G.R. No. L-23035 July 31, 1975

PHILIPPINE NUT INDUSTRY, INC.,petitioner,vs.STANDARD BRANDS INCORPORATED and TIBURCIO S. EVALLE as Director of Patents,respondents.

Perfecta E. De Vera for petitioner.

Paredes, Poblador, Cruz and Nazareno for private respondent.

Office of the Solicitor General Arturo A. Alafriz, Acting Assistant Solicitor General Isidro C. Borromeo and Solicitor Francisco J. Bautista for respondent Director.

MUNOZ PALMA,J.:Challenged in this petition for review is the decision of respondent Director of Patents which orders the cancellation of Certificate of Registration No. SR-416 issued in favor of herein petitioner Philippine Nut Industry, Inc. (hereinafter called Philippine Nut) for the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," upon complaint of Standard Brands Inc. (hereinafter to be called Standard Brands).

The records of the case show the following incidents:

Philippine Nut, a domestic corporation, obtained from the Patent Office on August 10, 1961, Certificate of Registration No. SR-416 covering the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," the label used on its product of salted peanuts.

On May 14, 1962, Standard Brands a foreign corporation,1filed with the Director of Patents Inter Partes Case No. 268 asking for the cancellation of Philippine Nut's certificate of registration on the ground that "the registrant was not entitled to register the mark at the time of its application for registration thereof" for the reason that it (Standard Brands) is the owner of the trademark "PLANTERS COCKTAIL PEANUTS" covered by Certificate of Registration No. SR-172, issued by the Patent Office on July 28, 1958. Standard Brands alleged in its petition that Philippine Nut's trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" closely resembles and is confusingly similar to its trademark "PLANTERS COCKTAIL PEANUTS" used also on salted peanuts, and that the registration of the former is likely to deceive the buying public and cause damage to it.

On June 1, 1962, Philippine Nut filed its answer invoking the special defense that its registered label is not confusingly similar to that of Standard Brands as the latter alleges.

At the hearing of October 4, 1962, the parties submitted a partial stipulation of facts. On December 12, 1962, an amended partial stipulation of facts was submitted, the pertinent agreements contained in which are: (1) that Standard Brands is the present owner of the trademark "PLANTERS COCKTAIL PEANUTS" covered by Certificate of Registration No. SR-172 issued on July 28, 1958; (2) that Standard Brands trademark was first used in commerce in the Philippines in December, 1938 and (3) that Philippine Nut's trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" was first used in the Philippines on December 20, 1958 and registered with the Patent Office on August 10, 1961.

On December 10, 1963, after the presentation of oral and documentary evidence and the filing by the parties of their memoranda, respondent Director of Patents rendered Decision No. 281 giving due course to Standard Brand's petition and ordering the cancellation of Philippine Nut's Certificate of Registration No. SR-416. The Director of Patents found and held that in the labels using the two trademarks in question, thedominant part is the word "Planters", displayed "in a very similar manner" so much so that "as to appearance and general impression" there is "a very confusing similarity," and he concluded that Philippine Nut "was not entitled to register the mark at the time of its filing the application for registration" as Standard Brands will be damaged by the registration of the same. Its motion for reconsideration having been denied, Philippine Nut came up to this Court for a review of said decision.

In seeking a reversal of the decision of respondent Director of Patents, petitioner brings forth eleven assigned errors all of which revolve around one main issue: is the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" used by Philippine Nut on its label for salted peanutsconfusingly similarto the trademark "PLANTERS COCKTAIL PEANUTS" used by Standard Brands on its product so as to constitute an infringement of the latter's trademark rights and justify its cancellation?2The applicable law to the case is found in Republic Act 166 otherwise known as the Trade-Mark Law from which We quote the following pertinent provisions:

Chapter II-A.

Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal register. There is hereby established a register of trade-marks, trade-names and service-marks which shall be known as the principal register. The owner of a trade-mark, trade-name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal register,unless it:

(d) Consists of or comprises a mark or trade-namewhich so resembles a mark or trade-nameregistered in thePhilippines or a markor trade-name previously used in the Philippinesby anotherand not abandoned, as to be likely, when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; ... (emphasis Ours)

Sec. 17. Grounds for cancellation Any person, who believes that he is or will be damaged by the registration of a mark or trade-name, may, upon the payment of the prescribed fee, apply to cancel said registration upon any of the following grounds:

(c) That the registration was obtained fraudulently or contrary to the provisions of section four, Chapter II hereof; ....

Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which suchuse is likely to cause confusion or mistakeor to deceive purchasers or others as to the source ororigin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. (emphasis supplied).

In the cases involving infringement of trademark brought before the Court it has been consistently held that there is infringement of trademark when the use of the mark involved would be likely to cause confusion or mistake in the mind of the public or to deceive purchasers as to the origin or source of the commodity; that whether or not a trademark causes confusion and is likely to deceive the public is a question of fact which is to be resolved by applying the "test of dominancy", meaning, if the competing trademark contains the main or essential or dominant features of another by reason of which confusion and deception are likely to result, then infringement takes pIace; that duplication or imitation is not necessary, a similarity in the dominant features of the trademarks would be sufficient.31. The first argument advanced by petitioner which We believe goes to the core of the matter in litigation is that the Director of Patents erred in holding that the dominant portion of the label of Standard Brands in its cans of salted peanuts consists of the word PLANTERS which has been used in the label of Philippine Nut for its own product. According to petitioner, PLANTERS cannot be considered as the dominant feature of the trademarks in question because it is a mere descriptive term, an ordinary word which is defined in Webster International Dictionary as "one who or that which plants or sows, a farmer or an agriculturist." (pp. 10-11, petitioner's brief)

We find the argument without merit. While it is true that PLANTERS is an ordinary word, nevertheless it is used in the labels not to describe the nature of the product, but to project the source or origin of the salted peanuts contained in the cans. The word PLANTERS printed across the upper portion of the label in bold letters easily attracts and catches the eye of the ordinary consumer and it is that word and none other that sticks in his mind when he thinks of salted peanuts.

In cases of this nature there can be no better evidence as to what is the dominant feature of a label and as to whether there is a confusing similarity in the contesting trademarks than the labels themselves. A visual and graphic presentation of the labels will constitute the best argument for one or the other, hence, we are reproducing hereunder a picture of the cans of salted peanuts of the parties to the case.

The picture below is part of the documentary evidence appearing in the original records, and it clearly demonstrates the correctness of the finding of respondent Director that the word PLANTERS is the dominant, striking mark of the labels in question.

It is true that there are other words used such as "Cordial" in petitioner's can and "Cocktail" in Standard Brands', which are also prominently displayed, but these words are mere adjectives describing the type of peanuts in the labeled containers and are not sufficient to warn the unwary customer that the two products come form distinct sources. As a whole it is the word PLANTERS which draws the attention of the buyer and leads him to conclude that the salted peanuts contained in the two cans originate from one and the same manufacturer. In fact, when a housewife sends her housemaid to the market to buy canned salted peanuts, she will describe the brand she wants by using the word PLANTERS and not "Cordial" nor "Cocktail".

2. The next argument of petitioner is that respondent Director should not have based his decision simply on the use of the term PLANTERS, and that what he should have resolved is whether there is a confusing similarity in the trademarks of the parties.

It is quite obvious from the record, that respondent Director's decision is based not only on the fact that petitioner herein adopted the same dominant mark of Standard Brands, that is, the word PLANTERS, but that it also used in its label the same coloring scheme of gold, blue, and white, and basically the same lay-out of words such as "salted peanuts" and "vacuum packed" with similar type and size of lettering as appearing in Standard Brands' own trademark, all of which result in a confusing similarity between the two labels.4Thus, the decision states: "Furthermore, as to appearance and general impression of the two trademarks, I find a veryconfusing similarity." (Emphasis supplied)5Referring again to the picture We have reproduced, the striking similarity between the two labels is quite evident not only in the common use of PLANTERS but also in the other words employed. As a matter of fact, the capital letter "C" of petitioner's "Cordial" is alike to the capital "C" of Standard's "Cocktail", with both words ending with an "1".

Admittedly, no producer or manufacturer may have a monopoly of any color scheme or form of words in a label. But when a competitor adopts a distinctive or dominant mark or feature of another's trademark and with it makes use of the same color ensemble, employs similar words written in a style, type and size of lettering almost identical with those found in the other trademark, the intent to pass to the public his product as that of the other is quite obvious. Hence, there is good reason for Standard Brands' to ask why did petitioner herein use the word PLANTERS, the same coloring scheme, even almost identical size and contour of the cans, the same lay-out of words on its label when there is a myriad of other words, colors, phrases, symbols, and arrangements to choose from to distinguish its product from Standard Brands, if petitioner was not motivated to simulate the label of the latter for its own can of salted peanuts, and thereby deceive the public?

