section of SM Cubao. Upon investigation,
Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further
discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMIs different branches. Pearl and Dean noted
that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to
both SMI and NEMI enjoining them to cease using the subject light boxes and to
remove the same from SMIs establishments. It also demanded the discontinued use of
the trademark Poster Ads, and the payment to Pearl and Dean of compensatory
damages in the amount of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-
four (224) light boxes and NEMI took down its advertisements for Poster Ads from the
lighted display units in SMIs stores. Claiming that both SMI and NEMI failed to meet all
its demands, Pearl and Dean filed this instant case for infringement of trademark and
copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently
developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Deans copyright. SMI noted that
the registration of the mark Poster Ads was only for stationeries such as letterheads,
envelopes, and the like. Besides, according to SMI, the word Poster Ads is a generic
term which cannot be appropriated as a trademark, and, as such, registration of such
mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed
for in its complaint since its advertising display units contained no copyright notice, in
violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of
action against it and that the suit was purely intended to malign SMIs good name. On
this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed
for moral, actual and exemplary damages and for the cancellation of Pearl and Deans
Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and
Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising
display units, nor having engaged in the business of advertising. It repleaded SMIs
averments, admissions and denials and prayed for similar reliefs and counterclaims as
SMI.
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for
infringement of copyright under Section 2 of PD 49, as amended, and infringement of
trademark under Section 22 of RA No. 166, as amended, and are hereby penalized
under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as
amended. Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs copyright
from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library, all light
boxes of SMI which were fabricated by Metro Industrial Services and
EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the
trademark Poster Ads, for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiffs light
boxes and its trademark Poster Ads.
Defendants counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.[4]
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either
prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly
classified as a copyrightable class O work, we have to agree with SMI when it posited
that what was copyrighted were the technical drawings only, and not the light boxes
themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the
drawings like plaintiff-appellants will not extend to the actual object. It has so been held
under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841
(1879). In that case, Selden had obtained a copyright protection for a book entitled
Seldens Condensed Ledger or Bookkeeping Simplified which purported to explain a
new system of bookkeeping. Included as part of the book were blank forms and
illustrations consisting of ruled lines and headings, specially designed for use in
connection with the system explained in the work. These forms showed the entire
operation of a day or a week or a month on a single page, or on two pages following
each other. The defendant Baker then produced forms which were similar to the forms
illustrated in Seldens copyrighted books. The Court held that exclusivity to the actual
forms is not extended by a copyright. The reason was that to grant a monopoly in the
underlying art when no examination of its novelty has ever been made would be a
surprise and a fraud upon the public; that is the province of letters patent, not of
copyright. And that is precisely the point. No doubt aware that its alleged original design
would never pass the rigorous examination of a patent application, plaintiff-appellant
fought to foist a fraudulent monopoly on the public by conveniently resorting to a
copyright registration which merely employs a recordal system without the benefit of an
in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a
copyright over an unpublished drawing entitled Bridge Approach the drawing showed
a novel bridge approach to unsnarl traffic congestion. The defendant constructed a
bridge approach which was alleged to be an infringement of the new design illustrated
in plaintiffs drawings. In this case it was held that protection of the drawing does not
extend to the unauthorized duplication of the object drawn because copyright extends
only to the description or expression of the object and not to the object itself. It does
not prevent one from using the drawings to construct the object portrayed in the
drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz
Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright infringement
when one who, without being authorized, uses a copyrighted architectural plan to
construct a structure. This is because the copyright does not extend to the structures
themselves.
In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the
technical drawings of the latters advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate
Appellate Court that the protective mantle of the Trademark Law extends only to the
goods used by the first user as specified in the certificate of registration, following the
clear mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise
known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of
registration of a mark or trade-name shall be prima facie evidence of the validity of the
registration, the registrants ownership of the mark or trade-name, and of the registrants
exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein. (underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of
the trademark Poster Ads with the Bureau of Patents, Trademarks, and Technology
Transfer. Said trademark was recorded in the Principal Register on September 12,
1988 under Registration No. 41165 covering the following products: stationeries such
as letterheads, envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part
of the defendants-appellants for their use of the words Poster Ads, in the advertising
display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law
as an implicit permission to a manufacturer to venture into the production of goods and
allow that producer to appropriate the brand name of the senior registrant on goods
other than those stated in the certificate of registration. The Supreme Court further
emphasized the restrictive meaning of Section 20 when it stated, through Justice
Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not
specified therein, then a situation may arise whereby an applicant may be tempted to
register a trademark on any and all goods which his mind may conceive even if he had
never intended to use the trademark for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Deans registered
trademark and defendants-appellants Poster Ads design, as well as the parallel use by
which said words were used in the parties respective advertising copies, we cannot find
defendants-appellants liable for infringement of trademark. Poster Ads was registered
by Pearl and Dean for specific use in its stationeries, in contrast to defendants-
appellants who used the same words in their advertising display units. Why Pearl and
Dean limited the use of its trademark to stationeries is simply beyond us. But, having
already done so, it must stand by the consequence of the registration which it had
caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words Poster
Ads are a simple contraction of the generic term poster advertising. In the absence of
any convincing proof that Poster Ads has acquired a secondary meaning in this
jurisdiction, we find that Pearl and Deans exclusive right to the use of Poster Ads is
limited to what is written in its certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark
Poster Ads.
There being no finding of either copyright or trademark infringement on the part of SMI
and NEMI, the monetary award granted by the lower court to Pearl and Dean has no
leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET
ASIDE, and another is rendered DISMISSING the complaint and counterclaims in the
above-entitled case for lack of merit.[5]
Dissatisfied with the above decision, petitioner P & D filed the instant petition
assigning the following errors for the Courts consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY
RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
NO INFRINGEMENT OF PEARL & DEANS TRADEMARK POSTER
ADS WAS COMMITTED BY RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE
AWARD OF THE TRIAL COURT, DESPITE THE LATTERS
FINDING, NOT DISPUTED BY THE HONORABLE COURT OF
APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS
NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL &
DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR
ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEYS FEES
AND COSTS OF SUIT.[6]
ISSUES
In resolving this very interesting case, we are challenged once again to put into
proper perspective four main concerns of intellectual property law patents, copyrights,
trademarks and unfair competition arising from infringement of any of the first three. We
shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display unit
(light box) are granted copyright protection (copyright certificate of
registration) by the National Library, is the light box depicted in such
engineering drawings ipso facto also protected by such copyright?
(2) or should the light box be registered separately and protected by a patent
issued by the Bureau of Patents Trademarks and Technology Transfer (now
Intellectual Property Office) in addition to the copyright of the engineering
drawings?
(3) can the owner of a registered trademark legally prevent others from using
such trademark if it is a mere abbreviation of a term descriptive of his goods,
services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright over the light
boxes when SMI had the units manufactured by Metro and EYD Rainbow Advertising
for its own account. Obviously, petitioners position was premised on its belief that its
copyright over the engineering drawings extended ipso facto to the light boxes depicted
or illustrated in said drawings. In ruling that there was no copyright infringement, the
Court of Appeals held that the copyright was limited to the drawings alone and not to
the light box itself. We agree with the appellate court.
