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KABUSHI KAISHA ISETAN vs. INTERMEDIATE APPELLATE COURT, ET AL. SECOND DIVISION [G.R. No. 75420. November 15, 1991.] KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO., LTD., petitioner, vs. THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS, and ISETANN DEPARTMENT STORE, INC. respondents. Agcaoili & Associates for petitioner. Cruz, Durian, Agabin, Atienza, Alday & Tuason for private respondent. SYLLABUS 1. REMEDIAL LAW; ACTIONS; APPEALS; STRINGENT APPLICATION OF PERIOD OF APPEAL APPLIED IN THE ABSENCE OF COMPELLING EQUITABLE CONSIDERATIONS FOR RELAXATION OF RULE; CASE AT BAR. — The Court dismissed the petition in a resolution dated July 8, 1987, on the ground that it was filed fourteen (14) days later. However, on motion for reconsideration, whereby the petitioner appealed to this Court on equitable grounds stating that it has a strong and meritorious case, the petition was given due course in a resolution dated May 19, 1988 to enable us to examine more fully any possible denial of substantive justice. The parties were then required to submit their memoranda. After carefully considering the records of this case, we reiterate our July 8, 1987 resolution dismissing the petition. There are no compelling equitable considerations which call for the application of the rule enunciated in Serrano v. Court of Appeals (139 SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148 [1990]) that considerations of substantial justice manifest in the petition may relax the stringent application of technical rules so as not to defeat an exceptionally meritorious petition. 2. ID.; EVIDENCE; FINDINGS OF FACT OF THE PATENT OFFICE, UPHELD ON APPEAL. — Regarding the petitioner's claims of substantial justice which led us to give due course, we decline to disturb the rulings of the Patent Office and the Court of Appeals. The rule is that the findings of facts of the Director of patents are conclusive on the Supreme Court, provided they are supported by substantial evidence. 3. MERCANTILE LAW; TRADEMARKS; ACTUAL USE, PREREQUISITE TO ACQUISITION OF OWNERSHIP. — A fundamental principle of Philippine Trademarks Law is that actual use in commerce in the Philippines is a pre-requisite to the acquisition of ownership over a trademark or a tradename. 4. ID.; ID.; ID.; PRIOR REGISTRANT CANNOT CLAIM EXCLUSIVE USE OF TRADENAME. — A prior registrant cannot claim exclusive use of the trademark unless it uses it in commerce.

5. ID.; ID.; ID.; MERE ADOPTION OF A PARTICULAR TRADENAME WITHOUT ACTUAL USE THEREOF, INSUFFICIENT; CASE AT BAR. — The records show that the petitioner has never conducted any business in the Philippines. It has never promoted its tradename or trademark in the Philippines. It has absolutely no business goodwill in the Philippines. It is unknown to Filipinos except the very few who may have noticed it while travelling abroad. It has never paid a single centavo of tax to the Philippine government. Under the law, it has no right to the remedy it seeks. There can be no question from the records that the petitioner has never used its tradename or trademark in the Philippines. The mere origination or adoption of a particular tradename without actual use thereof in the market is insufficient to give any exclusive right to its use (Johnson Mfg, Co. v. Leader Filling Stations Corp. 196 N.E. 852, 291 Mass. 394), even though such adoption is publicly declared, such as by use of the name in advertisements, circulars, price lists, and on signs and stationery. (Consumers Petroleum Co. v. Consumers Co. of Ill. 169 F 2d 153). 6. ID.; PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY; DOES NOT AUTOMATICALLY EXCLUDE OTHER COUNTRIES FROM USING A TRADENAME USED IN ONE COUNTRY. — The Paris Convention for the Protection of Industrial Property does not automatically exclude all countries of the world have signed it from using a tradename which happens to be used in one country. D E C I S I O N GUTIERREZ, JR., J p: This is a petition for review on certiorari which seeks to set aside — (1) the decision of the Court of Appeals dated June 2, 1986 in AC-G.R. SP No. 008873 entitled "Kabushi Kaisha Isetan, also known and trading as Isetan Company Limited v. Isetann Department Store, Inc." dismissing the petitioner's appeal from the decision of the Director of Patents; and (2) the Resolution dated July 11, 1986 denying the petitioner's motion for reconsideration. As gathered from the records, the facts are as follows: Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing under the laws of Japan with business address at 14-1 Shinjuku, 3-Chrome, Shinjuku, Tokyo, Japan. It is the owner of the trademark "Isetan" and the "Young Leaves Design". The petitioner alleges that it first used the trademark Isetan on November 5, 1936. It states that the trademark is a combination of "Ise" taken from "Iseya" the first name of the rice dealer in Kondo, Tokyo in which the establishment was first located and "Tan" which was taken from "Tanji Kosuge the First".

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The petitioner claims to have expanded its line of business internationally from 1936 to 1974. The trademark "Isetan" and "Young Leaves Design" were registered in Japan covering more than 34 classes of goods. On October 3, 1983, the petitioner applied for the registration of "Isetan" and "Young Leaves Design" with the Philippine Patent Office under Permanent Serial Nos. 52422 and 52423 respectively, (Rollo, p. 43) Private respondent, Isetann Department Store, on the other hand, is a domestic corporation organized and existing under the laws of the Philippines with business address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines. LLjur It claims that it used the word "Isetann" as part of its corporated name and on its products particularly on shirts in Joymart Department Store sometime in January 1979. The suffix "Tann" means an alter, the place of offering in Chinese and this was adopted to harmonize the corporate name and the corporate logo of two hands in cup that symbolizes the act of offering to the Supreme Being for business blessing. On May 30, 1980 and May 20, 1980, the private respondent registered "Isetann Department Store, Inc." and Isetann and Flower Design in the Philippine Patent Office under SR. Reg. Nos. 4701 and 4714, respectively, as well as with the Bureau of Domestic Trade under Certificate of Registration No. 32020. (Rollo, pp. 43-44) On November 28, 1980, the petitioner filed with the Phil. Patent Office two (2) petitions for the cancellation of Certificates of Supplemental Registration Nos. SR-4717 and SR-4701 stating among others that: " . . . except for the additional letter 'N' in the word "Isetan", the mark registered by the registrant is exactly the same as the trademark ISETAN owned by the petitioner and that the young leaves registered by the registrant is exactly the same as the young leaves design owned by the petitioner." The petitioner further alleged that private respondent's act of registering a trademark which is exactly the same as its trade mark and adopting a corporate name similar to that of the petitioner were with the illegal and immoral intention of cashing in on the long established goodwill and popularity of the petitioner's reputation, thereby causing great and irreparable injury and damage to it (Rollo, p. 521). It argued that both the petitioner's and respondent's goods move in the same channels of trade, and ordinary people will be misled to believe that the products of the private respondent originated or emanated from, are associated with, or are

manufactured or sold, or sponsored by the petitioner by reason of the use of the challenged trademark. The petitioner also invoked the Convention of Paris of March 20, 1883 for the Protection of Industrial Property of which the Philippines and Japan are both members, The petitioner stressed that the Philippines' adherence to the Paris Convention committed the government to the protection of trademarks belonging not only to Filipino citizens but also to those belonging to nationals of other member countries who may seek protection in the Philippines. (Rollo, p. 522) The petition was docketed as Inter Partes Cases Nos. 1460 and 1461 (Rollo, p. 514). Meanwhile, the petitioner also filed with the Securities and Exchange Commission (SEC) a petition to cancel the mark "ISETAN" as part of the registered corporate name of Isetann Department Store, Inc. which petition was docketed as SEC Case No. 2051 (Rollo, p. 524). On May 17, 1985, this petition was denied in a decision rendered by SEC's Hearing Officer, Atty. Joaquin C. Garaygay. prcd On appeal, the Commission reversed the decision of the Hearing Officer on February 25, 1986. It directed the private respondent to amend its Articles of Incorporation within 30 days from finality of the decision. On April 15, 1986, however, respondent Isetann Department Store filed a motion for reconsideration. (Rollo, pp. 325-353). And on September 10, 1987, the Commission reversed its earlier decision dated February 25, 1986 thereby affirming the decision rendered by the Hearing Officer on May 17, 1985. The Commission stated that since the petitioner's trademark and tradename have never been used in commerce on the petitioner's products marketed in the Philippines, the trademark or tradename have not acquired a reputation and goodwill deserving of protection from usurpation by local competitors. (Rollo, p. 392) This SEC decision which denied and dismissed the petition to cancel was submitted to the Director of Patents as part of the evidence for the private respondent. On January 24, 1986, the Director of Patents after notice and hearing rendered a joint decision in Inter Partes Cases Nos. 1460 and 1461, the dispositive portion of which reads: "WHEREFORE, all the foregoing considered, this Office is constrained to hold that the herein Petitioner has not successfully made out a case of cancellation. Accordingly, Inter Partes Cases Nos. 1460 and 1461 are, as

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they are hereby, DISMISSED. Hence, Respondent's Certificate of Supplemental Registration No. 4717 issued on May 20, 1980 covering the tradename 'ISETANN DEPT. STORE, INC. & FLOWER DESIGN' are, as they are hereby ordered to remain in full force and effect for the duration of their term unless sooner or later terminated by law. The corresponding application for registration in the Principal Register of the Trademark and of the tradename aforesaid are hereby given due course. Let the records of these cases be transmitted to the Trademark Examining Division for appropriate action in accordance with this Decision." On February 21, 1986, Isetan Company Limited moved for the reconsideration of said decision but the motion was denied on April 2, 1986 (Rollo, pp. 355-359). From this adverse decision of the Director of Patents, the petitioner appealed to the Intermediate Appellate Court (now Court of Appeals). On June 2, 1986, the IAC dismissed the appeal on the ground that it was filed out of time. The petitioner's motion for reconsideration was likewise denied in a resolution dated July 11, 1986. Hence, this petition. Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on the ground that it was filed fourteen (14) days later. However, on motion for reconsideration, whereby the petitioner appealed to this Court on equitable grounds stating that it has a strong and meritorious case, the petition was given due course in a resolution dated May 19, 1988 to enable us to examine more fully any possible denial of substantive justice. The parties were then required to submit their memoranda. (Rollo, pp. 2-28; Resolution, pp. 271; 453). After carefully considering the records of this case, we reiterate our July 8, 1987 resolution dismissing the petition. There are no compelling equitable considerations which call for the application of the rule enunciated in Serrano v. Court of Appeals (139 SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148 [1990]) that considerations of substantial justice manifest in the petition may relax the stringent application of technical rules so as not to defeat an exceptionally meritorious petition. llcd There is no dispute and the petitioner does not question the fact that the appeal was filed out of time. Not only was the appeal filed late in the Court of Appeals, the petition for review was also filed late with us. In common parlance, the petitioner's case is "twice dead" and may no longer be reviewed.

The Court of Appeals correctly rejected the appeal on the sole ground of late filing when it ruled: "Perfection of an appeal within the time provided by law is jurisdictional, and failure to observe the period is fatal. The decision sought to be appealed is one rendered by the Philippine Patent Office, a quasi-judicial body. Consequently, under Section 23(c) of the Interim Rules of Court, the appeal shall be governed by the provisions of Republic Act No. 5434, which provides in its Section 2; SECTION 2. Appeals to Court of Appeals. — Appeals to the Court of Appeals shall be filed within fifteen (15) days from notice of the ruling, award, order, decision or judgment or from the date of its last publication, if publication is required by law for its effectivity; or in case a motion for reconsideration is filed within that period of fifteen (15) days, then within ten (10) days from notice or publication, when required by law, of the resolution denying the motion for reconsideration. No more than one motion for reconsideration shall be allowed any party. If no appeal is filed within the periods here fixed, the ruling, award, order, decision or judgment shall become final and may be executed as provided by existing law. Attention is invited to that portion of Section 2 which states that in case a motion for reconsideration is filed, an appeal should be filed within ten (10) days from notice of the resolution denying the motion for reconsideration." The petitioner received a copy of the Court of Appeals' resolution denying its motion for reconsideration on July 17, 1986. It had only up to August 1, 1986 to file a petition for review with us. The present petition was posted on August 2, 1986 and received by us on August 8, 1986. There is no question that it was again, filed late because the petitioner filed an ex-parte motion for admission explaining the delay. The decision of the Patent Office has long become final and executory. So has the Court of Appeals decision. Regarding the petitioner's claims of substantial justice which led us to give due course, we decline to disturb the rulings of the Patent Office and the Court of Appeals. A fundamental principle of Philippine Trademarks Law is that actual use in commerce in the Philippines is a pre-requisite to the acquisition of ownership over a trademark or a tradename. cdphil The Trademark Law, Republic Act No. 166, as amended, under which this case was heard and decided provides: "SECTION 2. What are registrable. — Trademarks, tradenames and service marks owned by persons, corporation, partnerships or associations domiciled in the Philippines and by persons, corporations,

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partnerships or associations domiciled in any foreign country may be registered in accordance with the provisions of this Act: Provided, That said trademarks, tradenames, or service marks are actually in use in commerce and services not less than two months in the Philippines before the time the applications for registration are filed: And provided, further, That the country of which the applicant for registration is a citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is officially certified, with a certified true copy of the foreign law translated into the English language, by the government of the foreign country to the Government of the Republic of the Philippines. (As amended by R.A. No. 865). SECTION 2-A. Ownership of trademarks, tradenames and service marks; how acquired. — Anyone who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to his exclusive use a trademark, a tradename, or a service mark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise, business or service of others. The ownership or possession of a trademark, tradename, service mark, heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner and to the same extent as are other property rights known to this law. (As amended by R.A. No. 638)" These provisions have been interpreted in Sterling Products International, Inc. v. Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) in this way: "A rule widely accepted and firmly entrenched because it has come down through the years is that actual use in commerce or business is a prerequisite to the acquisition of the right of ownership over a trademark. xxx xxx xxx " . . . Adoption alone of a trademark would not give exclusive right thereto. Such right grows out of their actual use. Adoption is not use. One may make advertisements, issue circulars, give out price lists on certain goods; but these alone would not give exclusive right of use. For trademark is a creation of use. The underlying reason for all these is that purchasers have come to understand the mark as indicating the origin of the wares. Flowing from this is the trader's right to protection in the trade he has built up and the goodwill he has accumulated from use of the trademark. . . . ." In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it in commerce.