A similar question was asked by this Court inClarke vs. Manila Candy Co., 36 Phil. 100, when it resolved in favor of plaintiff a case of unfair competition based on an imitation of Clarke's packages and wrappers of its candies the main feature of which was one rooster. The Court queried thus: "... why, with all the birds in the air, and all the fishes in the sea, and all the animals on the face of the earth to choose from, the defendant company (Manila Candy Co.) selected two roosters as its trademark, although its directors and managers must have been well aware of the long-continued use of a rooster by the plaintiff with the sale and advertisement of its goods? ... A cat, a dog, a carabao, a shark or an eagle stamped upon the container in which candies are sold would serve as well as a rooster for purposes of identification as the product of defendant's factory. Why did defendant select two roosters as its trademark ?" (p.109,supra)

Petitioner contends, however, that there are differences between the two trademarks, such as, the presence of the word "Philippine" above PLANTERS on its label, and other phrases, to wit: "For Quality and Price, Its Your Outstanding Buy", the address of the manufacturer in Quezon City, etc., plus a pictorial representation of peanuts overflowing from a tin can, while in the label of Standard Brands it is stated that the product is manufactured in San Francisco, California, and on top of the tin can is printed "Mr. Peanut" and the representation of a "humanized peanut". (pp. 30-33, petitioner's brief)

We have taken note of those alleged differences but We find them insignificant in the sense that they are not sufficient to call the attention of the ordinary buyer that the labeled cans come from distinct and separate sources. The word "Philippine" printed in small type in petitioner's label may simply give to the purchaser the impression that that particular can of PLANTERS salted peanuts is locally produced or canned but that what he is buying is still PLANTERS canned salted peanuts and nothing else. As regards "Mr. Peanut" on Standard Brands' label, the same appears on the top cover and is not visible when the cans are displayed on the shelves, aside from the fact that the figure of "Mr. Peanut" is printed on the tin cover which is thrown away after opening the can, leaving no lasting impression on the consumer. It is also for this reason that We do not agree with petitioner that it is "Mr. Peanut and the Humanized Peanut" which is the trademark of Standard Brands salted peanuts, it being a mere descriptive pictorial representation of a peanut not prominently displayed on the very body of the label covering the can, unlike the term PLANTERS which dominates the label.

It is correctly observed by respondent Director that the merchandize or goods being sold by the parties herein are very ordinary commodities purchased by the average person and many times by the ignorant and unlettered 6 and these are the persons who will not as a rule examine the printed small letterings on the container but will simply be guided by the presence of the striking mark PLANTERS on the label. Differences there will always be, but whatever differences exist, these pale into insignificance in the face of an evident similarity in the dominant feature and overall appearance of the labels of the parties.

It is not necessary, to constitute trademark "infringement", that every word of a trade-mark should be appropriated, but it is sufficient that enough be taken to deceive the public in the purchase of a protected article. (Bunte Bros. v. Standard Chocolates, D.C. Mass., 45 F. Supp. 478, 481)

A trade-name in order to be an `infringement' upon another need not be exactly like it in form and sound, but it is enough if the one so resembles another as to deceive or mislead persons of ordinary caution into the belief that they are dealing with the one concern when in fact they are dealing with the other. (Foss v. Culbertson, 136 P. 2d 711, 718, 17 Wash. 2d 610)

Where a trade-mark contains a dominating or distinguishing word, and purchasing public has come to know and designate the article by such dominating word, the use of such word by another in marking similar goods may constitute Infringement though the marks aside from such dominating word may be dissimilar. (Queen Mfg. Co. v. lsaac Ginsberg & Bros., C.C.A. Mon., 25 F. 2d 284, 287)

(d) "Infringement" of trade-mark does not depend on the use of identical words, nor on the question whether they are so similar that a person looking at one would be deceived into the belief that it was the other; it being sufficient if one mark is so like another in form, spelling, or sound that one with not a very definite or clear recollection as to the real mark is likely to be confused or misled. (Northam Warren Corporation v. Universal Cosmetic Co., C. C. A; III., 18 F. 2d 774, 775)

3. What is next submitted by petitioner is that it was error for respondent Director to have enjoined it from using PLANTERS in the absence of evidence showing that the term has acquired secondary meaning. Petitioner, invoking American jurisprudence, asserts that the first user of a tradename composed of common words is given no special preference unless it is shown that such words have acquired secondary meaning, and this, respondent Standard Brands failed to do when no evidence was presented to establish that fact. (pp. 14-16, petitioner's brief)

The doctrine of secondary meaning is found in Sec. 4 (f), Chapter II-A of the Trade-Mark Law,viz:

Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this section, nothing herein shall prevent the registration of a mark or trade-name used by the applicant which has become distinctive of the applicant's goods, business or services. The Director may accept asprima facieevidence that the mark or trade-name has become distinctive, as applied to or used in connection with the applicant's goods, business or services, proof of substantially exclusive and continuous use thereof as a mark or trade-name by the applicant in connection with the sale of goods, business or services for the five years next preceding the date of the filing of the application for its registration. (As amended by Sec. 3, Rep. Act No. 638.)

This Court held that the doctrine is to the effect that a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product.7By way of illustration, is the word "Selecta" which according to this Court is a common ordinary term in the sense that it may be used or employed by any one in promoting his business or enterprise, but which once adopted or coined in connection with one's business as an emblem, sign or device to characterize its products, or as a badge of authenticity, may acquirea secondary meaningas to be exclusively associated with its products and business, so that its use by another may lead to confusion in trade and cause damage to its business.8The applicability of the doctrine of secondary meaning to the situation now before Us is appropriate because there is oral and documentary evidence showing that the word PLANTERS has been used by and closely associated with Standard Brands for its canned salted peanuts since 1938 in this country. Not only is that fact admitted by petitioner in the amended stipulation of facts (see p. 2 of this Decision), but the matter has been established by testimonial (tsn October 4, 1962, pp. 2-8) and documentary evidence consisting of invoices covering the sale of "PLANTERS cocktail peanuts". (Exhibits C to C-4; D to D-10; E to E-10; F to F-2) In other words, there is evidence to show that the term PLANTERS has become a distinctive mark or symbol insofar as salted peanuts are concerned, and by priority of use dating as far back as 1938, respondent Standard Brands has acquired a preferential right to its adoption as its trademark warranting protection against its usurpation by another.Ubi jus ibi remedium. Where there is a right there is a remedy. Standard Brands has shown the existence of a property right(Arce Sons & Co. vs. Selecta Biscuit Co., Inc., supra, pp. 262-263) and respondent Director, has afforded the remedy.

Still on this point, petitioner contends that Standard Brands' use of the trademark PLANTERS was interrupted during the Japanese occupation and in fact was discontinued when the importation of peanuts was prohibited by Central Bank regulations effective July 1, 1953, hence it cannot be presumed that it has acquired a secondary meaning. We hold otherwise. Respondent Director correctly applied the rule that non-use of a trademark on an article of merchandize due to legal restrictions or circumstances beyond one's control is not to be considered as an abandonment.

In the case ofAndres Romero vs. Maiden Form Brassiere Co., Inc., L-18289, March 31, 1964, 10 SCRA 556, the same question was raised by petitioner Romero when he filed with the Bureau of Patents a petition to cancel the registration of the trademark "Adagio" for brassieres manufactured by Maiden Form Brassiere Co., Inc. His petition having been dismissed by the Director of Patents, Romero appealed to this Court and one of the issues posed by him was that when the Government imposed restrictions on importations of brassieres bearing that particular trademark, there was abandonment of the same by respondent company which entitled petitioner to adopt it for his own use and which in fact he had been using for a number of years. That argument was met by the Court in the words of Justice Jesus Barrera thus:

... The evidence on record shows, on the other hand, that the trademark "Adagio" was first used exlusively 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 being the trademark, suchtemporary 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).1wph1.tThe 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 intention to abandon." Sanlehner v. Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 6.0).(Anheuser-Busch, Inc, v. Budweiser Malt Products Corp., 287 F. 245.)

xxx xxx xxx

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 name of liquor. (Nims, Unfair Competition and Trade-Mark, p. 1269.) (pp. 562-564,supra) (emphasis Ours)

Applying the words of Justice Roman Ozaeta in the "Ang Tibay" case (Ang vs. Toribio Teodoro, p. 56, supra) to the case now before Us, petitioner herein must not be allowed to get a free ride on the reputation and selling power of Standard Brands PLANTERS salted peanuts, for a self-respecting person, or a reputable business concern as is the case here, does not remain in the shelter of another's popularity and goodwill but builds one of his own.

