FIRST DIVISION

MCDONALDS CORPORATION
and G.R. No. 143993
MCGEORGE FOOD INDUSTRIES, INC.,
Petitioners,

Present:


Davide, Jr., C.J.,

Chairman,
- versus -
Quisumbing,

Ynares-Santiago,

Carpio, and

Azcuna, JJ.

L.C. BIG MAK BURGER, INC.,
FRANCIS B. DY, EDNA A. DY,
RENE B. DY, WILLIAM B. DY,
JESUS AYCARDO,
ARACELI Promulgated:
AYCARDO, and GRACE HUERTO,
Respondents.
August 18, 2004

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DECISION


CARPI O, J .:


The Case



This is a petition for review[1] of the Decision
dated 26 November 1999 of the Court of Appeals[2]
finding respondent L.C. Big Mak Burger, Inc. not liable
for trademark infringement and unfair competition and
ordering petitioners to pay respondents P1,900,000 in
damages, and of its Resolution dated 11 July
2000 denying reconsideration. The Court of Appeals
Decision reversed the 5 September 1994 Decision[3] of
the Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for
trademark infringement and unfair competition.


The Facts

Petitioner McDonalds Corporation
(McDonalds) is a corporation organized under the
laws of Delaware, United States. McDonalds operates,
by itself or through its franchisees, a global chain of
fast-food restaurants. McDonalds[4] owns a family of
marks[5] including the Big Mac mark for its double-
decker hamburger sandwich.[6] McDonalds registered
this trademark with the United States Trademark
Registry on 16 October 1979.[7] Based on this Home
Registration, McDonalds applied for the registration of
the same mark in the Principal Register of the then
Philippine Bureau of Patents, Trademarks and
Technology (PBPTT), now the Intellectual Property
Office (IPO). Pending approval of its application,
McDonalds introduced its Big Mac hamburger
sandwiches in the Philippine market in September 1981.
On 18 July 1985, the PBPTT allowed registration of the
Big Mac mark in the Principal Register based on its
Home Registration in the United States.

Like its other marks, McDonalds displays the
Big Mac mark in items[8] and paraphernalia[9] in its
restaurants, and in its outdoor and indoor signages.
From 1982 to 1990, McDonalds spent P10.5 million in
advertisement for Big Mac hamburger sandwiches
alone.[10]

Petitioner McGeorge Food Industries (petitioner
McGeorge), a domestic corporation, is McDonalds
Philippine franchisee.[11]

Respondent L.C. Big Mak Burger, Inc.
(respondent corporation) is a domestic corporation
which operates fast-food outlets and snack vans in
Metro Manila and nearby provinces.[12] Respondent
corporations menu includes hamburger sandwiches and
other food items.[13] Respondents Francis B. Dy, Edna
A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo,
Araceli Aycardo, and Grace Huerto (private
respondents) are the incorporators, stockholders and
directors of respondent corporation.[14]

On 21 October 1988, respondent corporation
applied with the PBPTT for the registration of the Big
Mak mark for its hamburger sandwiches. McDonalds
opposed respondent corporations application on the
ground that Big Mak was a colorable imitation of its
registered Big Mac mark for the same food products.
McDonalds also informed respondent Francis Dy
(respondent Dy), the chairman of the Board of
Directors of respondent corporation, of its exclusive
right to the Big Mac mark and requested him to desist
from using the Big Mac mark or any similar mark.

Having received no reply from respondent Dy,
petitioners on 6 June 1990 sued respondents in the
Regional Trial Court of Makati, Branch 137 (RTC),
for trademark infringement and unfair competition. In
its Order of 11 July 1990, the RTC issued a temporary
restraining order (TRO) against respondents enjoining
them from using the Big Mak mark in the operation of
their business in the National Capital Region.[15] On
16 August 1990, the RTC issued a writ of preliminary
injunction replacing the TRO.[16]

In their Answer, respondents admitted that they
have been using the name Big Mak Burger for their
fast-food business. Respondents claimed, however, that
McDonalds does not have an exclusive right to the
Big Mac mark or to any other similar mark.
Respondents point out that the Isaiyas Group of
Corporations (Isaiyas Group) registered the same
mark for hamburger sandwiches with the PBPTT on 31
March 1979. One Rodolfo Topacio (Topacio)
similarly registered the same mark on 24 June 1983,
prior to McDonalds registration on 18 July 1985.
Alternatively, respondents claimed that they are not
liable for trademark infringement or for unfair
competition, as the Big Mak mark they sought to
register does not constitute a colorable imitation of the
Big Mac mark. Respondents asserted that they did not
fraudulently pass off their hamburger sandwiches as
those of petitioners Big Mac
hamburgers.[17] Respondents sought damages in their
counterclaim.

In their Reply, petitioners denied respondents
claim that McDonalds is not the exclusive owner of the
Big Mac mark. Petitioners asserted that while the
Isaiyas Group and Topacio did register the Big Mac
mark ahead of McDonalds, the Isaiyas Group did so
only in the Supplemental Register of the PBPTT and
such registration does not provide any
protection. McDonalds disclosed that it had acquired
Topacios rights to his registration in a Deed of
Assignment dated 18 May 1981.[18]



The Trial Courts Ruling


On 5 September 1994, the RTC rendered
judgment (RTC Decision) finding respondent
corporation liable for trademark infringement and unfair
competition. However, the RTC dismissed the complaint
against private respondents and the counterclaim against
petitioners for lack of merit and insufficiency of
evidence. The RTC held:

Undeniably, the mark B[ig] M[ac] is a
registered trademark for plaintiff McDonalds, and
as such, it is entitled [to] protection against
infringement.

xxxx
There exist some distinctions between the
names B[ig] M[ac] and B[ig] M[ak] as
appearing in the respective signages, wrappers and
containers of the food products of the parties. But
infringement goes beyond the physical features of
the questioned name and the original name. There
are still other factors to be considered.

xxxx




Significantly, the contending parties are both
in the business of fast-food chains and
restaurants. An average person who is hungry and
wants to eat a hamburger sandwich may not be
discriminating enough to look for a McDonalds
restaurant and buy a B[ig] M[ac]
hamburger. Once he sees a stall selling hamburger
sandwich, in all likelihood, he will dip into his
pocket and order a B[ig] M[ak] hamburger
sandwich. Plaintiff McDonalds fast-food chain
has attained wide popularity and acceptance by the
consuming public so much so that its air-
conditioned food outlets and restaurants will
perhaps not be mistaken by many to be the same as
defendant corporations mobile snack vans located
along busy streets or highways. But the thing is
that what is being sold by both contending parties is
a food item a hamburger sandwich which is for
immediate consumption, so that a buyer may easily
be confused or deceived into thinking that the
B[ig] M[ak] hamburger sandwich he bought is a
food-product of plaintiff McDonalds, or a
subsidiary or allied outlet thereof. Surely,
defendant corporation has its own
secret ingredients to make its hamburger
sandwiches as palatable and as tasty as the other
brands in the market, considering the keen
competition among mushrooming hamburger stands
and multinational fast-food chains and
restaurants. Hence, the trademark B[ig] M[ac]
has been infringed by defendant corporation when
it used the name B[ig] M[ak] in its signages,
wrappers, and containers in connection with its food
business. xxxx

Did the same acts of defendants in using the
name B[ig] M[ak] as a trademark or tradename in
their signages, or in causing the name B[ig]
M[ak] to be printed on the wrappers and containers
of their food products also constitute an act of
unfair competition under Section 29 of the
Trademark Law?

