CASE DIGEST: G.R. No. 103543. July 5, 1993. ASIA BREWERY, INC.

, petitioner,
vs. THE HON. COURT OF APPEALS and SAN MIGUEL CORPORATION,
respondents. Abad Santos & Associates and Sycip, Salazar, Hernandez &
Gatmaitan for petitioner. Roco, Bunag, Kapunan Law Office for private
respondent. GRIÑO-AQUINO, J.:

FACTS: In 1988, San Miguel Corporation (SMC) filed a complaint against Asia Brewery
Inc. (ABI) for infringement of trademark and unfair competition on account of the latter's
BEER PALE PILSEN or BEER NA BEER product which has been competing with SMC's
SAN MIGUEL PALE PILSEN for a share of the local beer market.

On August 27, 1990, a decision was rendered by the trial court, presided over by Judge
Jesus O. Bersamira, dismissing SMC's complaint because ABI "has not committed
trademark infringement or unfair competition against" SMC.

SMC appealed to the Court of Appeals which reversed the trial court.

Upon a motion for reconsideration filed by ABI, the dispositive part of the decision, was
modified by the separate opinions of the Special Sixth Division.

In due time, ABI appealed to the Supreme Court by a petition for certiorari under Rule
45 of the Rules of Court.

ISSUE: The lone issue in this appeal is whether ABI infringes SMC's trademark:
San Miguel Pale Pilsen with Rectangular Hops and Malt Design, and thereby
commits unfair competition against the latter.

HELD: The issue is factual (Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA 575)
and as a general rule, the findings of the Court of Appeals upon factual questions are
conclusive and ought not to be disturbed by us.

The present case, however, is one of the exceptions because there is no concurrence
between the trial court and the Court of Appeals on the lone factual issue of
whether ABI, by manufacturing and selling its BEER PALE PILSEN in amber colored steinie
bottles of 320 ml. capacity with a white painted rectangular label has committed
trademark infringement and unfair competition against SMC.

Infringement of trademark is a form of unfair competition (Clarke vs. Manila Candy Co.,
36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise known as the Trademark
Law, defines what constitutes infringement:

Sec. 22. Infringement, what constitutes. — Any person who shall use, without the consent
of the registrant, any reproduction, counterfeit, copy or colorable imitation of any
registered mark or 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 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.

This definition implies that only registered trade marks, trade names and service marks
are protected against infringement or unauthorized use by another or others. The use of
someone else's registered trademark, trade name or service mark is unauthorized, hence,
actionable, if it is done "without the consent of the registrant."

Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN
MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN? The
answer is "No."

TEST OF DOMINANCY: Infringement is determined by the "test of dominancy" rather

than by differences or variations in the details of one trademark and of another. The rule
was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated in
Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus:

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
it is necessary that the infringing label should suggest an effort to imitate. 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.

What are the dominant features of the competing trademarks between SMC
and ABI?

There is hardly any dispute that the dominant feature of SMC's trademark is the name of
the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with elaborate
serifs at the beginning and end of the letters "S" and "M" on an amber background across
the upper portion of the rectangular design.

On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE
PILSEN, with the word "Beer" written in large amber letters, larger than any of the letters
found in the SMC label.
The word "BEER" does not appear in SMC's trademark, just as the words "SAN MIGUEL"
do not appear in ABI's trademark. Hence, there is absolutely no similarity in the dominant
features of both trademarks.

Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly
similar to SAN MIGUEL PALE PILSEN. No one who purchases BEER PALE PILSEN can
possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was
presented by SMC proving otherwise.

Besides the dissimilarity in their names, the following other dissimilarities in the trade
dress or appearance of the competing products abound:

(1) Shape of the bottle;

(2) Font sizes and font styles used;
(3) The names of the manufacturers are prominently printed on their respective bottles;
(4) The use of a copyrighted slogan on the product;
(5) Logos used;
(6) Other words on the product; and
(7) Substantial price difference between the products.

The fact that the words pale pilsen are part of ABI's trademark does not constitute an
infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for "pale pilsen" are
generic words descriptive of the color ("pale"), of a type of beer ("pilsen"),
which is a light bohemian beer with a strong hops flavor that originated in the City
of Pilsen in Czechoslovakia and became famous in the Middle Ages. "Pilsen" is a "primarily
geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted
by Sec. 2 of R.A. No. 638) hence, non-registerable and not appropriable by any
beer manufacturer.

The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they
are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than such
descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese," "corn
flakes" and "cooking oil" may be appropriated by any single manufacturer of these food
products, for no other reason than that he was the first to use them in his registered
trademark.

A word or a combination of words which is merely descriptive of an article of trade, or of

its composition, characteristics, or qualities, cannot be appropriated and protected as a
trademark to the exclusion of its use by others. (52 Am. Jur. 542-543.)

The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery
Incorporated, has printed its name all over the bottle of its beer product: on the label, on
the back of the bottle, as well as on the bottle cap, disproves SMC's charge that ABI
dishonestly and fraudulently intends to palm off its BEER PALE PILSEN as SMC's product.
In view of the visible differences between the two products, the Court believes it is
quite unlikely that a customer of average intelligence would mistake a bottle of
BEER PALE PILSEN for SAN MIGUEL PALE PILSEN.

The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-
colored steinie bottles of 320 ml. capacity and is also advertised in print, broadcast, and
television media, does not necessarily constitute unfair competition.

Unfair competition is 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 services, for those of another who has already established
goodwill for his similar goods, business or services, or any acts calculated to produce the
same result. (Sec. 29, Republic Act No. 166, as amended.)

In this case, the question to be determined is whether ABI is using a name or mark for
its beer that has previously come to designate SMC's beer, or whether ABI is passing off
its BEER PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN.

THE UNIVERSAL TEST OF PUBLIC DECEPTION: The universal test question is

whether the public is likely to be deceived. Nothing less than conduct tending to pass off
one man's goods or business as that of another will constitute unfair competition. Actual
or probable deception and confusion on the part of the customers by reason of
defendant's practices must always appear. (Shell Co., of the Philippines, Ltd. vs. Insular
Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.)

The use of ABI of the steinie bottle, similar but not identical to the SAN MIGUEL
PALE PILSEN bottle, is not unlawful. As pointed out by ABI's counsel, SMC did not
invent but merely borrowed the steinie bottle from abroad and it claims neither patent
nor trademark protection for that bottle shape and design. (See rollo, page 55.) The
Cerveza Especial and the Efes Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-
E.)

ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its own steinie
bottle which has a fat bulging neck to differentiate it from SMC's bottle. The amber color
is a functional feature of the beer bottle. As pointed out by ABI, all bottled beer produced
in the Philippines is contained and sold in amber-colored bottles because amber is the
most effective color in preventing transmission of light and provides the maximum
protection to beer. As was ruled in California Crushed Fruit Corporation vs. Taylor B.
and Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or color of
bottle where the same has the useful purpose of protecting the contents from the
deleterious effects of light rays. Moreover, no one may have a monopoly of any
color. Not only beer, but most medicines, whether in liquid or tablet form, are sold in
amber-colored bottles.

CAPACITY OF THE BOTTLE: That the ABI bottle has a 320 ml. capacity is not due to a
desire to imitate SMC's bottle because that bottle capacity is the standard prescribed
under Metrication Circular No. 778, dated 4 December 1979, of the Department of Trade,
Metric System Board.

WHITE LABEL OF BOTTLES: With regard to the white label of both beer bottles, ABI
explained that it used the color white for its label because white presents the strongest
contrast to the amber color of ABI's bottle; it is also the most economical to use on labels,
and the easiest to "bake" in the furnace (p. 16, TSN of September 20, 1988). No one can
have a monopoly of the color amber for bottles, nor of white for labels, nor of the
rectangular shape which is the usual configuration of labels. Needless to say, the shape
of the bottle and of the label is unimportant. What is all important is the name of the
product written on the label of the bottle for that is how one beer may be distinguished
form the others.

CONFUSINGLY SIMILAR DRESS: The main thrust of SMC's complaint if not

infringement of its trademark, but unfair competition arising form the allegedly "confusing
similarity" in the general appearance or trade dress of ABI's BEER PALE PILSEN beside
SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo)

SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly similar" to its SAN
MIGUEL PALE PILSEN because both are bottled in 320 ml. steinie type, amber-colored
bottles with white rectangular labels.

However, when as in this case, the names of the competing products are clearly different
and their respective sources are prominently printed on the label and on other parts of
the bottle, mere similarity in the shape and size of the container and label, does not
constitute unfair competition. The steinie bottle is a standard bottle for beer and is
universally used. SMC did not invent it nor patent it. The fact that SMC's bottle is
registered under R.A. No. 623 (as amended by RA 5700, An Act to Regulate the Use of
Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar
Containers) simply prohibits manufacturers of other foodstuffs from the unauthorized use
of SMC's bottles by refilling these with their products. It was not uncommon then for
products such as patis (fish sauce) and toyo (soy sauce) to be sold in recycled SAN
MIGUEL PALE PILSEN bottles. Registration of SMC's beer bottles did not give SMC a patent
on the steinie or on bottles of similar size, shape or color.

STANDARDIZED (SIZE) CONTAINERS: Most containers are standardized because

they are usually made by the same manufacturer. Milk, whether in powdered or liquid
form, is sold in uniform tin cans. The same can be said of the standard ketchup or vinegar
bottle with its familiar elongated neck. Many other grocery items such as coffee,
mayonnaise, pickles and peanut butter are sold in standard glass jars. The manufacturers
of these foodstuffs have equal right to use these standards tins, bottles and jars for their
products. Only their respective labels distinguish them from each other. Just as no milk
producer may sue the others for unfair competition because they sell their milk in the
same size and shape of milk can which he uses, neither may SMC claim unfair competition
arising from the fact that ABI's BEER PALE PILSEN is sold, like SMC's SAN MIGUEL PALE
PILSEN in amber steinie bottles.
Converse Rubber Corporation v. Universal Rubber Products (G.R. No. L-27906)
Facts:

Respondent Universal Rubber applied for the registration of the trademark ‘Universal
Converse and Device’ used on its rubber shoes and rubber slippers. Petitioner Converse
opposed on the ground that the trademark sought to be registered is confusingly similar
to the word ‘Converse’ which is part of its corporate name ‘Converse Rubber Corporation’
and will likely deceive purchasers and cause irreparable injury to its reputation and
goodwill in the Philippines. Respondent argued that the trademarks petitioner uses on its
rubber shoes are ‘Chuck Taylor’ and ‘All Star Device.’ The Director of Patents gave due
course to respondent’s application. MR was denied.

Issue:

Whether or not there is confusing similarity between the two trademarks.

Ruling: YES.

The trademark of respondent “UNIVERSAL CONVERSE and DEVICE” is imprinted in a

circular manner on the side of its rubber shoes. In the same manner, the trademark of
petitioner which reads “CONVERSE CHUCK TAYLOR” is imprinted on a circular base
attached to the side of its rubber shoes. The determinative factor in ascertaining whether
or not marks are confusingly similar to each other “is not whether the challenged mark
would actually cause confusion or deception of the purchasers but whether the use of
such mark would likely cause confusion or mistake on the part of the buying public. It
would be sufficient, for purposes of the law that the similarity between the two labels is
such that there is a possibility or likelihood of the purchaser of the older brand mistaking
the new brand for it.” Even if not all the details just mentioned were identical, with the
general appearance alone of the two products, any ordinary, or even perhaps even [sic]
a not too perceptive and discriminating customer could be deceived … “

But even assuming, arguendo, that the trademark sought to be registered by respondent
is distinctively dissimilar from those of the petitioner, the likelihood of confusion would
still subsists, not on the purchaser’s perception of the goods but on the origins thereof.
By appropriating the word “CONVERSE,” respondent’s products are likely to be mistaken
as having been produced by petitioner. “The risk of damage is not limited to a possible
confusion of goods but also includes confusion of reputation if the public could reasonably
assume that the goods of the parties originated from the same source.
SOMBOONSAKDIKUL v. ORLANE
SERI SOMBOONSAKDIKUL, Petitioner vs. ORLANE S.A., Respondent
G.R. No. 188996
February 1, 2017

Facts:

On September 23, 2003, petitioner Seri Somboonsakdikul (petitioner) filed an application

for registration of the mark LOLANE with the IPO for goods classified under Class 3
(personal care products) of the International Classification of Goods and Services for the
Purposes of the Registration of Marks (International Classification of Goods). Orlane S.A.
(respondent) filed an opposition to petitioner's application, on the ground that the mark
LOLANE was similar to ORLANE in presentation, general appearance and pronunciation,
and thus would amount to an infringement of its mark. Respondent alleged that: (1) it
was the rightful owner of the ORLANE mark which was first used in 1948; (2) the mark
was earlier registered in the Philippines on July 26, 1967 under Registration No. 129961
with the following goods: x x x perfumes, toilet water, face powders, lotions, essential
oils, cosmetics, lotions for the hair, dentrifices, eyebrow pencils, make-up creams,
cosmetics & toilet preparations under Registration No. 12996 and (3) on September 5,
2003, it filed another application for use of the trademark on its additional products.