First, petitioners application for a copyright certificate as well as Copyright
Certificate No. PD-R2588 issued by the National Library on January 20, 1981 clearly
stated that it was for a class O work under Section 2 (O) of PD 49 (The Intellectual
Property Decree) which was the statute then prevailing. Said Section 2 expressly
enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist
with respect to any of the following works:
xxxxxxxxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxxxxxxxx
Although petitioners copyright certificate was entitled Advertising Display Units
(which depicted the box-type electrical devices), its claim of copyright infringement
cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere
statutory grant, the rights are limited to what the statute confers. It may be obtained and
enjoyed only with respect to the subjects and by the persons, and on terms and
conditions specified in the statute.[7] Accordingly, it can cover only the works falling
within the statutory enumeration or description.[8]
P & D secured its copyright under the classification class O work. This being so,
petitioners copyright protection extended only to the technical drawings and not to the
light box itself because the latter was not at all in the category of prints, pictorial
illustrations, advertising copies, labels, tags and box wraps. Stated otherwise, even as
we find that P & D indeed owned a valid copyright, the same could have referred only
to the technical drawings within the category of pictorial illustrations. It could not have
possibly stretched out to include the underlying light box. The strict application[9] of the
laws enumeration in Section 2 prevents us from giving petitioner even a little leeway,
that is, even if its copyright certificate was entitled Advertising Display Units. What the
law does not include, it excludes, and for the good reason: the light box was not a
literary or artistic piece which could be copyrighted under the copyright law. And no less
clearly, neither could the lack of statutory authority to make the light box copyrightable
be remedied by the simplistic act of entitling the copyright certificate issued by the
National Library as Advertising Display Units.
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public
without license from P & D, then no doubt they would have been guilty of copyright
infringement. But this was not the case. SMIs and NEMIs acts complained of by P & D
were to have units similar or identical to the light box illustrated in the technical drawings
manufactured by Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioners copyright over the technical
drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was
neither a literary not an artistic work but an engineering or marketing
invention.[10]Obviously, there appeared to be some confusion regarding what ought or
ought not to be the proper subjects of copyrights, patents and trademarks. In the
leading case of Kho vs. Court of Appeals,[11] we ruled that these three legal rights are
completely distinct and separate from one another, and the protection afforded by one
cannot be used interchangeably to cover items or works that exclusively pertain to the
others:
Trademark, copyright and patents are different intellectual property rights that cannot
be interchanged with one another. A trademark 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. In relation thereto, a trade name
means the name or designation identifying or distinguishing an enterprise.
Meanwhile, the scope of a copyright is confined to literary and artistic works which are
original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any
technical solution of a problem in any field of human activity which is new, involves an
inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
 This brings us to the next point: if, despite its manufacture and commercial use of
the light boxes without license from petitioner, private respondents cannot be held
legally liable for infringement of P & Ds copyright over its technical drawings of the said
light boxes, should they be liable instead for infringement of patent? We do not think so
either.
For some reason or another, petitioner never secured a patent for the light
boxes. It therefore acquired no patent rights which could have protected its invention,
if in fact it really was. And because it had no patent, petitioner could not legally prevent
anyone from manufacturing or commercially using the contraption. In Creser Precision
Systems, Inc. vs. Court of Appeals,[12] we held that there can be no infringement of a
patent until a patent has been issued, since whatever right one has to the invention
covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no
common law right to a monopoly of his invention. He has the right to make use of and
vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the
world is free to copy and use it with impunity. A patent, however, gives the inventor the
right to exclude all others. As a patentee, he has the exclusive right of making, selling
or using the invention.[13] On the assumption that petitioners advertising units were
patentable inventions, petitioner revealed them fully to the public by submitting the
engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting
from the invention, a patent is a primordial requirement. No patent, no protection. The
ultimate goal of a patent system is to bring new designs and technologies into the public
domain through disclosure.[14] Ideas, once disclosed to the public without the protection
of a valid patent, are subject to appropriation without significant restraint.[15]
On one side of the coin is the public which will benefit from new ideas; on the
other are the inventors who must be protected. As held in Bauer & Cie vs.
ODonnel,[16]The act secured to the inventor the exclusive right to make use, and vend
the thing patented, and consequently to prevent others from exercising like privileges
without the consent of the patentee. It was passed for the purpose of encouraging
useful invention and promoting new and useful inventions by the protection and
stimulation given to inventive genius, and was intended to secure to the public, after
the lapse of the exclusive privileges granted the benefit of such inventions and
improvements.
The law attempts to strike an ideal balance between the two interests:
(The p)atent system thus embodies a carefully crafted bargain for encouraging the
creation and disclosure of new useful and non-obvious advances in technology and
design, in return for the exclusive right to practice the invention for a number of
years. The inventor may keep his invention secret and reap its fruits indefinitely. In
consideration of its disclosure and the consequent benefit to the community, the patent
is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the
expiration of that period, the knowledge of the invention inures to the people, who are
thus enabled to practice it and profit by its use.[17]
The patent law has a three-fold purpose: first, patent law seeks to foster and
reward invention; second, it promotes disclosures of inventions to stimulate further
innovation and to permit the public to practice the invention once the patent expires;
third, the stringent requirements for patent protection seek to ensure that ideas in the
public domain remain there for the free use of the public.[18]
It is only after an exhaustive examination by the patent office that a patent is
issued. Such an in-depth investigation is required because in rewarding a useful
invention, the rights and welfare of the community must be fairly dealt with and
effectively guarded. To that end, the prerequisites to obtaining a patent are strictly
observed and when a patent is issued, the limitations on its exercise are equally strictly
enforced. To begin with, a genuine invention or discovery must be demonstrated lest
in the constant demand for new appliances, the heavy hand of tribute be laid on each
slight technological advance in art.[19]
There is no such scrutiny in the case of copyrights nor any notice published before
its grant to the effect that a person is claiming the creation of a work. The law confers
the copyright from the moment of creation[20] and the copyright certificate is issued upon
registration with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the
petitioner cannot exclude others from the manufacture, sale or commercial use of the
light boxes on the sole basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for
the patent office (IPO) to scrutinize the light boxs eligibility as a patentable
invention.The irony here is that, had petitioner secured a patent instead, its exclusivity
would have been for 17 years only. But through the simplified procedure of copyright-
registration with the National Library without undergoing the rigor of defending the
patentability of its invention before the IPO and the public the petitioner would be
protected for 50 years. This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden[21], the United States Supreme Court held
that only the expression of an idea is protected by copyright, not the idea itself. In that
case, the plaintiff held the copyright of a book which expounded on a new accounting
system he had developed. The publication illustrated blank forms of ledgers utilized in
such a system. The defendant reproduced forms similar to those illustrated in the
plaintiffs copyrighted book. The US Supreme Court ruled that:
There is no doubt that a work on the subject of book-keeping, though only explanatory
of well known systems, may be the subject of a copyright; but, then, it is claimed only
as a book. x x x. But there is a clear distinction between the books, as such, and the
art, which it is, intended to illustrate. The mere statement of the proposition is so evident
that it requires hardly any argument to support it. The same distinction may be
predicated of every other art as well as that of bookkeeping. A treatise on the
composition and use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors for painting
or dyeing; or on the mode of drawing lines to produce the effect of perspective, would
be the subject of copyright; but no one would contend that the copyright of the treatise
would give the exclusive right to the art or manufacture described therein. The copyright
of the book, if not pirated from other works, would be valid without regard to the novelty
or want of novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to the author of
the book an exclusive property in the art described therein, when no examination
of its novelty has ever been officially made, would be a surprise and a fraud upon
the public. That is the province of letters patent, not of copyright. The claim to an
invention of discovery of an art or manufacture must be subjected to the
examination of the Patent Office before an exclusive right therein can be
obtained; and a patent from the government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated
by reference to the subjects just enumerated. Take the case of medicines. Certain
mixtures are found to be of great value in the healing art. If the discoverer writes and
publishes a book on the subject (as regular physicians generally do), he gains
no exclusive right to the manufacture and sale of the medicine; he gives that to
the public. If he desires to acquire such exclusive right, he must obtain a patent
for the mixture as a new art, manufacture or composition of matter. He may
copyright his book, if he pleases; but that only secures to him the exclusive right
of printing and publishing his book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations
it may contain, gives no exclusive right to the modes of drawing described, though they
may never have been known or used before. By publishing the book without getting a
patent for the art, the latter is given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof,
as a book intended to convey instruction in the art, any person may practice and use
the art itself which he has described and illustrated therein. The use of the art is a
totally different thing from a publication of the book explaining it. The copyright of
a book on bookkeeping cannot secure the exclusive right to make, sell and use account
books prepared upon the plan set forth in such book. Whether the art might or might
not have been patented, is a question, which is not before us. It was not patented, and
is open and free to the use of the public. And, of course, in using the art, the ruled lines
and headings of accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books,
which have been made the subject of copyright. In describing the art, the illustrations
and diagrams employed happened to correspond more closely than usual with the
actual work performed by the operator who uses the art. x x x The description of the
art in a book, though entitled to the benefit of copyright, lays no foundation for
an exclusive claim to the art itself. The object of the one is explanation; the object
of the other is use. The former may be secured by copyright. The latter can only
be secured, if it can be secured at all, by letters patent. (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark Poster Ads which
petitioners president said was a contraction of poster advertising. P & D was able to
secure a trademark certificate for it, but one where the goods specified were
stationeries such as letterheads, envelopes, calling cards and newsletters.[22] Petitioner
admitted it did not commercially engage in or market these goods. On the contrary, it
dealt in electrically operated backlit advertising units and the sale of advertising spaces
thereon, which, however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs.