We rule in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]): "3. The Trademark law is very clear. It requires actual commercial use of the mark prior to its registration. There is no dispute that respondent corporation was the first registrant, yet it failed to fully substantiate its claim that it used in trade or business in the Philippines the subject mark; it did not present proof to invest it with exclusive, continuous adoption of the trademark which should consist among others, of considerable sales since its first use. The invoices (Exhibits 7, 7-a, and 8-b) submitted by respondent which were dated way back in 1957 show that the zippers sent to the Philippines were to be used as 'samples' and 'of no commercial value'. The evidence for respondent must be clear, definite and free from inconsistencies. (Sy Ching v. Gaw Lui, 44 SCRA 148-149) 'Samples' are not for sale and therefore, the fact of exporting them; to the Philippines cannot be considered to be equivalent to the 'use' contemplated by the law. Respondent did not expect income from such 'samples'. There were no receipts to establish sale, and no proof were presented to show that they were subsequently sold in the Philippines." (Pagasa Industrial Corp. v. Court of Appeals, 118 SCRA 526 [1982]; Emphasis Supplied) The records show that the petitioner has never conducted any business in the Philippines. It has never promoted its tradename or trademark in the Philippines. It has absolutely no business goodwill in the Philippines. It is unknown to Filipinos except the very few who may have noticed it while travelling abroad. It has never paid a single centavo of tax to the Philippine government. Under the law, it has no right to the remedy it seeks. LexLib There can be no question from the records that the petitioner has never used its tradename or trademark in the Philippines. The petitioner's witnesses, Mr. Mayumi Takayama and Mr. Hieoya Murakami, admitted that: 1) The petitioner's company is not licensed to do business in the Philippines; 2) The petitioner's trademark is not registered under Philippine law; and 3) The petitioner's trademark is not being used on products in trade, manufacture, or business in the Philippines. It was also established from the testimony of Atty. Villasanta, petitioner's witness, that the petitioner has never engaged in promotional activities in the Philippines to popularize its trademark because not being engaged in business in the Philippines, there is no need for advertising. The claim of the petitioner that millions of dollars have been spent in advertising the petitioner's products, refers to advertising in Japan or other foreign places.

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No promotional activities have been undertaken in the Philippines, by the petitioner's own admission. Any goodwill, reputation, or knowledge regarding the name Isetann is purely the work of the private respondent. Evidence was introduced on the extensive promotional activities of the private respondent. It might be pertinent at this point to stress that what is involved in this case is not so much a trademark as a tradename. Isetann Department Store, Inc. is the name of a store and not of products sold in various parts of the country. This case must be differentiated from cases involving products bearing such familiar names as "Colgate", "Singer", "Toyota", or "Sony" where the products are marketed widely in the Philippines. There is no product with the name "Isetann" popularized with that brand name in the Philippines. Unless one goes to the store called Isetann in Manila, he would never know what the name means. Similarly, until a Filipino buyer steps inside a store called "Isetan" in Tokyo or Hongkong, that name would be completely alien to him. The records show that among Filipinos, the name cannot claim to be internationally well-known. The rule is that the findings of facts of the Director of Patents are conclusive on the Supreme Court, provided they are supported by substantial evidence. (Chua Che v. Phil. Patent Office, 13 SCRA 67 [1965]; Chung Te v. Ng Kian Giab, 18 SCRA 747 [1966]; Marvex Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966]; Lim Kiah v. Kaynee, Co. 25 SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34 SCRA 570 [1970]. The conclusions of the Director of Patents are likewise based on applicable law and jurisprudence: "What is to be secured from unfair competition in a given territory is the trade which one has in that particular territory. There is where his business is carried on where the goodwill symbolized by the trademark has immediate value; where the infringer may profit by infringement. LLphil There is nothing new in what we now say. Plaintiff itself concedes (Brief for Plaintiff-Appellant, p. 88) that the principle of territoriality of the Trademark law has been recognized in the Philippines, citing Ingenohl v. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the law of trademarks 'rests upon the doctrine of nationality or territoriality." (2 Callmann, Unfair Competition and Trademarks, 1945, ed., p. 1006) (Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 27 SCRA 1214 [1969]; Emphasis supplied) The mere origination or adoption of a particular tradename without actual use thereof in the market is insufficient to give any exclusive right to its use (Johnson Mfg, Co. v. Leader Filling Stations Corp. 196 N.E. 852, 291 Mass. 394), even though such adoption is publicly declared, such as by use of the

name in advertisements, circulars, price lists, and on signs and stationery. (Consumers Petroleum Co. v. Consumers Co. of Ill. 169 F 2d 153). The Paris Convention for the Protection of Industrial Property does not automatically exclude all countries of the world have signed it from using a tradename which happens to be used in one country. To illustrate — If a taxicab or bus company in a town in the United Kingdom or India happens to use the tradename "Rapid Transportation", it does not necessarily follow that "Rapid" can no longer be registered in Uganda, Fiji, or the Philippines. As stated by the Director of Patents — "Indeed, the Philippines is a signatory to this Treaty and, hence, we must honor our obligation thereunder on matters concerning internationally known or well known marks. However, this Treaty provision clearly indicated the conditions which must exist before any trademark owner can claim and be afforded rights such as the Petitioner herein seeks and those conditions are that: a) the mark must be internationally known or well known; b) the subject of the right must be a trademark, not a patent or copyright or anything else; c) the mark must be for use in the same or similar kinds of goods, and d) the person claiming must be the owner of the mark (The Parties Convention Commentary on the Paris Convention. Article by Dr. Bogach, Director General of the World Intellectual Property Organization, Geneva, Switzerland, 1985)". The respondent registered its trademark in 1979. It has continuously used that name in commerce. It has established a goodwill through extensive advertising. The people who buy at Isetann Store do so because of Isetann's efforts. There is no showing that the Japanese firm's registration in Japan or Hongkong has any influence whatsoever on the Filipino buying public. cdrep WHEREFORE, premises considered, the petition is hereby DISMISSED. SO ORDERED. Fernan, C .J ., Paras and Bidin, JJ ., concur. FIRST DIVISION [G.R. No. L-28554. February 28, 1983.]

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UNNO COMMERCIAL ENTERPRISES, INCORPORATED, petitioner, vs. GENERAL MILLING CORPORATION and TIBURCIO S. EVALLE, in his capacity as Director of Patents, respondents. Salem & Dionisio Law Office for petitioner. Siquion Reyna, Montecillo, Bello & Ongsiako for private respondent. SYLLABUS 1. MERCANTILE LAW; TRADEMARK; RIGHT TO REGISTER IT, BASED ON OWNERSHIP. — When the applicant is not the owner of the trademark being applied for, he has no right to apply for the registration of the same. Under the Trademark Law only the owner of the trademark, trade name or service mark used to distinguish his goods, business or service from the goods, business or service of others is entitled to register the same. A local importer, however, may make application for the registration of a foreign trademark, trade name or other mark of ownership. 2. ID.; ID.; OWNER; SCOPE UNDER THE TRADEMARK LAW. — The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or other mark of ownership, unless such importer is actually the owner thereof in the country from which the goods are imported. Thus this Court, has on several occasions ruled that where the applicant's alleged ownership is not shown in any notarial document and the applicant appears to be merely an importer or distributor of the merchandise covered by said trademark, its application cannot be granted. 3. ID.; ID.; DEED OF ASSIGNMENT; PROOF OF OWNERSHIP. — The Director of Patents correctly found that ample evidence was presented that Centennial Mills, Inc. was the owner and prior user in the Philippines of the trademark "All Montana" through a local importer and broker. The Deed of Assignment itself constitutes sufficient proof of its ownership of the trademark "All Montana, "showing that Centennial Mills was a corporation duly organized and existing under and by virtue of the laws of the State of Oregon, U.S.A. with principal place and business at Portland, Oregon, U.S.A. and the absolute and registered owner of several trademarks for wheat flour, i.e. (Imperial, White Lily, Duck, General, Swan, White Horse, Vinta, El Paro, Baker's Joy, Choice, Red Bowl, All Montana and Dollar) all of which were assigned by it to respondent General Milling Corporation. 4. ID.; ID.; OWNERSHIP NOT ACQUIRED BY REGISTRATION ALONE. — Petitioner's contention that it is the owner of the mark "All Montana'' because of its certificate of registration issued by the Director of Patents, must fail, since ownership of a trademark is not acquired by the mere fact of registration alone. Registration merely creates a prima facie presumption of the validity of the registration, of the registrant's ownership of

the trademark and of the exclusive right to the use thereof. Registration does not perfect a trademark right. As conceded itself by petitioner, evidence may be presented to overcome the presumption. Prior use by one will controvert a claim of legal appropriation by subsequent users. 5. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT BY THE DIRECTOR OF PATENTS; CONCLUSIVE IF SUPPORTED BY SUBSTANTIAL EVIDENCE. — It is well-settled that we are precluded from making further inquiry, since the findings of fact of the Director of Patents in the absence of any showing that there was grave abuse of discretion is binding on us and the findings of facts by the Director of Patents are deemed conclusive in the Supreme Court provided that they are supported by substantial evidence. Petitioner has failed to show that the findings of fact of the Director of Patents are not substantially supported by evidence nor that any grave abuse of discretion was committed. 6. MERCANTILE LAW; DIRECTOR OF PATENTS; AUTHORITY TO ORDER CANCELLATION OF A REGISTERED MARK OR TRADENAME IN AN INTER PARTES CASE. — Finally, the Court finds without merit petitioner's argument that the Director of Patents could not order the cancellation of its certificate of registration in an interference proceeding and that the question of whether or not a certificate of registration is to be cancelled should have been brought in cancellation proceedings. Under Rule 178 of the Rules of the Patent Office in Trademark Cases, the Director of Patents is expressly authorized to order the cancellation of a registered mark or trade name or name or other mark of ownership in an inter partes case, such as the interference proceeding at bar. D E C I S I O N TEEHANKEE, J p: The Court affirms respondent Director of Patent's decision declaring respondent General Milling Corporation as the prior user of the trademark "All Montana" on wheat flour in the Philippines and ordering the cancellation of the certificate of registration for the same trademark previously issued in favor of petitioner Unno Commercial Enterprises, Incorporated, it appearing that Unno Commercial Enterprises, Inc. merely acted as exclusive distributor of All Montana wheat flour in the Philippines. Only the owner of a trademark, trade name or service mark may apply for its registration and an importer, broker, indentor or distributor acquires no rights to the trademark of the goods he is dealing with in the absence of a valid transfer or assignment of the trade mark.

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On December 11, 1962, respondent General Milling Corporation filed an application for the registration of the trademark "All Montana" to be used in the sale of wheat flour. In view of the fact, that the same trademark was previously registered in favor of petitioner Unno Commercial Enterprises, Inc., the Chief Trademark Examiner of the Philippines Patent Office declared an interference proceeding 1 between respondent corporation's application (Serial No. 9732), as Junior/Party-Applicant, and petitioner company's registration (Registration No. 9589), as Senior Party-Applicant, docketed in the Philippines Patent Office as Inter Partes Case No. 313, to determine which party has previously adopted and used the trademark "All Montana". Respondent General Milling Corporation, in its application for registration, alleged that it started using the trademark "All Montana" on August 31, 1955 and subsequently was licensed to use the same by Centennial Mills, Inc. by virtue of a deed of assignment executed on September 20, 1962. On the other hand, petitioner Unno Commercial Enterprises, Inc. argued that the same trademark had been registered in its favor on March 8, 1962 asserting that it started using the trademark on June 30, 1956, as indentor or broker for S.H. Huang Bros. & Co., a local firm. LLpr The Director of Patents, after hearing, ruled in favor of respondent General Milling Corporation and rendered its decision as follows: "However, there is testimony in the record (t.s.n., pp. 11-12, Jan. 17, 1967, testimony of Jose Uy) to the effect that, indispensable, "ALL MONTANA" wheat flour is a premium flour produced from premium wheat coming from the State of Montana, U.S.A. It is apparent that the trademark is primarily geographically descriptive of the goods. It is therefore a matter overlooked by the Trademark Examiner, and it is incumbent upon him to determine if the applicant should claim and is qualified to claim distinctiveness under Section 4(f) of the Trademark Statute. Otherwise, it is registrable on the Supplemental Register and should thus be registered therein. "WHEREFORE, the Junior Party-Applicant is adjudged prior user of the trademark ALL MONTANA, but because it is primarily geographically descriptive, the application is herein remanded to the Chief Trademark Examiner for proper proceeding before issuance of the certificate of registration. "The certificate of registration issued to the Senior Party is ordered cancelled. "IT IS SO ORDERED." After its motion for reconsideration was denied, petitioner brought the instant petition seeking the reversal of the decision and praying that it be declared the owner and prior user of the trademark "All Montana" on wheat flour.