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

Petitioner maintained that the marks were distinct and not confusingly similar either under
the dominancy test or the holistic test.

The Bureau of Legal Affairs (BLA) rejected petitioner's application in a Decision dated
February 27, 2007, finding that respondent's application was filed, and its mark
registered, much earlier. The BLA ruled that there was likelihood of confusion based on
the following observations: (1) ORLANE and LOLANE both consisted of six letters with
the same last four letters - LANE; (2) both were used as label for similar products; (3)
both marks were in two syllables and that there was only a slight difference in the first
syllable; and (4) both marks had the same last syllable so that if these marks were read
aloud, a sound of strong similarity would be produced and such would likely deceive or
cause confusion to the public as to the two trademarks.16
Petitioner filed a motion for reconsideration but this was denied by the Director of the
BLA on May 7, 2007. On appeal, the Director General of the IPO affirmed the Decision of
the BLA Director. Thus, petitioner filed a petition for review before the CA arguing that
there is no confusing similarity between the two marks. The Court of Appeals denied the
petition and held that there exists colorable imitation of respondent's mark by LOLANE.
The CA accorded due respect to the Decision of the Director General and ruled that there
was substantial evidence to support the IPO's findings of fact. Applying the dominancy
test, the CA ruled that LOLANE' s mark is confusingly or deceptively similar to ORLANE.

Issue:

Wether or not there is confusing similarity between ORLANE and LOLANE which would
bar the registration of LOLANE before the IPO.

Ruling:

No, there is no confusing similarity between ORLANE and LOLANE which would bar the
registration of LOLANE before the IPO. The Court ruled that the CA erred when it affirmed
the Decision of the IPO.

There is no colorable imitation between the marks LOLANE and ORLANE which would
lead to any likelihood of confusion to the ordinary purchasers. A trademark is defined
under Section 121.1 of RA 8293 as any visible sign capable of distinguishing the goods.
It is susceptible to registration if it is crafted fancifully or arbitrarily and is capable of
identifying and distinguishing the goods of one manufacturer or seller from those of
another. Thus, the mark must be distinctive. The registrability of a trademark is governed
by Section 123 of RA 8293. Section 123.1 provides: Section 123. 1. A mark cannot be
registered if it: xxx...d. Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in respect of: i. The same goods
or services, or ii. Closely related goods or services, or iii. If it nearly resembles such a
mark as to be likely to deceive or cause confusion; e. Is identical with, or confusingly
similar to, or constitutes a translation of a mark which is considered by the competent
authority of the Philippines to be well-known internationally and in the Philippines,
whether or not it is registered here, as being already the mark of a person other than the
applicant for registration, and used for identical or similar goods or services: provided,
that in determining whether a mark is well-known, account shall be taken of the
knowledge of the relevant sector of the public, rather than of the public at large, including
knowledge in the Philippines which has been obtained as a result of the promotion of the
mark; xxx.

In determining the likelihood of confusion, the Court must consider: [a] the resemblance
between the trademarks; [b] the similarity of the goods to which the trademarks are
attached; [c] the likely effect on the purchaser and [d] the registrant's express or implied
consent and other fair and equitable considerations. Likewise, the Court finding that
LOLANE is not a colorable imitation of ORLANE due to distinct visual and aural differences
using the dominancy test, it no longer finds necessary to discuss the contentions of the
petitioner as to the appearance of the marks together with the packaging, nature of the
goods represented by the marks and the price difference, as well as the applicability of
foreign judgments. The Court ruled that the mark LOLANE is entitled to registration.
Hence, the petition is GRANTED and the Decision of the Court of Appeals dated July 14,
2009 is REVERSED and SET ASIDE.

MANG INASAL v. IFP MANUFACTURING CORPORATION

MANG INASAL PHILIPPINES, INC., Petitioner Vs. IFP MANUFACTURING CORPORATION,
Respondent
G.R. No. 221717
June 19, 2017

FACTS:
The Trademark Application and the Opposition Respondent IFP Manufacturing
Corporation is a local manufacturer of snacks and beverages.

On May 26, 2011, respondent filed with the Intellectual Property Office (IPO) an
application for the registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor
Mark"in connection with goods under Class 30 of the Nice Classification. The said mark,
which respondent intends to use on one of its curl snack products. The application of
respondent was opposed by petitioner Mang Inasal Philippines, Inc. Petitioner is a
domestic fast food company and the owner of the mark "Mang Inasal, Home of Real
Pinoy Style Barbeque and Device" (Mang Inasal mark) for services under Class 43 of the
Nice Classification. The said mark, which was registered with the IPO in 2006 and had
been used by petitioner for its chain of restaurants since 2003.

Petitioner, in its opposition, contended that the registration of respondent's OK Hotdog

Inasal mark is prohibited under Section 123.l (d)(iii) of Republic Act No. (RA) 8293.
Petitioner averred that the OK Hotdog Inasal mark and the Mang Inasal mark share
similarities-both as to their appearance and as to the goods or services that they epresent
which tend to suggest a false connection or association between the said marks and, in
that regard, would likely cause confusion on the part of the public. As petitioner
explained:

1. The OK Hotdog Inasal mark is similar to the Mang Inasal mark. Both marks feature the
same dominant element-i.e., the word "INASAL"-printed and stylized in the exact same
manner, viz:
a. In both marks, the word "INASAL" is spelled using the same font style and red color;
b. In both marks, the word "INASAL" is placed inside the same black outline and yellow
background; and
c. In both marks, the word "INASAL" is arranged in the same staggered format.
2. The goods that the OK Hotdog Inasal mark is intended to identify (i.e., curl snack
products) are also closely related to the services represented by the Mang Inasal mark
(i.e., fast food restaurants). Both marks cover inasal or inasal-flavored food products.
Petitioner's opposition was referred to the Bureau of Legal Affairs (BLA) of the IPO for
hearing and disposition.