Intermediate Appellate Court,[23] where we, invoking Section 20 of the old Trademark
Law, ruled that the certificate of registration issued by the Director of Patents can confer
(upon petitioner) the exclusive right to use its own symbol only to those goods specified
in the certificate, subject to any conditions and limitations specified in the certificate x x
x. One who has adopted and used a trademark on his goods does not prevent the
adoption and use of the same trademark by others for products which are of a
different description.[24] Faberge, Inc. was correct and was in fact recently reiterated
in Canon Kabushiki Kaisha vs. Court of Appeals.[25]
Assuming arguendo that Poster Ads could validly qualify as a trademark, the
failure of P & D to secure a trademark registration for specific use on the light boxes
meant that there could not have been any trademark infringement since registration
was an essential element thereof.
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation
which was possible even if P & D had no registration.[26] However, while the petitioners
complaint in the RTC also cited unfair competition, the trial court did not find private
respondents liable therefor. Petitioner did not appeal this particular point; hence, it
cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold
respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on
copyrights although it is applicable to disputes over the use of trademarks. Even a name
or phrase incapable of appropriation as a trademark or tradename may, by long and
exclusive use by a business (such that the name or phrase becomes associated with
the business or product in the mind of the purchasing public), be entitled to protection
against unfair competition.[27] In this case, there was no evidence that P & Ds use of
Poster Ads was distinctive or well-known. As noted by the Court of Appeals, petitioners
expert witnesses himself had testified that Poster Ads was too generic a name. So it
was difficult to identify it with any company, honestly speaking.[28] This crucial
admission by its own expert witness that Poster Ads could not be associated with P &
D showed that, in the mind of the public, the goods and services carrying the trademark
Poster Ads could not be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning.
Poster Ads was generic and incapable of being used as a trademark because it was
used in the field of poster advertising, the very business engaged in by petitioner.
Secondary meaning means that a word or phrase originally incapable of exclusive
appropriation with reference to an article in the market (because it is geographically or
otherwise descriptive) might nevertheless have been used for so long and so
exclusively by one producer with reference to his article that, in the trade and to that
branch of the purchasing public, the word or phrase has come to mean that the article
was his property.[29] The admission by petitioners own expert witness that he himself
could not associate Poster Ads with petitioner P & D because it was too generic
definitely precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to
belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals
when it reversed the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of
Appeals dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
 5. La Chemise Lacoste vs. Fernandez, 129 SCRA 373, 393.
G.R. No. L-63796-97 May 2, 1984
LA CHEMISE LACOSTE, S. A., petitioner,
vs.
HON. OSCAR C. FERNANDEZ, Presiding Judge of Branch XLIX, Regional Trial
Court, National Capital Judicial Region, Manila and GOBINDRAM
HEMANDAS, respondents.
G.R. No. L-65659 May 2l, 1984
GOBINDRAM HEMANDAS SUJANANI, petitioner,
vs.
HON. ROBERTO V. ONGPIN, in his capacity as Minister of Trade and Industry,
and HON. CESAR SAN DIEGO, in his capacity as Director of Patents, respondents.
Castillo, Laman, Tan & Pantaleon for petitioners in 63796-97.
Ramon C. Fernandez for private respondent in 63796-97 and petitioner in 65659.
GUTIERREZ, JR., J.:
It is among this Court's concerns that the Philippines should not acquire an unbecoming
reputation among the manufacturing and trading centers of the world as a haven for
intellectual pirates imitating and illegally profiting from trademarks and tradenames
which have established themselves in international or foreign trade.
Before this Court is a petition for certiorari with preliminary injunction filed by La
Chemise Lacoste, S.A., a well known European manufacturer of clothings and sporting
apparels sold in the international market and bearing the trademarks "LACOSTE"
"CHEMISE LACOSTE", "CROCODILE DEVICE" and a composite mark consisting of
the word "LACOSTE" and a representation of a crocodile/alligator. The petitioner asks
us to set aside as null and void, the order of judge Oscar C. Fernandez, of Branch XLIX,
Regional Trial Court, National Capital Judicial Region, granting the motion to quash the
search warrants previously issued by him and ordering the return of the seized items.
The facts are not seriously disputed. The petitioner is a foreign corporation, organized
and existing under the laws of France and not doing business in the Philippines, It is
undeniable from the records that it is the actual owner of the abovementioned
trademarks used on clothings and other goods specifically sporting apparels sold in
many parts of the world and which have been marketed in the Philippines since 1964,
The main basis of the private respondent's case is its claim of alleged prior registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was issued
Reg. No. SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE
LACOSTE & CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts,
sportswear and other garment products of the company. Two years later, it applied for
the registration of the same trademark under the Principal Register. The Patent Office
eventually issued an order dated March 3, 1977 which states that:
xxx xxx xxx
... Considering that the mark was already registered in the
Supplemental Register in favor of herein applicant, the Office has no
other recourse but to allow the application, however, Reg. No. SR-
2225 is now being contested in a Petition for Cancellation docketed
as IPC No. 1046, still registrant is presumed to be the owner of the
mark until after the registration is declared cancelled.
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights,
title, and interest in the trademark "CHEMISE LACOSTE & DEVICE".
On November 21, 1980, the petitioner filed its application for registration of the
trademark "Crocodile Device" (Application Serial No. 43242) and "Lacoste" (Application
Serial No. 43241).The former was approved for publication while the latter was opposed
by Games and Garments in Inter Partes Case No. 1658. In 1982, the petitioner filed a
Petition for the Cancellation of Reg. No. SR-2225 docketed as Inter Partes Case No.