The answer is in the affirmative. xxxx

The xxx provision of the law concerning
unfair competition is broader and more inclusive
than the law concerning the infringement of
trademark, which is of more limited range, but
within its narrower range recognizes a more
exclusive right derived by the adoption and
registration of the trademark by the person whose
goods or services are first associated therewith.
xxx Notwithstanding the distinction between an
action for trademark infringement and an action for
unfair competition, however, the law extends
substantially the same relief to the injured party for
both cases. (See Sections 23 and 29 of Republic
Act No. 166)

Any conduct may be said to constitute
unfair competition if the effect is to pass off on the
public the goods of one man as the goods of
another. The choice of B[ig] M[ak] as tradename
by defendant corporation is not merely for
sentimental reasons but was clearly made to take
advantage of the reputation, popularity and the
established goodwill of plaintiff McDonalds. For,
as stated in Section 29, a person is guilty of unfair
competition 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 likely influence purchasers to believe
that the goods offered are those of a manufacturer
or dealer other than the actual manufacturer or
dealer. Thus, plaintiffs have established their valid
cause of action against the defendants for
trademark infringement and unfair competition and
for damages.[19]



The dispositive portion of the RTC Decision
provides:

WHEREFORE, judgment is rendered in
favor of plaintiffs McDonalds Corporation and
McGeorge Food Industries, Inc. and against
defendant L.C. Big Mak Burger, Inc., as follows:

1. The writ of preliminary injunction
issued in this case on [16 August 1990] is made
permanent;

2. Defendant L.C. Big Mak Burger,
Inc. is ordered to pay plaintiffs actual damages in
the amount of P400,000.00, exemplary damages in
the amount of P100,000.00, and attorneys fees and
expenses of litigation in the amount of
P100,000.00;

3. The complaint against defendants
Francis B. Dy, Edna A. Dy, Rene B. Dy, Wiliam
B. Dy, Jesus Aycardo, Araceli Aycardo and Grace
Huerto, as well as all counter-claims, are dismissed
for lack of merit as well as for insufficiency of
evidence.[20]



Respondents appealed to the Court of Appeals.


The Ruling of the Court of Appeals

On 26 November 1999, the Court of Appeals
rendered judgment (Court of Appeals Decision)
reversing the RTC Decision and ordering McDonalds
to pay respondents P1,600,000 as actual and
compensatory damages and P300,000 as moral
damages. The Court of Appeals held:

Plaintiffs-appellees in the instant case would
like to impress on this Court that the use of
defendants-appellants of its corporate name the
whole L.C. B[ig] M[ak] B[urger], I[nc]. which
appears on their food packages, signages and
advertisements is an infringement of their trademark
B[ig] M[ac] which they use to identify [their]
double decker sandwich, sold in a Styrofoam box
packaging material with the McDonalds logo of
umbrella M stamped thereon, together with the
printed mark in red bl[o]ck capital letters, the words
being separated by a single space. Specifically,
plaintiffs-appellees argue that defendants-
appellants use of their corporate name is a
colorable imitation of their trademark Big Mac.

xxxx

To Our mind, however, this Court is fully
convinced that no colorable imitation exists. As the
definition dictates, it is not sufficient that a
similarity exists in both names, but that more
importantly, the over-all presentation, or in their
essential, substantive and distinctive parts is such as
would likely MISLEAD or CONFUSE persons in
the ordinary course of purchasing the genuine
article. A careful comparison of the way the
trademark B[ig] M[ac] is being used by plaintiffs-
appellees and corporate name L.C. Big Mak Burger,
Inc. by defendants-appellants, would readily reveal
that no confusion could take place, or that the
ordinary purchasers would be misled by it. As
pointed out by defendants-appellants, the plaintiffs-
appellees trademark is used to designate only one
product, a double decker sandwich sold in a
Styrofoam box with the McDonalds logo. On the
other hand, what the defendants-appellants
corporation is using is not a trademark for its food
product but a business or corporate name. They use
the business name L.C. Big Mak Burger, Inc. in
their restaurant business which serves diversified
food items such as siopao, noodles, pizza, and
sandwiches such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants
corporate or business name appearing in the food
packages and signages are written in silhouette red-
orange letters with the b and m in upper case
letters. Above the words Big Mak are the upper
case letter L.C.. Below the words Big Mak are
the words Burger, Inc. spelled out in upper case
letters. Furthermore, said corporate or business
name appearing in such food packages and signages
is always accompanied by the company mascot, a
young chubby boy named Maky who wears a red T-
shirt with the upper case m appearing therein and
a blue lower garment. Finally, the defendants-
appellants food packages are made of plastic
material.

xxxx

xxx [I]t is readily apparent to the naked eye
that there appears a vast difference in the
appearance of the product and the manner that the
tradename Big Mak is being used and presented
to the public. As earlier noted, there are glaring
dissimilarities between plaintiffs-appellees
trademark and defendants-appellants corporate
name. Plaintiffs-appellees product carrying the
trademark B[ig] M[ac] is a double decker
sandwich (depicted in the tray mat containing
photographs of the various food products xxx sold
in a Styrofoam box with the McDonalds logo
and trademark in red, bl[o]ck capital letters printed
thereon xxx at a price which is more expensive than
the defendants-appellants comparable food
products. In order to buy a Big Mac, a customer
needs to visit an air-conditioned McDonalds
restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the
umbrella M, and its mascot Ronald
McDonald. A typical McDonalds restaurant
boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to
allow customers with cars to make orders without
alighting from their vehicles, the interiors of the
building are well-lighted, distinctly decorated and
painted with pastel colors xxx. In buying a B[ig]
M[ac], it is necessary to specify it by its
trademark. Thus, a customer needs to look for a
McDonalds and enter it first before he can find a
hamburger sandwich which carry the mark Big
Mac. On the other hand, defendants-appellants
sell their goods through snack vans xxxx

Anent the allegation that defendants-
appellants are guilty of unfair competition, We
likewise find the same untenable.

Unfair competition is defined as the
employment of deception or any other means
contrary to good faith by which a person shall pass
off the goods manufactured by him or in which he
deals, or his business, or service, for those of
another who has already established good will for
his similar good, business or services, or any acts
calculated to produce the same result (Sec. 29,
Rep. Act No. 166, as amended).

To constitute unfair competition therefore it
must necessarily follow that there was malice and
that the entity concerned was in bad faith.

In the case at bar, We find no sufficient
evidence adduced by plaintiffs-appellees that
defendants-appellants deliberately tried to pass off
the goods manufactured by them for those of
plaintiffs-appellees. The mere suspected similarity
in the sound of the defendants-appellants corporate
name with the plaintiffs-appellees trademark is not
sufficient evidence to conclude unfair
competition. Defendants-appellants explained that
the name M[ak] in their corporate name was
derived from both the first names of the mother and
father of defendant Francis Dy, whose names are
Maxima and Kimsoy. With this explanation, it is
up to the plaintiffs-appellees to prove bad faith on
the part of defendants-appellants. It is a settled rule
that the law always presumes good faith such that
any person who seeks to be awarded damages due
to acts of another has the burden of proving that the
latter acted in bad faith or with ill motive.