4. Findings of fact by the Director of Patents are conclusive and binding on this Court provided they are supported by substantial evidence. 9 The testimonial and documentary evidence in addition to the stipulation of facts submitted by the parties fully support the findings of respondent Director that(1) there is a confusing similarity between the labels or trademarks of Philippine Nut and Standard Brands used in their respective canned salted peanuts; (2) respondent Standard Brands has priority of adoption and use of the label with PLANTERS as the dominant feature and the same has acquired secondary meaning in relation to salted peanuts; and (3) there has been no abandonment or non-use of said trademark by Standard Brands which would justify its adoption by petitioner or any other competitor for the sale of salted peanuts in the market.

PREMISES CONSIDERED, We AFFIRM the decision of respondent Director of Patents with costs against petitioner.

So Ordered.

Castro (Chairman), Makasiar, Esguerra and Martin, JJ., concur.

Teehankee, J., is on leave.

G.R. No. L-26557 February 18, 1970

AMERICAN WIRE & CABLE COMPANY,Petitioner, vs.DIRECTOR OF PATENTS and CENTRAL BANAHAW INDUSTRIES,Respondents.

REYES, J.B.L.,J.:Appeal filed by the American Wire & Cable Company, owner of the registered trademark DURAFLEX for electric wires, questioning the correctness of the decision of the Director of Patents (in Inter Partes Case No. 290) holding that the label DYNAFLEX and Device for electric wires, sought to be registered by the Central Banahaw Industries, Inc., is not similar to herein appellant's patented mark.chanroblesvirtualawlibrarychanrobles virtual law libraryOn 2 June 1962, Central Banahaw Industries, Inc., applied with the Director of Patents for registration of the trademark DYNAFLEX and Device to be used in connection with electric wires, class 20, which mark applicant allegedly had been using since 29 March 1962. The American Wire and Cable Co., Inc., another domestic corporation and authorized user since 10 April 1958 of the registered trade mark DURAFLEX and Globe representation, for electric wires, apparatus, machines and supplies, class 20, opposed the application on the ground that applicant's use of the trade mark DYNAFLEX would cause confusion or result in mistake to purchasers intending to buy DURAFLEX electric wires and goods, the mark being registered allegedly having practically the same spelling, pronunciation and sound, and covering the same good, as that of the opposer. Besides, opposer contended that there has been no continuous use in commerce of the applicant's mark.chanroblesvirtualawlibrarychanrobles virtual law libraryAfter due hearing, the Director of Patents rendered decision holding the applicant's mark DYNAFLEX not to be similar to the previously registered trademark DURAFLEX. Consequently, the application of Central Banahaw Industries for registration of DYNAFLEX was given due course and the opposition thereto by American Wire & Cable Company dismissed. The latter interposed the present appeal.chanroblesvirtualawlibrarychanrobles virtual law libraryThe issue to be resolved in this proceeding is simple: whether or not the mark DYNAFLEX and Device is registrable as label for electric wires, class 20, considering that the trademark DURAFLEX and Globe representation also for electric wires, machines and supplies under class 20, has been registered more than 4 years earlier.chanroblesvirtualawlibrarychanrobles virtual law libraryIn ruling in favor of the herein application, the Director of Patents said:

... The applicant's trademark is a composite mark consisting of the word DYNAFLEX printed in small letters of the English alphabet except that letter "D" is capitalized, within a fanciful device, on top of which is the encircled initials, in downward sequence, of the Respondent's corporate name, and jutting out on two sides of the circle are bolts of lightning, symbolic of electricity.chanroblesvirtualawlibrarychanrobles virtual law libraryOn the other hand, Opposer's trademark is DURAFLEX in Capitalized print, except that one cross piece of the letter X is in the form of a bolt of lightning. The word slants slightly upward, traversing the center of a figure of the earth or globe.chanroblesvirtualawlibrarychanrobles virtual law libraryResorting now to the semantics of the words, it is clear that both marks are suffixed by the word FLEX. The word appears in any dictionary having as common meaning "to bend." In Webster's International Dictionary, it is used by the British on electric cord. However, one mark (Respondent's) is prefixed with DYNA suggesting power. It is not in itself a rootword but it has been commonly associated with any source of power. At most, it could have been derived from the Greek word "Dynamis" and, generally, the root words commonly derived therefrom are ''dynam'' and "dynamo". The other (Opposer's) is prefixed with DURA, suggesting durability, strength and endurance.chanroblesvirtualawlibrarychanrobles virtual law libraryBased on the foregoing comparisons, the trademarks of the parties are different in appearance, meaning, sound and connotation and hence, are not confusingly similar.

The pertinent law, Republic Act 166, as amended, on registrability of trademarks, prescribes:

SEC. 4. - The owner of a trademark, trade name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same, unless it:chanrobles virtual law libraryxxx xxx xxxchanrobles virtual law library(d) Consists of or comprises a mark or trade name which so resembles a mark or trade-name registered in the Philippines by another and not abandoned, asto be likely, when applied to or used in connection with the goods, business or services of the applicant,to cause confusion or mistake or to deceive purchasers. (Emphasis supplied)

It is clear from the above-quoted provision that the determinative factor in a contest involving registration of trade mark is not whether the challenged mark wouldactuallycause confusion or deception of the purchasers but whether the use of such mark wouldlikelycause confusion or mistake on the part of the buying public. In short, to constitute an infringement of an existing trademark patent and warrant a denial of an application for registration, the law does not require that the competing trademarks must be so identical as to produce actual error or mistake; it would be sufficient, for purposes of the law, that the similarity between the two labels is such that there is a possibility or likelihood of the purchaser of the older brand mistaking the newer brand for it.chanroblesvirtualawlibrarychanrobles virtual law libraryThe question is, when is a trademark likely to confuse or cause the public to mistake one for another? Earlier rulings of the Court seem to indicate its reliance on thedominancytest or the assessment of the essential ordominantfeatures in the competing labels to determine whether they are confusingly similar.1On this matter, the Court said:

It has been consistently held that the question of infringement of a trademark is to be determined by the test ofdominancy. Similarity in size, form, and color, while relevant, is not conclusive. If the competing trademark contains the main or essential ordominantfeatures of another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary, nor is it necessary that the infringing label should suggest an effort to imitate (C. Neilman Brewing Co. vs. Independent Brewing Co., 191 F. 489, 495, citing Eagle White Lead Co. vs. Pflugh [CC] 180 Fed. 579). The question at issue in cases of infringement of trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers." (Go Tiong vs. Director of Patents, 95 Phil. 1, cited in Lim Hoa vs. Director of Patents, 100 Phil. 214).2chanrobles virtual law libraryIn fact, even their similarity in sound is taken into consideration, where the marks refer to merchandise of the same descriptive properties, for the reason that tradeidem sonansconstitutes a violation of trade mark patents.3Thus, in he case ofMarvex Commercial Co. vs. Hawpia & Co.,4the registration of the trademark "Lionpas" for medicated plaster was denied for being confusingly similar in sound with "Salonpas", a registered mark also for medicated plaster, the Court saying:

Two letters of "SALONPAS" are missing in "LIONPAS" the first letteraand the letters. Be that as it may, when the two words are pronounced, the sound effects are confusingly similar. And where goods are advertised over the radio, similarity in sound is of especial significance (Co Tiong Sa vs. Director of Patents, 95 Phil. 1, citing Nims, The Law of Unfair Competition and Trademarks, 4th ed., vol. 2, pp. 678-679). "The importance of this rule is emphasized by the increase of radio advertising in which we are deprived of help of our eyes and must depend entirely on the ear (Operators, Inc. vs. Director of Patents,supra.)