1689. Both cases have now been considered by this Court in Hemandas v. Hon.
Roberto Ongpin (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National Bureau of Investigation (NBI)
a letter-complaint alleging therein the acts of unfair competition being committed by
Hemandas and requesting their assistance in his apprehension and prosecution. The
NBI conducted an investigation and subsequently filed with the respondent court two
applications for the issuance of search warrants which would authorize the search of
the premises used and occupied by the Lacoste Sports Center and Games and
Garments both owned and operated by Hemandas.
The respondent court issued Search Warrant Nos. 83-128 and 83-129 for violation of
Article 189 of the Revised Penal Code, "it appearing to the satisfaction of the judge
after examining under oath applicant and his witnesses that there are good and
sufficient reasons to believe that Gobindram Hemandas ... has in his control and
possession in his premises the ... properties subject of the offense," (Rollo, pp. 67 and
69) The NBI agents executed the two search warrants and as a result of the search
found and seized various goods and articles described in the warrants.
Hemandas filed a motion to quash the search warrants alleging that the trademark used
by him was different from petitioner's trademark and that pending the resolution of IPC
No. 1658 before the Patent Office, any criminal or civil action on the same subject
matter and between the same parties would be premature.
The petitioner filed its opposition to the motion arguing that the motion to quash was
fatally defective as it cited no valid ground for the quashal of the search warrants and
that the grounds alleged in the motion were absolutely without merit. The State
Prosecutor likewise filed his opposition on the grounds that the goods seized were
instrument of a crime and necessary for the resolution of the case on preliminary
investigation and that the release of the said goods would be fatal to the case of the
People should prosecution follow in court.
The respondent court was, however, convinced that there was no probable cause to
justify the issuance of the search warrants. Thus, in its order dated March 22, 1983, the
search warrants were recalled and set aside and the NBI agents or officers in custody
of the seized items were ordered to return the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following issues:
Did respondent judge act with grave abuse of discretion amounting
to lack of jurisdiction,
(i) in reversing the finding of probable cause which he himself had
made in issuing the search warrants, upon allegations which are
matters of defense and as such can be raised and resolved only upon
trial on the merits; and
(ii) in finding that the issuance of the search warrants is premature in
the face of the fact that (a) Lacoste's registration of the subject
trademarks is still pending with the Patent Office with opposition from
Hemandas; and (b) the subject trademarks had been earlier
registered by Hemandas in his name in the Supplemental Register
of the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the following issues:
I to do so. To support this argument, he states that the applicable ruling is the case
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE COURTS.
II
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION IN ISSUING THE ORDER DATED
APRIL 22, 1983.
Hemandas argues in his comment on the petition for certiorari that the petitioner being
a foreign corporation failed to allege essential facts bearing upon its capacity to sue
before Philippine courts. He states that not only is the petitioner not doing business in
the Philippines but it also is not licensed to do business in the Philippines. He also cites
the case of Leviton Industries v. Salvador (114 SCRA 420) to support his contention
The Leviton case, however, involved a complaint for unfair competition under Section
21-A of Republic Act No. 166 which provides:
Sec. 21 — A. Any foreign corporation or juristic person to which a
mark or tradename has been registered or assigned under this Act
may bring an action hereunder for infringement, for unfair
competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the Philippines
under Act numbered Fourteen Hundred and Fifty-Nine, as amended,
otherwise known as the Corporation Law, at the time it brings the
complaint; Provided, That the country of which the said foreign
corporation or juristic person is a citizen, or in which it is domiciled,
by treaty, convention or law, grants a similar privilege to corporate or
juristic persons of the Philippines.
We held that it was not enough for Leviton, a foreign corporation organized and existing
under the laws of the State of New York, United States of America, to merely allege
that it is a foreign corporation. It averred in Paragraph 2 of its complaint that its action
was being filed under the provisions of Section 21-A of Republic Act No. 166, as
amended. Compliance with the requirements imposed by the abovecited provision was
necessary because Section 21-A of Republic Act No. 166 having explicitly laid down
certain conditions in a specific proviso, the same must be expressly averred before a
successful prosecution may ensue. It is therefore, necessary for the foreign corporation
to comply with these requirements or aver why it should be exempted from them, if
such was the case. The foreign corporation may have the right to sue before Philippine
courts, but our rules on pleadings require that the qualifying circumstances necessary
for the assertion of such right should first be affirmatively pleaded.
In contradistinction, the present case involves a complaint for violation of Article 189 of
the Revised Penal Code. The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton argument, Hemandas argued
in his brief that the petitioner was doing business in the Philippines but was not licensed
of Mentholatum Co., Inc. v. Mangaliman: (72 Phil. 524) where Mentholatum Co. Inc., a
foreign corporation and Philippine-American Drug Co., the former's exclusive
distributing agent in the Philippines filed a complaint for infringement of trademark and
unfair competition against the Mangalimans.
The argument has no merit. The Mentholatum case is distinct from and inapplicable to
the case at bar. Philippine American Drug Co., Inc., was admittedly selling products of
its principal Mentholatum Co., Inc., in the latter's name or for the latter's account. Thus,
this Court held that "whatever transactions the Philippine-American Drug Co., Inc. had
executed in view of the law, the Mentholatum Co., Inc., did it itself. And, the
Mentholatum Co., Inc., being a foreign doing business in the Philippines without the
license required by Section 68 of the Corporation Law, it may not prosecute this action
for violation of trademark and unfair competition."
In the present case, however, the petitioner is a foreign corporation not doing business
in the Philippines. The marketing of its products in the Philippines is done through an
exclusive distributor, Rustan Commercial Corporation The latter is an independent
entity which buys and then markets not only products of the petitioner but also many
other products bearing equally well-known and established trademarks and
tradenames. in other words, Rustan is not a mere agent or conduit of the petitioner.
The rules and regulations promulgated by the Board of Investments pursuant to its rule-
making power under Presidential Decree No. 1789, otherwise known as the Omnibus
Investment Code, support a finding that the petitioner is not doing business in the
Philippines. Rule I, Sec. 1 (g) of said rules and regulations defines "doing business" as
one" which includes, inter alia:
(1) ... A foreign firm which does business through middlemen acting
on their own names, such as indentors, commercial brokers or
commission merchants, shall not be deemed doing business in the
Philippines. But such indentors, commercial brokers or commission
merchants shall be the ones deemed to be doing business in the
Philippines.
(2) Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an
independent status, i.e., it transacts business in its name and for its
account, and not in the name or for the account of a principal Thus,
where a foreign firm is represented by a person or local company
which does not act in its name but in the name of the foreign firm the
latter is doing business in the Philippines.
xxx xxx xxx
Applying the above provisions to the facts of this case, we find and conclude that the
petitioner is not doing business in the Philippines. Rustan is actually a middleman acting
and transacting business in its own name and or its own account and not in the name
or for the account of the petitioner.
But even assuming the truth of the private respondent's allegation that the petitioner
failed to allege material facts in its petition relative to capacity to sue, the petitioner may
still maintain the present suit against respondent Hemandas. As early as 1927, this
Court was, and it still is, of the view that a foreign corporation not doing business in the
Philippines needs no license to sue before Philippine courts for infringement of
trademark and unfair competition. Thus, in Western Equipment and Supply Co. v.