[21]


Petitioners sought reconsideration of the Court of
Appeals Decision but the appellate court denied their
motion in its Resolution of 11 July 2000.

Hence, this petition for review.

Petitioners raise the following grounds for their
petition:

I. THE COURT OF APPEALS ERRED IN
FINDING THAT RESPONDENTS
CORPORATE NAME L.C. BIG MAK
BURGER, INC. IS NOT A COLORABLE
IMITATION OF THE MCDONALDS
TRADEMARK BIG MAC, SUCH
COLORABLE IMITATION BEING AN
ELEMENT OF TRADEMARK
INFRINGEMENT.

A. Respondents use the words Big Mak
as trademark for their products and not
merely as their business or corporate
name.

B. As a trademark, respondents Big
Mak is undeniably and unquestionably
similar to petitioners Big Mac
trademark based on the dominancy test
and the idem sonans test resulting
inexorably in confusion on the part of
the consuming public.

II. THE COURT OF APPEALS ERRED IN
REFUSING TO CONSIDER THE INHERENT
SIMILARITY BETWEEN THE MARK BIG
MAK AND THE WORD MARK BIG MAC
AS AN INDICATION OF RESPONDENTS
INTENT TO DECEIVE OR DEFRAUD FOR
PURPOSES OF ESTABLISHING UNFAIR
COMPETITION.[22]

Petitioners pray that we set aside the Court of Appeals
Decision and reinstate the RTC Decision.

In their Comment to the petition, respondents
question the propriety of this petition as it allegedly
raises only questions of fact. On the merits, respondents
contend that the Court of Appeals committed no
reversible error in finding them not liable for trademark
infringement and unfair competition and in ordering
petitioners to pay damages.


The Issues

The issues are:

1. Procedurally, whether the questions raised in
this petition are proper for a petition for review under
Rule 45.

2. On the merits, (a) whether respondents used
the words Big Mak not only as part of the corporate
name L.C. Big Mak Burger, Inc. but also as a
trademark for their hamburger products, and (b) whether
respondent corporation is liable for trademark
infringement and unfair competition.[23]

The Courts Ruling


The petition has merit.


On Whether the Questions Raised in the Petition are
Proper for a Petition for Review


A party intending to appeal from a judgment of
the Court of Appeals may file with this Court a petition
for review under Section 1 of Rule 45 (Section 1)[24]
raising only questions of law. A question of law exists
when the doubt or difference arises on what the law is
on a certain state of facts. There is a question of fact
when the doubt or difference arises on the truth or
falsity of the alleged facts.

[25]

Here, petitioners raise questions of fact and law in
assailing the Court of Appeals findings on respondent
corporations non-liability for trademark infringement
and unfair competition. Ordinarily, the Court can deny
due course to such a petition. In view, however, of the
contradictory findings of fact of the RTC and Court of
Appeals, the Court opts to accept the petition, this being
one of the recognized exceptions to Section 1.[26] We
took a similar course of action in Asia Brewery, I nc. v.
Court of Appeals[27] which also involved a suit for
trademark infringement and unfair competition in which
the trial court and the Court of Appeals arrived at
conflicting findings.



On the Manner Respondents Used
Big Mak in their Business




Petitioners contend that the Court of Appeals
erred in ruling that the corporate name L.C. Big Mak
Burger, Inc. appears in the packaging for respondents
hamburger products and not the words Big Mak only.

The contention has merit.

The evidence presented during the hearings on
petitioners motion for the issuance of a writ of
preliminary injunction shows that the plastic wrappings
and plastic bags used by respondents for their
hamburger sandwiches bore the words Big Mak. The
other descriptive words burger and 100% pure beef
were set in smaller type, along with the locations of
branches.[28] Respondents cash invoices simply refer
to their hamburger sandwiches as Big Mak.[29] It
is respondents snack vans that carry the words L.C.
Big Mak Burger, Inc.[30]
It was only during the trial that respondents
presented in evidence the plastic wrappers and bags for
their hamburger sandwiches relied on by the Court of
Appeals.[31] Respondents plastic wrappers and bags
were identical with those petitioners presented during
the hearings for the injunctive writ except that the letters
L.C. and the words Burger, Inc. in respondents
evidence were added above and below the words Big
Mak, respectively. Since petitioners complaint was
based on facts existing before and during the hearings
on the injunctive writ, the facts established during those
hearings are the proper factual bases for the disposition
of the issues raised in this petition.


On the I ssue of Trademark I nfringement



Section 22 (Section 22) of Republic Act No. 166,
as amended (RA 166), the law applicable to this
case,[32] defines trademark infringement as follows:

Infringement, what constitutes. Any
person who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-
name in connection with the sale, offering for sale,
or advertising of any goods, business or services on
or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers
or others as to the source or origin of such goods or
services, or identity of such business; or [2]
reproduce, counterfeit, copy, or colorably imitate
any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable
imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to
be used upon or in connection with such goods,
business or services, shall be liable to a civil action
by the registrant for any or all of the remedies
herein provided.[33]


Petitioners base their cause of action under the first part
of Section 22, i.e. respondents allegedly used, without
petitioners consent, a colorable imitation of the Big
Mac mark in advertising and selling respondents
hamburger sandwiches. This likely caused confusion in
the mind of the purchasing public on the source of the
hamburgers or the identity of the business.

To establish trademark infringement, the
following elements must be shown: (1) the validity of
plaintiffs mark; (2) the plaintiffs ownership of the
mark; and (3) the use of the mark or its colorable
imitation by the alleged infringer results in likelihood
of confusion.[34] Of these, it is the element of
likelihood of confusion that is the gravamen of
trademark infringement.[35]

On the Validity of the Big MacMark
and McDonalds Ownership of such Mark


A mark is valid if it is distinctive and th
us not barred from
registration under Section 4[36] of RA 166 (Section
4). However, once registered, not only the marks
validity but also the registrants ownership of the mark
is prima facie presumed.[37]


Respondents contend that of the two words in the
Big Mac mark, it is only the word Mac that is valid
because the word Big is generic and descriptive
(proscribed under Section 4[e]), and thus incapable of
exclusive appropriation.[38]