Petitioner based its claim of ownership over the trademark in question by the fact that it acted as an indentor or broker for S. H. Huang Bros. & Co., a local importer of wheat flour, offering as evidence the various shipments, documents, invoices and other correspondence of Centennial Mills, Inc., shipping thousand of bags of wheat flour bearing the trademark "All Montana" to the Philippines. Petitioner argued that these documents, invoices and correspondence proved the fact that it has been using the trademark "All Montana" as early as 1955 in the concept of an owner and maintained that anyone, whether he is only an importer, broker or indentor can appropriate, use and own a particular mark of its own choice although he is not the manufacturer of the goods he deals with. Relying on the provisions of Section 2-A of the Trademarks Law 2 (Republic Act 166), petitioner insists that "the appropriation and ownership of a particular trademark is not merely confined to producers or manufacturers but likewise to anyone who lawfully deals in merchandise who renders any lawful service in commerce, like petitioner in the case at bar." 3 The right to register trademark is based on ownership. 4 When the applicant is not the owner of the trademark being applied for, he has no right to apply for the registration of the same. 5 Under the Trademark Law only the owner of the trademark, trade name or service mark used to distinguish his goods, business or service from the goods, business or service of others is entitled to register the same. 6 The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or other mark of ownership, unless such importer is actually the owner thereof in the country from which the goods are imported. A local importer, however, may make application for the registration of a foreign trademark, trade name or service mark if he is duly authorized by the actual owner of the name or other mark of ownership. 7 Thus, this Court, has on several occasions ruled that where the applicant's alleged ownership is not shown in any notarial document and the applicant appears to be merely an importer or distributor of the merchandise covered by said trademark, its application cannot be granted. 8 Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act No. 166) allows one "who lawfully produces or deals in merchandise . . . or who engages in any lawful business or who renders any lawful service in commerce, by actual use thereof . . . (to) appropriate to his exclusive use a trademark, or a service mark not so appropriated by another." In the case at bar, the evidence showed that the trademark "All Montana" was owned and registered in the name of Centennial Mills, Inc. which later transferred it to

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respondent General Milling Corporation by way of a deed of assignment. It is undisputed that way back in March, 1955, Centennial Mills, Inc. under the tradename Wenatchee Milling Co., exported flour to the Philippines, through its distributor, herein petitioner Unno Commercial Enterprises, Inc. which acted as indentor or broker for the firm S. H. Huang Bros. & Co. However, because of increased taxes and subsidies, Centennial Mills discontinued shipments of flour in the Philippines and eventually sold its brands for wheat flour, including "All Montana" brand to respondent General Milling Corporation in consideration of 1,000 shares of stock of respondent corporation with a par value of P100.00 per share or a total of P100,000.00. Respondent General Milling Corporation, since the start of the operation in 1961 of its flour mills located in Lapu-lapu City, Cebu has been manufacturing and selling "All Montana" flour in the Philippines. As against petitioner's argument that respondent failed to establish convincingly the ownership of the trademark "All Montana" by its assignor Centennial Mills, Inc., the Director of Patents correctly found that ample evidence was presented that Centennial Mills, Inc. was the owner and prior user in the Philippines of the trademark "All Montana" through a local importer and broker. The Deed of Assignment itself constitutes sufficient proof of its ownership of the trademark "All Montana," showing that Centennial Mills was a corporation duly organized and existing under and by virtue of the laws of the State of Oregon, U.S.A. with principal place and business at Portland, Oregon, U.S.A. and the absolute and registered owner of several trademarks for wheat flour, i.e. (Imperial, White Lily, Duck, General, Swan, White Horse, Vinta, El Paro, Baker's Joy, Choice, Red Bowl, All Montana and Dollar) all of which were assigned by it to respondent General Milling Corporation. The deed of assignment was signed by its president, Dugald MacGregor, duly acknowledged before James Hunt, a notary public for the State of Oregon, accompanied by a certification issued by the Secretary of State of the State of Oregon stating that the said James Hunt is a duly qualified Notary Public with full power and authority to take acknowledgments of all oaths and that full faith and credit should be given to his official acts as notary public. The Director of Patents likewise correctly rejected petitioner's contention that in a 1954 conference in Manila the ownership and use by petitioner of the brand "All Montana" was agreed upon, on the contrary finding that "Details of that meeting were, however, explained by Mr. Dugald MacGregor, President of Centennial Mills, Inc., as the Junior Party's rebuttal witness. Mr. MacGregor confirmed holding such conference in a restaurant in Manila with representatives of the Senior Party, namely; Messrs. Jose Uy, Francisco Gonzales and S.H. Huang, although he could not remember the name of the

restaurant. He further explained that his company owned the trademark; that it had been using the mark in the United States; and that ownership of the mark had never been conferred upon any other company, much less the Senior Party"; and "Inasmuch as it was not the owner of the trademark, the Senior Party could not be regarded as having used and adopted it, and had no right to apply for its registration. It acknowledged that it was a mere importer of flour, and a mere importer and distributor acquires no rights in the mark used on the imported goods by the foreign exporter in the absence of an assignment of any kind . . ., Trademarks used and adopted on goods manufactured or packed in a foreign country in behalf of a domestic importer, broker, or indentor and distributor are presumed to be owned by the manufacturer or packer, unless there is a written agreement clearly showing that ownership vests in the importer, broker, indentor or distributor." Thus, petitioner's contention that it is the owner of the mark "All Montana" because of its certificate of registration issued by the Director of Patents, must fail, since ownership of a trademark is not acquired by the mere fact of registration alone. 9 Registration merely creates a prima facie presumption of the validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use thereof. 10 Registration does not perfect a trademark right. 11 As conceded itself by petitioner, evidence may be presented to overcome the presumption. Prior use by one will controvert a claim of legal appropriation by subsequent users. In the case at bar, the Director of Patents found that "ample evidence was presented in the record that Centennial Mills, Inc. was the owner and prior user in the Philippines of the trademark 'All Montana' through a local importer and broker. Use of a trademark by a mere importer, indentor or exporter (the Senior Party herein) inures to the benefit of the foreign manufacturer whose goods are identified by the trademark. The Junior Party has hereby established a continuous chain of title and, consequently, prior adoption and use" and ruled that "based on the facts established, it is safe to conclude that the Junior Party has satisfactorily discharged the burden of proving priority of adoption and use and is entitled to registration." It is well-settled that we are precluded from making further inquiry, since the findings of fact of the Director of Patents in the absence of any showing that there was grave abuse of discretion is binding on us 12 and the findings of facts by the Director of Patents are deemed conclusive in the Supreme Court provided that they are supported by substantial evidence. 13 Petitioner has failed to show that the findings of fact of the Director of Patents are not substantially supported by evidence nor that any grave abuse of discretion was committed. LexLib

9

Finally, the Court finds without merit petitioner's argument that the Director of Patents could not order the cancellation of its certificate of registration in an interference proceeding and that the question of whether or not a certificate of registration is to be cancelled should have been brought in cancellation proceedings. Under Rule 178 of the Rules of the Patent Office in Trademark Cases, 14 the Director of Patents is expressly authorized to order the cancellation of a registered mark or trade name or name or other mark of ownership in an inter partes case, such as the interference proceeding at bar. 15 WHEREFORE, the appealed decision is hereby affirmed. No costs. Melencio-Herrera, Plana, Vazquez, Relova and Gutierrez, Jr., JJ., concur. ESSO STANDARD EASTERN, INC. vs. COURT OF APPEALS, ET AL. 201 Phil. 803 FIRST DIVISION [G.R. No. L-29971. August 31, 1982.] ESSO STANDARD EASTERN, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS ** and UNITED CIGARETTE CORPORATION, respondents. Gonzalo W. Gonzales and Associates for petitioner. The Solicitor General for respondents. SYNOPSIS Petitioner filed a case against private respondent in the Court of First Instance of Manila for trademark infringement alleging that after the latter had acquired in November, 1963 the business, factory and patent rights of La Oriental Tobacco Corporation, it began to use the trademark ESSO on its cigarettes, the same trademark used by petitioner in its quality petroleum products which was likely to cause confusion or deception on the part of the purchasing public as to its origin or source, to the detriment of its own products. In its answer, private respondent admitted the use of the trademark ESSO on its own product of cigarettes but claimed that these were not identical to those produced and sold by the petitioner. The trial court found private respondent guilty of infringement of trademark. On appeal, the judgment was reversed and the complaint was dismissed. Hence, this petition.

On certiorari, the Supreme Court affirmed the appellate court's decision ruling that the goods are obviously different from each other as to make it unlikely that purchasers would think that petitioner is the manufacturer of respondent's goods. The mere fact that one person has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others on unrelated articles of a different kind. Judgment affirmed. SYLLABUS 1. COMMERCIAL LAW; PATENTS; INFRINGEMENT OF TRADEMARKS; MEANING OF. — The law defines infringement as the use without consent of the trademark owner of any "reproduction, counterfeit, copy or colorable imitation of any registered mark or trademark 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 tradename and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, package, wrappers, receptacles, or advertisement intended to be used upon or in connection with such goods, business or services." Implicit in this definition is the concept that the goods must be so related that there is a likelihood either of confusion of goods or business (Sec. 22 Trademark Law; 2 Callman, Unfair Competition and Trademarks, p. 1324). 2. ID.; ID.; ID.; NOT A CASE OF. — In the situation before Us, the goods are obviously different from each other with absolutely no iota of similitude. They are so foreign to each other as to make it unlikely that the purchasers would think that petitioner is the manufacturer of respondent's goods. The mere fact that one person has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others on unrelated articles of a different kind, (American Foundries vs. Robertson, 269 US 372, 381.) D E C I S I O N TEEHANKEE, J p: The Court affirms on the basis of controlling doctrine the appealed decision of the Court of Appeals reversing that of the Court of First Instance of Manila and dismissing the complaint filed by herein petitioner against private respondent for trade infringement for using petitioner's trademark ESSO, since it clearly appears that the goods on which the trademark ESSO is used by respondent is non-competing and entirely unrelated to the products of

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petitioner so that there is no likelihood of confusion or deception on the part of the purchasing public as to the origin or source of the goods. cdasoa Petitioner Esso Standard Eastern, Inc., 1 then a foreign corporation duly licensed to do business in the Philippines, is engaged in the sale of petroleum products which are identified with its trademark ESSO (which as successor of the defunct Standard Vacuum Oil Co. it registered as a business name with the Bureaus of Commerce and Internal Revenue in April and May, 1962). Private respondent in turn is a domestic corporation then engaged in the manufacture and sale of cigarettes, after it acquired in November, 1963 the business, factory and patent rights of its predecessor La Oriental Tobacco Corporation, one of the rights thus acquired having been the use of the trademark ESSO on its cigarettes, for which a permit had been duly granted by the Bureau of Internal Revenue. Barely had respondent as such successor started manufacturing cigarettes with the trademark ESSO, when petitioner commenced a case for trademark infringement in the Court of First Instance of Manila. The complaint alleged that the petitioner had been for many years engaged in the sale of petroleum products and its trademark ESSO had acquired a considerable goodwill to such an extent that the buying public had always taken the trademark ESSO as equivalent to high quality petroleum products. Petitioner asserted that the continued use by private respondent of the same trademark ESSO on its cigarettes was being carried out for the purpose of deceiving the public as to its quality and origin to the detriment and disadvantage of its own products. In its answer, respondent admitted that it used the trademark ESSO on its own product of cigarettes, which was not identical to those produced and sold by petitioner and therefore did not in any way infringe on or imitate petitioner's trademark. Respondent contended that in order that there may be trademark infringement, it is indispensable that the mark must be used by one person in connection or competition with goods of the same kind as the complainant's. The trial court, relying on the old cases of Ang vs. Teodoro 2 and Arce & Sons, Inc. vs. Selecta Biscuit Company, 3 referring to related products, decided in favor of petitioner and ruled that respondent was guilty of infringement of trademark. On appeal, respondent Court of Appeals found that there was no trademark infringement and dismissed the complaint. Reconsideration of the decision having been denied, petitioner appealed to this Court by way of certiorari to reverse the decision of the Court of Appeals and to reinstate the decision of the Court of First Instance of Manila. The Court finds no ground for granting the petition.

The law defines infringement as the use without consent of the trademark owner of any "reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services." 4 Implicit in this definition is the concept that the goods must be so related that there is a likelihood either of confusion of goods or business. 5 But likelihood of confusion is a relative concept; to be determined only according to the particular, and sometimes peculiar, circumstances of each case. 6 It is unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.: 7 "In trademark cases, even more than in other litigation, precedent must be studied in the light of the facts of the particular case." It is undisputed that the goods on which petitioner uses the trademark ESSO, petroleum products, and the product of respondent, cigarettes, are non-competing. But as to whether trademark infringement exists depends for the most part upon whether or not the goods are so related that the public may be, or is actually, deceived and misled that they came from the same maker or manufacturer. For non-competing goods may be those which, though they are not in actual competition, are so related to each other that it might reasonably be assumed that they originate from one manufacturer. Non-competing goods may also be those which, being entirely unrelated, could not reasonably be assumed to have a common source. In the former case of related goods, confusion of business could arise out of the use of similar marks; in the latter case of non-related goods, it could not. 8 The vast majority of courts today follow the modern theory or concept of "related goods" 9 which the Court has likewise adopted and uniformly recognized and applied. 10 Goods are related when they belong to the same class or have the same descriptive properties; when they possess the same physical attributes or essential characteristics with reference to their form, composition, texture or quality. They may also be related because they serve the same purpose or are sold in grocery stores. 11 Thus, biscuits were held related to milk because they are both food products. 12 Soap and perfume, lipstick and