Along the same line are the rulings denying registration of a mark containing the picture of a fish (Bagus), as label for soy sauce, for being similar to another registered brand of soy sauce that bears the picture of the fish carp;5or that of the mark bearing the picture of two roosters with the word "Bantam", as label for food seasoning (vetsin), which would confuse the purchasers of the same article bearing the registered mark "Hen Brand" that features the picture of a hen.6chanrobles virtual law libraryThe present case is governed by the principles laid down in the preceding cases. The similarity between the competing trademarks, DURAFLEX and DYNAFLEX, is apparent. Not only are the initial letters and the last half of the appellations identical, but the difference exists only in two out of the eight literal elements of the designations. Coupled with the fact that both marks cover insulated flexible wires under class 20; that both products are contained in boxes of the same material, color, shape and size; that the dominant elements of the front designs are a red circle and a diagonal zigzag commonly related to a spark or flash of electricity; that the back of both boxes show similar circles of broken lines with arrows at the center pointing outward, with the identical legend "Cut Out Ring" "Draw From Inside Circle", no difficulty is experienced in reaching the conclusion that there is a deceptive similarity that would lead the purchaser to confuse one product with the other.chanroblesvirtualawlibrarychanrobles virtual law libraryThe Director of Patents has predicated his decision mostly on the semantic difference and connotation of the prefixes "Dura" and "Dyna" of the competing trademarks, unfortunately forgetting that the buyers are less concerned with the etymology of the words as with their sound and the dominant features of the design.chanroblesvirtualawlibrarychanrobles virtual law libraryOf course, as pointed out in the decision now on appeal there are some differences in the mark on the front portion of the box. But they pale into insignificance in view of the close resemblance in the general appearance of the box and the tradenames of the articles. Indeed, measured against the dominant-feature standard, applicant's mark must be disallowed. For, undeniably, the dominant and essential feature of the article is the trademark itself. Unlike in the case of commodities that are ordinarily picked up by the purchaser himself from the grocery or market counters, electric wires are purchased not by their appearance but by the size (voltage) and length and, most importantly, by brand. It is even within layman's knowledge that different brands of wire have different characteristics and properties; and for an essential building item as electric wires and supplies, the owner of the building would not dare risk his property, perhaps his life, on an unknown or untested brand. He would only demand for what is recognized to be the best.chanroblesvirtualawlibrarychanrobles virtual law libraryRelying on the doctrine enunciated in the Etepha case7and the earlier ruling inLim Hoa vs. Director of Patents,8applicant-appellee contends that the DYNAFLEX mark would not confuse or deceive the buyers and subscribers of the DURAFLEX brand, because electrical wires are of great value and the purchasers thereof are generally intelligent - the architects, engineers and building contractors. It must be realized, however, that except perhaps in big constructions, the designing architect or engineer, or the contractor who will undertake the work of building, does not himself purchase or place the order for the purchase of the materials to be used therein. The task is oftentimes delegated to another. Nor are said technical men the ones personally laying down the wiring system in the building that they could possibly check on whether or not the correct wires are being used. So that even if the engineer or contractor will specify in the bill of materials the particular brand of wires needed, there is no certainty that the desired product will be acquired. For, unlike the pharmacists or druggists, the dispensers of hardware or electrical supplies are not generally known to pay as much concern to the brand of articles asked for by the customer and of a person who knows the name of the brand but is not acquainted with it is appearance, the likelihood of the DYNAFLEX product being mistaken for DURAFLEX is not remote.chanroblesvirtualawlibrarychanrobles virtual law libraryOf course, as in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters and designs available, the appellee had to choose those so closely similar to another's trademark if there was no intent to take advantage of the goodwill generated by the other mark.chanroblesvirtualawlibrarychanrobles virtual law libraryFOR THE FOREGOING CONSIDERATIONS, the decision appealed from is hereby set aside, and the application for registration of the trademark DYNAFLEX for electric wires, class 20, is ordered denied. No costs.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro Fernando, Barredo and Villamor, JJ., concur.chanroblesvirtualawlibrarychanrobles virtual law libraryTeehankee, J., took no part.

DEL MONTE CORPORATION-USA, PAUL E. DERBY, JR., DANIEL COLLINS and LUIS HIDALGO,Petitioners,v.COURT OF APPEALS, JUDGE BIENVENIDO L. REYES in his capacity as Presiding Judge, RTC-Br. 74, Malabon, Metro Manila, MONTEBUENO MARKETING, INC., LIONG LIONG C. SY and SABROSA FOODS, INC.,Respondents.D E C I S I O N

BELLOSILLO,J.:

ThisPetition for Reviewoncertiorariassails the 17 July 1998Decision[1of the Court of Appeals affirming the 11 November 1997 Order[2of the Regional Trial Court which denied petitionersMotion to Suspend Proceedingsin Civil Case No. 2637-MN. It also questions the appellate courtsResolution[3of 30 October 1998 which denied petitionersMotion for Reconsideration.

On 1 July 1994, in a Distributorship Agreement, petitioner Del Monte Corporation-USA (DMC-USA) appointed private respondent Montebueno Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del Monte products in the Philippines for a period of five (5) years, renewable for two (2) consecutive five (5) year periods with the consent of the parties. The Agreement provided, among others, for an arbitration clause which states -

12.GOVERNING LAW AND ARBITRATION[4This Agreement shall be governed by the laws of the State of California and/or, if applicable, the United States of America. All disputes arising out of or relating to this Agreement or the parties relationship, including the termination thereof, shall be resolved by arbitration in the City of San Francisco, State of California, under the Rules of the American Arbitration Association. The arbitration panel shall consist of three members, one of whom shall be selected by DMC-USA, one of whom shall be selected by MMI, and third of whom shall be selected by the other two members and shall have relevant experience in the industry x x x xIn October 1994 the appointment of private respondent MMI as the sole and exclusive distributor of Del Monte products in the Philippines was published in several newspapers in the country. Immediately after its appointment, private respondent MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of petitioner DMC-USA, as MMIs marketing arm to concentrate on its marketing and selling function as well as to manage its critical relationship with the trade.

On 3 October 1996 private respondents MMI, SFI and MMIs Managing Director Liong Liong C. Sy (LILY SY) filed a Complaint[5against petitioners DMC-USA, Paul E. Derby, Jr.,[6Daniel Collins[7and Luis Hidalgo,[8and Dewey Ltd.[9before the Regional Trial Court of Malabon, Metro Manila. Private respondents predicated their complaint on the alleged violations by petitioners of Arts. 20,[1021[11and 23[12of the Civil Code. According to private respondents, DMC-USA products continued to be brought into the country by parallel importers despite the appointment of private respondent MMI as the sole and exclusive distributor of Del Monte products thereby causing them great embarrassment and substantial damage. They alleged that the products brought into the country by these importers were aged, damaged, fake or counterfeit, so that in March 1995 they had to cause, after prior consultation with Antonio Ongpin, Market Director for Special Markets of Del Monte Philippines, Inc., the publication of a "warning to the trade" paid advertisement in leading newspapers. Petitioners DMC-USA and Paul E. Derby, Jr., apparently upset with the publication, instructed private respondent MMI to stop coordinating with Antonio Ongpin and to communicate directly instead with petitioner DMC-USA through Paul E. Derby, Jr.

Private respondents further averred that petitioners knowingly and surreptitiously continued to deal with the former in bad faith by involving disinterested third parties and by proposing solutions which were entirely out of their control. Private respondents claimed that they had exhausted all possible avenues for an amicable resolution and settlement of their grievances; that as a result of the fraud, bad faith, malice and wanton attitude of petitioners, they should be held responsible for all the actual expenses incurred by private respondents in the delayed shipment of orders which resulted in the extra handling thereof, the actual expenses and cost of money for the unused Letters of Credit (LCs) and the substantial opportunity losses due to created out-of-stock situations and unauthorized shipments of Del Monte-USA products to the Philippine Duty Free Area and Economic Zone; that the bad faith, fraudulent acts and willful negligence of petitioners, motivated by their determination to squeeze private respondents out of the outstanding and ongoing Distributorship Agreement in favor of another party, had placed private respondent LILY SY on tenterhooks since then; and, that the shrewd and subtle manner with which petitioners concocted imaginary violations by private respondent MMI of the Distributorship Agreement in order to justify the untimely termination thereof was a subterfuge. For the foregoing, private respondents claimed, among other reliefs, the payment of actual damages, exemplary damages, attorneys fees and litigation expenses.

On 21 October 1996 petitioners filed aMotion to Suspend Proceedings[13invoking the arbitration clause in their Agreement with private Respondents.

In a Resolution[14dated 23 December 1996 the trial court deferred consideration of petitionersMotion to Suspend Proceedingsas the grounds alleged therein did not constitute the suspension of the proceedings considering that the action was for damages with prayer for the issuance ofWrit of Preliminary Attachmentand not on the Distributorship Agreement.