The contention has no merit. The Big Mac
mark, which should be treated in its entirety and not
dissected word for word,[39] is neither generic nor
descriptive. Generic marks are commonly used as the
name or description of a kind of goods,[40] such as
Lite for beer[41] or Chocolate Fudge for chocolate
soda drink.[42] Descriptive marks, on the other hand,
convey the characteristics, functions, qualities or
ingredients of a product to one who has never seen it or
does not know it exists,[43] such as Arthriticare for
arthritis medication.[44] On the contrary, Big Mac
falls under the class of fanciful or arbitrary marks as it
bears no logical relation to the actual characteristics of
the product it represents.[45] As such, it is highly
distinctive and thus valid. Significantly, the trademark
Little Debbie for snack cakes was found arbitrary or
fanciful.[46]
The Court also finds that petitioners have duly
established McDonalds exclusive ownership of the
Big Mac mark. Although Topacio and the Isaiyas
Group registered the Big Mac mark ahead of
McDonalds, Topacio, as petitioners disclosed, had
already assigned his rights to McDonalds. The Isaiyas
Group, on the other hand, registered its trademark only
in the Supplemental Register. A mark which is not
registered in the Principal Register, and thus not
distinctive, has no real protection.[47] Indeed, we have
held that registration in the Supplemental Register is not
even a prima facie evidence of the validity of the
registrants exclusive right to use the mark on the goods
specified in the certificate.[48]

On Types of Confusion

Section 22 covers two types of confusion arising
from the use of similar or colorable imitation marks,
namely, confusion of goods (product confusion) and
confusion of business (source or origin confusion). In
Sterling Products I nternational, I ncorporated v.
Farbenfabriken Bayer Aktiengesellschaft, et al.,[49] the
Court distinguished these two types of confusion, thus:

[Rudolf] Callman notes two types of confusion. The
first is the confusion of goods in which event the
ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was
purchasing the other. xxx The other is the
confusion of business: Here though the goods of
the parties are different, the defendants product is
such as might reasonably be assumed to originate
with the plaintiff, and the public would then be
deceived either into that belief or into the belief that
there is some connection between the plaintiff and
defendant which, in fact, does not exist.


Under Act No. 666,[50] the first trademark law,
infringement was limited to confusion of goods only,
when the infringing mark is used on goods of a similar
kind.[51] Thus, no relief was afforded to the party
whose registered mark or its colorable imitation is used
on different although related goods. To remedy this
situation, Congress enacted RA 166 on 20 June 1947. In
defining trademark infringement, Section 22 of RA 166
deleted the requirement in question and expanded its
scope to include such use of the mark or its colorable
imitation that is likely to result in confusion on the

source or origin of such goods or services, or identity of
such business.[52] Thus, while there is confusion of
goods when the products are competing, confusion of
business exists when the products are non-competing
but related enough to produce confusion of
affiliation.[53]


On Whether Confusion of Goods and
Confusion of Business are Applicable


Petitioners claim that respondents use of the Big
Mak mark on respondents hamburgers results in
confusion of goods, particularly with respect to
petitioners hamburgers labeled Big Mac. Thus,
petitioners alleged in their complaint:

1.15. Defendants have unduly prejudiced
and clearly infringed upon the property rights of
plaintiffs in the McDonalds Marks, particularly the
mark B[ig] M[ac]. Defendants unauthorized acts
are likely, and calculated, to confuse, mislead or
deceive the public into believing that the products
and services offered by defendant Big Mak
Burger, and the business it is engaged in, are
approved and sponsored by, or affiliated with,
plaintiffs.[54] (Emphasis supplied)


Since respondents used the Big Mak mark on the
same goods, i.e. hamburger sandwiches, that petitioners
Big Mac mark is used, trademark infringement
through confusion of goods is a proper issue in this case.

Petitioners also claim that respondents use of the
Big Mak mark in the sale of hamburgers, the same
business that petitioners are engaged in, results in
confusion of business. Petitioners alleged in their
complaint:

1.10. For some period of time, and without
the consent of plaintiff McDonalds nor its
licensee/franchisee, plaintiff McGeorge, and in
clear violation of plaintiffs exclusive right to use
and/or appropriate the McDonalds marks,
defendant Big Mak Burger acting through
individual defendants, has been operating Big Mak
Burger, a fast food restaurant business dealing in
the sale of hamburger and cheeseburger
sandwiches, french fries and other food products,
and has caused to be printed on the wrapper
of defendants food products and incorporated in its
signages the name Big Mak Burger, which is
confusingly similar to and/or is a colorable
imitation of the plaintiff McDonalds mark B[ig]
M[ac], xxx. Defendant Big Mak Burger has thus
unjustly created the impression that its business
is approved and sponsored by, or affiliated with,
plaintiffs. xxxx

2.2 As a consequence of the acts
committed by defendants, which unduly prejudice
and infringe upon the property rights of plaintiffs
McDonalds and McGeorge as the real owner and
rightful proprietor, and the licensee/franchisee,
respectively, of the McDonalds marks, and which
are likely to have caused confusion or
deceived the public as to the true source,
sponsorship or affiliation of defendants food
products and restaurant business, plaintiffs have
suffered and continue to suffer actual damages in
the form of injury to their business reputation and
goodwill, and of the dilution of the distinctive
quality of the McDonalds marks, in particular, the
mark B[ig] M[ac].[55] (Emphasis supplied)

Respondents admit that their business includes selling
hamburger sandwiches, the same food product that
petitioners sell using the Big Mac mark. Thus,
trademark infringement through confusion of business is
also a proper issue in this case.

Respondents assert that their Big Mak
hamburgers cater mainly to the low-income group while
petitioners Big Mac hamburgers cater to the middle
and upper income groups. Even if this is true, the
likelihood of confusion of business remains, since the
low-income group might be led to believe that the Big
Mak hamburgers are the low-end hamburgers marketed
by petitioners. After all, petitioners have the exclusive
right to use the Big Mac mark. On the other hand,
respondents would benefit by associating their low-end
hamburgers, through the use of the Big Mak mark,
with petitioners high-end Big Mac hamburgers,
leading to likelihood of confusion in the identity of
business.

Respondents further claim that petitioners use the
Big Mac mark only on petitioners double-decker
hamburgers, while respondents use the Big Mak mark
on hamburgers and other products like siopao, noodles
and pizza. Respondents also point out that petitioners
sell their Big Mac double-deckers in a styrofoam box
with the McDonalds logo and trademark in red, block
letters at a price more expensive than the hamburgers of
respondents. In contrast, respondents sell their Big Mak
hamburgers in plastic wrappers and plastic bags.
Respondents further point out that petitioners
restaurants are air-conditioned buildings with drive-thru
service, compared to respondents mobile vans.

These and other factors respondents cite cannot
negate the undisputed fact that respondents use their
Big Mak mark on hamburgers, the same food product
that petitioners sell with the use of their registered mark
Big Mac. Whether a hamburger is single, double or
triple-decker, and whether wrapped in plastic or
styrofoam, it remains the same hamburger food
product. Even respondents use of the Big Mak mark
on non-hamburger food products cannot excuse their
infringement of petitioners registered mark, otherwise
registered marks will lose their protection under the law.

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

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



On Whether Respondents Use of the Big Mak
Mark Results in Likelihood of Confusion


In determining likelihood of confusion,
jurisprudence has developed two tests, the dominancy
test and the holistic test.[57] The dominancy test
focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion. In
contrast, the holistic test requires the court to consider
the entirety of the marks as applied to the products,
including the labels and packaging, in determining
confusing similarity.