Reyes (51 Phil. 115), this Court held that a foreign corporation which has never done
any business in the Philippines and which is unlicensed and unregistered to do
business here, but is widely and favorably known in the Philippines through the use
therein of its products bearing its corporate and tradename, has a legal right to maintain
an action in the Philippines to restrain the residents and inhabitants thereof from
organizing a corporation therein bearing the same name as the foreign corporation,
when it appears that they have personal knowledge of the existence of such a foreign
corporation, and it is apparent that the purpose of the proposed domestic corporation
is to deal and trade in the same goods as those of the foreign corporation.
We further held:
xxx xxx xxx
... That company is not here seeking to enforce any legal or control
rights arising from, or growing out of, any business which it has
transacted in the Philippine Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill, whenever
that reputation, corporate name or goodwill have, through the natural
development of its trade, established themselves.' And it contends
that its rights to the use of its corporate and trade name:
Is a property right, a right in rem, which it may assert and protect
against all the world, in any of the courts of the world-even in
jurisdictions where it does not transact business-just the same as it
may protect its tangible property, real or personal, against trespass,
or conversion. Citing sec. 10, Nims on Unfair Competition and
TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks,
Trade Names and Unfair Competition and cases cited.' That point is
sustained by the authorities, and is well stated in Hanover Star
Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). in which the
syllabus says:
Since it is the trade and not the mark that is to be protected, a trade-
mark acknowledges no territorial boundaries of municipalities or
states or nations, but extends to every market where the trader's
goods have become known and Identified by the use of the mark.
Our recognizing the capacity of the petitioner to sue is not by any means novel or
precedent setting. Our jurisprudence is replete with cases illustrating instances when
foreign corporations not doing business in the Philippines may nonetheless sue in our
courts. In East Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1), we
recognized a right of foreign corporation to sue on isolated transactions. In General
Garments Corp. v. Director of Patents (41 SCRA 50), we sustained the right of Puritan
Sportswear Corp., a foreign corporation not licensed to do and not doing business in
the Philippines, to file a petition for cancellation of a trademark before the Patent Office.
More important is the nature of the case which led to this petition. What preceded this
petition for certiorari was a letter complaint filed before the NBI charging Hemandas
with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If
prosecution follows after the completion of the preliminary investigation being
conducted by the Special Prosecutor the information shall be in the name of the People
of the Philippines and no longer the petitioner which is only an aggrieved party since a
criminal offense is essentially an act against the State. It is the latter which is principally
the injured party although there is a private right violated. Petitioner's capacity to sue
would become, therefore, of not much significance in the main case. We cannot snow
a possible violator of our criminal statutes to escape prosecution upon a far-fetched
contention that the aggrieved party or victim of a crime has no standing to sue.
In upholding the right of the petitioner to maintain the present suit before our courts for
unfair competition or infringement of trademarks of a foreign corporation, we are
moreover recognizing our duties and the rights of foreign states under the Paris
Convention for the Protection of Industrial Property to which the Philippines and France
are parties. We are simply interpreting and enforcing a solemn international
commitment of the Philippines embodied in a multilateral treaty to which we are a party
and which we entered into because it is in our national interest to do so.
The Paris Convention provides in part that:
ARTICLE 1
(1) The countries to which the present Convention applies constitute
themselves into a Union for the protection of industrial property.
(2) The protection of industrial property is concerned with patents,
utility models, industrial designs, trademarks service marks, trade
names, and indications of source or appellations of origin, and the
repression of unfair competition.
xxx xxx xxx
ARTICLE 2
(2) Nationals of each of the countries of the Union shall as regards
the protection of industrial property, enjoy in all the other countries of
the Union the advantages that their respective laws now grant, or
may hereafter grant, to nationals, without prejudice to the rights
specially provided by the present Convention. Consequently, they
shall have the same protection as the latter, and the same legal
remedy against any infringement of their rights, provided they
observe the conditions and formalities imposed upon nationals.
xxx xxx xxx
ARTICLE 6
(1) 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, of a mark considered by the competent
authority of the country of registration or use to be well-known in that
country as being already the mark of a person entitled to the benefits
of the 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.
xxx xxx xxx
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.
xxx xxx xxx
ARTICLE 10bis
(1) The countries of the Union are bound to assure to persons entitled
to the benefits of the Union effective protection against unfair
competition.
xxx xxx xxx
ARTICLE 10ter
(1) The countries of the Union undertake to assure to nationals of the
other countries of the Union appropriate legal remedies to repress
effectively all the acts referred to in Articles 9, 10 and l0bis.
(2) They undertake, further, to provide measures to permit
syndicates and associations which represent the industrialists,
producers or traders concerned and the existence of which is not
contrary to the laws of their countries, to take action in the Courts or
before the administrative authorities, with a view to the repression of
the acts referred to in Articles 9, 10 and 10bis, in so far as the law of
the country in which protection is claimed allows such action by the
syndicates and associations of that country.
xxx xxx xxx
ARTICLE 17
Every country party to this Convention undertakes to adopt, in
accordance with its constitution, the measures necessary to ensure
the application of this Convention.
It is understood that at the time an instrument of ratification or
accession is deposited on behalf of a country; such country will be in
a position under its domestic law to give effect to the provisions of
this Convention. (61 O.G. 8010)
xxx xxx xxx
In Vanity Fair Mills, Inc. v. T Eaton Co. (234 F. 2d 633) the United States Circuit Court
of Appeals had occasion to comment on the extraterritorial application of the Paris
Convention It said that:
[11] The International Convention is essentially a compact between
the various member countries to accord in their own countries to
citizens of the other contracting parties trademark and other rights
comparable to those accorded their own citizens by their domestic
law. The underlying principle is that foreign nationals should be given
the same treatment in each of the member countries as that country
makes available to its own citizens. In addition, the Convention
sought to create uniformity in certain respects by obligating each
member nation 'to assure to nationals of countries of the Union an
effective protection against unfair competition.'
[12] The Convention is not premised upon the Idea that the trade-
mark and related laws of each member nation shall be given extra-
territorial application, but on exactly the converse principle that each
nation's law shall have only territorial application. Thus a foreign
national of a member nation using his trademark in commerce in the
United States is accorded extensive protection here against
infringement and other types of unfair competition by virtue of United
States membership in the Convention. But that protection has its
source in, and is subject to the limitations of, American law, not the
law of the foreign national's own country. ...
By the same token, the petitioner should be given the same treatment in the Philippines
as we make available to our own citizens. We are obligated to assure to nationals of
"countries of the Union" an effective protection against unfair competition in the same
way that they are obligated to similarly protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20, 1980 issued a
memorandum addressed to the Director of the Patents Office directing the latter:
xxx xxx xxx
... 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, Gloria Vanderbilt, Sasson,
Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin
Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted
Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and other
legal action by the trademarks' foreign or local owners or original
users.
The memorandum is a clear manifestation of our avowed adherence to a policy of
cooperation and amity with all nations. It is not, as wrongly alleged by the private
respondent, a personal policy of Minister Luis Villafuerte which expires once he leaves
the Ministry of Trade. For a treaty or convention is not a mere moral obligation to be
enforced or not at the whims of an incumbent head of a Ministry. It creates a legally
binding obligation on the parties founded on the generally accepted principle of
international law of pacta sunt servanda which has been adopted as part of the law of
our land. (Constitution, Art. II, Sec. 3). The memorandum reminds the Director of
Patents of his legal duty to obey both law and treaty. It must also be obeyed.