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nail polish are similarly related because they are common household items nowadays. 13 The trademark "Ang Tibay" for shoes and slippers was disallowed to be used for shirts and pants because they belong to the same general class of goods. 14 Soap and pomade, although non-competitive, were held to be similar or to belong to the same class, since both are toilet articles. 15 But no confusion or deception can possibly result or arise when the name "Wellington" which is the trademark for shirts, pants, drawers and other articles of wear for men, women and children is used as a name of a department store. 16 Thus, in Acoje Mining Co., Inc. vs. Director of Patents, 17 the Court, through now Chief Justice Fernando, reversed the patent director's decision on the question of "May petitioner Acoje Mining Company register for the purpose of advertising its product, soy sauce, the trademark LOTUS, there being already in existence one such registered in favor of the Philippine Refining Company for its product, edible oil, it being further shown that the trademark applied for is in smaller type, colored differently, set on a background which is dissimilar as to yield a distinct appearance?" and ordered the granting of petitioner's application for registration ruling that "there is quite a difference between soy sauce and edible oil. If one is in the market for the former, he is not likely to purchase the latter just because of the trademark "LOTUS" and "when regard is had for the principle that the two trademarks in their entirety as they appear in their respective labels should be considered in relation to the goods advertised before registration could be denied, the conclusion is inescapable that respondent Director ought to have reached a different conclusion." By the same token, in the recent case of Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 18 the Court upheld the patent director's registration of the same trademark CAMIA for herein respondent's product of ham notwithstanding is already being used by herein petitioner for a wide range of products: lard, butter, cooking oil, abrasive detergents, polishing materials and soap of all kinds. The Court, after noting that the same CAMIA trademark had been registered by two other companies, Everbright Development Company and F. E. Zuellig, Inc. for their respective products of thread and yarn (for the former) and textiles, embroideries and laces (for the latter) ruled that "while ham and some of the products of petitioner are classified under Class 47 (Foods and Ingredients of Food), this alone cannot serve as the decisive factor in the resolution of whether or not they are related goods. Emphasis should be on the similarity of the products involved and not on the arbitrary classification or general description of their

properties or characteristics." The Court, therefore, concluded that "In fine, We hold that the businesses of the parties are noncompetitive and their products so unrelated that the use of identical trademarks is not likely to give rise to confusion, much less cause damage to petitioner." In the situation before us, the goods are obviously different from each other — with "absolutely no iota of similitude" 19 as stressed in respondent court's judgment. They are so foreign to each other as to make it unlikely that purchasers would think that petitioner is the manufacturer of respondent's goods. The mere fact that one person has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others on unrelated articles of a different kind. 20 Petitioner uses the trademark ESSO and holds certificate of registration of the trademark for petroleum products, including aviation gasoline, grease, cigarette lighter fluid and other various products such as plastics, chemicals, synthetics, gasoline solvents, kerosene, automotive and industrial fuel, bunker fuel, lubricating oil, fertilizers, gas, alcohol, insecticides and the "ESSO Gasul" burner, while respondent's business is solely for the manufacture and sale of the unrelated product of cigarettes. The public knows too well that petitioner deals solely with petroleum products that there is no possibility that cigarettes with ESSO brand will be associated with whatever good name petitioner's ESSO trademark may have generated. Although petitioner's products are numerous, they are of the same class or line of merchandise which are noncompeting with respondent's product of cigarettes, which as pointed out in the appealed judgment is beyond petitioner's "zone of potential or natural and logical expansion." 21 When a trademark is used by a party for a product in which the other party does not deal, the use of the same trademark on the latter's product cannot be validly objected to. 22 Another factor that shows that the goods involved are non-competitive and non-related is the appellate court's finding that they flow through different channels of trade, thus: "The products of each party move along and are disposed through different channels of distribution. The (petitioner's) products are distributed principally through gasoline service and lubrication stations, automotive shops and hardware stores. On the other hand, the (respondent's) cigarettes are sold in sari-sari stores, grocery stores, and other small distributor outlets. (Respondent's) cigarettes are even peddled in the streets while (petitioner's) 'gasul' burners are not. Finally, there is a marked distinction between oil and tobacco, as well as between petroleum

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and cigarettes. Evidently, in kind and nature, the products of (respondent) and of (petitioner) are poles apart." 23 Respondent court correctly ruled that considering the general appearances of each mark as a whole, the possibility of any confusion is unlikely. A comparison of the labels of the samples of the goods submitted by the parties shows a great many differences on the trademarks used. As pointed out by respondent court in its appealed decision, "(A) witness for the plaintiff, Mr. Buhay, admitted that the color of the 'ESSO' used by the plaintiff for the oval design where the blue word ESSO contained is the distinct and unique kind of blue. In his answer to the trial court's question, Mr. Buhay informed the court that the plaintiff never used its trademarks on any product where the combination of colors is similar to the label of the Esso cigarettes," and "Another witness for the plaintiff, Mr. Tengco, testified that generally, the plaintiff's trademark comes all in either red, white, blue or any combination of the three colors. It is to be pointed out that not even a shade of these colors appears on the trademark of the appellant's cigarette. The only color that the appellant uses in its trademark is green." 24 Even the lower court, which ruled initially for petitioner, found that a "noticeable difference between the brand ESSO being used by the defendants and the trademark ESSO of the plaintiff is that the former has a rectangular background, while in that of the plaintiff the word ESSO is enclosed in an oval background." cdtai In point of fact and time, the Court's dismissal of the petition at bar was presaged by its Resolution of May 21, 1979 dismissing by minute resolution the petition for review for lack of merit in the identical case of Shell Company of the Philippines, Ltd. vs. Court of Appeals, 25 wherein the Court thereby affirmed the patent office's registration of the trademark SHELL as used in the cigarettes manufactured by therein respondent Fortune Tobacco Corporation notwithstanding the therein petitioner Shell Company's opposition thereto as the prior registrant of the same trademark for its gasoline and other petroleum trademarks, on the strength of the controlling authority of Acoje Mining Co. vs. Director of Patents, supra, and the same rationale that "(I)n the Philippines, where buyers of appellee's (Fortune Corp.'s) cigarettes, which are low cost articles, can be more numerous compared to buyers of the higher priced petroleum and chemical products of appellant (Shell Co.) and where appellant (Shell) is known to be in the business of selling petroleum and petroleum-based chemical products, and no others, it is difficult to conceive of confusion in the minds of the buying

public in the sense it can be thought that appellant (Shell) is the manufacturer of appellee's (Fortune's) cigarettes, or that appellee (Fortune) is the manufacturer or processor of appellant's (Shell's) petroleum and chemical products." 26 ACCORDINGLY, the petition is dismissed and the decision of respondent Court of Appeals is hereby affirmed. Melencio-Herrera Plana, Relova and Gutierrez, Jr., JJ., concur. Makasiar, J., is on official leave. Vasquez, J., took no part. Footnotes EN BANC [G.R. No. L-18289. March 31, 1964.] ANDRES ROMERO, petitioner, vs. MAIDEN FORM BRASSIERE CO., INC. and THE DIRECTOR OF PATENTS, respondents. Alafriz Law Office for petitioner. Ross, Selph & Carascoso for respondent Maiden Form Brassiere Co., Inc. Solicitor General and Tiburcio S. Evalle for respondent Director of Patents. SYLLABUS 1. TRADEMARKS; REGISTRABILITY; "ADAGIO" AS A MUSICAL TERM NOT A COMMON DESCRIPTIVE NAME FOR BRASSIERES. — The trademark "Adagio" is a musical term, which means slowly or in an easy manner, and when applied to brassieres is used in an arbitrary (fanciful) sense, not being a common descriptive name of a particular style of brassieres, and is therefore registrable. 2. ID.; ID.; LONG CONTINUOUS USE OF TRADEMARK DOES NOT RENDER IT DESCRIPTIVE OF A PRODUCT. — A company's long and continuous use of a trademark does not by itself render it more descriptive of the product. 3. ID.; ID.; USING TRADEMARK FOR ONE TYPE OF THE PRODUCT DOES NOT AFFECT ITS VALIDITY AS A TRADEMARK. — Where a product is usually of different types or styles and the manufacturer has used different trademarks for every type as shown by its labels, the mere fact that said manufacturer uses a trademark like "Adagio", for one type or style, does not affect the validity of such word as a trademark. 4. ID.; ABANDONMENT; TEMPORARY NON-USE OCCASIONED BY GOVERNMENT RESTRICTIONS NOT DEEMED ABANDONMENT. — Temporary non-use of a trademark occasioned by government restrictions,

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not being permanent, intentional and voluntary, does not affect the right to a trademark. 5. ID.; FOREIGN TRADEMARKS; MAY BE AVAILED OF IN THE PHILIPPINES IS A PARTY TO A TRADE MARK TREATY. — Section 37 of Republic Act No. 166 can be availed of only where the Philippines is a party to an international convention or treaty relating to trademarks, in which case the trademark sought to be registered need not be in use in the Philippines. D E C I S I O N BARRERA, J p: From the decision of the Director of Patents (of January 17, 1961) dismissing his petition for cancellation of the registration of the trademark "Adagio" for brassieres manufactured by respondent Maiden Form Brassiere Co., Inc., petitioner Andres Romero, interposed this appeal. On February 12, 1957, respondent company, a foreign corporation, filed with respondent Director of Patents an application for registration (pursuant to Republic Act No. 166) of the trademark 'Adagio" for the Brassieres manufactured by it. In its application, respondent company alleged that said trademark was first used by it in the United States on October 26, 1937, and in the Philippines on August 31, 1946, that it had been continuously used by it in trade in, or with the Philippines for over 10 years: that said trademark "is on the date of this application, actually used by respondent company on the following goods, classified according to the official classification of goods (Rule 82) — Brassieres, Class 40"; and that said trademark is applied or affixed by respondent to the goods by placing thereon a woven label on which the trademark is shown. Acting on said application, respondent Director, on August 13, 1957, approved for publication in the Official Gazette said trademark of respondent company, in accordance with Section 7 of Republic Act No. 166 (Trademark Law), having found, inter alia, that said trademark is "a fanciful and arbitrary use of a foreign word adopted by applicant as a trademark for its product; that it is neither a surname nor a geographical term, nor any that comes within the purview of Section 4 of Republic Act No. 166; and that the mark as used by respondent company convincingly shows that it identifies and distinguishes respondent company's goods from others." On October 17, 1957, respondent Director issued to respondent company a certificate of registration of its trademark "Adagio". On February 26, 1958, petitioner filed with respondent Director a petition for cancellation of said trademark, on the grounds that it is a common descriptive name of an article or substance on which the patent has expired; that its registration was obtained fraudulently or contrary to the provision of Section 4, Chapter II of Republic Act No. 166; and that the application for its

registration was not filed in accordance with the provisions of Section 37, Chapter XI of the same Act. Petitioner also alleged that said trademark has not become distinctive of respondent company's goods or business; that it has been used by respondent company to classify the goods (the brassieres) manufactured by it, in the same manner as petitioner uses the same; that said trademark has been used by petitioner for almost 6 years, that it has become a common descriptive name; and that it is not registered in accordance with the requirements of Section 37 (a), Chapter XI of Republic Act No. 166. Issues having been joined, the case was heard and, after hearing, respondent Director (on January 17, 1961) rendered the decision above adverted to. Petitioner filed a motion for reconsideration of said decision, on the grounds that (1) it is contrary to the evidence, and (2) it is contrary to law. Said motion was denied by respondent Director by resolution of March 7, 1961. Hence, this appeal. Appellant claims that the trademark "Adagio" has become a common descriptive name of a particular style of brassiere and is, therefore, unregistrable. It is urged that said trademark had been used by local brassiere manufacturers since 1948, without objection on the part of respondent company. This claim is without basis in fact. The evidence shows that the trademark "Adagio" is a musical term, which means slowly or in an easy manner, and was used as a trademark by the owners thereof (the Rosenthals of Maiden Form Co., New York) because they are musically inclined. Being a musical term, it is used in an arbitrary (fanciful) sense as a trademark for brassieres manufactured by respondent company. It also appears that respondent company has, likewise, adopted other musical terms such as "Etude" (Exh. W-2), "Chansonette" Exh. W-3), "Prelude" (Exh. W-4), "Over-ture" (Exh. W-6), and "Concerto" (Exh. V), to identify, as a trademark, the different styles or types of its brassieres. As respondent Director pointed out, "the fact that said mark is used also to designate a particular style of brassiere, does not affect its registrability as a trademark" (Kiekhaefer Corp. v. Willys-Overland Motors, Inc., 111 USPQ 105). It is not true that respondent company did not object to the use of said trademark by petitioner and other local brassiere manufacturers. The records show that respondent company's agent, Mr. Schwarzt, warned the Valleson Department Store to desist from the sale of the "Adagio" Royal Form brassieres manufactured by petitioner (t.s.n., pp. 27-28, Oct. 7, 1958), and even placed an advertisement (Exhs. 3 & 4) in the local newspapers (Manila Daily) Bulletin, Manila Times, Fookien Times, and others) warning

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the public against unlawful use of said trademark (t.s.n., p. 15 Aug. 17, 1959). The advertisement (Exh. U) in the Manila Times made by respondent company on February 9, 1958, was brought to petitioner's attention (t.s.n, p. 24 Oct. 7, 1958), which must have prompted him to file this present petition for cancellation, on February 26, 1958. On the other hand, respondent company's long and continuous use of the trademark "Adagio" has not rendered it merely descriptive of the product. In Winthrop Chemical Co. v. Blackman (268 NYC 653), it was held that widespread dissemination does not justify the defendants in the use of the trademark. "Veronal has been widely sold in this country by the plaintiff; over 5,250,000 packages have been sold since 1919. This is a consequence of the long and continued use by the plaintiff of this trademark and is the result of its efforts to inform the profession and the public of its product. This widespread dissemination does not justify the defendants on the use of this trademark. If this argument were sound, then every time a plaintiff obtained the result of having the public purchase of its article, that fact of itself would destroy a trademark. Arbitrary trademarks cannot become generic in this way. Jacobs vs. Beecham, 221 U.S. 263, 31 S. Ct. 555, 55 L. Ed. 729; Coca- Cola Co. v. Koke Co. of America, 254 U.S. 143, 41 S. Ct. 113, 65 L. Ed. 189." (Emphasis supplied) Appellant next contends that the trademark "Adagio" at the time it was registered (in the Philippines) on October 17, 1957, had long been used by respondent company, only "to designate a particular style or quality of brassiere and, therefore, is unregistrable as a trademark." In support of the contention, he alleges that the sentence "Maidenform bras are packaged for your quick shopping convenience. For other popular Maidenform styles write for free style booklet to: Maiden Form Brassiere Co., Inc., 200 Madison Avenue, New York 16, N.Y." printed on the package (Exh. W), shows that the trademark "Adagio" is used to designate a particular style or quality of brassiere. He also cites portions of testimonies of his witnesses Bautista and Barro, to the effect that said trademark refers to the style of brassieres sold in the stores of which they are salesmen. This contention is untenable. Said sentence appearing on the package (Exh. W), standing alone, does not conclusively indicate that the trademark "Adagio" is merely a style of brassiere. The testimony of Mr. Schwartz, witness of respondent company, belies petitioner's claim: "Q. There is a statement at the bottom of Exhibit W which reads, 'There is a Maidenform for every type of figure'. As you stated you are very familiar with these bras manufactured by Maidenform Brassier Company, what are these types of figures this Exhibit W refer to?