ISSUE:

Whether or not the registration of respondent's OK Hotdog Inasal mark is prohibited

under Section 123.l (d) (iii) of Republic Act No. (RA) 8293

HELD:
Yes. The OK Hotdog Inasal mark meets the two conditions of the proscription under Sec.
123.l(d)(iii) of RA 8293. First, it is similar to the Mang Inasal mark, an earlier mark.
Second, it pertains to goods that are related to the services represented by such earlier
mark.
The Proscription: Sec. 123.l(d)(iii) of RA 8293 A mark that is similar to a registered mark
or a mark with an earlier filing or priority date (earlier mark) and which is likely to cause
confusion on the part of the public cannot be registered with the IPO. Such is the import
of Sec. 123.l(d)(iii) of RA 8293: SECTION 123. Registrability. – 123. 1. A mark cannot be
registered if it:
Verily, to fall under the ambit of Sec. 123. l(d)(iii) and be regarded as likely to deceive or
cause confusion upon the purchasing public, a prospective mark must be shown to meet
two (2) minimum conditions:
1. The prospective mark must nearly resemble or be similar to an earlier mark; and
2. The prospective mark must pertain to goods or services that are either identical, similar
or related to the goods or services represented by the earlier mark.
IN-N-OUT BURGER, INC. VS. SEHWANI INC., ET. AL
In-N-Out Burger, Inc. vs. Sehwani Inc., et. Al

Facts: Petitioner IN-N-OUT BURGER, INC., is a business entity incorporated under the
laws of California. It is a signatory to the Convention of Paris on Protection of Industrial
Property and the TRIPS Agreement. It is engaged mainly in the restaurant business, but
it has never engaged in business in the Philippines.

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in
the Philippines. Sometime in 1991, Sehwani filed with the BPTTT an application for the
registration of the mark “IN N OUT (the inside of the letter “O” formed like a star). Its
application was approved and a certificate of registration was issued in its name on 1993.
In 2000, Sehwani, Incorporated and Benita Frites, Inc. entered into a Licensing
Agreement, wherein the former entitled the latter to use its registered mark, “IN N OUT.”
Sometime in 1997, In-N-Out Burger filed trademark and service mark applications with
the Bureau of Trademarks for the “IN-N-OUT” and “IN-N-OUT Burger & Arrow Design. In
2000, In-N-Out Burger found out that Sehwani, Incorporated had already obtained
Trademark Registration for the mark “IN N OUT (the inside of the letter “O” formed like
a star).” Also in 2000, In-N-Out Burger sent a demand letter directing Sehwani, Inc. to
cease and desist from claiming ownership of the mark “IN-N-OUT” and to voluntarily
cancel its trademark registration. Sehwani Inc. did not accede to In-N-Out Burger’s
demand but it expressed its willingness to surrender its registration for a consideration.
In 2001 In-N-Out Burger filed before the Bureau of Legal Affairs an administrative
complaint against the Sehwani, Inc. and Benita Frites, Inc. for unfair competition and
cancellation of trademark registration.

Issues:
Whether or not the Intellectual Property Office (an administrative body) have jurisdiction
of cases involving provisions of the IPC (e.g. unfair competition).[1]
Whether or not there was unfair competition.

Held:
FIRST ISSUE: Yes, the IPO (an administrative body) has jurisdiction in cases involving
provisions of the IPC (e.g. unfair competition) due to the following reasons:
Section 10 of the Intellectual Property Code specifically identifies the functions of the
Bureau of Legal Affairs, thus:

Section 10. The Bureau of Legal Affairs.“The Bureau of Legal Affairs shall have the
following functions:
10.1 Hear and decide opposition to the application for registration of marks; cancellation
of trademarks; subject to the provisions of Section 64, cancellation of patents and utility
models, and industrial designs; and petitions for compulsory licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws
involving intellectual property rights; Provided, That its jurisdiction is limited to complaints
where the total damages claimed are not less than Two hundred thousand pesos
(P200,000): Provided, futher, That availment of the provisional remedies may be granted
in accordance with the Rules of Court. Xxx
Xxx
(vi) The cancellation of any permit, license, authority, or registration which may have
been granted by the Office, or the suspension of the validity thereof for such period of
time as the Director of Legal Affairs may deem reasonable which shall not exceed one
(1) year;
Xxx
(viii) The assessment of damages;
Unquestionably, petitioner’s complaint, which seeks the cancellation of the disputed mark
in the name of respondent Sehwani, Incorporated, and damages for violation of
petitioner’s intellectual property rights, falls within the jurisdiction of the IPO Director of
Legal Affairs.

While Section 163 thereof vests in civil courts jurisdiction over cases of unfair competition,
nothing in the said section states that the regular courts have sole jurisdiction over unfair
competition cases, to the exclusion of administrative bodies.
Sections 160 and 170, which are also found under Part III of the Intellectual Property
Code, recognize the concurrent jurisdiction of civil courts and the IPO over unfair
competition cases.

These two provisions read:

Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark
Enforcement Action. Any foreign national or juridical person who meets the requirements
of Section 3 of this Act and does not engage in business in the Philippines may bring a
civil or administrative action hereunder for opposition, cancellation, infringement, unfair
competition, or false designation of origin and false description, whether or not it is
licensed to do business in the Philippines under existing laws.

Section 170. Penalties. Independent of the civil and administrative sanctions imposed by
law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine
ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos
(P200,000), shall be imposed on any person who is found guilty of committing any of the
acts mentioned in Section 155, Section168, and Subsection169.1.

Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to
decide the petitioner’s administrative case against respondents and the IPO Director
General had exclusive jurisdiction over the appeal of the judgment of the IPO Director of
Legal Affairs.

SECOND ISSUE: Yes. The evidence on record shows that Sehwani Inc. and Benita Frites
were not using their registered trademark but that of In-n-Out Burger. Sehwani and
Benita Frites are also giving their products the general appearance that would likely
influence the purchasers to believe that their products are that of In-N-Out Burger. The
intention to deceive may be inferred from the similarity of the goods as packed and
offered for sale, and, thus, an action will lie to restrain unfair competition. The
respondents’ frauduulent intention to deceive purchasers is also apparent in their use of
the In-N-Out Burger in business signages.
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. 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. Actual fraudulent intent need not be shown.

[1] IPO – Director of Legal Affairs decision

In-N-Out Burger has legal capacity to sue in the Philippines because the latter is a
signatory of the Convention of Paris on Protection of Industrial Property.
IN-N-OUT Burger, Inc. – right to use its tradename and mark to the exclusion of the
others
Respondents’ use of the petitioner’s mark was made in good faith and therefore they are
not guilty of unfair competition.
IPO – Director General’s Decision
Respondents are guilty of unfair competition.
The following are ordered to be paid to In-N-Out Burger, inc.
Damages in the amount of PHP 212, 574.28
Exemplary damages in the amount of PHP 500,000
Attorney’s fees and expenses of litigation in the amount of PHP 500,000
CA Decision
Regular courts, and not the BLA-IPO, have sole jurisdiction to hear and decide cases
involving provisions of the IPC

SEHWANI INCORPORATED vs. IN-N-OUT BURGER, INC.