Hemandas further contends that the respondent court did not commit grave abuse of
discretion in issuing the questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion to quash the search
warrants reveals the fact that they are not appropriate for quashing a warrant. They are
matters of defense which should be ventilated during the trial on the merits of the case.
For instance, on the basis of the facts before the Judge, we fail to understand how he
could treat a bare allegation that the respondent's trademark is different from the
petitioner's trademark as a sufficient basis to grant the motion to quash. We will treat
the issue of prejudicial question later. Granting that respondent Hemandas was only
trying to show the absence of probable cause, we, nonetheless, hold the arguments to
be untenable.
As a mandatory requirement for the issuance of a valid search warrant, the Constitution
requires in no uncertain terms the determination of probable cause by the judge after
examination under oath or affirmation of the complainant and the witnesses he may
produce (Constitution, Art. IV, Sec. 3). Probable cause has traditionally meant such
facts and circumstances antecedent to the issuance of the warrant that are in
themselves sufficient to induce a cautious man to rely upon them and act in pursuance
thereof (People v. Sy Juco, 64 Phil. 667).
This concept of probable cause was amplified and modified by our ruling in Stonehill v.
Diokno, (20 SCRA 383) that probable cause "presupposes the introduction of
competent proof that the party against whom it is sought has performed particular acts,
or committed specific omissions, violating a given provision of our criminal laws."
The question of whether or not probable cause exists is one which must be decided in
the light of the conditions obtaining in given situations (Central Bank v. Morfe, 20 SCRA
507). We agree that there is no general formula or fixed rule for the determination of
the existence of probable cause since, as we have recognized in Luna v. Plaza (26
SCRA 310), the existence depends to a large degree upon the finding or opinion of the
judge conducting the examination. However, the findings of the judge should not
disregard the facts before him nor run counter to the clear dictates of reason. More so
it is plain that our country's ability to abide by international commitments is at stake.
The records show that the NBI agents at the hearing of the application for the warrants
before respondent court presented three witnesses under oath, sworn statements, and
various exhibits in the form of clothing apparels manufactured by Hemandas but
carrying the trademark Lacoste. The respondent court personally interrogated Ramon
Esguerra, Samuel Fiji, and Mamerto Espatero by means of searching questions. After
hearing the testimonies and examining the documentary evidence, the respondent
court was convinced that there were good and sufficient reasons for the issuance of
the warrant. And it then issued the warrant.
The respondent court, therefore, complied with the constitutional and statutory
requirements for the issuance of a valid search warrant. At that point in time, it was fully
convinced that there existed probable cause. But after hearing the motion to quash and
the oppositions thereto, the respondent court executed a complete turnabout and
declared that there was no probable cause to justify its earlier issuance of the warrants.
True, the lower court should be given the opportunity to correct its errors, if there be
any, but the rectification must, as earlier stated be based on sound and valid grounds.
In this case, there was no compelling justification for the about face. The allegation that
vital facts were deliberately suppressed or concealed by the petitioner should have
been assessed more carefully because the object of the quashal was the return of items
already seized and easily examined by the court. The items were alleged to be fake
and quite obviously would be needed as evidence in the criminal prosecution.
Moreover, an application for a search warrant is heard ex parte. It is neither a trial nor
a part of the trial. Action on these applications must be expedited for time is of the
essence. Great reliance has to be accorded by the judge to the testimonies under oath
of the complainant and the witnesses. The allegation of Hemandas that the applicant
withheld information from the respondent court was clearly no basis to order the return
of the seized items.
Hemandas relied heavily below and before us on the argument that it is the holder of a
certificate of registration of the trademark "CHEMISE LACOSTE & CROCODILE
DEVICE". Significantly, such registration is only in the Supplemental Register.
A certificate of registration in the Supplemental Register is not prima facie evidence of
the validity of registration, of the registrant's exclusive right to use the same in
connection with the goods, business, or services specified in the certificate. Such a
certificate of registration cannot be filed, with effect, with the Bureau of Customs in
order to exclude from the Philippines, foreign goods bearing infringement marks or
trade names (Rule 124, Revised Rules of Practice Before the Phil. Pat. Off. in
Trademark Cases; Martin, Philippine Commercial Laws, 1981, Vol. 2, pp. 513-515).
Section 19-A of Republic Act 166 as amended not only provides for the keeping of the
supplemental register in addition to the principal register but specifically directs that:
xxx xxx xxx
The certificates of registration for marks and trade names registered
on the supplemental register shall be conspicuously different from
certificates issued for marks and trade names on the principal
register.
xxx xxx xxx
The reason is explained by a leading commentator on Philippine Commercial Laws:
The registration of a mark upon the supplemental register is not, as
in the case of the principal register, prima facie evidence of (1) the
validity of registration; (2) registrant's ownership of the mark; and (3)
registrant's exclusive right to use the mark. It is not subject to
opposition, although it may be cancelled after its issuance. Neither
may it be the subject of interference proceedings. Registration on the
supplemental register is not constructive notice of registrant's claim
of ownership. A supplemental register is provided for the registration
of marks which are not registrable on the principal register because
of some defects (conversely, defects which make a mark
unregistrable on the principal register, yet do not bar them from the
supplemental register.) (Agbayani, II Commercial Laws of the
Philippines, 1978, p. 514, citing Uy Hong Mo v. Titay & Co., et al.,
Dec. No. 254 of Director of Patents, Apr. 30, 1963);
Registration in the Supplemental Register, therefore, serves as notice that the
registrant is using or has appropriated the trademark. By the very fact that the
trademark cannot as yet be entered in the Principal Register, all who deal with it should
be on guard that there are certain defects, some obstacles which the user must Still
overcome before he can claim legal ownership of the mark or ask the courts to vindicate
his claims of an exclusive right to the use of the same. It would be deceptive for a party
with nothing more than a registration in the Supplemental Register to posture before
courts of justice as if the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action
on application Serial No. 30954 that "registrant is presumed to be the owner of the mark
until after the registration is declared cancelled" is, therefore, misplaced and grounded
on shaky foundation, The supposed presumption not only runs counter to the precept
embodied in Rule 124 of the Revised Rules of Practice before the Philippine Patent
Office in Trademark Cases but considering all the facts ventilated before us in the four
interrelated petitions involving the petitioner and the respondent, it is devoid of factual
basis. And even in cases where presumption and precept may factually be reconciled,
we have held that the presumption is rebuttable, not conclusive, (People v. Lim Hoa,
G.R. No. L10612, May 30, 1958, Unreported). One may be declared an unfair
competitor even if his competing trademark is registered (Parke, Davis & Co. v. Kiu Foo
& Co., et al., 60 Phil. 928; La Yebana Co. v. Chua Seco & Co., 14 Phil. 534).
By the same token, the argument that the application was premature in view of the
pending case before the Patent Office is likewise without legal basis.
The proceedings pending before the Patent Office involving IPC Co. 1658 do not
partake of the nature of a prejudicial question which must first be definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
A petition for the suspension of the criminal action based upon the
pendency of a pre-judicial question in a civil case, may only be
presented by any party before or during the trial of the criminal
action.
The case which suspends the criminal prosecution must be a civil case which is
determinative of the innocence or, subject to the availability of other defenses, the guilt
of the accused. The pending case before the Patent Office is an administrative
proceeding and not a civil case. The decision of the Patent Office cannot be finally
determinative of the private respondent's innocence of the charges against him.