On 15 January 1997 petitioners filed aMotion for Reconsiderationto which private respondents filed theirComment/Opposition. On 31 January 1997 petitioners filed theirReply. Subsequently, private respondents filed anUrgent Motion for Leave to Admit Supplemental Pleadingdated 2 April 1997. This Motion was admitted, over petitioners opposition, in an Order of the trial court dated 27 June 1997.

As a result of the admission of theSupplemental Complaint, petitioners filed on 22 July 1997 aManifestationadopting theirMotion to Suspend Proceedingsof 17 October 1996 andMotion for Reconsiderationof 14 January 1997.

On 11 November 1997 theMotion to Suspend Proceedingswas denied by the trial court on the ground that it"will not serve the ends of justice and to allow said suspension will only delay the determination of the issues, frustrate the quest of the parties for a judicious determination of their respective claims, and/or deprive and delay their rights to seek redress."[15On appeal, the Court of Appeals affirmed the decision of the trial court. It held that the alleged damaging acts recited in the Complaint, constituting petitioners causes of action, required the interpretation of Art. 21 of the Civil Code[16and that in determining whether petitioners had violated it "would require a full blown trial" making arbitration "out of the question."[17PetitionersMotion for Reconsiderationof the affirmation was denied. Hence, thisPetition for Review.

The crux of the controversy boils down to whether the dispute between the parties warrants an order compelling them to submit to arbitration.

Petitioners contend that the subject matter of private respondents causes of action arises out of or relates to the Agreement between petitioners and private respondents. Thus, considering that the arbitration clause of the Agreement provides that all disputes arising out of or relating to the Agreement or the parties relationship, including the termination thereof, shall be resolved by arbitration, they insist on the suspension of the proceedings in Civil Case No. 2637-MN as mandated by Sec. 7 of RA 876[18-

Sec. 7.Stay of Civil Action.If any suit or proceeding be brought upon an issue arising out of an agreement providing for arbitration thereof, the court in which such suit or proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with the terms of the agreement.Provided,That the applicant for the stay is not in default in proceeding with such arbitration.Private respondents claim, on the other hand, that their causes of action are rooted in Arts. 20, 21 and 23 of the Civil Code,[19the determination of which demands a full blown trial, as correctly held by the Court of Appeals. Moreover, they claim that the issues before the trial court were not joined so that the Honorable Judge was not given the opportunity to satisfy himself that the issue involved in the case was referable to arbitration. They submit that, apparently, petitioners filed a motion to suspend proceedings instead of sending a written demand to private respondents to arbitrate because petitioners were not sure whether the case could be a subject of arbitration. They maintain that had petitioners done so and private respondents failed to answer the demand, petitioners could have filed with the trial court their demand for arbitration that would warrant a determination by the judge whether to refer the case to arbitration. Accordingly, private respondents assert that arbitration is out of the question.

Private respondents further contend that the arbitration clause centers more on venue rather than on arbitration. They finally allege that petitioners filed their motion for extension of time to file this petition on the same date[20petitioner DMC-USA filed a petition to compel private respondent MMI to arbitrate before the United States District Court in Northern California, docketed as Case No. C-98-4446. They insist that the filing of the petition to compel arbitration in the United States made the petition filed before this Court an alternative remedy and, in a way, an abandonment of the cause they are fighting for here in the Philippines, thus warranting the dismissal of the present petition before this Court.

There is no doubt that arbitration is valid and constitutional in our jurisdiction.[21Even before the enactment of RA 876, this Court has countenanced the settlement of disputes through arbitration. Unless the agreement is such as absolutely to close the doors of the courts against the parties, which agreement would be void, the courts will look with favor upon such amicable arrangement and will only interfere with great reluctance to anticipate or nullify the action of the arbitrator.[22Moreover, as RA 876 expressly authorizes arbitration of domestic disputes, foreign arbitration as a system of settling commercial disputes was likewise recognized when the Philippines adhered to the United Nations"Convention on the Recognition and the Enforcement of Foreign Arbitral Awards of 1958"under the 10 May 1965 Resolution No. 71 of the Philippine Senate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state.[23A careful examination of the instant case shows that the arbitration clause in the Distributorship Agreement between petitioner DMC-USA and private respondent MMI is valid and the dispute between the parties is arbitrable. However, this Court must deny the petition.

The Agreement between petitioner DMC-USA and private respondent MMI is a contract. The provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that contract and is itself a contract. As a rule, contracts are respected as the law between the contracting parties and produce effect as between them, their assigns and heirs.[24Clearly, only parties to the Agreement,i.e., petitioners DMC-USA and its Managing Director for Export Sales Paul E. Derby, Jr., and private respondents MMI and its Managing Director LILY SY are bound by the Agreement and its arbitration clause as they are the only signatories thereto. Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the Agreement and cannot even be considered assigns or heirs of the parties, are not bound by the Agreement and the arbitration clause therein. Consequently, referral to arbitration in the State of California pursuant to the arbitration clause and the suspension of the proceedings in Civil Case No. 2637-MN pending the return of the arbitral award could be called for[25but onlyas to petitioners DMC-USA and Paul E. Derby, Jr., and private respondents MMI and LILY SY, and not as to the other parties in this case, in accordance with the recent case ofHeirs of Augusto L. Salas, Jr. v. Laperal Realty Corporation,[26which superseded that ofToyota Motor Philippines Corp. v. Court of Appeals.[27InToyota,the Court ruled that "[t]he contention that the arbitration clause has become dysfunctional because of the presence of third parties is untenable ratiocinating that "[c]ontracts are respected as the law between the contracting parties"[28and that "[a]s such, the parties are thereby expected to abide with good faith in their contractual commitments."[29However, inSalas, Jr.,only parties to the Agreement, their assigns or heirs have the right to arbitrate or could be compelled to arbitrate. The Court went further by declaring that in recognizing the right of the contracting parties to arbitrate or to compel arbitration, the splitting of the proceedings to arbitration as to some of the parties on one hand and trial for the others on the other hand,orthe suspension of trial pending arbitration between some of the parties, should not be allowed as it would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary delay.[30The object of arbitration is to allow the expeditious determination of a dispute.[31Clearly, the issue before us could not be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration proceedings and trial, or suspension of trial pending arbitration. Accordingly, the interest of justice would only be served if the trial court hears and adjudicates the case in a single and complete proceeding.[32WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals affirming the Order of the Regional Trial Court of Malabon, Metro Manila, in Civil Case No. 2637-MN, which denied petitionersMotion to Suspend Proceedings, is AFFIRMED. The Regional Trial Court concerned is directed to proceed with the hearing of Civil Case No. 2637-MN with dispatch. No costs.

SO ORDERED.

Mendoza, Buena,andDe Leon, Jr., JJ.,concur.Quisumbing,J.,no part, related to counsel of a party.BATA INDUSTRIES, LTD.,Petitioner, vs.THE HONORABLE COURT OF APPEALS; TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, NEW OLYMPIAN RUBBER PRODUCTS CO., INC.,Respondents.

R E S O L U T I O N

ABAD SANTOS,J.:On October 27, 1980, the petition in this case was denied for lack of merit. Petitioner moved to reconsider and as required, private respondent submitted comments. A hearing on the motion for reconsideration was held on June 7, 1982. This is Our resolution on the motion for reconsideration.chanrobles virtual law libraryIn Inter Partes Case No. 654 of the Philippine Patent Office, New Olympian Rubber Products Co., Inc. sought the registration of the mark BATA for casual rubber shoes. It alleged that it has used the mark since July 1, 1970.chanrobles virtual law libraryRegistration was opposed by Bata Industries, Ltd., a Canadian corporation, which alleged that it owns and has not abandoned the trademark BATA.chanrobles virtual law libraryStipulated by the parties were the following:

1. Bata Industries, Ltd. has no license to do business in the Philippines;

2. It is not presently selling footwear under the trademark BATA in the Philippines; and

3. It has no licensing agreement with any local entity or firm to sell its products in the Philippines.chanrobles virtual law libraryEvidence received by the Philippine Patent Office showed that Bata shoes made by Gerbec and Hrdina of Czechoslovakia were sold in the Philippines prior to World War II. Some shoes made by Bata of Canada were perhaps also sold in the Philippines until 1948. However, the trademark BATA was never registered in the Philippines by any foreign entity. Under the circumstances, it was concluded that "opposer has, to all intents and purposes, technically abandoned its trademark BATA in the Philippines."