G.R. No. 171053
October 15, 2007
YNARES-SANTIAGO, J.:

FACTS:
Respondent IN-N-OUT Burger, Inc., a foreign corporation (California, USA), and not doing
business in the Philippines, filed before the Bureau of Legal Affairs of the IPO, an
administrative complaint against petitioners Sehwani, Inc. and Benita’s Frites, Inc. for
violation of intellectual property rights, attorney’s fees and damages with prayer for the
issuance of a restraining order or writ of preliminary injunction.

Respondent, alleges that it is the owner of the tradename “IN-N-OUT” and

trademarks “IN-N-OUT,”“IN-N-OUT Burger & Arrow Design” and “IN-N-OUT Burger
Logo” which are used in its business since 1948 up to the present. These tradename and
trademarks were registered in the United States as well as in other parts of the
world. Petitioner Sehwani allegedly had obtained a trademark registration for the
mark “IN N OUT” (with the inside letter O formed like a star) without its authority.

In their answer with counterclaim, petitioners alleged that respondent lack the legal
capacity to sue because it was not doing business in the Philippines and that it has no
cause of action because its mark is not registered or used in the Philippines. Petitioner
Sehwani, Inc. also claimed that as the registered owner of the "IN-N-OUT" mark, it enjoys
the presumption that the same was validly acquired and that it has the exclusive right to
use the mark. Moreover, petitioners argued that other than the bare allegation of fraud
in the registration of the mark, respondent failed to show the existence of any of the
grounds for cancellation thereof under Section 151 of Republic Act (R.A.) No. 8293,
otherwise known as The Intellectual Property Code of the Philippines.

The Bureau ruled in favor of In-N-Out and cancelled the registration of Shwani.

ISSUE/S:
1. Whether or not the Respondent has the legal capacity to sue for the protection of its
trademarks albeit it is not doing business in the Philippines

2. Whether or not a ground exists for the cancellation of the Petitioners’ registration

RULING:

1. Yes. Section 160 RA No. 8293 provides for the right of foreign corporations to sue in
trademark or service mark enforcement action, provided that it meets the requirements
under Section 3 thereof, which are a) Any convention, treaty or agreement relation to
intellectual property right or the repression of unfair competition wherein Philippines is
also a party; and b) An extension therein of reciprocal rights.

Moreoever, Article 6 of The Paris Convention, which governs the protection of well-known
trademarks, is a self-executing provision and does not require legislative enactment to
give it effect in the member country. The essential requirement therein is that the
trademark must be well-known in the country where protection is sought. In this case,
Director Beltran-Abelardo found that In-n-out Burger and Arrow Design is an
internationally well known mark as evidenced by its trademark registrations around the
world and its comprehensive advertisements therein.

2. Yes. Section 151(b) of RA 8293 provides that a petition to cancel a registration of a

mark may be filed with the Bureau of Legal Affairs by any person who believes that he is
or will be damaged by the registration of a mark at any time, if the registered mark
becomes the generic name for the goods or services, or a portion thereof, for which it is
registered, or has been abandoned, or its registration was fraudulently or contrary to the
provisions of this Act, or if the registered mark is being used by or with the permission
 of, the registrant so as to misrepresent the source of goods or services on or in connection
with which the mark is used. The evidence showed that not only did the petitioners use
the IN-N-OUT Burger trademark for the name of their restaurant, but they also used
identical or confusingly similar mark for their hamburger wrappers and French-fries
receptacles, thereby effectively misrepresenting the source of the goods and services.

246 Corporation v. Daway (G.R. No. 157216)

Facts:

Respondents Montres Rolex and Rolex Centre Phil., owners/proprietors of Rolex and
Crown Device, filed a complaint for trademark infringement alleging petitioner adopted
and used without authority the mark ‘Rolex’ in its business name ‘Rolex Music Lounge.’
Petitioner argued that there is no trademark infringement since no confusion would arise
by the use of ‘Rolex’ considering that its entertainment business is totally unrelated to
respondent’s business or products such as watches, clocks, etc.

Issue:

Whether or not likelihood of confusion would arise from the use of identical marks over
unrelated goods/business.

Ruling: YES.

Under the old Trademark Law where the goods for which the identical marks are used
are unrelated, there can be no likelihood of confusion and there is therefore no
infringement in the use by the junior user of the registered mark on the entirely different
goods. This ruling, however, has been to some extent, modified by Section 123.1(f) of
the Intellectual Property Code.

A junior user of a well-known mark on goods or services which are not similar to the
goods or services, and are therefore unrelated, to those specified in the certificate of
registration of the well-known mark is precluded from using the same on the entirely
unrelated goods or services, subject to the following requisites, to wit:

1. The mark is well-known internationally and in the Philippines.

2. The use of the well-known mark on the entirely unrelated goods or services would indicate
a connection between such unrelated goods or services and those goods or services
specified in the certificate of registration in the well known mark. This requirement refers
to the likelihood of confusion of origin or business or some business connection or
relationship between the registrant and the user of the mark.
3. The interests of the owner of the well-known mark are likely to be damaged. For instance,
if the registrant will be precluded from expanding its business to those unrelated good or
services, or if the interests of the registrant of the well-known mark will be damaged
because of the inferior quality of the good or services of the user.

*Section 123.1(f) is clearly in point because the Music Lounge of petitioner is

entirely unrelated to respondents’ business involving watches, clocks,
bracelets, etc. However, the Court cannot yet resolve the merits of the present
controversy considering that the requisites for the application of Section
123.1(f), which constitute the kernel issue at bar, clearly require
determination facts of which need to be resolved at the trial court.

246 CORPORATION VS. DAWAY

G.R. No. 157216, November 20, 2003

FACTS:

Montres Rolex S.A. and Rolex Centre Phil., Limited, owners/proprietors of Rolex and
Crown Device, filed against petitioner 246 Corporation the instant suit for trademark
infringement and damages with prayer for the issuance of a restraining order or writ of
preliminary injunction.

Respondents alleged that sometime in July 1996, petitioner adopted and, since then, has
been using without authority the mark "Rolex" in its business name "Rolex Music Lounge"
as well as in its newspaper advertisements as – "Rolex Music Lounge, KTV, Disco & Party
Club."