In Flordelis v. Castillo (58 SCRA 301), we held that:
As clearly delineated in the aforecited provisions of the new Civil
Code and the Rules of Court, and as uniformly applied in numerous
decisions of this Court, (Berbari v. Concepcion, 40 Phil. 837 (1920);
Aleria v. Mendoza, 83 Phil. 427 (1949); People v. Aragon, 94 Phil.
357 (1954); Brito-Sy v. Malate Taxicab & Garage, Inc., 102 Phil 482
(1957); Mendiola v. Macadael, 1 SCRA 593; Benitez v. Concepcion,
2 SCRA 178; Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia,
22 SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA 271) the
doctrine of prejudicial question was held inapplicable because no
criminal case but merely an administrative case and a civil suit were
involved. The Court, however, held that, in view of the peculiar
circumstances of that case, the respondents' suit for damages in the
lower court was premature as it was filed during the pendency of an
administrative case against the respondents before the POLCOM.
'The possibility cannot be overlooked,' said the Court, 'that the
POLCOM may hand down a decision adverse to the respondents, in
which case the damage suit will become unfounded and baseless for
wanting in cause of action.') the doctrine of pre-judicial question
comes into play generally in a situation where a civil action and a
criminal action both penned and there exists in the former an issue
which must be preemptively resolved before the criminal action may
proceed, because howsoever the issue raised in the civil action is
resolved would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case.
In the present case, no civil action pends nor has any been instituted. What was
pending was an administrative case before the Patent Office.
Even assuming that there could be an administrative proceeding with exceptional or
special circumstances which render a criminal prosecution premature pending the
promulgation of the administrative decision, no such peculiar circumstances are
present in this case.
Moreover, we take note of the action taken by the Patents Office and the Minister of
Trade and affirmed by the Intermediate Appellate Court in the case of La Chemise
Lacoste S. A. v. Ram Sadhwani (AC-G.R. No. SP-13356, June 17, 1983).
The same November 20, 1980 memorandum of the Minister of Trade discussed in this
decision was involved in the appellate court's decision. The Minister as the
"implementing authority" under Article 6bis of the Paris Convention for the protection of
Industrial Property instructed the Director of Patents to reject applications for Philippine
registration of signature and other world famous trademarks by applicants other than
its original owners or users. The brand "Lacoste" was specifically cited together with
Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar
dela Renta, Calvin Klein, Givenchy, Ralph Laurence, Geoffrey Beene, Lanvin, and Ted
Lapidus. The Director of Patents was likewise ordered to require Philippine registrants
of such trademarks to surrender their certificates of registration. Compliance by the
Director of Patents was challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v.
Sadhwani decision which we cite with approval sustained the power of the Minister of
Trade to issue the implementing memorandum and, after going over the evidence in
the records, affirmed the decision of the Director of Patents declaring La Chemise
Lacoste &A. the owner of the disputed trademark and crocodile or alligator device. The
Intermediate Appellate Court speaking through Mr. Justice Vicente V. Mendoza stated:
In the case at bar, the Minister of Trade, as 'the competent authority
of the country of registration,' has found that among other well-known
trademarks 'Lacoste' is the subject of conflicting claims. For this
reason, applications for its registration must be rejected or refused,
pursuant to the treaty obligation of the Philippines.
Apart from this finding, the annexes to the opposition, which La
Chemise Lacoste S.A. filed in the Patent Office, show that it is the
owner of the trademark 'Lacoste' and the device consisting of a
representation of a crocodile or alligator by the prior adoption and
use of such mark and device on clothing, sports apparel and the like.
La Chemise Lacoste S.A, obtained registration of these mark and
device and was in fact issued renewal certificates by the French
National Industry Property Office.
xxx xxx xxx
Indeed, due process is a rule of reason. In the case at bar the order
of the Patent Office is based not only on the undisputed fact of
ownership of the trademark by the appellee but on a prior
determination by the Minister of Trade, as the competent authority
under the Paris Convention, that the trademark and device sought to
be registered by the appellant are well-known marks which the
Philippines, as party to the Convention, is bound to protect in favor
of its owners. it would be to exalt form over substance to say that
under the circumstances, due process requires that a hearing should
be held before the application is acted upon.
 The appellant cites section 9 of Republic Act No. 166, which requires
notice and hearing whenever an opposition to the registration of a
trademark is made. This provision does not apply, however, to
situations covered by the Paris Convention, where the appropriate
authorities have determined that a well-known trademark is already
that of another person. In such cases, the countries signatories to
the Convention are obliged to refuse or to cancel the registration of
the mark by any other person or authority. In this case, it is not
disputed that the trademark Lacoste is such a well-known mark that
a hearing, such as that provided in Republic Act No. 166, would be
superfluous.
The issue of due process was raised and fully discussed in the appellate court's
decision. The court ruled that due process was not violated.
In the light of the foregoing it is quite plain that the prejudicial question argument is
without merit.
We have carefully gone over the records of all the cases filed in this Court and find
more than enough evidence to sustain a finding that the petitioner is the owner of the
trademarks "LACOSTE", "CHEMISE LACOSTE", the crocodile or alligator device, and
the composite mark of LACOSTE and the representation of the crocodile or alligator.
Any pretensions of the private respondent that he is the owner are absolutely without
basis. Any further ventilation of the issue of ownership before the Patent Office will be
a superfluity and a dilatory tactic.
The issue of whether or not the trademark used by the private respondent is different
from the petitioner's trade mark is a matter of defense and will be better resolved in the
criminal proceedings before a court of justice instead of raising it as a preliminary matter
in an administrative proceeding.
The purpose of the law protecting a trademark cannot be overemphasized. They are to
point out distinctly the origin or ownership of the article to which it is affixed, to secure
to him, who has been instrumental in bringing into market a superior article of
merchandise, the fruit of his industry and skill, and to prevent fraud and imposition
(Etepha v. Director of Patents, 16 SCRA 495).
The legislature has enacted laws to regulate the use of trademarks and provide for the
protection thereof. Modern trade and commerce demands that depredations on
legitimate trade marks of non-nationals including those who have not shown prior
registration thereof should not be countenanced. The law against such depredations is
not only for the protection of the owner of the trademark but also, and more importantly,
for the protection of purchasers from confusion, mistake, or deception as to the goods
they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; General Garments
Corporation v. Director of Patents, 41 SCRA 50).
The law on trademarks and tradenames is based on the principle of business integrity
and common justice' This law, both in letter and spirit, is laid upon the premise that,
while it encourages fair trade in every way and aims to foster, and not to hamper,
competition, no one, especially a trader, is justified in damaging or jeopardizing
another's business by fraud, deceipt, trickery or unfair methods of any sort. This
necessarily precludes the trading by one dealer upon the good name and reputation
built up by another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338).
The records show that the goodwill and reputation of the petitioner's products bearing
the trademark LACOSTE date back even before 1964 when LACOSTE clothing
apparels were first marketed in the Philippines. To allow Hemandas to continue using
the trademark Lacoste for the simple reason that he was the first registrant in the
Supplemental Register of a trademark used in international commerce and not
belonging to him is to render nugatory the very essence of the law on trademarks and
tradenames.
We now proceed to the consideration of the petition in Gobindram Hemandas Suianani
u. Hon. Roberto V Ongpin, et al. (G.R. No. 65659).
Actually, three other petitions involving the same trademark and device have been filed
with this Court.