The Court of Appeals, in finding that there is no
likelihood of confusion that could arise in the use of
respondents Big Mak mark on hamburgers, relied on
the holistic test. Thus, the Court of Appeals ruled that it
is not sufficient that a similarity exists in both name(s),
but that more importantly, the overall presentation, or
in their essential, substantive and distinctive parts is
such as would likely MISLEAD or CONFUSE persons
in the ordinary course of purchasing the genuine
article. The holistic test considers the two marks in
their entirety, as they appear on the goods with their
labels and packaging. It is not enough to consider their
words and compare the spelling and pronunciation of the
words.[58]

Respondents now vigorously argue that the Court
of Appeals application of the holistic test to this case is
correct and in accord with prevailing jurisprudence.

This Court, however, has relied on the dominancy
test rather than the holistic test. The dominancy test
considers the dominant features in the competing marks
in determining whether they are confusingly
similar. Under the dominancy test, courts give greater
weight to the similarity of the appearance of the product
arising from the adoption of the dominant features of the
registered mark, disregarding minor
differences.[59] Courts will consider more the aural
and visual impressions created by the marks in the
public mind, giving little weight to factors like prices,
quality, sales outlets and market segments.

Thus, in the 1954 case of Co Tiong Sa v. Director
of Patents,[60] the Court ruled:

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


The Court reiterated the dominancy test in Lim
Hoa v. Director of Patents,[61] Phil. Nut I ndustry, I nc.
v. Standard Brands I nc.,[62] Converse Rubber
Corporation v. Universal Rubber Products, I nc.,[63]
and Asia Brewery, I nc. v. Court of Appeals.[64] In
the 2001 case of Societe Des Produits Nestl, S.A. v.
Court of Appeals,[65] the Court explicitly rejected the
holistic test in this wise:

[T]he totality or holistic test is contrary to the
elementary postulate of the law on trademarks
and unfair competition that confusing similarity is
to be determined on the basis of visual, aural,
connotative comparisons and overall impressions
engendered by the marks in controversy as they
are encountered in the realities of the
marketplace. (Emphasis supplied)



The test of dominancy is now explicitly
incorporated into law in Section 155.1 of the Intellectual
Property Code which defines infringement as the
colorable imitation of a registered mark xxx or a
dominant feature thereof.

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

In short, aurally the two marks are the same, with
the first word of both marks phonetically the same, and
the second word of both marks also phonetically the
same. Visually, the two marks have both two words
and six letters, with the first word of both marks having
the same letters and the second word having the same
first two letters. In spelling, considering the Filipino
language, even the last letters of both marks are the
same.

Clearly, respondents have adopted in Big Mak
not only the dominant but also almost all the features
of Big Mac. Applied to the same food product of
hamburgers, the two marks will likely result in
confusion in the public mind.

The Court has taken into account the aural effects
of the words and letters contained in the marks in
determining the issue of confusing similarity. Thus, in
Marvex Commercial Co., I nc. v. Petra Hawpia & Co.,
et al.,[66] the Court held:

The following random list of confusingly
similar sounds in the matter of trademarks, culled
from Nims, Unfair Competition and Trade Marks,
1947, Vol. 1, will reinforce our view that
SALONPAS and LIONPAS are confusingly
similar in sound: Gold Dust and Gold Drop;
Jantzen and Jass-Sea; Silver Flash and
Supper Flash; Cascarete and Celborite;
Celluloid and Cellonite; Chartreuse and
Charseurs; Cutex and Cuticlean; Hebe and
Meje; Kotex and Femetex; Zuso and Hoo
Hoo. Leon Amdur, in his book Trade-Mark Law
and Practice, pp. 419-421, cities, as coming within
the purview of the idem sonans rule, Yusea and
U-C-A, Steinway Pianos and Steinberg
Pianos, and Seven-Up and Lemon-Up. In Co
Tiong vs. Director of Patents, this Court
unequivocally said that Celdura and Cordura
are confusingly similar in sound; this Court held in
Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
name Lusolin is an infringement of the trademark
Sapolin, as the sound of the two names is almost
the same. (Emphasis supplied)

Certainly, Big Mac and Big Mak for hamburgers
create even greater confusion, not only aurally but also
visually.

Indeed, a person cannot distinguish Big Mac
from Big Mak by their sound. When one hears a Big
Mac or Big Mak hamburger advertisement over the
radio, one would not know whether the Mac or Mak
ends with a c or a k.

Petitioners aggressive promotion of the Big
Mac mark, as borne by their advertisement expenses,
has built goodwill and reputation for such mark making
it one of the easily recognizable marks in the market
today. This increases the likelihood that consumers will
mistakenly associate petitioners hamburgers and
business with those of respondents.

Respondents inability to explain sufficiently how
and why they came to choose Big Mak for their
hamburger sandwiches indicates their intent to imitate
petitioners Big Mac mark. Contrary to the Court of
Appeals finding, respondents claim that their Big
Mak mark was inspired by the first names of
respondent Dys mother (Maxima) and father (Kimsoy)
is not credible. As petitioners well noted:

[R]espondents, particularly Respondent Mr.
Francis Dy, could have arrived at a more creative
choice for a corporate name by using the names of
his parents, especially since he was allegedly driven
by sentimental reasons. For one, he could have put
his fathers name ahead of his mothers, as is
usually done in this patriarchal society, and derived
letters from said names in that order. Or, he could
have taken an equal number of letters (i.e., two)
from each name, as is the more usual thing done.
Surely, the more plausible reason behind
Respondents choice of the word M[ak],
especially when taken in conjunction with the word
B[ig], was their intent to take advantage of
Petitioners xxx B[ig] M[ac] trademark, with their
alleged sentiment-focused explanation merely
thought of as a convenient, albeit unavailing,
excuse or defense for such an unfair choice of
name.[67]


Absent proof that respondents adoption of the
Big Mak mark was due to honest mistake or was
fortuitous,[68] the inescapable conclusion is that
respondents adopted the Big Mak mark to ride on the
coattails of the more established Big Mac
mark.[69] This saves respondents much of the expense
in advertising to create market recognition of their mark
and hamburgers.[70]

Thus, we hold that confusion is likely to result in
the public mind. We sustain petitioners claim of
trademark infringement.

On the Lack of Proof of
Actual Confusion


Petitioners failure to present proof of actual
confusion does not negate their claim of trademark
infringement. As noted in American Wire & Cable Co.
v. Director of Patents,[71] Section 22 requires the less
stringent standard of likelihood of confusion only.
While proof of actual confusion is the best evidence of
infringement, its absence is inconsequential.[72]


On the I ssue of Unfair Competition

Section 29 (Section 29)[73] of RA 166 defines
unfair competition, thus:
xxxx

Any person who will employ deception or
any other means contrary to good faith by which he
shall pass off the goods manufactured by him or in
which he deals, or his business, or services for those
of the one having established such goodwill, or who
shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and
shall be subject to an action therefor.
In particular, and without in any way
limiting the scope of unfair competition, the
following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his
goods shall give them the general appearance of
goods of another manufacturer or dealer, either
as to the goods themselves or in the wrapping of
the packages in which they are contained, or the
devices or words thereon, or in any feature of their
appearance, which would be likely to influence
purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the
actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall
deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling
such goods with a like purpose;
(b) Any person who by any artifice, or
device, or who employs any other means calculated
to induce the false belief that such person is offering
the services of another who has identified such
services in the mind of the public; or
(c) Any person who shall make any false
statement in the course of trade or who shall
commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or
services of another. (Emphasis supplied)