"A. This is a product sold primarily in the United States, they have cold climate there, and a style to suit the climate and we have different here. This kind of bra very seldom comes here. This type is very expensive and sold primarily in the United States. We do not sell it here; it is very expensive and import restrictions do not allow our dollar allocations for such sort." As to the testimonies of Bautista and Barro, they are mere conclusions of said witnesses. Note that when Bautista was asked why he considered the trademark "Adagio" as a style, he replied that the brand "Adagio" is attached to distinguish the style. He stated as follows: "Q. You said that those bras mentioned by you such as Adagio, Prelude, Alloette, are styles, will you please tell us the reason why you said that those are styles? "A. You know this brand like Adagio, Alloette are just attached to the bras just to distinguish the style. It is not the main brand." Barro, on the other hand, said that "Adagio" is a mark. She declared as follows: "Q. You state that you used to sell brassieres in the store in which you work; when customers come to your store and ask for brassieres, what do they usually ask from you? "A. Well, I tell you there are so many types and certain types of people asking for certain brassiere. There are people who ask for Royal Form, Adagio, and there are others who ask for Duchess Ideal Form, and so many kinds of marks." Brassieres are usually of different types or styles, and appellee has used different trademarks for every type as shown by its labels, Exhibits W-2 (Etude), W-3 (Chansonette), W-4 (Prelude), W-5 (Maidenette), and W-6 (Over-ture). The mere fact that appellee uses "Adagio" for one type or style, does not affect the validity of such word as a trademark. In the case of Kiekhaefer Corp., v. Willys-Overland Motors, 111 USPQ 105, it was held that the fact that the work "Hurricane" was used to designate only one model of automobile, did not affect the validity of that word as a trademark. In Minnesota Mining Co. v. Motloid Co., 74 USPQ 235, the applicant sought to register the letters "MM" in diagonal relationship within a circle. Applicant admitted that this mark was used only for its medium price and medium quality denture base materials. The Assistant Commissioner of Patents held: "It clearly appears, however, that the mark serves to indicate origin of applicant's goods; and the fact that it is used on only one of several types or grades does not affect its registrability as a trademark." Appellant also claims that respondent Director erred in registering the trademark in question, despite appellee's non-compliance with Section 37, paragraphs 1 and 4(a) of Republic Act No. 166.

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This contention flows from a misconception of the application for the registration of trademark of respondent company. As we see it, respondent's application was filed under the provisions of Section 2 of Republic Act No. 166 as amended by Section 1 of Republic Act 865 which reads as follows: "SEC. 2. What are registrable. — Trademarks, . . . owned by persons, corporations, partnerships or associations domiciled . . . in any foreign country may be registered in accordance with the provisions of this Act; Provided, That said trademarks, trade-names, or service marks are actually in use in commerce and services not less than two months in the Philippines before the time the applications for registrations are filed: . . ." Section 37 of Republic Act No. 166 can be availed of only where the Philippines is a party to an international convention or treaty relating to trademarks, in which case the trade-mark sought to be registered need not be in use in the Philippines. The applicability of Section 37 has been commented on by the Director of Patents, in this wise: "Trademark rights in the Philippines, without actual use of the trademark, in this country can, of course, be created artificially by means of a treaty or convention with another country or countries. Section 37 of the present Philippine Trademark Law, Republic Act No. 166, (incorporated as Rule 82 in the Rules of Practice for Registration of Trademarks) envisions the eventual entrance of the Philippines into such convention or treaty. It is provided in said section that applications filed thereunder need not allege use in the Philippines of the trademark sought to be registered. The Philippines has, however, not yet entered into any such treaty or convention and, until she does, actual use in the Philippines of the trademark sought to be registered and allegation in the application of such fact, will be required in all applications for original or renewal registration submitted to the Philippine Patent Office". (Circular Release No. 8) Appellant, likewise, contends that the registration of the trademark in question was fraudulent or contrary to Section 4 of Republic Act No. 166. There is no evidence to show that the registration of the trademark "Adagio" was obtained fraudulently by appellee. The evidence on record shows, on the other hand, that the trademark "Adagio" was first used exclusively in the Philippines by appellee in the year 1932. There, being no evidence of use of the mark by others before 1932, or that appellee abandoned use thereof, the registration of the mark was made in accordance with the Trademark Law. Granting that appellant used the mark when appellee stopped using it during the period of time that the Government imposed restrictions on importation of respondent's brassiere bearing the trademark, such temporary non-use did not affect the rights of appellee because it was occasioned by government restrictions and was not permanent, intentional, and voluntary.

"To work an abandonment, the disuse must be permanent and not ephemeral; it must be intentional and voluntary, and not involuntary or even compulsory. There must be a thoroughgoing discontinuance of any trade-mark use of the mark in question" (Callman, Unfair Competition and Trademark, 2nd Ed., p. 1341). The use of the trademark by other manufacturers did not indicate an intention on the part of appellee to abandon it. "The instances of the use by others of the term 'Budweiser', cited by the defendant, fail, even when liberally construed, to indicate an intention upon the part of the complainant to abandon its rights to that name. 'To establish the defense of abandonment, it is necessary to show not only acts indicating a practical abandonment, but an actual intent to abandon.' Saxlehner v. Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 60)." (Anheuser-Busch, Inc. v. Budweiser Malt Products Corp., 287 E. 245). Appellant next argues that respondent Director erred in declaring illegal the appropriation in the Philippines of the trademark in question by appellant and, therefore, said appropriation did not affect appellee's right thereto and the subsequent registration thereof. Appellant urges that its appropriation of the trademark in question cannot be considered illegal under Philippine laws, because of non-compliance by appellee of Section 37 of Republic Act No. 166. But we have already shown that Section 37 is not the provision invoked by respondent because the Philippines is not as yet a party to any international convention or treaty relating to trademarks. The case of United Drug Co. v. Rectanus, 248, U.S. 90, 39 S. Ct. 48, 63 L. Ed. 141, cited by appellant, is not applicable to the present case, as the records show that appellee was the first user of the trademark in the Philippines, whereas appellant was the later user. Granting that appellant used the trademark at the time appellee stopped using it due to government restrictions on certain importations, such fact did not as heretofore stated, constitute abandonment of the trademark as to entitle anyone to its free use. "Non-use because of legal restrictions is not evidence of an intent to abandon. Non-use of their ancient trade-mark and the adoption of new marks by the Carthusian Monks after they had been compelled to leave France was consistent with an intention to retain their right to use their old mark. Abandonment will not be inferred from a disuse over a period of years occasioned by statutory restrictions on the same of liquor." (Nims, Unfair Competition and Trade-Marks, p. 1269) IN VIEW OF ALL THE FOREGOING, we are of the opinion and so hold, that respondent Director of Patents did not err in dismissing the present petition for cancellation of the registered trademark of appellee company, and the

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decision appealed from is therefore hereby affirmed, with costs against the appellant. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur. Concepcion, J., took no part. FIRST DIVISION [G.R. No. L-24075. January 31, 1974.] CRISANTA Y. GABRIEL, petitioner, vs. DR. JOSE R. PEREZ and HONORABLE TIBURCIO EVALLE as Director of Patents, respondents. Paredes, Poblador, Cruz & Nazareno for petitioner. Jesus I . Santos for respondent Dr. Jose R. Perez. Solicitor General Antonio P. Barredo, Assistant Solicitor General Antonio G. Ibarra and Solicitor Alicia V . Sempio-Diy for respondent Director of Patents. D E C I S I O N MAKASIAR, J p: Petition for review of the decision dated July 18, 1964 of the respondent Director of Patents denying the petition of herein petitioner Crisanta Y. Gabriel to cancel and revoke certificate of registration No. SR-389 covering the trademark "WONDER" used on beauty soap issued on May 11, 1961 to herein private respondent Dr. Jose R. Perez. On October 19, 1962, petitioner Crisanta Y. Gabriel filed with the Patent Office a petition for cancellation of the trademark "WONDER from the supplemental register alleging that the registrant was not entitled to register the said trademark at the time of his application for registration; that the trademark was not used and has not been actually used by registrant at the time he applied for its registration; that it was thru fraud and misrepresentation that the registration was procured by the registrant; and that it was she who has been actually using the said trademark since March, 1959, and as such is the rightful and recognized owner thereof and therefore entitled to its registration. In support of her petition, she further alleged the written contract between her and the registrant (respondent) wherein, according to her, the latter has recognized her right of use and ownership of said trademark; and that the labels submitted by the registrant are the very containers bearing the trademark "WONDER" which are owned by her and which she has been exclusively and continuously using in commerce (pp. 24-25, Vol. I, rec.)

Respondent Dr. Jose R. Perez, in due time, duly filed his answer denying each and every ground for cancellation alleged in the said petition, and further averring that there is pending in the Court of First Instance of Bulacan a civil case (No. 2422) for unfair competition with injunction and damages filed by him against herein petitioner involving the manufacture of beauty soap and the use of the trademark "WONDER"; that a writ of preliminary injunction has been issued on September 7, 1961 by the said court against herein petitioner restraining her "from making, manufacturing and producing 'Wonder Bleaching Beauty Soap' with the same labels and chemical ingredients as those of the plaintiff, and from advertising, selling and distributing the same products"; and that no right of petitioner had been violated and therefore no cause of action exists in favor of petitioner (pp. 28-32, Vol. I, rec.) Issues having been joined, the case was heard and thereafter, respondent Director of Patents rendered his decision denying the petition to cancel the certificate of registration (pp. 139-150, Vol. I, rec.) Petitioner filed a motion for reconsideration on the ground that the decision is contrary to law and the evidence; but the same was denied on January 15, 1965 by respondent Director of Patents for lack of merit (p. 158, Vol. I, rec.) Hence, this petition for review filed on January 28, 1965 by herein petitioner (pp. 1-5, Vol. IV, rec.). Respondents were required to answer the same, and respondent Director Tiburcio Evalle filed his answer on August 6, 1965 (pp. 29-32, Vol. IV, rec.), Private respondent Dr. Jose R. Perez did not file an answer. Thereafter, both parties were required to file their respective briefs and petitioner filed one on September 28, 1965 (p. 38, Vol. IV, rec.) while respondent Director Evalle filed his brief on February 23, 1966 (p. 53, Vol. IV, rec.). Again, private respondent Perez did not file a brief as his counsel's motion for an extension of time within which to file one was denied by this Court for being late (pp. 41-42, Vol. IV, rec.). Consequently, the case was submitted for decision on May 22, 1966. On May 22, 1973, counsel for private respondent filed a motion for the early resolution of the case alleging among others that "respondent Dr. Jose R. Perez had died already and still Crisanta Y. Gabriel, the petitioner in this case, has been continuously harassing the rights of the late Dr. Jose R. Perez as far as the ownership and use of the trademark are concerned." (Pp. 59-61, Vol. IV, rec.) [No motion has been filed for substitution of the heirs in lieu of the deceased private respondent.]

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By way of factual background, herein private respondent Dr. Jose R. Perez filed with the Patents Office on February 23, 1961 an application for registration of the trademark "WONDER" in the Supplemental Register. After due and proper proceedings, the said petition was approved and the trademark "WONDER" was registered, as prayed for, in the Supplemental Register. Thereafter, Certificate of Registration No. SR-389 was issued to and in the name of herein private respondent Dr. Jose R. Perez. Said trademark "WONDER" is used by said private respondent on bleaching beauty soap (Medicated and Special) which under the Official Classification of Merchandise (Rule 82) of the Board of Patents falls under Class 51. Private respondent Dr. Perez, in his petition for registration, claimed March 10, 1953 as the date of first use of said trademark and August 1, 1953 as the date of first use of said trademark in commerce in the Philippines (see pp. 1-7, Vol. I, rec.) Petitioner Crisanta Y. Gabriel on the other hand, earlier filed on October 3, 1960 with the Patent Office a petition to register the same trademark "WONDER" and claimed March 7, 1959 as the date of first use of said trademark in commerce. Said petition was dismissed on November 18, 1960 by the Patents Office (thru its examiner) on the ground that said petitioner was not the owner of the trademark sought to be registered, informing at the same time petitioner that "as shown on the labels submitted, it appears that Dr. Jose R. Perez is the owner of the present mark . . ." Subsequently, on March 23, 1961, the said application was considered abandoned under Rules 97 and 98 of the Revised Rules of Practice in Trademark Cases for failure of petitioner to comply with Rule 93 of the same Revised Rules (see p. 8, Vol. I, rec.; pp. 79-86, Vol. III, rec.). Later, said application was revived, but further consideration thereof was suspended by the Patents Office until final determination of the present case considering that the matter of ownership of the trademark "WONDER" is in dispute (see p. 9, Vol. IV, rec.) The main facts of this case as substantially supported by the evidence on record, are related by respondent Director of Patents in the decision now under review, thus: ". . . Way back in 1953, the Respondent who claims to be a medical researcher and manufacturer. was experimenting on the creation of a beauty soap. Having discovered a workable formula he applied from the Bureau of Health for the issuance of a Certificate of Label Approval and on June 6, 1958 he was issued such certificate. It covers a beauty soap for bleaching,

which whitens or sometimes softens the skin. (t.s.n., p. 48, Aug. 27, 1968). This certificate (Exh. '5') particularly describes and mentions 'Dr. Perez' Wonder Beauty Soap. He continued experimenting until he was able to discover an improved soap formula which he claims that aside from bleaching or whitening the skin it also allegedly removes pimples, freckles, dandruff, scabies, itching, head lice(s), rashes, falling of hair, and shallow wrinkles (t.s.n. p. 49, Aug. 27, 1963). For such product he obtained another certificate of label approval from the Bureau of Health on August 10, 1959 (Exh. '6'). This document also particularly describes 'Dr. Perez Wonder Beauty Soap (Improved Formula).' "In January, 1959 he made an agreement with a certain company named 'Manserco' for the distribution of his soap. It was then being managed by Mariano S. Yangga who happens to be the brother of the Petitioner Crisanta Y. Gabriel (t.s.n., pp. 3-4, Aug. 27, 1963). This was corroborated by Mr. August Cesar Espiritu who testified in favor of the Respondent. Mr. Espiritu claims to be the organizer and one of the incorporators of 'Manserco,' although really no document of its corporate existence was introduced as evidence in this case (t.s.n., pp. 55-57, Sept. 23, 1963). However, this fact had never been disputed by the Petitioner. "Because the corporation was allegedly going bankrupt and the members were deserting, the Respondent terminated the agreement in July, 1959, and thereafter he asked the Petitioner to become the distributor of his products (t.s.n., pp. 4-5, Aug. 27, 1963) and on September 1, 1959, a contract of 'Exclusive Distributorship' was executed between the Petitioner and the Respondent. (Exh. '7'; 'F-1' to 'F-2'.) The agreement is hereunder reproduced, to wit: "EXCLUSIVE DISTRIBUTORSHIP AGREEMENT "KNOW ALL MEN BY THESE PRESENT: "THIS AGREEMENT made and executed by and between DR. JOSE R. PEREZ, Filipino, of legal age, a resident of Sta. Maria, Bulacan. now and hereinafter called the Party of the First Part, "AND "CRISANTA Y. GABRIEL, likewise Filipino, of legal age, a resident of 1558 Camarines St., Manila, now and hereinafter called the Party of the Second Part, "WITNESSETH "1. That the Party of the First Part hereby agrees and binds himself to make the Party of the Second Part the sole and exclusive distributor of his product called and popularly known as 'Dr. Perez' Wonder Medicated Beauty Soap' for the whole Philippines for a period of five (5) years from date of

