11/8/2017 G.R. No.

143993

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FIRST DIVISION

G.R. No. 143993 August 18, 2004

MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, INC., petitioners,

vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO,
ARACELI AYCARDO, and GRACE HUERTO, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the Decision dated 26 November 1999 of the Court of Appeals2 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 Decision3 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 McDonald's Corporation ("McDonald's") is a corporation organized under the laws of Delaware, United
States. McDonald's operates, by itself or through its franchisees, a global chain of fast-food restaurants.
McDonald's4 owns a family of marks5 including the "Big Mac" mark for its "double-decker hamburger sandwich."6
McDonald's registered this trademark with the United States Trademark Registry on 16 October 1979.7 Based on
this Home Registration, McDonald's 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, McDonald's 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, McDonald's displays the "Big Mac" mark in items8 and paraphernalia9 in its restaurants, and in
its outdoor and indoor signages. From 1982 to 1990, McDonald's spent P10.5 million in advertisement for "Big Mac"
hamburger sandwiches alone.10

Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic corporation, is McDonald's 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 corporation's 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

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On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak" mark for
its hamburger sandwiches. McDonald's opposed respondent corporation's application on the ground that "Big Mak"
was a colorable imitation of its registered "Big Mac" mark for the same food products. McDonald's 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 McDonald's 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 McDonald's 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 McDonald's 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
McDonald's, the Isaiyas Group did so only in the Supplemental Register of the PBPTT and such registration does
not provide any protection. McDonald's disclosed that it had acquired Topacio's rights to his registration in a Deed of
Assignment dated 18 May 1981.18

The Trial Court's 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 McDonald's, and as such, it is entitled
[to] protection against infringement.

xxxx

There exist some distinctions between the names "B[ig] M[ac]" and "B[ig] M[ak]" as appearing in the
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
McDonald's 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 McDonald's
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
corporation's 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 McDonald's, 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?

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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 McDonald's. 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 McDonald's Corporation and McGeorge Food
Industries, Inc. and against defendant L.C. Big Mak Burger, Inc., as follows:

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

2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual damages in the amount of
P400,000.00, exemplary damages in the amount of P100,000.00, and attorney's 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 McDonald's 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 McDonald's 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

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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 "McDonald's" 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 "McDonald's" restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the umbrella "M", and its mascot – "Ronald McDonald". A typical
McDonald's 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 "McDonald's" 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 MCDONALD'S 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

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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 Court's 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
corporation's 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, Inc. v. Court of Appeals27 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 Issue of Trademark Infringement

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
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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 plaintiff's mark; (2) the
plaintiff's 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 Mac"Mark

and McDonald's Ownership of such Mark

A mark is valid if it is "distinctive" and thus not barred from registration under Section 436 of RA 166 ("Section 4").
However, once registered, not only the mark's validity but also the registrant's 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 beer41 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 McDonald's exclusive ownership of the "Big Mac" mark.
Although Topacio and the Isaiyas Group registered the "Big Mac" mark ahead of McDonald's, Topacio, as petitioners
disclosed, had already assigned his rights to McDonald's. 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 registrant's 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
International, Incorporated 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
defendant's product is such as might reasonably be assumed to originate with the plaintiff, and the public
would then be deceived either into that belief or into the belief that there is some connection between the
plaintiff and defendant which, in fact, does not exist."

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

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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
McDonald's 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 McDonald's nor its licensee/franchisee,
plaintiff McGeorge, and in clear violation of plaintiffs' exclusive right to use and/or appropriate the McDonald's
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 defendant's 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 McDonald's 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 McDonald's and McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonald's 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 McDonald's 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
"McDonald's" 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:

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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 Industry, Inc. v. Standard
Brands Inc.,62 Converse Rubber Corporation v. Universal Rubber Products, Inc.,63 and Asia Brewery, Inc. v.
Court of Appeals.64 In the 2001 case of Societe Des Produits Nestlé, 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,

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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., Inc. 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 Dy's 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 father's name ahead of his mother's, 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 Issue of Unfair Competition

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73
Section 29 ("Section 29") 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 McDonald's to identify its double decker hamburger sandwich. The
packaging material is a styrofoam box with the McDonald's 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 McDonald's", 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

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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
petitioner's 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 2383 ("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 corporation's 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 good85 in view of the
finding of unfair competition where intent to deceive the public is essential. The award of attorney's 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.

Davide, C.J. (Chairman), Quisumbing, Ynares-Santiago and Azcuna, JJ., concur.

Footnotes
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 McDonald's registered marks representing food items (f) and services (s) are: McDONALD'S
HAMBURGERS (s); McDONALD'S (f); RONALD McDONALD (s); McDONALDLAND (s); McCHEESE &
DESIGN (f); EGG McMUFFIN (s); EGG McMUFFIN (f); McDONALDLAND (f); McDONALD'S & ARCHES (s);
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McFEAST (f); McCHICKEN (f); McDONALD'S & ARCHES (f); McDONUTS (f); McPIZZA (f); McPIZZA (s);
McHAPPY DAY (s); MINI MAC (s); McDOUBLE (f); TOGETHER-McDONALD'S & YOU (s); CHICKEN
McNUGGETS (f); McDONALD'S & 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).
(McDonald's Corporation v. McBagel's, Inc., 649 F.Supp. 1268 [1986]).
6
Aside from Big Mac sandwiches, McDonald's 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
McDonald's 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 Court's 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").

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33
Superseded by Section 155 of RA 8293 ("Section 155").
34
See A & H Sportswear Co. v. Victoria's Secret Stores, Inc., 167 F.Supp.2d 770 (2001).
35
Shaley's 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 applicant's 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 applicant's
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 registrant's ownership of the mark or trade-name, and of the registrant's 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 registrant's 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 Nestlé, 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 Nestlé, 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.

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42
A. J. Canfield Co. v. Honickman, 808 F.2d 291 (1986).
43
Societe Des Produits Nestlé, 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 complainant's property in the trade-mark and the
defendant's 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 Nestlé, 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).

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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.

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