The essential elements of an action for unfair
competition are (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the
public and defraud a competitor.[74] The confusing
similarity may or may not result from similarity in the
marks, but may result from other external factors in the
packaging or presentation of the goods. The intent to
deceive and defraud may be inferred from the similarity
of the appearance of the goods as offered for sale to the
public.[75] Actual fraudulent intent need not be
shown.[76]
Unfair competition is broader than trademark
infringement and includes passing off goods with or
without trademark infringement. Trademark
infringement is a form of unfair competition.[77]
Trademark infringement constitutes unfair competition
when there is not merely likelihood of confusion, but
also actual or probable deception on the public because
of the general appearance of the goods. There can be
trademark infringement without unfair competition as
when the infringer discloses on the labels containing the
mark that he manufactures the goods, thus preventing
the public from being deceived that the goods originate
from the trademark owner.[78]

To support their claim of unfair competition,
petitioners allege that respondents fraudulently passed
off their hamburgers as Big Mac hamburgers.
Petitioners add that respondents fraudulent intent can
be inferred from the similarity of the marks in
question.[79]

Passing off (or palming off) takes place where the
defendant, by imitative devices on the general
appearance of the goods, misleads prospective
purchasers into buying his merchandise under the
impression that they are buying that of his
competitors.[80] Thus, the defendant gives his goods
the general appearance of the goods of his competitor
with the intention of deceiving the public that the goods
are those of his competitor.

The RTC described the respective marks and the
goods of petitioners and respondents in this wise:

The mark B[ig] M[ac] is used by plaintiff
McDonalds to identify its double decker
hamburger sandwich. The packaging material is a
styrofoam box with the McDonalds logo and
trademark in red with block capital letters printed
on it. All letters of the B[ig] M[ac] mark are also
in red and block capital letters. On the other hand,
defendants B[ig] M[ak] script print is in orange
with only the letter B and M being capitalized
and the packaging material is plastic wrapper. xxxx
Further, plaintiffs logo and mascot are the umbrella
M and Ronald McDonalds, respectively,
compared to the mascot of defendant Corporation
which is a chubby boy called Macky displayed or
printed between the words Big and Mak.[81]
(Emphasis supplied)

Respondents point to these dissimilarities as proof that
they did not give their hamburgers the general
appearance of petitioners Big Mac hamburgers.

The dissimilarities in the packaging are minor
compared to the stark similarities in the words that
give respondents Big Mak hamburgers the general
appearance of petitioners Big Mac hamburgers.
Section 29(a) expressly provides that the similarity in
the general appearance of the goods may be in the
devices or words used on the
wrappings. Respondents have applied on their plastic
wrappers and bags almost the same words that
petitioners use on their styrofoam box. What attracts the
attention of the buying public are the words Big Mak
which are almost the same, aurally and visually, as the
words Big Mac. The dissimilarities in the material
and other devices are insignificant compared to the
glaring similarity in the words used in the wrappings.

Section 29(a) also provides that the defendant
gives his goods the general appearance of goods of
another manufacturer. Respondents goods are
hamburgers which are also the goods of petitioners. If
respondents sold egg sandwiches only instead of
hamburger sandwiches, their use of the Big Mak mark
would not give their goods the general appearance of
petitioners Big Mac hamburgers. In such case, there
is only trademark infringement but no unfair
competition. However, since respondents chose to
apply the Big Mak mark on hamburgers, just like
petitioners use of the Big Mac mark on hamburgers,
respondents have obviously clothed their goods with the
general appearance of petitioners goods.

Moreover, there is no notice to the public that the
Big Mak hamburgers are products of L.C. Big Mak
Burger, Inc. Respondents introduced during the trial
plastic wrappers and bags with the words L.C. Big
Mak Burger, Inc. to inform the public of the name of
the seller of the hamburgers. However, petitioners
introduced during the injunctive hearings plastic
wrappers and bags with the Big Mak mark without
the name L.C. Big Mak Burger, Inc. Respondents
belated presentation of plastic wrappers and bags
bearing the name of L.C. Big Mak Burger, Inc. as the
seller of the hamburgers is an after-thought designed to
exculpate them from their unfair business conduct. As
earlier stated, we cannot consider respondents evidence
since petitioners complaint was based on facts existing
before and during the injunctive hearings.

Thus, there is actually no notice to the public that
the Big Mak hamburgers are products of L.C. Big
Mak Burger, Inc. and not those of petitioners who have
the exclusive right to the Big Mac mark. This clearly
shows respondents intent to deceive the public. Had
respondents placed a notice on their plastic wrappers
and bags that the hamburgers are sold by L.C. Big Mak
Burger, Inc., then they could validly claim that they did
not intend to deceive the public. In such case, there is
only trademark infringement but no unfair
competition.[82] Respondents, however, did not give
such notice. We hold that as found by the RTC,
respondent corporation is liable for unfair competition.










The Remedies Available to Petitioners


Under Section 23[83] (Section 23) in relation to
Section 29 of RA 166, a plaintiff who successfully
maintains trademark infringement and unfair
competition claims is entitled to injunctive and
monetary reliefs. Here, the RTC did not err in issuing
the injunctive writ of 16 August 1990 (made permanent
in its Decision of 5 September 1994) and in ordering the
payment of P400,000 actual damages in favor of
petitioners. The injunctive writ is indispensable to
prevent further acts of infringement by respondent
corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent
corporations gross sales for three (1988-1989 and
1991) of the six years (1984-1990) respondents have
used the Big Mak mark.[84]

The RTC also did not err in awarding exemplary
damages by way of correction for the public good[85] in
view of the finding of unfair competition where intent to
deceive the public is essential. The award of attorneys
fees and expenses of litigation is also in order.[86]

WHEREFORE, we GRANT the instant petition.
We SET ASIDE the Decision dated 26 November 1999
of the Court of Appeals and its Resolution dated 11 July
2000 and REINSTATE the Decision dated 5
September 1994 of the Regional Trial Court of Makati,
Branch 137, finding respondent L.C. Big Mak Burger,
Inc. liable for trademark infringement and unfair
competition.

SO ORDERED.

ANTONIO
T. CARPIO
Associate
Justice
WE CONCUR:



HILARIO G. DAVIDE, JR.
Chief Justice
Chairman



LEONARDO A. QUISUMBING CONSUELO
YNARES-SANTIAGO
Associate
Justice Associate Justice



ADOLFO S. AZCUNA
Associate Justice


CERTIFICATION


Pursuant to Section 13, Article VIII of the
Constitution, it is hereby certified that the conclusions in
the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the
Courts Division.