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perfection of this agreement, renewable for another five (5) years at the mutual agreement of both parties; "2. That the Party of the First Part hereby agrees to sell to the Party of the Second Part the abovementioned merchandise at the rate of sixty (P.60) centavos a piece which shall have a minimum weight of eighty (80) grams; PROVIDED however that said price may be subject to change in cases of deflation and inflation of the peso; "3. That the Party of the First Part hereby binds himself to make delivery of the merchandise under contract at 1558 Camarines St. Manila, the cost of the same being for the account of the former; "4. That the Party of the First Part hereby agrees to extend to the Party of the Second Part a credit line of TWO THOUSAND (P2,000.00) PESOS with accounts due and payable on the 5th and 20th of each month with a maximum of sixty days from date of receipt of the merchandise by the Party of the Second Part; "5. That the Party of the First Part guarantees the production of the full quantity of Dr. Perez Wonder Medicated Beauty Soap that the Party of the Second Part could sell and distribute; with the latter giving the former a written notice of the same; "6. That the Party of the Second Part has the exclusive right of ownership of the packages and that said party is responsible for the costs as well as the design and the manner of packing the same; "7. That the Party of the First Part hereby binds himself not to give or sell to any person or entity the same product or any similar product or products of the same name during the term and duration of this contract; "8. That this contract is binding upon the administrator, heirs and assigns of both parties during the term and duration of this agreement; "9. That this contract will take effect upon the signing thereof. "IN WITNESS WHEREOF, the parties and their witnesses have hereunder set their hands at Manila this 1st day of September, 1959." (See pp. 11-13, Vol. IV, rec.) "At this juncture, mention should be made of the Petitioner's commercial background, as it appears in the record. Her documentary exhibits show that she was registered as a bona fide Filipino retailer as of April 8, 1958 (Exh. 'C'); that she was doing business under the name 'Gabriel Grocery and Cold Store' as of March 20, 1958 (Exh. 'A'); and that on September 24, 1959 she obtained another certificate of registration for the firm name 'Wonder Commercial Co., Inc.,' she being the Manager thereof (Exh. 'B')." (Pp. 10-13, Vol. IV, rec.)

Respondent Director of Patents set forth the evidence of the petitioner as follows: "From the evidence presented by her, she endeavors to prove that even before the execution of the agreement (Exh 'F-1') or particularly on March 11, 1959 she hired the services of Eriberto Flores (t.s.n., pp. 43-52, May 23, 1963) who allegedly designed the packages for which she paid him the sum of P50.00 (Exh. 'FF'). Thereafter she allegedly started the sales promotion of the Respondent's product by extensive advertisement through some magazines (Exhs. 'G'; 'G-1'; and 'H'), the radio (Exhs. 'I'-'18'), and the cinema by means of projector 'slides' (Exhs. 'M' and 'N') in various neighborhood theatres in the Philippines (Exhs. 'O' to '-48'). She also allegedly caused the printing of thousands of boxes and literature accompanying the soap with printing companies (Exhs. 'P', 'Q', 'R', 'S'. 'T', 'U', 'V', 'W', and 'X' to 'X-8'). She also presented a few sales invoices, the earliest of which was issued on November 4, 1959 by the Wonder Commercial Co., Inc., showing sales of the 'Wonder Soap.' (Exh. 'Y'). Another booklet of sales invoices under the firm name 'C.Y. Gabriel' showing sales of the same soap, the earliest of which was August 13, 1960, was also presented (Exhs. 'Z' and 'AA'). All the while the packages (Exhs. 'D' and 'E') and literature (Exh. 'W') indicate that the soap is known as 'Dr. Perez Bleaching Beauty Soap' manufactured by Dr. Jose R. Perez Cosmetic Laboratory and that the exclusive distributor is 'Crisanta Y. Gabriel (C Y. Gabriel)', the herein Petitioner. "As further evidence of sale, the Petitioner presented as witness Pedro Alvero, a businessman from San Pablo City who, as alleged dealer in medicinal products, toiletries, etc., testified as having purchased from her 'Wonder' soap in 1959 up to 1961 (t.s.n., pp. 43-52, May 23. 1963)." (See pp. 13-14, Vol. IV, rec.) I The determination that Dr, Perez is the rightful owner of the disputed trademark "WONDER" and the consequent denial by the respondent Director of Patents of the petition to cancel certificate of registration No. SR-389 covering said trademark issued to and in the name of Dr. Jose R. Perez, were based mainly on his finding that Dr. Perez had priority of adoption and use of the said trademark. And such finding of fact is conclusive on this Court. As stated by Justice Fernando in Lim Kiah vs. Kaynee Company (25 SCRA 485) and reiterated by him in the subsequent case of Sy Chng vs. Gaw Liu (44 SCRA 150-151): "It is well-settled that we are precluded from making an inquiry as the finding of facts of the Director of Patents in the absence of any showing that there was grave abuse of discretion is binding on us. As set forth by Justice Makalintal in Chung Te vs. Ng Kian Giab (18

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SCRA 747): 'The rule is that findings of facts by the Director of Patents are conclusive on the Supreme Court provided that they are supported by substantial evidence.'" In the present case, the findings of fact of the respondent Director of Patents are substantially supported by evidence and no grave abuse of discretion was committed by said respondent. 1. At the time of the analysis of the soap product of private respondent Dr. Jose R. Perez, there was already a label or trademark known as "Dr. Perez' WONDER Beauty Soap" as shown and supported by Exhibit "5" which is a Certificate of Label Approval dated June 6, 1958 (p. 103, Vol. III, rec.) and Exhibit "6" another Certificate of Label Approval dated August 10, 1959 (p. 104, Vol. III, rec.) both issued by the Bureau of Health to Dr. Jose R. Perez as manager of the Dr. Jose R. Perez Cosmetic Laboratory. Both certificates identified the product covered as "Dr. Perez' Wonder Beauty Soap" and further indicated that said product emanated from the Dr. Jose R. Perez Cosmetic Laboratory. Furthermore, the certificates show that the Bureau of Health referred to and relied on the said label or trademark of the product as the basis for its certification that the same (product) "was found not adulterated nor misbranded." 2. It is not denied that private respondent Dr. Jose R. Perez was the originator, producer and manufacturer of the soap product identified as "DR. JOSE R. PEREZ WONDER BEAUTY SOAP." This fact, furthermore, is clearly shown in Exhibits "5" and "6" which, as already adverted to, point out that said product emanated from the Dr. Jose R. Perez Cosmetic Laboratory. The very boxes-containers used in packing the said product also exhibit this fact (Exhs. "DD", "EE", "LL", "HH" also marked as Exh. "7", "JJ" and "KK", pp. 94-96, 98-101, Vol. III, rec.). On the other hand, petitioner Crisanta Y. Gabriel appears to be a mere distributor of the product by contract with the manufacturer, respondent Dr. Jose R. Perez (Exhs. "7", "F-l" to "F-2", p. 13, Vol. III, rec.) and the same was only for a term. This fact is also clearly shown by the containers-boxes used in packing the product (Exhs. "E", "D" and "II" also marked as Exh. "8", pp. 10, 11 and 99, Vol. III, rec.) which indicate and describe Crisanta Y. Gabriel as the exclusive distributor of the product. Thus, as stated in the decision under review: "Therefore, it cannot be denied that the Respondent is the originator and manufacturer of the so-called 'Dr. Perez Wonder Beauty Soap,' a phrase clearly coined by, and associated with, the Respondent. As such, the connotation in itself is sufficient to clothe the product as an item or a commodity emanating from a particularly identified source who is none other than Dr. Jose R. Perez. The words serve as an indication of origin, and the product identified by the words can never

be regarded as having emanated or originated from another individual, typical of which is the Petitioner, a mere distributor." (P. 15, Vol. IV, rec.). Under Sections 2 and 2-A of the Trademark Law, Republic Act No. 166, as amended, the right to register trademark is based on ownership and a mere distributor of a product bearing a trademark, even if permitted to use said trademark, has no right to and cannot register the said trademark (Marvex Commercial Co., Inc. vs. Petra Hawpia & Co., 18 SCRA 1178; Operators, Inc. vs. Director of Patents, et al., 15 SCRA 148). II 1. Petitioner urges that the agreement of exclusive distributorship executed by and between her and respondent vested in her the exclusive ownership of the trademark "WONDER". But a scrutiny of the provisions of said contract does not yield any right in favor of petitioner other than that expressly granted to her — to be the sole and exclusive distributor of respondent Dr. Perez' product. The fact that paragraph 6 (Exh. "F-2") of the agreement provides that the petitioner "has the exclusive right of ownership of the packages and that said party is responsible for the costs as well as the design and manner of packing the same" did not necessarily grant her the right to the exclusive use of the trademark; because the agreement never mentioned transfer of ownership of the trademark. It merely empowers the petitioner as exclusive distributor to own the package and to create a design at her pleasure, but not the right to appropriate unto herself the sole ownership of the trademark so as to entitle her to registration in the Patent Office. In fact, the agreement does not even grant her the right to register the mark, as correctly stated in the appealed decision, which further held that: "The statute provides that 'the owner of a trademark used in commerce may register his trademark . . .' By statutory definition a trademark is 'any word, name, symbol or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured by others.' (Emphasis added). There is nothing in the statute which remotely suggests that one who merely sells a manufacturer's goods bearing the manufacturer's mark acquires any rights in the mark; nor is there anything in the statute which suggests that such a person may register a mark which his supplier has adopted and used to identify his goods. Ex parte E. Leitz, Inc., (Comr Pats) 105 USPQ 480." (pp. 16-17. Vol. IV, rec.). 2. The exclusive distributor does not acquire any proprietary interest in the principal's trademark. "In the absence of any inequitable conduct on the part of the manufacturer, an exclusive distributor, who employs the trademark of the manufacturer

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does not acquire proprietary interest in the mark which will extinguish the rights of the manufacturer, and a registration of the trademark by the distributor as such belongs to the manufacturer, provided the fiduciary relationship does not terminate before application for registration is filed." (87 CJS 258-259, citing cases.) III It has been repeatedly said that the objects of a trademark are "to point out distinctly the origin or ownership of the goods to which it is affixed, to secure to him, who has been instrumental in bringing into market a superior article of merchandise, the fruit of his industry and skill, and to prevent fraud and imposition. 52 Am. Jur., p. 50, citing cases." (Etepha vs. Director of Patents, et al., 16 SCRA 495). Necessarily, therefore, a trademark can only be used in connection with the sale of the identical article that has been sold under the trademark or tradename to the extent necessary to establish them as such (Note 1 L.R.A. [N.S.] 704; A.I.M. Percolating Corporation vs. Ferrodine Chemical Corporation, et al., 124 S.E. 446). In this instant case, the trademark "WONDER" has long been identified and associated with the product manufactured and produced by the Dr. Jose R. Perez Cosmetic Laboratory. It would thus appear that the decision under review is but in consonance with the sound purposes or objects of a trademark. Indeed, a contrary ruling would have resulted in the cancellation of the trademark in question and in granting the pending application of herein petitioner to register the same trademark in her favor to be used on her bleaching soap, which is of the same class as that of respondent (bleaching and beauty soap) [see pp. 222, 265-276, Vol. I, rec.; also Exh. "9", p. 105, Vol. III, rec.]. And the effect on the public as well as on respondent Dr. Jose R. Perez would have been disastrous. Such a situation would sanction a false implication that the product to be sold by her (petitioner) is still that manufactured by respondent. IV Petitioner would also anchor her claim of exclusive ownership of the trademark in question on the fact that she defrayed substantial expenses in the promotion of respondent's soap as covered by the trademark "WONDER" and the printing of the packages which she further claimed to have been designed thru her efforts as she was the one who hired the services of an artist who created the design of the said packages and trademark. Such claim was disposed correctly by respondent Director of Patents, thus: "Petitioner's act in defraying substantial expenses in the promotion of the Respondent's goods and the printing of the packages are the necessary or essential consequences of Paragraph 6 of the agreement because, anyway,

those activities are normal in the field of sale and distribution, as it would redound to her own benefit as distributor, and those acts are incumbent upon her to do. While it may be argued that sale by the Petitioner may be regarded as trademark use by her. nevertheless it should also be regarded that such sale is a consequence of the 'Exclusive Distributorship Agreement' and it inured to the benefit of the Respondent because it was his trademark that was being used. But this does not result in the Respondent's surrender in her favor of the right to register the trademark in her own name. What would happen if the first five years' period terminates and the Respondent decides not to continue with the agreement under Paragraph 1 thereof? What trademark would be use if he himself assumes the distribution thereof or if he contracts with another entity or person for exclusive distributorship?" (P. 17, Vol. IV, rec.) It is true that she has been dealing with the product "Wonder Soap" even before the execution of the Exclusive Distributorship Agreement on September 1, 1959, evidenced by her agreement with Grace Trading Co., Inc. dated June 23, 1959 for the printing of boxes-containers for the "Wonder Soap" and the literature accompanying the same (Exhs. "Q" and "W", pp. 58, 68, Vol. III, rec.), as well as by another contract dated July 22, 1959 with the Philippine Broadcasting Corporation for spot announcement of the product "Wonder Soap" showing her as the sponsor (Exh. "I-1" or "5-A", p. 18, Vol. III, rec.). But this was because Manserco, Inc., which handled first the distribution of the product "Wonder Soap" from January, 1959 to July, 1959, employed her (petitioner) to help precisely in the marketing and distribution of the said product, she being the sister of Mariano Yangga who was then the general manager of said Manserco, Inc., as testified to by Mr. Augusto Cesar Espiritu, who, as earlier adverted to, was the organizer and one of the incorporators of the Manserco, Inc. (pp. 480-481, Vol. III, rec.). V From the records, it further appears that pursuant to the Exclusive Distributorship Agreement between petitioner and respondent, the latter manufactured "WONDER" soap and delivered them to the former who in turn handled the distribution thereof. This continued for sometime until January, 1961, when the arrangement was stopped because as claimed and alleged by herein respondent, he discovered that petitioner began manufacturing her own soap and placed them in the boxes which contained his name and trademark, and for which reason respondent Dr. Perez filed an unfair competition case against her (petitioner) [see pp. 29-31, Vol. I, rec.; pp. 379-380, Vol. II, rec.] with the Court of First Instance of Bulacan, which issued a writ of preliminary injunction against her. These claims of respondent were never denied, much less refuted by petitioner in her