Petitioner argued that respondents have no cause of action because no trademark

infringement exist; that no confusion would arise from the use by petitioner of the mark
"Rolex" considering that its entertainment business is totally unrelated to the items
catered by respondents such as watches, clocks, bracelets and parts thereof. It also
contended that the complaint was not properly verified and certified against forum
shopping considering that Atty. Alonzo Ancheta, the counsel of record of respondents
who signed the verification and certification, was not authorized to represent
respondents.

In 2000, 246 Corp. filed a motion for preliminary hearing on its affirmative defense; which
the court thereafter issued a subpoena ad testificandum to Atty. Atienza. Montres Rolex
opposed, and the trial court quashed the subpoena.

246 corp. filed a petition for certiorari before the Court of Appeals, which was dismissed.
Hence, the petition for review on certiorari.

ISSUES:
1. Whether or not the junior use of a registered mark on entirely different goods subsists.

2. Whether or not the Court of Appeals committed grave abuse of discretion in dismissing
the petition.

HELD:

The rule, that there is no infringement in the use of a ‘junior user of the registered mark
on the entirely different goods, has been modified by Section 123.1 (f) of Republic Act
No. 8293 (Intellectual Property code). His use is precluded when that the mark is well
known internationally and in the Philippines, the use of the mark would indicate a
connection or relationship between the user and the registrant, and that the interests of
the well-known mark are likely to be damaged. The court however cannot resolve the
merits considering the facts as to the existence/absence of the requisites should be
addressed in a full- blown hearing and not on a mere preliminary hearing.

Considering that the trial court correctly denied petitioner’s motion for preliminary hearing
on its affirmative defenses with motion to dismiss, there exists no reason to compel Atty.
Ancheta to testify. Hence, no abuse of discretion was committed by the trial court in
quashing the subpoena ad testificandum issued against Atty. Ancheta. Grave abuse of
discretion implies such capricious and whimsical exercise of judgment as equivalent to
lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and it must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law. None of these was committed by
the trial court; hence, the Court of Appeals correctly dismissed the petition.

La Chemise Lacoste v. Fernandez (G.R. No. L-63796-97)

Facts:

Petitioner La Chemise Lacoste is a foreign corporation and the actual owner of the
trademarks ‘Lacoste,’ ‘Chemise Lacoste,’ and ‘Crocodile Device’ used on clothing and
other goods that are sold in many parts of the world. Herein respondent Hemadas & Co.,
a domestic firm, applied and was granted registration of the mark ‘Chemise Lacoste and
Crocodile Device’ for its garment products. Sometime later, petitioner applied for the
registration of its mark ‘Crocodile Device’ and ‘Lacoste’ but was opposed by herein
respondent. Later, petitioner filed a letter-complaint of unfair competition before the NBI
which led to the issuance of search warrants and the seizure of goods of respondent
Hemadas. Respondent moved to quash the warrants alleging that its trademark was
different from petitioner’s trademark. Respondent court ruled to set aside the warrants
and to return the seized goods.

Issue:
Whether or not petitioner’s trademark is a well-known mark protected under the Paris
Convention.

Ruling: YES.

In upholding the right of the petitioner to maintain the present suit before our courts for
unfair competition or infringement of trademarks of a foreign corporation, we are
moreover recognizing our duties and the rights of foreign states under the Paris
Convention for the Protection of Industrial Property to which the Philippines and France
are parties.

Pursuant to this obligation, the Ministry of Trade issued a memorandum addressed to the
Director of the Patents Office directing the latter to reject all pending applications for
Philippine registration of signature and other world famous trademarks by applicants
other than its original owners or users. The conflicting claims over internationally known
trademarks involve such name brands as Lacoste, et. al. It is further directed that, in
cases where warranted, Philippine registrants of such trademarks should be asked to
surrender their certificates of registration, if any, to avoid suits for damages and other
legal action by the trademarks’ foreign or local owners or original users.

The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v. Sadhwani decision
which we cite with approval sustained the power of the Minister of Trade to issue the
implementing memorandum and declared La Chemise Lacoste S.A. the owner of the
disputed trademark, stating: “In the case at bar, the Minister of Trade, as ‘the competent
authority of the country of registration,’ has found that among other well-known
trademarks ‘Lacoste’ is the subject of conflicting claims. For this reason, applications for
its registration must be rejected or refused, pursuant to the treaty obligation of the
Philippines.”

FACTS:

La chemise Lacoste is a French corporation and the actual owner of the trademarks
“Lacoste,” “Chemise Lacoste,” “Crocodile Device” and a composite mark consisting of the
word “Lacoste” and a representation of a crocodile/alligator, used on clothings and other
goods sold in many parts of the world and which has been marketed in the Philippines
(notably by Rustans) since 1964. La Chemise Lacoste. VS. Fernandez
Read: Asia Brewery, Inc. vs. Court of Appeals

In 1975 and 1977, Hemandas Q. Co. was issued certificate of registration for the
trademark “Chemise Lacoste and Q Crocodile Device” both in the supplemental and
Principal Registry.
In 1980, La Chemise Lacoste SA filed for the registration of the “Crocodile device” and
“Lacoste”.

Games and Garments (Gobindram Hemandas, assignee of Hemandas Q.Co.) opposed the
registration of “Lacoste.” La Chemise Lacoste. VS. Fernandez
In 1983, La Chemise Lacoste filed with the NBI a letter-complaint alleging acts of unfair
competition committed by Hemandas and requesting the agency’s assistance.

A search warrant was issued by the trial court. La Chemise Lacoste. VS. Fernandez
Various goods and articles were seized upon the execution of the warrants.

Hemandas filed motion to quash the warrants, which the court granted.

The search warrants were recalled, and the goods ordered to be returned.

La Chemise Lacoste filed a petition for certiorari. La Chemise Lacoste. VS. Fernandez
Read: 246 Corporation vs. Daway

ISSUE:

Whether or not the trademark “Chemise Lacoste and Q Crocodile Device” is registrable.

HELD:

No.

Inasmuch as the goodwill and reputation of La Chemise Lacoste products date back even
before 1964, Hemandas cannot be allowed to continue the trademark “Lacoste” for the
reason that he was the first registrant in the Supplemental Register of a trademark used
in international commerce.

Registration in the Supplemental Register cannot be given a posture as if the registration

is in the Principal Register. La Chemise Lacoste. VS. Fernandez
It must be noted that one may be declared an unfair competitor even if his competing
trademark is registered.