In Hemandas & Co. v. Intermediate Appellate Court, et al. (G.R. No. 63504) the
petitioner asked for the following relief:
IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a) that
the Resolutions of the respondent Court of January 3, 1983
and February 24, 1983 be nullified; and that the Decision of the same
respondent Court of June 30, 1983 be declared to be the law on the
matter; (b) that the Director of Patents be directed to issue the
corresponding registration certificate in the Principal Register; and
(c) granting upon the petitioner such other legal and equitable
remedies as are justified by the premises.
On December 5, 1983, we issued the following resolution:
Considering the allegations contained, issues raised and the
arguments adduced in the petition for review, the respondent's
comment thereon, and petitioner's reply to said comment, the Court
Resolved to DENY the petition for lack of merit.
The Court further Resolved to CALL the attention of the Philippine
Patent Office to the pendency in this Court of G.R. No. 563796-97
entitled 'La Chemise Lacoste, S.A. v. Hon. Oscar C. Fernandez and
Gobindram Hemandas' which was given due course on June 14,
1983 and to the fact that G.R. No. 63928-29 entitled 'Gobindram
Hemandas v. La Chemise Lacoste, S.A., et al.' filed on May 9, 1983
was dismissed for lack of merit on September 12, 1983. Both
petitions involve the same dispute over the use of the trademark
'Chemise Lacoste'.
The second case of Gobindram Hemandas vs. La Chemise Lacoste, S.A., et al. (G.R.
No. 63928-29) prayed for the following:
I. On the petition for issuance of writ of preliminary injunction, an
order be issued after due hearing:
l. Enjoining and restraining respondents Company, attorneys-in-fact,
and Estanislao Granados from further proceedings in the unfair
competition charges pending with the Ministry of Justice filed against
petitioner;
2. Enjoining and restraining respondents Company and its attorneys-
in-fact from causing undue publication in newspapers of general
circulation on their unwarranted claim that petitioner's products are
FAKE pending proceedings hereof; and
3. Enjoining and restraining respondents Company and its attorneys-
in-fact from sending further threatening letters to petitioner's
customers unjustly stating that petitioner's products they are dealing
in are FAKE and threatening them with confiscation and seizure
thereof.
II. On the main petition, judgment be rendered:
l. Awarding and granting the issuance of the Writ of Prohibition,
prohibiting, stopping, and restraining respondents from further
committing the acts complained of;
2. Awarding and granting the issuance of the Writ of Mandamus,
ordering and compelling respondents National Bureau of
Investigation, its aforenamed agents, and State Prosecutor
Estanislao Granados to immediately comply with the Order of the
Regional Trial Court, National Capital Judicial Region, Branch XLIX,
Manila, dated April 22, 1983, which directs the immediate return of
the seized items under Search Warrants Nos. 83-128 and 83-129;
3. Making permanent any writ of injunction that may have been
previously issued by this Honorable Court in the petition at bar: and
4. Awarding such other and further relief as may be just and equitable
in the premises.
As earlier stated, this petition was dismissed for lack of merit on September 12, 1983.
Acting on a motion for reconsideration, the Court on November 23, 1983 resolved to
deny the motion for lack of merit and declared the denial to be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
In this last petition, the petitioner prays for the setting aside as null and void and for the
prohibiting of the enforcement of the following memorandum of respondent Minister
Roberto Ongpin:
MEMORANDUM:
FOR: THE DIRECTOR OF PATENTS
Philippine Patent Office
xxx xxx xxx
Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-
making and adjudicatory powers of the Minister of Trade and Industry and provides
inter alia, that 'such rule-making and adjudicatory powers should be revitalized in order
that the Minister of Trade and Industry can ...apply more swift and effective solutions
and remedies to old and new problems ... such as the infringement of internationally-
known tradenames and trademarks ...'and in view of the decision of the Intermediate
Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM
SADWHANI [AC-G.R. Sp. No. 13359 (17) June 1983] which affirms the validity of the
MEMORANDUM of then Minister Luis R. Villafuerte dated 20 November 1980
confirming our obligations under the PARIS CONVENTION FOR THE PROTECTION
OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a signatory,
you are hereby directed to implement measures necessary to effect compliance with
our obligations under said convention in general, and, more specifically, to honor our
commitment under Section 6 bis thereof, as follows:
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 well-known 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.
4. The Philippine Patent Office shall give due course to the
Opposition in cases already or hereafter filed against the registration
of trademarks entitled to protection of Section 6 bis of said PARIS
CONVENTION as outlined above, by remanding applications filed by
one not entitled to such protection for final disallowance by the
Examination Division.
5. All pending applications for Philippine registration of signature and
other world famous trademarks filed by applicants other than their
original owners or users shall be rejected forthwith. Where such
applicants have already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine Law, they
shall be directed to surrender their Certificates of Registration to the
Philippine Patent Office for immediate cancellation proceedings.
6. Consistent with the foregoing, you are hereby directed to expedite
the hearing and to decide without delay the following cases pending
before your Office:
1. INTER PARTES CASE NO. 1689-Petition filed by La Chemise
Lacoste, S.A. for the cancellation of Certificate of Registration No.
SR-2225 issued to Gobindram Hemandas, assignee of Hemandas
and Company;
2. INTER PARTES CASE NO. 1658-Opposition filed by Games and
Garments Co. against the registration of the trademark Lacoste
sought by La Chemise Lacoste, S.A.;
3. INTER PARTES CASE NO. 1786-Opposition filed by La Chemise
Lacoste, S.A. against the registration of trademark Crocodile Device
and Skiva sought by one Wilson Chua.
Considering our discussions in G.R. Nos. 63796-97, we find the petition in G.R. No.
65659 to be patently without merit and accordingly deny it due course.
In complying with the order to decide without delay the cases specified in the
memorandum, the Director of Patents shall limit himself to the ascertainment of facts
in issues not resolved by this decision and apply the law as expounded by this Court to
those facts.
One final point. It is essential that we stress our concern at the seeming inability of law
enforcement officials to stem the tide of fake and counterfeit consumer items flooding
the Philippine market or exported abroad from our country. The greater victim is not so
much the manufacturer whose product is being faked but the Filipino consuming public
and in the case of exportations, our image abroad. No less than the President, in issuing
Executive Order No. 913 dated October 7, 1983 to strengthen the powers of the
Minister of Trade and Industry for the protection of consumers, stated that, among other
acts, the dumping of substandard, imitated, hazardous, and cheap goods, the
infringement of internationally known tradenames and trademarks, and the unfair trade
practices of business firms has reached such proportions as to constitute economic
sabotage. We buy a kitchen appliance, a household tool, perfume, face powder, other
toilet articles, watches, brandy or whisky, and items of clothing like jeans, T-shirts, neck,
ties, etc. — the list is quite length — and pay good money relying on the brand name
as guarantee of its quality and genuine nature only to explode in bitter frustration and
genuine nature on helpless anger because the purchased item turns out to be a shoddy
imitation, albeit a clever looking counterfeit, of the quality product. Judges all over the
country are well advised to remember that court processes should not be used as
instruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie
the hands of the law as it seeks to protect the Filipino consuming public and frustrate
executive and administrative implementation of solemn commitments pursuant to
international conventions and treaties.
WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED. The order
dated April 22, 1983 of the respondent regional trial court is REVERSED and SET
ASIDE. Our Temporary Restraining Order dated April 29, 1983 is ma(i.e.
PERMANENT. The petition in G.R. NO. 65659 is DENIED due course for lack of merit.
Our Temporary Restraining Order dated December 5, 1983 is LIFTED and SET ASIDE,
effective immediately.
SO ORDERED.