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rebuttal testimony. Earlier in her direct testimony, petitioner stated that her occupation was merchant and manufacturer of bleaching soap (p. 222, Vol. II, rec.) and on cross-examination she stated that she manufactured Marvel and Dahlia Bleaching Beauty Soap as well as C.Y. GABRIEL WONDER BEAUTY SOAP, although she claimed to have manufactured the same only from February, 1961 to September, 1961 (pp. 265-270, Vol. II, rec.). Her use of the mark "Wonder" on the soap manufactured by her is patently shown by Exhibit "9" consisting of a cake of soap with the inscription C.Y. GABRIEL WONDER SPECIAL and an accompanying literature wherein appear, among others, the following words: C.Y. Gabriel — WONDER MEDICATED Beauty Soap, Manufactured by: C.Y. GABRIEL COSMETIC LABORATORY (see Exh. "9", p. 105, Vol. III, rec.; pp. 440-441, Vol. II, rec.). VI OUR examination of the entire records of the present case likewise revealed petitioner's disregard of the rudiments of fair dealing. Mr. Justice Fernando, in behalf of the Court, stated in Lim Kiah vs. Kaynee Company, thus: ". . . The decision of the Director of Patents is not only sound in law but also commendable for its consonance with the appropriate ethical standard which by no means should be excluded from the business world as alien, if not a hostile, force. While in the fierce competitive jungle which at times constitutes the arena of commercial transactions, shrewdness and ingenuity are at a premium, the law is by no means called upon to yield invariably its nod of approval to schemes frowned upon by the concept of fairness. Here. petitioner engaged in manufacturing and selling the same kind of products would rely on a trademark, which Undeniably was previously registered abroad and which theretofore had been used and advertised extensively by one of the leading department stores in the Philippines." (26 SCRA 490.) To our mind, the situation of herein petitioner is worse. WHEREFORE, THE DECISION SOUGHT TO BE REVIEWED IS HEREBY AFFIRMED AND THE PETITION IS HEREBY DISMISSED. WITH COSTS AGAINST PETITIONER. Makalintal, C .J ., Castro, Teehankee, Esguerra and Muñoz Palma, JJ ., concur. C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c. G.R. Nos. L-26188, L-26189 & L-26190 January 31, 1974 [G.R. No. 75562-63. July 19, 1990.]

PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner, vs. MIL-ORO MANUFACTURING CORPORATION and the HONORABLE COURT OF APPEALS, respondents. Siguion Reyna & Montecillo and Ongsiako for petitioner. Carpio Villaraza & Cruz and Florencio Z. Sioson for private respondent. R E S O L U T I O N This is a petition to set aside the June 23, 1989 order of the respondent court which granted a motion to dismiss filed by Mil-Oro Manufacturing Corporation in an infringement of patent or trademark case. The antecedent facts which led to the filing of this petition may be briefly mentioned. LexLib Puma SPORTSCHUFABRIKEN Rudolf Dassler, K.G. is a West German corporation which has not averred that it is doing business in the Philippines, it filed two (2) cases with Philippine Patent Office, now Bureau of Patents, Trademarks, and Technology Transfers, namely: (a) Inter Partes Case 1259 opposing the registration of Mil-Oro's Trademark "Puma and Device for sports socks in the Principal Register. The case was filed on June 18, 1979;. (b) Inter Partes Case 1675 for cancellation of the March 30, 1977 Certificate of Registration issued in favor of Mil-Oro for the mark "Puma Label" covering sports socks and belts. The case was filed on September 7, 1982. On July 25, 1985, before the consolidated Inter Partes cases could be completed, Puma filed Civil Case No. 11189 an Infringement or Patent or Trademark Case with the Regional Trial Court of Makati. The Regional Trial Court Judge denied Mil-Oro's motion to dismiss and granted Puma's application for preliminary injunction. Mil-Oro went to the Court of Appeals on certiorari and prohibition in the Infringement Case. On June 23, 1986, the Court of Appeals reversed the Regional Trial Court and directed it to dismiss the Infringement Case. Puma came to this Court on August 26, 1986 where the petition for review in the Infringement Case was docketed as G.R. No. 75067. In the meantime, the Bureau of Patents decided the Inter Partes cases in favor of Mil-Oro, declaring it as the prior and actual adopter and user and, therefore, the rightful owner of the trademark "Puma and Device" for belts and sports socks. On appeal to the Court of Appeals, the Patent Office decision was affirmed. On September 19, 1986 or less than one (1) month since G.R. No. 75067, the Court of Appeals' decision in the Infringement Case was elevated to this Court. Puma filed the second case docketed as

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G.R. Nos. 75562-63, questioning the Court of Appeals' decision in the Inter Partes Cases. Puma's not having mentioned a need for the consolidation of the two (2) cases filed by it with this Court less than one (1) month apart on basically the same issue, resulted in the two cases proceeding separately. On February 26, 1988, the Court, through its Third Division decided G.R. No. 75067, the Infringement Case in favor of Puma. The La Chemise Lacoste, S.A. v. Fernandez (129 SCRA 373 [1984]) rule on internationally known branch names was applied and the Court of Appeals reversed. The case was remanded to the Regional Trial Court of Makati so that it could continue hearing the Infringement Case. On September 7, 1988, this Court through its Second Division, decided G.R. No. 75562-63 on the Inter Partes cases in favor of Mil-Oro, thus affirming the July 30, 1986 decision of Court of Appeals and the earlier decision of the Bureau of Patents which declared Mil-Oro prior and actual user and, therefore, owner of the trademark "Puma and Device." The appeal of Puma to the Court of Appeals was found to have been filed late. According to the appellate court, there were also significant omissions in the appeal. Puma did not furnish a copy of its notice of appeal to Mil-Oro. There was no statement of material dates and no verification. Puma filed a motion for reconsideration on October 8, 1988. It was at this point when the decision in the other case it had earlier filed, G.R. No. 75067, was brought to the Court's attention and extensively treated. After taking into account the fact that the decision in the Inter Partes Cases had already become final for failure to file a timely and correct appeal and finding that what was decided in G.R. No. 75067 was a denial of motion to dismiss and the issuance of preliminary injunction, this Court denied a motion for reconsideration in G.R. Nos. 7556263 on May 15, 1989 with FINALITY. The entry of judgment was recorded on June 7, 1989. While this Court was deliberating on the motion for reconsideration in the Inter Partes petition, where the parties filed comment on the motion, reply, rejoinder, sur-rejoinder, and voluminous annexes, the Regional Trial Court was hearing the Infringement Case remanded to it.

The Regional Trial Court considered Mil-Oro's motion to dismiss and/or motion for preliminary hearing on defendant's affirmative defense together with Puma's opposition and corresponding documentary evidences presented by both parties. On June 23, 1989 the Regional Trial Court dismissed the Infringement Case. Hence, this petition. prLL It should be mentioned that Puma, in addition to the two (2) petitions earlier filed, also filed on October 18, 1988 a third petition, G.R. No. 85297, asking this Court to compel the respondent Judge to issue a writ of injunction in the Infringement Case remanded to it. After considering lengthy pleadings, numerous annexes and side issues such as failure to furnish the other party with copies of pleadings, motion for contempt, motion to expunge, etc., the Court on May 24, 1989 dismissed the petition. The Court's displeasure with parties who precipitately rush to the Supreme Court whenever a ruling on an incidental matter is issued or who bring actions which lead to piece-meal determinations was expressed in the resolution. Considering the circumstances surrounding this petition, the Third Division decided to bring it to the Court en banc. The petitioner in the instant case — G.R. No. 90827 — has failed to show any reversible error in the questioned decision of the public respondent. It has nobody to blame but itself for having allowed the decision in the Inter Partes cases to become final. The same issue raised in the Infringement Case — who owns the disputed trademark insofar as belts and socks are concerned — was extensively tried in the Bureau of Patents. As stated by the respondent court: "There can be no quarrel that there was a judgment on the merits rendered by the Phil. Patent Office, a quasi-judicial body having jurisdiction over the subject matter and the parties in this case. Indeed, this previous adversary action and the case at bar involve identity of parties, of subject matter and causes of action. In fine, the Phil. Patent Office too has jurisdiction and competence to adjudicate the issue of ownership of trademarks in furtherance of its functions in determining registrable trademarks (Sec. 25, Republic Act 166), in both the Principal and Supplemental Registers." "The determination of the Phil. Patent Office, whose finding was affirmed by no less than the Supreme Court definitely disposes the issue on ownership of the trademark 'PUMA & DEVICE' for sports socks and belts. Thus this

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declaration must be respected and followed by this Court being an inferior court under the hierarchy of positions. Indeed the doctrine of RES JUDICATA becomes operative, as the principle of finality of judgments extends not only to Courts but likewise to executive agencies performing quasi-judicial functions. The dictum in B.F. Goodrich Inc. v. WCC, 159 SCRA 355, is emphatic . . . ." (Rollo — 90827, p. 26). The respondent court found no need to receive evidence concerning belts and sports socks because the same evidence had already been presented by Puma and Mil-Oro in the other cases. The decision having become final, the factual issues had been laid to rest. Apart from the failure to show any reversible error in the questioned decision, the instant petition appears to have been filed late. cdrep According to Puma, it received the respondent court's order dated June 23, 1989 on July 4, 1989. A motion for reconsideration was filed on July 18, 1989. The Judge denied the motion for reconsideration on October 10, 1989. Puma received the denial on October 16, 1989. The petition for review was filed on November 16, 1989 or seventeen (17) days later. Puma is vague about the nature of its action because the petition is entitled as one for review but the body of the petition claims grave abuse of discretion. If it is a petition for review, it was late. If it is a petition for certiorari, there is no grave abuse of discretion and, therefore, it cannot take the place of a late petition for review. CONSIDERING the failure of the petitioner to show that the conclusions of the respondent court are contrary to applicable law and jurisprudence, the Court Resolved to DENY the petition." Cruz, J., took no part. C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c. A.M. No. RTJ-88-246 July 19, 1990 PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC., petitioners, vs. COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION and STANDARD PHILIPS CORPORATION, respondents. Emeterio V. Soliven & Associates for petitioners. Narciso A. Manantan for private respondent.

SYLLABUS 1. COMMERCIAL LAW; CORPORATION CODE; SECTION 18 THEREOF APPLICABLE ONLY WHEN CORPORATE NAMES ARE IDENTICAL. — Section 18 of the Corporation Code is applicable only when the corporate names in question are identical. In the instant case, there is no confusing similarity between Petitioners' and Private Respondent's corporate names as those of the Petitioners contain at least two words different from that of the Respondent. 2. ID.; CORPORATION; RIGHT TO USE ITS CORPORATE AND TRADE NAME, A PROPERTY RIGHT. — As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927), the Court declared that a corporation's right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right and one which cannot be impaired or defeated by subsequent appropriation by another corporation in the same field (Red Line Transportation Co. vs. Rural Transit co., September 6, 1934, 60 Phil. 549). 3. ID.; ID.; IMPORTANCE OF CORPORATE NAME. — A name is peculiarly important as necessary to the very existence of a corporation. Its name is one of its attributes, an element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the corporate franchise as any other privilege granted. 4. ID.; ID.; CORPORATE NAME DISTINGUISHED FROM INDIVIDUAL'S NAME. — A corporation acquires its name by choice and need not select a name identical with or similar to one already appropriated by a senior corporation while an individual's name is thrust upon him (See Standard Oil Co. of New Mexico, Inc. v. Standard Oil Co. of California, 56 F 2d 973, 977). A corporation can no more use a corporate name in violation of the rights of others that an individual can use his name legally acquired so as to mislead the public and injure another (Armington vs. Palmer, 21 RI 109, 42 A 308). 5. ID.; ID.; ID.; STATUTORY PROHIBITION PROVIDED IN SEC. 18 OF CORPORATION CODE; REQUISITES. — Our own Corporation Code, in its Section 18, expressly provides that: "No corporate name may be

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allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law. Where a change in the corporate name is approved, the commission shall issue an amended certificate of incorporation under the amended name." (Emphasis supplied) The statutory prohibition cannot be any clearer. To come within its scope, two requisites must be proven, namely: (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. 6. ID.; ID.; ID.; RIGHT TO EXCLUSIVE USE OF CORPORATE NAME DETERMINED BY PRIORITY OF ADOPTION; APPLIED IN CASE AT BAR. — The right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption (1 Thompson, p.80 citing Munn v. Americana Co., 82 N., Eq. 63 88 Atl. 30; San Francisco Oyster House v. Mihich, 75 Wash. 274, 134 Pac. 921). In this regard, there is no doubt with respect to Petitioners' prior adoption of the name "PHILIPS" as part of its corporate name. Petitioners Philips Electrical and Philips Industrial were incorporated on 29 August 1956 and 25 May 1956, respectively, while Respondent Standard Philips was issued a Certificate of Registration on 19 April 1982, twenty-six (26) years later (Rollo, p.16). Petitioner PEBV has also used the trademark "PHILIPS" on electrical lamps of all types and their accessories since 30 September 1922, as evidenced by Certificate of Registration No. 1651. 7. ID.; ID.; ID.; TEST IN DETERMINING EXISTENCE OF CONFUSING SIMILARITY; PROOF OF ACTUAL CONFUSION NOT NECESSARY. — 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 (Ohio Nat. Life Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298). It is settled, however, that proof of actual confusion need not be shown. It suffices that confusion is probably or likely to occur (6 Fletcher [Perm Ed], pp. 107-108, enumerating a long line of cases). 8. ID.; ID.; ID.; INTENT OF SUBSEQUENT APPROPRIATOR OF NAME. — Petitioners pointed out that "[p]rivate respondent's choice of