Upon the other hand, the Philippine Patent Office found that New Olympian Rubber Products Co., Inc.:

... has overwhelmingly and convincingly established its right to the trademark BATA and consequently, its use and registration in its favor. There is no gainsaying the truth that the respondent has spent a considerable amount of money and effort in popularizing the trademark BATA for shoes in the Philippines through the advertising media since it was lawfully used in commerce on July 1, 1970. It can not be denied, therefore, that it is the respondent-applicant's expense that created the enormous goodwill of the trademark BATA in the Philippines and not the opposer as claimed in its opposition to the registration of the BATA mark by the respondent.chanrobles virtual law libraryAdditionally, on evidence of record, having also secured (three) copyright registrations for the word BATA, respondent-applicant's right to claim ownership of the trademark BATA in the Philippines, which it claims to be a Tagalog word which literally means "a little child" (Exh. 5), is all the more fortified.chanrobles virtual law libraryThe Philippine Patent Office dismissed the opposition and ordered the registration of the trademark BATA in favor of the domestic corporation.chanrobles virtual law libraryAppeal from the decision of the Philippine Patent Office was made to the Court of Appeals by Bata Industries, Ltd. In a decision penned by Justice Justiniano P. Cortez dated August 9, 1979, with Justices Mariano Serrano and Jose B. Jimenez concurring, the PPO decision was reversed. A motion for reconsideration filed by New Olympian Rubber Products Co., Inc. was denied on October 17, 1979, by the same justices.chanrobles virtual law libraryHowever, in a resolution on a second motion for reconsideration penned by Justice Hugo E. Gutierrez who is now a member of this Court, to which Justices Corazon J. Agrava and Rodolfo A. Nocon concurred (with the former filing a separate opinion), the decision of August 9, 1979, was set aside and that of the Director of Patents was affirmed.chanrobles virtual law libraryIn addition to points of law, Bata Industries, Ltd. questions "the circumstances surrounding the issuance of the questioned resolutions of the respondent Court of Appeals." In effect, it insinuates that there was something wrong when a new set of justices rendered a completely different decision.chanrobles virtual law libraryIt should be stated that there is nothing wrong and unusual when a decision is reconsidered. This is so when the reconsideration is made by a division composed of the same justices who rendered the decision but much more so when the reconsideration is made by a different set of justices as happened in this case. Obviously, the new set of justices would have a fresh perspective unencumbered by the views expressed in the decision sought to be reconsidered. Nor should it be a cause for wonder why Justices Gutierrez, Agrava and Nocon had replaced the original justices. Justice Cortez resigned to become a candidate for the governorship of Cagayan (he was elected), while Justices Serrano and Jimenez retired upon reaching the age of 65.chanrobles virtual law libraryOn the merits, the extended resolution penned by Justice Gutierrez does not have to be fortified by Us. We agree with Mr. Justice Gutierrez when he says:

We are satisfied from the evidence that any slight goodwill generated by the Czechoslovakian product during the Commonwealth years was completely abandoned and lost in the more than 35 years that have passed since the liberation of Manila from the Japanese troops.chanrobles virtual law libraryThe applicant-appellee has reproduced excerpts from the testimonies of the opposer-appellant's witnesses to prove that the opposer-appellant was never a user of the trademark BATA either before or after the war, that the appellant is not the successor-in-interest of Gerbec and Hrdina who were not is representatives or agents, and could not have passed any rights to the appellant, that there was no privity of interest between the Czechoslovakian owner and the Canadian appellant and that the Czechoslovakian trademark has been abandoned in Czechoslovakia.chanrobles virtual law libraryWe agree with the applicant-appellee that more than substantial evidence supports the findings and conclusions of the Director of Patents. The appellant has no Philippine goodwill that would be damaged by the registration of the mark in the appellee's favor. We agree with the decision of the Director of Patents which sustains, on the basis of clear and convincing evidence, the right of the appellee to the registration and protection of its industrial property, the BATA trademark.chanrobles virtual law libraryWHEREFORE, the motion for reconsideration is hereby denied for lack of merit. No special pronouncement as to costs.chanrobles virtual law librarySO ORDERED.

Barredo (Chairman), Aquino, Guerrero, De Castro and Escolin, JJ., concur.chanrobles virtual law libraryConcepcion, Jr., J., is on leave.

G.R. No. L-54158 November 19, 1982PAGASA INDUSTRIAL CORPORATION,petitioner,vs.HE HONORABLE COURT OF APPEALS, TIBURCIO S. EVALLE Director of Patents, and YOSHIDA KOGYO KABUSHIKI KAISHA,respondents.

Quasha, Asperilla, Ancheta, Valmonte, Pea and Marcos for petitioner.

Florencio Z. Sioson counsel for private respondent.

Ozaeta, Romulo, De Leon, Mabanta, Buenaventura, Sayoc and De los Angeles collaborating counsel for private respondent.

DE CASTRO,J.:Sometime on November 9, 1961, the Philippines Patent Office issued Certificate of Registration No. 9331 in favor of respondent Kaisha covering the trademark "YKK" for slide fasteners and zippers in class 41.

On April 27, 1967 or 51/2 years after respondent's registration was issued by the Philippines Patent Office, petitioner Pagasa filed an application for registration of exactly the same or Identical trademark of "YKK" for zippers under class 41 which was allowed on April 4, 1968 with Certificate of Registration No. 13756.

Alleging that both trademark ("YKK") are confusingly similar, being used on similar products (slide fasteners or zippers) under the same classification of goods, respondent Kaisha filed with the Director of Patents a petition for cancellation of petitioner's registration of exactly the same trademark "YKK".

On May 5, 1977, the Director of Patents, finding the trademark in question "YKK" brand to be confusingly similar, and regretting the negligence of his office in allowing the registration of the trademark "YKK" in favor of petitioner notwithstanding the fact that the same trademark had long been previously registered in the name of respondent Kaisha, cancelled Registration No. 13756 in the name of Petitioner Corporation.

The Director of Patents based his order of cancellation on Section 4 (d) of Republic Act No. 166, as amended (An Act to Provide for the Registration and Protection of Trade-Marks, Trade Names and Service-Marks; etc.):

Sec. 4. Registration of trade-marks, tradenames, and service marks on the principal register.-There is hereby established a register of trademarks, tradenames and service marks which shall be known as the principal register. The owner of a trademark, tradename or service mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal register unless it:

xxx xxx xxx

(d) Consists of or comprises a mark or trade name which so resembles a mark or trade name registered in the Philippines or a mark trade name previously used in the Philippines by another and not abandoned as to be likely, when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; or

xxx xxx xxx

The matter was elevated by petitioner to the Court of Appeals and argued that there was laches on the part of Kaisha considering that notwithstanding the fact that the trademark was registered for the use of petitioner, it was not until January 23, 1975, that Kaisha filed a petition for cancellation after a lapse of almost seven (7) years.

The Court of Appeals affirmed the decision of the Director of Patents, and held that the equitable principles of laches, estoppel and acquiescence would not apply in this case for it has not been shown that Kaisha abandoned the use of the trademark; that to apply said principle in favor of petitioner Pagasa is far from equitable since evidence was shown, which was not refuted by petitioner, that it has previously known the registration of said trade mark which is a contraction standing for the first three letters of respondent's name Yoshida Kogyo Kabushiki, and was aware of such fact at the time of registration since it appears that the president of respondent visited the factory of petitioner and had preliminary business talks with the official of the latter because both are producing zippers; that technical help was given by the engineers of respondent to petitioner when the latter's president, in turn, visited respondent's company sometime in 1960.

Thus, the appellate court concluded that:

xxx xxx xxx

There is therefore, no doubt in Our Mind that indeed, [petitioner] knew of the use of trademark "YKK" by [respondent] which are the initials of the company, and notwithstanding this knowledge it later on sought trade registration of the same trademark in its favor. Thus, to allow [petitioner] to continue using the trademark "YKK" merely because [respondent] did not or was not able to immediately seek the cancellation of the irregularity issued registration in favor of [petitioner] would be far from equitable.

The second assigned error merely involves alleged lack of proof of [respondent's] actual commercial use in the Philippines of the trademark "YKK". This, to Us is of no moment. What is important is the fact that [respondent] has been allowed the use of the trademark "YKK" under the Certificate of Registration Nos. 9331 and 9345 issued respectively on November 9, 1961 and November 22, 1961. What could probably have saved the case for [petitioner] is positive proof that [respondent] has totally abandoned the use of said trademark in accordance with Our aforecited Section 4 of Republic Act 166. However, the records are bereft of any evidence to this effect. "

Hence, this present recourse wherein the petitioner assigned the following errors:

I

The Honorable Court of Appeals erred when it in effect ruled that the equitable principles of laches, estoppel and acquiescence cannot be applied in the instant case for lack of showing that Yoshida has abandoned the trademark in question and for Pagasa's failure to refute previous knowledge of its existence and registration.