HILARIO G.
DAVIDE, JR.
Chief
Justice








[1] Under Rule 45 of the 1997 RULES OF CIVIL PROCEDURE.
[2] Penned by Associate Justice Eloy R. Bello, Jr. with Presiding Justice Jainal
D. Rasul and Associate Justice Ruben T. Reyes concurring.
[3] Penned by Judge Santiago Ranada, Jr.
[4] Itself a registered service mark.
[5] Some of McDonalds registered marks representing food items (f) and
services (s) are: McDONALDS HAMBURGERS (s); McDONALDS (f);
RONALD McDONALD (s); McDONALDLAND (s); McCHEESE &
DESIGN (f); EGG McMUFFIN (s); EGG McMUFFIN (f);
McDONALDLAND (f); McDONALDS & ARCHES (s); McFEAST (f);
McCHICKEN (f); McDONALDS & ARCHES (f); McDONUTS (f);
McPIZZA (f); McPIZZA (s); McHAPPY DAY (s); MINI MAC (s);
McDOUBLE (f); TOGETHER-McDONALDS & YOU (s); CHICKEN
McNUGGETS (f); McDONALDS & YOU (s); SUPER MAC (f); McSNACK
(s); MAC FRIES (f); McRIB (f); MAPLE McCRISP (f); LITE MAC (f); BIG
MAC (s); CHICKEN McSWISS (f); McMUFFIN (f); McD.L.T. (f).
(McDonalds Corporation v. McBagels, Inc., 649 F.Supp. 1268 [1986]).
[6] Aside from Big Mac sandwiches, McDonalds menu includes cheeseburgers,
special sandwiches, fried french potatoes, chicken nuggets, fried fish
sandwiches, shakes, hot pies, sundaes, softdrinks, and other beverages.
[7] Certificate of Registration No. 1,126,102.
[8] Table napkins, tray liners, cups and food wrappers.
[9] Labels, promotional items and packages.
[10] TSN (Arlene Manalo), 26 July 1990, pp. 34-35.
[11] McDonalds and petitioner McGeorge are referred to as petitioners.
[12] Rizal, Laguna, Bulacan and Quezon.
[13] E.g. pizzas, noodles, siopaos, hotdog sandwiches, ham sandwiches, fish
burgers, fruit juices, softdrinks and other beverages.
[14] Respondent corporation and private respondents are referred to as
respondents.
[15] Records, p. 37.
[16] Ibid., pp. 457-458.
[17] Ibid., pp. 414-426.
[18] Ibid., pp. 460-463.

[19] Rollo, pp. 149-154.
[20] Records, pp. 1431-1432.
[21] Rollo, pp. 233-237 (Capitalization in the original).
[22] Ibid., p. 24.
[23] While petitioners seek to hold liable respondent corporation only, the
Courts opinion will refer not only to the latter but also to all the respondents
as all of them filed the pleadings in this petition.
[24] This provision states: Filing of petition with Supreme Court. A party
desiring to appeal by certiorari from a judgment or final order or resolution of
the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other
courts whenever authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition shall raise only questions of law
which must be distinctly set forth.
[25] Ramos, et al. v. Pepsi-Cola Bottling Co. of the Phils., et al., 125 Phil. 701
(1967).
[26] Ducusin, et al. v. CA, et al., 207 Phil. 248 (1983).
[27] G.R. No. 103543, 5 July 1993, 224 SCRA 437.






[28] Exhibits E-1 to 2, F-1 to 2 and G-1 to 2.
[29] Exhibits E, F and G.
[30] Exhibits L-10, L-16 to 27.

[31] Exhibits 34, 36-37.
[32] RA 166 has been superseded by Republic Act No. 8293 (RA 8293), the
Intellectual Property Code of the Philippines, which took effect on 1 January
1998. Section 22 is substantially identical with Section 16 of the United
States 1946 Trademark Act (Lanham Act).
[33] Superseded by Section 155 of RA 8293 (Section 155).
[34] See A & H Sportswear Co. v. Victorias Secret Stores, Inc., 167 F.Supp.2d
770 (2001).
[35] Shaleys Inc. v. Covalt, 704 F.2d 426 (1983). Also referred to as the
lynchpin (Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683
[1999]) or touchstone (VMG Enterprises, Inc. v. F. Quesada and Franco,
Inc., 788 F. Supp. 648 [1992]) of trademark infringement.
[36] This provision states: Registration of trade-marks, trade-names and
service-marks on the principal register. There is hereby established a
register of trade-marks, trade-names and service-marks which shall be known
as the principal register. The owner of a trade-mark, trade-name or service-
mark used to distinguish his goods, business or services from the goods,
business or services of others shall have the right to register the same on the
principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous
matter; or matter which may disparage or falsely suggest a connection with
persons, living or dead, institutions, beliefs, or national symbols, or bring
them into contempt or disrepute;
(b) Consists of or comprises the flag or coat of arms or other
insignia of the Philippines or any of its political subdivisions, or of any
foreign nation, or any simulation thereof;
(c) Consists of or comprises a name, portrait, or signature
identifying a particular living individual except by his written consent, or the
name, signature, or portrait of a deceased President of the Philippines, during
the life of his widow, if any, except by the written consent of the widow;
(d) Consists of or comprises a mark or trade-name which so
resembles a mark or trade-name registered in the Philippines or a mark or a
trade-name previously used in the Philippines by another and not
abandoned, as to be likely, when applied to or used in connection with the
goods, business or services of the applicant, to cause confusion or mistake or
to deceive purchasers; or
(e) Consists of a mark or trade-name which, when applied to or
used in connection with the goods, business or services of the applicant is
merely descriptive or deceptively misdescriptive of them, or when applied to
or used in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them,
or is primarily merely a surname;
(f) Except as expressly excluded in paragraphs (a), (b), (c) and (d)
of this section nothing herein shall prevent the registration of a mark or trade-
name used by the applicant which has become distinctive of the applicants
goods, business or services. The Director may accept as prima facie evidence
that the mark or trade-name has become distinctive, as applied to or used in
connection with the applicants goods, business or services, proof of
substantially exclusive and continuous use thereof as a mark or trade-name by
the applicant in connection with the sale of goods, business or services
for five years next preceding the date of the filing of the application for its
registration. This has been superseded by Section 123 of RA 8293.
[37] Section 20, RA 166. This provision states: Certificate 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. This has been superseded by Section 138 of RA 8293.
Neither RA 166 nor RA 8293 provides when the presumption of validity and
ownership becomes indubitable. In contrast, under the Lanham Act, as
amended, (15 United States Code 1065), such takes place once the
trademark has become incontestable i.e. after the mark owner files
affidavits stating that the mark is registered and has been in continuous use
for five consecutive years; that there is no pending proceeding; and that there
has been no adverse decision concerning the registrants ownership or right to
registration (See Luis Vuitton Malletier and Oakley, Inc. v. Veit, 211
F.Supp.2d 556 [2002]). However, both RA 166 (Section 12) and RA 8293
(Section 145) require the filing of the affidavit attesting to the continuous use
of the mark for five years and, under Section 145, failure to file such affidavit
will result in the removal of the mark from the Register.