'PHILIPS' as part of its corporate name [STANDARD PHILIPS CORPORATION] . . . tends to show said respondent's intention to ride on the popularity and established goodwill of said petitioner's business throughout the world." The subsequent appropriator of the name or one confusingly similar thereto usually seeks an unfair advantage, a free ride on another's goodwill (American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89 App DC 269, 191 F 2d 488). 9. ID.; ID.; ID.; RULE ON PROPOSED NAME. — True, under the Guidelines in the Approval of Corporate and Partnership Names formulated by the SEC, the proposed name "should not be similar to one already used by another corporation or partnership. If the proposed name contains a word already used as part of the firm name or style of a registered company, the proposed name must contain two other words different from the company already registered." It is then pointed out that Petitioners Philips Electrical and Philips Industrial have two words different from that of Private Respondent's name. 10. ID.; ID.; ID.; CORPORATION HAS EXCLUSIVE RIGHT TO THE USE OF ITS NAME WHICH MAY BE PROTECTED BY INJUNCTION; BASIS FOR SUCH PRINCIPLE. — A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the use of trademarks and tradenames (18 C.J.S. 574). Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name (6 Fletcher [Perm Ed.], pp. 39-40, citing Borden Ice Cream Co. v. Borden's Condensed Milk Co., 210 F 510). D E C I S I O N MELENCIO-HERRERA, J p: Petitioners challenge the Decision of the Court of Appeals, dated 31 July 1990, in CA-GR Sp. No. 20067, upholding the Order of the Securities and Exchange Commission, dated 2 January 1990, in SEC-AC No. 202, dismissing petitioners' prayer for the cancellation or removal of the word "PHILIPS" for private respondent's corporate name. Petitioner Philips Export B.V. (PEBV), a foreign corporation organized under the laws of the Netherlands, although not engaged in business here, is the registered owner of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM under Certificate of Registration Nos. R-1641 and R-1674,

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respectively issued by the Philippine Patent Office (presently known as the Bureau of Patents, Trademarks and Technology Transfer). Petitioners Philips Electrical Lamps, Inc. (Philips Electrical, for brevity) and Philips Industrial Development, Inc. (Philips Industrial, for short), authorized users of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM, were incorporated on 29 August 1956 and 25 may 1956, respectively. All petitioner corporations belong to the PHILIPS Group of Companies. Respondent Standard Philips Corporation (Standard Philips), on the other hand, was issued a Certificate of Registration by respondent Commission on 19 May 1982. On 24 September 1984, Petitioners filed a letter complaint with the Securities & Exchange Commission (SEC) asking for the cancellation of the word "PHILIPS" from Private Respondent's corporate name in view of the prior registration with the Bureau of Patents of the trademark "PHILIPS" and the logo "PHILIPS SHIELD EMBLEM" in the name of Petitioner PEBV, and the previous registration of Petitioners Philips Electrical and Philips Industrial with the SEC. As a result of Private Respondent's refusal to amend its Articles of Incorporation, Petitioners filed with the SEC, on 6 February 1985, a Petition (SEC Case No. 2743), praying for the issuance of a Writ of Preliminary Injunction, alleging, among others, that Private Respondent's use of the word PHILIPS amounts to an infringement and clear violation of Petitioner's exclusive right to use the same considering that both parties engage in the same business. In its Answer, dated 7 March 1985, Private Respondent countered that Petitioner PEBV has no legal capacity to sue; that its use of its corporate name is not at all similar to Petitioners' trademark PHILIPS when considered in its entirety; and that its products consisting of chain rollers, belts, bearings and cutting saw are grossly different from Petitioners' electrical products. After conducting hearings with respect to the prayer for Injunction, the SEC Hearing Officer, on 27 September 1985, ruled against the issuance of such Writ. On 30 January 1987, the same Hearing Officer dismissed the Petition for lack of merit. In so ruling, the latter declared that inasmuch as the SEC found no sufficient ground for the granting of injunctive relief on the basis of the testimonial and documentary evidence presented, it cannot order the removal or cancellation of the word "PHILIPS" from Private Respondent's corporate name on the basis of the same evidence adopted in toto during trial on the merits. Besides, Section 18 of the Corporation Code (infra) is

applicable only when the corporate names in question are identical. Here, there is no confusing similarity between Petitioners' and Private Respondent's corporate names as those of the Petitioners contain at least two words different from that of the Respondent. Petitioners' Motion for Reconsideration was likewise denied on 17 June 1987. LibLex On appeal, the SEC en banc affirmed the dismissal declaring that the corporate names of Petitioners and Private Respondent hardly breed confusion inasmuch as each contains at least two different words and, therefore, rules out any possibility of confusing one for the other. On 30 January 1990, Petitioners sought an extension of time to file a Petition for Review on Certiorari before this Court, which Petition was later referred to the Court of Appeals in a Resolution dated 12 February 1990. In deciding to dismiss the petition on 31 July 1990, the Court of Appeals 1 swept aside Petitioners' claim that following the ruling in Converse Rubber Corporation v. Universal Converse Rubber Products, Inc., et al, (G.R. No. L-27906, January 8, 1987, 147 SCRA 154), the word PHILIPS cannot be used as part of Private Respondent's corporate name as the same constitutes a dominant part of Petitioners' corporate names. In so holding, the Appellate Court observed that the Converse case is not four-square with the present case inasmuch as the contending parties in Converse are engaged in a similar business, that is, the manufacture of rubber shoes. Upholding the SEC, the Appellate Court concluded that "private respondent's products consisting of chain rollers, belts, bearings and cutting saw are unrelated and non-competing with petitioners' products i.e. electrical lamps such that consumers would not in any probability mistake one as the source or origin of the product of the other." The Appellate Court denied Petitioners' Motion for Reconsideration on 20 November 1990, hence, this Petition which was given due course on 22 April 1991, after which the parties were required to submit their memoranda, the latest of which was received on 2 July 1991. In December 1991, the SEC was also required to elevate its records for the perusal of this Court, the same not having been apparently before respondent Court of Appeals. We find basis for petitioners' plea. As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927), the Court declared that a corporation's right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right and one which cannot be impaired or defeated by

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subsequent appropriation by another corporation in the same field (Red Line Transportation Co. vs. Rural Transit Co., September 6, 1934, 60 Phil 549). A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co, 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the corporate franchise as any other privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18 RI 165, 26 A 36). Cdpr A corporation acquires its name by choice and need not select a name identical with or similar to one already appropriated by a senior corporation while an individual's name is thrust upon him (See Standard Oil Co. of New Mexico, Inc. v. Standard Oil Co. of California, 56 F 2d 973, 977). A corporation can no more use a corporate name in violation of the rights of others than an individual can use his name legally acquired so as to mislead the public and injure another (Armington vs. Palmer, 21 RI 109, 42 A 308). Our own Corporation Code, in its Section 18, expressly provides that: "No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law. Where a change in the corporate name is approved, the commission shall issue an amended certificate of incorporation under the amended name." (Emphasis supplied). The statutory prohibition cannot be any clearer. To come within its scope, two requisites must be proven, namely: (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. The right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption (1 Thomson, p.80 citing Munn v. Americana Co., 82 N., Eq. 63, 88 Atl. 30; San Francisco Oyster House v. Mihich, 75 Wash, 274, 134 Pac. 921). In this regard, there is no doubt with respect to Petitioners' prior adoption of the name "PHILIPS" as part of its corporate name. Petitioners Philips Electrical and Philips Industrial were incorporated on 29 August 1956 and 25 May 1956, respectively, while Respondent Standard Philips was issued a Certificate of Registration on 19 April 1982, twenty-six (26) years later (Rollo, p.16). Petitioner PEBV has also used the trademark "PHILIPS" on electrical lamps of all types and their accessories since 30 September 1922, as evidenced by Certificate of Registration No. 1651. The second requisite no less exists in this case. 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 (Ohio Nat. Life Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298). While the corporate names of Petitioners and Private Respondent are not identical, a reading of Petitioner's corporate names, to wit: PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to conclude that "PHILIPS" is, indeed, the dominant word in that all the companies affiliated or associated with the principal corporation, PEBV, are known in the Philippines and abroad as the PHILIPS Group of Companies. cdll Respondents maintain, however, that Petitioners did not present an iota of proof of actual confusion or deception of the public much less a single purchaser or their product who has been deceived or confused or showed any likelihood of confusion. It is settled, however, that proof of actual confusion need not be shown. It suffices that confusion is probably or likely to occur (6 Fletcher [Perm Ed], pp. 107-108, enumerating a long line of cases). It may be that Private Respondent's products also consist of chain rollers, belts, bearing and the like while petitioners deal principally with electrical

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products. It is significant to note, however, that even the Director of Patents had denied Private Respondent's application for registration of the trademarks "Standard Philips & Device" for chains, rollers, belts, bearings and cutting saw. That office held that PEBV "had shipped to its subsidiaries in the Philippines equipment, machines and their parts which fall under international class where chains, rollers, belts, bearings and cutting saw, the goods in connection with which Respondent is seeking to register "STANDARD PHILIPS . . . also belong" (Inter Partes Case No. 2010, June 17, 1988, SEC Rollo). Furthermore, the records show that among Private Respondent's primary purposes in its Articles of Incorporation (Annex D, Petition; p. 37, Rollo) are the following: "To buy, sell, barter, trade, manufacture, import, export or otherwise acquire, dispose of, and deal in and deal with any kind of goods, wares, and merchandise such as but not limited to plastics, carbon products, office stationery and supplies, hardware parts, electrical wiring devices, electrical component parts and/or complement of industrial, agricultural or commercial machineries, constructive supplies, electrical supplies and other merchandise which are or may become articles of commerce except food, drugs, and cosmetics and to carry on such business as manufacturer, distributor, dealer, indentor, factor, manufacturer's representative capacity for domestic or foreign companies." (emphasis ours). For its part, Philips Electrical also includes, among its primary purposes, the following: "To develop, manufacture and deal in electrical products, including electronic, mechanical and other similar products . . ." (p. 30, Record of SEC Case No. 2743) Given Private Respondent's aforesaid underlined primary purpose, nothing could prevent it from dealing in the same line of business of electrical devices, products or supplies which fall under its primary purposes. Besides, there is showing that Private Respondent not only manufactured and sold ballasts for fluorescent lamps with their corporate name printed thereon but also advertised the same as, among others, Standard Philips (TSN, before the SEC, pp. 14, 17, 25, 26, 37-42, June 14, 1985; pp. 16-19, July 25, 1985). As aptly pointed out by Petitioners, "[p]rivate respondent's choice of 'PHILIPS' as part of its corporate name [STANDARD PHILIPS CORPORATION] . . . tends to show said respondent's intention to ride on the popularity and established goodwill of said petitioner's business

throughout the world" (Rollo, p. 137). The subsequent appropriator of the name or one confusingly similar thereto usually seeks an unfair advantage, a free ride on another's goodwill (American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89 App DC 269, 191 F 2d 488). prLL In allowing Private Respondent the continued use to its corporate name, the SEC maintains that the corporate names of Petitioners PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC. contain at least two words different from that of the corporate name of respondent STANDARD PHILIPS CORPORATION, which words will readily identify Private Respondent from Petitioners and vice-versa. True, under the Guidelines in the Approval of Corporate and Partnership Names formulated by the SEC, the proposed name "should not be similar to one already used by another corporation or partnership. If the proposed name contains a word already used as part of the firm name or style of a registered company, the proposed name must contain two other words different from the company already registered" (Emphasis ours). It is then pointed out that Petitioners Philips Electrical and Philips Industrial have two words different from that of Private Respondent's name. What is lost sight of, however, is that PHILIPS is a trademark or trade name which was registered as far back as 1922. Petitioners, therefore, have the exclusive right to its use which must be free from any infringement by similarity. A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the use of trademarks and tradenames (18 C.J.S. 574). Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name (6 Fletcher [Perm Ed], pp. 39-40, citing Borden Ice Cream Co. v. Borden's Condensed Milk Co., 210 F 510). Notably, too, Private Respondents' name actually contains only a single word, that is, "STANDARD", different from that of Petitioners inasmuch as the inclusion of the term "Corporation" or "Corp." merely serves the purpose of distinguishing the corporation from partnerships and other business organizations.

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The fact that there are other companies engaged in other lines of business using the word "PHILIPS" as part of their corporate names is no defense and does not warrant the use by Private Respondent of such word which constitutes an essential feature of Petitioners' corporate name previously adopted and registered and having acquired the status of a well-known mark in the Philippines and internationally, as well (Bureau of Patents Decision No. 88-35 [TM], June 17, 1988, SEC Records). In support of its application for the registration of its Articles of Incorporation with the SEC, Private Respondent had submitted an undertaking "manifesting its willingness to change its corporate name in the event another person, firm or entity has acquired a prior right to the use of the said firm name or one deceptively or confusingly similar to it." Private Respondent must now be held its undertaking. cdll "As a general rule, parties organizing a corporation must choose a name at their peril; and the use of a name similar to one adopted by another corporation, whether a business or a nonbusiness or nonprofit organization if misleading and likely to injure it in the exercise of its corporate functions, regardless of intent, may be prevented by the corporation having the prior right, by a suit for injunction against the new corporation to prevent the use of the name (American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc. 89 App DC 269, 191 F 2d 488, 27 ALR 2d 948)." WHEREFORE, the Decision of the Court of Appeals dated 31 July 1990, and its Resolution dated 20 November 1990, are SET ASIDE and a new one entered ENJOINING private respondent from using "PHILIPS" as a feature of its corporate name, and ORDERING the Securities and Exchange Commission to amend private respondent's Articles of Incorporation by deleting the word PHILIPS from the corporate name of private respondent. No costs. SO ORDERED. Paras, Padilla, Regalado and Nocon, JJ., concur. Footnotes 1. Second Division, composed of Justice Jose A. R. Melo, Chairman, Justice Antonio M. Martinez, Ponente, and Justice Nicolas P. Lapeña, Jr., Member.