I I

The Honorable Court of Appeals erred when it in effect ruled that it is the fact of registration that vests one's right to a trademark.

Anent the first assigned error, petitioner argues that considering respondent Kaisha's failure or neglect to assert its trademark rights for more than five (5) years, respondent should now be barred from filing the petitioner for cancellation of trademark "YKK" of petitioner under the equitable principles of laches, estoppel and acquiescence; and that because of respondent's inaction, petitioner had been led to believe that its use was unobjectionable or tolerated. It further argues that to be entitled to the defense of estoppel by laches, it is not necessary for the petitioner either to show that respondent has abandoned the trademark or to prove its good faith if it is shown that respondent was aware of petitioner's use of the trademark without the former's protest or objection thereto leading petitioner to assume that its act did not constitute an invasion of respondent Kaisha's trademark rights.

On the second assigned error, petitioner claims that Kaisha never acquired ownership of the trademark, considering that the latter had no proof of actual commercial use of "YKK" trademark in the Philippines; that the certificate of registration issued to Kaisha is voidab initiofor without such commercial use, no trademark rights accrue; that respondent has not presented any reliable and competent evidence to show that the sample zippers sent to this country were actually sold here and sample products are not for sale; that no invoice or receipt were submitted and neither did respondent present testimony of any buyer or distributor to which said samples were addressed.

Petitioner likewise asserts that respondent failed to satisfy a conditionsine qua nonimposed by law, that is, the two months commercial use of the trademark prior to the filing of' an application for registration, as provided for in Section 2 of the Trademark Law:

Section 2. What are registrable Trademarks, trade-names, and service marks owned by persons, corporations, partnerships or associations domiciled in the Philippines and 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 registration are filed.

Respondent in its comment, argued that the mark applied for by petitioner not only resembles the mark which it previously registered but is exactly the same or is Identical to respondent's trademark; that petitioner should have presented clear, positive proof that Kaisha abandoned the trademark, because there exists already aprima facieevidence of continuing use by the latter by virtue of its registration; that it was incumbent upon petitioner which raised the defense of laches, to establish by clear evidence that either respondent was aware of the use of its trademark by petitioner or that respondent has performed an act which misled petitioner into believing that respondent was abandoning its rights over the trademark; and that respondent since its organization in 1948 has endeavoured to popularize its trademark and spent tremendous sum of money for this purpose, thus, it is unbelievable that it will just abandon its product after spending so many years in developing the same.

Petitioner however argued that it adopted and first used the trademark in commerce in the Philippines on December 27, 1958 and has continuously used the same up to the present and that respondent's exportation in the Philippines of YKK brand zippers in 1957 were by its own official records designated as merely "samples" and "of no commercial value.

We find for the petitioner.

The Director of Patents, stressed in his order of cancellation,1that the trademarks in question are "confusingly similar". However, the discussion2made by the Senior Trademark Examiner of the Patents Office regarding the registrability of the mark revealed that "the concurrent registration of subject mark is not likely to cause purchasers confusion, mistake or deception," since the "over-all commercial impression of the marks are grossly different and used on goods not only falling under different (Pat. Off.) classification, but also possessing different descriptive properties." It was also emphasized by said examiner that they are sold through different trade channels or outlets and are non-competing. It is apparent that the foregoing was the basis of respondent Director in allowing the registration of petitioner's trademark.

The Court observes that respondent Director made a sudden turnabout after the petition for cancellation was filed, when he stated in his order that "the then examiner ... miserably overlooked the fact that at the time there was already an existing and validly issued certificate of registration for the trademark YKK, ...," for the records will show that the examiner, before proceeding with her discussion, mentioned that "a verification of Index Files show that there is registered, the trademark 'YKK and Globe Dev.' in favor of Yoshida Kogyo YKK ... ." The Director's order was affirmed by the Court of Appeals whose decision is now being assailed.

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 invoices3submitted 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, definite and free from inconsistencies.4"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.

It appears that it was only after more than seven (7) years when respondent sought the cancellation of the trademark. An unreasonable length of time had already passed before respondent asserted its right to the trademark. There is a presumption of neglect already amounting to "abandonment" of a right after a party had remained silent for quite a long time during which petitioner had been openly using the trademark in question. Such inaction on the part of respondent entitles petitioner to the equitable principle of laches.

A perusal of the pleadings showed no explanation why respondent allowed the use by petitioner of the trademark under a duly approved application of registration thereof for as long as almost eight (8) years before filing the instant petition for cancellation. Obviously, respondent wanted goodwill and a wide market established at the expense of the petitioner but for its benefit. It is precisely the intention of the law, including a provision on equitable principle to protect only the vigilant, not those guilty of laches. It is most unfair if at any time, a previous registrant, even after a lapse of more than five (5) years, can ask for the cancellation of a similar or the same trademark, the registration of which was never opposed by the prior registrant. Why, in the first place did respondent not file an opposition to the application of petitioner, as it ought to have done? It could be because by the fact that its own registration was defective for there being no compliance with the requirement of the law such as the two (2) months commercial use of the trademark prior to the filing of the application, its own registration may be cancelled, specially as it had no evidence of actual use of the trademark after its registration up to the time of the filing of petitioner's application, a fact easily deducible from the fact of respondent's complete silence and having taken no action to cancel petitioner's trademark until after the lapse of more than seven (7) years from the approval of petitioner's application to respondent filing a petition for cancellation.

Section 9-A of the Trademark Law as amended provides:

Equitable principles to govern proceedings: In opposition proceedings and all other inter partes proceedings in the Patent Office under this Act, equitable principle of laches, estoppel and acquiescence where applicable, may be considered applied.

Respondent by its silence, must be aware that its "title" to the subject mark is defective since it failed to conform with the provision of the law regarding prior use of the mark; and it must have been afraid that it cannot fully substantiate its claim that the mark was commercially used in the Philippines. Surely, the evidence of respondent showing that it had advertised in magazines such as Life and Time, cannot be considered as compliance with the law, for it is of general knowledge that said magazines are not published in the Philippines, nor was there any showing that the product so advertised was even sold here. Hence, to grant the application for cancellation would greatly prejudice petitioner since respondent would be taking advantage of the goodwill already established by petitioner in selling its product, without the respondent having incurred in any expense to gain this priceless asset.

Equity and justice, therefore, demand that petitioner should be allowed to continue the use of the subject mark and the mark which was supposedly registered under the name of respondent be deemed cancelled.

WHEREFORE, the decision dated February 6, 1980 of the Court of Appeals is hereby set aside. No costs.

SO ORDERED.

Makasiar (Chairman), Concepcion, Jr. and Guerrero, JJ.,concur.

G.R. No. 78298 January 30, 1989

WOLVERINE WORLDWIDE, INC.,petitioner,vs.HONORABLE COURT OF APPEALS and LOLITO P. CRUZ,respondents.

K. V. Faylona & Associates for petitioner.

Florencio Z. Sioson for private respondent Lolito P. Cruz.

SARMIENTO,J.:The subject of this petition for review is the resolution of the Court of Appeals1granting the private respondents's motion for reconsideration and reviving the decision of the Director of Patents which ordered the dismissal, on the groundof res judicata,of Inter Partes Case No. 807 instituted by the petitioner herein.

On February 8, 1984, the petitioner, a foreign corporation organized and existing under the laws of the United States, brought a petition before the Philippine Patent Office, docketed as Inter Partes Case No. 1807, for the cancellation of Certificate of Registration No. 24986-B of the trademark HUSH PUPPIES and DOG DEVICE issued to the private respondent, a Filipino citizen.

In support of its petition for cancellation, the petitioner alleged,inter alia, that it is the registrant of the internationally known trademark HUSH PUPPIES and the DEVICE of a Dog in the United States and in other countries which are members of the Paris Convention for the Protection of Industrial Property; that the goods sold by the private respondent, on the one hand, and by the petitioner, on the other hand, belong to the same class such that the private respondent's use of the same trademark in the Philippines (which is a member of said Paris Convention) in connection with the goods he sells constitutes an act of unfair competition, as denied in the Paris Convention.