La Chemise Lacoste is world renowned mark, and by virtue of the 20 November 1980
Memorandum of the Minister of Trade to the director of patents in compliance with the
Paris Convention for the protection of industrial property, effectively cancels the
registration of contrary claimants to the enumerated marks, which include “Lacoste.” La
Lyceum of the Philippines v. CA (G.R. No. 101897)
Facts:

Petitioner Lyceum of the Philippines had commenced before the SEC a proceeding against
the Lyceum of Baguio to change its corporate name alleging that the 2 names are
substantially identical because of the word ‘Lyceum’. SEC found for petitioner and the SC
denied the consequent appeal of Lyceum of Baguio in a resolution. Petitioner then basing
its ground on the resolution, wrote to all educational institutions which made use of the
word ‘Lyceum’ as part of their corporate name to discontinue their use. When this
recourse failed, petitioner moved before the SEC to enforce its exclusive use of the word
‘Lyceum.’ Petitioner further claimed that the word ‘Lyceum’ has acquired a secondary
meaning in its favor. The SEC Hearing Officer found for petitioner. Both SEC En Banc and
CA ruled otherwise.

Issues:

(1) Whether or not ‘Lyceum’ is a generic word which cannot be appropriated by petitioner
to the exclusion of others.

(2) Whether or not the word ‘Lyceum’ has acquired a secondary meaning in favor of
petitioner.

(3) Whether or not petitioner is infringed by respondent institutions’ corporate names.

Ruling:

(1) YES. “Lyceum” is in fact as generic in character as the word “university.” In the name
of the petitioner, “Lyceum” appears to be a substitute for “university;” in other places,
however, “Lyceum,” or “Liceo” or “Lycee” frequently denotes a secondary school or a
college. It may be that the use of the word “Lyceum” may not yet be as widespread as
the use of “university,” but it is clear that a not inconsiderable number of educational
institutions have adopted “Lyceum” or “Liceo” as part of their corporate names. Since
“Lyceum” or “Liceo” denotes a school or institution of learning, it is not unnatural to use
this word to designate an entity which is organized and operating as an educational
institution.

(2) NO. Under the doctrine of secondary meaning, a word or phrase originally incapable
of exclusive appropriation with reference to an article in the market, because geographical
or otherwise descriptive might nevertheless have been used so long and so exclusively
by one producer with reference to this article that, in that trade and to that group of the
purchasing public, the word or phrase has come to mean that the article was his produce.
With the foregoing as a yardstick, [we] believe the appellant failed to satisfy the
aforementioned requisites. While the appellant may have proved that it had been using
the word ‘Lyceum’ for a long period of time, this fact alone did not amount to mean that
the said word had acquired secondary meaning in its favor because the appellant failed
to prove that it had been using the same word all by itself to the exclusion of others.
More so, there was no evidence presented to prove that confusion will surely arise if the
same word were to be used by other educational institutions.

(3) NO. We do not consider that the corporate names of private respondent institutions
are “identical with, or deceptively or confusingly similar” to that of the petitioner
institution. True enough, the corporate names of private respondent entities all carry the
word “Lyceum” but confusion and deception are effectively precluded by the appending
of geographic names to the word “Lyceum.” Thus, we do not believe that the “Lyceum
of Aparri” can be mistaken by the general public for the Lyceum of the Philippines, or that
the “Lyceum of Camalaniugan” would be confused with the Lyceum of the Philippines. We
conclude and so hold that petitioner institution is not entitled to a legally enforceable
exclusive right to use the word “Lyceum” in its corporate name and that other institutions
may use “Lyceum” as part of their corporate names.

Fact:
Petitioner Lyceum of the Philippines after a favorable case enjoining the Lyceum of Baguio
from using the word “Lyceum”, Armed with the Resolution of this Court in G.R. No. L-
46595, petitioner then wrote all the educational institutions it could find using the word
“Lyceum” as part of their corporate name(Respondents), and advised them to discontinue
such use of “Lyceum.” When, with the passage of time, it became clear that this recourse
had failed, petitioner instituted before the SEC to enforce what petitioner claims as its
proprietary right to the word “Lyceum.” The SEC hearing officer rendered a decision
sustaining petitioner’s claim to an exclusive right to use the word “Lyceum.” On appeal,
however, by private respondents to the SEC En Banc, the decision of the hearing officer
was reversed and set aside. The SEC En Banc did not consider the word “Lyceum” to
have become so identified with petitioner as to render use thereof by other institutions
as productive of confusion about the identity of the schools concerned in the mind of the
general public. Unlike its hearing officer, the SEC En Banc held that the attaching of
geographical names to the word “Lyceum” served sufficiently to distinguish the schools
from one another, especially in view of the fact that the campuses of petitioner and those
of the private respondents were physically quite remote from each other. Petitioner then
went on appeal to the Court of Appeals. In its Decision dated 28 June 1991, however,
the Court of Appeals affirmed the questioned Orders of the SEC En Banc. Petitioner filed
a motion for reconsideration, without success. Hence, this case.

Issue:
Whether the word Lyceum has acquired a secondary meaning in favor of petitioner.
Held:
No, “Under the doctrine of secondary meaning, a word or phrase originally incapable of
exclusive appropriation with reference to an article in the market, because geographical
or otherwise descriptive might nevertheless have been used so long and so exclusively
by one producer with reference to this article that, in that trade and to that group of the
purchasing public, the word or phrase has come to mean that the article was his produce.
This circumstance has been referred to as the distinctiveness into which the name or
phrase has evolved through the substantial and exclusive use of the same for a
considerable period of time. Consequently, the same doctrine or principle cannot be made
to apply where the evidence did not prove that the business (of the plaintiff) has
continued for so long a time that it has become of consequence and acquired a good will
of considerable value such that its articles and produce have acquired a well-known
reputation, and confusion will result by the use of the disputed name (by the defendant)
SC believe the appellant failed to satisfy the aforementioned requisites. No evidence was
ever presented in the hearing before the Commission which sufficiently proved that the
word ‘Lyceum’ has indeed acquired secondary meaning in favor of the appellant. If there
was any of this kind, the same tend to prove only that the appellant had been using the
disputed word for a long period of time. Nevertheless, its (appellant) exclusive use of the
word (Lyceum) was never established or proven as in fact the evidence tend to convey
that the cross-claimant was already using the word ‘Lyceum’ seventeen (17) years prior
to the date the appellant started using the same word in its corporate name. Furthermore,
educational institutions of the Roman Catholic Church had been using the same or similar
word like ‘Liceo de Manila,’ ‘Liceo de Baleno’ (in Baleno, Masbate), ‘Liceo de Masbate,’
‘Liceo de Albay’ long before appellant started using the word ‘Lyceum’. The appellant also
failed to prove that the word ‘Lyceum’ has become so identified with its educational
institution that confusion will surely arise in the minds of the public if the same word were
to be used by other educational institutions.