[38] Rollo, pp. 525-527.
[39] Societe Des Produits Nestl, S.A. v. Court of Appeals, G.R. No. 112012, 4
April 2001, 356 SCRA 207; McKee Baking Co. v. Interstate Brands
Corporation, 738 F. Supp. 1272 (1990).
[40] Societe Des Produits Nestl, S.A. v. Court of Appeals, supra note 39;
Miller Brewing Co. v. Heileman Brewing Co., 561 F.2d 75 (1977).
[41] Miller Brewing Co. v. Heileman Brewing Co., supra note 40.
[42] A. J. Canfield Co. v. Honickman, 808 F.2d 291 (1986).
[43] Societe Des Produits Nestl, S.A. v. Court of Appeals, supra note 39 citing
43(A) of the Lanham Act, as amended.
[44] Bernard v. Commerce Drug Co., 964 F.2d 1338 (1992).
[45] Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366 (1980).
[46] McKee Baking Co. v. Interstate Brands Corporation, supra note 39.
[47] See A. MILLER AND M. DAVIS, INTELLECTUAL PROPERTY,
PATENTS, TRADEMARKS AND COPYRIGHT IN A NUTSHELL 177-
178 (1983).
[48] See Lorenzana v. Macagba, No. L-33773, 22 October 1987, 154 SCRA 723;
La Chemise Lacoste, S.A. v. Hon. Fernandez, etc., et al. 214 Phil. 332 (1984).
RA 8293 no longer provides for a Supplemental Register and instead
mandates a single registry system (Section 137). Under Section 239, marks
registered in the Supplemental Register under RA 166 will remain in force but
are no longer subject to renewal.
[49] 137 Phil. 838 (1969).
[50] Enacted on 6 March 1903.
[51] Section 3 of Act No. 666 provides: The ownership or possession of a
trade-mark, heretofore or hereafter appropriated, as in the foregoing section
provided, shall be recognized and protected in the same manner and to the
same extent, as are other property rights known to the law. To this end any
person entitled to the exclusive use of a trade-mark to designate the origin or
ownership of goods he has made or deals in may recover damages in a civil
action from any person who has sold goods of a similar kind, bearing such
trade-mark, and the measure of the damages suffered, at the option of the
complaining party, shall be either the reasonable profit which the complaining
party would have made had the defendant not sold the goods with the trade-
mark aforesaid, or the profit which the defendant actually made out of the sale
of the goods with the trade-mark, and in cases where actual intent to mislead
the public or to defraud the owner of the trade-mark shall be shown, in the
discretion of the court, the damages may be doubled. The complaining party,
upon proper showing, may have a preliminary injunction, restraining the
defendant temporarily from use of the trade-mark pending the hearing, to be
granted or dissolved in the manner provided in the Code of Civil Procedure,
and such injunction upon final hearing, if the complainants property in the
trade-mark and the defendants violation thereof shall be fully established,
shall be made perpetual, and this injunction shall be part of the judgment for
damages to be rendered in the same cause as above provided. (Emphasis
supplied)




[52] The United States Congress had introduced the same amendment to the
Lanham Act in 1946. In 1962, the US Congress again amended Section 16 of
the Lanham Act (Sec. 43(A)) by deleting the phrase the source or origin of
such goods or services, or identity of such business in the definition of
trademark infringement. This led courts in that jurisdiction to hold that post-
sale confusion by the public at large (Esercizio v. Roberts, 944 F.2d 1235
[1991]. See also Koppers Company, Inc. v. Krup-Koppers, 517 F.Supp. 836
[1981]) or subliminal confusion, defined as confusion on a subliminal or
subconscious level, causing the consumer to identify the properties and
reputation of one product with those of another, although he can identify the
particular manufacturer of each, (Ortho Pharmaceutical Corporation v.
American Cyanamid Company, 361 F.Supp. 1032 [1973]. See also Farberware,
Inc. v. Mr. Coffee, Inc., 740 F.Supp. 291 (1990); Dreyfus Fund Incorporated v.
Royal Bank of Canada, 525 F. Supp. 1108 [1981]) are sufficient to sustain a
trademark infringement claim. Section 155 substantially reproduces Sec.
43(A).
[53] AGPALO, THE LAW ON TRADEMARK, INFRINGEMENT AND
UNFAIR COMPETITION 45-46 (2000).
[54] Records, p. 5.
[55] Ibid., pp. 4, 6-7.
[56] Sta. Ana v. Maliwat, et al., 133 Phil. 1006 (1968).
[57] Societe Des Produits Nestl, S.A. v. Court of Appeals, supra note 39;
Emerald Garment Manufacturing Corporation v. Court of Appeals, G.R. No.
100098, 29 December 1995, 251 SCRA 600.
[58] V. AMADOR, TRADEMARKS UNDER THE INTELLECTUAL
PROPERTY CODE 260 (1999).
[59] Ibid., p. 263.
[60] 95 Phil. 1 (1954).
[61] 100 Phil. 214 (1956).
[62] No. L-23035, 31 July 1975, 65 SCRA 575.
[63] No. L-27906, 8 January 1987, 147 SCRA 154.
[64] Supra note 27.
[65] Supra note 39.
[66] 125 Phil. 295 (1966).
[67] Rollo, pp. 588-589.
[68] Time v. Life Television Co. of St. Paul, 123 F. Supp. 470 (1954);
[69] Conde Nast Publications v. Vogue School of Fashion Modelling, 105 F.
Supp. 325 (1952); Hanson v. Triangle Publications, 163 F.2d 74 (1947).
[70] See Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466 (1994).
[71] No. L-26557, 18 February 1970, 31 SCRA 544.
[72] PACCAR Inc. v. Tele Scan Technologies, L.L.C., 319 F.3d 243 (2003).
[73] Reiterated in Section 168 of RA 8293.
[74] V. AMADOR, supra note 58 at 278.
[75] Shell Co. of the Philippines, Ltd. v. Ins. Petroleum Refining Co., Ltd., 120
Phil. 434 (1964); La Insular v. Jao Oge, 42 Phil. 366 (1921).
[76] Alhambra Cigar, etc., Co. v. Mojica, 27 Phil. 266 (1914).
[77] Co Tiong Sa v. Director of Patents, supra note 60; Clarke v. Manila Candy
Co., 36 Phil. 100 (1917).
[78] See Q-Tips, Inc. v. Johnson & Johnson, 108 F.Supp 845 (1952).
[79] Rollo, pp. 40-45.
[80] Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683 (1999).
[81] Rollo, pp. 148-149.

[82] See Q-Tips, Inc. v. Johnson & Johnson, supra note 78.





[83] This provision reads: Actions, and damages and injunction for infringement.
Any person entitled to the exclusive use of a registered mark or trade-name
may recover damages in a civil action from any person who infringes his
rights, and the measure of the damages suffered shall be either the reasonable
profit which the complaining party would have made, had the defendant not
infringed his said rights, or the profit which the defendant actually made out of
the infringement, or in the event such measure of damages cannot be readily
ascertained with reasonable certainty, then the court may award as damages a
reasonable percentage based upon the amount of gross sales of the defendant of
the value of the services in connection with which the mark or trade-name was
used in the infringement of the rights of the complaining party. In cases where
actual intent to mislead the public or to defraud the complaining party shall be
shown, in the discretion of the court, the damages may be doubled.
The complaining party, upon proper showing, may also be granted
injunction.
[84] TSN, (Francis Dy), 15 March 1993, p. 32; TSN (Francis Dy), 22 March
1993, pp. 1-2.
[85] Article 2229, CIVIL CODE.
[86] Article 2208(1), CIVIL CODE.