Subsequently, the private respondent moved to dismiss the petition on the ground ofres judicata,averring that in 1973, or more than ten years before this petition (Inter Partes Case No. 1807) was filed, the same petitioner filed two petitions for cancellation (Inter Partes Cases Nos. 700 and 701) and was a party to an interference proceeding (Inter Partes Case No. 709), all of which involved the trademark HUSH PUPPIES and DEVICE, before the Philippine Patent Office. The Director of Patents had ruled in all three inter parties cases in favor of Ramon Angeles, the private respondent's predecessor-in-interest, to wit:

WHEREFORE, for all the foregoing considerations,

1. The petitions seeking cancellation of Registration Nos. SR-1099 and SR-1526, respectively, are both denied and accordingly DISMISSED;

2. Respondent-Registrant/Junior Party-Applicant, Roman Angeles, is hereby adjudged as the prior user and adopter of the trademark HUSH PUPPIES & DEVICE, under Appl. Serial No. 17174, and therefore, the same given due course; and

3. Registration No. 14969 of Dexter Sales Company, assignor to Wolverine Worldwide, Inc., covering the trademark HUSH PUPPIES & Representation of a Dogie Head, is hereby CANCELLED.2On June 29, 1979, the Court of Appeals affirmed tile above decision, finding the same to be in accordance with law and supported by substantial evidence.3In the present case, after both parties had submitted their respective memoranda, the Director of Patents rendered the questioned decision (in Inter Partes Case No. 1807), the dispositive portion of which states:

WHEREFORE, in view of the foregoing considerations this Office is constrained to hold that Respondent's Motion to Dismiss be, as it is hereby, GRANTED and that the subject Petition for Cancellation be, as it is hereby DISMISSED.

Accordingly, Certificate of Registration No. 24986-B issued on May 3, 1983 to the herein Respondent-Registrant, Lolito P. Cruz, for the trademark "HUSH PUPPIES" for use on shoes is, as it is hereby, declared valid and subsisting for the duration of its term unless owner cancelled in accordance with law.4On appeal, the Court of Appeals at first set aside the Director's decision;5however, upon reconsideration the latter was revived.6The principal legal question raised in this petition for review is whether or not the present petition for cancellation (Inter Partes Case No. 1807) is barred byres judicatain the light of the final and executory decision in Inter Partes Cases Nos. 700 701, and 709.

We rule in the affirmative.

The Court has repeatedly held that for a judgment to be a bar to a subsequent case, the following requisites must concur: (1) it must be a final judgment; (2) the court which rendered it had jurisdiction over the subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be Identity between the two cases, as to parties, subject matter, and cause of action.7Contrary to the petitioner's assertion, the judgment in Inter Partes Cases Nos. 700, 701, and 709 had long since become final and executory. That Sec. 17 of Republic Act 166, also known as the Trademark Law, allows the cancellation of a registered trademark is not a valid premise for the petitioner's proposition that a decision granting registration of a trademark cannot be imbued with the character of absolute finality as is required inres judicata.A judgment or order is final, as to give it the authority ofres judicata,if it can no longer be modified by the court issuing it or by any other court.8In the case at bar, the decision of the Court of Appeals affirming that of the Director of Patents, in the cancellation cases filed in 1973, was never appealed to us. Consequently, when the period to appeal from the Court of Appeals to this Court lapsed, with no appeal having been perfected, the foregoing judgment denying cancellation of registration in the name of private respondent's predecessor-in-interest but ordering cancellation of registration in the name of the petitioner's predecessor-in-interest, became the settled law in the case. In the words of the Court of Appeals:

The subsequent failure of appellant-oppositor to elevate the decision of the Court of Appeals, which affirmed the ruling of the Director of Patents, to the Supreme Court, sounded the death knell of appellant-oppositor's instant case. Having become final and executory, the decision in Case No. 967 now bars the prosecution of the present action under the principle ofres judicata.9It must be stressed anew that, generally, the fundamental principle ofres judicataapplies to all cases and proceedings in whatever form they may be.10We now expressly affirm that this principle applies, in the appropriate cases, to proceedings for cancellation of trademarks before the Philippine Patent Office (now Bureau of Patents, Trademarks and Technology Transfer). InIpekjan Merchandising Co., Inc. vs Court of Tax Appeals,we said:

To say that the doctrine applies exclusively to decisions rendered by what are usually understood as courts would be to unreasonably circumscribe the scope thereof. The more equitable attitude is to allow extension of the defense to decisions of bodies upon whom judicial powers have been conferred.11Undoubtedly, final decisions, orders, and resolutions, of the Director of Patents are clothed with a judicial character as they are, in fact, reviewable by the Court of Appeals and by us.

The subject judgment is undeniably on the merits of the case, rendered after both parties and actually submitted their evidence.

Between the earlier petitions and the present one there is substantial identity of parties, subject matter, and cause of action.

The petitioner in all of these cases is Wolverine Worldwide, Inc. The respondent-registrant in this case is the assignee of Randelson Agro-Industrial Development, Inc. (formerly known as Randelson Shoes, Inc.) which in turn, acquired its right from Ramon Angeles, the original respondents-registrant.

As regards the subject matter, all of these cases refer to the cancellation of registration of the trademark HUSH PUPPIES and DEVICE of a Dog.

Finally, there is identity of cause of action, which is the alleged wrongful or erroneous registration of the trademark.

It is argued, however, thatres judicatadoes not apply in this particular instance because when the May 9, 1977 decision was handed down by the Director of Patents, Executive Order No. 913 dated October 7, 1983 and the resulting memorandum of Minister Roberto Ongpin dated October 25, 1983 had not yet been issued. (The validity of this memorandum was later upheld by this Court in LaChemise Lacoste, S.A. vs. Fernandez andSujananivs. Ongpin).12The petitioner underscores the following specific directive contained in the abovementioned memorandum of Minister Ongpin for the Director of Patents:

5. All pending applications for Philippine registration of signature and other world famous trademarks filed by applicants other than their original owners or users shall be rejected forthwith. Where such applicants have already obtained registration contrary to the abovementioned PARIS CONVENTION and/or Philippine Law, they shall be directed to surrender their Certificates of Registration to the Philippine Patent Office for immediate cancellation proceedings.13It is thus contended that despite the previous grant of registration to the private respondent, the present petition for cancellation could still be brought, and the same should be granted by the Director of Patents, pursuant to the abovequoted clause. Stated otherwise, the petitioner suggests that the petition is not barred byres judicatabecause while the former petitions were filed under Republic Act 166, the present one was brought pursuant to the cited memorandum which expressly sanctions the cancellation of registration of a trademark granted even prior to the same memorandum.

In the first place, the subject memorandum never amended, nor was it meant to amend, the Trademark Law. It did not indicate a new policy with respect to the registration in the Philippines of world-famous trademarks. The protection against unfair competition, and other benefits, accorded to owners of internationally known marks, as mandated by the Paris Convention, is already guaranteed under the Trademark Law.14Thus, the subject memorandum, as well as Executive Order No. 913, merely reiterated the policy already existing at the time of its issuance. As accurately enunciated by the Court of Appeals:

Such being the case, appellant-oppositor could have properly ventilated the issue of whether or not it fell within the protective ambit of the Paris Convention in the previous proceedings which culminated in the registration of the Hush Puppies trademark in appellee-movant's name, i.e., in Case No. 967 before the Philippine Patent Office. The Director of Patents in that case, after hearing both parties and thereafter, deciding that appellee-movant was entitled to the registration of the trademark in its name, must have concluded that appellant-oppositor had not established the fact that it was entitled to the application of the favorable provision; of the Paris Convention.15Furthermore, we agree with the conclusion of the Court of Appeals that the memorandum discussed here is subject to the doctrine ofres judicata.The same memorandum has, in the words of the Court of Appeals:

... no room for application where the oppositor previously availed of the same remedy to contest and cancel the registration of subject trademark but did not prevail, against the same registrant regarding the same subject matter (the trademark in question) and for the same cause of action. This is the more so when, as in this present controversy, the certificate of registration, cancellation of which is sought anew, was issued by the Patent office after due hearing in the prior appropriate inter partes case, pursuant to a decision of the Director of Patents which was affirmed on appeal by the Court of Appeals, and has become final and executory.16In the same light, the repeated filing of petitions for cancellation founded on substantially the same ground as provided in Sec. 17 of the Trademark Law, we rule, is not permissible. For to allow without any limitation whatsoever such a practice would be clearly violative of the time-honored doctrine ofres judicata.The present petition for cancellation raises basically the same issue of ownership of the trademark HUSH PUPPIES, which issue was already discussed and settled in Inter Partes Cases Nos. 700, 701, and 709. As pointed out by the private respondent, the petitioner itself expressly recognized the issue of ownership when in the brief it filed in the Court of Appeals it included the following in the assignment of errors:

That the Phil