In other words, while the appellant may have proved that it had been using the word
‘Lyceum’ for a long period of time, this fact alone did not amount to mean that the said
word had acquired secondary meaning in its favor because the appellant failed to prove
that it had been using the same word all by itself to the exclusion of others. More so,
there was no evidence presented to prove that confusion will surely arise if the same
word were to be used by other educational institutions. Consequently, the allegations of
the appellant in its first two assigned errors must necessarily fail.

CASE DIGEST: [ G.R. No. 205548, February 07, 2018 ] DE LA SALLE

MONTESSORI INTERNATIONAL OF MALOLOS, INC., PETITIONER, VS. DE LA
SALLE BROTHERS, INC., DE LA SALLE UNIVERSITY, INC., LA SALLE ACADEMY,
INC., DE LA SALLE-SANTIAGO ZOBEL SCHOOL, INC. (FORMERLY NAMED DE LA
SALLE-SOUTH INC.), DE LA SALLE CANLUBANG, INC. (FORMERLY NAMED DE
LA SALLE UNIVERSITY-CANLUBANG, INC.), RESPONDENTS. JARDELEZA, J.:
FACTS: Petitioner De La Salle Montessori International of Malolos, Inc. was asked by
respondents De La Salle Brothers, Inc., De La Salle University, Inc., La Salle Academy,
Inc., De La Salle-Santiago Zobel School, Inc. (formerly De La Salle-South, Inc.), and De
La Salle Canlubang, Inc. (formerly De La Salle University-Canlubang, Inc.) to change its
corporate name. Alleged misleading or confusingly similar.
SEC OGC ordered petitioner to change corporate name. Said "La Salle" is not descriptive.
Said there is priority registration in favor of respondents. Said the Lyceum ruling does not
apply. Said there is confusion because of the name and business model.

ISSUES:

1. What are the requisites regarding the prohibition under Section 18 re corporate
name?
2. Who are the priority registrants and, therefore, those who have better right over
the name "De La Salle" or "La Salle"?
3. What is the test to say if there is "confusing similarity in corporate names"?
4. Do the four additional words "Montessori International of Malolos, Inc." remove
the confusion?
5. Is "De La Salle" a generic term?
6. Does the Lyceum ruling apply?

HELD: We DENY the petition and uphold the Decision of the CA.

ISSUE [1]: The policy underlying the prohibition in Section 18 against the registration
of a corporate name which is "identical or deceptively or confusingly similar" to that of
any existing corporation or which is "patently deceptive" or "patently confusing" or
"contrary to existing laws," is the avoidance of fraud upon the public which would have
occasion to deal with the entity concerned, the evasion of legal obligations and duties,
and the reduction of difficulties of administration and supervision over corporations.[29]

In Philips Export B.V. v. Court of Appeals,[31] the Court held that to fall within the
prohibition of Section 18, two requisites must be proven, to wit: (1) that the complainant
corporation acquired a prior right over the use of such corporate name; and (2) the
proposed name is either: (a) identical, or (b) deceptively or confusingly similar to that of
any existing corporation or to any other name already protected by law; or (c) patently
deceptive, confusing or contrary to existing law.[32]

With respect to the first requisite, the Court has held that the right to the exclusive use
of a corporate name with freedom from infringement by similarity is determined
by priority of adoption.[33]
ISSUE [2]: Respondents' corporate names were registered as early as October 9, 1961
and as late as August 5, 1998.[34]

On the other hand, petitioner was issued a Certificate of Registration only on July 5, 2007
under Company Registration No. CN200710647.[35] It being clear that respondents are
the prior registrants, they certainly have acquired the right to use the words "De La Salle"
or "La Salle" as part of their corporate names.

The second requisite is also satisfied since there is a confusing similarity between
petitioner's and respondents' corporate names. While these corporate names are not
identical, it is evident that the phrase "De La Salle" is the dominant phrase used.

ISSUE [3]: In determining the existence of confusing similarity in corporate names, the
test is whether the similarity is such as to mislead a person using ordinary care and
discrimination. In so doing, the Court must look to the record as well as the names
themselves.[37]

ISSUE [4]: Petitioner's assertion that the words "Montessori International of Malolos,
Inc." are four distinctive words that are not found in respondents' corporate names so
that their corporate name is not identical, confusingly similar, patently deceptive or
contrary to existing laws,[38] does not avail. As correctly held by the SEC OGC, all these
words, when used with the name "De La Salle," can reasonably mislead a person using
ordinary care and discretion into thinking that petitioner is an affiliate or a branch of, or
is likewise founded by, any or all of the respondents, thereby causing confusion.[39]

ISSUE [5]: Petitioner's argument that it obtained the words "De La Salle" from the
French word meaning "classroom," while respondents obtained it from the French priest
named Saint Jean Baptiste de La Salle,[40] similarly does not hold water.

We affirm that the phrase "De La Salle" is not merely a generic term. Respondents' use
of the phrase being suggestive and may properly be regarded as fanciful, arbitrary and
whimsical, it is entitled to legal protection.[42] Petitioner's use of the phrase "De La Salle"
in its corporate name is patently similar to that of respondents that even with
reasonable care and observation, confusion might arise. The Court notes not only
the similarity in the parties' names, but also the business they are engaged in. They
are all private educational institutions offering pre-elementary, elementary and secondary
courses.[43] As aptly observed by the SEC En Banc, petitioner's name gives the
impression that it is a branch or affiliate of respondents.[44] It is settled that proof of
actual confusion need not be shown. It suffices that confusion is probable or likely to
occur.[45]

ISSUE [6]: The Court's ruling in Lyceum of the Philippines[46] does not apply.

In that case, the Lyceum of the Philippines, Inc., an educational institution registered
with the SEC, commenced proceedings before the SEC to compel therein private
respondents who were all educational institutions, to delete the word "Lyceum" from their
corporate names and permanently enjoin them from using the word as part of their
respective names.

The Court there held that the word "Lyceum" today generally refers to a school or
institution of learning. It is as generic in character as the word "university." Since
"Lyceum" denotes a school or institution of learning, it is not unnatural to use this word
to designate an entity which is organized and operating as an educational institution.
Also, no evidence presented to prove confusion.[47]

There is thus no similarity between the Lyceum of the Philippines case and this case that
would call for a similar ruling.

CASE DIGEST ENDS HERE.

WHEREFORE, the Petition is DENIED. The assailed Decision of the CA dated September
27, 2012 is AFFIRMED.

SO ORDERED.